The Export reorganization act, 1975 : hearings before the Committee on Government Operations, United States Senate, Ninety-fourth Congress, first session, April 24, 30, and May 1, 1975 online

mits itself.

Second: In establishing safeguards under agreements for coopera-
tion, there has been complete reliance on the international IAEA



z/y



system of accountancy. This system is designed only to detect diver-
sion. It cannot prevent such diversion, and it does not provide for
physical security or other protective measures. In our view, the
IAEA system, as presently constituted, is not sufficiently able to deal
with the full range of risks associated with fission power develop-
ment.

Third : The authority for issuance of export licenses within the
United States has been split among several agencies. And this split
of authority unnecessarily increases the risks of a lack of effective
coordination among the responsible Federal agencies. Moreover, some
transfers, particularly the transfer of technology, have been virtually
unregulated under our current system of export licensing.

Fourth : There has been a lack of substantive review in actual
licensing proceedings themselves. The committee is well aware of the
fact that safeguards have not been independently reviewed by the
AEC in the past and now by NRC in connection with export licens-
ing. It might also be worthwhile to point out that under current pro-
cedures, NRC does not examine health, safety or environmental im-
pacts which might be associated with the grant of a particular
license.

Fifth : There has been a lack of procedural safeguards within the
system. In particular, I might point out that, with regard to the
licensing of the export of special nuclear material, there has not even
been public notice in the Federal Register or otherwise of the filing
of license applications or the commencement of licensing proceed-
ings. Thus, the public has been kept in the dark as to the status
of current licensing.

Before going on to discuss the particulars of S. 1439, I would like
to state briefly that we believe that legislation such as S. 1439 can
be effective. I know the argument will be made that imposition of
unilateral standards by the United States will competitively disad-
vantage the United States' nuclear power industry, driving foreign
countries, anxious to obtain nuclear power, to "irresponsible" for-
eign competitors, and diminishing our ability to influence nuclear
power growth worldwide.

The problem with that argument, if accepted, is that it leads to the
inevitable conclusion that the United States cannot impose standards
any higher than those of our most irresponsible competitors. The
end result is that the lowest common denominator prevails and that
the United States has become just as irresponsible as its competitors.

I further believe that the argument that unilateral standards are
ineffective and counterproductive in the long term simply fails to
recognize the still powerful position of the United States in the
nuclear power industry. With our commanding position in the mar-
ket, it is far from clear that imposition of additional standards would
undercut the competitiveness of our industry. It might equally be
possible that suppliers of technology outside the United States would
follow the United States' lead, for they, too, as nuclear powers, have
an interest in restraining the spread of nuclear weapons and protect-
ing the world community against terrorist activity or environmental
disaster.

I think the point was well made by Senator Ribicoff, in introduc-
ing this bill on April 15, that time is running out, and that we must



280

take action now if we are to exercise world leadership on this impor-
tant issue.

With regard to S. 1439, the environmental groups which I repre-
sent firmly favor the concept behind this legislation. It is essential,
in our view, to transfer safeguards authority out of a promotional
agency such as ERDA and into an independent regulatory body.

I have a number of specific comments, however, with regard to the
structure of the export licensing process as suggested by S. 1439,
which I hope will assist the committee in its effort to develop legis-
lation :

First : We believe that licensing authority should be centralized in
the Nuclear Regulatory Commission and not in the Department of
Commerce. There are at least three reasons for our conclusions in
this regard; (1) we believe that placing licensing functions within
the Department of Commerce will raise, yet again, the same problem
of an agency combining both promotional and regulatory functions
which the Energy Reorganization Act of 1974 was designed to end;
(2) we do not believe that the Department of Commerce has the
expertise to make any substantive decisions associated with the con-
sideration of nuclear export licenses; (3) we believe the argument
that has been made that the Department of Commerce' ability to
handle speedily export license applications is not a justification for
a transfer of authority to that agency. What is needed, in our view,
is a less perfunctory licensing process, with more detailed scrutiny
given to the particulars of individual license applications.

Second : We believe that control over the negotiations of bilateral
agreements for cooperation should be strengthened. I do not think
that the bill as presently drafted, focuses enough attention on this
vital aspect of the export process.

Even if certification authority is vested in the NRC, the safe-
guards embodied in an agreement for cooperation will be a dominant
factor at the stage that the export license is actually considered. It
will not be easy, 8 to 10 years down the line, after a prospective
foreign purchaser has invested millions of dollars in nuclear equip-
ment, for NRC to deny a license application on the grounds that the
safeguards embodied in an agreement for cooperation are inadequate.

Thus, we make the following two suggestions; (1) the criteria
established by NRC for use in the development of agreements for
cooperation should be met before such agreements can be concluded.
To merely provide for the use of such criteria is not enough; (2) a
nuclear proliferation assessment statement should be prepared in
connection with the negotiation and conclusion of an agreement for
cooperation as well as in connection with the licensing application
itself.

The third point which I have to make with respect to the bill is
that the review criteria should be expanded. By review criteria I
mean the safeguards review criteria and other substantive criteria
which might be taken into account by a licensing agency.

With regard to the safeguards criteria, in order to make a mean-
ingful judgment as to the appropriateness of specific safeguards
measures in specific countries, the regulatory and political climate of
such countries must be analyzed in detail. Safeguards which are
comparable to U.S. safeguards in one country may be sufficient in



281

that country but not sufficient in another country to protect against
the risk of diversion. Consequently, we would suggest that, in addi-
tion to a requirement of comparability, there be a requirement that
safeguards be "adequate" to protect against the risk of diversion,
sabotage or theft in the recipient country.

Fourth: It seems clear that some effort should be made to relate
U.S. standards to standards which might be developed internation-
ally. The bill, as drafted, represents a unilateral approach to the
safeguards problem. We believe that unilateral action may be neces-
sary in order to achieve adequate protection of the nuclear power
fuel cycle. However, in an ideal world, we would ideally like to have
an adequate international agreement, because we are dealing not just
with the United States in the nuclear field, but with numbers of
other foreign suppliers as well. It is necessary, in our view, to bring
all of the suppliers of nuclear technology, equipment and fuels under
adequate control.

Thus, we would suggest a scheme under which XRC would still
be required to promulgate and impose its own safeguards standards.
If, thereafter, a multilateral agreement could be worked out, con-
taining substantially equivalent standards, then, in any particular
case, that agreement could replace U.S. unilateral safeguards, sub-
ject to the caveat that adoption of the multilateral accord would not
impair the United States, right to later impose more stringent safe-
guards if deemed appropriate in the public interest.

Fifth : We believe the provision should be made for appropriate
public participation in the export licensing process. Public procedures
are important especially for groups such as those which I represent.
In particular, in licensing proceedings, in the establishment by XRC
of safeguards criteria, and in connection with consideration of
nuclear proliferation assessments, we would suggest that it is appro-
priate to require there be public notice and opportunity for public
comment.

Sixth : And finally, we believe that a greater role should be given
to the Arms Control and Disarmament Agency. It is not enough, in
our view, merely to offer an opportunity to ACDA to participate in
the export process. It has that opportunity now, but it is not utiliz-
ing it, at least as far as I am aware. I think it is necessary to require
by law that ACDA, which has expertise concerning the political
risks of nuclear proliferation, take an active role in the export licens-
ing process. This might be done by requiring ACDA to prepare the
nuclear proliferation assessment statement and to submit it to XRC
in connection with the licensing process.

Mr. Chairman, in conclusion, I believe that Congress is moving in
the right direction with legislation such as S. 1439. It is critically
important that Congress follow up on the wise choices made in the
Energy Reorganization Act of 1974 to separate promotional and
regulatory functions in the area of nuclear exports and to vest con-
trol over safeguards and other regulatory considerations in an inde-
pendent licensing or certifying agency with expertise in nuclear
power. Unless the United States takes the lead now in placing ade-
quate controls over the international fuel cycle, it may well be too
late.



282

Thank you. That concludes my prepared presentation. Jeffrey
Knight has one or two words to say, and then we will throw our-
selves open to any questions you may have.

Senator Glenn. All right. Mr. Knight.

Mr. Knight. Thank you, Mr. Chairman.

I just want to thank the committee for its work done last year in
creating ERDA and the Nuclear Regulatory Commission. I think
that this separation of promotional and regulatory responsibilities
was long overdue in the nuclear field. I want to stress that this same
split ought to be continued in the international field. I do not think
that we can allow our zeal for exports to overcome the need to place
responsible safeguards on those exports.

Specifically, I recall a statement by former AEC Commissioner
Dowb a few years ago. He indicated that the benefit to the U.S.
balance of payments from nuclear exports would be in the billions
and billions of dollars just by 1980. I think, with our problems with
oil and the worsening of the position of balance of payments, we
have got to be sure that we do not let safeguards and safety issues
slide by in our efforts to export nuclear power.

I think the responsibility for this should not be in the Commerce
Department which is a promotional agency and should be in the
Nuclear Regulatory Commission.

I also think the committee ought to keep in mind, as it is setting
criteria for the various sections of the bill, that we are exporting a
technology that we do not yet have full control over, specifically in
the areas of safeguards, of waste management and disposal, and,
some would say, in the area of reactor safety. I think we ought to
have a very great concern about whether the foreign countries to
which we are exporting this technology can handle it, whether they
have the physical and technological resources and the personnel to
be able to deal with it in a manner that is responsible and safe, and,
also, whether they have plans to deal with other areas of the nuclear
fuel cycle which we do not choose to help them with, such as waste
management.

Thank you.

Senator Glenn. Thank you very much, gentlemen.

I do have some questions here I would like to get into. You both,
obviously, advocate the NRC assuming the coordinating role in this
as well as the control role.

The way it was envisioned in this bill, and in the discussion of it
here in previous testimony, the Commerce Department would coor-
dinate all of the possible vetoes that other agencies might have,
including NRC in the safety and the safeguards area. Looking at
it in that regard, do you still have an objection to Commerce play-
ing the same agency role which it plays with respect to almost every-
thing else we export to foreign countries.

Mr. Greenberg. It is unclear from the bill as drafted just what
role Commerce will play. The licensing authority which NRC now
has is being transferred completely to Commerce. That means that
Commerce, at least under the current legislation, would have any
authority that NRC has, under current law, to pass on health and
safety and environment and so forth. It seems to me that this is
clearly inappropriate because Commerce simply does not have any
expertise to deal with these issues.



283

Senator Glenn. That was not intended. I think it was brought
out quite forcefully yesterday in the testimony. Senator Percy
focused on that problem for awhile during the questioning yester-
day, as a matter of fact, and suggested that perhaps we need to
change some of the wording in our markup on the bill or change the
bill to reflect that.

"We really did not look to Commerce as haying all of the nuclear
expertise to make these judgments and decisions on whether the
physical security is or is not adequate or what is safe or is not safe
with plutonium. This would be best left with NRC. Commerce was
put in this to perform lead-agency functions with respect to the
ministerial aspect of export controls.

As was pointed out yesterday, there are myriads of requirements
under the regulations to be coordinated when a businessman tries to
sell a plant abroad, and you are talking about a $1, $3, $5 billion a
year income for the United States which is not a small thing to be
considered.

So we do want to make the coordinating functions as easy as
possible, but at the same time have safeguards in there so that we
are not taking undue chances with respect to nuclear energy going
abroad.

Would you see any objection to Commerce playing that type of
role ?

Mr. Greenberg. Commerce has no substantive role whatsoever. It
is only acting as a coordinator. The question to ask, I suppose, is
how much greater efficiency is achieved in the system by haying a
coordinator outside of the agencies which are actually carrying on
substantive reviews. The answer may be very little if we are dealing
with the nuclear industry. That industry has had long experience in
dealing with the AEC and will be dealing with NRC in the future
as far as domestic licensing is concerned. So I do not think that
there is any great advantage from the viewpoint of a businessman
in the nuclear industry in dealing with Commerce.

Senator Glenn. I would think there might be some problem giving
NRC that whole thing. They would then tend to become a big
bureaucratic organization to administer all of this. All of us would
like to see NRC become a streamlined, highly technical and very
competent organization — keeping their efforts on that line — and not
become a great bureaucracy.

Mr. Greenberg. Again, it depends upon analyzing the efficiencies
in the system. Our concern is : that because the Department of Com-
merce has been a promotional agency, its bias is going to be in favor
of promoting nuclear exports. It is going to be putting pressure — if
it is interested in this promotional aspect — on NRC and other regu-
latory agencies to move perhaps more quickly than they otherwise
should.

Senator Glenn. You mentioned, as I understood it, that we can
work to replace our own safeguards with international agreements.
Are you saying that we could go back and reinvoke different safe-
guards at a later time ?

Mr. Greenberg. We do not believe that the United States should
enter an international agreement which would foreclose its opportu-
nity to later impose more stringent standards if it felt that such
stringent standards were in the national interest.



284

Senator Glenn. Let me turn that around a little. Let's say that
Pmgland, or let's say West Germany — well, let's say India. A scien-
tist in India comes up with some new thing with regard to nuclear
energy, and it is excellent, and we have not been able to get it. Then
they want to sell it to us and we buy it. Do you think we would buy
it on that same basis, so that they can come in and invoke safeguards
later after we have spent maybe several hundred million dollars for
a piece of equipment ? It would all be bought and put into operation
with the idea that India still had safeguards control over it, and
then come in and invoke new standards on it.

Mr. Greenberg. Would we buy it? It depends on how important
we felt the particular equipment was. We are talking about countries
which want to develop nuclear power. Those countries make a judg-
ment as to how important nuclear power generating capacity is to
them, and they are willing to accept safeguards. They are certainly
willing to accept international safeguards. They may be willing to
accept any number of further unilateral criteria which are required
to be met by the United States.

I do not think you can automatically predict in advance what the
reaction of a particular purchaser is going to be to a set of regula-
tory requirements, because that purchaser is going to make its own
cost-benefit analysis.

Senator Glenn. I would think that would be very difficult to
administer or to operate under that kind of a guideline in the con-
duct of international business, but maybe something can be worked
out.

You mentioned that multilateral agreements among suppliers
would be useful. Do you have any suggestions or any experience as
to how such legislation might be worked out ?

Mr. Greenberg. I suggest in my prepared statement that one
model for legislation which relates to U.S. unilateral controls to
multilateral agreement is the Ports and Waterways Safety Act,
enacted by Congress some 3 years ago, in an effort to pressure the
international community to come up with standards regulating oil
tanker design and construction.

There are problems with that statutory scheme, which I set forth
in my written testimony, but I think it suggests a possible model for
Congress taking action and by that action stimulating the inter-
national community to do something more than it has to date.

Senator Glenn. You mentioned that you were concerned about
the absence of public hearings and Federal Register notices. Are
other export license applications listed in the Federal Register? Do
} 7 ou know about this? I do not know.

Mr. Greenberg. Chairman Glenn, even with regard to the nuclear
export licensing process, applications for the export of nuclear power
generating systems are publicly noted in the Federal Register. There
is an opportunity for public participation now in those proceedings.
However, when NRC considers applications for special nuclear
material there is no public notice.

Senator Glenn. OK. That takes in another area then. The replace-
ment of parts and equipment can now be licensed by the Depart-
ment of Commerce and is signed off on it. There is no notice given
of that type, I suppose, in the Federal Register. Some of those can
be very vital.



285

Mr. Greenberg. I think that is right. As far as I am aware, there
is no notice with respect to such applications.

Senator Glenn. In your statement you say that two nations which
do not have bilateral agreements for cooperation with the United
States ; Yugoslavia and Mexico, have been able to receive uranium
from us nevertheless through the conduit of the IAEA.

As long as such things as that are not stopped are we ever going
to be able to have control? What are your comments on that? How
did this happen? I am not familiar with it.

Mr. Greenberg. This came about through an amendment to the
Atomic Energy Act of 1954 which was approved at the last session
of Congress. That amendment allows shipments through the conduit
of the IAEA for power purposes if the foreign country has an
agreement with the IAEA, and if the United States has an agree-
ment with the IAEA.

As I understand it, neither Yugoslavia or Mexico, for variety of
political reasons, were willing to enter into a direct bilateral agree-
ment with the United States. Thus, the Atomic Energy Commission
came up with the alternative of using the IAEA as an intermediary.

The problem with that approach is that, in the absence of a
bilateral agreement, there is no direct control by the United States
over what the foreign purchaser does with nuclear equipment, tech-
nology and fuels.

Senator Glenn. Why did they refuse to enter into an agreement?
Do you know why ?

Mr. Greenberg. I am not familiar with the facts of the particular
negotiations.

Senator Glenn. Let's keep on IAEA for just a moment here.
Mainly, IAEA has been used for sort of inventory information so
far and has not reaiiy exercised physical control as such.

From your testimony I gather that you would like more inter-
national control as such. Is that correct ?

Mr. Greenberg. Well, I am at least suggesting that international
physical security standards might be set by an international agency
and required to be met by individual nations.

Senator Glenn. Let me put it more directly. Would you favor
more physical control of plants, equipment, plutonium reprocessing
by IAEA and giving up our soverign right, if you want to call it
that, in this area to an international organization?

Mr. Greenberg. The United States is in a somewhat different posi-
tion than other countries, insofar as we are a weapons state, and
thus the problem of national diversion at least is not a problem
which we have. We are in a very different position than Singapore
or the Philippines or some other country.

I think the problem of physical security is a very difficult one. It
may be that no nation will be willing to accept foreign inspectors,
whether they be the U.S. inspectors or international IAEA inspec-
tors, on its soil.

Senator Glenn. We can do it better with IAEA in a control func-
tion like that, as opposed to our own people in this role, in view of
the fact that we do control most of the enriched uranium and have
controlled the bulk of the equipment to date on international mar-
kets. Would you feel better turning that over to the United Nations
and voting all sorts of things when things go out of hand and out



286



of control in other areas ? Would you feel better with our own people,
our NRC, our own safeguard system, which is set up and used to
apply these stringent rules to other nations we sell to, and hoping
that you get Mexico and some of the nonagreed to nations to do the
same thing? Would you feel better turning that over to an inter-
national agency?

Mr. Greenberg. No, I think that in an ideal world international
solutions are better. I think that if, in the real world, the inter-
national solutions are not adequate — not adequate by our own lights
— then we cannot turn it over to the IAEA. That is the point that
I would like to make very strongly.

Senator Glenn. I am just about to come back to your other state-
ment of not going with international standards that were lesser
standards than ours.

Mr. Greenberg. That is right.

Senator Glenn. All right.

Mr. Greenberg. In the area of physical security, I just do not
know whether it is practical to station U.S. Marines at every foreign
reprocessing plant or fabrication plant. I don't know whether such
an approach is politically possible or whether it is even an alterna-
tive that should be considered. That does not mean, however, that
foreign recipients of U.S. nuclear power, equipment and fuels should
not be required to provide their own physical security, subject per-
haps to periodic inspection by the United States and subject to
review of the overall plans by the U.S. regulatory authorities.

Senator Glenn. Mr. Knight, you are working with environmental
groups. I know you must have contact with some groups similar in
other countries.

Mr. Knight. Yes, we do. We have 12 Friends of the Earth in