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

in which such impacts will be felt.

Third , ERDA's analysis in no way permits the
reader to understand who might be affected by impacts as-
sociated with interim actions or in what' geographic locations
such impacts would occur. If, for example, 90% of the exports
and imports of special nuclear material passed through one
or two ports of entry, this would be a very different situation,
in terms of risk to a particular environment, from one in
which such imports might pass through dozens of cities.
Similarly, because all three United States gaseous diffusion

enrichment plants are located in one part of the country, it

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314

seems clear that the incremental impact of enriching fuel
for foreign users is particularly felt by residents of that
region. These absolute and potentially significant localized
effects are simply ignored in the Proposed Findings.

(c) Individual Impacts and the Need for Separate
Environmental Impact Statements — In his letter to us of
November, 11, 19 74, 32 / Marcus Rowden indicated that the
possibility of preparing separate, environmental impact state-
ments on proposed, interim actions was awaiting completion
of the Proposed Findings. The failure of the Proposed Findings,
however, to provide any understandable, differentiated risk
analysis forecloses the opportunity of ERDA, NRC, and other
agencies concerned with the interim review to determine whether
separate environmental impact statements should be prepared with
regard to particular transactions. Indeed, it is impossible
to determine whether such statements would be appropriate
based upon the data contained in the Proposed Findings. ERDA
has thus disabled itself from fulfilling a commitment which
is essential to the integrity of the overall NEPA process. 33 /



32 / See Note 24, supra .

33 / This deficiency in the Proposed Findings is especially
serious as regards the issuance of the license on October 24 ,
1974, for the export of the Laguna Verde-2 nuclear power
generating system to be sited near Vera Cruz on the Gulf of
Mexico (37) . As we have stated in the past, see our letter
of December 11, 1974, to Marcus Rowden, this transaction,
which involves export for the first time to a country not
party to a bilateral Agreement for Cooperation with the United
States, may pose a potential threat to the North American
environment, and deserves "the fullest possible consideration"
in the Proposed Findings. Moreover, in his letter of December 24,
1974, to Robert Hallman and myself, see Appendix B to the Affidavit

[footnote continued on page 25]
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315

III. The Proposed Findings Do Not Consider Alternatives
Short of a Total Moratorium

In a letter to us dated December 24, 1974, Bertram H.
Schur, Associate General Counsel of the AEC, stated that,
"The purpose of the interim analysis is to determine, inter
alia , whether, and to what extent, interim actions must be
modified or made conditional ...." 34 / The approach which
ERDA has taken in the Proposed Findings forecloses the pos-
sibility of taking any steps to modify or make conditional



33/ continued from previous page

of Abraham S. Friedman, sworn to March 28, 1975, in Sierra Club ,
et al . v. United States Atomic Energy Commission, et al . ,
Bertram H. Schur, Associate General Counsel of the AEC, in-
dicated to us that the Proposed Findings would consider the risks
associated with this transaction. Their failure to do so is
wholly inexplicable. Certainly, consideration must be given
forthwith to the preparation of a separate environmental impact
statement on this significant export license.

34/ Appendix B to the Affidavit of Abraham S. Friedman,
iworn to March 28, 1975, in Sierra Club, et a l. v. United
States Atomic Energy Commission, et al .

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316

interim actions. Indeed, ERDA has structured its analysis
in such a way so as to present only two alternatives:
continuing all program activities with no alteration or
imposing a total "moratorium." This black and white analysis
is completely unnecessary, for certainly there are less
drastic alternatives, both substantive and procedural, available
to the responsible agencies which might help ensure that
non-redressable, environmental impacts do not occur and that
future options are not foreclosed as far as particular trans-
actions are concerned.

(a) Substantive Alternatives — As regards substantive
alternatives, a decision might be made in the interim period
to differentiate between different classes of actions. For example,
such a decision might involve deferral of entering into new com-
mitments with countries which do not now have civilian nuclear
power programs and/or which are not yet parties to the NPT.
Contracting and licensing might go forward, however, with
countries which are NPT parties and/or which have already em-
barked upon nuclear power programs. Adoption of this alternative
would help ensure that new expectations and reliances are not
built up which would make it more difficult in the future
to terminate or modify program activities, but it would not
interfere with existing contractual relationships or expecta-
tions.

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317

Similarly, the United States might defer making new com-
mitments with countries such as Mexico and Yugoslavia with which
the United States has no direct bilateral agreement (13 ) ,
but continue to make commitments with countries willing to
deal directly with us. Under the proposed transactions with
Mexico and Yugoslavia, sole reliance is placed on the Inter-
national Atomic Energy Agency (the "IAEA") for ensuring safe-
guards, and, under current IAEA procedures, there is no way
in which the United States can assure the physical sucurity
of exported special nuclear material. 35 / Consequently, these
transactions may significantly foreclose United States options
in the future — the United States, one nation standing alone,
can scarcely force the IAEA to change its standards or establish



35 / It should be pointed out that the discussion of the
Yugoslavian and Mexican transactions, which represent a signifi-
cant new departure in the regulatory structure of the program

(see S. Rep. No. 94-8, 94th Cong., 1st Sess. (February 13, 1975))
receives only the most cursory treatment in the Proposed
Findings (13). It is, however, certainly open to question
whether it is appropriate to proceed with these new procedures,
not fully evaluated under NEPA, until the final Programmatic
Statement is issued. In any event, some attention must be
given to the difference, in terms of U.S. control, between
transactions which take place without a direct bilateral
agreement between a foreign country and the United States
and transactions which occur under the umbrella of such
agreements. ,

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318



physical security requirements. The alternative of rescinding

such transactions or, at the very least, proposing no further

transactions in which sole reliance is placed upon the IAEA

for safeguarding special nuclear material, may therefore markedly

increase the United States' flexibility to impose safeguards

conditions, should they be deemed appropriate, on future exports. 3_6_/

(b) Procedural Alternatives - Even if it is determined
that all program activities should proceed in the interiim
period, nonetheless there appear to be procedural alternatives
available to the responsible agencies which might eliminate
or reduce the risks of foreclosing program options. Certainly,
some consideration must be given in the Proposed Findings
to the need for modifying or making conditional interim actions.
As we suggested last December to the AEC,

"[I]n order to avoid foreclosing objective
consideration of options, including termination
and/or modification of program actions,...
the contingent nature of interim actions must be
expressly acknowledged and discussed in the interim
analysis. It must be made clear that all interim
actions are conditional, i.e., subject to revo-
cation or modification if such steps are deemed
appropriate based on the results of the final
environmental statement, and, the option of
incorporating a specific provision to such ef-
fect in any interim agreements, contracts or
licenses should be fully considered in the interim
analysis." 37/



36 / It should be emphasized, of course, that alternatives such
as this are open to and must be considered by Eximbank, the
Department of Commerce, and other responsible agencies, as well
as ERDA and NRC.

37 / Letter, dated December 11, 1974, from Eldon V. C. Greenberg
and Robert M. Hallman to Marcus A. Rowden.

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319

As is stated at various points in the Proposed Findings, the
United States has broad authority "to impose specific con-
ditions on any export license issued, such as requiring
adequate physcial security measures in the recipient country,
restrictions on the location of reprocessing plants and dis-
position of Pu produced in the fuel elements" (35) .

Given this apparent flexibility, we fail to understand
why no consideration has been given to the possibility
of specifically conditioning Agreements for Cooperation,
fuel enrichment service contracts and licenses in the
interim period so that all who deal with the United States
will be fully aware that the commitments made are contingent,
thus avoiding the possibility of future misunderstandings
and unfulfilled expectations.

Finally, short of conditioning interim actions on the
results of the final Programmatic Statement, certain procedural
steps might be taken to help insure that appropriate public
consideration is given to individual, interim actions as
they are considered in the licensing or contracting process.
As is apparent from reading the Proposed Findings, one
glaring defect in NRC ' s current export licensing procedures
is that no Federal Register notice is issued in connection
with export or import licenses for special nuclear material (38).
Thus, interested persons, unless they have the opportunity
personally to examine NRC's docket, have no way of knowing
when particular export or import license applications are under



320

consideration or what such applications involve. Without
undertaking a formal rule-making, NRC could alter its
procedures now so as to provide for such public notice, thus
increasing likelihood that public attention will be able to
be focused on risks associated with individual licenses for
the export or import of special nuclear material during the
interim period. _38/ Procedural alternatives such as this
should be considered in the Proposed Findings.

IV. The Proposed Findings Do Not Realistically Examine
the Ways in Which Program Options May be Foreclosed as the
Result of Taking Interim Actions

ERDA concludes that continuing program activities during
the interim period should not "significantly foreclose" the
ability of the U.S. to terminate or modify such activities
after completion of a full NEPA review (118) . This conclusion
is unwarranted and substantially undercut by the constraints
upon the United States' ability to do so arising out of interim
commitments and the vagueness of ERDA's assurances that such
legal ability will remain unimpaired. 39 /



387 It should be noted that NRC has already, in the interim
period, taken certain other steps to ensure that greater con-
sideration is given to individual export and import licenses.
Thus, in April of this year, NRC shifted its procedures to pro-
vide for review by the full Commission of export and import
licenses, although previously such licenses had only been reviewed
by the staff. See the New York Times , April 23, 1975, at 5, col, 1.

39/ The vagueness of ERDA's assurances is illustrated by state-
ments such as

"The conclusion or amendment of Agreements for Cooperation
during the interim period generally will not commit the
ERDA to enter into uranium enrichment service contracts"
(emphasis added) (111); or

[footnote continued on page 31]



321



The Proposed Findings recognize that , to the extent
that "entering into Agreements for Cooperation during the
interim period commits the United States to continued
reliance on IAEA; the U.S. loses the ability to unilaterally
impose different safeguards" (113) ; that approval of increased
ceilings for shipments of enriched nuclear fuel to the IAEA
commits ERDA to the fulfillment of enrichment contracts
previously entered into with with Yugoslavia and Mexico (114);
and that, "once exported pursuant to such [export] license,



39/ continued from previous page



"Although issuance of particular export
licenses during the interim period will fore-
close the ability of the United States to
institute new conditions... other vehicles should
generally be available to accomplish the objectives
deemed necessary upon completion of the NEPA
review" (emphasis added) (118) .

Because it is not clear under just what circumstances future
freedom of action v/ill or will not exist, these statements
provide no real guidance to the decisionmakers in assessing
whether particular actions should be deferred or modified.

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322



facilities and enriched uranium cease to be subject to the
licensing authority" (117) . it is further indicated
that the "general obligation of the U.S. to act in good
faith" under Agreements for Cooperation or enrichment service
contracts places real constraints on the United States '
ability to adopt subsequent regulatory alternatives (110, 112). 40/
Yet, despite this recognition of the ways in which future
options may be foreclosed, continuation of all program
activities is justified in reliance on theoretical or
hypothetical legal tools for later modifying or terminating
such commitments, i.e., ERDA's unilateral right to void
contractual obligations (115), the fact that fuel provided
under enrichment service contracts is subject to issuance
of an export license (115) , and so forth. The problem with
this analysis is that it never comes to grips with the legal
realities of U.S. commitments, the likelihood that corrective
action will be taken, or the practical impact of building up
foreign expectations concerning the receipt of U.S. nuclear
exports. 41 /

4~0~7 If adoption of a particular regulation, policy, or practice
based upon an assessment of risks associated with the inter-
national nuclear power fuel cycle, raises questions of good
faith compliance with Agreements for Cooperation or enrichment
service contracts, then the foreclosure of U.S. options by
taking such actions may be very significant indeed and obviously
this risk is something which must be discussed in much greater
detail in the Proposed Findings.

41 / It should be pointed out that the discussion of "ir-
reversible and irretrievable commitments of resources" (127-128)
has many of these same problems. For example, while the
expenditure of resources by the federal government during

[footnote continued on page 33]



323

ERDA's analysis of legal options is essentially circular.
The key issue with regard to foreclosure of legal options is
whether taking such action results in the loss of control over
exported nuclear equipment, technology and fuels. And the key
step with regard to this loss of control, as ERDA views it, is the
issuance of an export license. As the Proposed Findings state,
"[0]nce the facility or enriched uranium is exported, the U.S.
is foreclosed from modifying the conditions in the license
under which the particular export occurred" (117) . Given
this analysis, not surprisingly, in discussing Agreements for
Cooperation and enrichment service contracts, great emphasis
is placed upon the fact that, subsequent to the entry into
such Agreements or contracts, licenses may be denied or con-
ditions imposed on licenses granted (110-112) . Yet when it
comes to discussing the licensing power - "one of the most
important means for implementing policy changes" (116) -
the analysis comes full circle by arguing that, once a license



41/ continued from previous page



the interim period might be of such magnitude as to constitute

"an irrevocable commitment to the continuation of the international

nuclear power export program," the question nonetheless remains

whether the commitment of resources to any particular project

or transaction might constitute an irrevocable commitment of

resources or affect the eventual outcome of the NEPA review

as to that particular project. Moreover, might not there be

an irrevocable and irretrievable commitment of resources by another

party, such as a foreign utility, involved in a transaction with

a U.S. agency which would have a heavy bearing on the eventual

outcome of the NEPA process?

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324

is issued, enriched uranium and/or reactors "remain subject to
the terms and conditions of the enrichment contract or the
terms and conditions of the relevant Agreement for Cooperation"
(117) , which theoretically can be modified or terminated (but
which even ERDA has earlier stated are subject to the U.S.
obligation to act in "good faith"). Such reasoning simply
cannot be used to bolster the argument that issuance of an
export license would not foreclose options. 42/

Even assuming that future options remain legally available
it must be questioned how likely it is that corrective action
will be taken. For example, although the Agreement for Co-
operation with Austria contains provisions relating to U.S.
review of the reactor design (24), U.S. acceptance of
facilities selected for reprocessing (22) and U.S. veto over
storage facilities for special nuclear material (25) , has
such authority ever actually been exercised by the United
States under similar Agreements in the past? Likewise, has



42 / It is equally clear that ERDA's other legal grounds for con-
cluding that issuance of an export license would not foreclose
options are wholly speculative and do not support the conclusion that
options are not indeed "significantly" foreclosed by such action.
The impact of conditioning "future" licenses so as to modify
the terms and conditions under which a foreign country holds
special nuclear material or reactors previously exported from
this country (118) is far from clear, while it is obvious
that the United States cannot rely on the IAEA to ensure
modifications in existing uses (118). As the Proposed Findings
earlier admit, the United States simply does not have the legal
(or practical) ability to require the IAEA to adopt alterna-
tive safeguards or safety measures (113) .

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325

NRC (or the AEC before 1975) ever imposed significant substan-
tive conditions on a license for export of nuclear equipment
or fuels? And, has there ever been a case in which an export
license has been denied, once an enrichment service contract
has been entered into? If the answers to these questions are
in the negative, there is little reason to expect a change
in the future. In point of fact, the reasonable expectation
is that once an enrichment service contract has been entered
into, there is very little likelihood of the conditions ap-
plicable thereto being modified in a subsequent license pro-
ceeding. And it is equally unlikely that once a license is
issued, future actions will be taken through the domestic regu-
latory process to modify it. Indeed, ERDA essentially admits
that this is the case by noting numerous caveats (110-112) to
its"legal ability to adopt alternatives".

Finally, a discussion of foreclosure of options is in-
complete without an evaluation of the reliance which our
foreign trading partners may put on our commitments and their
expectations with regard to future U.S. actions in the area
of nuclear exports. Even with a specific proviso in Agreements

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326



for Cooperation, enrichment service contracts, or licenses,
it seems plain that new U.S. commitments for particular pro-
jects will raise expectations abroad that such commitments
will be fulfilled. Even in monetary terms, it seems likely
that the $3.3 million advance payment required for a 1,000-
megawatt light water reactor power plant supply contract (31)
might legitimately raise the expectations in recipient countries
that they are going to receive such fuel. And, in relying on
such enrichment contracts, recipient countries will surely take
other steps to assure that nuclear power generating systems
are in place at the date when the fuel is scheduled to arrive -
actions involving the investment of literally hundreds of
millions of dollars. Eight years down the road from such contracts,
it may simply not be politically feasible for NRC to deny an
export license. 4 3 / In such circumstances, it may plainly
be better to stop making new commitments now in order to
avoid later "misunderstandings" and the realistic foreclosure
of future options.



43/ Recent events would seem to bear out this analysis. The
rumor which spread through Europe in April that the United States
might delay its exports of enriched uranium to the Western
European countries which already depend upon such uranium
for their fuel supply raised a storm of protest and required
the NRC to make extensive efforts to clear up any "misunder-
standings". See the New York Times , April 15, 1975, at 7,
col. 1; the New York Times , April 23, 1975, at 5, col. 1.

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327

V. The Proposed Findings Do Not Properly Analyze
the Effect on the Public Interest of Deferring on Modifying
Program Activities in the Interim Period

The discussion in the Proposed Findings of the "effect
on the public interest of a moratorium on nuclear power ex-
port activities" (119-126) , quite apart from the fact that
it skews the entire analysis by not considering program al-
ternatives short of total termination 4 4/, is inadequate
insofar as it contains no discussion of the rationale for
proceeding with certain interim program activities, no
balanced appraisal of adverse effects on the public interest
of deferral of program activities, and no consideration what-
soever of any public benefit which might be associated with
the deferral or modification of such activities. It is not
surprising, given these inadequacies, that the balance weighs
heavily in favor of continuing all program activities without
alteration in the interim period.

One of the most troubling aspects of ERDA's analysis
of the public interest is its failure to identify any rationale
for proceeding in many instances. As is made clear at various
points in the Proposed Findings, the overall process leading
to the export of nuclear equipment, technology and fuels is
a lengthy one, with, for example, negotiations



44 / See Point III, supra .

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328



involving an Agreement for Cooperation often extending over
a period of many months 4 5/, and nuclear fuel enrichment
service contracts ordinarily being executed "eight years in advance
of the first delivery of enriched uranium" (31). In such
circumstances, it is difficult to understand what the incen-
tive is, for example, to initiate negotiations with Brazil
and Greece prior to August 31, 1975 (12). Given the long
lead time needed for the development of a civilian nuclear
power program, the question necessarily arises why a delay
of several months in commencing negotiations of new agreements
with countries not now dependent upon the United States for
nuclear power poses any public disadvantage whatsoever.

The problem of proceeding to make commitments, when there
is no clear incentive to do so, is most apparent if one ex-
amines the proposed transactions with Yugoslavia and Mexico
(12-13) . Nuclear fuel enrichment service contracts were
entered into with such countries on August 17, 1974. 4 6 /
Such contracts were specifically contingent upon Congressional
approval of an increase in the ceiling of shipments through
the IAEA. That contingency could have been removed at any time prior
to September, 1975. Yet, on January 8, 1975, the AEC sub-
mitted proposals to Congress, automatically effective sixty days



45 / See Table 2 of Exhibit C to the Affidavit of Eldon V.C.
Greenberg, sworn to March 21, 1975, in Sierra Club, et al . v.
United States Atomic Energy Commission, et al .

46 / Table 1 to Exhibit C of the Affidavit of Eldon V. C. Greenberg,
sworn to March 21, .1975, in S ierra Club, et al . v. United States
Atomic Energy Commission, et a l.

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329

later, to remove the contingency and thus commit the United
States to supply enriched nuclear fuel to Mexico and Yugoslavia
under an exclusive IAEA system. 47 / Given the one year available
under these contracts to remove the contingency, there appears,
at least as far as the public record is concerned, no need