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

nium-233.

(c) Power reactors: The same restrictions would apply to fuel used
and produced in foreign power reactors exported from the United
States, or incorporating major components exported from the United
States, as to fuel enriched in the United States.

(d) Nuclear material exports for nuclear power R. & D. : U.S.
exports of high-enriched uranium or plutonium for use in foreign
nuclear power research and development activities would be subject
to specially negotiated conditions as to safeguards during use.

(e) International safeguards against governmental diversion:
Article III, paragraph 2 of the NPT would apply.

(/) National safeguards against nongovernmental diversion or
sabotage: U.S. exports of nuclear materials and equipment would be
subject to a requirement that they be protected in the recipient coun-
try and any third country to which they may be transferred by phys-
ical security measures designed to give at least the level of protection
afforded similar materials and equipment in the United States.

The above policy suggestions do not differentiate between nuclear-
weapon and nonnuclear-weapon countries, or between parties and
nonparties to the NPT. The absence of discrimination may be viewed
as an advantage, but it may nevertheless introduce complications.

Such a U.S. policy would not succeed unless other countries develop
a common view of nuclear power interdependence as being in their
own long run economic and security interests. The nonnuclear-weapon
countries must seize the present opportunity they have now — but not
for long — to develop nuclear power on the basis of interdependence
instead of self-sufficiency. The major industrial countries of Western
Europe and Japan, the resource rich nonindustrial countries, and the
less developed countries need not be dependent upon the United
States or the Soviet Union. Instead, they can develop cooperation
among themselves. This is the kind of interdependence that will be
most important.



31

In the nuclear era, it is clear from an economic viewpoint, and even
more from a security viewpoint, that the interests of nations are be-
coming increasingly interwoven into an interdependent world.

Senator Glenn. Thank you very much. It is an excellent state-
ment.

I would like to ask a few questions here as rapidly as we can, with
time passing by. The promise we would end by 1 o'clock was made to
all of the panelists who are here this morning.

"Would you comment, Mr. O'Leary, with regard to NRC's export
licensing being largely a ministerial-type function, did you ever con-
sider withholding such a license when you were in the AEC ? If not,
why not? Why was it just a rubber stamp operation?

Mr. O'Leary. My deputy, who was in charge of this, once or on two
occasions discussed the possibility of withholding a license.

"We never really saw one that came through that presented a suf-
ficient issue, although we were prepared to do so.

Senator Glexn. I see.

Mr. O'Leary. "We would have to see one that was a good clear
test case, one such as without any safeguards, and highly vulnerable
composition, for example, the South African movement would have
been an excellent one if they had not been a member of IAEA.

Senator Glexn. Well, South Africa, I think is still pretty well
suspect.

We have a lot of information on it that has not even been read into
the record here, and I will not take the time, but they apparently have
asked for far more material than necessary to run the nuclear facility
that they have indicated they need it for — up to some eight times
the amount of material.

Over the past 10 years, we have exported about 200 pounds of 90
percent enriched uranium in the form of fuel elements to them for use
in their Safari I research reactor. Some 100 pounds of this is cur-
rently in South Africa, even though the reactor requires only 30
pounds for refueling each year, and that leaves a surplus of 70 pounds
or enough for five nuclear weapons.

In addition, a U.S. fuel supplier at Oak Ridge has two more orders
from them now, I understand, for fuel elements totaling 56 pounds
of highly enriched uranium, and it anticipates a third order, for a
total of enough for eight nuclear weapons.

I tend to agree with your statement that that is one that would have
been highly suspect. Would you have held that up, or would you
have passed on any of these orders ?

Mr. O'Leary. I think some of these orders were passed on during
my presence, but they were not brought to my attention.

One of the remarks I want to make. Senator, is that the regulatory
staff, the one that has the responsibility for issuing the licenses,
never really looked into it.

They did not have the intelligence, they did not have the contacts.
They were at the end of a long chain, that began perhaps with the
Department of State, perhaps with the Germantown side of the AEC
operation, and they were purely and classically ministerial.

Senator Glexx. Would you say that business interests overcame
what might have been our best international security interests?



32

Mr. O'Leary. I think the vested interests, promotional interests,
have tended over the formidable length of this particular chain I de-
scribed, to dominate the system.

Senator Glenn. Do we have access to all of the specific terms of
subsidiary agreements, and arrangements that IAEA makes?

When we are saying that we are relying on IAEA to do some of
the investigation for us — and South Africa has IAEA membership —
do we have access, and do we perform any function in determining
what the IAEA criteria are?

Mr. O'Leary. No, I think we do not. I know that Mr. Page from
the NRC is in the audience. He has been the delegate to IAEA, and
he can better comment on that.

Senator Glenn. It would appear this is a blank check, a blank
check confidence, we have given to the IAEA without really know-
ing what they are doing.

Mr. O'Leary. Let me give you another measure of the degree to
which the regulatory staff looked at this.

Our entire investment in the export licensing process, was one-half
man-year. We did not look at it, We did not have cognizance of the
sorts of arrangements that were behind the transactions. We did not
participate in the development of the transactions. We came in at the
end of the chain and simply issued the license.

Senator Glenn. Either of you other gentlemen may have comments
on this. Do you have any comments on what we have been discussing
here?

Mr. Eosenbaum. I think the pertinent questions about organizations
like the IAEA are: How do they go about finding information
which might lead them to suspect diversion ? What would they do if
they found such information ? How would we find out about it ?

There is a story that might suggest some possible answers to these
questions with regard to the IAEA. It is a story I cannot verify from
personal knowledge, but I believe it is true. You might want to ask
some of the witnesses from ERDA, or NRC, about it. I tell it because
I think it is indicative of a problem, not because I want to emphasize
this particular example.

The United States has two 250 megawatt General Electric power
reactors in Tarapur, India, which are under IAEA safeguards. They
have been running more than 5 years.

It is very difficult to know how much plutonium has been made in a
reactor over a period of several years unless you know at what power
levels the reactor has been running.

That is to say, if you want to find out whether all of the plutonium
made in a reactor is still there after the fuel has been reprocessed,
you need to know at what power levels the reactor has been run.
Otherwise there is a large uncertainty in the estimate of how much
plutonium has been made.

The story I have heard is that a Yugoslavian IAEA inspector
named T. Dragnev went to India to inspect the Tarapur reactors in
the fall of 1973. He brought with him a new technique which, using
high resolution gamma spectroscopy, would have enabled him to
closely estimate how much plutonium had been made in these
reactors.



33

This technique, I believe, was given to the IAEA by the United
States, and taught to this inspector by a U.S. scientist at the IAEA.

My understanding of what happened is that, when Mr. Dragnev
told the Indian engineers what he was doing, they confiscated the
magnetic tape on which the data was recorded. Thus, even if the
Indians were diverting plutonium from our reactors, we might not
have known it. Even if the plutonium for their bomb did not come
from the Canadian reactor, but from ours, we would not be very sure
of it. The sort of measurements which might have given us some way
of knowing, the Indians confiscated.

What were the penalties for confiscating it ? Nothing. What was
done about this suspicious act? As far as I can tell, nothing was done.
Was any report made to the U.S. Government? I don't think so.
Again, I do not have personal knowledge of this.

Senator Glenn. You have done a lot of study in this area, and I
believe you were commissioned to do one of your studies in the safe-
guards area a year or so ago by Mr. O'Leary. Do you think the major
problem we should be protecting against is terrorist activities, that is,
preventing the theft of plutonium within a country, as opposed to try-
ing to control all plutonium in the country to prevent diversion by
the country itself ?

So the question is. should it be government to government coopera-
tion to the extent that we trust that governments will not indiscrim-
inately start throwing atomic bombs around, with the understanding
that they themselves will be interested in keeping internal control of
what could be a terrorist situation. Could we get more cooperation
that way ?

Mr. Rosenbaum. Yes, sir, I feel very deeply that the national pro-
liferation situation is largely out of our control.

There are many countries in the world who feel that their existence
is threatened by armed forces on their borders and who have the
capability to make nuclear weapons. I believe they will make them
for exactly the reason we made them ourselves, for deterrence. The
nonproliferation treaty, for example does not prevent a country from
making the elements that go into a weapon. Such a country can with-
draw from the treaty and then put the weapons together in a short
time.

Senator Glenn. You are talking about comparable safeguards. Is it
not true that we use different licensing criteria for exports than we do
for domestic use, and, if so, why, why do not comparable safeguards
criteria apply to begin with?

Mr. O'Leart. The comparability would run this way. At the mo-
ment, we do not require on an export that the importing country have
safeguards, for example physical security, safeguards that are com-
parable to ours. We are developing a fairly effective system in the
United States.

The thrust of the bill is to assure that when the material leaves our
borders, as it goes over, let us say into one of the adjacent States, it is
similarly safeguarded.

Mr. Willrich. Could I comment on that point ?

Senator Glenn. Briefly, as my 10 minutes have passed.

Mr. Willrich. Very briefly, we are developing in this country
safeguards applicable to our industry, but we have come very lately



34

to focusing on this problem, and I do not think that the United States
has yet sorted out its own priorities in terms of the internal arrange-
ments we are going to have here.

There are major decisions pending before the Nuclear Regulatory
Commission, and before the industry as a whole, in terms of how it
is going to manage its domestic safeguards program. The United
States has an enormous nuclear power capacity operable, and coming

on line.

What we do will make a difference in the world. I would suggest
we put our own house in order. At the same time, I think our deci-
sions are linked to the world situation. There is interdependence of
fuel cycle elements. The problem is to realize the deficiencies and move
forward in a sensible way.

Senator Glenn. The Senator from Illinois.

Senator Percy. Mr. O'Leary. I have been constantly surprised, and
particularly on returning recently from the Mideast, at the way we
have proliferated the sale, or gift of weapons all over the world,
sophisticated conventional weapons, without a real clear-cut policy
as to what effect this will have.

I assume that our controls are much tighter, for weapons, and
weapon potential that has unlimited capability, such as in the nuclear
field, and therefore I am rather shocked with the procedure that you
outlined for licensing so-called normal commercial nuclear export
transactions. That this Government could so casually approve the
export of weapons-grade material is really beyond comprehension.

Is it true that NRC has the responsibility for issuing the export
license, but it has no, or relatively limited internal capability for
making independent judgments on the purchasing country's actual
compliance with the IAEA materials accountability safeguards?

Mr. O'Leary. I think that is a fair summation. I do not know
precisely what the situation is now. When I left that organization
at the end of last June, the regulatory staff had essentially no capabil-
ity to do other than process paper.

Now, that is not to say that the entire Atomic Energy Commission
was not doing something in this area, because under the international
programs, under the general manager, I am quite sure that there was
a look. But the point to emphasize here is that we in the regulatory
staff were in fact the ones that were conducting the act, we were
stamping the export licenses, and simply because of the history of this
business, and I must say that it went beyond that, it ran to the entire
problem of safeguards.

There was a clear separation between responsibility and authority,
that is really the point you have to focus on, the authority was in a
number of agencies, and it was simply diffused all over the place.
Senator Percy. Is it true that the R. & D. side of the former AEC,
not only had the research and development responsibility, but also
were tied in with the responsibility to promote the use of energy ?

Mr. O'Leary. Of course.

Senator Percy. Now that EDRA has been created by this commit-
tee, is it true that it has not only the research and development, but
it is the promotional agency? And is it accurate therefore that they
not only are the promotional agency, but they are relied upon to make
the key decision to issue licenses ?



35

Mr. O'Leary. Let me answer that.

Senator Percy. It sort of reminds me of haying a factory where
you have the quality control, and you also tie it up with your sales
effort. You are constantly trying to choose which is the more impor-
tant, and, at times, the pressures get very great to get more sales.
Senator Glenn. Before you answer, could I interrup.
Senator Percy, I will step out to vote in order that the hearings
may continue, and after I return you can step out.
Senator Percy. Fine.

Mr. O'Leary. Senator Percy, I think it is fair to say, and as a mat-
ter of fact I have said it on some occasions, that after a while, and
not because of any finality, simply because of an almost evangelical
fervor on the part of the Commission, the Commission and the indus-
try became inseparable.

You really could not see the difference. There was a general aware-
ness of this unity of purpose that should have existed, and really
there ought to be a segregation of research promotional side from the
regulatory side.

I think we are really talking about some unfinished business here
in that area.

Let me go back to Mr. Willrich's statement earlier about the deci-
sions with regard to the fuel cycle. In fact, the Atomic Energy Com-
mission has looked upon the whole nuclear business as simply another
sort of technology that is directly competitive with coal, oil, or nat-
ural gas, and can go anywhere that coal, oil, or natural gas can go.

The fact is that we realize now the hazards of nonlocation, but co-
location raises some very, very severe institution problems.
Who gets in bed with whom, for example, in the facility ?
What are the relationships, the physical relationships between these
corporations? Is it a nationalized thing, or can we continue to have
a private sector corporation working this.

This is part of a whole series of questions that the old Commission
was simply unwilling to tackle, they were unwilling to deal with.

Now, we are getting to the point where our inability to deal with
these problems is really addressing the hole process, and we have to
find ways, other ways to do things, otherwise we are going to short
circuit the entire nuclear thing, not only here, but abroad, and we
must treat nuclear force as a very hazardous technology, but a very
desirable technology.

Senator Percy. If we can concur that it should be segregated from
the safeguard element, do you agree this responsibility should be
removed from ERDA, and that the NRC should be required to make
its own independent judgments about the national interests and safety
aspects of the proposed nuclear exploits?

Mr. O'Leary. I think that NRC is not properly constituted to be-
come a part of the total decision here of what is in the public inter-
est, what is in the short-term political interests of the United States.
In my view, this bill is well expressed in that NRC ought to look
at the safeguard situation, and say if you look to do this, for other
reasons, it is all right, or it is not all right from the standpoint of this
vital element of the safeguards problem.

Senator Percy. Then you would concur with the bill ?
Mr. O'Leary. In those features, yes.



36

Senator Percy. In that bill ?

Mr. O'Leary. Yes.

Senator Percy. Thank you very much, and I appreciate your
statement. In fact, all three statements are extraordinarily good.

Dr. Rosenbaum, you are an acknowledged expert in this field, and
we are grateful for your being here, particularly in the field of
safeguards.

As we are familiar, we are all familiar with the scenario of ter-
rorist threats to entire cities based on the ability to build and deliver
so-called homemade nuclear devices, how real in your judgment is
this threat, how serious should we take the threat ?

Dr. Rosenbaum. I think it is a very serious threat. I do not know
quite how to answer the question of how serious it is. It certainly is
possible. There are thousands and thousands of people in this country,
outside the Government, who have the capability, in small groups, to
make weapons out of plutonium, or highly enriched uranium.

There are thousands and thousands of people outside the United
States, and not in governments, who have similar capability.

The borders of the United States are virtually open, as we see by
the enormous number of illegal Mexican immigrants who come in,
as we see from the difficulty of controlling drug traffic into the
country.

I cannot conceive that we want to do the sorts of things that close
borders, things such as East Germany does. Therefore, I assume our
very long borders will continue to be essentially open, and all of this
presents a very serious threat indeed.

Senator Glenn. Thank you very much, Mr. O'Leary, Mr. Rosen-
baum, and Mr. Willrich. I think you stated a very good case for
internationalizing uranium enrichment and reprocessing of spent
fuel. I think you have presented your statements with great persua-
siveness.

Mr. Willrich, in your statement on page 9, you said that the po-
litical will is missing, and on page 10, you state that this goal — inter-
nationalizing the nuclear fuel cycle — has not been pursued with ur-
gency by government. Can you give us the reasons why you think this
is true ?

Mr. Willrich. Well, there is a long answer and a short answer ob-
viously to a question like that, but it is not a question of putting
blame on some particular part of the Government.

The history that Dr. Ikle gave earlier this morning indicates that
dedicated people have been at work on a lot of these problems for
decades, and not just recently.

We live in a very decentralized political structure in the world.
The United States does not have its way entirely, and we are learning
that more and more. It is very difficult for us to make decisions in
this country to solve these institutional problems, which Mr. O'Leary
was touching on. and the burden of my thought here would be, com-
bining the issue of weapons proliferation with the energy situation,
it really is time to recognize the important decisions. For example,
there are other things in the ERDA split from NRC that are loose
ends, so to speak. The largest program in ERDA, budgetarily speak-
ing, is the manufacture of nuclear weapons. Some years ago, a very



37

large amount, several hundred kilograms of plutonium were exported
by the United States to West Germany, and other very large amounts
to Japan.

Now, this was well before any of these problems we are talking
about here today, sort of crept to the surface.

Those export sales, I believe, were very carefully looked at, from
the standpoint of what kind of arrangements would be applied on
both ends, because obviously people recognize that that amount of
material was very significant from the standpoint of the recipient.

It is not so much organization. Senator Percy, as it is substance
and policy, and the kind of policies that are applied, and I would
encourage you in looking at this bill, to look at it as a vehicle, not to
just reorganize and to take out what is in ERDA now and destabilize
what has already been stabilized, but to really make some decisions
here where they ought to be made, in terms of specific policies that
the U.S. Government ought to follow, in this area, and not to simply
reorganize with a broad delegation of power handing the problem off
to some new or old Government agency. The Congress needs to make
some of these decisions, and there is a whole range of things where
the Congress needs to make decisions.

On the export issue, the United States has to decide what is our
national interest.

Senator Percy. I will have to go over and vote.

One last question on that very point. Do you think these hearings
should be a spur to international negotiations, so that we can accel-
erate the speed with which we are moving on this, and point up the
necessity for it ?

Mr. Willrich. I think that is the essential purpose of these hear-
ings, you must eventually legislate, but also you can ventilate the
substance of the issues to get that legislation.

Senator Percy. I will ask unanimous consent of the committee, that
the remainder of my prepared questions be submitted for the record,
though when the chairman returns, if he would like to ask them, I
would have him do so. I ask the staff to bring that to his attention.

We will have to recess for a short time while I vote.

[The prepared statements of John O'Leary, Dr. David M. Rosen-
baum and Professor Mason Willrich follow :]



38

STATEMENT OF JOHN F. CLEAR Y

Mister Chairman, Members of the Committee. My name
is John F. O'Leary. I served from June, 1972, through June, 1974, as
Director of Licensing of the Atomic Energy Commission. In that capacity
I was responsible for licensing of nuclear-related exports. My task
today is to describe for you the role of the Atomic Energy Commission,
which is essentially identical to that of the Nuclear Regulatory Commission,
in granting licenses for export of nuclear reactors and similar facilities
and of special nuclear material (SNM).

The Committee should note that the responsibility for approval
of nuclear-related exports is difused. We can identify several broad
categories of export that are potentially of significance from the
standpoint of safeguards and of nuclear proliferation. These would
include exports of technology in the form of blueprints, designs and
design concepts, etc; the export of sub-components for reactors and for
fuel reprocessing and fuel fabrication facilities; the export of "user
facilities, " that is to say, of facilities with a direct capability of
utilizing nuclear material - principally reactors; and the export of
special nuclear material - that is of fissile material capable of being
fabricated into a fission bomb. Exports of the first category -
technology - are controlled by ERDA. Exports of the second -
sub-components - are controlled, to the extent that they are controlled
at all, by Commerce. Exports of the third and fourth categories -



39

user facilities and special nuclear material - are nominally controlled