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

by NRC but in fact are controlled, by ERDA.

The Committee can obtain insight into the licensing process by
tracking through two export licenses - the first involving a normal
commercial transaction and the second a transaction that was negotiated
at the policy level of the United States government.

In the first case, a foreign purchaser (perhaps a government
laboratory or a university) might wish to have, for example, special
nuclear material in the form of highly enriched or weapons grade
uranium for use in an experimental reactor. The foreign entity would
contact an American firm in the business of selling the special
nuclear material involved. The United States firm, in turn, would
make application for an export license to NRC. NRC would then consult
with ERDA to determine whether or not there was a cooperative agreement
between the United States and the importing country was a participant
in the safeguards program of the International Atomic Energy Agency.
If the advice from ERDA is affirmative on either point, the license
â– would be issued automatically.

A second example would involve the offer of the sale of one
or more nuclear reactors to a government of a nation who was not a
signatory of the Nuclear Proliferation Treaty by a high official of our
government, for example, the Secretary of State. Following on the offer,



40

ERDA would conduct a negotiation with the potential importer and would
ultimately work out a bilateral agreement on safeguards or an arrange-
ment under which the importing country would subject itself to the
safeguards provisions of IAEA. In the meantime, the potential
importing nation would be conducting negotiations with a reactor manu-
facturer. On culmination of these negotiations, the manufacturer
would apply to NRC for an export license and here again NRC would
request the advice of ERDA with regard to the safeguards aspect of the
license and if results were affirmative would issue the license.

In both examples, the point to note is that NRC acts in a purely
ministerial capacity, that is to say, the licenses are issued after an
affirmative finding by ERDA without the exercise of any judgment or
discretion on the part of the NRC.

The Committee will also be interested in the safeguards
philosophy that unlies the activity of the IAEA.

The sole objective of IAEA's formal safeguards program is
to prevent illegal diversion by states. In furthering this objective the
agency places total reliance on inventory controls for special nuclear
material. It does not provide safeguards controls from the standpoint
of physical security of special nuclear material and it is not primarily
concerned with the prevention of theft of SNM. In discharging its



41

international responsibilities the agency has a program consisting
of five functional elements:

It maintains a bluebook which sets forth general
critieria to guide states in the development of their
safeguards program.

It receives complete descriptions from states of
their nuclear production processing and using facilities
together with a complete description of the inventory
measurement system employed in the facility for
safeguards purposes.

It enters into detailed "subsidiary" agreements covering
each facility that details a specific inventory control program
applicable to that facility.

It requires comprehensive reporting of transactions
affecting inventories of SNM.

It conducts international inspections to insure compliance
with the terms of subsidiary agreements.
In addition, the agency provides guidance in the form of
suggested criteria to states for the development of physical security
programs, however, its role in the non-inventory aspects of safeguards
is essentially advisory.



42



STATEMENT OF DAVID M. ROSENBAUM BEFORE THE
SENATE COMMITTEE ON GOVERNMENT OPERATIONS ON APRIL 24, 1975



Mr. Chairman, an age of world politics is coming to an end. Our
nation's hopes for a peaceful and free world after World War II were
abruptly shattered when the Soviet Union colonized the eastern half
of Europe, slaughtered or imprisoned all its non-Communist leaders,
and imposed Communist dictatorships upon the people by the most
ruthless sort of military and secret police brutality. An era which
began with our national disillusionment with a policy based on
wishful thinking is ending in the same manner.

This cold war era has been essentially a bipolar one dominated
by our, until now largely successful, policy of containment of
Communist expansion by military means. It was preceded by the
collapse of our policy of trading real gains for the Communists,
namely substantial territorial acquisitions, for paper agreements,
such as Yalta, which the Communists ignored. The same sort of wish-
ful thinking has characterized our recent foreign policy and has
partly brought about our present situation in the world. Vietnam,
Cambodia, and Laos, in which we have expended so much blood and
treasure, will soon be entirely Communist. Greece and Turkey,
traditionally both our allies, are now both hostile. Portugal is
very close to being openly Communist. All over the world govern-
ments are publicly questioning what benefits and security are to be
had from being a friend of the United States. Most of them are
liable to come to the conclusion that the answer is, "not much".



43

I do not mean to suggest by this that most of these countries
will turn Communist. I do mean to suggest, however, that countries
which perceive an immediate military threat to their existence, or
even a potential long range threat, are likely to develop nuclear
weapons capabilities for precisely the same reason that we have
done so: to provide a deterrent. I think that the proliferation
of nuclear weapons among the nations of the world is inevitable.
It is inevitable because the technology and materials necessary to
make nuclear weapons are already available in many countries of the
world and many of these countries will perceive it to be in their
national interest to develop such weapons.

The questions we must ask ourselves now are the following. In
what ways would we like to influence the course of nuclear prolif-
eration? How much is it in our power to influence the course of
nuclear proliferation? What effects on our other internal and
external national goals will different policies toward nuclear
proliferation have?

The proliferation of nuclear weapons among middle-sized nations

may not be an unmitigated evil. Possession of nuclear weapons by

these countries may substantially lessen the frequency of warfare

between them and the total number of people killed per year may

not be any greater than the world is currently experiencing with

its constant series of brutal little wars around the world. It

is difficult, on the other hand, to think of possession of nuclear

- 2 -



44

weapons by sub-national terrorist groups as anything but an
unmitigated evil. While nations have a territory which may be
retaliated against, terrorist groups, by their nature, have none.
I believe, therefore, that whatever influence we can bring to bear
on the proliferation of nuclear weapons in the world should be largely
expended in an effort to keep nuclear weapons and the materials to
make them out of the hands of sub-national groups. This is a goal
we can share with virtually every other nation of the world and,
in particular, with the Soviet Union.

It cannot go unnoticed in the Soviet Union that the last two
countries to acquire nuclear weapons, China and India, lie along
her southern border. Other potential candidates for nuclear weapons
development also lie along the southern border of the Soviet Union.
The Soviet Union is made up of many different cultural groups and
nationalities and many of the smaller groups which lie along her
southern border share a cultural identity with groups on the other
side of the border. Many of these groups have legitimate grievances
against their treatment by the Soviet Union. I feel, therefore, that
this is one area in which we might expect honest and full hearted
cooperation from the Soviets.

I believe tha . proliferation of nuclear weapons among national

and perhaps some sub-national groups will be the dominant political

reality by the :nd of the century. Pandora's box has been opened

and there is nc way to put the evils back inside. It is vital that

- 3 -



45

we face this fact and use whatever influence we have not merely to
delay the process a little bit longer, but to modify it in whatever
ways we believe most beneficial to our nation and the world.

I have, Mr. Chairman, two general comments and a number of
specific suggestions about the Export Reorganization Act of 1975.

First of all, while I support an expanded, better financed, and
better staffed IAEA, I believe the bill should be largely oriented
toward trying to keep nuclear weapons and the materials to make them
out of the hands of sub-national groups, rather than stopping the
proliferation of nuclear weapons among nations. Secondly, I believe
the bill should deal 'only with those quantities of material and types
of equipmsnt which pose a safeguards danger. In particular, I believe
that section 3(1) should be modified to exclude quantities of special
nuclear material, source material, and by-product material too small
to have any safeguard significance.

I would like to make the following other specific suggestions,
Mr. Chairman, for modifications in the wording of the act. With
regard to section 2(a)(6) and section 7(a), I suggest first of all
that the wording be changed from "substantially at least comparable,"
to, "at least equivalent to." Secondly, I would like to point out
that our internal safeguards are not designed to keep the United
States government from acquiring special nuclear material. Safe-
guards equivalent to ours would, thus, not be designed to keep
governments from acquiring special nuclear material from their own

facilities.

- 4 -



46

The "internationalization of all strategically significant
aspects of the non-military nuclear fuel cycle," mentioned in
section 2(a)(8) and in section 9(b)(1) may not increase safeguards
security. I ask, Mr. Chairman, where would such facilities be put?
Who would staff them? Who would have the authority to police them?
I think, Mr. Chairman, that it is often worse to have a structure
which gives one a false assurance of safety than to have no structure

at all.

I suggest, Mr. Chairman, that section 3(6) should be changed
tc read "'safeguards,' means any action to make diversion more
difficult," Spiking plutonium with cobalt 60, for example, Mr.
Chairman, does not seem to be included under the present definition
of section 3(6) .

I suggest, Mr. Chairman, that a section 4(a)(3) be added reading
as follows. "No export license for arms, ammunition, and the
implements of war including technical data relating thereto can be
issued by the Secretary unless the Secretary of Defense has given
written approval for the issuance of such a license." I suggest
also, Mr. Chairman, that the act include authority for the Secretary
of Defense to waive as much of this authority as he deems necessary.

I suggest, Mr. Chairman, there be added a section 7(c)(3) that

reads as follows. "The Commission shall make available to other

nations the most advanced special monitoring and protective devices

developed for safeguards purposes, consistent with national security

interests of the United States."

- 5 -



47

Last of all, Mr. Chairman, I suggest that section 8(a) be dropped
altogether. I believe that the necessary national purposes will be
covered by section 8(b). The nuclear proliferation assessment state-
ment called for in section 8(a) seems to me to be so vague that it is
liable to lead to still more delay in the administrative machinery
of our government and to still further clogging up of our courts.

That is the end of my prepared statement, Mr. Chairman. Thank
you very much for the opportunity to testify.

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48

TESTIMONY OF MASON WILLRICH
Professor of Law
University of Virginia



Before the U.S. Senate Committee on Government
Operations on the Export Reorganization Act of
1975 (S. 1439).

April 24, 1975



49

MASON WILLRICH: RESUME

MASON WILLRICH is professor of law at the University of Vir-
ginia. He was Assistant General Counsel of the U.S. Arms Control
Agency from 1962 to 1965. Prior to 1962 he was in private law prac-
tice in San Francisco. Mr. Willrich has served as consultant to
the Ford Foundation, the RAND Corporation, the U.S. Arms Control
and Disarmament Agency, and various private companies.

Mr. Willrich' s latest book is Energy and World Politics .
His other publications include Nuclear Theft: Risks and Safeguards
(co-authored with Theodore B. Taylor) ; SALT: The Moscow Agreements
and Beyond ; Global Politics of Nuclear Energy and numerous articles
concerning energy matters and national security issues. Mr. Willrich
graduated from Yale University in 1954 and received his law degree
from the University of California, Berkeley, in 1960.



50

Mr. Chairman:

I welcome the opportunity to assist in your consideration of
the Export Reorganization Act of 1975 (S. 14 39) . My testimony is
limited to the parts of the bill that pertain to the export of non-
military nuclear facilities, material and technology.

I will first outline the relevant trends in the development
of a worldwide nuclear power industry. Next I will consider the
provisions of S. 1439 in the context of U.S. government organiza-
tion to develop and implement a nuclear export policy. Finally, I
will outline some substantive suggestions for such a policy.

Given international political realities, there are a variety
of motives for national governments to establish nuclear power pro-
grams. These include: low-cost electric power; increased energy
security; and creation of a nuclear weapons option.

The economics of nuclear power were strengthened by the world
oil price explosion in 1973/74. A compelling economic case for nu-
clear power can now be made in industrially advanced countries with
relatively large electric power grids. Moreover, the current high
oil price provides an economic rationale for smaller nuclear power
reactors in a much larger number of countries with relatively small
electric power grids.

Nuclear power can offer increased security of energy supply
basically in two ways. First, nuclear fuel can be substituted for
oil for electric power generation, thereby diminishing a country's
dependence on the world oil market that has, for the near term at
least, been effectively cartelized by OPEC. Second, nuclear power



51

can be exploited in ways that will lead to the eventual development
of a maximum degree of national nuclear self-sufficiency. However,
in most national circumstances for the foreseeable future, nuclear
independence could be achieved only if industry in the country involv-
ed were able to acquire and operate sophisticated fuel cycle techno-
logies and if government were willing to pay a very large economic
penalty.

Nuclear power can result in a nuclear weapon option in a large
number of ways. The basic requirement is the availability in the
country concerned of plutonium or high-enriched uranium. Beyond 1980,
the annual plutonium output from nuclear power programs throughout
the world will increase rapidly to hundreds of thousands of kilograms
and eventually reach millions of kilograms, assuming nuclear power
forecasts are fulfilled. Yet five kilograms, or less, of plutonium
is enough for a bomb capable of destroying a medium-sized city.
Therefore, one of"the most challenging energy policy issues is how
to manage over the long run the inherent risks of nuclear weapon pro-
liferation. The risks are twofold: diversion of materials from
nuclear power industries by governments; and theft of materials by
criminals or terrorists. The widespread use of nuclear power must
not lead to widespread nuclear violence.

It is important to understand that the pursuit of self-suffi-
ciency in a nuclear power program leads inevitably to the creation of
a nuclear weapon option. At the same time, nuclear self-sufficiency
reduces external political constraints which might inhibit a govern-
ment in exercising that option. Thus, one nation's pursuit of
nuclear energy self-sufficiency may well appear provocative to another.

As of January 1975 over 360,000 megawatts of nuclear power



52



capacity was operable, under construction or on order worldwide
(see Table 1) . This figure reflects most of the slippage that has
occurred since the 1973/74 OPEC oil price revolution. Whereas 15
countries now have operable nuclear power reactors, 30 countries
will have them in 1980. Therefore, the issue is not whether we
have nuclear power, but how we manage it.

While politically irreversible commitments to nuclear power
have been made in a number of countries, the basic pattern or struc-
ture for worldwide development of the essential nuclear fuel cycle
support facilities — uranium enrichment, irradiated fuel reprocess-
ing and fuel fabrication — remains to be worked out. The pattern
that evolves will be critical in determining whether nuclear power
develops worldwide in an economically efficient way and in a way in
which the inherent security risks are effectively managed. A central
fact in this regard is that economic efficiency and international
security considerations work together, not at cross purposes.

One pattern of nuclear power development would occur if
national governments were to aim for nuclear efficiency and security.
If these criteria were applied, the nuclear-electric power growth
rate would be determined by particular national economic circumstances.
[Many nations would have nuclear power reactors on their territories.
However, economics of scale in fuel cycle operations would be fully
exploited. Large-scale uranium enrichment, irradiated fuel repro-
cessing and fuel fabrication plants would be built in a relatively
few locations. These facilities would be large enough to meet the
needs of nuclear power plants throughout an entire region of the
world. The facilities would be multinationally owned and operated
and subject to international inspection by the International Atomic
Energy Agency.



53

Each nation participating in such multinational nuclear
enterprises would receive the benefits of an assured supply of nu-
clear fuel at least cost. The burden of putting up the capital
required for the venture could be spread proportionately among the
participants according to their entitlements to the output of the
facility concerned.

The civilian nuclear power posture of the participating nations
would not appear provocative to each other or to countries outside
the region. Finally, effective physical security against theft of
nuclear fuel could be maintained. Transport of materials that could
be used directly in nuclear explosives could be eliminated by co-
location of fuel cycle facilities, and strong physical security
measures could be incorporated into the design and operation of such
centralized facilities.

The alternative pattern of nuclear power development would
emerge if national governments were to aim for nuclear power inde-
pendence. Each nation would, as rapidly as feasible, acquire its
own capabilities in uranium enrichment and/or fuel reprocessing and
fuel fabrication. These capabilities would not be efficient accord-
ing to commercial criteria, but they could nevertheless provide the
nation concerned with part or all of its nuclear fuel requirements.

A nation with its own small uranium enrichment capability
could produce low-enriched uranium for use in its reactors and/or
high-enriched uranium for use in explosives. A nation with its own
\fuel reprocessing plant would have control over plutonium that could
be recycled in power reactors and/or used in nuclear explosives.
Thus one country's nuclear power independence may threaten another's
security, turning the latter into an inefficient and insecure path
of nuclear power development itself.



54

Furthermore/ if nuclear power were to develop along such
nationalistic lines, materials that could be used directly in nu-
clear weapons would be widely dispersed in a large number of coun-
tries. The problem of safeguards against theft and terrorist use
of crude nuclear explosives would then be much more difficult, per-
haps impossible, to manage. The presence of large quantities of
Plutonium or high-enriched uranium in a country could also add a
new, frightening dimension to any domestic political revolution or
.civil war.

Which pattern of nuclear power development will become
prevalent? — economic efficiency and international security, or
economic nationalism and global insecurity? So far, the evidence
is conflicting. Plans for future uranium enrichment ventures —
whether using the diffusion or centrifuge method — are being
formulated mostly on a multinational basis . This includes
British/Dutch/West German cooperation in the development of the
centrifuge with URENCO and the French led Eurodif project based
on gaseous diffusion. However, South Africa is pressing ahead
with construction of its own enrichment capability based on an
undisclosed process. A number of countries, including India, have
built small chemical reprocessing plants, and larger national
facilities are planned in several industrial countries. However,
the Eurochemic plant in Belgium, which is now shut down, provides
a precedent for multinational ownership and operation of such a
facility. Plutonium recycle has not yet begun on a commercial
scale in any country. The decision whether to take this critical
step in the development of nuclear power, and, if so, on what terms,
is now pending in the U.S. and also in Europe.



55

In my judgment, the tendencies toward nuclear power develop-
ment along primarily nationalistic lines are likely to prevail in
many countries, if not most. But these tendencies are not yet
irreversible, unlike the basic underlying trend toward nuclear
power. However, to reverse the trends toward nuclear nationalism
and resulting economic inefficiency and political insecurity will
require strong and concerted governmental action .

With this background in mind, let me turn to the specific
provisions of S. 14 39. In general, the bill seeks to make the
U.S. governmental structure for nuclear export regulation more
rational than at present. Moreover, the bill suggests certain
lines of policy development. I will limit myself to a few important
points.

The bill would centralize authority to grant nuclear export
licenses in the Department of Commerce. However, it is unclear
whether the Commerce Department is intended to play a primarily
ministerial role in granting nuclear export licenses, once the
other agencies specified have made their assigned assessments,
reviews and findings , or whether the Department is intended to
play a more substantive role in determining whether proposed
nuclear exports are, on balance, in the national interest. If
the latter is the intent, the legislation should provide explicit
criteria to guide the Commerce Department in its licensing decisions.

The bill would give the Nuclear Regulatory Commission (NRC)
a key role to play in the nuclear export field. Exports would
require a finding of "safeguards" in the recipient country "sub-
stantially at least comparable to" U.S. safeguards. I believe
such a finding of comparability or equivalence should be part of



56

U.S. nuclear export policy. Nevertheless, it should be recognized
that, if taken seriously, the process of making such a finding
would be a delicate and difficult task. A recipient country might
well view such a requirement as an unwarranted intrusion into a
particularly sensitive aspect of its internal affairs; namely, its
domestic security arrangements.

An alternative approach would be to negotiate an international
agreement providing physical security standards and procedures
potentially applicable to nuclear power industries worldwide.
This has been proposed by the IAEA Director General and the U.S.
government. The proposal should be pursued. If a satisfactory
international agreement could be worked out, including provision
for verification of its observance, then the role of the NRC
under section 7(a) of S. 1439 could be limited to possible U.S.
nuclear exports to countries that had not joined the international
nuclear materials security convention.

Furthermore, under section 8(a) of S. 1439, the NRC would be