[Congressional Record Volume 141, Number 63 (Wednesday, April 5, 1995)]
[Senate]
[Pages S5193-S5207]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                 AMERICA'S SENSITIVE NUCLEAR TECHNOLOGY

  Mr. GLENN. Madam President and colleagues, I rise to speak briefly 
today about a rather curious development in the history of U.S. efforts 
to halt the global spread of nuclear weapons.
  The hallmark of a good law is its ability to balance elements of 
permanence and change. A good law offers both fixed compass points and 
sufficient latitude for tactical navigation.
  Our nonproliferation legislation offers no exception to this rule. 
When our laws and policies apply too much sail or too much anchor, the 
consequences can be devastating for vital national security interests 
of the United States.
  For example, the notion of timely warning--that is, a legal 
precondition for certain forms of nuclear cooperation that was placed 
into the Atomic Energy Act to ensure stringent controls over exported 
U.S. nuclear materials and technology--has been rendered virtually 
meaningless by the way various administrations have used this term over 
the last decade to expedite commercial uses of U.S.-controlled 
plutonium in other countries.
   United States nuclear cooperation with Japan and with members of 
EURATOM, the European Atomic Energy Community, a region plagued by 
daily headlines of new black market nuclear deals, are two specific 
cases where large-scale nuclear cooperation is proceeding without 
timely warning having been satisfied within the original meaning of the 
term.
  Madam President, I ask unanimous consent to have printed at the end 
of my remarks an authoritative interpretation of this concept by Dr. 
Leonard Weiss, who is now the minority staff director of the 
Governmental Affairs Committee
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (See exhibit 1.)
  Mr. GLENN. Another example, Madam President, in 1985, following 
repeated and flagrant violations of its peaceful nuclear assurances to 
the United States, Pakistan was required by the Pressler amendment to 
satisfy a certification requirement before receiving new aid. 
Specifically, the President had to certify that Pakistan did not 
possess a nuclear explosive device and that new aid would, as numerous 
officials from the Reagan administration had asserted, reduce 
significantly the risk that Pakistan would acquire such a device.
  America funneled hundreds of millions of United States taxpayer 
dollars into Pakistan after 1985, until President Bush finally stopped 
making the required certifications in 1990.
  Throughout that period, both Presidents Reagan and Bush solemnly 
certified--using an interpretation of the word ``possess'' that would 
make even the most cynical of our Government's legal advisors blush--
that Pakistan did not possess the bomb.
  The interpretations of the words ``reduce'' and ``significantly'' 
were similarly handled, as though they had been inscribed on something 
like silly putty. They did not mean anything.
  Since the aid cutoff in 1990, by the way, we have finally started to 
see the first signs of some potential nuclear restraint in Pakistan in 
the form of a freeze on the production of highly enriched uranium.
  Oh yes, I almost forgot to mention the $1 billion or so in taxpayer 
dollars not doled out to Pakistan since 1990 in the name of restraining 
Pakistan's bomb program. Those funds remain here at home, thanks to the 
Pressler amendment.
  As a footnote to the sad saga of Washington's failure to implement 
the Pressler sanctions until 1990, however, our Government has since 
interpreted the ban on assistance as not covering commercial sales of 
military equipment, including spare parts for Pakistan's nuclear weapon 
delivery vehicle, the F-16. Even joint military exercises are not 
regarded as assistance. Once again, a key nonproliferation term has 
been molded and distorted beyond recognition.
  Yet, my remarks today will focus on another term that has found its 
way into the ``Twilight Zone'' of nonproliferation. I am referring to 
the term ``sensitive nuclear technology,'' SNT, as it is known, which 
the Nuclear Non-Proliferation Act very clearly defines as any 
information, other than restricted data, ``* * * which is not available 
to the public and which is important to the design, construction, 
fabrication, operation or maintenance of a uranium enrichment or 
nuclear fuel reprocessing facility or a facility for the production of 
heavy water * * *''.
  If we look carefully into the United States-Japan agreement for 
nuclear cooperation, signed in 1987, we will find a clause in there 
that says the following: ``* * * sensitive nuclear technology shall not 
be transferred under this Agreement.'' That is article 2-1-b.
  Underscoring this provision, the principal negotiator of this 
agreement, Ambassador Richard Kennedy, testified on December 16, 1987, 
before the House Foreign Affairs Committee: ``The transfer of 
restricted data and sensitive nuclear technology under the agreement is 
specifically excluded.''
  Last September, the international environmental group, Greenpeace, 
prepared a lengthy analysis of the transfers of United States nuclear 
reprocessing technology to Japan. This study, titled ``The Unlawful 
Plutonium Alliance: Japan's Supergrade Plutonium and the Role of the 
United States,'' makes for interesting reading. It presents 
considerable evidence of United States cooperation with Japan in the 
areas of plutonium breeder reactors and nuclear fuel reprocessing.
  On September 8, 1994, the United States Department of Energy promised 
a comprehensive review of the report and further stated that it was 
``phasing out collaborative research efforts with Japan on plutonium 
reprocessing and development of breeder reactor technology.''
  The same day, the New York Times quoted a Department of Energy 
spokesman as saying that this cooperation was ``* * * a remnant of the 
last administration.''
  Later, on September 23, Greenpeace was joined by the Natural 
Resources Defense Council and the Nuclear Control Institute in 
demanding several steps to restore United States-Japan nuclear 
cooperation to the constraints of United States law.
  Madam President, I ask unanimous consent to have printed in the 
Record a letter by these organizations to Energy Secretary Hazel 
O'Leary.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

         Greenpeace International; Nuclear Control Institute; 
           Natural Resources Defense Council,
                                [[Page S5194]] September 23, 1994.
     Hon. Hazel O'Leary,
     Secretary of Energy, U.S. Department of Energy, Washington, 
         DC.
       Dear Secretary O'Leary: We are writing to you concerning 
     the Department of Energy's current review of its policies and 
     practices with respect to the export of ``sensitive nuclear 
     technology.''
       We urge that the Department immediately suspend its July 
     1986 guidelines for determining whether technology proposed 
     to be transferred to other countries constitutes SNT within 
     the meaning of the Nuclear Non-Proliferation Act. We further 
     request suspension of all cooperation in reprocessing, 
     uranium enrichment, and heavy water technology pursuant to 
     the guidelines, pending the outcome of the SNT review.
       On September 8, 1994, in response to a report issued by 
     Greenpeace, ``The Unlawful Plutonium Alliance'', outlining 
     the history of recent transfers of reprocessing technology to 
     Japan, the Department announced that it was undertaking a 
     ``comprehensive review'' of its SNT guidelines. It promised 
     to publish the results of this review within 60 days, or by 
     November 7, 1994. It further stated that it was ``phasing out 
     collaborative research efforts with Japan on plutonium 
     reprocessing and development of breeder reactor technology.''
       As outlined in the Greenpeace report, there is no question 
     that any SNT transfers to Japan are unlawful. Indeed, the 
     1988 agreement for nuclear cooperation between Japan and the 
     United States flatly prohibits such transfers. While the 
     Department, in reliance on its internal guidelines, has 
     sought to justify the transfer of reprocessing technology to 
     Japan on the grounds that it is not SNT, the justification 
     cannot withstand scrutiny. In fact, the Department's July 
     1986 guidelines--which permit reprocessing technology to be 
     treated as something other than SNT when supplied to a 
     recipient country with a sophisticated nuclear program or 
     where it would duplicate an existing capability (the
      rationale invoked in the case of Japan)--cannot be squared 
     with the language and intent of the NNPA.
       Indeed, taken to its logical extreme, the Department's 
     interpretation would allow reprocessing technology transfers 
     to countries with questionable proliferation credentials. 
     However, contrary to the Department's guidelines, the NNPA 
     mandates strict, statutory controls over this highly 
     sensitive technology wherever it is to be transferred and 
     without regard to the relative nuclear sophistication of the 
     recipient.
       Our conclusion mirrors that of the General Accounting 
     Office, which stated in a 1987 report that the Department's 
     interpretation was ``not fully consistent with the intent of 
     the NNPA.'' (GAO, ``Department of Energy Needs Tighter 
     Controls Over Reprocessing Information'', 41 GAO/RCED-87-150, 
     August 1987.)
       Likewise, in House hearings held more than eight years ago, 
     Senator Glenn, a principal co-author of the NNPA, 
     characterized the Department's approach to SNT determinations 
     as reflecting a ``willful determination over a period of 
     years to ignore the intent of Congress.'' (Hearing on Nuclear 
     Exports before the Subcommittee on Energy Conservation and 
     Power of the House Committee on Energy and Commerce, 99th 
     Cong., 2d Sess. 4-5, May 15, 1986.) At the same hearing, 
     Congressman Markey called the Department's views ``bizarre'' 
     and underscored. ``In the NNPA, Congress took the view that 
     enrichment, reprocessing and heavy water manufacture are 
     inherently sensitive activities wherever they are located. No 
     latitude is specified in the act because none was intended.'' 
     Id. at 3.
       We think the legal positions asserted in the Greenpeace 
     report, echoing those of GAO and key members of Congress, are 
     unassailable. We think far too much time has passed during 
     which the Department has ignored the requirements of law and 
     cavalierly condoned unauthorized SNT transfers. While we 
     applaud the Department for undertaking its review, we do not 
     believe that business as usual is appropriate while the 
     review is underway. Indeed, ``business as usual'', when it 
     involves continued violation of the law, is scarcely 
     something that can or should be tolerated by the Department.
       We therefore believe it is incumbent upon the Department to 
     take three firm steps during the period of the review. First, 
     it must immediately suspend the 1986 guidelines. Second, 
     independent of the general phase-out of collaborative 
     reprocessing efforts with Japan, it must perforce suspend 
     approvals of any further technology transfers which might 
     involve SNT to any country. Third, Japan and other countries 
     with whom SNT is shared must immediately be advised of the 
     suspension of the 1986 guidelines and cooperation involving 
     SNT. Only by taking these steps can both the NNPA and the 
     review process be the 1986 guidelines and cooperation 
     involving SNT. Only by taking these steps can both the NNPA 
     and the review process be preserved and can the public have 
     adequate assurance that fundamental U.S. non-proliferation 
     law will not continue to be undermined.
       Thank you for your consideration of our views. We would 
     appreciate it if you would promptly advise us of how you 
     intend to proceed concerning our request.
           Sincerely,
     Tom Clements,
       Greenpeace International.
     Paul Leventhal,
       Nuclear Control Institute.
     Christopher Paine,
       Natural Resources Defense Council.

  Mr. GLENN. Months later, on December 28, 1994, these groups received 
a brief reply from the Department of Energy simply asserting that the 
transfers to Japan were ``permissible exercises of its statutory 
authorities.''
  Madam President, I further ask to have printed in the Record a letter 
from the Director of the Department of Energy's Office of Nuclear 
Energy communicating DOD's view that it is permissible for the 
Department ``to consider the quality of technology already indigenous 
to the country that would receive the export in making the 
determination that sensitive nuclear technology was in fact proposed to 
be exported in a given transaction.''
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                         Department of Energy,

                                Washington, DC, December 28, 1994.
     Mr. Tom Clements,
     Greenpeace, Inc., Washington, DC.
       Dear Mr. Clements: As you will recall, after receiving 
     Greenpeace's report. ``The Unlawful Plutonium Alliance,'' the 
     Department agreed to review the guidelines it has used since 
     1986 in determining whether particular proposed exports 
     involve ``sensitive nuclear technology,'' as that term is 
     used in the Nuclear Non-Proliferation Act. In particular, the 
     Department directed its critical scrutiny to the question 
     whether it is legally permissible for the Department to 
     consider the quality of technology already indigenous to the 
     country that would receive the export in making the 
     determination that sensitive nuclear technology was in fact 
     proposed to be exported in a given transaction.
       The Department's Office of General Counsel has concluded 
     that consideration of the quality of indigenous technology is 
     permissible in identifying whether sensitive nuclear 
     technology is proposed to be exported in a particular 
     transaction. As a result, the Department has concluded that 
     its determinations with respect to technology exports to 
     Japan were permissible exercises of its statutory 
     authorities.
       The Department will codify the overall guidelines it uses 
     to determine which exports should be considered sensitive 
     nuclear technology by December 1995. This decision is 
     consistent with our current practice of codifying statements 
     of general applicability and future effect that implement, 
     interpret, or prescribe law or policy. To begin this process 
     the Department will publish an Advanced Notice of Proposed 
     Rulemaking in the Federal Register by February 1995. The 
     Department will actively seek the public's views about 
     sensitive nuclear technology during the rulemaking process. 
     We encourage your participation.
           Sincerely,
                                                    Terry R. Lash,
                               Director, Office of Nuclear Energy.

  Mr. GLENN. In short, because Japan already had demonstrated a 
capability to separate plutonium, DOE is arguing that our reprocessing 
technology did not qualify as SNT--even though the technology was not 
in the public domain, even though the technology was important to a 
Japanese facility engaged in reprocessing activities, and even though 
the technology was not classified Restricted Data. In short, the 
Department is asserting that even though the technology satisfied each 
and every one of the requisite components of the definition of SNT, the 
technology transferred to Japan was not SNT.
  The Department did, however, indicate that it will soon invite the 
public's views on this interpretation in a rule making process. By all 
indications, that should be a lively process indeed.
  Madam President, I ask unanimous consent to insert into the Record: 
First, three articles from the trade newsletter, Nuclear Fuel: ``Four-
Month Look at SNT Guidelines Yields Three-Paragraph Response,'' January 
2, 1995; ``DOE Pressured to Explain Position on Secret SNT Export 
Guidelines'', October 24, 1994; and ``PNC Argues Against Public Release 
of RETF-Related Design Information'', October 24, 1994; and second, a 
January 6, 1995, letter from the three environmental organizations--
Greenpeace, NRDC, and NCI--to the Secretaries of Energy and State 
urging the exclusion of reprocessing technology transfers from any new 
agreement for cooperation with the European Atomic Community.
  There being no objection, the material was ordered to be printed in 
the Record as follows:
     [[Page S5195]] Four-Month Look at SNT Guidelines Yields Three-
                           Paragraph Response

       In a pithy three-paragraph letter, a senior DOE official 
     said December 28 that the department is within its legal 
     authority to transfer so-called sensitive nuclear technology 
     (SNT) to other countries if those countries have advanced 
     nuclear programs.
       Questions about DOE's export of SNT arose in September when 
     Greenpeace International released a report charging that DOE 
     has for years illegally provided Japan's Power Reactor & Fuel 
     Development Corp. (PNC) with SNT, which PNC has used to 
     research and develop a
      planned breeder reactor spent fuel reprocessing plant. 
     Greenpeace said such exports violate the Nuclear 
     Nonproliferation Act, which limits such transfers, and the 
     1987 U.S.-Japan Peaceful Nuclear Cooperation Agreement, 
     which specifically bars them (NF, 12 Sept '94, 12).
       DOE promised to review the Greenpeace report, ``prepare a 
     comprehensive response'' and ``analyze the guidelines used in 
     determining whether nuclear technology transferred to other 
     countries is (SNT) which would be subject to export controls 
     under the Nuclear Nonproliferation Act.''
       DOE said it would ``make public the results of the 
     comprehensive review within 60 days'' (by November 7), but a 
     lengthy legal analysis added 51 days to the review, 
     culminating in the one-page, three paragraph response faxed 
     to Tom Clements, U.S. coordinator of Greenpeace's plutonium 
     campaign, at 5:30 p.m., December 28.
       The letter from Terry Lash, director of DOE's Office of 
     Nuclear Energy, provides no details on how DOE concluded that 
     the exports to Japan are permissible, but rather merely 
     restates DOE's position that SNT export guidelines, prepared 
     by DOE in 1986, permit such exports if a country has an 
     advanced nuclear capability.
       Greenpeace and other environmental groups have argued that 
     the guidelines themselves are unlawful because SNT is SNT, 
     regardless of the capabilities of the country that receives 
     it.
       In September, a Greenpeace-sponsored legal analysis of the 
     guidelines concluded that DOE ``is not free to designate the 
     same technology as SNT for some recipients and not for 
     others.''
       DOE clearly disagrees with that analysis, but has provided 
     nothing to back up its rationale and apparently doesn't 
     intend to. Asked specifically if DOE plans to provide 
     additional information on how it concluded that it had not 
     violated the NNPA or the U.S.-Japan agreement. DOE's Ray 
     Hunter said: ``There is nothing more intended to come out.'' 
     The ``comprehensive review'' DOE promised in early September 
     ``is reflected in that letter'' to Clements, he said.
       Clements told NuclearFuel December 29 that DOE claims to 
     have no written record of its legal analysis, even though 
     Lash noted in his letter that the department ``directed its 
     critical scrutiny'' to the question of whether ``it is 
     legally permissible'' to consider a recipient country's level 
     of nuclear expertise when determining whether SNT is involved 
     in a proposed transaction.
       Having concluded--without further explanation--that the SNT 
     guidelines are legal. DOE has further concluded that ``its 
     determinations with respect to technology exports to Japan 
     were permissible exercises of its statutory authorities.'' 
     The letter offers no insight as to which ``statutory 
     authorities'' the department's lawyers considered in their 
     lengthy deliberations over the SNT designation issue.
       Lash said the department will codify the overall guidelines 
     it uses to determine which exports should be considered SNT 
     by December 1995. He invited Clements
      to participate in the rulemaking process, which will begin 
     in February when DOE publishes an advanced notice of 
     proposed rulemaking.


                           totally inadequate

       ``We obviously view this as totally inadequate,'' Clements 
     told NuclearFuel, ``and we will continue to legally challenge 
     DOE on this.''
       In a press release, Clements said DOE ``has failed in the 
     extreme to conduct the thorough review promised of its 
     `sensitive nuclear technology' export policy. The DOE 
     determination to leave its SNT export policy in place has no 
     basis in law and stands in contradiction to stated U.S. 
     policies aimed at halting the proliferation of plutonium.''
       Greenpeace and the Nuclear Control Institute (NCI), which 
     have long fought breeder reactor technologies and the 
     separation and use of plutonium, also maintained that DOE's 
     response was contrary to opinions by the U.S. General 
     Accounting Office, Sen. John Glenn (D-Ohio) and Rep. Edward 
     Markey (D-Mass.).
       ``DOE's conclusion creates a massive loophole in the U.S. 
     nuclear nonproliferation regime, which is particularly 
     disturbing in light of the current renegotiation of the U.S. 
     nuclear agreement with the European Atomic Energy Community 
     (Euratom),'' added NCI Deputy Director Daniel Horner.
       NCI and Greenpeace are concerned that DOE may be laying the 
     foundation for a new deal with Euratom which would allow 
     virtually unfettered cooperation in plutonium reprocessing 
     technology.
       Clements was also disturbed by the way DOE released the 
     letter to him. According to Clements, DOE provided PNC and at 
     least one nuclear industry official with a copy of the 
     December 28 letter before sending it to him.
       ``The timing of the release of the letter was contrary to 
     openness policies of DOE and we are perturbed that DOE 
     continues to conduct the public's business in this slipshod 
     way,'' he said.
                                                                    ____

   DOE Pressured to Explain Position on Secret SNT Export Guidelines

       DOE critics are pressing the department to explain how and 
     why it adopted export guidelines that allowed the transfer of 
     nuclear technology that would otherwise be barred under U.S. 
     law.
       The export guidelines adopted by DOE in July 1986 without 
     any public notice, allow the transfer of so-called Sensitive 
     Nuclear Technology (SNT) if a recipient country has an 
     advanced nuclear program.
       The guidelines became an issue last month after Greenpeace 
     International released a report charging that DOE--relying on 
     the guidelines--has for years provided Japan with SNT, in 
     violation of the 1978 Nuclear Nonproliferation Act and the 
     1987 U.S.-Japan Peaceful Nuclear Cooperation Agreement (NF, 
     12 Sept., 12).
       Critics charge that the guidelines, and the exports made 
     under them, violate the nonproliferation law and the U.S.-
     Japan agreement because the law and the pact define SNT 
     strictly by the information and technology involved, making 
     no distinction on the recipient.
       The day Greenpeace issued its report, DOE conceded that 
     information and technology provided to Japan under a 1987 
     collaborative arrangement with Japan's Power Reactor & Fuel 
     Development Corp. (PNC) ``may be considered'' SNT if provided 
     to a country with a less-developed nuclear program than 
     Japan's.
       The department is analyzing the 1986 guidelines and is 
     supposed to make public the results of its review around 
     November 8. However, sources say that date may slip because 
     the DOE review is disorganized and might be folded in broader 
     review of how the department handles surplus material.
       Late last month, Greenpeace, the Nuclear Control Institute 
     and the Natural Resources Defense Council jointly urged 
     suspension of the 1986 guidelines and of ``all cooperation in 
     reprocessing, uranium enrichment, and heavy water technology 
     pursuant to the guidelines,'' pending the outcome of the 
     review.
       In a separate six-page letter, dated October 11, Rep. 
     Edward Markey (D-Mass.) urged a similar suspension of the 
     guidelines and ongoing cooperative agreements. He also asked 
     detailed questions about who devised the 1986 guidelines and 
     whether agencies other than DOE signed off on them.
       Markey wants to know who were the principal authors of the 
     SNT guidelines and why they were not promulgated in a formal, 
     open process as agency rulemaking. He also wants to know who 
     was the highest ranking DOE official to approve the 
     guidelines and whether DOE did a legal analysis to determine 
     whether the guidelines were consistent with the Nuclear 
     Nonproliferation Act and other applicable law. As of October 
     20, DOE had not responded to the queries and had not 
     suspended the guidelines.
                                                                    ____


  PNC Argues Against Public Release of RETF-Related Design Information

       DOE's use of controversial, secret guidelines to sanction 
     export to Japan of information and hardware that would 
     otherwise be considered sensitive nuclear technology (SNT) 
     has put the department in a bind over how to respond to a 
     year-old Freedom of Information Act (FOIA) request.
       The FOIA, filed in October 1993 by Greenpeace's Tom 
     Clements, requests information concerning technology and 
     information transferred to the Japanese Power Reactor & 
     Nuclear Fuel Development Corp. (PNC) from DOE's Oak Ridge 
     National Laboratory under contract with PNC.
       Specifically, Clements has asked for copies of the design 
     of a fuel disassembly system which Oak Ridge delivered to PNC 
     for use at its Recycle Equipment Test Facility Fuel (RETF), a 
     breeder reactor spent fuel reprocessing plant.
       For more than a year, DOE has balked at releasing the 
     design information and, for at least six months, the 
     department has been consulting with PNC on the issue.
       Clements has argued that if the information provided to PNC 
     was not SNT--and DOE insists it wasn't--then it should be 
     publicly available.
       The 1987 U.S.-Japan Nuclear Cooperation Agreement, which 
     bars the transfer of SNT, defines SNT as ``data which are not 
     available to the public and which are important to the 
     design, construction, fabrication, operation or maintenance 
     of enrichment, reprocessing or heavy water facilities. . . 
     .''
       DOE determined that this and other information and 
     equipment transferred to PNC for use in its breeder reactor
      program is not SNT because export guidelines, adopted by the 
     department in July 1986 without any public exposure, allow 
     the transfer of what would otherwise be deemed SNT if a 
     recipient country has an advanced nuclear program.
       The guidelines became an issue last month after Greenpeace 
     International released a report charging that DOE has for 
     years provided Japan with SNT, in violation of the 1978 
     Nuclear Nonproliferation Act and the 1987 U.S.-Japan 
     agreement (NF, 12 Sept., 12).
       In April and again July, DOE told Clements that the 
     department had asked the Japanese for comments on the FOIA 
     request. 
     [[Page S5196]] A July 25 letter from Terry Lash, director of 
     DOE's Office of Nuclear Energy, informed Clements that PNC 
     had ``recently'' assured DOE that the Japanese company's 
     comments would be sent ``in the near future.''
       On September 20, following another Clements' inquiry on the 
     status of his FOIA request, Lash advised that the Washington, 
     D.C. law firm of Lepon, McCarthy, White & Holzworth, ``acting 
     for PNC, has provided DOE with a lengthy, detailed legal 
     argument opposing the release of this information to 
     Greenpeace.''
       DOE's Office of General Counsel is reviewing the letter, 
     Lash said. Contacted by NuclearFuel, neither the law firm nor 
     PNC would provide a copy of the legal argument or discuss the 
     arguments made.
       Clements has argued that, while he is interested in 
     whatever the Japanese might have to say about his request 
     ``their opinion should be of no concern regarding the release 
     of the information to me.'' DOE has taken the position that 
     no SNT was transferred, Clements has noted. Any other 
     information transferred ``should be publicly available.''
                                                                    ____

         Nuclear Control Institute; Greenpeace International; 
           Natural Resources Defense Council,
                                                  January 6, 1995.
     Hon. Hazel R. O'Leary,
     Secretary of Energy, U.S. Department of Energy, Washington, 
         DC.

     Hon. Warren Christopher,
     Secretary of State, U.S. Department of State, Washington, DC.
       Dear Secretaries O'Leary and Christopher: In view of 
     certain recent determinations by the Department of Energy 
     with respect to the identification of ``sensitive nuclear 
     technology'' (``SNT'') in export transactions, we are writing 
     to urge that it be made crystal clear in any new agreement 
     for cooperation with the European Atomic Energy Community 
     (``EURATOM'') that transactions involving reprocessing 
     technology are prohibited. As explained below, failure 
     plainly to bar such transactions would run directly counter 
     to the Administration's expressed non-proliferation policy.
       As you know, Section 123a.(9) of the Atomic Energy Act, 42 
     U.S.C. Sec. 2153(a)(9) (the ``Act''), requires that, as a 
     precondition to SNT transfers, agreements for cooperation 
     contain ``a guaranty by the cooperating party that any 
     special nuclear material, production facility, or utilization 
     facility produced or constructed under the jurisdiction of 
     the cooperating party by or through the use of any sensitive 
     nuclear technology transferred pursuant to such agreement for 
     cooperation will be subject to all the requirements specified 
     in this subsection. . .'' including, among other things, 
     full-scope safeguards, adequate physical security and U.S. 
     approval of retransfers. Absent such a guaranty, under the 
     terms of Sections 127 and 128 of the Act, 42 U.S.C. 
     Sec. 2156, 2157, no SNT may be exported from the United 
     States to the nation or group of nations in question. 
     Further, under the Department of Energy's regulations, 10 CFR 
     Part 810, technology transfers involving SNT are prohibited 
     unless the Section 127 and 128 requirements are met.
       In 1987, the United States determined that no SNT transfers 
     would be permitted under the U.S.-Japan agreement for nuclear 
     cooperation. The U.S.-Japan agreement therefore does not 
     contain the provision required by Section 123a.(9) of the 
     Act. Instead,
      Article 2(1)(b) provides, ``[S]ensitive nuclear technology 
     shall not be transferred under this Agreement.'' Because 
     SNT is defined in Section 4(a)(6) of the Nuclear Non-
     Proliferation Act of 1978 (Pub. L. No. 95-242) generally 
     to cover non-public information ``important to the design, 
     construction, fabrication, operation or maintenance of a 
     uranium enrichment or nuclear fuel reprocessing facility 
     or a facility for the production of heavy water,'' it was 
     understood at the time by observers outside the Executive 
     Branch, including ourselves and, to our knowledge, the 
     responsible Congressional oversight committees, that 
     reprocessing technology transfers to Japan would be 
     prohibited.
       As it has turned out, this understanding was not shared by 
     the Executive Branch. Under an internal Department of Energy 
     guideline, adopted in 1986, the Department permitted itself 
     to determine whether certain information constituted SNT in 
     part based upon the ``level of expertise of the information 
     recipient.'' In fact, at the time the U.S.-Japan agreement 
     was under consideration in Congress, Oak Ridge National 
     Laboratory (``ORNL'') was transferring reprocessing 
     technology to Japan, based upon a determination that it was 
     not ``SNT' when delivered to a such a sophisticated nuclear 
     nation.
       In our view, the Executive Branch misled Congress in 1987 
     and 1988 into believing that reprocessing transfers were not 
     possible under the ``no-SNT'' provision of the U.S.-Japan 
     agreement at the very time such transfers were already 
     underway. We have since established by means of a Freedom of 
     Information Act request that the Department of State has been 
     briefed by the Department of Energy on the ORNL transaction 
     well in advance of the State Department's testimony in 
     Congressional hearings that no SNT could be transferred to 
     Japan under the terms of the new agreement.
       Given the high level of expertise in Japan with respect to 
     reprocessing technology, the Department has proceeded over 
     the past half-dozen years to authorize numerous transfers of 
     such technology to Japan. These transfers have been carried 
     out pursuant to a Department of energy guideline which was, 
     in our view, improperly adopted in secret in the first 
     instance, without public notice or opportunity for comment. 
     The SNT prohibition in the U.S.-Japan agreement has thus 
     effectively been rendered a nullity.
       The DOE guideline clearly violated the expressed language 
     of the statute and led to absurd results. Moreover, DOE's 
     interpretation has been rejected as having no basis in law by 
     the chairmen of two Congressional oversight committees with 
     jurisdiction over nuclear exports and by the General 
     Accounting Office, which reviewed DOE's nuclear-export 
     performance and concluded that ``DOE made [SNT] 
     determinations . . . on the basis of factors that are not 
     included in the 1978 act,'' and that ``DOE needs standards 
     for identifying sensitive nuclear technology that are 
     consistent with the 1978 act.''
       This fall we raised what we believe are serious concerns 
     about the legality of the Department of Energy's 
     interpretation. In response, the Department promised a
      ``comprehensive review'' of the entire issue of the 
     lawfulness of its guidelines. However, in a three 
     paragraph letter dated December 28, 1994, not supported by 
     any public, background analysis, the Department rejected 
     our contentions. Instead, it concluded that 
     ``consideration of indigenous technology is permissible in 
     identifying whether sensitive nuclear technology is 
     proposed to be exported in a particular transaction.'' On 
     that basis, the Department then further concluded that its 
     ``determinations with respect to technology exports to 
     Japan were permissible exercises of its statutory 
     authorities.''
       We continue to believe that the Department of Energy's 
     conduct was wrong as a matter of law. However, without 
     awaiting resolution of the legal issue, we believe that the 
     policy issues presented by the Department of Energy's 
     conclusions need to be addressed immediately and 
     unequivocally in the context of the U.S.-EURATOM 
     negotiations. Indeed, it is essential that the 
     misapprehensions which attended the U.S.-Japan agreement be 
     avoided in the case of EURATOM.
       In his September 27, 1993 Policy Statement on 
     Nonproliferation and Export Control Policy, President Clinton 
     categorically states that the United States ``does not 
     encourage the civil use of plutonium. * * *'' While he also 
     referred to his decision to ``maintain its existing 
     commitments regarding the use of plutonium in civil nuclear 
     programs in Western Europe * * *,'' whatever those 
     commitments are they cannot survive the term of our existing 
     agreement with EURATOM, which expires at the end of December, 
     1995.
       In our judgment, any transfer of reprocessing technology, 
     whether determined to be SNT or not, would involve the 
     encouragement of civil use of plutonium, contrary to the 
     Administration's policy. It is in fact presumably for such 
     reasons that the Department of Energy stated in September, 
     1994, that it was ``phasing out collaborative research 
     efforts with Japan on plutonium reprocessing. * * *''
       The need to curtail any future reprocessing transfers to 
     EURATOM is of particular importance. EURATOM is a 
     conglomerate consisting of numerous countries which have 
     quite different degrees of nuclear sophistication. Twenty 
     years hence it could be even more variegated, perhaps 
     stretching from the Atlantic to the Urals, presenting 
     proliferation and terrorism risks that may vary dramatically 
     from member state to member state. Yet, because the United 
     States treats EURATOM as a single entity under the Act, U.S. 
     nuclear materials, technology and facilities will be able to 
     move freely from state to state within the Community. We 
     think it critical in such circumstances that any 
     new nuclear cooperation agreement with EURATOM 
     leave no doubt that cooperation on the civil use of plutonium 
     will not be permitted.
       The United States must act consistently with the 
     President's non-proliferation policy in the context of any 
     new EURATOM agreement. This consistency of action means that 
     whatever approach the Department of Energy may ultimately 
     take in its promised
      rulemaking on SNT transfers, there should be an explicit 
     prohibition on the transfer of any non-public and/or 
     proprietary technology, whether or not designated as SNT, 
     relating in any way to reprocessing. In this way, the type 
     of controversy which has attached to reprocessing 
     technology transfers to Japan would not arise, 
     administrative interpretation would not be allowed to 
     undercut non-proliferation law and policy, and the 
     Congress and the public would have full and complete 
     assurance that the policy of not encouraging plutonium use 
     would be implemented in a consistent and comprehensive 
     manner.
       Thank you for your consideration of our views.
           Sincerely,
     Paul Leventhal,
       Nuclear Control Institute.
     Tom Clements,
       Greenpeace International.
     Christopher Paine
       Natural Resources Defense Council.

  Mr. GLENN. Madam President, my own views on this whole issue are well 
known. On May 15, 1986, Congressman 
[[Page S5197]] Markey chaired a hearing of the House Subcommittee on 
Energy Conservation and Power to assess the effectiveness of DOE 
controls over nuclear technology exports. The hearing focused in 
particular on findings of a report by the General Accounting Office 
documenting several problems in DOE's controls. I testified that 
``GAO's documentation of examples where obvious exports of sensitive 
nuclear technology were covered up by DOE through twisted reasoning 
allowing determinations that no sensitive nuclear technology was 
involved, suggests a dangerous attitude of contempt for law on the part 
of some DOE officials.'' That was clear back in 1986.
  The GAO report that was the focus of that hearing was entitled, ``DOE 
Has Insufficient Control over Nuclear Technology Exports'' (RCED-86-
144) and was dated May 1, 1986--about 9 years ago. That same report 
reached the following specific conclusions--

       DoE has not established objective standards for 
     specifically authorizing exports [of nuclear technology] 
     (page 2).
       The 1978 act [the Nuclear Nonproliferation Act (NNPA)] . . 
     . limits the determination of sensitive nuclear technology to 
     its importance to sensitive facilities, not to recipient 
     countries. (page 4)
       In defining SNT, neither the act nor its legislative 
     history distinguished among countries, their nuclear weapons 
     capabilities, or their nonproliferation credentials. The act 
     requires DoE to determine if information to be provided to a 
     foreign country is important to the design, construction, 
     fabrication, operation, or maintenance of an enrichment, 
     reprocessing, or heavy water production facility. (page 57)
       In our opinion, therefore, the better view is that the NNPA 
     requires DoE to make SNT determinations strictly on the basis 
     of the technical importance of proposed assistance to 
     sensitive nuclear facilities. (page 58)

  On August 17, 1987, GAO issued another report, entitled, ``Department 
of Energy Needs Tighter Controls Over Reprocessing Information' (RCED-
87-150). This report found that ``DOE has little control over the 
dissemination of information related to the design, operation, and 
maintenance of commercial or defense reprocessing technology that it 
produces * * * [adding that] most of DOE's reprocessing-related 
information is readily available to anyone who wants it.'' That was on 
page 17. Here are some additional findings from that report--

       DoE has not enforced the SNT export conditions on 
     activities in conducts with foreign countries under technical 
     exchange agreements. (page 33)
       DoE's interpretation [of SNT] * * * does not appear 
     consistent with the NNPA definition of SNT. (page 33)
       DoE has not fully met NNPA conditions for transferring SNT 
     on any of the cooperative reprocessing activities with other 
     countries. (page 39)
       * * * prior approval rights required by the act were not 
     obtained on any of the cooperative reprocessing activities 
     [specifically the UK and Japan].'' (page 39)
       [DoE officials] believe that although the information 
     [transferred to the UK and Japan] is `valuable,' it is not 
     `important' in the sense intended by the NNPA and is, 
     therefore, not SNT. (page 40)
       Neither the definition [of SNT in the NNPA] nor the export 
     requirements [under existing regulations] indicate that SNT 
     decisions were to be based on the nuclear proficiency of the 
     recipient country. (page 41)
       Neither the act [NNPA] nor its legislative history 
     distinguishes among countries, their nuclear capabilities, or 
     their nonproliferation status to determine what information 
     constitutes SNT * * * this definition should be consistently 
     applied to all countries on the basis of objective criteria. 
     (page 42)
       The assistance DoE provides directly to the reprocessing 
     programs of other countries * * * qualifies in our opinion as 
     SNT as defined in the NNPA. (page 43)

  In March 1988, DOE's own Office of International Security Affairs 
issued a lengthy report on Technology Security (DOE/DP-8008612) which 
found that ``Success in acquiring unclassified sensitive technology, as 
identified in the Militarily Critical Technologies List, has enabled 
potential proliferant countries to construct, outside of the 
international safeguards regime, sensitive fuel cycle facilities at 
lower costs and in shorter period of time'' (page 9-2).
  Then on September 19, 1989, the GAO issued another report entitled 
``Better Controls Needed Over Weapons-Related Information and 
Technology'' (RCED-89-116), which found that ``DOE makes readily 
available a great deal of unclassified information and computer codes 
that could assist sensitive countries in developing or advancing their 
nuclear weapons programs'' (page 16). GAO also found that ``In addition 
to obtaining DOE information, sensitive countries routinely obtain 
hardware
 from the United States that has both nuclear weapons and commercial 
applications * * * about 290 of the approved requests [for export 
licenses in 1987] were destined for facilities suspected of conducting 
nuclear weapons development activities'' (page 5).

  With respect to exports of these so-called dual-use goods, GAO's 1987 
data amount to peanuts compared with what GAO found in 1994. In a 
report bearing a now-familiar title, ``Export Licensing Procedures for 
Dual-Use Items Need to be Strengthened,'' (NSIAD-94-119), GAO found 
that the United States approved over 330,000 licenses for exports of 
nuclear dual-use goods worldwide between fiscal years 1985 and 1992. 
Even more alarming, some $350 million of such goods went specifically 
to facilities believed to be involved in nuclear weapons-related 
activities in eight controlled countries. For further discussion of 
this GAO report, readers should consult my floor statement on January 
4, 1995, where I inserted into the Record detailed summaries of this 
report and another report prepared by four inspectors general 
describing serious problems in the implementation of U.S. export 
controls relating both to munitions and to goods relating to weapons of 
mass destruction.
  Fortunatly, DOE is now under new leadership and appears to be trying 
to grapple with bringing DOE practices back into line with the spirit 
and letter of our fundamental nonproliferation legislation.
  I compliment Hazel O'Leary for the job she is doing there as the 
Secretary of Energy.
  In light of President Clinton's September 27, 1993, policy statement 
that the United States ``does not encourage the civil use of 
plutonium,'' I hope that the Department's three-paragraph letter does 
not represent the administration's final position on this matter. I 
would urge DOE in the strongest of terms to undertake a truly 
comprehensive reexamination of its policies and practices for handling 
such data and to bring these policies and practices back into line with 
U.S. law.
  The United States is not in the business of promoting commercial uses 
of plutonium or highly enriched uranium around the world, either as a 
matter of policy or of law. The bizarre notion that just because a 
country has demonstrated a national capability to separate plutonium or 
perform some other sensitive nuclear activity does not, should not, and 
must not exempt it from provisions of our law addressing sensitive 
nuclear technology. Indeed, if this notion continues to poison our 
nonproliferation laws, what would keep our weapons labs or their 
subcontractors from transferring SNT to virtually any proliferant 
nation, given the capabilities that many of them have already 
demonstrated in the fields of reprocessing, enrichment, and heavy water 
production? If today such technology can go to Japan in direct 
violation of a bilateral agreement, where will such technology go 
tomorrow?
  I will closely monitor developments in this area in the months ahead 
and am optimistic that the Department will eventually bring its 
practices into line with statutory controls over SNT. This will be a 
splendid opportunity for the Department to distance itself from the 
time-dishonored practice of previous administrations of redefining key 
nonproliferation terms to pursue short-term political or diplomatic 
goals.
  I will close this statement by attaching a chronology of some 
relevant documents pertaining to this whole SNT controversy,
 and I ask unanimous consent that it be printed in the Record, and I 
urge all my colleagues to look into this matter and to support 
retaining some consistency, predictability, and clarity in the 
implementation of one of our most important nonproliferation controls.

  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                    Chronology of Relevant Documents

       1/6/95: Letter from Greenpeace/National Resource Defense 
     Council/Nuclear Control Institute to the secretaries of 
     Energy and State.
       12/28/94: Letter from Terry Lash (DoE/Nuclear Energy) to 
     Greenpeace.
       11/9/94: Letter from Sec. Hazel O'Leary to Sen. John Glenn 
     re DoE handling of reprocessing technology.
       [[Page S5198]] 11/3/94: Letter from Greenpeace/Nuclear 
     Control Institute to Sec. O'Leary.
       10/11/94: Letter from Cong. Edward Markey to Secretary 
     O'Leary.
       9/23/94: Letter from Greenpeace/National Resource Defense 
     Council/Nuclear Control Institute to Sec. O'Leary.
       9/9/94: NY Times quotes DoE spokesman Michael Gauldin on 
     past US plutonium reprocessing cooperation with Japan: 
     Gauldin terms such cooperation ``* * * a remnant of the last 
     Administration.''
       9/8/94: DoE Press Release on recent Greenpeace study states 
     that ``The Department of Energy takes Greenpeace's concerns 
     seriously,'' that DoE ``is phasing out collaborative research 
     efforts with Japan on plutonium reprocessing and development 
     of breeder reactor technology,'' and that DoE will 
     ``thoroughly review the Greenpeace study and prepare a 
     comprehensive response.''
       9/8/94: Greenpeace releases ``The Unlawful Plutonium 
     Alliance.''
       9/29/94: Legal memorandum to Greenpeace by Eldon Greenberg.
       8/3/94: O'Leary memorandum to DoE field offices states that 
     ``the President's nonproliferation policy of September 1993, 
     which discourages civil reprocessing, must be integrated into 
     Department of Energy property control and management 
     practices.''
       7/25/94: Letter from Terry Lash to Greenpeace.
       6/19/89: GAO issues report, ``Better Control Needed over 
     Weapons-Related Information and Technology.''
       3/88: DoE/OISA issues study on technology security which 
     finds that existing regulations ``do not adequately protect 
     unclassified sensitive technology from disclosure and foreign 
     access.''
       8/17/87: GAO issues report, ``DoE Needs Tighter Controls 
     over Reprocessing Information.''
       1/12/87: DoE concludes agreement with Japanese PNC 
     enterprise regarding breeder reprocessing cooperation.
       7/86: DoE issues internal document on guidelines for 
     implementing SNT controls.
       5/15/86: Cong. Ed Markey chairs hearing on ``Nuclear 
     Exports: The Effectiveness of Department of Energy Controls 
     Over the Export of Nuclear-Related Technology, Information, 
     and Services.''
       5/1/86: GAO issues report, ``DoE Has Insufficient Control 
     over Nuclear Technology Exports.''
                               Exhibit 1

 The Concept of ``Timely Warning'' in the Nuclear Nonproliferation Act 
                                of 1978


                              Introduction

       In 1984, the first major shipment was made of plutonium 
     separated from U.S.-origin spent fuel to a non-weapon state 
     (Japan) since passage of the Nuclear Nonproliferation Act of 
     1978 (NNPA) (1). Approval of the shipment had been given by 
     the Secretary of Energy, with the concurrence of the 
     Secretary of State, who was required by the NNPA to determine 
     whether the retransfer of this plutonium from France (where 
     the reprocessing of spent fuel took place) to Japan would 
     result in a ``significant increase of the risk of 
     proliferation . . .'' in which the ``foremost'' factor was 
     whether the United States would receive ``timely warning'' of 
     a diversion of the material.
     Footnotes at end.
       In accordance with procedures adopted pursuant to the NNPA, 
     the interagency discussions of the Japanese request for 
     approval of the shipment involved the Nuclear Regulatory 
     Commission (NRC). Although the NRC concurred with the finding 
     that the shipment would not result in a ``significant 
     increase of the risk of proliferation,'' the Commission 
     questioned whether the Departments of Energy (DOE) and State 
     had followed Congressional intent in arriving at their 
     conclusion that the ``timely warning'' test had been met. The 
     NRC's position was summarized by NRC Chairman Nunzio J. 
     Palladino as follows: (2)
       ``(T)he Commission's disagreement with DOE's position is 
     focused on whether or not non-technical factors are permitted 
     to be considered in connection with reaching any conclusions 
     on the existence of timely warning. In the Commission's view, 
     the legislative history of the Nuclear Non-proliferation Act 
     of 1978 (NNPA) indicates that Congress intended timely 
     warning to be essentially a technical matter involving such 
     factors as safeguards measures applied to the material and 
     the technical ease of incorporating the material into a 
     nuclear explosive device. Other, non-technical factors were 
     to be considered relevant only in connection with making the 
     overall statutory finding of no significant increase in the 
     risk of proliferation. A close reading of the statutory 
     language in Section 131 b. of the Atomic Energy Act would 
     seem to support the Commission's interpretation regarding 
     timely warning, particularly since otherwise it would be 
     necessary to consider the same non-technical factors both in 
     connection with the timely warning analysis and in connection 
     with the overall ``increase in the risk of proliferation'' 
     finding. The attachment to this letter lists the more 
     significant technical factors that the Commission believes 
     affect timely warning, and that should be addressed in a 
     classified supplement to future DOE analyses of subsequent 
     arrangements.''
       The resolution of this issue will set a precedent with 
     possibly profound future implications for U.S. national 
     security and foreign relations.
       The DOE/State conclusion on ``timely warning'' was not 
     accompanied by a detailed supporting analysis. Rather, as 
     indicated in the NRC letter, the conclusion was claimed to 
     result from the presence of certain favorable political 
     factors surrounding the U.S./Japan relationship. Subsequent 
     inquiry (3) has revealed that DOE and State interpret the 
     NNPA as saying that political factors, such as the nature and 
     condition of the governmental system and nonproliferation 
     policies in a recipient country, independently of the 
     technical capabilities of that country, could be determining 
     factors in judging whether the U.S. would receive ``timely 
     warning'' of a diversion. Therefore, according to this view, 
     some political factors, which determine the ``inherent risk 
     of proliferation'' (4) in a country, could determine that 
     ``timely warning'' was available, and these and other 
     political factors could be used to determine that there was 
     ``no significant increase in the risk of proliferation'' 
     stemming from a proposed retransfer for reprocessing or 
     return of plutonium. Further, it is claimed that there was no 
     stated or implied legislative requirement for a supporting 
     analysis of the DOE/State ``timely warning'' conclusion or 
     the weight given to the latter in relation to other factors 
     in determining proliferation risk.
       It is the purpose of this paper to show that the DOE/State 
     position is not in keeping with the legislative history of 
     the NNPA or any other indication of Congressional intent. 
     Rather, we shall show that; (a) the Congressional intent was 
     to separate and independently weigh the ``timely warning'' 
     test from the set of possibly counterbalancing political 
     factors listed in the NNPA as being pertinent to an overall 
     judgment as to whether a proposed retransfer would result in 
     a significant increase of the risk of proliferation; and, (b) 
     that Congress meant the ``timely warning'' test to compare 
     the time needed by the U.S. to effectively react to a 
     diversion of nuclear material to the time needed by the 
     diverting country to produce an explosive device, the latter 
     time being estimated by technical assessments only. By this 
     view, a political assessment based on specific political 
     factors could result in approval of a retransfer request even 
     if the ``timely warning'' test fails, but then the burden is 
     on the political assessment to show that such political 
     factors override ``foremost'' consideration of the technical 
     capabilities of the recipient country to make a nuclear 
     explosive device quickly from diverted materials.
                       I. The Language of the Act

       The key paragraph, Section 131b (2) of the Atomic Energy 
     Act of 1954 (Section 303a of the NNPA of 1978) states that,
       ``. . . the Secretary of Energy may not enter into any 
     subsequent arrangement for the reprocessing of any such 
     material in a facility which has not processed power reactor 
     fuel assemblies or been the subject of a subsequent 
     arrangement therefor prior to the date of enactment of the 
     Nuclear Non-Proliferation Act of 1978 or for subsequent 
     retransfer to a non-nuclear-weapon state of any plutonium in 
     quantities greater than 500 grams resulting from such 
     reprocessing, unless in his judgment, and that of the 
     Secretary of State, such reprocessing or retransfer will not 
     result in a significant increase of the risk of proliferation 
     beyond that which exists at the time that approval is 
     requested. Among all the factors in making this judgment, 
     foremost consideration will be given to whether or not the 
     reprocessing or retransfer will take place under conditions 
     that will ensure retransfer will take place under conditions 
     that will ensure timely warning to the United States of any 
     diversion well in advance of the time at which the non-
     nuclear-weapon state could transform the diverted material 
     into a nuclear explosive device. . . .''
       This language was originally offered by Senator Glenn to 
     the Administration during negotiations prior to the beginning 
     of markup of the NNPA by the Subcommittee on Arms Control, 
     Oceans, and International Environment of the Senate Foreign 
     Relations Committee on September 14, 1977. It was a 
     substitute for proposed language by the Administration that 
     would have replaced the ``timely warning'' criterion with 
     consideration of ``the probability of timely warning'' as one 
     (not ``foremost'') factor among many in determining whether 
     to approve a retransfer request. We shall examine this markup 
     in more detail later on. For now it suffices to note that the 
     Subcommittee approved the Glenn language and ignored the 
     Administration's proposal.
       Following the markup by the full Committee (there were two 
     earlier markups by the Committees on Governmental Affairs and 
     Energy and Natural Resources), the legislation was reported 
     out and a report filed which contained the following 
     statement on the meaning of ``timely warning'' (5):
       ``* * * the standard of `timely warning' * * * is strictly 
     a measure of whether warning of a diversion (emphasis added) 
     will be received far enough in advance of the time when the 
     recipient could transform the diverted material into an 
     explosive device to permit an adequate diplomatic response.''
       The Senate bill language was accepted by the House on the 
     grounds that there were no substantive differences between 
     the Senate bill and one passed by the House some months 
     earlier. Representative Zablocki (D-Wisconsin), the floor 
     manager for the House bill, while offering a resolution on 
     February 23, 1978, directing the Clerk of the House to make 
     certain technical corrections in the NNPA, made the following 
     observation about 
     [[Page S5199]] the Senate amendments (6): ``The House 
     reviewed these and found the amended Senate version to be, in 
     all essential respects, consistent with (the House Bill). 
     Upon reaching this judgment, the House, by unanimous consent 
     then moved to recede and accept (the House Bill) as 
     amended.'' Indeed, on February 9, 1978, when Representative 
     Zablocki received unanimous consent to bring up the Senate 
     bill and successfully proposed its passage by voice vote, he 
     stated (7):
       ``All of the central elements of the House bill--including 
     the important ``timely warning'' criterion--were faithfully 
     preserved. * * * On the critical issue of timely warning, I 
     am pleased to say that the Senate's legislative history was 
     indeed consistent with our own.''
       The concept of ``timely warning'' was explained in the 
     House report as follows (8):
       ```Timely warning' has to do with that interval of time 
     that exists between the detection of a diversion and the 
     subsequent transformation of diverted material into an 
     explosive device.''
       Despite Representative Zablocki's clear statement, the 
     Senate Report's phrase ``warning of a diversion'' as opposed 
     to the House Report's ``detection of a diversion'', along 
     with some additional Senate report language has been used by 
     some in State/DOE to bolster a claim that the intent of the 
     Senate on the meaning of ``timely warning'' was substantially 
     different from that of the House.
       We shall show that such a claim is logically unsupportable.

        II. A Precise Reformulation of the Timely Warning Issue

       Thee are four time intervals associated with the notion of 
     ``timely warning'' to the U.S. of a diversion by country 
     ``X''. For purposes of explanation, we define them as 
     follows.
       Reaction Time: The amount of time needed to fashion an 
     appropriate and effective diplomatic response to prevent 
     diverted material from being converted by country ``X'' into 
     an explosive device. Reaction time is a function of bilateral 
     and multilateral relationships and, therefore, involves a 
     political assessment.
       Conversion Time: The time needed by country ``X'' to 
     convert diverted material into an explosive device. (Note: 
     Conversion time is a function of the industrial and bomb-
     making infrastructure in country ``X'', the nature of the 
     diverted material, and the availability of any technology 
     needed to process the diverted material into weapons-usable 
     form. A technical assessment of country ``X'''s capabilities 
     would yield an estimate of conversion time, and no political 
     factors are involved.)
       Detection Time: The time between diversion of material and 
     either the last detection of the diversion by the safeguards 
     system or the earlier prediction of diversion through 
     intelligence information. (In the latter case, detection time 
     is a negative quantity, and may depend upon observations of 
     political changes in country ``X''. Note that if we tacitly 
     assume that the safeguards system works as designed, no 
     political factors enter into an estimate of positive 
     detection time. Quality of safeguards is then measured by the 
     value of positive detection time, with smaller values 
     indicating better safeguards.)
       Warning Time: The interval between the time when the U.S. 
     learns a diversion has occurred or may occur and the time at 
     which country ``X'' is capable of producing a nuclear 
     explosive device following the aforementioned diversion of 
     material. (Thus, warning time = conversion time - detection 
     time. It is important to note that warning time involves 
     political as opposed to technical assessments only when 
     detection time is negative.)
       In terms of the above definitions, the concept of ``timely 
     warning'' in the NNPA becomes as follows:
       Definition: The U.S. has received ``timely warning'' of a 
     diversion by country ``X'' when warning time is greater than 
     reaction time.
       The only thing remaining in order to show equivalence with 
     the statutory concept is to make the connection between some 
     auxiliary concepts in the Senate report with the terminology 
     in this paper.
       The phrase ``warning time required'' in the Senate report 
     as in, ``The amount of warning time required will vary (and 
     cannot be defined in terms of a certain number of weeks or 
     months) . . .'', (9) refers to what is here called ``reaction 
     time''. Thus, if a multinational response is needed for 
     effective diplomacy, a quicker reaction time can be expected 
     in the event that the diverted material was multinationally 
     owned or came from a multinational plant, since all the 
     parties in that venture would have reason to feel aggrieved 
     by the diversion.
       The phrase ``time . . . available'' as in ``. . . it will 
     be necessary to determine how much time be actually (sic) 
     available under any specific circumstances,'' (10) refers to 
     what we are calling here ``warning time''.
       The State/DOE position boils down to the claim that 
     Congress did not intend the ``timely warning'' criterion to 
     involve, on either side of the inequality in the above 
     definition, a quantity estimated only on the basis of a 
     technical assessment.
       Since ``reaction time'' clearly involves political factors, 
     and ``warning time'' can involve political factors, there 
     appears, superficially at least, to be some merit to the 
     State/DOE argument. On closer examination, however, the 
     apparent merit vanishes.
       We reiterate that ``warning time'' may involve political 
     factors only when ``detection time'' is negative. The key 
     observation to make is to note that detection time can be 
     negative only in two situations: 1) Either the U.S. has 
     learned of plans for (or suspects) diversion at a time prior 
     to the time of actual retransfer (in which case the approval 
     of retransfer is denied or revoked and there is no problem), 
     or 2) There is a significant interval of time after the 
     retransfer occurs before a diversion is achieved. In this 
     case it can be argued that the clock marking off warning time 
     could be triggered by observed changes in the political
      character of the government of country ``X''. But there is 
     nothing in the Senate or House floor debate or report 
     language or in the statute language that suggests making 
     an assumption of existence of a significant time interval 
     between retransfer and diversion, or equivalently, to 
     assume that a significant change had occurred on the 
     meaning of timely warning by the time the final version of 
     the NNPA was passed by the Senate on February 7, 1978, and 
     by the House two days later without further amendment.
       To show this, we provide a detailed history of the 
     Congress' consideration of the timely warning issue during 
     its deliberations on the NNPA.

      III. The Senate Legislative Markup Record on Timely Warning

       Committee markup records, which are uncorrected and not 
     publicly filed, and therefore not readily available to the 
     rest of the Congress, are usually given little or no weight 
     in legal determinations of congressional intent on 
     legislation. Nonetheless, they may, in conjunction with the 
     committee report on the legislation and the floor debate, 
     give some clue as to the meaning of certain legislative 
     provisions when such meaning is otherwise obscure.
       The DOE/State defense of its position on ``timely warning'' 
     in the NNPA apparently includes a claim that the 
     Congressional interpretation of the statutory language at the 
     time of passage reflected the Carter Administration's view as 
     expressed in a formal communication from the State Department 
     to the Senate Foreign Relations Committee (see (4)). Since 
     the only place in the legislative history of the NNPA where 
     the Administration's position on ``timely warning'' is 
     substantively discussed by Senators occurs in the Senate 
     Foreign Relations Committee markups (11), (12), (13) of the 
     legislation, we consider these (uncorrected) markup records 
     in examining the DOE/State claim.
       On September 14, 1977, at the Foreign Relations 
     Subcommittee markup (see (11)) Senator Glenn introduced the 
     language on approvals of retransfers for reprocessing or 
     return of plutonium, including the ``timely warning'' test, 
     that subsequently was adopted as the statute language. This 
     language was a substitute for a previous formulation 
     identical to that contained in the House bill, H.R. 8638, 
     which passed with a dissenting vote on September 28, 1977,
      the same day the Senate Foreign Relations Committee reported 
     out the NNPA. As indicated earlier, Senator Glenn offered 
     this new language following discussions with and in 
     response to objections by the Executive Branch that the 
     previous formulation on approvals of retransfers was too 
     ``restrictive in scope'' (14).
       It is important to note the motivation as well as substance 
     of the Administration's position at this point. The 
     Administration was facing a serious problem in that the House 
     and Senate bills had virtually identical provisions that 
     subjected decisions on retransfers for reprocessing or return 
     of plutonium to consideration of a single factor, the timely 
     warning criterion. The Administration was concerned that this 
     single test could be used to block U.S. approvals of any such 
     retransfers and disrupt trade relations with our allies. 
     Accordingly, the Administration had to either try to get the 
     Congress to alter the definition of ``timely warning'' or 
     broaden the test for approvals of retransfers to include 
     other factors besides timely warning. Thus, in its comments 
     on the marked up version of the NNPA reported by the 
     Government Affairs Committee, the Administration said this 
     about the proposed test for retransfer (15):
       ``First, it would jeopardize negotiation of new, strict 
     nuclear cooperation agreements since an overly strict 
     interpretation of the ``timely warning'' standard could rule 
     out all forms of fuel processing necessary for future fuel 
     cycle activities. Second, timely warning should not be the 
     sole basis for making determinations concerning the 
     acceptability of subsequent arrangements, taking into account 
     the existence of other factors which must be evaluated. 
     Additional factors of importance include the nonproliferation 
     policies of the countries concerned, and the size and scope 
     of the activities involved.''
       Now, it is interesting that the language actually proposed 
     by the Administration by way of compromise, language that was 
     arrived at following negotiations with Senator Glenn, clearly 
     takes the path of broadening the test for approvals for 
     retransfers, and does not change the definition of ``timely 
     warning'' but merely attempts to make the determination fuzzy 
     by referring only to the probability of timely warning being 
     available. The proposed language was as follows (16).
       ``The Administrator may not enter into any subsequent 
     arrangement for the reprocessing of any such material in a 
     facility 
     [[Page S5200]] which has not processed power fuel assemblies 
     or been the subject of a subsequent arrangement therefore 
     prior to the date of enactment of the Act or for subsequent 
     retransfer to a non-nuclear-weapon state of any plutonium in 
     quantities greater than 500 grams resulting from such 
     reprocessing unless in his view such reprocessing to 
     retransfer shall take place under conditions that will safely 
     secure the materials and that are designed to ensure reliable 
     and timely detection of diversion. In making his judgment, 
     the Administrator will take into account such factors as the 
     size and scope of the activities involved, the non-
     proliferation policies of the countries concerned and the 
     probabilities that the arrangements will provide timely 
     warning to the United States of diversions well in advance of 
     the time at which the non-nuclear-weapon state could 
     transform the diverted material into a nuclear explosive 
     device; and''.
       Senator Glenn's explanation of the amendment he offered at 
     the Foreign Relations Subcommittee markup left no doubt that 
     it was not his intention to change the meaning of timely 
     warning, but rather to broaden the test for approvals of 
     certain retransfers. To see this, we note that in his 
     statement, Senator Glenn referred approvingly to recent 
     congressional testimony by then NRC Commissioner, Victor 
     Gilinsky, defending the timely warning standard against 
     Administration criticism that it was ``unnecessary, 
     unworkable, rigid, and unrealistic'' (17). Senator Glenn went 
     on to say, (18).
       ``The idea of timely warning is the explicitly stated 
     objective of the so-called blue book safeguards of the IAEA, 
     which polices the Non-Proliferation Treaty. Under this 
     system, as under the U.S. bilateral safeguards which preceded 
     it, records are kept of all nuclear material going into and 
     coming out of civilian power reactors throughout most of the 
     world, and verified by an international inspectorate. The 
     idea is simply that the disappearance of any of this material 
     will be reported to the international community in plenty of 
     time to allow for appropriate counteraction. Thus timely 
     warning is essential to effective safeguards.''
       Senator Glenn's references to safeguards and timely warning 
     strongly imply that the timely warning criterion in his 
     amendment could be met only if the reaction time afforded by 
     the safeguards system's detection of a diversion was 
     sufficient ``to allow for appropriate counter action'' (19).
       This thought was echoed in substance by Representative 
     Bingham (D-NY) in introducing this language on the House 
     floor 14 days later. He said (20):
       ``(W)e consider (timely warning) to be an essential to the 
     safeguarding of nuclear facilities. If there is no timely 
     warning, there are no effective safeguards.''
       At this point in the Senate markup and without challenging 
     Glenn's view, the Chief Administrative spokesman, Ambassador 
     Gerard C. Smith, expressed two Administration concerns 
     explicitly. First, he said (21):
       ``May I observe on that Gilinsky quotation that we don't 
     disagree with the concept of timely warning. It is a very 
     appropriate consideration here but we feel it will lead to 
     distortions if it is made the exclusive (emphasis added) 
     consideration.''
       This statement shows that the Administration understood 
     that ``timely warning'' was a concept that could stand 
     separately and apart from other considerations in determining 
     how to exercise U.S. consent rights for certain retransfers. 
     Indeed, prior to Senator Glenn's statement, Senator Pell had 
     stated that (22):
       ``The Executive Branch believes that the timely warning 
     standard should not be the sole basis (emphasis added) for 
     measuring an arrangement's acceptability. . . .''
       There is no hint in this markup record that the Committee 
     viewed the position of the Administration as seeking to alter 
     the meaning of ``timely warning'' or how to determine it. On 
     the contrary, the position statement by Senator Pell 
     indicates that the Committee saw the Administration's goal as 
     replacing the timely warning test with a broader one in which 
     the test of ``timely warning'' was an important factor.
       The second concern expressed by the Administration at the 
     markup stemmed from its own confusion between ``timely 
     warning'' and ``reaction time''. The House report had stated 
     in essence that the amount of reaction time needed to 
     effectively counter a diversion from a reprocessing plant 
     based on the Purex process was unlikely to be larger than the 
     conversion time to make the bomb (23). The drafters of that 
     report also tried to provide some guidance for a minimum 
     acceptable amount of reaction time, corresponding to a 
     situation where the diverting country only possessed stored 
     spent fuel and had no reprocessing facility. The effect of 
     this would have been to force the denial of nearly all 
     reprocessing requests since ``reaction time'' would have been 
     mandated to a level greater than ``conversion time'' in 
     almost all cases, thereby leading to a failure of the 
     ``timely warning'' test.
       In sum, the administration's second complaint was directed 
     to the fixing a priori of a high ``reaction time'' guideline 
     that effectively did not allow approval of any reprocessing 
     requests. This lack of flexibility in judging reprocessing 
     requests was viewed by Senator Glenn as having been taken 
     care of in his amendment, which did not mandate a ``reaction 
     time'' beyond that needed for ``effective safeguards'', and 
     which allowed other factors (besides ``timely warning'') to 
     be taken into account in judging whether to approve a 
     request. Indeed, although Ambassador Smith's initial reaction 
     to the Glenn language was that ``. . . it doesn't move enough 
     in the direction of flexibility that I think is necessary . . 
     .'' (24), the Administration's own proposed language at that 
     point, as we have already seen, gave no hint of altering the 
     meaning of ``timely warning'' or the factors that would have 
     involved its determination. Therefore, when the subcommittee 
     adopted Glenn's language, it had no alternative meaning of 
     ``timely warning'' before it.
       This conclusion was reinforced at the opening of the 
     discussion of the Glenn amendment during the full Committee 
     markup on September 20, 1977. In response to the Chairman's 
     (Senator Frank Church, (D-Idaho)) request for an explanation 
     of the amendment, Senator Glenn replied (25):
       ``The main issue on the timely warning amendment is this. 
     Timely warning really means technical safeguards and making a 
     judgment as to whether approving reprocessing for some 
     country will result in a significant elevation of risk. The 
     question arises as the weight that should be given to 
     technical safeguards as opposed to, say, political or foreign 
     policy considerations.
       My position, as relected in the language adopted by the 
     subcommittee was that technical safeguards, that is, timely 
     warning, should be given primary consideration in these 
     cases. We should not be able to override that because it 
     seems to me that the technical methods of giving timely 
     warning are so critical to the system of safeguards and 
     protections that we have in this area that they should not be 
     ignored.''
       Now this quote is from an uncorrected record. In the first 
     paragraph, when Glenn says, ```Timely warning' really means 
     technical safeguards'', it should be understood (indeed, 
     cannot be understood any other way) from the context of all 
     that has gone before, that the statement implies ```timely 
     warning' really means effective technical safeguards,'' 
     where, in the Subcommittee markup, Glenn made it clear that 
     effective technical safeguards meant detection of a diversion 
     by technical means ``in time for use to do something about 
     it'' (26).
       The second paragraph, in the absence of further 
     elucidation, could have been interpreted as meaning that the 
     absence of ``timely warning'' can never be overridden by 
     political or foreign policy considerations. A later statement 
     by Glenn (27) indicates that he meant for ``timely warning'' 
     to be the largest single factor (``it would be given the bulk 
     of the consideration'') in judging whether a retransfer would 
     result in a significant increase in the risk of 
     proliferation. This view was not challenged by the Committee 
     during its discussion of ``timely warning''. Rather, the 
     committee concentrated on those other factors which, in 
     strong combination, could produce a decision in favor of a 
     retransfer even if ``timely warning'' is not clearly 
     determinable. Senator Glenn turned the general discussion to 
     specifics by suggesting that (28):
       ``. . . in the report language we put in that there are 
     situations in which other factors, besides timely warning, 
     may induce the Secretary of State to give his approval. I 
     will give a few examples.''
       Senator Glenn then listed the factors that ended up being 
     mentioned in the Senate report and in his floor statement 
     during debate on the bill. Senator Church summarized the 
     discussion by saying (29).
       ``Clearly what is sought is to give timely warning a very 
     high priority; but at the same time to recognize that there 
     may be circumstances . . . that will suffice and lead us to 
     grant such a request even though timely warning is not 
     present.''
       Note that there is no suggestion of any change in the 
     definition or interpretation of timely warning as given 
     earlier by Senator Glenn.
       Moreover, Senator Glenn indicated that discussions had been 
     held on his proposed language with members of the House 
     Committee on International Relations (indeed, there was much 
     staff contact on this issue at the time) and that ``they are 
     in agreement with this language (30).'' What is implied here 
     is that the House members agreed not only with Glenn's 
     language, but also with his interpretation of that language.
       At this point, Senator Richard Stone (D-Florida) asked for 
     the Administration's views on this matter. Mr. Philip Farley, 
     the chief Administration spokesman at the full Committee 
     Markup, stated that the Administration's position was set 
     forth in letters to the Senate Foreign Relations Committee 
     dated September 12 and September 19, 1977, and asked that 
     these letters be placed in the record (31). The letter of 
     September 19th, from Assistant Secretary of State Douglas 
     Bennett to Senator John Sparkman (D-Alabama), contained the 
     substantive details of the Administration's position. The 
     most important paragraph is reproduced below (32):
       ``Agreement has been reached on suitable language relating 
     to the timely warning standard to govern U.S. approval of 
     reprocessing with the leadership of the House Committee on 
     International Relations. This language is acceptable to the 
     Administration. While setting forth strict standards, it 
     recognizes that other foreign policy and non-proliferation 
     factors must be considered. It should also be recognized that 
     warning time associated with alternative reprocessing 
     technology is difficult to quantify but does represent a 
     continuum, progressing from a minimum time associated with 
     processes 
     [[Page S5201]] that involve separated plutonium to longer 
     times for processes that involve uranium and most of the 
     fission products present in irradiated spent fuel. Timely 
     warning is a function of a number of factors, including the 
     inherent risk of proliferation in the country concerned, the 
     amount of warning time provided, and the degree of 
     improvement in warning time that alternative reprocessing 
     technology provides relative to other technologies.''
       We note that the phrase ``inherent risk of proliferation'', 
     which appears almost gratuitously and with no explanation of 
     its meaning, was never used in any previous Executive Branch 
     communication to the Congress on ``timely warning''. We also 
     reiterate our comment in note (4) that this phrase or concept 
     was given no substantive acknowledgment in the legislative 
     history of the NNPA beyond its appearance in the September 
     19th letter.
       In discussing the content of this letter, Mr. Farley went 
     into a long and cogent explanation concerning the amount of 
     warning time available to the U.S. under various 
     circumstances involving the retransfer of nuclear materials. 
     But his explanation does not reflect, in words or 
     implication, any notion that timely warning is a function of 
     ``the inherent risk of proliferation'' in a country, whatever 
     the meaning of that phrase. Indeed, Mr. Farley's explanation 
     of warning time conforms with the notion that one must 
     consider the worse case possibility of a completely 
     unexpected diversion in determining whether one's warning 
     time is ``timely'' or not. He said (33):
       ``For many States, clearly achieving the capability to 
     proceed fairly quickly to a nuclear explosives capability is 
     increasingly going to be something which they have. In that 
     case, there will be very strict limits on the amount of 
     warning we can expect'' (emphasis added).
       Mr. Farley did not say that the ``strict limits'' he 
     referred to depended on a fuzzy concept like the ``inherent 
     risk of proliferation'' in a country. He tied those limits 
     only to technological capability. There was no further 
     substantive discussion on this point in the markup because 
     the Executive Branch's explanation of the timely warning 
     language was not viewed as differing from the explanation 
     offered earlier by Senator Glenn.
       Thus, the State Department letter of September 19th played 
     no role in changing the congressional view of ``timely 
     warning'' that had existed from the beginning. The Glenn 
     compromise allowed for ``timely warning'' not to be the 
     controlling factor in every circumstance where one had to 
     judge whether a given subsequent arrangement would result in 
     a significant increase of risk of proliferation, but the 
     meaning of ``timely warning'' was unaffected.
       The above claim is nailed down for good by considering the 
     House floor statements on timely warning, following the 
     Senate markup.

     IV. The House Discussion of the New Language on Timely Warning

       The House floor debates clearly show that House members 
     viewed the new language as not altering the relationship of 
     timely warning to effective safeguards, i.e., that timely 
     warning was still to be viewed as having to do with ``that 
     interval of time that exists between the detection of a 
     diversion and the subsequent transformation into an explosive 
     device'' (see (8)).
       In support of this proposition we have already offered a 
     statement by Representative Bingham in introducing the Glenn 
     language on September 28, 1977. Statements by other key 
     participants also are supportive of our claim. For example, 
     Representative Paul Findley (R-Ohio), Ranking Member of the 
     House Committee on International Relations, in two speeches 
     given before and after the final markup of the NNPA in the 
     Senate, showed that his view of the meaning of ``timely 
     warning'' was unaffected by the Senate action. He stated 
     (34):
       ``Moreover, the definition of an effective safeguard 
     standard--timely warning--will insure that recipient nations 
     cannot manufacture, undetected and overnight, bombs from 
     materials we provide for peaceful purposes.''
       Representative Findley solidified his view of timely 
     warning in the floor debate on September 28, 1977, with the 
     following discussion of the related concept of ``warning 
     time'' (35) (recall that timely warning is present when 
     warning time exceeds reaction time):
       ``One needs to have warning times that are ample enough to 
     give supplier states or the international community an 
     opportunity to orchestrate an effective response to an act of 
     diversion and to be able to do this, moreover, before the 
     violator is able to transform his stolen material into 
     bombs.'' (Emphasis added.)
       Representative Lagomarsino (R-California) in support of the 
     compromise amendment described it as follows (36):
       ``Specifically, it requires that the reprocessing of U.S.-
     supplied fuel must occur under conditions that provide timely 
     warning of illicit diversion of bomb-usable material. Without 
     such timely warning, the nuclear safeguards system becomes 
     meaningless. We would discover that the plutonium has been 
     diverted after the bombs have been built. Delayed warning or 
     no warning at all would render deterrence impossible.''
       Representative Lagomarsino went on to paraphrase the 
     amendment, and describe it further. He said (37):
       ``. . .  the timely warning amendment . . . will further 
     require the Administrator to give foremost consideration to 
     the question of whether the reprocessing facility and the 
     reprocessed product can be safeguarded so as to provide 
     timely warning (emphasis added) to the United States of any 
     diversion well before the time at which a violating (emphasis 
     added) country could transform weapons-useable material into 
     a nuclear explosive device. Such warning time is essential if 
     the international community or the community of supplier 
     states is to have the opportunity for action. And it is only 
     when such an opportunity for action exists, that safeguards 
     can reliably be considered to deter''.
       Finally, Representative Legget (D-California), while 
     expressing general support for the House bill on the day it 
     passed (September 28, 1977), expressed a number of 
     reservations about the changes in the measure, including 
     ``timely warning'' (38). His complaints, however, do not 
     address any perceived change in definition, but address the 
     fact that certain facilities were exempted from immediate 
     application of the timely warning standard. The tenor of his 
     remarks suggest that if he had perceived a change in the 
     definition of timely warning to make it ``more flexible'', he 
     would have cited this as a problem.
       The congressional statements discussed above make clear 
     that the change in wording of the amendment did not alter the 
     intent of Congress to view ``timely warning'' as a measure of 
     whether effective action was possible after discovery of a 
     diversion (i.e., the worst-case scenario) to deter or prevent 
     the diverting country from fashioning a nuclear explosive 
     device. There is no reference in the House debate to any 
     concept such as the ``inherent risk of proliferation'' as 
     being part of the ``timely warning'' test. Indeed, there is 
     no indication that any member of the House saw a copy of the 
     Bennett-to-Sparkman letter that contained this phrase, let 
     alone paid any attention to it. The only Administration 
     communications that appear in the record of the House debate 
     are identical letters (39) dated September 17, 1977 from 
     Secretary of State Cyrus Vance to Representatives Zablocki 
     and Findley approving proposed amendments to be offered by 
     Congressman Bingham and expressing support for the amended 
     bill. There is not only no reference to ``inherent risk of 
     proliferation'' as an ingredient of ``timely warning'' in 
     these letters, but one of the letter's recipients, 
     Congressman Findley, in the statement that preceded his 
     placement of the letter in the Congressional Record 
     reiterated his view that ``timely warning'' was connected to 
     the notion of effective international safeguards. In his 
     words (40):
       ``Moreover, the definition of an effective safeguard 
     standard--timely warning--will insure that recipient nations 
     cannot manufacture, undetected and overnight, bombs from 
     materials we provide for peaceful purposes.
       ``By requiring safeguards to provide reliable, timely 
     warning of diversion we are not committing to a new standard 
     but are returning to an old truth.''
       Later, in the same statement, Representative Findly said:
       ``Existing safeguards when applied to reactors do provide 
     reliable, timely warning'', but that ``present safeguards, 
     when applied to reprocessing, do not . . . permit timely 
     warning.''
       He went on to say that:
       ``[W]e must devise safeguards that, when applied to 
     reprocessing, will provide reliable, timely warning. 
     Promising technologies exist which, if pursued, may satisfy 
     this standard. This bill, by defining the standard that 
     safeguards must meet intends to stimulate these new 
     technologies.''
       Congressman Findley then referred to collaboration between 
     the Committee and the Administration ``to fashion this 
     safeguard standard'', and remarked that ``. . . the president 
     and Secretary of State have urged that this legislation pass 
     Congress during this session--in its present form--without 
     amendment'' (41).
       Obviously, it was not Congressman Findley's understanding 
     that the Administration was proposing any substantial 
     alteration of interpretation of ``timely warning'' from the 
     one he had just laid down.
       The conclusion is therefore inescapable that the House did 
     not see the Senate action as changing the meaning of timely 
     warning, but only as broadening the test for determining 
     whether a subsequent arrangement for reprocessing or return 
     of plutonium would result in a significant increase of the 
     risk of proliferation.

             V. Conclusion on the Meaning of Timely Warning

       There is no logical alternative to the conclusion that the 
     Congress meant for the ``timely warning'' criterion to apply 
     to the most difficult or ``worst-case'' situation, where the 
     U.S. would not suspect in advance that a diversion might 
     occur, but would learn about it after the fact, when the 
     safeguards system had detected it. That is, when detection 
     time is a positive quantity. In this case it follows from the 
     definition that ``timely warning'' is met only when reaction 
     time is less than conversion time (which depends only on a 
     technical and not a political assessment). This explains why 
     the legislative history of the NNPA is replete with 
     references to ``timely warning'' as being associated with 
     what we are here calling ``conversion time'', and squares the 
     statutory (Senate) language on ``timely warning'' with the 
     discussion of the concept in the House report.
[[Page S5202]] VI. The Relationship of Timely Warning to Other Factors 
                   in Determining Proliferation Risk

       The Senate report, after a discussion of factors that are 
     involved in judging whether ``timely warning'' would be 
     present (i.e., factors entering into an assessment of 
     ``conversion time'' and ``detection time''), launches into a 
     listing of ``other factors which may be taken into account in 
     determining whether there will be a significant increase in 
     the risk of proliferation.'' These are (42):
       (1) ``whether the nation is firmly committed to effective 
     non-proliferation policies and is genuinely willing to accept 
     conditions which would minimize the risk of proliferation'';
       (2) ``whether the nation has a security agreement or other 
     important foreign policy relationship with the U.S.'';
       (3) ``the nature and stability of the recipient's 
     government, its military, and security position''; and,
       (4) ``the energy resources available to that nation''.
       There would have been no reason for the Senate to label 
     these as ``other factors'' if they already were included in 
     judging whether the ``timely warning'' test was met. To do 
     otherwise would have meant that the Senate was counting such 
     factors twice in giving guidance to DOE on retransfer 
     requests, in which case these component factors would become 
     the ``foremost'' factors in practice, a result not in keeping 
     with the clear congressional intent to identify ``timely 
     warning'' as a separate, ``foremost'' factor.
       We have thus established through examination of the NNPA, 
     the Senate and House Reports on the legislation, the Senate 
     Markups, and the floor debate, that Congress intended 
     ``timely warning to be an important factor (the ``foremost'' 
     one), separable and apart from specific political 
     considerations in determining whether a proposed subsequent 
     arrangement for reprocessing or retransfer of plutonium will 
     result in a ``significant increase of the risk of 
     proliferation.''

VII. The Need for Adequate Analysis of the Timely Warning Criterion by 
                          the Executive Branch

       The chief sponsor and Senate floor management of the bill, 
     Senator John Glenn, stated during the floor debate on 
     February 7, 1978, that (42):
       ``It is important to note, however, that the bill requires 
     that foremost consideration be given to the question of 
     timely warning. This implies that the latter will receive the 
     greatest weight among all factors. Although this does not 
     require denial of a request when timely warning is not 
     clearly determinable, the language suggests that in the 
     absence of a clear determination that timely warning will 
     indeed be provided, a strong combination of other factors 
     would be necessary to compensate for this weakness in 
     safeguards.''
       This statement emphasizes the importance of clearly 
     determining that the ``timely warning'' test has been met. 
     Since Executive Branch decisions on retransfers were made 
     optionally reviewable by the Congress under the NNPA, it 
     would have made no sense for the Congress, which went through 
     tortuous hours of debate and negotiation with the Executive 
     Branch on this issue, to intend the Executive Branch to make 
     an important, possibly critical, determination on ``timely 
     warning'' without adequate supporting analysis showing that 
     the test, as laid out by the Congress, had been met. 
     Therefore, an Executive Branch determination, such as in the 
     Japanese plutonium case, in which there is inadequate 
     analysis revealing how the presence of ``timely warning'' was 
     arrived at, which does not show how ``foremost 
     consideration'' was given to it, and which suggests that 
     extraneous political factors were the main component in the 
     determination, is directly counter to Congressional intent.
                               Footnotes

       (1) P.L. 95-242, enacted on March 10, 1978.
       (2) Letter from NRC Chairman Nunzio J. Palladino to DOE 
     Secretary Donald P. Hodel, September 13, 1984.
       (3) Private communication.
       (4) A phrase used without definition or explanation by the 
     Administration in discussing its own position on ``timely 
     warning'' in a letter dated September 19, 1977, from then 
     Assistant Secretary of State Douglas Bennett to the Chairman 
     of the Senate Foreign Relations Committee, Senator John 
     Sparkman (D-Alabama). It should be noted that this phrase was 
     never mentioned or acknowledged in any way in the extensive 
     House and Senate debates on the floor, during markups, or in 
     hearings.
       (5) Senate Report 95-467, October 3, 1977.
       (6) Congressional Record--House, February 23, 1978, p. 
     1456.
       (7) Congressional Record--House, February 9, 1978, p. H918.
       (8) House Report 95-587, August 5, 1977, p. 18.
       (9) See (5), p. 11.
       (10) Ibid.
       (11) Stenographic Record of Markup--S. 897, U.S. Senate 
     Subcommittee on Arms Control, Oceans, and International 
     Environment, Committee on Foreign Relations; Alderson 
     Reporting Company, September 14, 1977.
       (12) Stenographic Record, Committee Business, U.S. Senate 
     Committee on Foreign Relations; Alderson Reporting Company, 
     September 20, 1977.
       (13) Stenographic Record, Committee Business, U.S. Senate 
     Committee on Foreign Relations; Alderson Reporting Company, 
     September 28, 1977.
       (14) See (5), Section on Executive Branch Comments on S. 
     897 (As reported by Senate Committee on Governmental 
     Affairs), September 12, 1977, with cover letter from 
     Secretary of State Cyrus Vance, p. 42.
       (15) See (14), p. 47.
       (16) Ibid.
       (17) See (11), p. 14.
       (18) Ibid.
       (19) Ibid.
       (20) Congressional Record--House, September 28, 1977, p. 
     H10280.
       (21) See (11), p. 15.
       (22) Ibid., p. 11.
       (23) See (8), p. 20.
       (24) See (11), p. 15.
       (25) See (12), p. 45.
       (26) See (11), p. 14.
       (27) See (12), p. 61.
       (28) Ibid., p. 60.
       (29) Ibid., p. 61.
       (30) Ibid., p. 57.
       (31) Ibid., p. 62, The letter of September 12th from 
     Secretary Vance to Senator John Sparkman, Chairman of the 
     Senate Foreign Relations Committee, is identical to the cover 
     letter referred to in (14).
       (32) See (5), p. 59.
       (33) Ibid., p. 65.
       (34) Congressional Record--House, September 22, 1977, p. 
     H9833.
       (35) See (20), p. H10282.
       (36) Congressional Record--House, September 28, 1977, p. 
     H9835. Although this statement was made on September 22, it 
     was made in reference to the new language on ``timely 
     warning'' that was formally considered by the House on 
     September 28, 1977. (See colloquy between Representatives 
     Lagomarsino and Bingham in Congressional Record--House, 
     September 28, 1977, p. H10280).
       (37) Ibid.
       (38) See (20), p. H10282.
       (39) See (35), pp. H9832 and H9834.
       (40) See (35), p. H9833.
       (41) See (35), p. H9834.
       (42) See (5), p. 12.
       (43) Congressional Record--Senate, February 7, 1978, p. 
     S1310.
       (44) Section 131a (1) of the Atomic Energy Act as amended 
     provides for a 15 day period of notice before a proposed 
     subsequent arrangement goes into effect.

  Mr. GLENN. Madam President, we started working on this effort of 
nonproliferation back many years ago in my very early days in the 
Senate. We have been on it ever since. Sometimes you feel like the 
little story of the Dutch Boy with his finger in the dike. You feel 
like you are not getting very far, and then you find some nations which 
are willing to sign up under the Nuclear Nonproliferation Treaty [NPT] 
and place their confidence in some of the restrictions we have had 
going on around the world. They express admiration that we and Russia 
finally are at long last getting our nuclear stockpiles downhill 
somewhat. So maybe over the long term we are making considerable 
progress in that area.
                       irs compliance initiative

  Mr. GLENN. Madam President, I rise today to take issue with my 
distinguished colleague, the majority leader, whose amendment would 
severely impact the wide variety of Federal programs on which all 
Americans rely.
  The amendment being offered by the majority leader seeks a recession 
in the funding of the Internal Revenue Service of $100 million. The 
funding in question is part of the IRS' new compliance initiative, a 
broad-based effort to collect all the outstanding tax revenue 
rightfully due the Federal Government. This excellent program, which 
was passed with bipartisan support by the Congress last year, will 
bring in more than $9.2 billion in additional revenue over the next 5 
years at a cost of just $2.2 billion during the same period. This is a 
great deal by anybody's calculations.
  In fact, as we stand here and debate, this initiative is already 
working. For the first quarter of 1995, the IRS has generated an 
additional $101 million of enforcement revenue, 31 percent of the 
fiscal year 1995 commitment. These are outstanding results for which we 
should commend the IRS, given that the program has only just begun and 
that some lag is always necessary to hire new compliance staff. Do we 
really want to stop a program that brings in revenue to the Government?
  Madam President, I am as aware as any of my colleagues of the need to 
save scarce tax dollars and effectively spend resources provided by the 
public. I have long believed that there is a lot of fat, fraud, waste 
and abuse in Government programs. It has been the focus of our activity 
on the Governmental Affairs Committee for the last several years.
   [[Page S5203]] But I must respectfully take issue with cuts that 
would come in a program expected to bring in $9.2 billion. If the 
Senate approved this amendment to the recession bill, then the IRS 
would be seriously affected by the resulting funding cut. IRS estimates 
that at this point in the fiscal year, the agency would have to
 furlough all 70,000 compliance personnel for up to 10 days. At the 
same time, a cut of this magnitude would cost the Government 
approximately $500 million in lost collections in addition to the loss 
of revenue from this initiative.

  I am aware that some of my colleagues think that because this 
appropriation last year was made outside of the domestic discretionary 
caps, that it undermines our budget strictures and unfairly provides 
one agency with additional resources. While I sympathize with this 
reasoning in general--and would not be eager to make exceptions for 
other agencies--I think that in the case of the IRS, the only 
responsible choice is to make an exception. To cut compliance funds 
from the IRS, when each new revenue officer brings in five times their 
keep, is truly penny wise and pound stupid.
  Cutting compliance funds for the IRS is not good logic and it is not 
good business.
 I cannot support this amendment that the majority leader has offered. 
I hope it goes down to defeat.

  Madam President, the IRS has had problems. We followed those problems 
through a number of GAO reports. They have had some financial 
management problems. After we passed the CFO Act, the IRS management 
was one of the areas that was targeted to have a first look made of it 
under the CFO Act to see how they are doing. They are making a number 
of improvements now as a result of those studies.
  Another area that I have followed for several years in which we are 
beginning, I think, to maybe get our hands on is in the area of IRS 
receivables. I do not think most Members of this body, or most 
Americans, people out across America, realize the IRS has owed to it 
somewhere around $156 billion. Why do we not go out and collect that? 
Part of that is not collectible in that it is debt that is not validly 
collectible; where people have gone into bankruptcy, either 
individually or as corporations. So a big chunk of it fits in that 
category.
  How much can we go out and collect? Peeling that $156 billion down, 
they have active accounts, they estimate, of $79.5 billion. But they 
expect, when they look into those, that some are going to be abated or 
suspended because it will cost more to get them than the money they 
would get back anyway. But when you come down to the hard core figures 
that we were given just day before yesterday in a hearing by the 
Commissioner of the IRS, Margaret Richardson, they feel over there 
right now that actually collectible money, if we had the people to go 
out and collect it, is $27.5 billion out there. That is collectible 
money on IRS accounts if we had the people to go out and get it.
  We provided them with additional people last year. We have several 
thousand people, 4,000 I believe it was, a little over 4,000, that we 
got as new, full-time employees to go out and collect those accounts 
because each employee actually brings back in about five times his or 
her keep as an agent in the IRS.
  Now, I think that is a good investment. I think when we talk about 
cutting back in some of these areas and cutting back on their 
enforcement money, I cannot understand that, when they bring back far 
more than what it costs us for those particular people.
  The impact of the $100 million rescission would have some far-
reaching effects also. We had a hearing just this morning on earned 
income tax credit. Now, that is a program that has had a lot of fraud 
and problems because people file either some false income data or they 
file the wrong number of dependents or whatever and a fairly high 
percentage of those returns are fraudulent returns.
  Now, what do we do? Just as the IRS at the beginning of this year 
said they were going to do, hold up and look at those returns before 
they automatically send the money out. They are doing that right now. 
And we are about to cut the people who do that. We are going to lose 
far more than the $100 million rescission that has been proposed.
  What the amendment would do, it would actually cut the IRS tax law 
enforcement appropriation by $100 million, 25 percent of the amounts 
approved in fiscal 1995 for a compliance initiative which is intended 
to collect an additional $9.2 billion over the fiscal 1995 to fiscal 
1999 time period.
  The amendment would further require that any revenue officers hired 
since the beginning of fiscal 1995, which are those addressing the 
accounts I just mentioned, would have to be redeployed as collection 
call site assisters.
  And third, the amendment would limit the cuts that could be made to 
the examination and inspection activities of IRS to accommodate the 
rescission. Reductions cannot take these activities below fiscal 1994 
approved levels.
  The IRS compliance initiative is designed--and is carrying on right 
now--to try to already reduce the deficit. Last year, Congress approved 
a $405 million annual investment to collect an additional $9.2 billion 
to reduce the deficit over a 5-year period. And the initiative is 
working. That is the good news. Early results show that IRS will meet 
or exceed the goal of generating the additional $9.2 billion. In fact, 
through the first quarter alone, the initiative has generated an 
additional $101 million of enforcement revenue--in the first quarter of 
this year. That is 31 percent of the fiscal 1995 commitment. It is 
ahead of schedule. In other words, they have collected more this year 
already than it would cost to keep the program in place.
  These initiative results are being tracked. They have a new system 
for tracking enforcement initiatives, and revenue has been developed 
and approved by GAO. The first-quarter report was delivered to Congress 
on schedule on March 31.
  Further, cutting the initiative increases the deficit. For every 
appropriated dollar saved, tax revenues are reduced by nearly $5. The 
cost of this cut in lost revenue is $500 million, if it is limited just 
to 1 year--a 5 to 1 ratio. If the cut is permanent, the revenue loss is 
in the range of $2.5 billion. The rescission will negatively impact 
examination coverage, collection of delinquent accounts, information 
returns matching, and efforts to curb fraud and abuse with refundable 
credits.
  Just think of that. If we make this cut of $100 million, we are going 
to reduce impact; we are going to reduce examination coverage; we are 
going to reduce collection of delinquent accounts, and we are going to 
not reduce one of the big problems, matching information returns in 
order to curb fraud and abuse on those refundable credits that we send 
out.
  These are only direct revenues. The Service's enforcement activities 
also encourage voluntary compliance. When other people see what is 
going on and they are not able to get away with fraud and abuse, they 
think twice before they do it and they check that return an extra time 
before they send it in to make sure there are not mistakes in that 
account. An estimate has been made of this. Every 1-percent increase in 
voluntary compliance increases tax revenues by about $10 billion 
annually. I think that is a very, very impressive figure.
  There are some other aspects of what this $100 million rescission cut 
would do to IRS. Stop-and-go financing disrupts IRS operations. IRS put 
in place a long-range hiring and training plan. They did it with our 
support, with our encouragement. Over 4,000 people have been hired or 
redeployed to compliance jobs so far as part of this initiative. It is 
a good initiative. In balanced tax administration, ACS addresses 
predominantly the high volume of low- to middle-dollar cases while 
revenue officers address the more complex higher dollar individual and 
business cases. Uneven enforcement could lead to a perception of unfair 
tax administration. So we want a balanced tax administration.
  There are limits to telephone intervention. Certain issues, such as 
trust fund recovery penalty, cannot be resolved with the telephone. 
Additionally, certain enforcement tools require face-to-face contact, 
including seizure and sale, lien priority investigations, and offers in 
compromise.
  The IRS fiscal 1995 savings options are few. With only 6 months 
remaining in the fiscal year, IRS would need to 
[[Page S5204]] make reductions through a combination of an across-the-
board hiring freeze in the tax law enforcement appropriation and the 
staff furloughed.
  Now, the worst case I mentioned a moment ago is a furlough of all 
70,000 tax law-enforcement appropriation personnel for a 10-day period. 
A 10-day furlough could result in $500 million in lost revenue 
collections. So that sounds like a poor bargain to have to do that.
  Another factor, too, is using revenue officers as call-site assisters 
is not practical. In allocating resources for the fiscal 1995 
initiative, IRS listened to GAO and congressional concerns regarding 
staffing for automated collection call sites. The fiscal 1995 
initiative contained 2,200, FTE's, full-time employees, for collection; 
1,450 of these FTE's were allocated to positions other than revenue 
officers such as ACS, service center examiners, bankruptcy, account 
notice work in toll-free operations, and early intervention. Counting 
the early intervention initiative, 900 additional full-time employees 
were allocated to ACS.
  I wish to also mention the capacity issues. IRS has 3,276 full-time 
employees assigned to ACS. There are space, equipment, and system 
limitations that would need to be addressed to accommodate the 
redeployed revenue officers if this legislation went through. The usual 
procurement cycle for space and equipment is 18 months.
  Since the start of fiscal 1995, only 216 revenue officers have been 
hired, 89 from outside the IRS and another 127 from other occupations 
within the IRS.
  And redeployment is costly. Even if there were available ACS 
positions to be filled, redeploying recently hired revenue officers 
would be costly and it would be inefficient. Revenue officers were not 
hired in the same location as ACS sites. Revenue officers from around 
the country would have to either travel to distant cities, incurring 
travel and hotel costs, or be permanently moved. It has its own costs 
associated with it. This would mean as much as $7 million in 
unnecessary travel costs. Further, IRS would be using higher skilled 
revenue officers to do call-site work that could be done at lower 
salary costs.
  Madam President, this is simply not good business,
   to cut $800 million out in the interest of balancing the budget, 
much as we may want to do that, and at the same time cut back on the 
modernization systems that the IRS has undertaken.

  These are good programs that they have and cutting $100 million from 
law enforcement is exactly the wrong way to move.
  I will quote from another document that came to my attention in the 
office. The headline is:

       Cutting $100 Million From Law Enforcement Bad Move, 
     Richardson Says.
       Congress should reconsider before it rescinds $100 million 
     of a $405 million compliance initiative enacted last year, 
     IRS Commissioner Margaret Richardson testified April 3.
       Richardson told the Senate Appropriations Subcommittee on 
     Treasury, Postal Service and General Government that the 
     rescission proposal ``is simply not good business.''
       The proposal is part of S. 617, which would cancel $13 
     billion in fiscal 1995 spending. It was offered as an 
     amendment by Sens. Robert Dole, R-Kan., and Thomas A. 
     Daschle, D-S.D.
       Richardson, defending the agency's $8.2 billion request for 
     fiscal 1996, said any reduction in law enforcement funds or 
     personnel could reduce revenue $2.5 billion. ``Unlike many 
     agencies, the IRS is not a program agency. Over 70 percent of 
     the IRS's budget is personnel cost,'' she said.

  And she went on to detail some more of this.
  I ask unanimous consent that that article, and another article out of 
the Washington Times, be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                     [From Highlights & Documents]

  Cutting $100 Million From Law Enforcement Bad Move, Richardson Says

                         (By Ryan J. Donmoyer)

       Congress should reconsider before it rescinds $100 million 
     of a $405 million compliance initiative enacted last year, 
     IRS Commissioner Margaret Richardson testified April 3.
       Richardson told the Senate Appropriations Subcommittee on 
     Treasury, Postal Service and General Government that the 
     rescission proposal ``is simply not good business.''
       The proposal is part of S. 617, which would cancel $13 
     billion in fiscal 1995 spending. It was offered as an 
     amendment by Sens. Robert Dole, R-Kan., and Thomas A. 
     Daschle, D-S.D.
       Richardson, defending the agency's $8.2 billion request for 
     fiscal 1996, said any reduction in law enforcement funds or 
     personnel could reduce revenue $2.5 billion. ``Unlike many 
     agencies, the IRS is not a program agency. Over 70 percent of 
     the IRS's budget is personnel cost,'' she said.
       Except for her comments on the rescission proposal, 
     Richardson's testimony was basically the same she has given 
     to several congressional panels since the Clinton's budget 
     was released in February.
       Yet even as Richardson tried to justify a $739 million 
     budget increase for fiscal 1996, she found herself talking an 
     awful lot about this filing season.
       Sen. J. Robert Kerrey, D-Neb., criticized Richardson and 
     her entourage of deputy commissioners for delays this year in 
     the issuance of the earned income credit. Accusing the IRS of 
     harassing ``hard-working Americans,'' Kerrey said measures 
     such as getting a notary and a clergy member to attest to a 
     child for suspect returns amounted to abuse of taxpayers.
       Richardson, taken aback by Kerrey's criticism, said the 
     Service had uncovered several schemes, many involving 
     multiple returns. Fraudulent EITC refunds cost Treasury $1 
     billion to $5 billion last year, according to official 
     estimates.
       Kerrey criticized Richardson for characterizing ``some'' of 
     those caught as ``common street criminals'' and wondered 
     aloud how much of the fraud is committed by organized efforts 
     and how much by individuals trying to snag an extra hundred 
     dollars. Richardson could not say.
       ``There are bigger fish in the ocean,'' said Kerrey, who 
     suggested the IRS should pay more attention to corporate 
     fraud and individuals who try to avoid all tax.
       Richardson tried to escape the examination by saying she 
     would testify on the EITC before the Senate Governmental 
     Affairs Committee the next day.
       Subcommittee Chairman Richard C. Shelby, R-Ala., quizzed 
     her about problems with electronic filing and whether the 
     Service could cut its staff positions by 30,000 in seven 
     years if it got all of its budget request.
       Shelby also asked Richardson about a March 29 Tax Analysts 
     article that said IRS computers were responsible for some of 
     the millions of returns rejected this year. Richardson said 
     the IRS has found that all of the rejects were caused by 
     taxpayer errors.
                                                                    ____

               [From the Washington Times, Apr. 4, 1995]

      IRS Fights Recision, Tells Hill Panel It Would Boost Deficit

                            (By Ruth Larson)

       A Senate proposal to trim the current budget of the 
     Internal Revenue Service ultimately will increase, not 
     decrease, the federal deficit, IRS Commissioner Margaret 
     Milner Richardson told a Senate panel yesterday.
       The cuts are part of a $1.2 billion recision package now 
     being considered on the Senate floor. Senate Republicans want 
     to pay for federal disaster relief by trimming funds already 
     appropriated for federal agencies like the IRS.
       IRS' share of the cuts--$100 million--would come from the 
     $405 million appropriated by Congress last year to help the 
     agency increase tax compliance by hiring 4,000 more agents. 
     The plan was touted as a relatively painless way to raise 
     $9.2 billion in revenues in the next five years, to be 
     earmarked for deficit reduction.
       That compliance initiative may be jeopardized just as it 
     gets under way if some Senate Republicans have their way. An 
     amendment expected to be introduced today by Senate Majority 
     Leader Bob Dole of Kansas and Sen. John Ashcroft of Missouri 
     would rescind a quarter of the IRS compliance funding.
       Mrs. Richardson said that while she understands Congress is 
     being forced to make difficult funding choices, ``some cuts 
     that might appear to produce a short-term benefit may not 
     actually do so. The recision proposal is simply not good 
     business.''
       The IRS estimates that for each dollar spent on compliance, 
     such as hiring more enforcement officials, it receives $5 in 
     extra tax revenues. Thus, cutting $100 million could 
     translate to a $500 million loss in revenues next year, and a 
     five-year loss of $2.5 billion, Mrs. Richardson said.
       Budget cuts could force the IRS to furlough all 70,000 of 
     its compliance agents for up to 10 days, or even lay off the 
     4,000 newly hired agents, Mrs. Richardson told the Senate 
     Appropriations subcommittee on the Treasury.
       Sen. Richard C. Shelby, Alabama Republican and subcommittee 
     chairman, has been skeptical of the IRS initiatives. Last 
     year he supported an amendment, eventually rejected, that 
     would have eliminated funding for the additional enforcement 
     agents.
       For its fiscal 1996 budget, the IRS has requested $8.2 
     billion--an increase of $700 million over this year's budget. 
     ``Many of us are asking, What are we getting for this large 
     expenditure?'' Mr. Shelby said.
       More than half the increase is tied to the agency's on-
     going tax systems modernization.
       Next year the IRS plans to upgrade its computer scanning 
     equipment so it can enter all tax forms and supporting 
     documents into its database. Basic tax data is now entered 
     [[Page S5205]] manually, a time-consuming task prone to 
     error; many supporting records are not even entered in the 
     system.
       The General Accounting Office has long criticized the IRS 
     modernization efforts, saying it doubted the project would 
     result in more revenue, even if it were completed. The GAO 
     also has questioned the need for hiring more compliance 
     staff. It found that the IRS has used the extra compliance 
     funds to pay for budget shortfalls, such as locality pay.
       Mrs. Richardson said, ``While the IRS agrees with many of 
     the issues raised by GAO, we believe a number of their 
     criticisms are not valid.'' An independent evaluation team 
     from GAO has been looking at the program and is expected to 
     report its findings to Congress next month.

  Mr. GLENN. Madam President, when introducing this legislation, 
Senator Dole, when he was listing the cuts, said ``IRS, 100 million--
that ought to be a favorite of everybody.''
  Well, I disagree with that. I disagree that cutting the IRS is going 
to prove to be popular with very many people.
  On the following page of the Congressional Record, Senator Kyl is 
quoted as saying, ``For example, as the majority leader says, it cuts 
$100 million from the IRS bureaucracy, and makes other changes,'' as 
though there was a bureaucracy over there that is not working properly 
to get in the amount of revenue that is owed to the Government.
  Let me tell you why I think Senator Dole is wrong in that regard. 
When I go back home, what makes people more unhappy than anything 
else--while they are unhappy at paying taxes, of course; no one likes 
to pay taxes--but what really burns people up is to feel that they are 
paying their taxes, they fill out that form, they are honest about 
everything they do, they do the most honest job they can in submitting 
their data in for the IRS to consider, but then, when they hear about 
other people getting away with falsifying accounts and with not 
submitting all the data and with getting away with something and not 
paying their fair share, that is what really concerns people very much. 
It makes them very, very angry. And it makes me angry, too, and, I am 
sure, every Member of this body.
  Yet when we know there are compliance difficulties like this, and we 
know the earned income tax credit has some difficulties, and where we 
have programs that are set up now to address those difficulties and get 
every person to pay their fair share, and now we are saying that 
instead of expanding that program and making sure that that program is 
big enough to really make sure everybody does pay their fair share, we 
are going to cut it.
  We are going to cut those funds by one-quarter? That just does not 
make any sense at all, just from a plain business, flat business 
standpoint, when we know that each IRS agent gets approximately five 
times his or her keep in return of revenues that they have found that 
should have been submitted or should have been paid for and was not. 
Now that just does not make any sense.
  I appreciate the necessity to try to cut the budget here and so on, 
but this is absolutely the wrong, wrong place to do it.
  Madam President, I would like to go to a different subject for a 
moment.
  Another one of the cuts that has been proposed by the Republican 
Conference this year, which I think is very shortsighted and I hope it 
does not go through, is an attempt to cut the funding for the General 
Accounting Office by one-fourth in this 1 year.
  Let me give just a little bit of background. We, in the Governmental 
Affairs Committee, have been the committee of jurisdiction and of 
supervision over the General Accounting Office ever since I have been 
on that committee and long before that. We work very closely with them.
  They started over 2 years ago, before the last election, to downsize. 
They wanted to be more efficient. They started their own program of 
modernization and downsizing at GAO and it has been on schedule. What 
has happened? They are already down some 12 or 13 percent now and they 
plan by the end of 1997 to be down one-fourth smaller than they were 
when they started this program. They are doing that at their own 
initiative.
  Now what happened? The Republican Conference came out with a policy 
that they want to see GAO cut one-fourth this year, an additional one-
fourth of what the GAO is already doing, an additional one-fourth cut 
in this year alone. This would decimate the GAO.
  We depend on the GAO as our investigative arm of Congress.
  When they were before us a short time ago over in committee, I could 
detail just what my own personal efforts where, as committee chairman 
on the Governmental Affairs Committee, I had asked them to do certain 
reports. They would come back and then, as a result of that, with 
action here on the floor or working with other committees, we would 
point to several billion dollars just that I had saved, just with my 
own initiative working with GAO.
  They have pointed out all sorts of problems. And yet we are trying to 
cut them back.
  Where did this start? Where did people get down on the GAO to the 
point where they are proposing to be cut back by one-fourth when they 
do good work and where they their own downsizing already going. And, as 
Comptroller General Bowsher has said, if you just let them alone and 
let them proceed until the end of 1997, they will have reduced by one-
fourth over that period of time and accomplished on their own an 
orderly reduction that still enables them to do their job without 
getting slashed as the proposal would do out of the Republican 
Conference this year.
  There is an editorial in the Hill newspaper, Wednesday, April 5, 
today. That editorial is entitled ``Don't gut the GAO.'' By and large 
they state the situation pretty well, I think. I just read this a few 
moments ago, before I came on the floor. I quote from this editorial:
       Ever since the General Accounting Office uncovered the 
     House bank scandal, which cost many lawmakers their jobs and 
     sent some to jail, Congress has been gunning for the watch-
     dog agency. Republicans were particularly incensed by GAO 
     reports critical of President Bush's tax policies.
       It now appears that the GAO, the research arm of Congress, 
     may have to pay a heavy price for its independence. Senate 
     Republicans want to slash the agency's budget by 25 percent.
       The ostensible reason for this cut is a deeply flawed 
     report by a panel of the prestigious National Academy of 
     Public Administration, which concluded that the GAO had 
     strayed from its role as a numbers cruncher and wandered into 
     the more esoteric realm of evaluating government programs and 
     policies. But how does an agency evaluate whether taxpayer 
     funds are being well spent except by evaluating the programs 
     and policies for which they are used?
       Since its inception in 1921, the agency has saved taxpayers 
     billions of dollars--more than $200 billion by some accounts.

  In fact, I correct the editorial here. The $200 billion I think was 
since 1985, not going clear back to 1921.
  I continue with the editorial:

       It was the GAO that found the money trail in the Iran-
     Contra scandal. After uncovering the HUD scandal, the agency 
     went to work on the Department of Defense, and found $36 
     billion in supplies not needed to satisfy current operations 
     of war reserves. GAO also turned the spotlight on wasteful 
     Medicare reimbursement practices, including hospitals whose 
     physical therapists billed as much as $600 an hour even 
     though their salaries were as low as $20 an hour.
       Last year, the agency examined the Department of Energy's 
     Rock Flats plant in Colorado, and found numerous safety 
     problems, including ``plutonium liquids leaking from pipes 
     and tanks, fire hazards and risks of exposing workers to 
     plutonium.''
      The GAO is currently studying Supplemental Security Income, 
     which now costs $60 billion a year, a 140-percent increase 
     in the last 10 years. The agency is seeking ways to bring 
     the mushrooming costs under control.
       Scotty Campbell, former head of the Office of Personnel 
     Management who directed the critical study, nevertheless 
     warns that a 25-percent budget cut ``could do serious damage 
     to that organization in terms of getting on with its work and 
     readjusting its mission.''
       The agency, whose $443 million budget is the largest of any 
     legislative branch agency, has already cut its staff from 
     5,325 to 4,700 since 1992, and is prepared to reduce it to 
     3,975 during the next two years. They would have to dismiss 
     1,600 employees in the next nine months to comply with a 25-
     percent cut in one year.
       The GAO does have its internal problems. The agency is 
     stymied by an antiquated management system that never ceases 
     reviewing its work. It seems constitutionally incapable of 
     producing reports to Congress on time--only 21 percent met 
     GAO's own deadline.
       Paradoxically, although Congress wants to slash the 
     agency's budget, it bears most responsibility for GAO's 
     workload. About 77 percent of the agency's work was at the 
     request of Congress. Only last week, the Senate approved 
     giving GAO responsibility for 
     [[Page S5206]] reviewing every significant regulation 
     promulgated by a Federal agency, a task currently performed 
     by the Office of Management and Budget.
       Clearly, the agency that uncovered the House bank scandal 
     doesn't always give Congress what it wants. That makes the 
     GAO all the more needed, especially when budget cutters are 
     honing their axes.
       This is definitely not the time to shackle Congress' most 
     effective fiscal watchdog.

  I ask unanimous consent that the editorial be printed in the Record.
  There being no objection, the editorial was ordered to be printed in 
the Record, as follows:

                     [From the Hill, April 5, 1995]

                           Don't Gut The GAO

       Ever since the General Accounting Office uncovered the 
     House bank scandal, which cost many lawmakers their jobs and 
     sent some to jail, Congress has been gunning for the watchdog 
     agency. Republicans were particularly incensed by GAO reports 
     critical of President Bush's tax policies.
       It now appears that the GAO, the research arm of Congress, 
     may have to pay a heavy price for its independence. Senate 
     Republicans want to slash the agency's budget by 25 percent.
       The ostensible reason for this cut is a deeply flawed 
     report by a panel of the prestigious National Academy of 
     Public Administration, which concluded that the GAO had 
     strayed from its role as a numbers cruncher and wandered into 
     the more esoteric realm of evaluating government programs and 
     policies. But how does an agency evaluate whether taxpayer 
     funds are being well spent except by evaluating the programs 
     and policies for which they are used?
       Since its inception in 1921, the agency has saved taxpayers 
     billions of dollars--more than $200 billion by some accounts. 
     It was the GAO that found the money trail in the Iran-Contra 
     scandal. After uncovering the HUD scandal, the agency went to 
     work on the Department of Defense, and found $36 billion in 
     supplies not needed to satisfy current operations of war 
     reserves. GAO also turned the spotlight on wasteful Medicare 
     reimbursement practices, including hospitals whose physical 
     therapists billed as much as $600 an hour even though their 
     salaries were as low as $20 an hour.
       Last year, the agency examined the Department of Energy's 
     Rocky Flats plant in Colorado, and found numerous safety 
     problems, including ``plutonium liquids leaking from pipes 
     and tanks, fire hazards and risks of exposing workers to 
     plutonium.'' The GAO is currently studying Supplemental 
     Security Income, which now costs $60 billion a year, a 140 
     percent increase in the last 10 years. The agency is seeking 
     ways to bring the mushrooming costs under control.
       Scotty Campbell, former head of the Office of Personnel 
     Management who directed the critical study, nevertheless 
     warns that a 25 percent budget cut ``could do serious damage 
     to that organization in terms of getting on with its work and 
     readjusting its mission.''
       The agency, whose $443 million budget is the largest of any 
     legislative branch agency, has already cut its staff from 
     5,325 to 4,700 since 1992, and is prepared to reduce it to 
     3,975 during the next two years. They would have to dismiss 
     1,600 employees in the next nine months to comply with a 25 
     percent cut in one year.
       The GAO does have its internal problems. The agency is 
     stymied by an antiquated management system that never ceases 
     reviewing its work. It seems constitutionally incapable of 
     producing reports to Congress on time--only 21 percent met 
     GAO's own deadline.
       Paradoxically, although Congress wants to slash the 
     agency's budget, it bears most responsibility for GAO's 
     workload. About 77 percent of the agency's work was at the 
     request of Congress. Only last week, the Senate approved 
     giving GAO responsibility for reviewing every significant 
     regulation promulgated by a federal agency, a task currently 
     performed by the Office of Management and Budget.
       Clearly, the agency that uncovered the House bank scandal 
     doesn't always give Congress what it wants. That makes the 
     GAO all the more needed, especially when budget cutters are 
     honing their axes.
       This is definitely not the time to shackle Congress' most 
     effective fiscal watchdog.

  Mr. GLENN. Madam President, it just does not make any sense that we 
are going to cut GAO at a time when we need their investigations more 
than ever.
  It came as a big surprise to me back several years ago, as chairman 
of the Governmental Affairs Committee, to learn that the departments 
and agencies of Government are not required to do a bottom-line audit 
every year, as any business would have to do. The biggest spending 
organization in the world, the U.S. Government, and we are not required 
to do any audits at the end of the year.
  We worked over several years putting together legislation. It was put 
together with the assistance of Dick Darman in the White House, during 
the years when he was head of OMB, and with Charles Bowsher, who is the 
Comptroller General, and we put together what we called the Chief 
Financial Officer Act, which has been in effect since 1990.
  What does that do? It requires a bottom-line audit every year of 
every Department, every agency. We started GAO out auditing just three 
pilot projects trying to see whether we could get audits or not and 
what kind of shape they would be in. Nobody is passing, at this point, 
what in business would be called a certified audit. It will be a number 
of years before we get to that point. But who is required to analyze 
those new activities that we have put on every Department, every agency 
of Government to make sure that they are truly doing an audit--in other 
words, checking the audits, making sure the bottom-line audit is valid? 
The GAO, the General Accounting Office. That is one of their assigned 
jobs.
  We are assigning them new roles all the time, and yet, at the same 
time, we are saying in addition to what they are already cutting down, 
12 to 15 percent, we whack them out one-fourth this year when we need 
more accounting capability, not less.
  I wish we could go not just to three agencies of the Government or 
Departments of Government and say, ``Yes, the GAO is coming over to 
audit you and you better get your books in order.'' I wish we could go 
the whole length and breadth of Government. We are going to do that 
next year, and they are phasing it in slowly and doing a good job of 
phasing it in slowly, because they do not have the resources to go 
further into this and do it more rapidly.
  It is unbelievable some of the things we found in our hearings going 
on over at the Pentagon, as far as accounting. GAO found across the 
whole length and breadth we have 200 different accounting systems, most 
of which cannot talk to each other on computers. The Pentagon alone has 
160 different accounting systems; the Army has 43 different accounting 
systems. GAO is working closely with the Pentagon, with John Hamre, the 
comptroller over there, trying to make some sense out of this and 
trying to get reports and combine some of these systems so that we can 
know what happens to the money that we appropriate for the Pentagon. I 
use that as just one example.
  I think it was $32 billion in unmatched disbursements, for instance, 
where they are just sort of written off. We hope they were all valid 
payments, but we could not really document what those payments were, 
whether they were as valid as they should be or not.
  We did not have the paperwork trail there to do it. They are helping 
the Pentagon upgrade their system so we can get that kind of an audit 
trail every single year, not just once in a great while. Yet, at the 
same time, we are talking about cutting their funding back by a fourth 
when they are on the downswing now.
  It was rare we used to hear any comment about problems with the GAO, 
and I know, as chairman of the Governmental Affairs Committee, where I 
heard the first major complaints. I think maybe this is where some of 
the problems started with the reputation of GAO in the Senate at least.
  I know that the editorial I read a moment ago puts some of the 
problem over in the House on what they did in uncovering the House bank 
scandal. But in the Senate, everybody went along thinking GAO was doing 
a good job, which they were, up until President Bush was elected. And 
during that transition period is when the GAO took it upon themselves 
to issue the transition reports, giving advice, which was not solicited 
by the new administration at that time.
  These were transition reports that called on GAO's background and 
their experience in these different areas as to where they saw some of 
the major problems in Government. This was unsolicited by the new 
administration. We had very few Senators here, but some--I still have 
one of the letters in my file that was just caustically critical of the 
General Accounting Office for going outside what this particular 
Senator saw as their proper role of doing only reports that we had 
requested specifically from here, committee chairmen or individuals, of 
course. But they voluntarily made these transition reports.
   [[Page S5207]] If that affronted some people, I am sorry it did, but 
it certainly did not affront me and it would not have affronted me had 
it been a Democratic administration coming in.
  I do not think there is any agency of Government--no one certainly at 
the congressional level--to give us advice whose views go clear across 
the length and breadth of Government, all the way across, and is more 
qualified to give advice than the General Accounting Office.
  I know if it had been a Democratic administration coming in, I would 
have welcomed those transition reports to give a new administration 
some guidance. Instead of that, their initiative, which they took on 
their own, seemed to have affronted some people here. And we heard 
continual criticism of the General Accounting Office ever since that 
time. Even up to and including one of the reported suggestions after 
the Republican conference made their suggestions on cutbacks at 25 
percent, one of the Senators was quoted as saying he thought they 
should be cut back 50 percent. That would virtually do away with the 
fine job the General Accounting Office does for the Congress.
  So I hope that we can think about this very carefully as to what we 
are doing when we cut funds back for the General Accounting Office. I 
hope they can be permitted not to take a one-quarter cut in this year, 
all in this year. That would decimate them. It would interrupt all 
their programs. They are on a reduction of about one-fourth of their 
work force right now. It started back 2 years ago and will be completed 
by the end of 1997. That is their target for this, and they are on 
schedule for it right now.
  They can go that kind of reduction in an orderly fashion and 
accomplish the same thing if just given the time to do it.
  I realize the efforts that we try to put forth around here to cut the 
budget, but if we are cutting the budget with regard to the General 
Accounting Office to that level, I think we are making a very, very, 
major mistake and one that we will regret.
  If we do not have them, who are we to use for investigations that 
they have done in the past? I have used them. As chairman of the 
Governmental Affairs Committee, I used them for quite a number of 
different projects.
  One I will mention. We are all concerned about the nuclear waste 
across the country, nuclear waste out of the nuclear weapons production 
program across the country that went for so many years without anybody 
even looking at it.
  Back in 1985, I was at Fernald in Ohio. People wanted me to come out 
there, and it was one of the first steps in the nuclear weapons 
process, a processing plant at Fernald, and they felt there were 
problems there with waste.
  I went out not knowing quite what I would find. The situation was 
worse than I thought it was. I went to work on that.
  Then we asked the General Accounting Office to do a study of the 
site, which they did. I thought it could not possibly be this bad all 
over the whole country at the 17 major sites in 11 different States 
that were part of that nuclear weapons process. It turned out we asked 
GAO to do studies in some of the other areas, which they did, and what 
did they find? They found what I had run into at Fernald was only the 
starting point. What was out there across the whole nuclear weapons 
complex was a hideous ignoring of what had been going on all during the 
cold war as we fought to get fissile material and nuclear weapons 
produced as fast as we possibly could.
  We had been just ignoring the waste. Everybody was so concerned, 
including me, including Members of this body, including most Americans, 
we were concerned, ``The Russians are coming, the Russians are 
coming.'' We have to get those nuclear weapons out there fast.
  What are we going to do with the waste? Put it out behind the plant 
and we will deal with that later. That is what we did. This ``out 
behind the plant and deal with it later'' was all the nuclear waste 
that we are now going to have to spend hundreds of billions of dollars 
to clean up.
  The organization that has given the best definition of that whole 
problem all across the country is the General Accounting Office. I add 
this. Back then, when we first ran into this and had the first GAO 
reports, we asked for estimates from the Department of Energy as to how 
much they thought it was going to cost to clean up this whole thing out 
across the country. This was in about early 1986. They estimated it was 
going to cost $8 to $12 billion to clean these places up.
  Better defining as GAO went through this showed in about 2 years it 
would cost closer to $100 billion. That was our estimate for several 
years. Then the cost went up, through better refining of the data, to 
about $200 billion and 20 to 30 years to do the cleanup.
  Now this past week the Department of Energy has finally estimated 
that depending on how clean we want to make the sites, the cost will be 
$200 to $375 billion. Some can be done in 20 to 30 years, and some of 
it may take as long as 75 years as we try to learn how to do it.
  GAO is the one who has defined most of this problem and pointed it 
out. They deserve a lot of credit for having done that.
  We could go on. I could talk all night here, all afternoon and all 
evening about what has happened in GAO on the different projects and 
what we have been able to save. They have gotten back so many times 
their cost, the cost of having GAO so many times.
  I indicated just my own personal case of requests for information 
that has resulted in several billion being saved on different accounts 
that we can document. This $200 billion I said they saved since about 
1985, I believe it was, they can document. They have follow-up 
activities that show. These are not some wild pie-in-the-sky estimates 
to make them look good. They document this with follow-up review 
procedures to see how much has actually been saved, and $200 billion 
over the last 10 years is an enormous savings. Yet at the same time we 
are talking about whacking them by one-quarter in addition to the 
reduction they are already making. That would be the most false economy 
I can think of if we went through with that.
  Madam President, I have spoken longer than I usually speak on the 
floor today, but I think these are very important matters. We talk 
about pulling back money for the IRS at a time when they are getting 
their TSM, their tax system modernization in place. That is a mistake. 
They are getting back far more than what it costs.
  If we cut them down on their compliance activities, their follow-up 
on tax returns, their follow-up to make sure that everybody is paying 
their fair share, their follow-up to make sure the IETC--the earned 
income tax credit--is not given incorrectly to the wrong people, when 
we start cutting back on activities like that, that is a mistake.
  I personally would like to see funding increased for GAO and 
increased for IRS because their track record is that they are getting 
back more than those additional dollars would cost.
  I hope we are not going to, in the interests of balancing the budget 
here, make some false economies here that will cost more in the long 
run than it would to fully fund these agencies as requested right now.
  I appreciate the consideration of my colleagues. I yield the floor.

                          ____________________