[Senate Report 110-151]
[From the U.S. Government Publishing Office]
Calendar No. 349
110th Congress Report
SENATE
1st Session 110-151
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NUCLEAR SAFEGUARDS AND SUPPLY ACT OF 2007
_______
September 11, 2007.--Ordered to be printed
Mr. Biden, from the Committee on Foreign Relations,
submitted the following
REPORT
[To accompany S. 1138]
The Committee on Foreign Relations, having had under
consideration a bill (S. 1138) to enhance nuclear safeguards
and to provide assurances of nuclear fuel supply to countries
that forgo certain fuel cycle activities, reports favorably
thereon and recommends that the bill do pass.
CONTENTS
Page
I. Purpose and Summary..............................................1
II. Committee Action.................................................6
III. Summary of Legislation...........................................6
IV. Cost Estimate...................................................15
V. Evaluation of Regulatory Impact.................................17
VI. Changes in Existing Law.........................................17
VII. Annex: Additional Documents and Information.....................17
I. PURPOSE AND SUMMARY
The Nuclear Safeguards and Supply Act of 2007 provides
increased support to the International Atomic Energy Agency's
(IAEA) safeguards system by addressing a funding shortfall in
the present safeguards system. The bill also makes it the
policy of the United States to discourage the development of
enrichment and reprocessing capabilities in additional
countries, encourage the creation of bilateral and multilateral
assurances of nuclear fuel supply, and ensure that all supply
mechanisms operate in strict accordance with the IAEA
safeguards system and do not result in any additional unmet
verification burdens for the system. The bill would also
authorize the President to negotiate, on both a bilateral and
multilateral level, mechanisms to assure nations that forgo
national nuclear fuel-cycle capabilities a supply of nuclear
fuel for peaceful purposes. S. 1138 also ties the supply of
nuclear fuel and an expansion of nuclear power to the ability
of the IAEA to assure, through safeguards implementation, the
absence of undeclared nuclear materials and activities
involving them in states receiving nuclear fuel under such
mechanisms.
Significant international attention has focused in recent
years on the problem of the increasing number of states seeking
access to technical capabilities in the enrichment of uranium
and the reprocessing of spent nuclear fuel. At the same time,
increasing interest in nuclear power has led many countries to
make new policy determinations that favor the use of nuclear
power. A decision by any country to enter into the nuclear
power field requires a clear understanding of the nuclear fuel
cycle facilities for the storage or production of fuel to run
reactors, the numbers and types of reactors that will be built,
and the disposition of spent nuclear fuel and waste that will
result from the operation of reactors. New nuclear facilities,
be they production or utilization facilities, carry with them
safeguards burdens. A substantial increase in the use of
nuclear power throughout the world could result in many new
facilities with nuclear material in new states over the coming
decades. Such a situation poses inherent risks for U.S.
national security and global peace and stability if the
international community does not plan for an expansion of
nuclear power in a manner that ensures that the nuclear
nonproliferation system--which depends heavily on the IAEA's
safeguards system--has the resources and technology available
to it to cope with an expansion of civilian nuclear power. The
committee believes that support for IAEA safeguards is thus an
urgent priority.
Most projections regarding the expansion of nuclear power
show some increase in the number of facilities and the amount
of power generated, but are uncertain regarding the rate and
scope of the rise in the use of nuclear power for electricity
generation and the pace in construction of new utilization
facilities or reactors. There are currently 435 commercial
nuclear power plants operating in 30 countries around the
globe, with a combined capacity of 370 GW(e). These plants
supply 16 percent of the world's electricity.\1\ A number of
states, including China, India, Pakistan, Japan, Russia, the
Republic of Korea, and the United States, have stated their
intention to expand their nuclear power sectors. In the past
year, there have been more than 25 announcements of license
applications by the U.S. Nuclear Regulatory Commission (NRC)
and various U.S. nuclear power entities for planned activities
in the United States. Canada has recently undertaken
preparatory activities for additional nuclear power plants. The
United Kingdom has concluded in a major government review that
nuclear power would form a key part of that country's energy
strategy over the next century. The governments of Egypt,
Nigeria, Indonesia, Turkey, and Belarus have all announced
their intention to build their first nuclear reactors. The
February 2005 Report of the IAEA Experts Group on Multilateral
Approaches to the Nuclear Fuel Cycle found that ``In light of
existing, new and reawakened interest in many regions of the
world, the prospect of new nuclear power stations on a large
scale is therefore real. A greater number of States will
consider developing their own fuel cycle facilities and nuclear
know-how, and will seek assurances of supply in materials,
services and technologies.''
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\1\See http://www.world-nuclear.org/info/inf01.htm.
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There has also been an expansion of the capacity to make
nuclear fuel within the last several years. In 2006-2007,
Brazil completed work on its uranium enrichment facility at
Resende. In the United States construction is underway on the
National Enrichment Facility, and France also began building a
new enrichment facility, to be called Georges Besse II.
The United States has for many years maintained a policy
that it will not transfer enrichment and reprocessing
technology to any state. President Bush has stated that his
administration's policy is to prevent the further spread of
such technology to new states. At the same time, the rising
interest in nuclear power has challenged the international
community to find ways to assure states contemplating nuclear
power that they do not need to create national fuel cycles,
which necessitate enrichment and reprocessing, to enjoy the
benefits of nuclear power.
In 2005, Senator Lugar, then chairman of the committee,
formed a Policy Advisory Group (PAG) on nuclear
nonproliferation, which made and forwarded certain
recommendations to President George W. Bush regarding the
future of the nuclear fuel cycle and the dangers of
proliferation. Co-chaired by Ronald F. Lehman II, formerly
Administrator of the U.S. Arms Control and Disarmament Agency,
and Ashton B. Carter, formerly Assistant Secretary of Defense
for International Security Policy, the group included notable
experts in the fields of nuclear nonproliferation, verification
and arms control.\2\ The PAG focused on the future of the
Nuclear Non-Proliferation Treaty (NPT) and the larger
nonproliferation system it supports.
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\2\See Appendix to this Report.
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The PAG found that the existing safeguards regime has
failed to keep pace with the increase in the global
availability of nuclear weapons technology, especially the
technology and equipment for uranium enrichment and spent
nuclear reactor fuel reprocessing. While the number of
recognized nuclear-weapon states has not dramatically increased
over the years, the dangers of proliferation have become more
apparent, as demonstrated by the A.Q. Khan network and the
Iranian, North Korean and Libyan examples.
The PAG found that the construction of new facilities for
the enrichment of uranium and reprocessing of spent nuclear
fuel, even for ostensibly peaceful purposes, poses an
unacceptable long-term risk to the national security of the
United States. The enrichment technology intended to produce
fuel for nuclear power reactors can also be used to create
material for a nuclear weapon, and the plutonium that is
produced from reprocessing spent nuclear fuel is weapons-
usable. Safeguards, even if applied as envisioned by the IAEA's
Model Additional Protocol to country safeguards agreements
(hereinafter, ``additional protocol''), cannot solve the
fundamental problems inherent in detecting enrichment
facilities, which can be easily hidden. The spread of
enrichment and reprocessing capabilities dangerously increases
the possibility that more nations could develop their own
nuclear weapons or that terrorists might obtain fissile or
radiological materials for a dirty bomb. Given such threats,
the PAG called on the United States to lead an international
effort to halt the expansion of enrichment and reprocessing to
new countries.
The PAG found that the use of nuclear power is likely to
increase, both in developed countries and, in particular, in
developing countries. Importantly, however, the PAG concluded
that expansion of nuclear power does not require--either
technically or economically--the construction of new enrichment
and reprocessing facilities in countries that do not currently
have them. ``Under most scenarios,'' the PAG found, ``excess
capacity already exists and will continue to exist for many
years.''\3\
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\3\See Appendix.
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The increasing international focus on nuclear power and
consequent concerns about nonproliferation have resulted in the
world's leading nuclear states offering a variety of proposals
that not only favor the expansion of nuclear power, but also
draw attention to the dangers of proliferation. In 2006, the
United States announced a major initiative called the ``Global
Nuclear Energy Partnership'' (GNEP). According to the
administration, GNEP would seek to increase energy security and
promote nonproliferation through the expanded use of
proliferation-resistant nuclear energy facilities to meet
growing electricity demand. The key elements of GNEP would
include expanding domestic use of nuclear power; demonstration
of proliferation-resistant actinide recycling of irradiated
nuclear fuel; the minimization of nuclear waste; the
development of advanced burner reactors; the establishment of
reliable global fuel services; the demonstration of small- and
medium-scale, proliferation-resistant reactors; and the
revitalization of programs for advanced nuclear safeguards.
With regard to safeguards, GNEP may include such enhanced
activities (which remain largely undefined) as:
Incorporation of nuclear safeguards technology into
designs for recycle facilities, advanced fast reactors,
and associated nuclear materials storage and
transportation, making them proliferation resistant.
Development of high-reliability, remote, and
unattended monitoring technologies; advanced
containment and surveillance; smart safeguards
information collection, management, and analysis
systems; nuclear facility use-control systems; and next
generation nondestructive analysis and process
monitoring sensors.
Research and development of advanced material
tracking methodologies, process control technologies,
and plant engineering.
Remote sensing, environmental sampling and forensic
verifica-tion methods.
International facilities for conducting testing and
demonstration.
Continued support for global best practices for
security and accounting of nuclear materials.\4\
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\4\See http://www.gnep.energy.gov/gnepNuclearSafeguards.html.
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In January 2006, President Vladimir Putin of Russia also
proposed creation of ``a system of international centres,
providing nuclear fuel-cycle services, including enrichment, on
a non-discriminatory basis and under the control of the
IAEA.''\5\ In addition to the U.S. and Russian proposals, a
number of other ideas have been placed before the IAEA by major
nuclear states, which were considered at a Special Event on a
New Framework for the Utilization of Nuclear Energy in the 21st
century during the 50th IAEA General Conference.\6\
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\5\``Paper Profiles Russian-Kazakh-Uzbek Uranium Enrichment Deal,''
Text of a Report from the Kommersant Newspaper, January 29, 2006, BBC
Monitoring Former Soviet Union, available on Nexis.com.
\6\See http://www-pub.iaea.org/MTCD/Meetings/
Announcements.asp?ConfID=147.
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Despite the wide expectation of increased nuclear facility
construction, there has been little increase in financial
support to the IAEA's Department of Safeguards to ensure that
it can meet both existing and future safeguards demands. The
committee notes that all of the work conducted by the IAEA to
implement existing safeguards is carried out under a budget
that is not sufficient to meet the growing demands for
safeguards. With activities likely to resume in North Korea, as
well as verification of North Korean compliance with agreements
reached in the Six Party Talks, ongoing activities in Iran,
increasing activities in many European states, a likely new and
costly set of safeguards requirements that will result from
renewed international nuclear cooperation with India, expanded
reprocessing activities in Japan, and the welcome
implementation of additional protocols by more states, along
with stresses the IAEA is already experiencing in its
verification program, particularly as more environmental
samples come to it for analysis under additional protocols,
funding for safeguards now demands immediate attention. The
IAEA must maintain an ability to implement unprogrammed
safeguards and verification activities when issues arise, but
maintaining routine safeguards grows difficult in times when
many of its resources are already engaged. The United States
and all IAEA member states must prevent a scenario in which the
IAEA is forced to reduce--or cease altogether--safeguards
efforts in key states because of budget shortfalls.
Historically, certain policies have adversely affected the
ability of the IAEA to meet growing safeguards challenges. In
1985, the Geneva Group (the 14 largest contributors to the
United Nations) imposed a policy of ``zero real growth'' on the
IAEA's budget, save for staff salaries. This policy was
reversed by the IAEA's Board of Governors in July 2003. The
committee strongly supported the decision to end the zero real
growth policy, a decision consistent with previously-enacted
legislation.\7\ Nevertheless, overall budgetary support remains
insufficient to meet existing safeguards needs, much less the
dramatically expanded requirements that may present themselves
in the future. Moreover, additional constraints on the IAEA's
verification effort, such as those on the amount of time staff
may work at the IAEA's Safeguards Analytical Laboratory, pose
other challenges. In this regard, certain provisions of S. 1138
again call to attention the need for reform.
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\7\See section 1305 of P.L. 107-228, The Foreign Relations
Authorization Act, Fiscal Year 2003.
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S. 1138 deals with the realities of expanding nuclear power
given the existing demands on IAEA safeguards. Much of the work
that will create a more proliferation-resistant, nuclear-
powered future can be done today, but this requires more than
technical progress in the design of new nuclear facilities.
Such technologies are many years away from being commercially
available. What are needed now are sustained U.S. leadership
and increased financial support for IAEA safeguards. The
committee finds that S. 1138 will positively contribute to and
enhance existing safeguards and will enhance nuclear fuel
supply mechanisms that take into account important
nonproliferation criteria, and to these ends has reported
favorably this legislation.
II. COMMITTEE ACTION
S. 1138 was introduced by Senators Lugar and Bayh on April
18, 2007, and referred to the committee on the same day.
At a business meeting on June 27, 2007, by a voice vote,
the committee ordered the bill reported favorably to the
Senate.
III. SUMMARY OF LEGISLATION
The Nuclear Safeguards and Supply Act of 2007 consists of
two titles that augment existing U.S. activities in support of
IAEA safeguards and provide authority to the President to
negotiate agreements or create mechanisms for the supply of
nuclear fuel to countries forgoing enrichment and reprocessing
and meeting certain criteria. Importantly, the committee notes
that neither title provides authorities additional to those
available to the executive branch for nuclear cooperation,
which remains governed by existing statutes and regulations.
Sections 1 and 2 set forth the short title and provide a
table of contents. Section 3 defines ``appropriate
congressional committees'' as the Committee on Foreign
Relations in the Senate and the Committee on Foreign Affairs in
the House of Representatives.
Title I provides a set of findings, stipulates both
existing and new policies of the United States with respect to
assurances of nuclear fuel supply, increases budgetary support
for the IAEA's Safeguards Analytical Laboratory, and calls for
an enhanced safeguards technology development program. Title II
provides Presidential authority, consistent with existing law,
for negotiation of bilateral and multilateral assurances of
nuclear fuel supply to states meeting certain criteria,
requires a report on the establishment of an International
Nuclear Fuel Authority, and contains a sense of the Senate
provision on IAEA activities for nuclear fuel supply.
TITLE I--NUCLEAR SAFEGUARDS AND NUCLEAR FUEL SUPPLY
Sections 101 (1)-(19) provide important findings. In the
past two years, major studies, both in the United States and
under the auspices of the IAEA, have highlighted critical
questions confronting the world as it contemplates the nuclear
future and begins to examine proposals for nuclear supply that
would use nonproliferation criteria as conditions of supply.
Particularly significant was the 2005 Report of the IAEA
Experts Group on Multilateral Approaches to the Nuclear Fuel
Cycle, which was chaired by the former Deputy Director General
of the IAEA for Safeguards, Dr. Bruno Pellaud. The Experts
Group noted:
Two primary deciding factors dominate all assessments
of multilateral nuclear approaches, namely ``Assurance
of non-proliferation'' and ``Assurance of supply and
services''. Both are recognised overall objectives for
governments and for the NPT community. In practice,
each of these two objectives can seldom be achieved
fully on its own. History has shown that it is even
more difficult to find an optimum arrangement that will
satisfy both objectives at the same time.\8\
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\8\See http://www.iaea.org/Publications/Documents/Infcircs/2005/
infcirc640.pdf, hereinafter, ``Pellaud Report.''
This statement highlights the difficulty that will confront
the international community as it works to create international
fuel supply mechanisms. The committee notes that many supply-
side assurance efforts have been initiated in the past.
Importantly, Congress proposed in the Nuclear Nonproliferation
Act (NNPA) of 1978 (22 U.S.C. 3201 et seq.) that the President
create and submit to Congress such mechanisms as ``initial fuel
assurances, including creation of an interim stockpile'' of low
enriched uranium fuel ``to be available for transfer pursuant
to a sales arrangement to nations which adhere to strict
policies designed to prevent proliferation when and if
necessary to ensure continuity of nuclear fuel supply to such
nations.''\9\ Congress also mandated that the provision of this
fuel be equivalent to generation of up to ``100,000 MW(e) years
of power from light water reactors.''\10\ Yet serious
negotiations were never pursued for such a proposal by the
executive branch. Over the next 20 years, the IAEA and other
expert groups also initiated studies on fuel assurances and
nonproliferation. These included the IAEA study on Regional
Nuclear Fuel Cycle Centers, the International Nuclear Fuel
Cycle Evaluation, the Expert Group on International Plutonium
Storage, and the IAEA Committee on Assurances of Supply. No
countries substantially changed their nuclear policies as a
result of these efforts. Consensus was difficult to achieve
because of the declining interest in (and in some cases
opposition to) nuclear power and a failure to agree on what
criteria would govern supply assurances.
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\9\22 U.S.C. 3223(b).
\10\Ibid.
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With regard to nonproliferation factors that should
influence the evaluation of any proposals for assurance of
supply, the Pellaud report noted:
The non-proliferation value of a multilateral
arrangement is measured by the various proliferation
risks associated with a nuclear facility, whether
national or multilateral. These risks include the
diversion of materials from [a multilateral nuclear
approach or MNA] (reduced through the presence of a
multinational team), the theft of fissile materials,
the diffusion of proscribed or sensitive technologies
from MNAs to unauthorised entities, the development of
clandestine parallel programmes and the breakout
scenario. The latter refers to the case of the host
country ``breaking out,'' for example, by expelling
multinational staff, withdrawing from the NPT (and
thereby terminating its safeguards agreement), and
operating the multilateral facility without
international control.\11\
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\11\Pellaud Report.
The committee strongly concurs with this assessment, and
notes that proposals for the creation of supply mechanisms must
directly address these issues at the point of their creation,
rather than offer only vague understandings that may result in
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later difficulties. Thus, section 101(16) concludes:
Any proposals for the creation of bilateral or
multilateral assurances of supply mechanisms must take
into account, and be achieved in a manner that
minimizes, the risk of nuclear proliferation or
regional arms races and maximizes adherence to
international nonproliferation regimes, including, in
particular, the Guidelines of the Nuclear Suppliers
Group (NSG), and the IAEA Additional Protocol.
There appears to be wide international support for limiting
enrichment and reprocessing, based on supply incentives. For
instance, the 2004 Report of the United Nations Secretary-
General's High-Level Panel on Threats, Challenges and Change
found (and section 101(6) notes) that ``creating incentives for
countries to forego the development of domestic uranium
enrichment and reprocessing facilities is essential, and that
such suggestions, if implemented swiftly and firmly, offer a
real chance to reduce the risk of a nuclear attack, whether by
states or non-state actors, and that such proposals should be
put into effect without delay.''\12\
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\12\See http://www.un.org/secureworld/.
The committee strongly believes that any mechanism
developed for the provision of nuclear fuel should be country-
neutral, should be based on solid nonproliferation criteria,
and should, to the maximum degree possible, reinforce the
existing safeguards system and prevent additional proliferation
by limiting the spread of enrichment and reprocessing. Even if
a recipient state were to forgo enrichment and reprocessing,
the supply of nuclear fuel to that state would require
effective safeguards measures to be in place. Should an
international fuel storage facility be located in a nuclear-
weapon state, it would be preferable from a nonproliferation
standpoint for comprehensive safeguards to be applied to that
facility, so as to maintain strict accounting for all fuel set
aside for non-nuclear weapons states.
Section 102(a) continues U.S. policies already enacted in
the NNPA, namely that it is the policy of the United States:
(1) to create mechanisms to provide adequate supplies
of nuclear fuel consistent with the provisions of the
Nuclear Non-Proliferation Act of 1978, in particular
title I of such Act (22 U.S.C. 3221 et seq.);
(2) to strengthen the IAEA safeguards system
consistent with the provisions of the Nuclear Non-
Proliferation Act of 1978, in particular title II of
such Act (22 U.S.C. 3241 et seq.); and
(3) to cooperate with other nations, international
institutions, and private organizations to assist in
the development of non-nuclear energy resources under
title V of the Nuclear Non-Proliferation Act of 1978
(22 U.S.C. 3261 et seq.).
The committee notes that it has long been U.S. policy, as
embodied in the NNPA, to create assurances of nuclear supply,
to strengthen the IAEA safeguards system, and to work to
provide nations seeking new sources of electricity with non-
nuclear options. Much work is already done under the U.S.
Program of Technical Assistance to IAEA Safeguards (POTAS).
Section 102(b) would enact into law the policy announced in
President Bush's speech at the National Defense University on
February 11, 2004:
The world's leading nuclear exporters should ensure
that states have reliable access at reasonable cost to
fuel for civilian reactors, so long as those states
renounce enrichment and reprocessing. Enrichment and
reprocessing are not necessary for nations seeking to
harness nuclear energy for peaceful purposes.\13\
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\13\See http://www.whitehouse.gov/news/releases/2004/02/20040211-
4.html.
Thus, section 102(b) makes it the policy of the United
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States
[T]o discourage the development of enrichment and
reprocessing capabilities in additional countries,
encourage the creation of bilateral and multilateral
assurances of nuclear fuel supply, and ensure that all
supply mechanisms operate in strict accordance with the
IAEA safeguards system and do not result in any
additional unmet verification burdens for the system.
Section 103(a) would authorize, in addition to the amount
requested by the President for U.S. voluntary contributions to
the IAEA for fiscal year 2008, $10 million for the
refurbishment or possible replacement of the IAEA Safeguards
Analytical Laboratory (SAL).
Committee staff and, on one occasion, Senator Lugar, have
visited SAL. Each time, staff was impressed with the level of
professionalism and dedication of the laboratory staff but was
troubled by the apparent state of the facility. Located in
Seibersdorf, Austria, outside Vienna, the SAL provides
analytical support to the IAEA Department of Safeguards by
receiving samples of materials taken during inspections at key
measurement points of the nuclear fuel cycle for destructive
chemical and isotopic analysis. This complements physical
inspections and measurements performed by IAEA inspectors in
nuclear facilities. Such technical analysis capabilities help
the IAEA to assure that nuclear material under IAEA safeguards
is not diverted to military purposes and, at times, to locate
undeclared nuclear material. When SAL is unable to perform
certain types of analysis, or when increased verification of
results is needed, SAL will often involve its Network of
Analytical Laboratories (in other IAEA member states) to assist
it in its work.
During staff site visits, which occurred in February 2004
and in October and November 2006, staff found that considerable
investment is needed for the laboratory to meet future IAEA
requirements. The SAL's workload is growing, laboratory
infrastructure is aging, and IAEA requirements have become more
demanding. While initial plans have been made for laboratory
enhancement, there is no escaping the fact that, as more
countries implement IAEA safeguards and additional protocols,
many more nuclear samples are coming to the SAL for analysis.
Because of the way the laboratory's responsibilities have
grown over the years, the facilities are not optimal:
facilities are dispersed throughout the Seibersdorf site, which
presents a security problem; almost all of the laboratory space
is rented; the nuclear chemistry lab is 31 years old and has
outdated infrastructure; and overall, the facility lacks space
to deal with demands of the future.
The laboratory also has significant personnel issues that
stem from rules governing U.N. agencies. The rules create
problems for the SAL in finding and keeping experienced
professional staff. As experienced technicians retire, the SAL
has been unable to replace them with experienced staff, largely
because the IAEA has been unwilling to provide long-term
contracts to laboratory personnel.
The committee finds that, while certain personnel policies
may be required for most U.N. agencies, the tremendously
complicated and technical work of IAEA safeguards verification
represents an especially critical function since that work
directly enhances international nuclear accountability and
transparency through safeguards, which in turn allow nations to
make decisions relating to their future peace and security. The
IAEA and its Board of Governors should reevaluate staffing
policies at the SAL, with an eye toward improving staff
retention through more long-term contracts, increasing
budgetary support, and ensuring the effective operation of the
SAL well into the future. Current funding and equipment
planning is not sufficient to meet these goals, and attention
to these problems is an urgent matter.
Significantly, previous years' State Department budget
requests have noted that a goal of U.S. contributions to the
IAEA was ``[s]trengthening quality control and sensitivity of
analyses by the Safeguards Analytical Laboratory (SAL) and the
Network of Analytical Laboratories, and reviewing needs for
possible refurbishment or replacement of SAL.''\14\ Section
103(b), therefore, requires the Secretary of State to submit a
report to Congress not later than 180 days after the date of
the enactment of this Act on the refurbishment or possible
replacement of the SAL. In such a report, the committee expects
the Secretary to examine equipment, personnel, and budgetary
issues associated with the SAL, including estimates of the
total costs of completely refurbishing the SAL or replacing it.
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\14\See http://www.state.gov/documents/organization/60647.pdf.
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Section 104 requires the Secretary of State, in cooperation
with the Secretary of Energy and the Directors of the National
Laboratories and in consultation with the Secretary of Defense
and the Director of National Intelligence, to pursue a program
to strengthen technical safeguards research and development; to
increase resources, identify near-term technology goals,
formulate a technology roadmap, and improve interagency
coordination on safeguards technology; and to examine
proliferation resistance in the design and development of all
future nuclear energy systems.
The committee notes that much of this work is already done
under POTAS, but that significant research done by various non-
governmental organizations has called for greater emphasis in
this area. In particular, the May 2005 Report of the Nuclear
Energy Study Group of the American Physical Society Panel on
Public Affairs, titled ``Nuclear Power and Proliferation
Resistance: Securing Benefits, Limiting Risks,'' contained
important recommendations for future safeguards work.\15\ The
report noted:
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\15\See http://www.aps.org/policy/reports/popa-reports/
proliferation-resistance/upload/proliferation.pdf.
The current Safeguards program largely implements or
transfers technologies that are the result of [research
and development] carried out 10-20 years ago.
Revitalizing Safeguards [research and development] is
the most significant technical investment that can
enhance the proliferation resistance of nuclear power
within the next five years.\16\
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\16\Ibid.
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TITLE II--NUCLEAR FUEL SUPPLY
Section 201(a) authorizes the President to create,
consistent with title I of the NNPA and other applicable
provisions of law, bilateral and multilateral mechanisms to
provide a reliable supply of nuclear fuel to those countries
and groups of countries that adhere to policies designed to
prevent the proliferation of nuclear weapons and that decide to
forgo a national uranium enrichment program and spent nuclear
fuel reprocessing facilities. The committee recognizes that
forgoing enrichment and reprocessing strikes many countries as
restricting rights they understand themselves to have acquired
by ratifying or acceding to the NPT. Section 201(a) does not
require countries to foreswear any rights. Rather, they must
refrain from investing in sensitive fuel cycle facilities. The
committee believes that there would be little value added to
the existing nonproliferation regime by any assurance of
nuclear fuel supply that did not rest on at least this basic
assurance of nonproliferation. Notwithstanding such assurances,
moreover, as a general matter, the committee believes that
enrichment and reprocessing transfers should be denied to
states that do not already operate full-scale enrichment and
reprocessing facilities.
Section 201(a) would, again, provide a statutory embodiment
of the President's policy regarding the supply of nuclear fuel
and the proliferation of enrichment and reprocessing technology
announced on February 11, 2004. It is also written so as to
require consistency with the NNPA. Many proposals for the
expansion of nuclear power have included substantial programs
for international cooperation on reprocessing. While the
nuclear fuel cycle envisioned by some more than 50 years ago
included substantial re-use of plutonium in fast neutron
reactors, many became concerned regarding the inherent
proliferation risks posed by the use of such reactors and
reprocessing. Today, some proposals contemplate expanded use of
long-lived, separated actinides, including plutonium, in new,
more sophisticated fast neutron reactors. Such reactors appear
to be many years from being commercially viable. Several
important studies, including a recent study commissioned by the
Keystone Center, have also noted:
No commercial reprocessing of nuclear fuel is
currently undertaken in the U.S. ... while reprocessing
of commercial spent fuel has been pursued for several
decades in Europe, overall fuel cycle economics have
not supported a change in the U.S. from a ``once-
through'' fuel cycle. Furthermore, the long-term
availability of uranium at reasonable cost suggests
that reprocessing of spent fuel will not be cost-
effective in the foreseeable future.\17\
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\17\See http://www.keystone.org/spp/documents/FinalReport--NJFF6--
12--2007(1).pdf.
Given this assessment of the domestic nuclear picture, and
recalling the conclusions of the 2005 PAG on nonproliferation,
it is unclear when reprocessing technologies would be prudent
to advocate as a part of assured fuel supply to certain states.
Given the current supply of natural uranium, the undemonstrated
nature of certain new technologies, and uncertainties regarding
the proliferation resistance of new fast neutron reactor
designs, the committee believes it prudent at this time to
offer instead light water thermal reactors, and a supply of
low-enriched uranium for them.
The committee notes that the administration has already
taken steps toward just such a mechanism, with an announcement
by the National Nuclear Security Administration (NNSA) that it
has awarded a contract to Wesdyne International and Nuclear
Fuel Services, Inc., to down-blend 17.4 metric tons of U.S.
highly enriched uranium and store the resulting low-enriched
uranium for a reliable fuel supply program.\18\ The material
would be converted, by 2010, to a stockpile of some 290 metric
tons of low-enriched uranium fuel. According to the NNSA,
``[t]he fuel will be available for use in civilian reactors by
nations in good standing with the International Atomic Energy
Agency (IAEA) that have good nonproliferation credentials and
are not pursuing uranium enrichment and reprocessing
technologies.''\19\ This proposal was first announced by
Secretary of Energy Samuel Bodman at the 49th General
Conference of the IAEA in 2005, when he stated that ``the U.S.
Department of Energy will reserve up to 17 metric tons of
highly enriched uranium for an IAEA verifiable assured supply
arrangement.''\20\
---------------------------------------------------------------------------
\18\See http://www.nnsa.doe.gov/docs/newsreleases/2007/PR--2007-06-
29--NA-07-26.htm.
\19\Ibid.
\20\See http://www.energy.gov/news/1948.htm.
---------------------------------------------------------------------------
The committee notes the importance of such progress. S.
1138 envisions such initiatives as a part of assurance of
supply mechanisms, instead of simply authorizing additional
money to the IAEA to achieve such purposes. While money for an
IAEA-administered nuclear fuel bank may well be needed, the
provision of materials, particularly down-blended former
weapons materials, also supports a fuel assurance policy and
demonstrates U.S. nonproliferation leadership by permanently
removing such materials from our weapons program.
Section 201(b) provides a set of factors that the President
shall take into account when creating mechanisms for fuel
supply under this title. Section 201(b) is intended to be a
partial, not exhaustive, list of relevant criteria that should
inform decisions regarding to which nations nuclear supply
should be extended. Importantly, this provision states that
these factors shall be taken into account ``to the maximum
extent practicable.'' To the extent that one or more factors
included in this section prove impracticable, or that other
factors should be taken into account given a particular
country's circumstances, the provision is intended to permit
flexibility.
The committee notes that no aspect of the creation of
multilateral or bilateral mechanisms assuring nuclear fuel
supply will be more difficult than the criteria for access to
that supply. Section 201(b) sets forth factors the President
shall examine in addition to the basic criteria related to
nonproliferation of nuclear weapons or fuel cycle facilities:
(1) The economic rationale for a country or countries
pursuing nuclear power, including existing sources of
power for such country or countries.
(2) Whether such country or countries are in
compliance with their obligations under applicable
safeguards agreements and additional protocols with the
IAEA.
(3) Whether or not the development in such country or
countries of the complete nuclear fuel cycle would
impose new, costly IAEA safeguards measures that cannot
be supported by current IAEA safeguards implementation
in such country or countries, such that there is a
reasonable assurance that all nuclear materials in such
country or countries are for peaceful purposes and that
there are no undeclared nuclear materials or activities
in such country or countries.
(4) An evaluation of the proliferation dangers of
such country or countries developing nuclear fuel cycle
facilities for the production and disposition of source
and special nuclear materials.
(5) Whether or not the country or countries that
would be recipients of nuclear fuel or other assistance
provided by the United States are or have ever been
designated as state sponsors of terrorism pursuant to
section 620A of the Foreign Assistance Act of 1961 (22
U.S.C. 2371), section 40 of the Arms Export Control Act
(22 U.S.C. 2780), or section 6(j) of the Export
Administration Act (50 U.S.C. App. 2405(j)).
(6) If done under a bilateral supply mechanism,
whether IAEA safeguards are being applied or will be
applied to any facility, site, or location where
international nuclear fuel supply activities are to be
carried out.
(7) Whether, in the case of a multilateral supply
mechanism, procedures are in place to ensure that when
United States funds are used or when United States
nuclear materials are to be used, exported, or
reexported, all applicable provisions of United States
law are followed.
(8) Whether the recipient country or countries of any
fuel provided under this Act are or will become a
party, prior to the commencement of any nuclear fuel
supply under this Act, to--
(A) the Nuclear Non-Proliferation Treaty;
(B) in the case of a non-nuclear-weapon State
Party to the Nuclear Non-Proliferation Treaty,
a comprehensive safeguards agreement that is in
force, pursuant to which the IAEA has the right
and obligation to ensure that safeguards are
applied, in accordance with the terms of the
agreement, on all source or special fissionable
material in all peaceful nuclear activities
within the territory of such country, under its
jurisdiction, or carried out under its control
anywhere, for the exclusive purpose of
verifying that such material is not diverted to
nuclear weapons or other nuclear explosive
devices;
(C) an additional protocol;
(D) the Convention on Nuclear Safety, done at
Vienna September 20, 1994, and entered into
force October 24, 1996;
(E) the Convention on Physical Protection of
Nuclear Materials, done at Vienna October 26,
1979, and entered into force February 8, 1987;
and
(F) the Convention on Supplementary
Compensation for Nuclear Damage, done at Vienna
September 12, 1997.
(9) The extent to which the recipient country or
countries have or will have prior to the commencement
of any nuclear fuel supply under this Act effective and
enforceable export controls regarding nuclear and dual-
use nuclear technology and other sensitive materials
comparable to those maintained by the United States.
(10) The conformity of the safety and regulatory
regimes in the recipient country or countries regarding
the nuclear power sector with similar United States
laws and regulations.
(11) The history of safety or environmental problems
associated with any nuclear site, facility, or location
in the recipient country or countries in the past, and
the potential for future safety or environmental
problems or issues in connection with the civilian
nuclear power development plan of the country or
countries.
(12) Whether the recipient country or countries have
resident within them any persons or entities involved
in the illicit trafficking of nuclear weapons, nuclear
materials, or dual-use nuclear technology.
(13) Whether the recipient country or countries have
or will have sufficiently open and transparent civilian
power markets such that United States firms may benefit
from any such bilateral or multilateral supply
mechanisms.
The committee notes that one of these factors, section
201(b)(7), requires an examination by the President of
compliance with relevant U.S. laws when providing funds or
materials for international fuel assurances. For example,
United States law would appear to prohibit supply in cases
where ultimate use of material is to be by a state sponsor of
terrorism. Section 201(b)(5) would also provide that the
President take into account whether state sponsors of terrorism
would be involved in any assurance of supply. In view of the
complexity presented by this question, the committee hopes the
administration will initiate consultations with the committee
regarding its own analysis of U.S. laws and regulations at the
earliest possible time, so as to permit clearer understandings
of the various problems that may present themselves.
Section 201(c) provides a rule of construction, stipulating
that nothing in this Act shall be construed to provide any
authority with respect to bilateral cooperation with another
country or countries or any international organization or
organizations in atomic energy that is additional to the
authority provided under the Atomic Energy Act of 1954 (42
U.S.C. 2011 et seq.) and all other applicable laws and
regulations in effect on the date of the enactment of this Act.
This provision guards against an overbroad reading of the Act's
terms to obviate restrictions in current law regarding nuclear
cooperation with other nations.
Section 202 requires a new report from the executive branch
regarding the creation of an International Nuclear Fuel
Authority or INFA, which Congress first required in section
104(a)(1) of the NNPA (22 U.S.C. 3223(a)(1)). In addition to
the factors that were reported many years ago, this section
would call for an updated and expanded report that would take
into account, under section 202(b), new elements:
(1) United States laws and regulations that could be
affected by the establishment of an INFA.
(2) What the cost to the United States Government
could be of establishing an INFA.
(3) Potential locations for the INFA.
(4) The potential for creating a fuel supply bank
under the control of the INFA.
(5) Nuclear materials that should be placed within
the control of the INFA, including which nuclear
activities should be carried out by the INFA for the
production of nuclear fuel or for use as fuel.
(6) Whether the INFA should provide nuclear fuel
services to recipient countries.
(7) Whether a multilateral supply mechanism, such as
the INFA, is, in the judgment of the President,
superior to bilateral mechanism for nuclear fuel
supply.
(8) How such an international organization should
operate to preserve freedom of markets in nuclear fuel
and avoid undue interference in the efficient operation
of the international nuclear fuel market.
(9) The degree and extent to which such a
multilateral supply mechanism should be under the
control of, or a subordinate organization within, the
IAEA, including whether establishing such an INFA would
be superior or preferable to allowing the IAEA,
pursuant to Article IX of the Statute of the IAEA, to
become an international broker of nuclear fuel and
nuclear fuel services, including with respect to an
examination of the costs to IAEA Member States of
effectively carrying out clauses (1) through (4) of
paragraph (H) of such Article.
(10) The likely receptivity of the major countries
involved in the supply of nuclear fuel and nuclear
services to the creation of a multilateral supply
mechanism such as the INFA or one under the IAEA.
Section 203 provides a sense of the Senate on an IAEA-
administered fuel bank. Section 203(4) concludes that
[A] combination of public and private
efforts, including the provisions of law
previously enacted in the Nuclear Non-
Proliferation Act of 1978 (22 U.S.C. 3201 et
seq.) and other applicable laws, initiatives
supported by the President, efforts provided
for by private groups, and the recommendations
of many relevant studies, such as those cited
in section 101, will be necessary to
effectively and flexibly manage the growth of
civilian nuclear power in a manner that does
not result in undue burdens on the IAEA
safeguards system.
IV. COST ESTIMATE
In accordance with Rule XXVI, paragraph 11(a) of the
Standing Rules of the Senate, the committee provides this
estimate of the costs of this legislation prepared by the
Congressional Budget Office.
United States Congress,
Congressional Budget Office,
Washington, DC, July 20, 2007.
Hon. Joseph R. Biden, Jr.,
Chairman, Committee on Foreign Relations,
U.S. Senate, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for S. 1138, the Nuclear
Safeguards and Supply Act of 2007.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Sam
Papenfuss.
Sincerely,
Peter R. Orszag.
------
Congressional Budget Office Cost Estimate
S. 1138
Nuclear Safeguards and Supply Act of 2007
AS ORDERED REPORTED BY THE SENATE COMMITTEE ON FOREIGN RELATIONS ON
JUNE 27, 2007
S. 1138 would authorize the appropriation of $10 million
for a contribution to the International Atomic Energy Agency
(IAEA) to refurbish or replace the IAEA Safeguards Analytical
Laboratory. Additionally, the bill would authorize the
Secretary of State to pursue a program to develop better
safeguards for the civilian use of nuclear energy to prevent
proliferation of nuclear weapons. The bill also would authorize
the President to develop a process by which nuclear fuel could
be provided to other countries in the event of a disruption in
the market supply.
Both the development of safeguards and of a reliable supply
of nuclear fuel are already authorized under current law and
would not have a significant budgetary effect, CBO estimates.
Based on historical spending patterns for contributions to
international organizations, CBO estimates that implementing S.
1138 would cost $10 million in 2008 for increased contributions
to IAEA, assuming appropriation of the authorized amount.
Enacting the bill would not affect direct spending or receipts.
S. 1138 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act and
would not affect the budgets of state, local, or tribal
governments.
On June 1, 2007, CBO transmitted an estimate for H.R. 885,
the International Nuclear Fuel for Peace and Nonproliferation
Act of 2007, as ordered reported by the House Committee on
Foreign Affairs on May 23, 2007. The differences in the
estimates reflect differences in the bills. In particular, H.R.
885 would authorize the appropriation of $50 million for a
contribution to the IAEA for an international nuclear fuel bank
and would not authorize the appropriation of funds for the
IAEA's laboratory.
The CBO staff contact for this estimate is Sam Papenfuss.
This estimate was approved by Peter H. Fontaine, Deputy
Assistant Director for Budget Analysis.
V. EVALUATION OF REGULATORY IMPACT
Pursuant to Rule XXVI, paragraph 11(b) of the Standing
Rules of the Senate, the committee has determined that there is
no regulatory impact as a result of this legislation.
VI. CHANGES IN EXISTING LAW
In compliance with paragraph 12 of Rule XXVI of the
Standing Rules of the Senate, the committee notes that no
changes to existing law are made by this bill.
VII ANNEX: ADDITIONAL DOCUMENTS AND INFORMATION
U.S. Senate,
Committee on Foreign Relations,
Washington, DC, July 19, 2005.
Hon. George W. Bush,
President of the United States,
The White House, Washington, DC.
Dear Mr. President; I share with you a great concern about
the future of the Nuclear Non-Proliferation Treaty and the
larger non-proliferation system it supports. Attached is an
interim report I have received from the Policy Advisory Group
(PAG), a panel of experts I convened to provide advice to me
and the Senate Foreign Relations Committee on what Congress and
the administration should do to strengthen the NPT system. The
group has had a number of meetings, and their deliberations
continue. However, they have already reached conclusions about
one crucial aspect of the issue that I felt I should share with
you now.
The existing safeguards regime used by the International
Atomic Energy Agency (IAEA) succeeded in forestalling nuclear
weapons programs in the world's advanced industrial states,
several of which were weighing the nuclear option 40 years ago.
This regime has failed to keep pace, however, with the increase
in the global availability of nuclear weapons technology,
especially the technology and equipment for uranium enrichment
and spent nuclear reactor fuel reprocessing to produce the
fissile material for such weapons. Now the road to nuclear
weapons can be traveled by determined countries with only a
minimal industrial base. While the number of recognized
nuclear-weapon states (NWS) has not dramatically increased over
the years, the dangers of proliferation have become all too
apparent as demonstrated by the A.Q. Khan network, and the
Iranian, North Korean, and Libyan examples.
The PAG believes, and I concur, that the construction of
new facilities for the enrichment of uranium and reprocessing
of spent nuclear reactor fuel, even for ostensibly peaceful
purposes, poses an unacceptable long-term risk to the national
security of the United States. You pointed to this same risk in
your February 11, 2004, speech at National Defense University.
The enrichment technology intended to produce fuel for nuclear
power reactors can also be used to create material for a
nuclear weapon, and the plutonium that is produced from
reprocessing spent fuel is also suitable for nuclear weapons
and susceptible to diversion to terrorists. The spread of
enrichment and reprocessing capabilities will dangerously
increase the chances that more nations will develop their own
nuclear weapons and that terrorists might obtain fissile or
radiological materials for a crude or even highly destructive
nuclear bomb. It is therefore incumbent upon the United States
to lead an international effort to halt the expansion of
enrichment and reprocessing to new countries.
The PAG found that the use of nuclear power is likely to
increase, both in developed countries and, in particular, in
developing countries. Importantly, however, the experts of the
PAG concluded that expansion of nuclear power does not
require--either technically or economically--the construction
of enrichment or reprocessing facilities in countries that do
not currently have them. ``Under most scenarios,'' the PAG
found, ``excess capacity already exists and will continue to
exist for many years.''
Therefore, I believe the United States should adopt as a
basic nonproliferation principle that countries which forego
their own enrichment and reprocessing programs have guaranteed
access to nuclear reactor fuel at reasonable prices. I
encourage your administration to begin to implement this policy
immediately by seeking international concurrence on new
arrangements to control enrichment and reprocessing technology,
a Proliferation Safeguards Initiative, or PSI-II. Such efforts
would also aim to continue to strengthen, in terms of
technology, funding, and policy, the existing international
nuclear safeguards regime. Taking as a model your successful
Proliferation Security Initiative, PSI-II should be a U.S.-led
coalition of willing states, assembled without the cumbersome
and time-consuming negotiation of new international agreements.
Based on my own experience and the discussions of the PAG,
I would recommend several criteria to guide the creation and
operation of this effort.
1. It should seek to buttress, not undermine, the NPT
and the Nuclear Suppliers Group.
2. It should be accompanied by a significant increase
in funding for the Safeguards Division of the
International Atomic Energy Agency to improve its
ability to meet its inspection and verification
responsibilities. The IAEA is underfunded to perform
its current tasks and would be required to do much more
should nuclear energy become more widespread globally.
The current staffing and budget of the IAEA cannot
sustain further stress, nor can the world afford to
allow another state to develop nuclear weapons in
secret.
3. Non-nuclear weapon states which agree to accept
fuel services and leasing of fuel, in return for giving
up reprocessing and enrichment facilities, must consent
to wide access and close monitoring of their nuclear
energy activities, exceeding the requirements of the
IAEA Additional Protocol. This would include
activities, locations, and information not directly
related to nuclear material itself, but that could be
associated with nuclear weapons development.
4. Countries wishing to initiate or expand a nuclear
power program should be required to demonstrate an
economic need for such nuclear power capacity before
they are granted access to nuclear fuel services. The
United States should develop criteria to evaluate such
need.
5. The United States should explore means for
disposing and storing of spent nuclear fuel from those
countries which agree to accept a closed fuel cycle and
forego a reprocessing capability. No such repository
for spent fuel now exists for use in an international
closed fuel cycle plan. Past discussions in this area
have suggested that Russia would be a candidate for
such a repository.
6. The administration should take great care as it
implements the Next Steps Strategic Partnership with
India's nuclear power sector to which you have just
agreed. We must provide clear and credible warnings to
current non-nuclear weapon states party to the NPT that
they will not be able to gain similar arrangements
should they leave the treaty.
Mr. President, I look forward to working closely with you
to prevent the proliferation of these dangerous technologies.
The future peace and security of our Nation and the world is at
stake. The inherent dual-use nature of the nuclear fuel cycle,
combined with its wide availability in civilian nuclear power,
uniquely challenges the world to find ways to stop diversion of
such technologies to military uses while ensuring that no state
uses the cover of nuclear power to develop nuclear weapons. A
decade ago, I took action with those in Congress who were ready
to meet the threat of proliferation posed by the collapse of
the Soviet Union. Today, we must work together to ensure that
the global nonproliferation regime does not collapse through
inaction.
Sincerely,
Richard G. Lugar,
Chairman.
------
July 1, 2005.
Memorandum to: Senator Richard G. Lugar, Chairman, Senate Committee on
Foreign Relations
From: Policy Advisory Group on Nonproliferation
Subject: Interim Report On Nuclear Threat Reduction and the Fuel Cycle
Mr. Chairman: With the Review Conference on the Nuclear
Nonproliferation Treaty (NPT) behind us, the Senate Foreign
Relations Committee, under your leadership, is looking to the
long-term future of the NPT System. The Policy Advisory Group
(PAG) has started its work in making recommendations for
American leadership to update and improve the workings of the
NPT and related nonproliferation efforts over the long term.
While the PAG has only begun its deliberations, it has
already arrived at some observations with respect to one key
issue: How the nuclear nonproliferation system of the future
should treat the proliferation of uranium enrichment and
plutonium reprocessing.
President Bush addressed the danger posed by the spread of
fuel-cycle capabilities to more countries in his February 11,
2004, speech at National Defense University. The PAG supports
the priority the President attached to this issue and urges the
U.S. Government to take a strong position of international
leadership to stop the proliferation of uranium enrichment and
plutonium reprocessing facilities and technology. After 9/11,
the specter of nuclear terrorism and its close connection to
nuclear proliferation must occupy center stage in our national
security policy.
An initiative to oppose the proliferation of enrichment and
reprocessing capabilities to additional countries can directly
reinforce the effort to stop the Iranian nuclear program, since
the international understanding it would seek would be fully
consistent with the European-led multilateral effort backed by
the United States to prevent Iran from completing enrichment
facilities. And while influencing North Korea is probably well
beyond the reach of any such initiative, both North Korea and
Iran would not have realized their nuclear ambitions nor
continue their respective progress in the fuel cycle
unchallenged if elements the system recommended here had been
in place. Indeed, the 1991 North-South Denuclearization
Agreement prohibited reprocessing and enrichment in both North
and South Korea. Had it been implemented successfully, we might
have an entirely different situation in the two Koreas today.
Hindsight on the Iranian and North Korean crises therefore
suggests the foresight necessary to prevent future situations
like these from developing. The PAG believes that without such
a system in place, the future world could contain many states
engaged in enrichment and reprocessing, some of which would
inevitably pose the threat of nuclear attack and the spread to
terrorists of such knowledge, technology, and materials as
possessed today by Iran and North Korea.
The PAG has made these key observations in its
deliberations:
1. The Dangers and Promise of Nuclear Power
Proliferation of uranium enrichment and plutonium
reprocessing to additional nations is inherently
dangerous to U.S. national security because it can lead
to both state and nonstate nuclear threats:
State proliferation: Possessing these facilities brings a
state close to the point of a nuclear weapons
capability.
Nuclear terrorism: Security failures at any such
facility, or during storage and transportation,
could provide a source of fissile material (highly
enriched uranium, or HEU, and plutonium) for non-
state terrorists.
Preventing this threat is only one component--but a
vital one--of a multi-layered defense against nuclear
attack. This multilayered defense ranges across the
spectrum of tools at our disposal, from diplomatic to
military action, and must address weaponization
research and development as well as fissile materials
production.
Much of the expansion of nuclear power is likely to
take place in the developing world. This expansion
could be desirable on economic and environmental
grounds, but it can and must be accomplished in a
manner consistent with U.S. national security.
This expansion in the use of nuclear power will
require uranium enrichment capacity that could also
produce tens of thousands of nuclear bombs per year,
and it could produce as a byproduct enough plutonium
for tens of thousands of additional nuclear bombs per
year.
Expansion of nuclear power does not require
proliferation of enrichment or reprocessing--either
technically or economically--to countries that do not
have it. Under most scenarios, excess capacity already
exists and will continue to exist for many in states
with functioning nuclear fuel production facilities.
On the other hand, were acts of nuclear terrorism to
occur because of ``loose'' fissile material, the
expansion of nuclear electricity generation would
likely be brought to an abrupt halt.
National security, economics, and environmental
protection are therefore all in alignment in
recommending that the United States oppose the
proliferation of enrichment and reprocessing facilities
into new countries and especially into troubled
regions. The spread of such technology truly deserves
to be spotlighted as a centerpiece of
``proliferation.''
2. The Fuel Cycle and the NPT
A policy of active opposition to the spread, under
today's circumstances, of enrichment and reprocessing
know-how to countries that do not currently possess
such technology, in particular to troubled regions, is
consistent with the principal intent of the NPT.
Indeed, action in this area is essential to
strengthening the nonproliferation regime. Moreover,
opposition to the proliferation of enrichment and
reprocessing is made more urgent by technological,
security, economic, and environmental forces, all
equally compelling:
Technology: On the weapons front, when the NPT was first
signed it was beyond the reach of all but developed
nation states to master the art of fission bomb
design. In the interim, the general progress of
technology and the proliferation of specific know-
how in bomb-making by the A.Q. Khan network, have
resulted in a situation in which the mere
possession of highly enriched uranium or plutonium
removes a major obstacle to bomb-making capability
for the possessor whether they are a state or non-
state actor. Today, on the nuclear power front, the
once-through fuel cycle producing and using low-
enriched uranium for power generation is the fuel-
cycle and plant design of choice. Advanced
``proliferation-resistant'' reactor designs may be
technically and economically feasible in the
future; however, interest is growing in some
circles for greater use of closed fuel cycles.
These factors must be taken into account now, while
there is more opportunity to influence the future
to ensure that U.S. national security concerns are
met.
Security: Two major events since the signing of the NPT
have changed the nature of nuclear security in
fundamental ways. First, the collapse of the Soviet
Union showed that seemingly stable governments in
possession of nuclear capabilities can be replaced
by fluid, even chaotic, situations in which nuclear
capabilities can fall into dangerous hands. Second,
the terrorist attacks of 9/11 should be a clear
wakeup call that nonstate nuclear use is likely if
fissile materials are available to certain
terrorist groups that are accessing the know-how.
Economics: When the NPT was signed the future of nuclear
power seemed open-ended: Electricity generated by
nuclear power would be ``too cheap to meter'';
every country's economic future would depend on
nuclear power; and importantly, the economics of
expanding nuclear power would require many
locations where uranium would be enriched and
plutonium would be reprocessed. Today experts and
industry have a more refined view of the economics
of nuclear energy. There is enough enrichment
capacity in existing facilities and their planned
expansion to fuel all the world's reactors for many
years, and at reasonable prices. Reprocessing is
not currently economically competitive with once-
through fuel cycles, and there is plenty of raw
uranium to fuel the once-through cycle long into
this century under most scenarios. Today we can
assert that stopping the proliferation of
enrichment and reprocessing need not slow the
spread of nuclear power nor increase its cost.
Environment: Carbon-free nuclear electricity generation
could be an important ingredient in slowing global
warming, displacing natural gas, some oil, and
especially coal.
While the United States is therefore entirely
justified in a policy of opposition to the
proliferation of enrichment and reprocessing, we are
not well positioned to promote such a policy
internationally and will need the help of other
nations:
Most countries with enrichment and reprocessing are
nuclear weapon states, which introduces political
complications arising from claims made by non-
nuclear weapon states regarding Article VI of the
NPT.
Our position as a nation with an active uranium
enrichment industry likewise makes it difficult for
us to appear evenhanded in opposing the
proliferation of enrichment facilities.
Any approach that denies to some what is permitted to
others, no matter how valuable, must address the
political question of discrimination or fairness.
Success in opposing the proliferation of enrichment
and reprocessing will therefore require adroit and
sustained U.S. diplomacy that systematically enlists a
growing body of international support.
3. Assessing Proposals for U.S. Policy
The PAG has reviewed a number of specific proposals
for stemming the proliferation of enrichment and
reprocessing capabilities, including the President's
NDU proposals, IAEA Director General ElBaradei's, and
those of other governments (e.g., France) and
recognized experts. All have merits, yet all have
drawbacks and their own opponents.
Many of these proposals overlap in one common
feature--that states foregoing their own enrichment or
reprocessing facilities will be guaranteed various
cradle-to-grave fuel services for their nuclear
reactors at reasonable prices and within a strictly
controlled and verified transfer system. U.S. policy
should therefore focus on this common ground to stand
the best chance of succeeding. A number of mechanisms
have been suggested to provide guarantees to states
that renounce their own capacity to enrich nuclear
fuel, and to provide inducements to store or reprocess
spent fuel outside of their country. The PAG assesses
that a combination of industry contract provisions,
national policies, and strengthened safeguards can
together provide reasonable assurance of fuel supply to
such states.
We believe that identifying the ``best'' compromise
to bring the necessary players together will require
further work and, above all, a vigorous testing of the
diplomatic waters.
4. Interim PAG Recommendations
The PAG does, however, make the following
recommendations for USG action at this time:
The administration should attach a high priority to
achieving broad international agreement to a U.S.
policy opposing proliferation of enrichment and
reprocessing. The priority attached to this mission
should be comparable to that devoted by the USG to
the Proliferation Security Initiative (PSI), a
``Proliferation Safeguards Initiative'' or PSI-II.
The diplomatic strategy pursued should take PSI as its
model--an effort that has been able to garner the
support of willing states. An initial ``core
group'' of suppliers and consumers of fuel services
should be carefully selected as a starting point.
The administration should be prepared to amend the
President's February 11, 2004, proposal if further
analysis or diplomatic experience suggests that
doing so will lead to a greater chance of success.
The administration should work with the Foreign Relations
Committee if it finds that amendments to U.S. law
are necessary to implement fuel-cycle proposals.
The USG should be willing to accept a temporary
arrangement (perhaps 10 to 15 years) that might
lead over time to a more permanent arrangement.
The United States can and should use this fuel-cycle
nonproliferation initiative synergistically to
promote other national security goals:
{time} This initiative could reinforce efforts to
encourage responsible practices by states that are
not parties to the NPT (e.g., India) and might
provide some additional realms for cooperation to
prevent further proliferation.
{time} The initiative could reinforce the continuing
effort to encourage the Russian Government to take
more active leadership on the security of nuclear
materials and to make the Russian nuclear power
infrastructure more secure and more in line with
today's economic realities. Russia could, for
example, downblend more HEU as a strategic reserve
for assured supply, and build a profitable
international spent fuel repository.
{time} The initiative could further remove any veil of
economic necessity from the Iranian and (to the
extent this claim is made by North Korea) North
Korean nuclear programs and further isolate these
states diplomatically.
{time} The initiative would reinforce and augment key
counterproliferation efforts such as the newly
globalized Cooperative Threat Reduction program
(``Nunn-Lugar''), National Missile Defense, PSI,
UNSCR 1540, and the new priority for
counterproliferation within DOD's Quadrennial
Defense Review by adding fuel cycle restraints to
the Nation's growing layered defense against
nuclear attack and the proliferation of nuclear
weapons.
{time} The initiative would express the willingness of the
United States to spearhead multinational
initiatives where they serve the interests of U.S.
and international security.
{time} Above all, the initiative would reflect President
Bush's determination that his highest priority is
to ``not permit the world's most dangerous regimes
and terrorists to threaten our Nation and our
friends and allies with the world's most
destructive weapons.''
The President should appoint a senior diplomat with
authority and accountability for success in this
initiative.
The administration should report progress in this
endeavor to the Congress, and the Senate Foreign
Relations Committee should engage the
administration to further prospects for success.
The PAG stands ready to assist the committee in
monitoring and assessing progress.
Mr. Chairman, following the collapse of the Soviet Union
you and Senator Nunn and your Senate colleagues saw more
clearly than most that the terms of nuclear security had
changed fundamentally and that a basic change in the American
approach to the nuclear relationship between Moscow and
Washington was required. Today in the wake of 9/11, your
appointment of this PAG signifies how urgent it is to make
equally profound changes in the way nuclear proliferation is
countered due to the threat of nuclear terrorism. We appreciate
your leadership and are honored to serve. We will continue to
deliberate and to make recommendations to the committee on this
and other aspects of updating the NPT and the system of
counterproliferation efforts surrounding it.
Sincerely,
Ashton B. Carter, Cochair; Ronald Lehman II,
Cochair; Robert Einhorn; Alan A. Foley;
Arnold Kanter; David Kay; Susan Koch;
Lawrence Scheinman; William Schneider, Jr.