59–010 

Calendar No. 349 

110TH CONGRESS REPORT " ! SENATE 1st Session 110–151 

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 

R E P O R T 

[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. 


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1See http://www.world-nuclear.org/info/inf01.htm. 

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.’’

There has also been an expansion of the capacity to make nuclear fuel within the last several years. In 2006–2007, Brazil comVerDate Aug 31 2005 04:26 Sep 12, 2007 Jkt 059010 PO 00000 Frm 00002 Fmt 6659 Sfmt 6602 E:\HR\OC\SR151.XXX SR151

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2See Appendix to this Report. 

pleted 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. 

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 


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3See Appendix. 

4See http://www.gnep.energy.gov/gnepNuclearSafeguards.html. 

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. 

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

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 verification methods. 

• International facilities for conducting testing and demonstration. 

• Continued support for global best practices for security and accounting of nuclear materials.4

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 


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6See http://www-pub.iaea.org / MTCD / Meetings / Announcements.asp?ConfID = 147. 

7See section 1305 of P.L. 107–228, The Foreign Relations Authorization Act, Fiscal Year 2003. 

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

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. 

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 enVerDate Aug 31 2005 04:26 Sep 12, 2007 Jkt 059010 PO 00000 Frm 00005 Fmt 6659 Sfmt 6602 E:\HR\OC\SR151.XXX SR151

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hance 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 optiVerDate Aug 31 2005 04:26 Sep 12, 2007 Jkt 059010 PO 00000 Frm 00006 Fmt 6659 Sfmt 6602 E:\HR\OC\SR151.XXX SR151

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8See http: / / www.iaea.org / Publications / Documents / Infcircs / 2005 / infcirc640.pdf, hereinafter, ‘‘Pellaud Report.’’ 9 22 U.S.C. 3223(b). 

10 Ibid. 11Pellaud Report. 

mum arrangement that will satisfy both objectives at the 

same time. 8

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. 

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

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 later difficulties. 

Thus, section 101(16) concludes: 


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12See http://www.un.org/secureworld/. 

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

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 NonProliferation 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 NonProliferation 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). 


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13See http://www.whitehouse.gov/news/releases/2004/02/20040211-4.html. 

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

Thus, section 102(b) makes it the policy of the United 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 


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14See http://www.state.gov/documents/organization/60647.pdf. 15See http: / / www.aps.org / policy / reports / popa-reports / proliferation-resistance / upload / proliferation.pdf. 

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. 

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 nongovernmental 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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16 Ibid. 

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

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 reasonVerDate Aug 31 2005 04:26 Sep 12, 2007 Jkt 059010 PO 00000 Frm 00011 Fmt 6659 Sfmt 6602 E:\HR\OC\SR151.XXX SR151

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17See http://www.keystone.org/spp/documents/FinalReport—NJFF6—12—2007(1).pdf. 18See http://www.nnsa.doe.gov/docs/newsreleases/2007/PR—2007-06-29—NA-07-26.htm. 19 Ibid. 20See http://www.energy.gov/news/1948.htm. 

able cost suggests that reprocessing of spent fuel will not 

be cost-effective in the foreseeable future.17

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

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 


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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; 


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(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 


cnoel on PRODPC68 with HEARING
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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 


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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. 


cnoel on PRODPC68 with HEARING
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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 nonproliferation 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 


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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 


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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 fuelcycle 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 


cnoel on PRODPC68 with HEARING
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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: 

Æ State proliferation: Possessing these facilities brings a state 

close to the point of a nuclear weapons capability. 

Æ 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. 


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• 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: 

Æ 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. 

Æ 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. 


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Æ 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 oncethrough 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. 

Æ 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: 

Æ 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. 

Æ 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. 

Æ 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 


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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: 

Æ 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. 

Æ 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. 

Æ 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. 

Æ 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. 

Æ 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. 

Æ The United States can and should use this fuel-cycle nonproliferation initiative synergistically to promote other national security goals: 

b 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. 

b 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. 

b 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. 

b The initiative would reinforce and augment key counterproliferation efforts such as the newly globalized Cooperative 

Threat Reduction program (‘‘Nunn-Lugar’’), National Missile 


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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. 

b 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. 

b 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.’’

Æ The President should appoint a senior diplomat with authority and accountability for success in this initiative. 

Æ 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. 

Æ 


cnoel on PRODPC68 with HEARING