I 114th CONGRESS 2d Session H. R. 5370 IN THE HOUSE OF REPRESENTATIVES May 26, 2016 Mr. Sherman (for himself and Mr. Fortenberry ) introduced the following bill; which was referred to the Committee on Foreign Affairs , and in addition to the Committee on Energy and Commerce , for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned A BILL To provide for restrictions related to nuclear cooperation with the People’s Republic of China, and for other purposes.

1. Short title This Act may be cited as the U.S.-China Nuclear Cooperation and Nonproliferation Act of 2016 . 2. Findings Congress makes the following findings: (1) A report issued in 2001 by the Department of Defense found that China supplied Pakistan with nuclear material and expertise and has provided critical assistance in the production of Pakistan’s nuclear facilities . China is also alleged to have provided Pakistan with 50 kilograms of highly enriched uranium, and designs for a nuclear weapon. (2) An unclassified report submitted to Congress in 2011 by the Director of National Intelligence found that Chinese entities continue to supply a variety of missile-related items to multiple customers, including Iran and Pakistan . Previous reports by the Director of National Intelligence have confirmed that Chinese entities have provided support for the missile program of North Korea. (3) China has failed to bring to justice Li Fangwei, also known as Karl Lee, who has been indicted in the United States on charges of providing sensitive missile technology to Iran. According to a report from the Congressional Research Service, concerns persist about Chinese willingness as well as ability to detect and prevent illicit transfers of dual-use and sensitive nuclear and missile items. (4) At a May 12, 2015, hearing, members of the Committee on Foreign Relations of the Senate raised concerns that China may have diverted to its nuclear submarine program reactor cooling pumps produced by the Curtiss-Wright Corporation, thereby bolstering the stealth of its submarines, and violating the Previous Nuclear Cooperation Agreement (as that term is defined in section 3(4)). (5) Similarly, at a July 16, 2015, hearing before two subcommittees of the Committee on Foreign Affairs of the House of Representatives, witnesses testified that China had likely diverted technology from its civilian nuclear program to its military programs, and had failed to undertake sufficient efforts to prevent the transfer of sensitive dual use and other controlled items. (6) China has announced plans to provide Pakistan with nuclear reactors, in addition to those China had already agreed to construct prior to 2004, in violation of its 2004 commitments to the Nuclear Suppliers Group (NSG). (7) Five members of the Chinese People’s Liberation Army have been indicted in the United States on charges of hacking into the computer networks of Westinghouse and stealing United States intellectual property, including the design of nuclear power plants. (8) China has announced plans to export nuclear power plants based on technology acquired legally from Westinghouse, one of China’s primary commercial partners under its current and previous nuclear cooperation agreements with the United States. While China has committed not to export United States-origin technology without a marketing license from Westinghouse, there is no definition of United States-origin technology in statute or regulation, thereby complicating efforts by the United States to control the transfer of United States-origin nuclear technology. (9) China General Nuclear Power Company, a state-owned nuclear power provider, has been indicted in the United States on charges of unlawfully producing special nuclear material outside the United States without the authorization of the Department of Energy. (10) China’s plans to reprocess United States-origin spent nuclear fuel raises the risk that China could divert plutonium to military purposes, thereby enabling it to produce additional nuclear weapons that threaten the United States and its allies. (11) Secretary of Energy Ernest Moniz told the Wall Street Journal, in Beijing on March 17, 2016, that the United States does not support large-scale reprocessing , and China’s plan to proceed with a commercial-scale reprocessing facility certainly isn’t a positive in terms of nonproliferation . (12) China’s pursuit of commercial plutonium reprocessing will increase the likelihood that Japan expands its own commercial reprocessing program, and that South Korea will increase efforts to initiate such a program of its own. Growing stockpiles of plutonium in East Asia increase the chances of military diversion and theft, thereby raising the risk of nuclear proliferation, nuclear terrorism, and interstate nuclear conflict. It is in the interest of the United States to prevent the stockpiling of plutonium in East Asia. 3. Definitions In this Act: (1) Appropriate congressional committees The term appropriate congressional committees means the Committee on Foreign Relations of the Senate and the Committee on Foreign Affairs of the House of Representatives. (2) China The term China means the People’s Republic of China. (3) Chinese person The term Chinese person means— (A) an individual who is a citizen or national of China; and (B) an entity organized under the laws of China or otherwise subject to the jurisdiction of the Government of China. (4) Previous nuclear cooperation agreement The term Previous Nuclear Cooperation Agreement means the Agreement for Cooperation Between the Government of the United States of America and the Government of the People’s Republic of China Concerning Peaceful Uses of Nuclear Energy, concluded July 23, 1985. (5) United states The term United States means the several States, the District of Columbia, and any territory or possession of the United States. (6) United states person The term United States person means any United States citizen, any alien lawfully admitted to the United States for permanent residence, any entity organized under the laws of the United States or any jurisdiction within the United States, and any person in the United States. (7) United States-China nuclear cooperation agreement The term United States-China Nuclear Cooperation Agreement means the Agreement for Cooperation Between the United States and the Government of the People's Republic of China that was submitted to the appropriate congressional committees under section 123 of the Atomic Energy Act of 1954 ( 42 U.S.C. 2153 ) on April 21, 2015, and which entered into force on October 29, 2015. 4. Notice regarding transfers of nuclear technology to China The Secretary of Energy shall, not later than 5 days after receiving an application for the proposed transfer of nuclear technology to China under section 57b. of the Atomic Energy Act of 1954 ( 42 U.S.C. 2077(b) ), including an application for specific authorization to be provided for in a subsequent arrangement under section 131 of that Act ( 42 U.S.C. 2160 ), notify the appropriate congressional committees of the receipt of such application. The notice shall describe with particularity the items contained in the proposed transfer of nuclear technology. 5. Approval for transfer of United States-origin technology wherever located (a) Approval Section 57b. of the Atomic Energy Act of 1954 ( 42 U.S.C. 2077(b) ) is amended— (1) by striking b. It shall be unlawful and inserting b.(1) It shall be unlawful ; (2) by striking (1) as specifically and inserting (A) as specifically ; (3) by striking (2) upon authorization and inserting (B) upon authorization ; and (4) by adding at the end the following new paragraph: (2) The requirements for authorization under paragraph (1) shall apply to any United States-origin technology that may be used in the development or production of special nuclear material, and items derived from such United States-origin technology, regardless of the nationality of the ownership of such technology or the location of the technology outside the United States. . (b) Definition of United States-Origin technology Not later than 90 days after the date of the enactment of this Act, the Secretary of Energy shall issue, as part of the regulations issued pursuant to section 57b. of the Atomic Energy Act of 1954 ( 42 U.S.C. 2077(b) ), a definition of items covered by the term United States-origin technology in paragraph (2) of such section, including items derived from such technology. The term shall include items developed by United States persons or persons subject to the jurisdiction of the United States, and items developed with the participation of the United States Government, including large, passive light water reactors. 6. Additional requirement for approval of retransfers of United States-origin technology In addition to the requirements applicable to transfers of items under section 57b. of the Atomic Energy Act of 1954 ( 42 U.S.C. 2077(b) ), any request for authorization to transfer United States-origin technology (as defined pursuant to section 5(b) of this Act) from China, or with the significant participation of Chinese persons not located in the United States, to a country other than the United States or China, shall be denied unless the applicant can demonstrate— (1) significant ongoing participation by United States persons in the transfer; (2) in the case of nuclear reactors and reactor components, significant United States content involved in, or attendant to, the proposed transfer; and (3) in the case of the transfer of technology developed with the participation of the United States Government, timely and adequate reimbursement of the United States Government for any grants or loans provided by the United States Government to entities involved in the development of the technology. 7. Statement of policy on China-Pakistan nuclear cooperation It is the policy of the United States— (1) to oppose the provision by China of assistance in the construction of any nuclear reactor in Pakistan other than the first 2 reactors constructed at Chasma, which were consistent with the conditions concerning China’s participation in the Nuclear Suppliers Group; and (2) to assist Pakistan with the acquisition and development of sufficient electrical power to meet its domestic requirements for electrical power through means other than nuclear power. 8. Additional notification requirements (a) Notification of presidential determination (1) Notification Not later than 30 days after the President makes a determination described in paragraph (2), the President shall notify the appropriate congressional committees of that determination. (2) Determination A determination described in this paragraph is a determination that the Government of China, persons acting on behalf of the Government of China, or Chinese persons have, since the entry into force of the United States China Nuclear Cooperation Agreement— (A) retransferred any United States nuclear items to a third country without the permission of the United States Government; (B) diverted or attempted to divert United States nuclear items to military use; (C) stolen or attempted to steal United States nuclear items; (D) failed to undertake measures necessary to prevent transfers of goods, services, and technology described in section 2(a) of the Iran, North Korea, and Syria Nonproliferation Act ( Public Law 106–178 ; 50 U.S.C. 1701 note), or to make substantial progress in efforts to prevent such transfers; (E) failed to undertake measures to enforce the sanctions provided for in United Nations Security Council Resolution 2270, adopted on March 2, 2016, and previous resolutions concerning North Korea; (F) refused to adhere to the Nuclear Supplier Group guidelines regarding the export of any new civilian nuclear reactors, regardless of any prior or future contract obligations; or (G) otherwise violated the terms and conditions of the United States-China Nuclear Cooperation Agreement, or any authorization issued by the United States Government concerning transfers of United States nuclear items. (b) Plan of corrective action Not later than 60 days after the President makes a determination described in subsection (a), the President shall provide to the appropriate congressional committees a plan of corrective action to— (1) address the activity described in subsection (a) that was the subject of the determination; (2) mitigate any damage to the national security of the United States because of such activity; and (3) prevent further such activity. (c) Measures authorized At any time the President may, if the President determines it is necessary to address activity described in subsection (a) that was the subject of a determination under that subsection, impose any measures authorized by law, including— (1) measures authorized by the International Emergency Powers Act ( 50 U.S.C. 1701 et seq. ); and (2) suspension of cooperation with China under the United States-China Nuclear Cooperation Agreement. (d) Definition In this section, the term United States nuclear items means any items that are transferred to China under— (1) the United States-China Nuclear Cooperation Agreement; (2) section 57b. of the Atomic Energy Act of 1954 ( 42 U.S.C. 2077(b) ); or (3) part 110 of title 10, Code of Federal Regulations. 9. Implementation of agreed minute The President may not bring into effect the procedures described in the section of the Agreed Minute to the United States-China Nuclear Cooperation Agreement that appear under the heading Technology and Information Exchanges unless the President, at least 60 days of continuous session of Congress before those procedures become effective— (1) provides to the appropriate congressional committees the details concerning the implementation of those provisions; and (2) certifies to the appropriate congressional committees that those procedures protect the national security of the United States to an extent that is equal to or greater than those procedures provided for under parts 110 and 810 of title 10, Code of Federal Regulations. 10. Reprocessing under the United States-China Nuclear Cooperation Agreement (a) Sense of Congress It is the sense of Congress that the United States should encourage countries in East Asia to forgo the commencement of spent nuclear fuel reprocessing activities, as part of a mutual effort to prevent the spread of separated plutonium in the region. (b) Implementation of reprocessing consent rights under agreement The President shall not agree to the reprocessing, recycling, or other alteration in form or content of nuclear material, as described in Article 6.2 of the United States-China Nuclear Cooperation Agreement, at any facility to which the International Atomic Energy Agency (IAEA) safeguards are not applied, unless, for each proposed facility at which such activity will take place, the President certifies to the appropriate congressional committees that— (1) the President has made a formal request to the IAEA to apply safeguards to the facility; (2) the IAEA has refused the request described in paragraph (1); and (3) the arrangements and procedures under which such reprocessing, recycling, or other alteration in form or content will occur— (A) include a requirement that nuclear material transferred pursuant to the United States-China Nuclear Cooperation Agreement and nuclear material used in or produced through the use of such material— (i) not be commingled with any other nuclear material; (ii) be clearly marked as United States-obligated nuclear material; (iii) be stored in separate facilities from any other nuclear material; and (iv) be available for inspection immediately and without prior notice upon request by the IAEA or either party to the Agreement; and (B) are sufficient to detect in a timely manner— (i) the diversion for military purposes of nuclear material transferred pursuant to the United States-China Nuclear Cooperation Agreement and nuclear material used in or produced through the use of such material; and (ii) the transfer to facilities or locations not agreed to by the United States of nuclear material transferred pursuant to the United States-China Nuclear Cooperation Agreement and nuclear material used in or produced through the use of such material. (c) Notification required If the President issues a certification described in subsection (b), the President shall include with that certification a detailed description of— (1) the facility at which the reprocessing, recycling, or other alteration in form and content will take place; (2) the safeguards applied to the facility; (3) the measures that will be undertaken to secure and prevent the theft or diversion to military purposes of any separated plutonium that will result from the activities at the facility; (4) the amounts of materials to be processed at the facility; (5) the amount of processed fissile material that may be stockpiled as a result of the activities at the facility, and the estimated period of time that it may be stockpiled prior to its civilian use in a nuclear reactor; and (6) the risks to the national security of the United States that are posed by the potential diversion of nuclear material at the facility. 11. Reports (a) Initial report (1) In general No later than 90 days after the date of the enactment of this Act, the President shall submit to the appropriate congressional committees a report on China’s history of compliance with the peaceful use and nonproliferation provisions of the Previous Nuclear Cooperation Agreement. (2) Elements The report required under paragraph (1) shall include— (A) a detailed examination of every suspected or alleged violation of the Previous Agreement; (B) the response by China to any inquiries by the United States regarding any such suspected or alleged violation of the Previous Agreement; (C) an assessment of the likelihood of future violations under the terms of the United States-China Nuclear Cooperation Agreement; and (D) an assessment of the potential advantages that a large civil nuclear infrastructure or program may provide to China as it seeks to meet its future nuclear weapons requirements. (b) Annual intelligence report (1) In general Not later than April 15, 2017, and annually thereafter, the President shall submit to the appropriate congressional committees a report on the status of the United States-China Nuclear Cooperation Agreement and compliance by China with the Agreement. (2) Elements The report required under paragraph (1) shall include, at a minimum— (A) a detailed examination of every suspected or alleged violation of the Agreement by China that may have occurred during the preceding calendar year; (B) the response by China to any inquiries by the United States regarding any such suspected or alleged violation; (C) an accounting of the specific roles played in the civil and military nuclear programs of China by all Chinese persons visiting United States nuclear labs and facilities; (D) an assessment of whether China or any entity acting on its behalf has targeted any United States nuclear-related private-sector or governmental entities, enterprises, or assets for any form of cyber trespass, theft, or attack, or has taken specific actions pursuant to such targeting by any entity; (E) an assessment of the risks of diversion of special nuclear material transferred pursuant to the Agreement, the likely consequences of such diversion, and steps taken to avert any potential diversion; (F) an assessment of the potential military utility of diverted civil nuclear technology; (G) an assessment of any civil or criminal law enforcement actions taken by China against any entities or individuals within its government or its jurisdiction that have— (i) violated nonproliferation or peaceful use requirements of the Agreement or any other bilateral or multilateral nuclear agreement to which China is a party; (ii) committed any cyber trespass, theft, or attack on any United States nuclear-related private sector or governmental entities, enterprises, or assets; or (iii) conducted any cyber trespass or cyber exploitation against any private sector nuclear entities, enterprises, or assets for commercial gain; and (H) a description of the extent to which the Government of China has honored requests by the United States for enforcement of legal action against any entities or individuals described in subparagraph (G), including requests by the United States for extradition. (c) Form The reports required under subsections (a) and (b) may be submitted in classified form, but shall also contain an unclassified executive summary and may contain an unclassified annex. (d) Annual exports report Not later than April 15, 2017, and annually thereafter, the President shall submit to the appropriate congressional committees a report that— (1) identifies all export licenses issued in the preceding calendar year pursuant to the United States-China Nuclear Cooperation Agreement, including, at a minimum for each license, the license applicant, the items licensed and their value, the proposed end user of the items, and the term of the license; and (2) assesses China’s progress in strengthening, implementing, and enforcing laws to ensure that restricted dual-use technology is not transferred to countries of proliferation concern.