Nuclear Commerce: Additional Actions Needed to Improve DOE's Export Control Process
Published: 2014-10-14T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Encouraging U.S. exports of civilian nuclear products, services, and technology while ensuring they are not used for foreign nuclear weapons programs is a fundamental goal of U.S. policy. Exports of U.S. civilian nuclear technology, assistance, and services are regulated by DOE through 10 C.F.R. Part 810. Depending on the importing country and technology, exports can be generally authorized, with no application required, or specifically authorized, in which case the exporter must submit an application to DOE. The Departments of Commerce, Defense, and State, as well as the Nuclear Regulatory Commission, also review the applications, which must finally be approved by the Secretary of Energy.
GAO was asked to examine the Part 810 process. This report examines (1) Part 810 processing times over the last 6 years compared with DOE's targets; (2) the extent to which Part 810's scope is clear and DOE can reasonably assure consistent interpretation; and (3) the extent to which DOE enforces Part 810. GAO analyzed all 89 specific authorizations granted from 2008-2013 and interviewed key agency officials and U.S. nuclear industry representatives.
section_title: What GAO Found
paragraphs: The Department of Energy (DOE) has consistently missed its 30-day targets for the initial and interagency stages of the Part 810 review process (see table). From 2008 through 2013, DOE missed the target for the initial review stage for 80 of 89 applications processed, and interagency review times missed DOE's 30-day target for 85 applications. DOE has not established a target for the entire final review stage, which had the longest median review times, or for the overall process. DOE has acknowledged exporter concerns that processing times for specific authorizations can impose business risks, and DOE officials have proposed initiatives to reduce processing times.
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The scope of Part 810 is unclear, and DOE's inquiry process does not reasonably assure that the regulation is consistently interpreted. For example, it is unclear what marketing activities are covered by Part 810. DOE has not provided written guidance to clarify the regulation's scope, instead directing exporters to inquire with DOE officials. DOE officials said that they do not document all such inquiries or their responses. Without such documentation, DOE can neither reasonably assure that its responses are consistent, nor can it analyze the inquiries to identify parts of the regulation that may need clarification. DOE is taking some steps to clarify Part 810 by defining or refining some key terms. However, DOE's revisions do not address all terms that exporters have identified as unclear, and the time frame of DOE's revisions is unknown.
DOE has taken limited actions to enforce Part 810. DOE's primary method for monitoring compliance with Part 810 is reading reports from exporters, but according to DOE officials, they conduct in-depth analysis on less than 10 percent of reports and do not have a risk-based procedure for selecting reports to analyze. Also, because DOE does not provide guidance for companies to self-identify and self-report possible violations, DOE is missing an opportunity to leverage exporters' role in monitoring their own compliance. DOE has not yet determined whether it has the legal authority to impose civil penalties for violations of Part 810. According to DOE officials, DOE has never taken a formal action for a violation of Part 810, such as revoking an authorization or referring a potential violation to the Department of Justice (DOJ). Furthermore, DOJ officials reported that they are not aware of any prosecutions related to Part 810 violations from 2008-2013, the time frame GAO reviewed.
section_title: What GAO Recommends
paragraphs: GAO recommends that the Secretary of Energy take several actions to improve the Part 810 process, such as determine whether DOE has legal authority to impose civil penalties, and establish realistic and achievable targets for each stage of the Part 810 process, as well as the overall process. DOE agreed with the recommendations.

section_title: Letter
paragraphs: Renewed interest in nuclear power worldwide has led to increased  concerns about limiting the spread of nuclear weapons-relevant  technology. Seeking a balance between encouraging U.S. exports of  civilian nuclear products, services, and technology while ensuring they  are not used for foreign nuclear weapons programs has long been a  fundamental goal of U.S. policy. The U.S. nuclear industry faces  formidable competition abroad from foreign companies, some of which  receive strong financial and political support through direct government  ownership or subsidies. As we reported in 2010, the U.S. share of global  nuclear exports decreased during the period from 1994 through 2008.  U.S. nuclear companies have raised concerns that, compared with the  nuclear export control regimes of their major competitors—in Russia,  Japan, South Korea, and France—the U.S. regime is, in many respects,  more complex, restrictive, and time-consuming.
In 2010, we found that U.S. industry representatives believed that certain  U.S. government policies and practices—particularly the Department of  Energy’s (DOE) authorization process under 10 C.F.R. Part 810— impeded the U.S. nuclear industry’s ability to compete globally. Part 810  empowers the Secretary of Energy to authorize persons subject to the  jurisdiction of the United States to directly or indirectly engage in the  development or production of special nuclear material, which includes  plutonium, outside of the United States, upon a determination that the  activity will not be inimical to the national interest. Part 810 applies  broadly to commercial nuclear technology, assistance, and services  abroad because nuclear reactors fueled with uranium also produce  plutonium. Nuclear technology and assistance may include training and  services in support of commercial power reactors, as well as tangible  items such as manuals, blueprints, and software. Exports subject to Part  810 also include the transfer of technology to non-U.S. persons in civilian  U.S. nuclear facilities and universities.
Exports with little or no proliferation or national security significance may  be generally authorized under Part 810, with no application required. For  example, the export of commercial nuclear power reactor technology may  be generally authorized unless intended for restricted countries or  nationals of those countries, to which any export of civilian nuclear  technology must be specifically authorized through an application to  DOE. Transactions with a more direct relationship to the production of  special nuclear material must always be specifically authorized through  an application to DOE, regardless of the countries involved. DOE’s  procedures for approving specifically authorized exports include target  time frames, and the authorizations include conditions to hold the  exporter, importer, and importing government accountable for protecting  the technology and reducing the risk of proliferation. DOE data show that  the value of generally authorized transactions is currently in the range of  $2 billion to $3 billion per year, and the total value of specifically  authorized transactions since 2009 is at least $13.6 billion. According to  DOE officials and nuclear industry representatives, Part 810 applications  are typically the initial foray into a broader nuclear relationship with a  foreign partner company or foreign country.
In 2010, we recommended that DOE review the Part 810 process and  develop guidelines to help clarify the types of technology, information,  and technical assistance that require a Part 810 authorization, among  other things. Clarity and consistency are among the key principles of  efficient regulation, according to two executive orders. DOE reviewed the  Part 810 process and, in August 2013, DOE issued a Supplemental  Notice of Proposed Rulemaking, with the purpose of “striking a balance  to promote trade without increasing proliferation risk,” by clarifying the  scope of the regulation, among other things. In this proposed rule, DOE  further noted that the goals of Part 810 were efficient regulation—defined  by an efficient, timely, transparent, and predictable regulatory process;  effective nuclear trade support; and effective threat reduction by better  addressing proliferation challenges.
In light of the international security and commercial implications of the  export of U.S. civilian nuclear technology, you asked us to examine the  Part 810 process. This report examines (1) Part 810 processing times,  compared with DOE’s targets, for applications over the last 6 years; (2)  the extent to which the scope of Part 810 is clear and DOE can  reasonably assure consistent interpretation; and (3) the extent to which  DOE enforces Part 810.
To examine processing times over the last 6 years for Part 810  applications, we reviewed DOE’s 10 C.F.R. Part 810 Assistance to  Foreign Atomic Energy Activities Part 810 Program Elements to  determine DOE’s target time frames, and analyzed data on the  processing times for specific authorizations granted from 2008 through  2013. We selected eight applications to examine in more depth and  interviewed agency officials to better understand the factors affecting  processing times. We also interviewed representatives of nuclear  exporters (including representatives of nuclear companies and industry  organizations, as well as university export control officers) regarding how  Part 810 processing times affect exporters, and we reviewed public  comments submitted in response to DOE’s proposed changes. To  examine the extent to which the scope of Part 810 is clear and DOE can  reasonably assure that the regulation is consistently interpreted, we  consulted the Atomic Energy Act, the federal standards for internal  control, and executive orders related to government regulation, and we  interviewed DOE officials and representatives of nuclear exporters for  their views on the clarity of the regulation, and reviewed public comments  submitted in response to DOE’s proposed changes. To examine the  extent to which DOE enforces Part 810, we reviewed the authorization  letters signed by the Secretary that state a determination that the  proposed export is not inimical to the interest of the United States,  provided that the conditions imposed in the authorization are met. We  also interviewed DOE officials and Part 810 applicants about these  conditions and the mechanisms DOE uses to enforce the regulation.
We conducted this performance audit from August 2013 to October 2014  in accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives. Appendix I contains more  detailed information on the scope and methodology of our review.
subsections: section_title: Background
paragraphs: Different federal agencies have jurisdiction to control various types of  nuclear-related exports; DOE regulates the export of nuclear technology  through Part 810, which implements Section 57(b) of the Atomic Energy  Act; DOE and the Department of Justice (DOJ) have roles in enforcing  Part 810.
subsections: section_title: Nuclear Export Controls
paragraphs: Four federal agencies share jurisdiction over nuclear-related exports, with  different agencies regulating different types of such exports. DOE  regulates exports of commercial nuclear technology and assistance  through its National Nuclear Security Administration’s (NNSA) Office of  Nonproliferation and International Security. The Nuclear Regulatory  Commission (NRC) regulates exports of commercial nuclear materials  and equipment through its Office of International Programs (OIP). Nuclear  materials and equipment include certain enriched uranium and reactor  components, respectively. The Department of Commerce (Commerce)  regulates dual-use items—those that can be used for both commercial  and military applications—and certain military items. Nuclear dual-use  items include, among other things, turbines, generators, and machine  tools. The Department of State (State) regulates munitions items and  technologies—those designed, developed, configured, adapted, or  modified solely for military applications. Table 1 provides additional detail  on the U.S. nuclear export control regime.
section_title: The Atomic Energy Act and the Part 810 Process
paragraphs: DOE regulates exports of commercial nuclear technology and assistance  under section 57(b) of the Atomic Energy Act (AEA), which governs  development or production of special nuclear material outside the United  States. DOE implements section 57(b) through the regulations at 10  C.F.R. Part 810. Part 810 applies to commercial activities because  nuclear reactors fueled with uranium also produce plutonium. Section  57(b) of the AEA requires establishment of orderly and expeditious  procedures, to include, among other things, explicit direction on the  handling of requests to engage or participate in development or  production of special nuclear material outside of the United States and  express deadlines for soliciting and collecting the views of the other  agencies (with identified officials responsible for meeting such deadlines).  Activities generally authorized under Part 810 do not require prior  application to or notification of the Secretary of Energy, although  companies must report certain information about such activities to DOE  within 30 days. Applications for specific authorization, which must be  approved by the Secretary of Energy, undergo a three-stage review  process, as depicted in figure 1.
In the first or “initial” review stage, NNSA prepares an analysis of each  application. In the second or “interagency” review stage, NNSA provides  the application to State for concurrence and to the NRC, Commerce, and  the Department of Defense (DOD) for consultation. DOE’s target time  frames for completion of the initial and interagency review stages are 30  days each. DOE does not have a target time frame for completion of the  third or “final” review stage, in which NNSA and DOE staff conduct a final  review of the application and make a recommendation to the Secretary,  who then makes a determination as to whether the proposed export  would be inimical to the national interest. DOE does, however, have an  interim target within the final review stage for providing a recommendation  to the Secretary. Specifically, NNSA’s procedures for processing,  reviewing, and approving specific authorizations state that the Secretary  is to be provided with a recommendation no later than 30 days following  receipt of the interagency concurrence or views, or 60 days in the event  of interagency disagreements.
section_title: Enforcement
paragraphs: Both DOE and DOJ have a role in the enforcement of Part 810. DOE may  act to correct deficiencies in applications or processes, or obtain an  injunction or restraining order to prevent violation of Part 810, and may  refer suspected criminal violations to DOJ for investigation and possible  prosecution under the AEA. Any person convicted of violating, conspiring,  or attempting to violate Section 57 of the AEA; or of willfully falsifying,  concealing, or covering up a material fact or making false, fictitious or  fraudulent statements or representations may be fined or imprisoned or  both. Further, under Part 810, if a violation of the AEA is committed with  intent to injure the United States or to aid a foreign nation, the penalty  could be up to life imprisonment and a $20,000 fine. DOE has not yet  determined whether it has legal authority to apply civil penalties for  violation of Part 810. DOE monitors compliance with Part 810 in part  through reports that exporters are required to submit on authorized  activities.
The United States has pledged to adhere to a set of guidelines that  include export licensing regulations, enforcement procedures, and  penalties for violations. These guidelines, developed by nuclear supplier  countries (the Nuclear Suppliers Group ), aim to ensure that trade  in civilian nuclear technologies does not contribute to nuclear  proliferation. The NSG was established in 1975, and since 1978, it has  published guidelines which cover transfers of nuclear and nuclear-related  dual use equipment, material, software, and related technology. These  guidelines lay out principles for the members to apply, in accordance with  their national requirements. All NSG members, including the United  States, have pledged to put in place legal measures to ensure the  effective implementation of the NSG guidelines.
section_title: DOE Consistently Missed Target Time Frames for Processing Part 810 Applications, with the Interagency and Final Review Stages Taking Longest
paragraphs: From 2008 through 2013, DOE consistently missed its 30-day targets to  complete the initial and interagency stages of the Part 810 review  process. Specifically, during this period, DOE missed the target to  complete the initial stage of review for 80 of the 89 applications  processed. Similarly, interagency review times missed DOE’s target for  85 of the applications. The third stage, for which DOE has not established  a target time frame, had the longest median review times. (See fig. 2).  U.S. nuclear exporters said that the lengthy and unpredictable Part 810  time frames can impose business risks.
subsections: section_title: DOE Missed Its Target to Complete Initial Review for 90 Percent of Applications
paragraphs: We found that DOE missed its target to complete initial review for 90  percent (80 of 89) of the applications for specific authorization approved  from 2008 through 2013 (no application was denied during this period).  DOE took a median of 71 days to complete the initial review stage, with  DOE’s longest initial review taking 1,035 days. In this stage, NNSA  prepares an analysis of each application based on a set of technical and  other reviews by experts in DOE’s National Laboratories, its Office of  Nuclear Energy (NE) and Office of General Counsel, and NNSA’s Office  of General Counsel. NNSA considers eight factors, including whether the  United States has an agreement for nuclear cooperation with the nation  or group of nations involved; whether the country is a party to the Treaty  on the Non-Proliferation of Nuclear Weapons (NPT); and whether the  country involved has entered into an agreement with the International  Atomic Energy Agency (IAEA) for the application of safeguards on all its  peaceful nuclear activities.
For the two applications that we reviewed based on their initial review  times—one that met the 30-day initial review target, and one that did  not—the nature of the proposed export affected the initial review times.  Specifically, an application for a U.S. company to provide assistance to  the United Arab Emirates’ (UAE) nuclear regulatory body had a 29-day  initial review stage (meeting the 30-day target), because, according to  DOE officials, the details of the application matched those of another  recently submitted application. As a result, DOE’s internal review of this  application could leverage the work completed for the preceding  application. The application that missed the target, taking 186 days for  initial review, was for the export of mixed oxide (MOX) fuel fabrication  technology to the United Kingdom. According to DOE officials, MOX is a  sensitive technology, which requires greater scrutiny.
section_title: Interagency Review Times Missed DOE’s Target for More Than 95 Percent of Applications
paragraphs: Interagency review times missed DOE’s 30-day target for 85 of the 89  applications approved from 2008 through 2013. The interagency review  stage was the second longest in the process, with a median review time  of 105 days. Ten applications took more than a year for interagency  review. As noted earlier, in this stage, DOE seeks concurrence from  State, and consults Commerce, NRC, and DOD. These agencies have 30  days to provide comments or concurrence, including any conditions they  would place on the authorization.
State took the longest among the agencies to provide its comments or  concurrence. State’s median review time—86 days—was nearly three  times longer than DOE’s 30-day target. According to DOE and State  officials, State’s concurrence times depend on, among other things, the  responsiveness of the importing country in providing assurances of  peaceful use and no re-export without U.S. government consent. For  example, NNSA sent an application package for interagency review in  April 2009 asking for responses within 30 days for the export of a  computer program to a Chinese university for teaching and research  purposes. State concurred in January 2011, about 2 weeks after receiving  the foreign government assurance and almost 2 years after receiving the  letter from NNSA. Agency officials attributed the 645-day interagency  review period to delays in obtaining assurances from the Chinese  government.
State officials, who obtain assurances through embassy staff, told us they  have not established a time frame for the embassies to respond, but they  noted that it is rare for embassy staff not to follow up on an assurance  request expeditiously. Embassy staff, who receive instructions and  background documents from State headquarters, often work to make sure  that the facts listed in the request for assurances are correct and that the  staff have current information for points of contact for the importer, which  is a key step in the assurance process. State officials recognized the  need to streamline the process for obtaining assurances in countries with  growing nuclear markets, such as China and the UAE. Of the 89  applications DOE approved from 2008 through 2013, 23 were for exports  to the UAE—more than any other country—largely for U.S. persons to  provide expertise to the UAE’s Emirates Nuclear Energy Corporation and  nuclear regulatory body. In 2010, State developed generic assurances for  Part 810 authorizations to the UAE, based on an agreed-upon template,  so that the language would not need separate negotiation for each  application. These generic assurances confirm that the transferred  technology will be used exclusively for civil nuclear power activities and  not for any nuclear explosive or other military purpose and that the  technology will not be retransferred outside the UAE without prior U.S.  consent. State officials said they would seek to streamline the assurance  process in other countries where needed, based on growth in their  nuclear industries, which drives the number of requests for assurances.
Foreign government assurance times are not a factor in interagency  review times in the cases of deemed exports—foreign nationals who  access nuclear technology subject to Part 810 in the United States— because, in these cases, DOE requires U.S. employers of the foreign  nationals to obtain written nonproliferation assurances from the  employees rather than from the foreign government. However, the  median interagency review time for such cases—46 days—still exceeded  DOE’s target of 30 days. Notably, the longest interagency review of 810  days was for a deemed export. The 46-day median interagency review  time for deemed export applications was shorter than that for other export  applications—126 days. See figure 3 for interagency review times for  deemed and all other exports.
In some cases, foreign policy considerations affect interagency review  times. For example, a U.S. government hold on civil nuclear cooperation  with Russia following its 2008 military actions in Georgia accounted for a  large part of the 840-day interagency review for an application to export  nuclear fuel specifications to Russia. The application, submitted in  January 2008, had reached the final review stage in August 2008, when  NNSA held it in abeyance because of Russia’s actions. Following the  signing of the New START Treaty in April 2010 and resubmission of the  U.S.-Russia nuclear cooperation agreement to Congress in May 2010,  nuclear cooperation with Russia resumed, and NNSA requested that  interagency reviewers resubmit their views on the application from 2008  as soon as possible and emphasized the need for promptness.
Interagency review times vary among countries and within the same  country. For example, among the three countries with the most Part 810  applications (excluding deemed exports)—UAE, China, and Russia— interagency review times for exports to the UAE ranged from 27 to 344  days; review times for exports to China ranged from 46 days to 749 days;  and review times for exports to Russia ranged from 35 to 840 days.
section_title: Final Review Was the Longest Stage
paragraphs: Our analysis found that the final review stage, for which DOE has not  established comprehensive targets, had the longest median processing  times—125 days—with seven applications taking more than a year for  final review and approval. In the final stage, NNSA’s and DOE’s Offices of  General Counsel and DOE’s Office of Nuclear Energy review the  applications, and NNSA prepares a package of materials for the  Secretary’s determination. According to DOE’s procedures, the Secretary  is to be provided with a recommendation no later than 30 days following  receipt of the interagency concurrence or views (or 60 days in the event  of interagency disagreements). The Secretary of Energy reviews the  package to determine whether the activities covered by the Part 810  application will not be inimical to the interest of the United States. Under  the AEA, the Secretary may not delegate the determination.
We found variability in final-stage processing times across countries. For  example, for the three countries with the most Part 810 applications  (excluding deemed exports)—UAE, China, and Russia—median  completion times for final review ranged from 100 days for the UAE to  127 days for China. Final review times for applications for exports to the  same country also varied. For example, the shortest final review time for  an export to Russia was 35 days and the longest was 194 days; final  review times for exports to the UAE ranged from 31 days to 197 days  (excluding deemed exports). The longest final review took 921 days, for a  deemed export.
A variety of factors contributed to the duration of final review. For an  application to transfer controlled technology to Indian nationals working at  a U.S. nuclear facility, DOE’s Office of General Counsel’s concerns about  the application package contributed to DOE’s final review times of 241  days. According to NNSA officials, this application was 1 of 10 delayed for  this reason. Once DOE General Counsel completed its revisions, NNSA  sent a memorandum to the Secretary recommending approval of the  application, which the Secretary granted within 2 weeks.
In the final review stage, conditions that agencies imposed as part of their  concurrence may also affect review times. In one case, DOD placed  restrictions on foreign nationals’ access to information and facilities as a  condition of its concurrence, in August 2010. Pending reconsideration of  these conditions, NNSA held this application in abeyance for 10 months,  starting in December 2010, contributing to a final review stage of 634  days, out of a total processing time of 824 days for the application. The  following October, DOD concurred with the application without conditions  after reviewing the background of the foreign nationals and the DOE staff  analysis that determined that transfer of the technology would be  appropriate and would not pose a risk to the facility where they would be  employed.
NNSA has a 30-day target (60 days in the case of interagency  disagreement) within the final review stage for providing a  recommendation to the Secretary, but does not track the dates that it  provides these recommendations. For the 10 applications for which we  could determine the date that NNSA provided a recommendation to the  Secretary, DOE exceeded the 30-day target for 9 applications. Of these,  2 were held in abeyance as described above.
Table 2 provides a comparison of processing times for each stage in the  process and shows shortest and longest review at each stage.
DOE’s targets are not comprehensive, as DOE has not established  targets for the entire third stage of the Part 810 process, or for overall  processing time. By comparison, NRC has established targets—which  are part of its performance metrics—for processing export licenses. We  have identified measurable, numerical targets as key attributes of  successful performance measures. Furthermore, the rate at which DOE  has missed its targets calls into question whether these targets are  realistic and achievable. According to a 2007 executive order on  improving government program performance, program goals should be  sufficiently aggressive but realistic in light of authority and resources  assigned. Without measurable and realistic targets, DOE cannot  determine whether its Part 810 process is meeting its goal of efficient  regulation, which includes timeliness.
Realistic targets could also further DOE’s goal of efficient regulation— another aspect of which is predictability—by giving exporters a sense of  how long the application process may take. According to some nuclear  exporters, the lengthy and unpredictable specific authorization process  affects the competitiveness and hiring practices of their companies and  universities. One company, in its comments on DOE’s proposed changes  to Part 810, noted that the Part 810 process is unpredictable, and that  predictability is important for business planning. An industry organization  representative we spoke to also emphasized the importance of  predictability, stating that nuclear companies understand that nuclear  matters may take a long time but that it is important to know how long  things may take.
section_title: DOE and Representatives of U.S. Nuclear Exporters Stated That the Lengthy Part 810 Process Can Impose Business Risks
paragraphs: DOE, in its preamble to the proposed changes to Part 810, acknowledged  nuclear exporters’ concerns that the time frame for processing specific  authorizations can impose business risks for companies. In comments on  DOE’s proposed changes to Part 810, the Nuclear Energy Institute (NEI),  an industry group that represents hundreds of nuclear companies, wrote  in November 2013 that the specific authorization process was a cause of  delay and uncertainty, and a distinct disadvantage, for U.S. exporters.  Representatives of one U.S. nuclear exporter told us that Chinese clients  had advised the company against submitting a bid if it would require a  specific authorization. According to a representative from a second  company, the delays in obtaining a Part 810 authorization inhibit the  demonstration and deployment of reactor technology.
According to industry representatives and university officers, Part 810  processing times may also delay or restrict the work or study of foreign  nationals in the United States. The Ad-Hoc Utilities Group, another  industry group, described the “two equally unsatisfactory alternatives”  where (1) companies can either delay hiring foreign nationals or (2) hire  them but limit the scope of their work functions until approval of the  authorization. For example, a representative from a nuclear company told  us that an engineer from India employed at a U.S. nuclear plant was  unable to carry out the full scope of duties without a specific authorization,  which took 14 months to process. The engineer left the job before the  authorization was granted. According to the Ad-Hoc Utilities Group, it is  impractical for nuclear power operators to offer a foreign national a job  that depends on a specific authorization that can take a year to obtain.  The group added that Part 810 hinders utilities from hiring qualified  foreign employees for positions that require access to certain nuclear- related materials. As a result, the group wrote, Part 810 can deter the  hiring of workers who can safely operate nuclear power plants. In  addition, a university officer whose institute offers a nuclear science and  engineering program told us that Part 810 imposes a barrier for U.S.  universities in recruiting faculty and students that the universities’ foreign  competitors do not face.
section_title: DOE Has Begun Efforts to Improve the Part 810 Process, Including the Development of an E- Licensing System
paragraphs: DOE has begun efforts to reduce processing times of Part 810  applications. For example, NNSA officials said they plan to build an e- licensing system for the Part 810 process and are finalizing the details  regarding the functionality of such a system. The e-licensing system  would track applications as they proceed through the authorization  process, allowing NNSA to monitor its performance in processing them.  NNSA officials said that the e-licensing system would improve  predictability by allowing applicants to track their applications throughout  the process, including the interagency review. NNSA is also working to  become compliant with the International Standards Organization (ISO)- 9001, a quality management standard, and the Part 810 process is part  of this initiative. NNSA officials told us that the agency has completed the  initial interview phase of the ISO certification process, as well as the Lean  Six Sigma process, but NNSA’s time frame for becoming compliant with  the ISO-9001 standard is unclear.
section_title: Part 810 Is Unclear in Its Scope, and DOE’s Inquiry Process Does Not Reasonably Assure Consistent Interpretation
paragraphs: Part 810 is unclear with regard to the activities it covers, among other  things. DOE has not provided written guidance to help exporters interpret  the scope of the regulation; instead, DOE encourages exporters to inquire  with DOE officials for interpretation. DOE cannot reasonably assure that  its responses to inquiries are consistent, however, because DOE officials  do not routinely document these inquiries or DOE’s responses. DOE has  taken steps to clarify the regulation and is planning to develop guidance.
subsections: section_title: Part 810 Is Unclear in Its Scope
paragraphs: Part 810 is unclear with regard to the scope of activities covered and  application requirements. For example, key definitions do not make it  clear which activities are subject to the regulation. This affects, among  other things, how companies conduct marketing activities related to  nuclear reactors. Two executive orders identify clarity and consistency  among the key principles of federal regulation. We identified the  following three areas regarding the lack of clarity in the regulation:
Key definitions in Part 810 are broad. The regulation’s definition of  “nuclear reactor” does not distinguish among reactor components  based on their relative sensitivities. Representatives of nuclear  exporters have said that the regulation’s definition of “nuclear  reactor”—as “an apparatus, other than a nuclear explosive device,  designed or used to sustain nuclear fission in a self-supporting chain  reaction”—is overly broad and could be interpreted to encompass a  wide variety of technologies unrelated to the production of special  nuclear material. For example, NEI noted in its comments on DOE’s  proposed revisions to Part 810 that nuclear reactors, under DOE’s  definition, contain thousands of components and systems, only some  of which, such as the reactor pressure vessel, relate to the  production of special nuclear material. The group raised concerns  that absent a clearer definition of the technologies covered within the  scope of “nuclear reactor,” companies would be forced to seek time- consuming advisory opinions for each item in a nuclear power plant.  By contrast, NRC’s export control regulations provide an illustrative  list of covered nuclear reactor components, and representatives of  exporters suggested in their public comments that DOE compile a  similar list.
Part 810 does not explicitly address sales or marketing. The  regulation does not contain provisions that specifically address  marketing and does not clearly delineate the types of marketing  information that may require a general or specific authorization. A  representative of an association for nuclear companies told us that  this has created confusion and that exporters determine whether  sales and marketing information is covered based on whether the  information is public or proprietary. However, exporters noted in their  public comments on DOE’s proposed revisions to Part 810 that  marketing activities may entail the transfer of general design or price  information that is proprietary but not sufficiently detailed to assist in  production of special nuclear material. Nonetheless, such information  may fall under the jurisdiction of Part 810 because it is not “public  information,” which is generally authorized for transfer (and would be  exempt under the proposed rule). A company representative told us  that absent greater clarity, companies are limited in marketing a  design and advancing a contract because customers request detailed  information—which may be proprietary—to understand how much  they would be willing to pay for a product. Representatives of another  company told us that it took 2 years to get the specific authorization to  disclose the information needed for a marketing activity. While DOE  has proposed to adjust its definitions related to public information, it  has declined to specify what marketing activities may be exempt from  authorization—stating that the regulation’s applicability depends on  the data transferred rather than the activity—and has instead noted in  its Supplemental Notice of Proposed Rulemaking that companies can  seek guidance from the department on a case-by-case basis.
The regulation does not clearly specify the information and  documents that applicants are required to submit. DOE’s review  of Part 810 applications may be prolonged because applicants may  not submit all of the information required, which may occur because it  is sometimes unclear to applicants what information is required. For  example, a university export control officer told us that she applied for  a specific authorization for a course being developed on operating a  nuclear power plant. More than 5 weeks after submitting the  application, a DOE official requested additional information from the  applicant—specifically, résumés for the foreign nationals involved.  The university officer said that, unlike with other export control  regimes, DOE does not provide guidance on the application materials  necessary for Part 810, and that she would have included the  résumés at the beginning of the process if she had known she needed  to provide them. Section 57(b) of the AEA states that, to the extent  practicable, an applicant should be advised of all the information  required at the beginning of the process. NNSA officials told us that  Part 810 contains the application requirements; however, the  regulation does not list, for example, résumés among the  requirements. The university officer said she submitted the additional  information to DOE, and DOE officials informed her 4 weeks later that  the activity would not require specific authorization.
section_title: DOE Does Not Provide Exporters with Supplemental Guidance and Its Inquiry Process Does Not Reasonably Assure Consistency
paragraphs: DOE does not provide supplemental guidance to help exporters interpret  the scope and requirements of Part 810. According to an OMB bulletin,  agencies increasingly have relied on guidance documents to inform the  public and to provide direction to their staffs as the scope and complexity  of regulatory programs have grown. According to this bulletin, guidance  documents, used properly, can channel the discretion of agency  employees, increase efficiency, and enhance fairness by providing the  public clear notice of the line between permissible and impermissible  conduct, while ensuring equal treatment of similarly situated parties. We  found that the other agencies that regulate civilian nuclear exports—NRC  and Commerce—do provide written guidance, such as frequently-asked- questions documents, to clarify their interpretation of the regulations to  exporters. Nuclear exporters said that such guidance would be helpful  for Part 810. According to one company, a more comprehensive  explanation of activities that require specific authorization would afford  U.S. businesses the opportunity to adequately plan for international  commitments.
DOE’s practice is to provide guidance on a case-by-case basis on its  interpretations of various Part 810 provisions, but this guidance is  provided only to the specific party and is not made public. One company  wrote in its public comments on DOE’s proposed revisions to Part 810  that, rather than requiring companies to obtain advisory opinions with  respect to proposed activities, DOE and the nuclear industry would  benefit from DOE’s establishment of clearer boundaries for the  applicability of Part 810. University export officers also said that DOE  declined their request to clarify which types of university activities would  require authorization, but encouraged the officers to inquire or apply so  that DOE could make a case-by-case determination. These officers  raised concerns that the lack of clarity in Part 810, together with the  uncertainty about DOE’s decisions regarding what activities require  authorization, may restrict scientific communication by creating confusion  about what universities may share openly.
Without established written guidance, exporters uncertain about the  scope of Part 810 must inquire with DOE for interpretation. Under Part  810, potential applicants may request advice on, among other things,  whether a proposed activity falls within the scope of the regulations or  requires specific authorization. According to DOE’s Part 810 procedures,  DOE receives numerous inquiries from U.S. persons and firms regarding  activities that may fall under the scope of Part 810 regulations. NNSA  officials told us they receive approximately two inquiries in the form of  letters and more than 10 inquiries by phone each week. According to  DOE’s Part 810 procedures, most of these inquiries are requests for  interpretation of the regulation or requests for review of proposed financial  ventures with foreign entities. These inquiries require the input of a wide  range of expertise from various sources inside DOE and elsewhere that  are consolidated into informal written or oral guidance or for formal  correspondence. DOE’s responses to these inquiries are significant,  because, as DOE acknowledges, the specific-authorization process can  be protracted, and its approval time frames can impose business risks for  U.S. companies.
Several representatives of nuclear exporters told us that DOE responded  promptly to inquiries, but that the need to consult DOE to clarify the scope  and applicability of the regulation contributed to a process that was too  dependent on individual interpretation. For example, one company  representative told us that there was no way of knowing whether other  companies were getting the same response—with regard to what type of  authorization would be needed—for the same set of circumstances. A  university export officer said that a definition provided by DOE in the  course of an inquiry appeared to be “made up on the spot.” Another  company representative suggested that a potential applicant could get a  different answer depending on which official at DOE takes the call, based  on an individual interpretation with no basis in the regulation. This  representative said that DOE’s inquiry system provides companies with  an incentive to proceed with the activity in question without consulting  DOE. Specifically, the representative noted that an inquiry could lead to a  response that the transaction could not proceed without waiting for an  authorization. If the company proceeds without inquiring, however, and  DOE later determines that the transaction required authorization, this  representative believes that the company would be able to defend itself  against any enforcement action because DOE would not be able to point  to the specific regulatory language on which it based its determination.
DOE officials do not consistently document inquiries or their responses,  and cannot analyze them for consistency or to identify parts of the  regulation that may need clarification. Part 810 does not require exporters  to submit inquiries for interpretation of the scope of the regulation, or for  DOE to respond to them, in writing or electronically. However, DOE’s  internal procedures state that DOE is to maintain a database that includes  a listing of and files for all inquiries, and other export-control agencies  such as State and Commerce do require written or electronic submissions  and responses for inquiries regarding jurisdiction. DOE officials said that  they do not document all inquiries or responses because some inquiries  are vague, and DOE’s responses are predecisional. However, as noted  earlier, DOE’s responses to these inquiries are significant because of the  time frames of the specific authorization process; they determine whether  or not an activity is subject to the regulation and whether an exporter has  to engage in the time-consuming authorization process. Documenting all  inquiries and responses would provide DOE with the information needed  to reasonably assure that the agency’s responses are consistent under  similar circumstances, and to identify aspects of the regulation that may  need clarification. Under the federal standards for internal control,  agencies are to accurately record and appropriately document  transactions. Documentation of transactions is also important because  gaps can develop in an organization’s institutional knowledge and  leadership as experienced employees leave. Some nuclear exporters  expressed concerns in this regard, stating that, while the staff that  currently implements Part 810 is competent and helpful, the system  should not rely on individuals, and that a change of staff could make the  process more difficult.
section_title: DOE Has Taken Steps to Clarify the Regulation
paragraphs: DOE has taken steps to clarify Part 810, recognizing in its Supplemental  Notice of Proposed Rulemaking that the scope of activities regulated  under Part 810 could be clearer. For example, DOE is proposing to  define some key terms, such as “technical assistance,” and to refine its  definitions of other terms, for example by replacing its prior definition of  “public information” with definitions of “publicly available information” and  “publicly available technology,” so that potential applicants would have a  clearer description of activities and technology subject to Part 810.  However, DOE’s proposed rule neither clarifies the scope of the  regulation by refining the definitions of other broad terms, such as  “nuclear reactor,” or by providing an illustrative list of reactor  components, nor more clearly delineates sales and marketing activities  subject to Part 810. DOE officials have said that they plan to develop  guidance once the proposed changes to the regulation are finalized, but  the proposed changes are an ongoing effort whose time frame and  eventual impact are unclear.
section_title: DOE Has Taken Limited Actions to Enforce Its Nuclear Export Controls
paragraphs: DOE has taken limited actions to enforce its export controls for nuclear  technology, assistance, and services, even though DOE must enforce  Part 810 to achieve one of its goals for the regulation—effective threat  reduction by mitigating the risk of proliferation. One way that DOE seeks  to mitigate this risk is through conditions included in Part 810 specific  authorizations; most authorizations are subject to common sets of  conditions. DOE’s primary method for monitoring compliance with the  conditions is for NNSA officials to read required reports from exporters  and in some cases to conduct a more in-depth analysis of the reports.  However, NNSA officials report that they typically conduct an in-depth  analysis for compliance with the authorizations on less than 10 percent of  the reports, and they do not have risk-based procedures for prioritizing  which reports to analyze. DOE does not provide guidance for companies  to self-identify and self-report violations. DOE has not determined  whether it has the authority to impose civil penalties for violations of Part  810 and has not referred any potential violations to the Department of  Justice (DOJ) for investigation or criminal prosecution within the last 6  years, the period covered by our review.
subsections: section_title: Most Part 810 Authorizations Are Subject to Common Sets of Conditions
paragraphs: On the basis of our analysis of all 89 specific authorizations approved  between 2008 and 2013, we identified two common sets of conditions— one for deemed exports, another for all other exports—that DOE imposes  on specific authorizations. These conditions are enumerated in  “Secretarial Determinations”—the authorization letters signed by the  Secretary that state a determination that the proposed export is not  inimical to the interest of the United States, as long as the conditions are  met. The conditions on each authorization reflect the actions that DOE,  State, Commerce, NRC, and DOD judge sufficient to mitigate the risk of  proliferation in a given circumstance and which result in the export  benefiting U.S. interests.
The common set of conditions on specific authorizations for deemed  exports—in this case, foreign nationals who access nuclear technology in  the United States—includes five conditions that appear in nearly all of the  18 authorizations for such exports (see table 3). These conditions require  the company or other applicant seeking the authorization to (1) ensure  that the foreign national maintains a current passport and work visa, (2)  notify DOE promptly upon termination or change in immigration status for  the foreign national, (3) submit to DOE for prior approval changes in the  foreign national’s work duties, (4) report annually to DOE on activities  pursued by each foreign national covered by the authorization, and (5)  obtain a signed nonproliferation or nondisclosure statement from the  foreign national. In addition, there are other conditions that have been  imposed less frequently; for example, DOE imposed conditions on some  specific authorizations involving transfers of certain technologies related  to reactor operations to certain foreign nationals in the United States.  These conditions state that these individuals cannot have access to  sensitive nuclear technology or software programming language (see  app. II).
The common set of conditions for specific authorizations (other than  deemed exports) includes four conditions that appear in nearly all of the  72 authorizations for these types of exports (see table 4). The first two  conditions—a requirement to use the technology for peaceful (nonmilitary  and nonnuclear weapons) purposes and a requirement to obtain  permission before re-exporting the technology to a country other than the  United States—are the responsibility of the importer and the importing  country’s government to implement, and they are known collectively as  “foreign government assurances.” The other two conditions are the  responsibility of the exporter. These include requirements to (1) report to  DOE on the activities conducted under the authorization on a quarterly,  semiannual, or annual basis and (2) submit for prior DOE approval the  names of any companies or individuals, beyond those listed in the original  application, to which the exporter proposes transferring the technology.  There are other conditions that have been imposed less frequently; for  example, about 20 percent of the authorizations (13 of the 72) contain a  condition that requires the importer and the importing country to take all  measures necessary to maintain adequate protection of the technology  and, in some cases, also to ensure adequate physical protection of any  items derived from it (see app. II).
section_title: DOE Does Not Use a Risk-Based Procedure to Determine Which Reports to Analyze for Compliance
paragraphs: NNSA officials, who implement Part 810, draw on various information  sources to monitor compliance with the conditions on authorizations.  NNSA officials said their primary source of information is the reports  submitted by exporters. These reports are required by the conditions on  the specific authorizations, as described above, as well as by Part 810,  which contains reporting requirements for all specifically authorized  exports and certain generally authorized exports. Exporters who are  required to report on generally authorized activities must do so no more  than 30 days after they begin. According to an NNSA official, some  generally authorized activities would trigger frequent reports, so NNSA  negotiates a filing frequency for the exporters to report all of their  generally authorized activities on a consolidated basis instead of requiring  reports for each activity. For specific authorizations, exporters must also  report no more than 30 days after they initiate activities, and, depending  on the conditions contained in their authorization, they are also required  to submit ongoing reports that detail their activities conducted under the  authorization on a quarterly, semiannual, or annual basis.
NNSA officials stated that they read and categorize each report as it is  received. If they decide that a particular report merits further attention,  they conduct follow-up analysis, which includes checking that the  activities and individuals listed are consistent with the application and the  authorization. However, NNSA officials stated that they currently do not  conduct such an analysis for every report to determine compliance or to  identify trends; the officials estimate that they currently conduct follow-up  analysis on less than 10 percent of reports. They also stated that they do  not have procedures for determining which reports merit in-depth analysis  and that their current practice is to decide on a case-by-case basis  according to the type of technology and parties involved. As a result,  NNSA may be missing important information that could lead to  identification of violations and provide a fuller understanding of the degree  of compliance with Part 810.
We requested information on the number of reports NNSA received from  2008-2013 for generally and specifically authorized exports. For generally  authorized exports, NNSA officials stated that they had a gap in their data  that prevented them from providing complete information during these 6  years, but according to their data, they received at least 50 reports per  year from 2009-2013. For specifically authorized exports, NNSA officials  stated that providing information on the number of reports received would  be challenging.
NNSA officials said that their report analysis process is not as systematic  as they would like, but noted that they do not have the staff to analyze the  reports more thoroughly. According to NNSA officials, they employ two  people who work full-time on Part 810 authorizations, as well as six  people who work on the authorizations as part of their broader  responsibilities. Officials at the national laboratories also assist with  reviewing reports, based on the end user and the type of technology  being transferred, according to NNSA officials. Staffing levels in the  NNSA office that processes these authorizations and reviews the reports  have remained level over the last 6 years, but the number of specific  authorizations granted each year has increased (see fig. 4). An NNSA  official noted that the office is looking into changes that could be made to  the report analysis process to facilitate monitoring for compliance, such  as linking the reports to the authorizations in the proposed e-licensing  system.
NNSA officials said they have other sources of information for monitoring  compliance with Part 810 authorizations, including the national  laboratories, trade publications, and newsletters from a variety of sources,  as well as the companies themselves (NNSA periodically asks companies  for briefings). They stated that they also receive support from the  intelligence community, including DOE’s Office of Intelligence and  Counterintelligence. In addition, according to a State official, U.S.  embassies play a role in monitoring the extent to which the importing  country and company or other entity, as well as the exporter, are  complying with the conditions associated with Part 810 authorizations.
section_title: DOE Has Not Determined Its Authority to Impose Civil Penalties and Does Not Provide Guidance for Companies to Self-Identify and Self-Report Possible Violations
paragraphs: DOE has not determined whether it has legal authority to impose civil  penalties for violations of Part 810 and does not provide guidance for  companies to self-identify and self-report possible violations. Part 810  contains a statement about the actions that DOE can take to prevent  violations under the authority of the AEA (temporary injunctions and  restraining orders) and a description of penalties for criminal violations.  However, Part 810 does not indicate that DOE can impose civil penalties  for violations, and DOE officials told us that the issue of whether the  department has the authority to impose civil penalties was “unsettled.”  We have previously found that civil penalties are an important element of  regulatory enforcement, allowing agencies to punish violators  appropriately and to serve as a deterrent to future violations. Without a  clear position on whether DOE has authority to impose such penalties for  violations of Part 810, DOE may not have access to a tool for enforcing its  export controls.
Furthermore, DOE does not provide any external guidance to exporters  on enforcement of Part 810, such as a voluntary disclosure policy,  internal compliance guidelines, or an enforcement manual, in the  regulation, or, according to DOE officials, elsewhere. In contrast to DOE,  other government agencies that regulate nuclear or nuclear-related  exports have established procedures, as well as policies and guidelines  on enforcement of their export controls. As discussed below, NRC, State,  and Commerce provide a variety of resources for companies to  understand the enforcement policies for their respective export control  regimes and to provide incentives for companies to recognize and  address violations. These resources are publicly available on the  agencies’ websites. In addition, information on civil and criminal  enforcement is stated in the regulations governing their respective export  control regimes.
NRC has an enforcement policy and enforcement manual. NRC  has a publicly available enforcement policy document that lays out the  general principles governing its enforcement efforts and information  on the process it uses to deal with violations. NRC also has an  enforcement manual that contains specific processes and guidance  for implementing the enforcement policy. The stated goals of NRC’s  enforcement policy are to (1) deter noncompliance by emphasizing  the importance of compliance with regulations and other NRC  requirements, and (2) encourage prompt identification and prompt  comprehensive correction of violations. The policy clearly describes  the factors that NRC takes into consideration when assessing the  significance of the violation and describes how prompt self- identification of violations can decrease consequences for violators. In  addition, NRC publishes on its website Notices of Violation, which can  serve as examples of how violations are assessed and fines are  determined. Its website also contains the Part 110 regulations, which  describe, among other things, the civil penalties and the procedures  through which they would be applied, in the case of violations.
State’s website contains compliance resources, including  guidelines for comprehensive compliance programs. State’s  Directorate of Defense Trade Controls (DDTC) maintains a website  with a variety of compliance-related resources and documents for  exporters, including a list of significant export control enforcement  cases. The site contains the International Traffic in Arms Regulations  (ITAR), of which Parts 127 (Violations and Penalties) and 128  (Administrative Procedures) lay out State’s enforcement policies,  including its voluntary disclosure policy, the aim of which is to strongly  encourage self-disclosure of violations by noting that such disclosures  may be considered as mitigating factors in determining penalties.  The site also provides guidelines that exporters can use to create  comprehensive operational compliance programs. The guidelines do  not promote a certain type of program; instead, they list the important  elements of effective programs, including organizational structure;  corporate commitment and policy; identification, receipt and tracking  of controlled items and technical data; re-exports; and internal  monitoring, and training, among other elements.
Commerce’s website provides a variety of compliance and  enforcement information. Commerce’s Bureau of Industry and  Security (BIS) has an Office of Export Enforcement (OEE) that works  with companies to prevent export control violations and is responsible  for enforcement actions in response to such violations. OEE’s website  contains, among other things, information on compliance, penalties,  and voluntary self-disclosures, including voluntary self-disclosure  cases. The BIS website contains the Export Administration  Regulations, which govern the export of dual-use items and certain  military items. Part 764, “Enforcement and Protective Measures,”  provides readers with information on enforcement, including voluntary  self-disclosure and civil penalties, and Part 766, “Administrative  Enforcement Proceedings,” describes the administrative enforcement  process and includes guidance on how BIS makes penalty  determinations.
While DOE’s export controls and their regulatory basis may differ in some  aspects from those administered by NRC, State, and Commerce, these  other agencies provide information to companies and individuals to help  them understand how to comply with their rules and the consequences of  violating those rules. Several exporters told us that other agencies  provide guidance that is more comprehensive. By not establishing  policies or creating guidance that encourages companies to create strong  compliance programs and self-identify and self-report violations, DOE is  missing an opportunity to leverage exporters’ potential to play a greater  role in monitoring their own compliance.
section_title: DOE and DOJ Have Not Taken Any Formal Actions to Enforce Part 810
paragraphs: Neither DOE nor DOJ have taken formal actions—such as revoking an  authorization or prosecuting an exporter—to enforce Part 810 within the  last 6 years, even though there have been violations of Part 810 within  this period. Between 2008 and 2013, NNSA received at least 11 notices  of voluntary disclosures of violations of the Part 810 regulations, mostly  related to deemed exports to India or China—but according to an NNSA  official, any time NNSA knows of a violation of the Part 810 regulations,  NNSA tries to deal with it internally, generally meeting with the company  to discuss the issue. This official reported that NNSA has not identified  any willful violations of Part 810, and consequently, NNSA has not  referred any potential criminal violations to the DOJ for investigation or  prosecution. According to DOE and NNSA officials, NNSA has never  taken any formal action, such as revoking an authorization, against  companies that have violated Part 810. DOE’s internal procedures for  administering Part 810 contain no information on DOE enforcement of the  regulation. DOJ, which is charged with investigating and prosecuting  suspected criminal violations, reports that of the cases charged under the  AEA in the last 6 years, it is not aware of any related to Part 810  violations.
section_title: Conclusions
paragraphs: The renewed interest in nuclear power worldwide could provide increased  opportunities for U.S. companies. The highly competitive global nuclear  market underscores the importance of an efficient authorization process  for U.S. nuclear technology exports. DOE has stated that its goals for the  Part 810 process are efficient regulation (defined by an efficient, timely,  transparent, and predictable process); effective nuclear trade support;  and effective threat reduction by better addressing proliferation  challenges. DOE and NNSA have taken steps toward a more efficient  regulatory process, including developing an e-licensing system. However,  DOE and NNSA’s current implementation of Part 810 raises questions as  to whether the agencies are administering the process in accordance with  DOE’s goals and with key principles of federal regulation, which include  clarity and consistency.
DOE rarely meets its existing target time frames for processing Part 810  applications, which calls into question whether these targets are realistic  and achievable in light of its resources and authorities. Furthermore, DOE  has not established target time frames for obtaining the Secretary’s  determination in the third stage of the process, or for the overall Part 810  authorization process. Without realistic and achievable targets for the  entire Part 810 process, DOE cannot provide U.S. nuclear exporters with  a timely and predictable regulatory process, which could impair their  competitiveness.
DOE has taken steps to clarify the scope of Part 810, but DOE officials  plan to continue to rely on a case-by-case inquiry process. DOE currently  does not document all inquiries, contrary to agency procedures. Without a  documented inquiry process, DOE does not have the information it needs  to provide reasonable assurance that its responses are consistent, and  DOE officials are not documenting information that could identify parts of  the regulation that may need clarification.
DOE must enforce Part 810 to achieve one of its goals for the  regulation—effective threat reduction by mitigating the risk of proliferation.  However, DOE may be missing opportunities to enforce its nuclear export  controls. Civil penalties are an important element of regulatory  enforcement, but DOE has not determined whether it has the legal  authority to impose civil penalties for violations of Part 810. In addition,  NNSA does not conduct in-depth analysis on all reports from exporters on  activities authorized under Part 810 and does not have a risk-based  procedure for prioritizing which reports to analyze. As a result, NNSA may  be missing important information that could lead to identification of  violations and allow the agency to take enforcement actions when  warranted. Moreover, unlike other agencies that administer nuclear- related export controls, DOE does not have policies or guidance for  exporters about self-identifying, self-reporting, and correcting possible  violations. Consequently, DOE is missing an opportunity to encourage  exporters to recognize and address violations.
section_title: Recommendations for Executive Action
paragraphs: We are making six recommendations to improve the administration of 10  C.F.R. Part 810.
To better align the Part 810 process with its stated goal of efficient  regulation, we recommend that the Secretary of Energy, working with  the Administrator of the National Nuclear Security Administration, take  the following two actions:
Review existing targets for processing Part 810 applications and  determine the extent to which they align with DOE’s resources  and authorities. Based on the results of this review, establish  realistic and achievable targets for each stage of the Part 810  process, including the third stage, as well as the overall process.
As DOE moves forward with the e-licensing system, integrate  these targets into the system to monitor agency performance  against them to ensure that the targets remain realistic and  achievable and that they improve predictability for exporters.
To promote clarity and consistency in administering Part 810, we  recommend that the Administrator of the National Nuclear Security  Administration ensure that all inquiries about the scope of Part 810,  together with NNSA’s responses to these inquiries, are documented,  in accordance with existing DOE procedures.
To facilitate enforcement of Part 810 and encourage compliance, we  recommend that the Secretary of Energy, working with the  Administrator of the National Nuclear Security Administration, take the  following three actions:
Determine whether DOE has legal authority to impose civil  penalties for violations of the regulation and develop procedures  accordingly.
Develop a risk-based procedure for selecting exporters’ reports on  authorized activities for in-depth analysis.
Assess the need to establish and articulate export compliance  policies that encourage and reward exporters who self-identify,  self-report, and correct violations, and provide guidance to  exporters on such policies.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to DOE, NRC, State, Commerce, DOD,  and DOJ for review and comment. NNSA provided written comments for  DOE, which are presented in appendix III. In addition, NNSA, NRC, State,  Commerce, and DOJ provided technical comments that we incorporated,  as appropriate.
In its written comments, NNSA agreed with all six of our  recommendations and noted several actions and initiatives it is planning  or undertaking to implement our recommendations. For example, NNSA  stated that as part of its ongoing process improvements, the agency is  working to identify gaps, overlaps, and inefficiencies in the Part 810  authorization process and will establish new, achievable targets for each  stage of the Part 810 process. Among other things, NNSA also stated that  it plans to consult with other regulatory agencies, such as NRC, to  determine what risk-based procedures the agency has for analyzing  reports on authorized activities and whether they could be modified to  work for Part 810 reports. NNSA also stated that it would consult with  regulatory agencies such as NRC and Commerce to determine what  export compliance policies they have for encouraging and rewarding self- disclosure and whether they could be modified for Part 810 self-reporting.
NNSA also provided general comments on some of our findings. For  example, NNSA stated that the draft report frequently draws comparisons  between DOE’s Part 810 process and other agencies’ export control  regimes. NNSA stated that, unlike the other regimes, DOE’s export  authorization process involves other agencies and diplomatic  engagements with foreign governments, whose responsiveness the U.S.  government cannot control. We note that our analysis considered relevant  differences in the export control regimes. As noted above, NNSA  concurred with our recommendations and stated that it would consider  whether the processes of these agencies could be adapted for Part 810.
NNSA also stated that the ability to devise “creative solutions” for unique  or new situations remains an important aspect of the Part 810  authorization process, and that consistent guidance in light of such  situations is inapplicable. However, as noted in the report, DOE must  reasonably assure that its interpretation of Part 810 is consistent in  responding to wide-ranging questions from exporters.
In addition, NNSA stated that the Department clearly took seriously the  recommendations from our report, Nuclear Commerce: Governmentwide  Strategy Could Help Increase Commercial Benefits from U.S. Nuclear  Cooperation Agreements with Other Countries (GAO-11-36), as  evidenced by the current rulemaking, process improvements, and the  creation of an e-810 system. We noted the actions DOE took in response  to these recommendations in the current report. However, because the  rulemaking and process improvements were ongoing at the time of our  audit, we could not evaluate the extent to which these initiatives will  address the findings and recommendations in this report. NNSA said that  our draft report stated that DOE had not proposed revising its inquiry  process, but noted that its initiatives will address the inquiry process, and  that the inquiries we referred to are exploratory and informal. We clarified  the language in the report to address NNSA’s comment. However, as we  say in the report, several exporters whom we interviewed expressed  concern about the consistency of the responses DOE was providing to  their inquiries. We could not evaluate whether DOE’s responses to  inquiries were consistent because DOE does not document all inquiries.  Without such documentation, DOE cannot reasonably assure that the  interpretations offered in response to these inquiries are consistent.
Finally, in its written comments, NNSA stated that it is true that it has not  referred any suspected Part 810 violations to the Department of Justice  for criminal investigation or revoked any authorizations for cause but that  it has not received reports of illicit technology transfers or seen evidence  of violations of Part 810 authorization restrictions. We recommend in this  report, as a step in strengthening export controls through Part 810, that  DOE take a risk-based approach to reviewing reports for in-depth  analysis from exporters and assess the need for guidance and incentives  to exporters for self-identifying, self-reporting, and correcting possible  violations. NNSA agreed with these recommendations.
As agreed with your offices, unless you publicly announce the contents of  this report earlier, we plan no further distribution until 30 days from the  report date. At that time, we will send copies to the appropriate  congressional committees, the Secretary of Energy, the Administrator of  the National Nuclear Security Administration, the Secretary of State, the  Chairman of the Nuclear Regulatory Commission, the Secretary of  Defense, the Secretary of Commerce, and other interested parties. The  report also will be available at no charge on the GAO website at  http://www.gao.gov.
If you or your staff members have any questions about this report, please  contact David C. Trimble at (202) 512-3841 or trimbled@gao.gov or  Thomas Melito at (202) 512-9601 or melitot@gao.gov. Contact points for  our Offices of Congressional Relations and Public Affairs may be found  on the last page of this report. GAO staff who made key contributions to  this report are listed in appendix IV.
section_title: Appendix I: Scope and Methodology
paragraphs: In this report, we examine (1) Part 810 processing times, compared with  the Department of Energy’s (DOE) targets, for over the last 6 years; (2)  the extent to which Part 810 is clear and DOE can reasonably assure  consistent interpretation; and (3) the extent to which DOE enforces Part  810.
To examine DOE’s processing times for Part 810 applications over the  last 6 years compared with its own targets, we reviewed DOE’s 10 C.F.R.  Part 810 Assistance to Foreign Atomic Energy Activities Part 810  Program Elements and the National Nuclear Security Administration’s  (NNSA) procedures for processing, reviewing, and approving specific  authorizations to determine DOE’s internal targets. We analyzed DOE  data on the processing times for the 89 specific authorizations granted  from 2008 through 2013. For each authorization, the analysis included a  calculation of the number of days between the date of each application for  authorization and the date of the Secretary’s determination, which  encompasses the entire Part 810 process. We also calculated the  number of days between each of the three stages of the process—initial  review, interagency review, and final review. We calculated the duration  of the internal review stage based on the number of days between the  date on the application and the date NNSA forwarded the application to  the interagency. This date marked the beginning of the interagency stage,  which ended when NNSA received the last interagency concurrence with  the application package. The final review stage started from the date of  the last interagency concurrence and ended on the date of the Secretary  of Energy’s determination. To ensure the analysis was as accurate as  possible, we reviewed the data, identified irregularities, and contacted  NNSA officials to clarify and correct those irregularities. For example,  when we noticed an application in which the Department of Commerce’s  concurrence date preceded the date NNSA submitted the application to  the interagency, we notified NNSA officials of this inconsistency, and they  provided us with the correct date. Moreover, we interviewed the NNSA  officials who collected and recorded the data, about the procedures they  follow to ensure the data are accurate, complete, and reliable. On the  basis of our review, we concluded that the data were sufficiently reliable  for purposes of analyzing trends in processing times.
To identify factors affecting the processing times for specific  authorizations, we selected a nonprobability sample of eight applications  that represented a range of processing times. Specifically, for each stage  in the Part 810 process as well as for the entire process, we selected (1)  one case from among applications with short processing times, defined  as processing times in the 25th percentile (that is, processing times  shorter than those for 75 percent of all applications), and (2) one case  representing long processing times, defined as applications in the 75th  percentile (that is, processing times longer than those for 75 percent of all  applications). Among applications with long processing times, we  considered those with over twice the median processing time. We used  the median—rather than the mean—because outliers in the data unduly  impact the size of the mean, making it a less valid representation of the  typical processing time. From applications with long and short processing  times, we selected cases that represented a range of countries and types  of exports or assistance, such as computer codes, consulting services,  and advanced reactor technologies.
The small number of cases selected precluded us from generalizing the  results, but the case study analysis provided examples of factors that may  explain the varying processing times. To identify these factors, we  reviewed application packets NNSA provided to us, including technical  assessments and intra- and inter-agency correspondence. When  reviewing case study documents, we noticed that some of the  correspondence dates differed from the dates recorded in the  spreadsheet. Because these discrepancies are small, they do not  significantly impact the results of our aggregate data analysis, which  measures the duration (i.e., number of days) between each stage of the  process and the overall process. The small discrepancies also do not  impact the findings of our case study analysis, which focuses on the  causes of long and short processing times. We also interviewed agency  officials to better understand these factors. For seven of the eight  applications in our case study, as well as for the three applications that  NNSA provided to us as samples, we were able to determine, based on  the last internal concurrence among DOE and NNSA staff, the earliest  date that the recommendation could have been provided to the Secretary  upon receipt of interagency comments to determine whether the  recommendation was provided to the Secretary within 30 days—the  target time frame. In one case, the correspondence was not dated, and  we could not determine the date of the recommendation to the Secretary.  In nine other cases, we were able to determine whether the time elapsed  between the receipt of interagency comments and the last internal  concurrence among DOE and NNSA staff—which must precede the  recommendation to the Secretary— exceeded 30 days.
To examine the impacts of Part 810 processing times on U.S. nuclear  exporters, we interviewed representatives of these exporters and  reviewed public comments submitted in response to DOE’s proposed  changes to Part 810, as well as DOE’s response to comments made in  response to the Notice of Proposed Rulemaking, as articulated in the  preamble to the Supplemental Notice of Proposed Rulemaking. The  representatives we interviewed included representatives of companies, as  well as representatives of four associations (the Nuclear Energy Institute  (NEI), American Nuclear Society (ANS), Nuclear Infrastructure Council  (NIC), and Association of University Export Control Officers (AUECO),  and reviewed the public comments of a fifth (the Ad-Hoc Utilities Group)).  The companies were either identified through interviews with association  representatives—we requested that they identify nuclear exporters with  experience with the Part 810 authorization process for us to interview—  or by GAO (for example, at public meetings and other forums on nuclear  export issues, or through their public comments). We then interviewed  five exporters, including reactor designers and manufacturers,  engineering service providers, and fuel companies, and obtained written  comments from a nuclear energy technology company. We also selected  for interviews, based on recommendations from industry associations and  on our reviews of public comments and letters, representatives from a  consulting group that exports nuclear services and from a utility company,  which is the largest commercial nuclear generator in the United States,  and from two law firms. The law firms were selected because of their  expertise and experience in U.S. nuclear export controls. To learn more  about the relevance of regulation of civilian nuclear technology to  nonproliferation more generally, we interviewed five nonproliferation  experts.
To examine the extent to which the scope of Part 810 is clear, we  consulted and analyzed the Atomic Energy Act, as well as executive  orders and Office of Management and Budget bulletins related to  government regulation. We also reviewed the Part 810 regulation. We  interviewed DOE officials and a variety of entities regulated or potentially  regulated under Part 810, as well as various groups representing these  entities—as described above—for their views on the clarity of the  regulation. We also consulted public comments submitted in response to  DOE’s proposed changes to Part 810, as well as DOE’s response to the  comments received in response to the Notice of Proposed Rulemaking as  articulated in the preamble to the Supplemental Notice of Proposed  Rulemaking. To examine the extent to which DOE can reasonably assure  that the regulation is consistently interpreted, we consulted DOE’s 10  C.F.R. Part 810 Assistance to Foreign Atomic Energy Activities Part 810  Program Elements and the federal standards for internal control, and  interviewed DOE officials and a variety of entities regulated or potentially  regulated under Part 810, as well as various groups representing these  entities, as described above.
To examine the extent to which DOE enforces its nuclear export controls,  we first determined the activities DOE undertakes to monitor conditions  imposed through authorizations by interviewing DOE and NNSA officials.  We then conducted an analysis of the conditions imposed through the 89  Part 810 authorizations approved from 2008-2013. The conditions for  each authorization are documented in determination letters signed by the  Secretary of Energy, and we conducted a double-blind content analysis of  the 89 letters to determine the range and frequency of conditions.  Specifically, two analysts independently reviewed the 89 letters and  recorded the range and frequency of conditions in separate documents.  Then the analysts compared their assessments and resolved any  differences through discussion. To describe DOE’s authorities to enforce  these conditions, as well as the actions DOE has taken to enforce them,  we reviewed the Atomic Energy Act and 10 C.F.R. Part 810. We also  interviewed DOE, NNSA, Federal Bureau of Investigation, and  Department of Justice officials and obtained information on enforcement  actions. To describe the information DOE provides on its enforcement of  Part 810, we reviewed DOE’s 10 C.F.R. Part 810 Assistance to Foreign  Atomic Energy Activities Part 810 Program Elements and interviewed  DOE and NNSA officials. We also interviewed representatives from  entities regulated or potentially regulated under Part 810, as described  above. To determine the information provided by other agencies that  administer related export control regimes, we reviewed relevant  regulations and publicly available information on NRC and the  Departments of State and Commerce’s enforcement policies, including  enforcement manuals and voluntary disclosure guidelines; and  interviewed NRC officials. We also interviewed two export-control  compliance experts, recommended to us based on their expertise, and  representatives from two law firms with expertise and experience in U.S.  nuclear export controls.
We conducted this performance audit from August 2013 to October  2014 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.
section_title: Appendix II: Enforcement Tables
paragraphs: Tables 5 and 6 contain information on the common conditions imposed  on specific authorizations for exports of nuclear technology under 10  C.F.R. Part 810 granted from 2008 through 2013, as well as examples of  less common conditions.
section_title: Appendix III: Comments from the Department of Energy
section_title: Appendix IV: GAO Contacts and Staff Acknowledgments
subsections: section_title: GAO Contacts:
section_title: Staff Acknowledgments:
paragraphs: In addition to the individual named above, Glen Levis (Assistant Director),  Jeff Phillips (Assistant Director), Alisa Beyninson, Antoinette Capaccio,  Pamela Davidson, R. Scott Fletcher, Grant Mallie, Cynthia Norris, John  Rastler, and Jennifer Young made key contributions to this report.