Nuclear Commerce: Additional Actions Needed to Improve DOE's Export Control Process
Released: 2014-11-14T00:00:00

Letter

Background

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.

Nuclear Export Controls

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.

The Atomic Energy Act and the Part 810 Process

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.

Enforcement

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.

DOE Consistently Missed Target Time Frames for Processing Part 810 Applications, with the Interagency and Final Review Stages Taking Longest

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.

DOE Missed Its Target to Complete Initial Review for 90 Percent of Applications

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.

Interagency Review Times Missed DOE’s Target for More Than 95 Percent of Applications

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.

Final Review Was the Longest Stage

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.

DOE and Representatives of U.S. Nuclear Exporters Stated That the Lengthy Part 810 Process Can Impose Business Risks

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.

DOE Has Begun Efforts to Improve the Part 810 Process, Including the Development of an E- Licensing System

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.

Part 810 Is Unclear in Its Scope, and DOE’s Inquiry Process Does Not Reasonably Assure Consistent Interpretation

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.

Part 810 Is Unclear in Its Scope

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.

DOE Does Not Provide Exporters with Supplemental Guidance and Its Inquiry Process Does Not Reasonably Assure Consistency

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.

DOE Has Taken Steps to Clarify the Regulation

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.

DOE Has Taken Limited Actions to Enforce Its Nuclear Export Controls

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.

Most Part 810 Authorizations Are Subject to Common Sets of Conditions

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).

DOE Does Not Use a Risk-Based Procedure to Determine Which Reports to Analyze for Compliance

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.

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

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.

DOE and DOJ Have Not Taken Any Formal Actions to Enforce Part 810

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.

Conclusions

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.

Recommendations for Executive Action

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.

Agency Comments and Our Evaluation

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.

Appendix I: Scope and Methodology

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.

Appendix II: Enforcement Tables

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.

Appendix III: Comments from the Department of Energy

Appendix IV: GAO Contacts and Staff Acknowledgments

GAO Contacts:

Staff Acknowledgments:

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.