This is the accessible text file for GAO report number GAO-15-124
entitled 'Nuclear Commerce: Additional Actions Needed to Improve DOE's
Export Control Process' which was released on November 14, 2014.
This text file was formatted by the U.S. Government Accountability
Office (GAO) to be accessible to users with visual impairments, as
part of a longer term project to improve GAO products' accessibility.
Every attempt has been made to maintain the structural and data
integrity of the original printed product. Accessibility features,
such as text descriptions of tables, consecutively numbered footnotes
placed at the end of the file, and the text of agency comment letters,
are provided but may not exactly duplicate the presentation or format
of the printed version. The portable document format (PDF) file is an
exact electronic replica of the printed version. We welcome your
feedback. Please E-mail your comments regarding the contents or
accessibility features of this document to Webmaster@gao.gov.
This is a work of the U.S. government and is not subject to copyright
protection in the United States. It may be reproduced and distributed
in its entirety without further permission from GAO. Because this work
may contain copyrighted images or other material, permission from the
copyright holder may be necessary if you wish to reproduce this
material separately.
United States Government Accountability Office:
GAO:
Report to Congressional Requesters:
October 2014:
Nuclear Commerce:
Additional Actions Needed to Improve DOE's Export Control Process:
GAO-15-124:
GAO Highlights:
Highlights of GAO-15-124, a report to congressional requesters.
Why GAO Did This Study:
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.
What GAO Found:
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.
Table:
Target review time:
Initial review stage: 30 days;
Interagency review stage: 30 days;
Final review stage: None.
Median Review time:
Initial review stage: 71 days;
Interagency review stage: 105 days;
Final review stage: 125 days.
Longest review time:
Initial review stage: 1,035 days;
Interagency review stage: 810 days;
Final review stage: 921 days.
Shortest review time:
Initial review stage: 0 days[A];
Interagency review stage: 12 days;
Final review stage: 14 days.
Reviews exceeding 30 days:
Initial review stage: 80 of 89;
Interagency review stage: 85 of 89;
Final review stage: 86 of 89.
Source: GAO analysis of Department of Energy information. GAO-15-124.
[A] The 0-day initial review was for an amended application whose
initial review was completed the same date the amended application was
submitted.
[End of table]
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.
What GAO Recommends:
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.
View [hyperlink, http://www.gao.gov/products/GAO-15-124]. For more
information, contact David C.Trimble at (202) 512-3841 or
trimbled@gao.gov or Thomas Melito at (202) 512-9601 or melitot@gao.gov.
[End of section]
Contents:
Letter:
Background:
DOE Consistently Missed Target Time Frames for Processing Part 810
Applications, with the Interagency and Final Review Stages Taking
Longest:
Part 810 Is Unclear in Its Scope, and DOE's Inquiry Process Does Not
Reasonably Assure Consistent Interpretation:
DOE Has Taken Limited Actions to Enforce Its Nuclear Export Controls:
Conclusions:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Appendix I: Scope and Methodology:
Appendix II: Enforcement Tables:
Appendix III: Comments from the Department of Energy:
Appendix IV: GAO Contacts and Staff Acknowledgments:
Tables:
Table 1: U.S. Nuclear Export Control Regime:
Table 2: Comparison of Processing Times for Part 810 Process:
Table 3: Common Conditions for Specific Part 810 Authorizations for
Deemed Exports, 2008-2013:
Table 4: Common Conditions for Specific Part 810 Authorizations Other
Than for Deemed Exports, 2008-2013:
Table 5: Conditions Imposed through Specific Authorizations for 18
Deemed Exports, 2008-2013:
Table 6: Conditions Imposed through Specific Authorizations for 72
Technology Exports (Other Than Deemed Exports), 2008-2013:
Figures:
Figure 1: The Three-Stage Process for Reviewing Commercial Nuclear
Technology Export Applications under 10 C.F.R. Part 810:
Figure 2: Median Processing Time per Stage Compared with Applicable
Targets:
Figure 3: Median Processing Time per Stage for Deemed and Other
Exports:
Figure 4: Specific Authorizations by Year, 2008-2013:
Abbreviations:
AEA: Atomic Energy Act:
ANS: American Nuclear Society:
AUECO: Association of University Export Control Officers:
BIS: Bureau of Industry and Security:
Commerce: Department of Commerce:
DDTC: Directorate of Defense Trade Controls:
DOD: Department of Defense:
DOE: Department of Energy:
DOJ: Department of Justice:
IAEA: International Atomic Energy Agency:
ISO: International Standards Organization:
ITAR: International Traffic in Arms Regulations:
MOX: mixed oxide:
NE: Office of Nuclear Energy:
NEI: Nuclear Energy Institute:
NIC: Nuclear Infrastructure Council:
NNSA: National Nuclear Security Administration:
NPT: Treaty on the Non-Proliferation of Nuclear Weapons:
NRC: Nuclear Regulatory Commission:
NSG: Nuclear Suppliers Group:
OEE: Office of Export Enforcement:
OIP: Office of International Programs:
State: Department of State:
UAE: United Arab Emirates:
[End of section]
United States Government Accountability Office:
GAO:
441 G St. N.W.
Washington, DC 20548:
October 14, 2014:
The Honorable Fred Upton:
Chairman:
Committee on Energy and Commerce:
House of Representatives:
The Honorable Tim Murphy:
Chairman:
Subcommittee on Oversight and Investigations:
Committee on Energy and Commerce:
House of Representatives:
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.[Footnote 1] 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.[Footnote 2] 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,[Footnote 3]
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.[Footnote 4]
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.[Footnote 5] 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.[Footnote 6] 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.[Footnote 7]
In 2010,[Footnote 8] 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.[Footnote 9] DOE reviewed the Part 810 process and,
in August 2013, DOE issued a Supplemental Notice of Proposed
Rulemaking,[Footnote 10] 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,[Footnote 11] and executive orders related to
government regulation,[Footnote 12] 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.
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.[Footnote 13] 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.
Table 1: U.S. Nuclear Export Control Regime:
Agency and authority: Department of Energy National Nuclear Security
Administration (Part 810);
Jurisdiction: Nuclear technology and services related to the
production of special nuclear material;
Examples:
* Providing information or assistance to address a radiological
emergency; enhance the safety of a civilian nuclear facility in
certain other countries;
* Participating in open meetings sponsored by educational, scientific,
or technical organizations; approved exchange and International Atomic
Energy Agency (IAEA) programs;
* Providing sensitive nuclear technology (for example, through
blueprints, manuals, or services);
* Designing, building, or operating: production reactors, facilities
for enrichment or reprocessing; or some research and test reactors;
* Deemed exports and deemed re-exports (activities of non-U.S. persons
accessing U.S. nuclear technologies).
Agency and authority: Nuclear Regulatory Commission (Part 110);
Jurisdiction: Nuclear reactors, reactor components, and material;
Examples:
* Nuclear reactor or fuel cycle facilities;
* Reactor components;
* Special nuclear material and source material;
* Byproduct material;
* Deuterium (heavy hydrogen);
* Nuclear grade graphite for nuclear end use.
Agency and authority: Department of Commerce (Export Administration
Regulations);
Jurisdiction: Nuclear-related dual-use items;
Examples:
* Pressure transducers, mass spectrometers, machine tools;
* Health and safety equipment;
* Turbines, generators, pipes, and valves;
* Materials and manufacturing equipment;
* General infrastructure, telecommunications;
* and maintenance equipment.
Agency and authority: Department of State (International Traffic in
Arms Regulations);
Jurisdiction: Defense articles and services;
Examples:
* Nuclear reactors and associated power conversion systems associated
with spacecraft;
* Nuclear thermal propulsion systems associated with spacecraft.
Sources: GAO analysis of agency data. GAO-15-124.
[End of table]
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.
Figure 1: The Three-Stage Process for Reviewing Commercial Nuclear
Technology Export Applications under 10 C.F.R. Part 810:
[Refer to PDF for image: process illustration]
Stage I—-Initial review:
Application received;
National Nuclear Security Administration (NNSA) Office of
Nonproliferation and International Security:
* Initial analysis;
* Recommendation;
Department of Energy (DOE) review:
* NNSA staff;
* DOE Nuclear Energy;
* General Counsel.
DOE: Send approval recommendation to interagency for review.
Stage II—-Interagency review:
Interagency review:
* Department of State (State);
* Department of Commerce;
* Nuclear Regulatory Commission;
* Department of Defense;
State:
* Requests written nonproliferation assurances from host government;
* Receives assurances.
DOE time frame: 30 days.
Stage III-—Final review:
NNSA Office of Nonproliferation and International Security:
Draft authorization approval recommendation;
Review:
* NNSA staff;
* DOE staff:
- General Counsel;
- DOE Nuclear Energy;
* Secretary approval
* Issue authorization;
DOE time frame: none[A].
Source: NNSA. GAO-15-124.
[A] There is no target time frame for the entire final review stage;
however, the Secretary is to be provided with a recommendation
regarding the determination no later than 30 days following receipt of
the interagency concurrence or views (or 60 days in the event of
interagency disagreements).
[End of figure]
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.
[Footnote 14] 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.[Footnote 15]
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 [NSG]), aim to ensure
that trade in civilian nuclear technologies does not contribute to
nuclear proliferation.[Footnote 16] 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 figure 2). U.S. nuclear exporters said that the lengthy and
unpredictable Part 810 time frames can impose business risks.
Figure 2: Median Processing Time per Stage Compared with Applicable
Targets:
[Refer to PDF for image: vertical bar graph]
Review stage: Initial;
Median processing time: 71 days;
DOE target: 30 days.
Review stage: Interagency;
Median processing time: 105 days;
DOE target: 30 days.
Review stage: Final[A];
Median processing time: 125 days.
Source: GAO analysis of National Nuclear Security Administration data.
GAO-15-124.
[A] There is no target time frame for the entire final review stage;
however, the Secretary is to be provided with a recommendation
regarding the determination no later than 30 days following receipt of
the interagency concurrence or views (or 60 days in the event of
interagency disagreements).
[End of figure]
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.[Footnote
17] 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.[Footnote 18] 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.
[Footnote 19] 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.[Footnote 20] 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.
Figure 3: Median Processing Time per Stage for Deemed and Other
Exports:
[Refer to PDF for image: 2 vertical bar graphs]
Deemed exports:
Review stage: Initial;
Median processing time: 122 days;
DOE target: 30 days.
Review stage: Interagency;
Median processing time: 49 days;
DOE target: 30 days.
Review stage: Final[A];
Median processing time: 285 days.
All other exports:
Review stage: Initial;
Median processing time: 66 days;
DOE target: 30 days.
Review stage: Interagency;
Median processing time: 122.5 days;
DOE target: 30 days.
Review stage: Final;
Median processing time: 113.5 days.
Source: GAO analysis of National Nuclear Security Administration data.
GAO-15-124.
[End of figure]
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.[Footnote 21] 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,[Footnote 22] 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).[Footnote 23] 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.[Footnote 24]
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,[Footnote 25]
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.
Table 2: Comparison of Processing Times for Part 810 Process:
Target review time;
Initial review stage: 30 days;
Interagency review stage: 30 days;
Final review stage: None.
Median review time;
Initial review stage: 71 days;
Interagency review stage: 105 days;
Final review stage: 125 days.
Longest review;
Initial review stage: 1,035 days;
Interagency review stage: 810 days;
Final review stage: 921 days.
Shortest review;
Initial review stage: 0 days[A];
Interagency review stage: 12 days;
Final review stage: 14 days.
Reviews exceeding 30 days;
Initial review stage: 80 of 89;
Interagency review stage: 85 of 89;
Final review stage: 86 of 89.
Source: GAO analysis of NNSA data. GAO-15-124.
[A] The 0-day initial review was for an amended application whose
initial review was completed the same date the amended application was
submitted.
[End of table]
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.[Footnote 26]
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,
[Footnote 27] 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,[Footnote 28] 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,[Footnote 29] 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,[Footnote 30] 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.[Footnote
31] 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,[Footnote 32] relate to the
production of special nuclear material.[Footnote 33] 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,[Footnote 34]
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).[Footnote 35] 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,[Footnote 36] 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.[Footnote 37] 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.[Footnote 38] 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.[Footnote
39] 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.[Footnote 40] 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.[Footnote 41] 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.[Footnote 42] Documentation of transactions is also
important because gaps can develop in an organization's institutional
knowledge and leadership as experienced employees leave.[Footnote 43]
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.[Footnote 44] 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,[Footnote 45]" 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[Footnote 46] or software programming
language (see appendix II).
Table 3: Common Conditions for Specific Part 810 Authorizations for
Deemed Exports, 2008-2013:
Condition: Ensure that the foreign national maintains a current
passport and visa;
Responsibility: U.S. company;
Frequency: 16 of 18[A].
Condition: Notify DOE promptly upon termination or change in
immigration status for the foreign national;
Responsibility: U.S. company;
Frequency: 17 of 18.
Condition: Submit to DOE for prior approval changes in the foreign
national's work duties;
Responsibility: U.S. company;
Frequency: 17 of 18.
Condition: Report annually to DOE on activities pursued by each
foreign national under the authorization;
Responsibility: U.S. company;
Frequency: 17 of 18.
Condition: Obtain from the foreign national a signed nonproliferation
or nondisclosure statement;
Responsibility: U.S. company, foreign national;
Frequency: 17 of 18[B].
Source: GAO analysis of DOE information. GAO-15-124.
[A] Two authorizations did not contain this condition. In one, the
foreign nationals were being employed through a German affiliate. The
other authorization was for the transfer of technology to a company in
India, as well as Indian nationals in the company's U.S. affiliate.
The latter authorization also did not have the next two common
conditions shown in the table and required quarterly, rather than
annual, reports.
[B] One authorization, for the transfer of mixed oxide fuel
fabrication technology to a South African national, did not require a
nonproliferation statement or a nondisclosure statement.
[End of table]
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 appendix II).
Table 4: Common Conditions for Specific Part 810 Authorizations Other
Than for Deemed Exports, 2008-2013:
Condition: Peaceful (nonmilitary, nonexplosive) use;
Responsibility: Importing country, importing company or other entity;
Frequency: 70 of 72[A].
Condition: Re-export permission required[B];
Responsibility: Importing country, importing company or other entity;
Frequency: 70 of 72[C].
Condition: Submit for prior DOE/NNSA approval names of additional
companies or individuals to which the exporter proposes transferring
the technology;
Responsibility: Exporter (U.S. company or other entity);
Frequency: 70 of 72[D].
Condition: Report to DOE/NNSA on activities conducted under the
authorization;
Responsibility: Exporter (U.S. company or other entity);
Frequency: 70 of 72[E].
Source: GAO analysis of DOE information. GAO-15-124.
[A] Two authorizations for exports to China did not explicitly contain
conditions on peaceful use. However, the authorizations stated that
the transferred technology would be subject to the Agreement for
Cooperation between the Government of the United States of America and
the Government of the People's Republic of China Concerning Peaceful
Uses of Nuclear Energy of July 23, 1985. This agreement provides that
transferred technology may not be used for any nuclear explosive
device, for research specifically on or development of any nuclear
explosive device, or for any military purpose.
[B] Some authorizations state that prior written permission is
required for re-exports, while in other cases, they do not state that
written permission be "prior." In one authorization, the condition
required "prior coordination," without defining what coordination
would entail.
[C] Two authorizations for exports to China did not explicitly contain
conditions on re-export. However, the authorizations stated that the
transferred technology would be subject to the Agreement for
Cooperation between the Government of the United States of America and
the Government of the People's Republic of China Concerning Peaceful
Uses of Nuclear Energy of July 23, 1985. This agreement provides that
transferred technology may not be retransferred outside the parties'
boundaries unless the parties agree.
[D] Two authorizations for exports to the UAE did not contain this
condition.
[E] Two authorizations, one for the export of sensitive nuclear
technology to Germany and the other for computer codes to China, did
not contain any reporting requirements.
[End of table]
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.[Footnote
47] Exporters who are required to report on generally authorized
activities must do so no more than 30 days after they begin.[Footnote
48] 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,
[Footnote 49] 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 figure 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.
Figure 4: Specific Authorizations by Year, 2008-2013:
[Refer to PDF for image: vertical bar graph]
Year: 2008;
Number of applications approved: 2.
Year: 2009;
Number of applications approved: 10.
Year: 2010;
Number of applications approved: 15.
Year: 2011;
Number of applications approved: 19.
Year: 2012;
Number of applications approved: 21.
Year: 2013;
Number of applications approved: 22.
Source: GAO analysis of National Nuclear Security Administration data.
GAO-15-124.
[End of figure]
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."[Footnote 50] 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.[Footnote 51] 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.[Footnote 52] 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,[Footnote 53] 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 [hyperlink, 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.
Signed by:
David C. Trimble:
Director, Natural Resources and Environment:
Signed by:
Thomas Melito:
Director, International Affairs and Trade:
[End of section]
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[Footnote 54] to determine DOE's
internal targets. We analyzed DOE data on the processing times for the
89 specific authorizations granted from 2008 through 2013.[Footnote
55] 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.[Footnote 56] 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,[Footnote 57] 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),[Footnote 58] 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,[Footnote 59] 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.
[End of section]
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.
Table 5: Conditions Imposed through Specific Authorizations for 18
Deemed Exports, 2008-2013:
Common conditions:
Condition: Ensure that the foreign national maintains a current
passport and visa;
Responsibility: U.S. company;
Frequency: 16 of 18;
Relevant notes: Two authorizations did not contain this condition. In
one, the foreign nationals were being employed through a German
affiliate. The other authorization was for the transfer of technology
to a company in India, as well as Indian nationals in the company's
U.S. affiliate.
Condition: Notify Department of Energy (DOE) promptly upon termination
or change in immigration status for the foreign national;
Responsibility: U.S. company;
Frequency: 17 of 18;
Relevant notes: The one authorization without this condition was for
the transfer of technology to a company in India, as well as Indian
nationals in the company's U.S. affiliate.
Condition: Submit to DOE for prior approval changes in the foreign
national's work duties;
Responsibility: U.S. company;
Frequency: 17 of 18;
Relevant notes: The one authorization without this condition was for
the transfer of technology to a company in India, as well as Indian
nationals in the company's U.S. affiliate.
Condition: Report annually to DOE on activities pursued by each
foreign national under this authorization;
Responsibility: U.S. company;
Frequency: 17 of 18;
Relevant notes: In one case, for the transfer of technology to a
company in India, as well as Indian nationals in the company's U.S.
affiliate, the authorization required quarterly reports.
Condition: Obtain from the foreign national a signed nonproliferation
or nondisclosure statement;
Responsibility: U.S. company, foreign national;
Frequency: 17 of 18;
Relevant notes: In one case, for the transfer of mixed oxide fuel
fabrication technology to a South African national, neither a
nonproliferation statement nor a non-disclosure statement was required.
Examples of less common conditions:
Condition: Ensure that the foreign national has access to technology
governed by Part 810 only through fulfillment of contracts and
projects described in the authorization;
Responsibility: U.S. company;
Frequency: 12 of 18;
Relevant notes: It appears that DOE meant to include this condition in
one authorization (not counted in the 12), but omitted the word
"only," which potentially renders the provision meaningless[A].
Condition: Ensure that the foreign national will not access sensitive
nuclear technology;
Responsibility: U.S. company;
Frequency: 3 of 18;
Relevant notes: These three authorizations involved exports of nuclear
power plant technology and training tools to either Indian or Chinese
nationals.
Condition: Ensure that the foreign national will only have access to
executable code (i.e., not source code);
Responsibility: U.S. company;
Frequency: 3 of 18;
Relevant notes: The three authorizations pertained to transfers of
nuclear power plant technology and training tools to either Indian or
Chinese nationals.
Source: GAO analysis of DOE information. GAO-15-124.
Note: We analyzed all authorizations from 2008-2013; the 18
authorizations for deemed exports were signed in 2010 or later.
[A] The condition requires that the company ensure that each foreign
national approved under the authorization be allowed access to the
nuclear technology described in its application during fulfillment of
the company's contracts and projects.
[End of table]
Table 6: Conditions Imposed through Specific Authorizations for 72
Technology Exports (Other Than Deemed Exports), 2008-2013:
Common conditions:
Condition: Peaceful (non-military or non-explosive) use;
Responsibility: Importing country, importing company or other entity;
Frequency: 70 of 72;
Relevant notes: Two authorizations for exports to China did not
explicitly contain conditions on peaceful use. However, the
authorizations stated that the transferred technology would be subject
to the Agreement for Cooperation between the Government of the United
States of America and the Government of the People's Republic of China
Concerning Peaceful Uses of Nuclear Energy of July 23, 1985. This
agreement provides that transferred technology may not be used for any
nuclear explosive device, for research specifically on or development
of any nuclear explosive device, or for any military purpose.
Condition: Re-export permission required:
Responsibility:
Importing country, importing company:
Frequency: 70 of 72;
prior written permission:
Frequency: 42 of 72;
written permission:
Frequency: 10 of 72;
prior permission:
Frequency: 10of 72;
prior coordination:
Frequency: 1 of 72;
Relevant notes: Two authorizations for exports to China did not
explicitly contain conditions on re-export. However, the
authorizations stated that the transferred technology would be subject
to the Agreement for Cooperation between the Government of the United
States of America and the Government of the People's Republic of China
Concerning Peaceful Uses of Nuclear Energy of July 23, 1985. This
agreement provides that transferred technology may not be
retransferred outside the parties' boundaries unless the parties
agree. In one case, an export to Ukraine in 2013, retransfer required
"prior coordination."
Condition: Submit for prior DOE approval names of additional companies
or individuals to which the exporter proposes transferring the
technology;
Responsibility: Exporter;
Frequency: 70 of 72;
Relevant notes: The two authorizations that did not include this
condition were for exports to the United Arab Emirates in 2009 and
2010.
Condition: Report to DOE on activities conducted under the
authorization;
Responsibility: Exporter;
Frequency: 70 of 72;
quarterly:
Frequency: 5 of 72;
semi-annually:
Frequency: 19 of 72;
annually:
Frequency: 46 of 72;
Relevant notes: Two authorizations did not contain any explicit
reporting requirement. One authorization was for an export to Germany
of specifications and requirements for procuring components, equipment
and services for construction of a centrifuge plant. The other was for
an export to China of computer codes.
Examples of less common conditions:
Condition: Implement necessary physical protections;
Responsibility: Importing country, importing company;
Frequency: 13 of 72;
Relevant notes: The 13 authorizations with this condition involved
exports to China (7), Russia (4), Germany (1), and Armenia (1).
Condition: The identified recipients of the transferred technology are
authorized to receive the technology;
Responsibility: Importing country, importing company;
Frequency: 12 of 72;
Relevant notes: This condition was imposed for 12 of the 21
authorizations for exports to China.
Condition: Prior to any third party transfer, the United States and
China mutually agree in writing on conditions associated with the
transfer;
Responsibility: U.S. government, importing government, importing
company;
Frequency: 12 of 72;
Relevant notes: This condition was imposed for 12 of the 21
authorizations for exports to China.[A].
Condition: In case of possible re-export, the principles stipulated in
IAEA document INFCIRC/254/Part1 will be applied.[B];
Responsibility: Importing country, importing company;
Frequency: 6 of 72;
Relevant notes: This condition was imposed in six authorizations for
exports to Russia.
Source: GAO analysis of DOE information. GAO-15-124.
[A] The 12 authorizations that contained this condition are not the
same 12 authorizations that contained the prior condition requiring
that the identified recipients of the technology are authorized to
receive it.
[B] For example, see INFCIRC/254/Rev.9/Part1, "Communication Received
from the Permanent Mission of Brazil regarding Certain Member States'
Guidelines for the Export of Nuclear Material, Equipment and
Technology," 7 November 2007. This communication lays out the Nuclear
Suppliers Group (NSG) guidelines.
[End of table]
[End of section]
Appendix III: Comments from the Department of Energy:
Department of Energy:
Under Secretary for Nuclear Security:
Administrator, National Nuclear Security Administration:
Washington, DC 20585:
October 3, 2014:
Mr. David Trimble:
Director, Natural Resources and Environment:
U.S. Government Accountability Office:
Washington, DC 20548:
Dear Mr. Trimble:
Thank you for the opportunity to review the Government Accountability
Office's (GAO) draft report titled, "Nuclear Commerce: Additional
Actions Needed to Improve DOE's Export Control Process" (GAO-15-124).
The National Nuclear Security Administration (NNSA) concurs with and
has already begun addressing all six of the recommendations provided
in the draft report. In particular, part of our ongoing Process
Improvement Plan involves working to identify gaps, overlaps, and
inefficiencies in the Part 810 authorization process.
The enclosure to this letter provides the specific milestones and
timelines for addressing each recommendation. We have also provided
general and technical comments for GAO's consideration to enhance the
clarity and the factual accuracy of the report.
If you have any questions regarding this response, please contact Dean
Childs, Director, Office of Audit Coordination, at (301) 903-1341.
Sincerely,
Signed by:
Frank G. Klotz:
Enclosure:
National Nuclear Security Administration:
Response to Report Recommendations:
Nuclear Commerce: Additional Actions Needed to Improve DOE's
Export Control Process (GAO-15-124):
Recommendation 1: 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.
Management Response: Concur.
As part of our ongoing Process Improvement Plan (PIP), NNSA is working
to identify gaps, overlaps, and inefficiencies in the Part 810
authorization process. This effort aims to reduce the amount of time
required to process an export request application, while maintaining
the strongest nuclear nonproliferation controls in the interest of
U.S. national security. As part of the PIP, NNSA will establish new,
achievable targets for each stage of the Part 810 process. The most
significant processing delays are caused by long wait times to receive
the required written nonproliferation assurances from foreign
governments. While the U.S. Government cannot control how long a
foreign government takes to provide nonproliferation assurances, NNSA
has initiated discussions with governments to streamline the process
where possible.
In parallel, NNSA is performing a quantitative analysis as a part of a
Six Sigma-based effort, to improve the quality of process outputs by
identifying and removing the causes of defects (errors) and minimizing
variability in business processes. NNSA as a whole, and the Part 810
team specifically, is working towards ISO 9001 compliance. ISO 9000 is
a series of standards developed and published by the International
Organization for Standardization (ISO) that define, establish, and
maintain an effective quality assurance system for manufacturing and
service industries. Based upon the outcome of a quantitative analysis
of the current Part 810 authorization process, NNSA will incorporate,
where possible, those efficiencies.
The third prong of the PIP involves a comprehensive study currently
underway led by industry experts under contract to DOE that will
result in a report and set of recommendations for improvement to NNSA.
This study includes interviews with all relevant stakeholders impacted
by Part 810 including DOEINNSA staff, the U.S. interagency, industry,
and non-governmental organizations.
Estimated completion date: We anticipate this effort will be complete
by June 2015.
Recommendation 2: Integrate these targets into DOE's new Part 810 e-
licensing system to monitor agency performance against them to ensure
that the targets remain realistic and achievable and that they improve
predictability for exporters.
Management Response: Concur.
NNSA is in the process of developing an electronic processing system
("e810 system") and case management web portal for Part 810
applications that has both internet and intranet components. This
portal will: (1) help make the Part 810 process ISO 9001 compliant by
developing a records management function; (2) make the Part 810
application process easier for applicants to complete; (3) align with
industry's request for Part 810 procedural reforms; (4) increase
transparency in the application process to provide more insight into
the status of each application throughout the review; (5) shorten the
processing time for Part 810 authorizations; and (6) enable NNSA to
monitor performance against new target processing times for each stage
of the Part 810 process.
For the past year, NNSA has been working with the NNSA Chief
Information Officer (CIO) to develop in stages, the e810 system. The
initial phase will allow U.S. companies to submit and track the
progress of their Part 810 application or request through the e810
system. This will facilitate NNSA coordination with the interagency to
obtain the requisite concurrence (State Department) and conduct the
required consultations (Departments of Defense and Commerce, and the
Nuclear Regulatory Commission). Future phases will focus on
streamlining the internal, back-end processing and adding
administrative enhancements to the existing site, including a database
of previous authorization decisions.
Estimated completion date: The NNSA CIO's office estimates that the
e810 system will be available for public use around May 2015. However,
development will continue, to make the system increasingly more
sophisticated and helpful.
Recommendation 3: Determine whether DOE has authority to impose civil
penalties for Part 810 violations and develop procedures accordingly.
Management Response: Concur.
DOE has under active consideration whether the Department has
statutory authority under section 234 of the Atomic Energy Act (AEA)
to assess civil penalties for violation of AEA section 57b. and its
implementing regulations at 10 CFR Part 810.
Estimated completion date: At the conclusion of the review process, we
will take any action deemed appropriate.
Recommendation 4: Develop a risk based procedure for selecting
exporters' reports on authorized activities for in-depth analysis.
Management Response: Concur.
NNSA plans to consult with other regulatory agencies such as the
Nuclear Regulatory Commission (NRC) to determine what risk-based
procedures they have in place for analyzing reports on authorized
activities they receive, if any, and to evaluate whether such a
process could be modified to work for Part 810 reports. We also intend
to consult with the DOE Office of Intelligence and Counterintelligence
to explore collaborate on developing a risk-based assessment tool. If
we determine it is possible and useful to create such a system, we
anticipate including this as part of the previously discussed PIP.
We do note that 810 general authorizations already are risk-informed
and are limited to technology, information, and foreign country
destinations that the Secretary of Energy already has determined to be
"non-inimical" to the interest of the United States.
Estimated completion date: We anticipate determining whether risk-
based procedures should be included in the PIP by December 31, 2014.
Recommendation 5: Assess the need to establish export compliance
policies that encourage and reward exporters who self-identify and
correct violations, and develop guidance to exporters on such policies.
Management Response: Concur.
NNSA plans to consult with other regulatory agencies such as the NRC
and the Department of Commerce to determine what export compliance
policies they have in place for encouraging and rewarding self-
disclosure and to evaluate whether such a process( es) could be
modified for Part 810 self-reporting.
Additionally, for the issuance of the final rule, NNSA has developed a
strategic plan for outreach and communications. Through digital media,
face-to-face meetings, and third party partnerships, NNSA will be
informing the public how we plan to manage the transition to the final
rule internally, developing guidelines to facilitate understanding of
the final rule, as well as creating channels to answer questions
promptly. Our main goals with the communications plan are to:
* Ease the transition to and promote understanding of the final rule;
* Present a responsive NNSA;
* Create transparency to allay concerns raised in public comments on
the proposed Part 810 regulatory amendments; and;
* Remind industry of its obligation with regard to self-reporting, and
offer assistance to any company or individual that would like to
discuss its export compliance program with NNSA.
NNSA will undertake speaking engagements with the press and industry
to discuss the regulatory changes, develop and maintain website
content with updated guidelines and FAQs, and will reach out to those
affected by the final rule to help them to submit necessary
information required to be submitted before the expiration of the
transition period after the final rule becomes effective. Information
on how to self-report will be included in the FAQs.
Estimated completion date: We anticipate consulting with the various
offices by the end of calendar year 2014. While the public roll-out
for the e81 0 system will likely be around May 2015, we do not
anticipate that the initial stage of the system will incorporate
a self-reporting mechanism. That will likely be incorporated in
subsequent modifications in the late 2015-early 2016 time frame.
Recommendation 6: Ensure that all inquiries about the scope of part
810, including NNSA's responses, are documented in accordance with
existing DOE procedures.
Management Response: Concur.
The e810 system will be structured so that anyone who applies for
specific authorization or reports on a general authorization activity
must register in order to do so. We will encourage registration from
anyone who comes to the Department with a Part 81O-related question
for purposes of documentation. NNSA will document (for internal NNSA
purposes, not for public consumption) when there is an inquiry or
contact from anyone registered on the e810 system, thus ensuring
memorialization of all contacts. NNSA will continue to consider such
inquiries "informal." Only written interpretations of the Department's
General Counsel in response to formal requests, therefore, are binding
on the Department.
Estimated completion date: We anticipate the ability to add
information on inquiries to the files of registered users on the e810
system to be part of the initial public roll-out of the e81 0 system
in the May 2015 timeframe.
General Comments:
The draft report frequently draws comparisons between the DOE Part 810
export control regime and the export control regimes of the Nuclear
Regulatory Commission (NRC), the Department of Commerce (DOC), and the
Department of State (DOS). Unlike all of the other regimes, DOE's
export authorization process mandated by section 57b. of the Atomic
Energy Act (AEA) prescribes the involvement of five different
executive departments/agencies, and includes diplomatic engagements
with a host of individual foreign governments, whose responsiveness to
U.S. Government requests for nonproliferation assurances the U.S.
Government cannot control. Clarification of this point maybe
beneficial to the average reader of the report.
DOE guidance must be able to address rapid change in the global civil
nuclear market. With the global nuclear market expanding
exponentially. Part 810 requests have become more complicated in
recent years. There are occasions when we receive a request that
presents a unique situation, making "consistent" guidance inapplicable.
NNSA is taking steps in the current Part 810 rulemaking to make the
rule as comprehensive as possible, and aspects of the PIP will provide
guidance as well. Specifically, the proposed revision, among other
things, proposes to: conform Part 810 to the Nuclear Suppliers Group
Guidelines; replace the list of specifically authorized destinations
with a list of generally authorized destinations (this positive list
is consistent with the President's export control reform initiative);
provide a technical description of the activities that are generally
authorized; clarify the use of the "operational safety" fast track
approval; identify required information for all specific authorization
applications; and embody the Department's practice for authorizing
"deemed exports" of technology to lawful permanent residents of the
United States and protected individuals under the Immigration and
Naturalization Act working for U.S. nuclear employers. NNSA believes
that, if adopted, these revisions will address many concerns expressed
by commenters related to consistency and clarity. However, the ability
to devise creative solutions for unique and/or new situations remains
an important aspect of the Part 810 authorization process.
NNSA is revising the inquiry process. The draft report states (on the
first page) that DOE has not proposed revising the inquiry process. As
described below, various aspects of the PIP will address the inquiry
process and the website will contain both written guidance on
reporting for general authorizations and applying for specific
authorizations. Additionally, there will be FAQs and case studies
(with any identifying or proprietary information redacted). NNSA
believes that, taken together, these steps will greatly improve the
inquiry process by reducing the need for potential applicants to contact
NNSA with questions about the Part 810 authorization process. NNSA
representatives stated this position at public meetings regarding the
proposed new rule and PIP, which was a 2010 GAO recommendation. The
Department clearly took seriously the 2010 GAO audit recommendations
on Part 810, as is evidenced by the current rulemaking, process
improvement plan, and creation of an e-810 system.
Additionally, with regard to informal inquiries, the current Part 810
rule states that only a written interpretation of the Department's
General Counsel (or an interpretation authorized in writing by the
Secretary) is binding upon the Department. NNSA staff provides written
guidance approximately 15 times every month. We believe GAO is
referring to informal conversations by members of the public with NNSA
staff, which are generally exploratory in nature. This type of
interaction with the regulated community is consistent with NRC and
DOC practice and is in keeping with the best practices of regulatory
authorities in that it assists with maintaining open lines of
communication.
Part 810 authorization enforcement. It is true that NNSA has not
referred any suspected Part 810 violations to the Department of
Justice for criminal investigation, or revoked any authorizations for
cause. However, for clarification NNSA has not received reports of
illicit technology transfers or seen evidence of companies violating
Part 810 authorization restrictions. Thus, while we are taking steps
to evaluate how we can strengthen our administration of Part 810, we
believe we have been diligent in assuring nuclear technology and
information are properly controlled.
[End of section]
Appendix IV: GAO Contacts and Staff Acknowledgments:
GAO Contacts:
David C. Trimble, (202) 512-3841, or trimbled@gao.gov and Thomas
Melito, (202) 512-9601, or melitot@gao.gov:
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.
[End of section]
Footnotes:
[1] GAO, Nuclear Commerce: Governmentwide Strategy Could Help Increase
Commercial Benefits from U.S. Nuclear Cooperation Agreements with
Other Countries, [hyperlink, http://www.gao.gov/products/GAO-11-36]
(Washington, D.C.: Nov. 4, 2010).
[2] See [hyperlink, http://www.gao.gov/products/GAO-11-36]. Exports of
U.S. civilian nuclear technology are regulated under 10 C.F.R. Part
810, which implements Section 57(b) of the Atomic Energy Act (AEA).
The National Nuclear Security Administration (NNSA)--a separately
organized agency within DOE--implements Part 810 through its Office of
Nonproliferation and International Security. Part 810 applies to
persons subject to the jurisdiction of the United States who engage
directly or indirectly in the production of special nuclear material
outside the United States, or by licensees, contractors or
subsidiaries under their direction, supervision, responsibility, or
control.
[3] Special nuclear material includes plutonium and uranium enriched
in the isotopes uranium-233 or uranium-235.
[4] The activities of non-U.S. persons in U.S. nuclear facilities are
referred to as "deemed exports" because foreign nationals gain access
to U.S. nuclear technology through such activities.
[5] Commercial (or civilian) nuclear power activities represent
"indirect" engagement or participation in the development or
production of special nuclear material, and may or may not require
specific authorization under Part 810. According to DOE documents, the
agency interprets Part 810 broadly to include the provision of
technology in the form of assistance or services to any nuclear power
program outside the United States.10 C.F.R. Part 810 includes a list
of 77 restricted countries, including China, Russia, and India.
[6] The export of sensitive nuclear technology to any country must
always be specifically authorized under Part 810. For example,
enrichment is a sensitive nuclear technology. Enrichment is generally
defined as the process of increasing the concentration of uranium-235
from its natural concentration of less than 1 percent so that the
uranium can be used for fuel in most commercial power reactors (or in
a nuclear weapon).
[7] Part 810-authorized activities, such as bids for contracts, may be
followed by activities that require export licenses from the Nuclear
Regulatory Commission (NRC), which regulates exports of certain
nuclear materials and equipment, under 10 C.F.R. Part 110. These
nuclear materials and equipment include enriched uranium and reactor
components, which can only be exported via NRC license if there is an
agreement for civil nuclear cooperation (123 agreement) or a Project
and Supply Agreement in place with the importing country.
[8] [hyperlink, http://www.gao.gov/products/GAO-11-36].
[9] Exec. Order No. 12,866, 58 Fed. Reg. 51,735 (Sept. 30, 1993);
Exec. Order No. 13,563, 76 Fed. Reg. 3,821 (Jan. 18, 2011). In
particular, Executive Order 13,563 directs that regulations be
accessible, consistent, written in plain language, and easy to
understand.
[10] Assistance to Foreign Atomic Energy Activities, 78 Fed. Reg.
46,829 (Aug. 2, 2013) (to be codified at 10 C.F.R. pt. 810). In
September 2011, DOE issued a Notice of Proposed Rulemaking for Part
810 (Assistance to Foreign Atomic Energy Activities, 76 Fed. Reg.
55,278 (Sep. 7, 2011).
[11] GAO, Standards for Internal Control in the Federal Government,
[hyperlink, http://www.gao.gov/products/GAO/AIMD-00-21.3.1] ("Green
Book") (Washington, D.C.: November 1999).
[12] Exec. Order No. 12,866, 58 Fed. Reg. 51,735 (Sept. 30, 1993);
Exec. Order No. 13,563, 76 Fed. Reg. 3,821 (Jan. 18, 2011).
[13] NNSA is a separately organized agency within DOE.
[14] State's concurrence is required under the AEA; DOE must consult
the other agencies, but their concurrence is not required.
[15] However, the procedures state that any time period in this stage
may be extended by the Assistant Secretary for Defense Programs or his
designee. Under DOE's current organization, which has changed since
the procedures were last updated, this official is the Deputy
Administrator for Defense Nuclear Nonproliferation, NNSA. Amendment to
Procedures Established Pursuant to the Nuclear Nonproliferation Act of
1978, 49 Fed. Reg. 20,780 (May 16, 1984).
[16] NSG is a voluntary, nonbinding arrangement among nuclear supplier
countries. Participating countries undertake a political commitment to
abide by the goals and principles established by the group.
[17] In the data that DOE provided to us, on which we based our
analysis, DOE recorded the date on the application as the start date
for the initial review stage. However, DOE officials told us that they
sometimes have to contact applicants to request additional information
or clarification and do not start reviewing the application until they
receive all of the required information. In response to GAO inquiries
about Part 810 processing times in November 2013, DOE began using the
docket date--the date the initial internal review actually begins--as
the start date for the initial review stage.
[18] MOX fuel is a mix of plutonium and uranium oxides.
[19] Foreign government assurances are not required by the regulation
or by Section 57(b) of the AEA, but State will not provide its
concurrence--which is required--without such assurances because it
views them as meeting several important legal and policy objectives.
Furthermore, DOE officials have stated that any Secretary of Energy
would be unwilling to sign an authorization for which State cannot
provide a foreign government's assurance that the technology would not
be retransferred or diverted.
[20] This 810-day interagency review period was the longest, although
the data that NNSA provided and that we used as the basis of our
aggregated analysis included an interagency review period of 840 days
(the application to export fuel specifications to Russia discussed
below). Because the 840 days include the abeyance period that resulted
from U.S. policy in response to Russia's actions in Georgia, we are
considering the 810-day interagency review period for this application
the longest.
[21] According to the dates NNSA provided, which we used as the basis
of our aggregated data analysis, the interagency review accounted for
840 of the 972 days to process this application. However, those 840
days include the first final review in August 2008 (before the
application was held in abeyance) and the entire abeyance period,
rather than a discrete interagency review period.
[22] The formal titles of these agreements are the Treaty Between the
United States of America and the Russian Federation on Measures for
the Further Reduction and Limitation of Strategic Offensive Arms and
the Agreement Between the Government of the United States of America
and the Government of the Russian Federation for Cooperation in the
Field of Peaceful Uses of Nuclear Energy, respectively.
[23] Amendment to Procedures Established Pursuant to the Nuclear
Nonproliferation Act of 1978, 49 Fed. Reg. 20,780 (May 16, 1984).
[24] 42 U.S.C. §§ 2077(b), 2201(n) (2012).
[25] According to our analysis of NNSA data, NNSA attributed the
number of days it held this application in abeyance to the final
review stage. The final review stage was 634 days and the interagency
stage was 30 days.
[26] GAO, National Laboratories: DOE Needs to Improve Oversight of
Work Performed for Non-DOE Entities, [hyperlink,
http://www.gao.gov/products/GAO-14-78] (Washington, D.C.: Oct. 25,
2013); Environmental Justice: EPA Needs to Take Additional Actions to
Help Ensure Effective Implementation, [hyperlink,
http://www.gao.gov/products/GAO-12-77] (Washington, D.C.: Oct. 6,
2011); and Tax Administration: IRS Needs to Further Refine Its Tax
Filing Season Performance Measures, [hyperlink,
http://www.gao.gov/products/GAO-03-143] (Washington, D.C.: Nov. 22,
2002).
[27] Exec. Order No. 13,450, 72 Fed. Reg. 64, 519 (Nov. 13, 2007).
[28] NEI's mission includes providing a unified industry voice on the
global importance of nuclear energy and nuclear technology. NEI has
over 350 members in 17 countries.
[29] The ISO 9000 series is a quality management standard developed
from the collective experience and knowledge of international experts
who participate in the ISO Technical Committee. These standards are
based on eight quality management principles, which senior management
can use as a framework to guide their organizations toward improved
performance. The quality management principles include, among others,
customer focus, leadership, continual improvement, and a factual
approach to decision making.
[30] Lean Six Sigma is a data-driven approach based on the idea of
eliminating defects and errors that contribute to losses of time,
money, opportunities, or business.
[31] Exec. Order No. 12,866, 58 Fed. Reg. 51,735 (Sept. 30, 1993);
Exec. Order No. 13,563, 76 Fed. Reg. 3,821 (Jan. 18, 2011). As
previously noted, Executive Order 13,563 directs that regulations be
accessible, consistent, written in plain language, and easy to
understand.
[32] Reactor pressure vessels contain the nuclear fuel in nuclear
power plants.
[33] These comments were made on DOE's 2011 proposed revisions to Part
810, but the definition in question is unchanged from its current
version.
[34] NRC provides an "Illustrative List of Nuclear Reactor Equipment
under NRC Export Licensing Authority" at 10 C.F.R. Part 110 Appendix A.
[35] Under the regulation, "public information" includes information
generally available in print or electronic media; libraries, archives,
and university courses; information that has been presented in open
meetings; and certain information that has been filed with the United
States Patent and Trademark Office or which has been made available
under the Freedom of Information Act. It does not include any
technical embellishment, enhancement, explanation or interpretation
which in itself is not public information.
[36] Specifically, DOE has proposed to replace its definition of
"public information" with definitions of "publicly available
information" and "publicly available technology."
[37] Part 810 specifies that each application shall contain (a) the
name, address, and citizenship of the applicant, and complete
disclosure of all real parties in interest; if the applicant is a
corporation or other legal entity, where it is incorporated or
organized, the location of its principal office, and the degree of any
control or ownership by any foreign person or entity; (b) a complete
description of the proposed activity, including its approximate
monetary value, the name and location of any facility or project
involved, the name and address of the person or legal entity for which
the activity is to be performed, and a detailed description of any
specific project to which the activity relates; (c) any information
the applicant may wish to provide concerning the factors the Secretary
must take into account in considering a grant of specific
authorization; and (d) designation of any information considered
proprietary for which public disclosure would cause substantial harm
to the competitive position of the applicant.
[38] Office of Management and Budget: Final Bulletin for Agency Good
Guidance Practices (72 Fed. Reg. 3,432 (Jan. 2007) defines ''guidance
document'' as an agency statement of general applicability and future
effect, other than a regulatory action (as defined in Executive Order
12866, as further amended), that sets forth a policy on a statutory,
regulatory, or technical issue or an interpretation of a statutory or
regulatory issue.
[39] NRC provides an "Illustrative List of Nuclear Reactor Equipment
under NRC Export Licensing Authority" at 10 C.F.R. Part 110 Appendix
A. Commerce maintains the Commerce Control List, which describes the
characteristics and capabilities of the dual-use items and certain
military items that may require export licenses at 15 C.F.R. Part 774
Supplement 1, and the agency also provides an online list of
frequently asked questions.
[40] Specifically, 10 C.F.R. § 810.5 provides that, "A person may
request the advice of the Director, Nuclear Transfer and Supplier
Policy Division (NN-43), on whether a proposed activity falls outside
the scope of this part, is generally authorized under § 810.7, or
requires specific authorization under § 810.8; however, unless
authorized by the Secretary of Energy, in writing, no interpretation
of the regulations in this part other than a written interpretation by
the General Counsel is binding upon the Department. When advice is
requested from the Director, Nuclear Transfer and Supplier Policy
Division, or a binding, written determination is requested from the
General Counsel, a response normally will be made within 30 days and,
if this is not feasible, an interim response will explain the delay."
However, there is no requirement that inquiries be handled formally.
[41] If companies have determined that their items are Commerce-
controlled but are uncertain of export licensing requirements, they
may request a classification from Commerce through the commodity
classification process. Commerce can refer classification requests to
State and DOD to confirm that the items are Commerce-controlled. If
companies are unsure of which department has jurisdiction over their
items, they can request a determination through the commodity
jurisdiction process from State, which consults with Commerce and
Defense. For more information, please see GAO, Export Controls:
Processes for Determining Proper Control of Defense-Related Items Need
Improvement, [hyperlink, http://www.gao.gov/products/GAO-02-996],
(Washington, D.C.: Sept. 20, 2002).
[42] [hyperlink, http://www.gao.gov/products/GAO/AIMD-00-21.3.1].
[43] GAO, Federal Workforce: Recent Trends in Federal Civilian
Employment and Compensation, [hyperlink,
http://www.gao.gov/products/GAO-14-215] (Washington, D.C.: Jan. 29,
2014).
[44] Assistance to Foreign Atomic Energy Activities. 78 Fed. Reg.
46,829 (Aug. 2, 2013).
[45] The definition of "nuclear reactor" in DOE's proposed rule is the
same as that in the current rule. DOE's proposed rule does not change
the definition or clarify it with an illustrative list. The final
rule, which has not yet been issued, may differ from the proposed
rule, and DOE has not communicated its content to us.
[46] Sensitive nuclear technology is any information that is not
available to the public and is important to the design, construction,
fabrication, operation, or maintenance of a uranium enrichment or
nuclear fuel reprocessing facility or a facility for the production of
heavy water.
[47] For some categories of generally authorized exports, such as
furnishing public information as defined in the regulation, there are
no reporting requirements.
[48] Part 810 requires reports submitted for general authorizations to
include the following elements: (1) the name, address, and citizenship
of the person submitting the report; (2) the name, address, and
citizenship of the person or entity for which the activity is being
performed; and (3) a description of the activity, the date it began,
its location, status, and anticipated date of completion.
[49] Part 810 requires reports submitted for specific authorizations
to include the same elements we described for generally authorized
exports, with the addition of a copy of DOE's letter authorizing the
activity.
[50] Officials from DOE's Office of General Counsel initially told us
that the AEA provision for civil penalties regarding violations of
Section 57--which authorize the imposition of a civil penalty of no
more than $100,000 for each violation--applied to violations of
Section 57(b) and thus Part 810. However, DOE officials later told us
that they were uncertain whether the Department had authority under
the AEA to impose civil penalties, because the matter had not come up
prior to their receipt of portions of our draft report. DOE officials
also said that they were uncertain of when they may determine whether
the Department has this authority.
[51] GAO, Civil Penalties: Agencies Unable to Fully Adjust Penalties
for Inflation Under Current Law, [hyperlink,
http://www.gao.gov/products/GAO-03-409] (Washington, D.C.: Mar.14,
2003).
[52] The International Traffic in Arms Regulations (ITAR) provide that
the Department of State may impose civil penalties for violations of
the ITAR. As discussed above, DOE has not determined whether it has
the legal authority to impose civil penalties for violations of Part
810. In 2013, the ITAR was revised so as not to apply to certain
nuclear-related items to the extent that they are under the export
control of the Department of Energy or the Nuclear Regulatory
Commission. To the extent that those items were previously controlled
by the Department of State and are now controlled by the Department of
Energy, they were moved from a system with clear administrative
enforcement authority to one without such clear authority.
[53] An example of a non-willful violation, according to DOE
officials, is an employee inadvertently leaving export-controlled
material in open places where non-U.S. persons may access them.
[54] "Amendment to Procedures Established Pursuant to the Nuclear
Nonproliferation Act of 1978." 49 Fed. Reg. 20,780 (May 16, 1984).
[55] Our analysis excluded one application that DOE approved in 2008,
because that application preceded DOE's electronic data collection
system on which we based our aggregate data analysis.
[56] In seven cases, the dates in the aggregate data NNSA provided to
GAO for applications processed from 2008-2013, on which we based our
aggregate data analysis, differed from the dates on formal and
informal correspondence, on which we based our case study analyses.
[57] We reviewed all public comments submitted on [hyperlink,
http://www.regulations.gov] in response to the proposed rule changes.
We conducted a double-blind content analysis of the 75 comments
submitted to identify those pertinent to the scope of our work. We
used the public comments to provide illustrative examples (and to
identify additional exporters to interview). We did not analyze the
contents of the comments to quantify exporter views on the regulation.
[58] AUECO representatives are university export control officers.
[59] [hyperlink, http://www.gao.gov/products/GAO/AIMD-00-21.3.1]
("Green Book") (Washington, D.C.: November 1999).
[End of section]
GAO's Mission:
The Government Accountability Office, the audit, evaluation, and
investigative arm of Congress, exists to support Congress in meeting
its constitutional responsibilities and to help improve the
performance and accountability of the federal government for the
American people. GAO examines the use of public funds; evaluates
federal programs and policies; and provides analyses, recommendations,
and other assistance to help Congress make informed oversight, policy,
and funding decisions. GAO's commitment to good government is
reflected in its core values of accountability, integrity, and
reliability.
Obtaining Copies of GAO Reports and Testimony:
The fastest and easiest way to obtain copies of GAO documents at no
cost is through GAO's website [hyperlink, http://www.gao.gov]. Each
weekday afternoon, GAO posts on its website newly released reports,
testimony, and correspondence. To have GAO e-mail you a list of newly
posted products, go to [hyperlink, http://www.gao.gov] and select
"E-mail Updates."
Order by Phone:
The price of each GAO publication reflects GAO's actual cost of
production and distribution and depends on the number of pages in the
publication and whether the publication is printed in color or black
and white. Pricing and ordering information is posted on GAO's
website, [hyperlink, http://www.gao.gov/ordering.htm].
Place orders by calling (202) 512-6000, toll free (866) 801-7077, or
TDD (202) 512-2537.
Orders may be paid for using American Express, Discover Card,
MasterCard, Visa, check, or money order. Call for additional
information.
Connect with GAO:
Connect with GAO on facebook, flickr, twitter, and YouTube.
Subscribe to our RSS Feeds or E mail Updates. Listen to our Podcasts.
Visit GAO on the web at [hyperlink, http://www.gao.gov].
To Report Fraud, Waste, and Abuse in Federal Programs:
Contact:
Website: [hyperlink, http://www.gao.gov/fraudnet/fraudnet.htm];
E-mail: fraudnet@gao.gov;
Automated answering system: (800) 424-5454 or (202) 512-7470.
Congressional Relations:
Katherine Siggerud, Managing Director, siggerudk@gao.gov:
(202) 512-4400:
U.S. Government Accountability Office:
441 G Street NW, Room 7125:
Washington, DC 20548.
Public Affairs:
Chuck Young, Managing Director, youngc1@gao.gov:
(202) 512-4800:
U.S. Government Accountability Office:
441 G Street NW, Room 7149:
Washington, DC 20548.
[End of document]