Foreign Relations of the United States, 1969–1976, Volume E–14, Part 2, Documents on Arms Control and Nonproliferation, 1973–1976

153. Paper Prepared in the Bureau of Oceans and International Environmental and Scientific Affairs¹

Washington, undated.

SAFEGUARDS AND NON-PROLIFERATION IMPLICATIONS OF PROPOSAL TO HAVE NEXT ENRICHMENT PLANTS BUILT BY PRIVATE INDUSTRY

This paper attempts to review the safeguard and non-proliferation aspects of the Administration’s proposal to have the next major increment of U.S. enrichment capacity, financed, constructed and operated by U.S. private industry. In this regard the following principal questions are addressed:

(a) Will the proposal significantly add in any way to the risks that the enriched uranium produced by the proposed new plants will fall into unauthorized hands in the U.S.?

(b) Is the proposal likely to compromise in any significant way the rigorous classification and related constraints that now apply to sensitive U.S. enrichment technology?

(c) Is the proposal likely to contribute in any way to the problem of international proliferation by encouraging the spread of U.S. or other enrichment technologies around the world?

To place these questions in perspective it should be noted that the Government has, for approximately 30 years, relied on private contractors to operate the three U.S. diffusion plants. At the present time sensitive technology involved in the U.S. gaseous diffusion plants and centrifuge facilities is classified as Restricted Data and the facilities themselves are subjected to government requirements for physical security protection, nuclear materials accountability as well as governmental inspection and inventory verification. There are severe criminal penalties for anyone who discloses U.S. Restricted Data to an unauthorized person. Also, pursuant to the Atomic Energy Act, special nuclear material (including enriched uranium) only may be distributed domestically to authorized persons and only may be distributed abroad pursuant to inter-governmental agreements for cooperation containing suitable assurances against military use. Additionally, no U.S. Restricted Data, including that pertaining to enrichment, may be transferred to another country, unless the transfer occurs pursuant to an appropriate agreement for cooperation, which would be subject to congressional review. With the exception of an early arrangement with the United Kingdom, which was terminated several years ago, the U.S. has not transferred any classified enrichment technology to any other nation. In general the other countries engaged in major enrichment projects (including France, UK, the USSR, the FRG, Netherlands, South Africa and the PRC) have also kept their programs highly classified. The German jet nozzle process which may be made available by the FRG to Brazil is, however, not classified. With these factors in mind the following paragraphs address the principal questions noted above.

Disposition of the Plant Products

The proposed program favoring private installation is not expected to reduce in any way the various constraints that now govern the distribution of enriched uranium domestically as well as overseas. Indeed, since 1954, the U.S. has operated under a regime of private ownership of nuclear power reactors, as well as fuel fabrication and chemical reprocessing plants. Private ownership of enriched uranium and plutonium also have been permitted for over ten years. The proposition of having the next enrichment plants operated by the private sector therefore should not introduce any inherently new risks into the picture, and the enriched uranium produced by these plants will be subjected to the full range of U.S. domestic and export regulations.

Only authorized persons will be enabled to possess such materials and exports only will take place pursuant to an inter-governmental agreement for cooperation, as well as an approved export license. Such a license is issued only after a thorough review of all relevant implications and following a determination that the export would not be inimical to the interests of the U.S. Our agreements for cooperation governing the export of enriched uranium call for the application of international safeguards on the materials transferred as well as all generations of plutonium produced therefrom. These controls are designed to detect and thus deter any diversions to military uses. Comprehensive U.S. bilateral safeguards come into effect if the international safeguards terminate for any reason. Moreover, quantitative limitations are placed in these agreements on the total amount of enriched uranium that may be transferred to a cooperating country and fuel is exported only when it is needed in a defined peaceful project. Moreover, the U.S. has various ancillary rights designed to reinforce the safeguards and guarantee provisions. These include opportunities to actively participate in the decision as to where the transferred fuel might be reprocessed. All of these constraints which now govern the exports of government-produced enriched uranium would apply with equal force to the products of the proposed new private enrichment plants.

It also should be noted that the UEA plant will be designed to produce only the low enriched uranium that is needed for most U.S.-type nuclear power reactors. Moreover, since the government would continue to control all exports, UEA would consult at an early stage with the government to verify the acceptability of any prospective foreign investor wishing to obtain access to its product.

The principal responsibility for assuring that adequate safeguards and physical protective measures will apply to the proposed new private plants will fall on the Nuclear Regulatory Commission. NRC intends to proceed promptly with the development of the necessary safeguards and associated protective measures; these may have a bearing on the optimal design of the plant and may figure in the initial licensing actions. Since several years will be required to construct the facility NRC will benefit from any further advances that are made in safeguard techniques, including the experience acquired by the International Atomic Energy Agency in this area.

With regard to the IAEA the question arises as to whether the UEA plant and the proposed follow-on gas centrifuge facilities will now fall under the terms of the U.S. Presidential offer to place the entire U.S. nuclear program under IAEA safeguards excluding only those activities having a “direct national security significance.” This is an issue that the U.S. Government would propose to address at such time as the proposed new facilities near completion. If it appears at that time that the subject facilities meet the test of the U.S. offer then we would be prepared to have them subjected to IAEA safeguards. If, however, these enrichment facilities are judged at that time to have direct national security significance they will not be incorporated under the scope of the offer.

Will Current Classification and Related Constraints on U.S. Gaseous Diffusion Technology and U.S. Gas Centrifuge Technology be Eroded by “Privatization?”

The government will continue to require the classification and security protection of that aspect of gaseous diffusion and gas centrifuge technology which is judged to be sensitive and necessary to protect for national security purposes. In general, and because of non-proliferation considerations centrifuge technology is considered to be more sensitive than the gaseous diffusion process.

With the increase in the number of enrichment plants in the United States it is anticipated that a greater number of appropriately cleared U.S. citizens will have access to enrichment technology. The principal factor occasioning this increase will be the expansion in our capacity and scale up of the centrifuge, rather than the proposal to move to private ownership, per se. Had the government elected to install the capacity itself it too would have had to rely on private contractors to design, build and operate the plants. Every effort, however, will continue to be made to restrict the dissemination of sensitive design parameters, components (seals and compressors) and manufacturing processes. Moreover, the concept of “need to know” will continue to apply to such access. ERDA is now performing a classification review of the U.S. gaseous diffusion process to determine if any declassifications can be made which would assist in the production and procurement of components, and the construction of an enrichment plant. Much useful data, enabling prospective investors to meaningfully assess the economics and efficiency of the U.S. gaseous diffusion process, already has been declassified.

Is Private Enrichment Likely to Contribute to the Spread of the Nuclear Enrichment Technology Around the World?

On the whole we believe that a U.S. move to now place new capacity promptly in place will deter the installation of additional foreign capacity and foster our non-proliferation objectives, including the acceptance of safeguards.

Although the transfer to the private sector can be expected to build up a private equity in U.S. enrichment technology and possibly some incentive for foreign ties, no widespread dissemination of U.S. information to other nations is foreseen at this time. As noted, sensitive enrichment technology will remain classified and prospective foreign investors will not have access to such classified information. Moreover, the export constraints and controls as now apply to government-generated information will apply to information and technology advancements generated by UEA and other elements of the private sector. We can expect prospective private enrichers to be fairly sensitive on their own about protecting their technological leadership and proprietary information in this field.

Any proposed sharing of technology with other countries would have to be taken up as a separate matter and would necessarily involve affirmative governmental approvals of the necessary arrangements. In this regard, within the context of the activities of the International Energy Agency, the United States has expressed a willingness to explore cooperation in either the gaseous diffusion or gas centrifuge fields. We have made it clear, however, that in the first instances, we would expect any such proposals on the U.S. side to be developed for U.S. governmental review by those U.S. companies seriously intending to become U.S. enrichers. Thereafter, any such proposals would have to be carefully evaluated by the government taking into account various explicitly stated criteria, including compatibility of the arrangements with surety of supply for the U.S. domestic market and with U.S. national security interests. At this stage the specific character of any cooperative arrangements that might so develop is not known. However, the recent decision favoring “the introduction of private industry” is not expected to alter the picture since (a) all proposals for technology sharing will be subjected to a very intensive review and (b) the current IEA ground rules were, in fact, developed with advent of U.S. private ownership much in mind.

Overall Conclusions

Overall, this paper concludes that the Administration’s proposal to have the next increments of U.S. enrichment capacity privately built will not have any adverse effects on U.S. responsibilities for safeguarding either the products of these plants or sensitive technology. While vigorous efforts in sustaining prudent controls will be necessary in the future, these will be dictated primarily by the growth in the industry and technological advances, rather than the mode of facility ownership.

1. Summary: The paper provided information on the national security implications of the administration’s proposal to have private industry finance, construct, and operate uranium enrichment facilities.

   Source: Ford Library, Glenn R. Schleede Files, Subject File, 1974–77, Box 51, Uranium Enrichment, 1975: National Security Implications. No classification marking. Bengelsdorf sent the paper to Schleede under a June 20 covering memorandum and indicated it reflected input from “the various interested agencies,” including the Department of State, National Security Council, Energy Research and Development Administration, Office of Management and Budget, and the Arms Control and Disarmament Agency. For the decision regarding private industry see telegram 145886 to multiple recipients, June 20, National Archives, RG 59, Central Foreign Policy File, D750216–0297.