Ask the Scholar

{
    "localId": "6283022",
    "label": "Nuclear Policy Review: September 7, 1976 (1)",
    "core": "doc",
    "dtoType": "document",
    "citationUrl": "https://catalog.archives.gov/id/6283022"
}

{
    "id": "6283022",
    "sourceUrl": "https://catalog.archives.gov/id/6283022",
    "contentType": "document",
    "title": "Nuclear Policy Review: September 7, 1976 (1)",
    "citationUrl": "https://catalog.archives.gov/id/6283022",
    "collections": [
        "White House Special Files Unit Files",
        "Issue Decision Papers for the President"
    ],
    "subjects": [
        "Nuclear energy",
        "Nuclear nonproliferation",
        "Nuclear weapons"
    ],
    "iiifBase": "https://s3.amazonaws.com/NARAprodstorage/opastorage/live/22/2830/6283022/content/library/document/0010/6283022.pdf",
    "thumbnailUrl": "https://s3.amazonaws.com/NARAprodstorage/opastorage/live/22/2830/6283022/content/library/document/0010/6283022.pdf",
    "largeImageUrl": "https://s3.amazonaws.com/NARAprodstorage/opastorage/live/22/2830/6283022/content/library/document/0010/6283022.pdf",
    "imageCount": 1,
    "hasImages": true,
    "source": "import",
    "hasTranscription": false
}

{
    "url": "https://catalog.archives.gov/id/6283022",
    "naId": 6283022,
    "coverageEndDate": {
        "day": 27,
        "logicalDate": "1976-09-27",
        "month": 9,
        "year": 1976
    },
    "coverageStartDate": {
        "day": 3,
        "logicalDate": "1976-09-03",
        "month": 9,
        "year": 1976
    },
    "levelOfDescription": "fileUnit",
    "recordType": "description",
    "ocrSource": "nara-archive"
}

{
    "seq": 1,
    "pageIndex": 0,
    "type": "document",
    "url": "https://s3.amazonaws.com/NARAprodstorage/opastorage/live/22/2830/6283022/content/library/document/0010/6283022.pdf",
    "mediaId": "8a8bb9bdbd2e42e0",
    "ocrText": "The original documents are located in Box 5, folder \"Nuclear Policy Review: September 7,\n1976 (1)\" of the White House Special Files Unit Files at the Gerald R. Ford Presidential\nLibrary.\nCopyright Notice\nThe copyright law of the United States (Title 17, United States Code) governs the making of\nphotocopies or other reproductions of copyrighted material. Gerald Ford donated to the United\nStates of America his copyrights in all of his unpublished writings in National Archives collections.\nWorks prepared by U.S. Government employees as part of their official duties are in the public\ndomain. The copyrights to materials written by other individuals or organizations are presumed to\nremain with them. If you think any of the information displayed in the PDF is subject to a valid\ncopyright claim, please contact the Gerald R. Ford Presidential Library.\nDigitized from Box 5 of the White House Special Files Unit Files\nat the Gerald R. Ford Presidential Library\nTHE WHITE HOUSE\nwashington\nTrudy,\nJust so we'll be prepared₁I\nasked the messengers to run off\n10 copies of the naclear pepx paper\novernight. They will have it first\nthing in the morning. I assume\nJim then will have decided how to\nstaff it.\nE.\n9/7\n8:15\nGlenn\nlook 3 cope,\nconn memo is\nsaving redome = - -\nHlenn wacking\nwell 4 NSC\n+OMB\n8:20\n9/8/70\nCONT\nIDENTITY\nTHE WHITE HOUSE\nWASHINGTON\nSeptember 7, 1976\nDECISION\nMEMORANDUM FOR:\nThe President\nFROM:\nRobert Fri\nact\nSUBJECT:\nNuclear Policy Review\nThe Nuclear Policy Review Group that you established on\nJuly 19 has completed its analysis. You directed that the\nreview examine three interrelated issues:\n1. What should be U.S. policy on nuclear exports,\nsafeguards, and related matters to reduce the potential for\nweapons proliferation?\n2. What should be the U.S. policy on reprocessing\nspent fuel from commercial power reactors to recover\nplutonium and unused uranium, and on the development of the\nU.S. reprocessing industry?\n3. Are U.S. plans for handling and storing nuclear\nwaste adequate?\nWorking in collaboration with thirteen interested agencies,\nwe have developed several recommendations and options for\nyour consideration. There is general agreement that the\nproliferation threat is sufficiently serious to warrant a\nchange in U.S. nuclear policy. In most cases, there is also\nagreement among your advisers on major recommendations,\nalthough some important if secondary differences remain.\nThere is, however, a divergence of view on the central\ndirection that your nonproliferation policy could take, and\nmore specifically on the nature of your endorsement, if any,\nof reprocessing to recover plutonium.\nDECLASSIFIED\nE.O. 12356, Sec. 3.4.\nMR 98-30,*5; NState letter 7/2/98\nCONF IDENTIAL\nBy lit NARA, Date 10/19/98\nCONFIDENTIAL\n-2-\nTo present these issues to you in an orderly way, you have\nbefore you:\n1. This memorandum, which provides necessary back-\nground, presents major options requiring your decision,\nand recommends next steps.\n2. Tab A, which contains three short option papers on\nwhich we need your decision to resolve secondary issues.\n3. Tab B, which briefly describes other recommendations\non which all your advisers concur.\n4. Tab C, which contains agency views.\nBACKGROUND\nThe problems addressed in this memorandum arise from the\nnature of the nuclear \"fuel cycle.\" The nuclear fuel cycle\nbegins with mining of natural uranium. The amount of\nfissile material in natural uranium--the isotope U-235--must\nbe increased to produce fuel for U.S.-type nuclear power\nreactors; this step is called enrichment. Fuel assemblies\nare fabricated from the enriched uranium and burned in a\nreactor. The resultant spent fuel is stored temporarily at\nthe reactor site.\nAfter burning in a reactor, nuclear fuel contains a mixture\nof plutonium, slightly enriched uranium, and radioactive\nwaste products. This spent fuel must be cooled for several\nmonths at the reactor site. The unresolved issue is what\ndisposition should be made of it thereafter.\nIndustry has long assumed that the spent fuel would be\nreprocessed to recover the plutonium and uranium, which\nwould be recycled into new fuel, thus reducing the amount of\nfresh enriched uranium required. The radioactive wastes\nseparated during reprocessing would be prepared for per-\nmanent disposal. However, the desirability of reprocessing\nis open to question, and other technologies for handling the\nspent fuel may be available.\nCONFIDENTIAL\nCONFIDENTIAL\n-3-\nThe major concern in reprocessing is the recovery of\nplutonium, which is both extremely carcinogenic and the\nprincipal material needed to make nuclear explosives. The\nplutonium is inaccessible while it remains in spent fuel,\nbut once separated in a reprocessing plant, plutonium could\nbe diverted for a national weapons capability or seized by\nterrorists.\nOn the other hand, the plutonium and uranium in spent fuel\ncontains residual energy value, and recovering it could\nextend the U.S. fuel supply for current reactors by 50%. If\nno more natural uranium is discovered, the added fuel would\nbe important to the U.S. reaching its targets for installed\nnuclear capacity by 2000. However, the economics of re-\ncovering the energy value are uncertain, and could at best\nreduce by 2% the cost of generating electricity in the U.S.\nA. International Considerations\nThe oil embargo has made nuclear power a more attractive\nenergy option. Indeed, it has been our policy to help other\ncountries decrease their dependence on imported oil. The\nemergence of nuclear power as an alternative to oil imports\nboth accelerates demand for nuclear power worldwide and\nstimulates commercial opportunities for nuclear supplier\nnations.\nThese and other forces create powerful incentives for the\nspread of reprocessing, and hence separated plutonium.\nChief among these forces are:\nLegitimate interests in an assured supply of\nnuclear fuel.\nThe fast breeder reactor, which ultimately\nrequires plutonium for its operation. France\nwill soon start to build a commercial breeder.\nInternational competition among suppliers, which\ncan lead to sale of enrichment and reprocessing\nfacilities as an inducement for reactor sales or\nas a commercially profitable venture in its own\nright.\nDesire for a nuclear weapons option.\nCONFIDENTIAL\nCONTYDENTAL\n-4-\nThe U.S. has acted to control proliferation of weapons\nmaterial. For many years we dominated the market for nuclear\nreactors and fuel, and we used this influence to impose\nrestraints on our customers. In so doing, we have:\nPromoted the international safeguards system to\ndetect any diversion of sensitive nuclear material.\nInduced many nations to foreswear nuclear weapons\nthrough the Nonproliferation Treaty (NPT), and,\nthrough the NPT, to accept international safeguards.\nRefused, since 1972, to distribute technical informa-\ntion on reprocessing.\nDeveloped common conditions that all suppliers\nwill apply to their nuclear exports to limit the\npossibility of proliferation.\nHowever, several countries remain outside the NPT and we\nhave remaining differences with both other suppliers and\nmany consumers as to how far we can go to restrain the\nspread of sensitive technology and material. France, the\nFRG, and Iran feel we have already taken too rigorous a\nstand.\nAlthough we have made progress, we are losing our leverage\nto make more. Our role as a reliable supplier, the main\nlever for our nonproliferation strategy, has eroded.\nWe remain the dominant enrichment supplier, but\nour future order books have been closed since mid-\n1974.\nAs other suppliers have entered the field, our\nshare of the reactor market has dropped from 80%\nto 55%, and there have been virtually no signifi-\ncant U.S. reactor sales in the past year.\nWe do not offer reprocessing services, and it\nis possible that reprocessing capacity outside\nthe U.S. will be available to service all non-U.S.\nspent fuel by 1985. Several major industrial\nCOVEDENTIAL\nCONFIDENTAL\n-5-\nnations currently plan to operate commercial\nreprocessing facilities, but the only one now\nin operation is a plant in France. Small, non-\ncommercial facilities have been constructed in\nseveral countries, notably including India, which\ncould not have produced its nuclear explosive\nwithout such a facility.\nB. Domestic Considerations\nThere are no commercial reprocessing facilities now operating\nin the United States, and none are likely to operate until\nthe Nuclear Regulatory Commission (NRC) makes the \"GESMO\"\n(Generic Environmental Statement on Mixed Oxides) decision,\nexpected in 1977. This decision will determine whether or\nnot plutonium recycle can be licensed in the U.S. Industry\nis also concerned about the uncertainties of licensing the\nfirst reprocessing plants, even if GESMO is approved.\nAlthough this regulatory problem is frustrating, it is not\nclear that the U.S. needs to build reprocessing capacity\nrapidly. The economics of the technology are uncertain, and\neven if favorable, would produce only a 2% reduction in the\ncost of generating electricity. The energy content of the\nspent fuel is not needed to fuel current reactors for several\nmore years. ERDA has deferred until 1986 an Environmental\nImpact Statement on commercialization of the breeder, and so\nplutonium is not required now for this technology. There\nare, of course, proliferation risks associated with repro-\ncessing that should be resolved before its widespread use.\nThese economic and regulatory uncertainties surrounding\nreprocessing lead us to believe that government investment\nor guarantees may be required to stimulate initial construction.\nThe U.S. does not have a nuclear waste disposal capability.\nAlthough some of the basic technology is known, it was not\nuntil the past year that a comprehensive program for de-\nveloping waste disposal technology was conceived. It is now\nhoped that the first waste repository will operate in 1985.\nCONFEDENTAT\nCONFIDENTIAL\n-6-\nMAJOR POLICY OPTIONS\nThe major issue facing you is a directional one-what\nshould be the U.S. position on the use of reprocessing\ninternationally and domestically. Although reprocessing is\nnot the only nonproliferation issue, it is of central\nsubstantive and symbolic importance as the technology that\ncreates plutonium. As a result, its acceptability is the\npoint on which many people divide, including your advisers.\nBefore presenting the options, we briefly describe the\nnature of the tradeoff involved and the importance of your\ndecision.\nFirst, the nuclear industry and utilities want a decision on\nreprocessing. The industry stresses its benefits and\ngenerally promotes the technology. Utilities appear to be\nmore concerned about eliminating uncertainty, and therefore\nplace more emphasis on taking some stand on reprocessing\nthan on precisely what that stand is.\nPublic, press, and Congressional views show concern over\nreprocessing, and over nonproliferation generally. The\nCongress has extreme problems with the course of our non-\nproliferation policy, and has made several proposals to\ntighten sharply and abruptly our policy, often in ways that\ncould disrupt our nonproliferation efforts. Simultaneously,\nthe press has taken an editorial interest in the subject,\ngenerally to deplore past inaction and occasionally to com-\nmend one or the other of the new proposals made in Congress\nor elsewhere. As a result, there is considerable sentiment\nfor a forceful nonproliferation initiative domestically, and\nthis sentiment is by no means on the liberal fringe.\nCongressman John Anderson is actively seeking nonprolifera-\ntion legislation, and the Wall Street Journal encouraged us\nto defer reprocessing for a number of years.\nIn contrast to the domestic view, our international stance\ntoward nonproliferation argues for some moderation. We are\nparty to thirty bilateral agreements for nuclear coopera-\ntion, and our obligations under these Presidential agree-\nments cannot be taken lightly. Other countries, mostly our\nallies, also supply nuclear reactors and fuel services,\nCONEIDENTIAL\nGONFIDENTTAL\n-7-\nand the forging of common supplier policies is central to\nthe worldwide control of proliferation. A radical toughening\nof our current policy could undercut the evolution of common\nsupplier policies, since some other suppliers would regard\nsuch a stance as politically unrealistic, and possibly as an\nopportunity to further their own commercial interests at our\nexpense.\nNotwithstanding the difficulty of striking the delicate\nbalance between the \"tough\" stance some seek domestically\nand international realism, we believe it is crucial to do\nso. The U.S. remains, uniquely in the world, the leader in\nnuclear policy. Unless we are prepared to embark on a\nresponsible but aggressive policy of nonproliferation, it\nis unlikely that others will.\nYour advisers agree on certain steps that we believe you can\ntake to exercise nuclear policy leadership. Specifically,\nwe should:\nDevelop, with heavy U.S. backing, more rigorous\ninternational controls over plutonium inventories,\nmore effective safeguards against diversion of\nthis material, and tighter security to prevent\ntheft.\nNegotiate actively to persuade our nuclear\ncustomers to defer or foreswear national repro-\ncessing, and to accept more rigorous safeguards and\ninventory controls.\nBe prepared to invoke sanctions when our safeguards\nagreements are broken.\nBeyond these steps, you have four alternate major policy\ndirections open to you.\n1. Accept that reprocessing is inevitable, and undertake\na program designed to lead to its use only under carefully con-\ntrolled conditions worldwide. In this option, you would\ntake the stand that plutonium recycle is essentially with us,\nand the need is to control its development. Since we still\nCONFIDENTIAL\nCONFIDENTIAL\n-8-\nhave some time before reprocessing becomes a commercial\nactivity, we would urge the world to use this time to ensure\nreprocessing develops safely in selected, stable countries.\nIn the meantime, we would favor a go-slow posture toward\nrecycling internationally.\nTo implement this position, you would support (including\nFederal assistance) the operation of a first commercial\nreprocessing plant and associated recycle facilities in the\nU.S We would use this facility to demonstrate new inter-\nnational controls and to gain experience needed for a U.S.\nreprocessing industry. Internationally, we would work\ntoward a system of assured fuel supply for all countries\nagreeing to tougher controls, and we would offer incentives\nto other countries (e.g., offer to purchase their spent\nfuel) to support this alternative to national reprocessing.\n2. Adopt a more conservative stance on reprocessing,\nnot accept its inevitability, and mount a major program to\ndetermine how to reprocess safely. This stance could lead\nto the same result as Option 1, but the tone of your position\non reprocessing would be significantly different. You would\nstate that economic interests should not dominate nonpro-\nliferation goals, and point out that there is little urgency\nin developing plutonium recycle. Therefore, you would take\nthe stand that reprocessing should not go ahead unless\ndemonstrably safe means to do so are available, or unless\nacceptable alternate technologies not involving separated\nplutonium cannot be developed. Until these conditions are\nsatisfied, the U.S. would oppose the use of plutonium as a\nfuel internationally. Under this option, we would support\noperation of a first U.S. plant to answer the outstanding\nquestions relative to safeguards and economics, and would\noffer near-term incentives of assured supply to other\nnations, as in Option 1.\n3. Oppose the use of reprocessing, and take a very\ntough line in doing so. This option would, if successful,\nproduce a completely different result from either Option 1\nor 2. We would view reprocessing as a serious danger, and\nwould oppose its use. As an alternative to reprocessing, we\nCONFIDENTIAL\nCONFIDENTIAL\n-9-\nwould attempt to develop new technologies to get the energy\nvalue from spent fuel without separating the plutonium;\nfailing this, we would be prepared to dispose of spent fuel\nwithout regard to its value. In any case, we would not have\nto face the plutonium problem.\n4. Pursue our existing policies. We would continue to\nresist the spread of national reprocessing, but do so within\nthe framework of existing supplier and consumer agreements,\nand selectively toughen our stand with countries like India.\nIn general, we would avoid dramatic unilateral initiatives,\nengage in intensive but usually unheralded diplomatic efforts,\nand expect the domestic controversy to pass. Since we would\napprove of reprocessing, although not in some nations, we\nwould support its development in the U.S.\nConsiderations affecting your decision among these options\nare:\nOption 1: Accept Reprocessing\nIs in keeping with the views of other responsible\nsuppliers, although Canada favors a tougher stance\nagainst reprocessing, and the FRG and France a\nsomewhat more liberal one.\nSome nations (like Brazil and perhaps Pakistan)\nwill proceed with national reprocessing ventures\nto fulfill nationalist ambitions, although we\ncould anticipate that many nations would go along\nwith our position.\nShould receive favorable reaction in some quarters\nof the Congress, press, and public, but would not\ngo far enough in the eyes of domestic critics who\nbelieve that the proliferation risks of reprocessing\noutweigh its energy or economic advantage, at\nleast for several years.\nIs compatible with development of breeder reactors\nby allowing a technology important to the breeder\nto advance, but at a measured pace.\nWould resolve many of the fuel cycle uncertainties\naffecting U.S. nuclear power.\nCONFIDENTIAL\nCONFIDENTIAL\n-10-\nCommits the U.S. to a technology program that\ncould cost $1 billion through 1985 (assuming an\nNRC decision favorable to recycle), and involves\nstarting up an existing commercial plant at\nBarnwell, South Carolina. However, half of the\ncost is for a nuclear waste facility that must be\nbuilt in any event to demonstrate waste disposal\ntechnology.\nCommits the U.S. to offer incentives (e.g., fuel\nbuy-back) that could have a cumulative cost of\n$200 million by 1985 and $2-5 billion through\n2000.\nOption 2: Conservative Stance\nIs a variant on Option 1 that has not been presented\nto agencies for their formal views. ERDA, FEA,\nCommerce, Defense, and State have indicated their\nsupport of Option 1, but have not yet had the\nopportunity to consider Option 2. Their views\nwill be obtained.\nMight strengthen our position slightly with suppliers\nother than France, and with most consumer nations.\nWould be more favorably received than Option 1 by\nmost of Congress and the press.\nAvoids explaining why you support reprocessing in\nthe face of uncertain economics and proliferation\nrisks.\nU.S. industry might be less inclined to proceed\nwith private investment in reprocessing than under\nOption 1.\nDoes not substantially change the program or costs\nadopted under Option 1, and could produce the same\nresults.\nIs recommended by the Director of your Nuclear\nPolicy Review Group.\nCONFIDENTIAL\nCONFIDENTIAL\n-11-\nOption 3: Oppose Reprocessing\nWould enhance our ability to persuade sensitive\ncountries such as Korea, Pakistan, Republic of\nChina and Iran not to acquire reprocessing\nfacilities by removing the arguments that we were\nseeking to deprive them of a capability we were\nexploiting ourselves.\nWould be unlikely to dissuade France and the\nUnited Kingdom and possibly others from proceeding\nwith their reprocessing plans to which they\nalready are committed.\nWould have the U.S. forego a known technology\n(reprocessing) in return for pursuing alternates\nwhose viability has not been demonstrated.\nWould deprive the U.S. of employing a reprocessing\nfacility as a test bed for developing new safe-\nguards techniques.\nCould be quite popular in some sectors of Congress,\nthe press, and the public.\nU.S. private sector reprocessing capability would\nfold, utilities might slow down nuclear reactor\norders, and the breeder would be called into\nquestion.\nIncurs roughly about the same costs as Option 1,\nbut to develop alternative technologies.\nIs supported by ACDA, CEQ, and EPA.\nOption 4: Business As Usual\nContinues sound existing policies, but on a\nbusiness-as-usual approach that does not deal with\nthe currently perceived threat of proliferation\nthrough reprocessing.\nCould take some credit for progress already made.\nCONFIDENTIAL\nCONFIDENTIAL\n-12-\nOther nations, who already view us as overreacting,\nwould be reassured by our steadiness.\nEssentially unacceptable in Congress and by most\nof the press and the public.\nLittle or no cost would be incurred.\nNone of your advisers recommends it.\nDECISION\nOption 1 (Accept Reprocessing)\nOption 2 (Conservative Stance)\nOption 3 (Oppose Reprocessing)\nOption 4 (Business As Usual)\nNEXT STEPS\nTo implement the option you select, as well as the recom-\nmendations contained in Tabs A and B, steps must be taken to\nlay the groundwork for announcing your decisions.\n1. The NSC and Domestic Council should prepare one or\nmore Presidential messages announcing your new initiatives.\n(One possibility is for you to announce your international\npolicy in a speech at the U.N. General Assembly on September 27.)\n2. The Secretary of State should enter into appro-\npriate consultations prior to your message.\n3. We believe that the credibility of any statement\nthat you make on sanctions will be tested in public eyes by\nwhat the Administration actually does on problems immed-\niately before us, especially regarding India, Taiwan, Egypt,\nand Israel. We recommend that the NSC be directed to recom-\nmend to you our stand on each of these problems before any\nstatement is made.\nCONFIDENTIAL\nCONFIDENTIAL\n-13-\nSteps also need to be taken to implement your decisions. We\nrecommend that a Nuclear Policy Council be established for\nthis purpose. (Tab A presents options for organizing this\nCouncil.)\n1. The Council should be directed to prepare imple-\nmentation plans as soon as possible.\n2. State, ERDA, Commerce, and the Nuclear Policy\nReview Group strongly believe that, until we open our\nenrichment order book, we have very little leverage with\nother countries. We note that even if NFAA is passed this\nyear, it will be 6 months until Congress approves the con-\ntracts and 12 months more before UEA has secured enough\norders and a power supply to enable it to commit finally to\nconstruction. We strongly urge that you establish a policy\nthat can be announced at the time of final action on NFAA,\nand that allows the U.S. to offer more binding assurances of\nenrichment supply to other countries than we now can. The\nCouncil should be directed to prepare options for your\nconsideration on this problem.\nApprove\nDisapprove\nTab A contains other issues requiring your decision, and you\nwill find the place to indicate your decision at the end of\nthe brief discussion of each issue in Tab A.\nTab B describes other actions on which your advisers all\nconcur. Please check below your approval for us to initiate\nthese actions.\nApprove\nDisapprove\nTab C contains agency views.\nCONFIDENTIAL\nCONFIDENTIAL\nTAB A\nOTHER ISSUES FOR DECISION\nThis Tab presents three issues requiring your decision.\nRetroactivity of Restraints\nIssue: By what means should the U.S. attempt to apply\nnew export restraints to existing agreements for nuclear\ncooperation?\nOur agreements for nuclear cooperation impose restraints\non the cooperating nation designed to limit the possibility\nof proliferation. In all new and amended agreements, tighter\nrestraints than those negotiated on old agreements need to be\napplied. These largely pertain to controls over reprocessing,\nexplicit exclusion of peaceful nuclear explosives, etc.\nHowever, only three new agreements are being negotiated and\nas few as three amendments are expected in the next five years.\nFew of our 30 existing agreements contain all of the restraints\nwe would prefer to apply to future agreements. Thus, the\ntighter restraints will have little effect unless also applied\nto existing agreements.\nThe issue for decision is, therefore, the nature of our\npolicy for applying restraints retroactively. We do not\nconsider that a policy of no retroactive application to any\npreexisting agreements is proper or feasible. However, to\napply restraints retroactively will produce difficult problems\nfor our partners, since it is difficult to enforce new conditions\nwithout appearing to be in material breach of preexisting\nintergovernmental understandings.\nThere are two options open to you:\n1. Unilaterally insist on retroactivity. Under this\napproach, new restraints would be immediately applied to all\nlicenses for nuclear exports, and provisions made to accord\nthe President authority to exempt specific licenses from them.\nNo new materials or reactors could be exported in the absence\nof a specific Presidential exemption, unless the other government\nagreed to the new terms. After 18 months, we would apply still\nmore rigorous conditions. The Presidential exemption would\nbecome increasingly hard to exercise and, at some future\nDECLASSIFIED\nE.O. 12356, Sec. 3.4.\nMR 30, #6; NSC letter 7/21/98\nCONFYDENTIAL\nBy let NARA, Date 10/19/98\nCONFIDENTIAL\n-A2-\ntime, would effectively expire. Meanwhile, we would seek to\nnegotiate the restraints retroactively into existing agreements,\nusing the prospect of a licensing cutoff as a lever.\nThe effect of this option would be to place in jeoparady\nexports to at least EURATOM, the IAEA and Argentina, and\npossibly to others, including Switzerland, Brazil, India,\nPortugal, South Africa, Spain, Japan and Finland. As the\nrestraints tighten, it would become increasingly difficult to\ndeal with EURATOM, the IAEA, Canada, Argentina, Brazil and\nIndia.\nThus, this option:\nWould penalize both nations of concern (e.g. India)\nand our allies (e.g. EURATOM).\nDoes not put as severe pressure on some nations of\nparticular concern (e.g. Korea and Republic of China).\nWould likely raise the serious difficulty that imposi-\ntion of these new controls places us, in spirit if not\nlegally, in material breach of existing agreements.\nCould penalize several supplier nations, some of whom\ncould otherwise provide reprocessing services as a\nway to avoid the further spread of national facilities.\nCould produce a massive shift of nuclear trade elsewhere,\nsince other suppliers would not adopt such standards.\nOn the other hand, it could be argued that this approach\nimposes desirable nonproliferation controls and, since several\nare not found in any of our existing agreements, they can only\nbe effectuated unilaterally. If you concurred, you would be\nperceived by some as taking an admirably tough stand on\nproliferation.\nNone of your advisers concur in this option, but it has\nstrong support among some members of Congress (notably Senators\nPercy, Glenn, Ribicoff, and Symington.)\n2. A strong initiative on retroactivity. As an alternative\nto insisting on immediate retroactivity, you could adopt a\nstrategy having the following major components:\nCONFIDENTIAL\nCONFIDENTIAL\n-A3-\nApply new restraints, generally consistent with\nthe recently adopted Supplier Guidelines, but not\nso rigidly couched as to compel us to contravene\nexisting agreements.\nDirect the Secretary of State and the Administrator\nof ERDA to organize a major diplomatic effort aimed\nat upgrading existing agreements to at least the\nlevel of the restraints indicated ábove.\nSeek, through appropriate international undertakings\nand negotiations, retroactive application of even more\nrigorous restraints that clearly go beyond the terms\nof existing agreements.\nIn contrast to the first option, we would negotiate for\nthese restraints, rather than try to impose them unilaterally.\nMoreover, how hard we press would be a function of the degree\nto which there is supplier agreement. It is believed that\nthis option would offer a firm yet workable framework that\nwould enable the U.S. to preserve its influence with a variety\nof nations, although it must be recognized that we can encounter\ndifficult negotiation problems. This overall approach would\nhave the virtue of signifying a generally tougher U.S. line.\nAt the same time it would not deprive us of the opportunity to\nextend our cooperation and influence to a number of supplier\nor consumer states not meeting our preferred tests. Such an\neffort also could focus on restraints which other suppliers\nmight accept if they can be convinced that they suffer no\ncommercial disadvantages.\nHowever, the inherently greater flexibility of this\napproach also can draw some domestic criticism, even though\nit may penalize us economically by clearly placing our new\nrestraints beyond FRG or French practice. Some private inter-\nvenors before the NRC can be expected to press the Commission\nto adopt as criteria some of our longer-term stated goals in\napproving current licenses. Thus, success of this strategy\nmay depend on the degree of public confidence that we are\npursuing diligently a major diplomatic initiative to tighten\nconstraints, whether they apply to new or preexisting\narrangements.\nCONFIDENTIAL\nCONADENTIAL\n-A4-\nYour advisers all concur in this option. We believe\nit would have the support of Senators Pastore and Baker, and\nRepresentatives Anderson, Price and others.\nPlease indicate your decision below:\nOption 1: Unilateral Imposition\nOption 2: Strong Initiative\nYour decision on the above options will determine the\nbasis for our cooperation with the Joint Committee on Atomic\nEnergy on the nonproliferation bill they are writing. Based\non your recent meeting with Senator Pastore, it is our under-\nstanding that we should communicate your decision to them and\nattempt to work out an acceptable bill. If you approve, we\nwill proceed along these lines.\nApprove\nDisapprove\nDomestic Program\nIssue: When, and to what extent, should you announce\na program to develop reprocessing technology in the U.S.?\nIf you select Major Policy Option 1, 2, or 4, some\nprogram to develop reprocessing in the U.S. would be required.\nHeretofore, you have not decided to spend Government funds on\nreprocessing to attain purely domestic objectives. However,\nwe believe a .S.-based capability is needed to further the\ninternational policies recommended in this Review. Specifically,\nsuch a program is needed to:\nProvide a test bed for demonstrating safeguards.\nProvide a basis for Japanese participation in\nmultinational investment in reprocessing, and\nfor cooperation with United Reprocessors, a\nEuropean group.\nExplore technologies other than reprocessing\nfor getting the energy value from spent fuel.\nCONFIDENTIAL\nCONFIDENTIAL\n-A5-\nIn the course of creating this capability, we would\nachieve objectives of domestic benefit, by:\nResolving remaining technical and economic\nuncertainties of reprocessing.\nDemonstrating the solidification of nuclear\nwaste at near-commercial scale.\nDetermining if large reprocessing plants have\nmajor economies of scale.\nTo meet these purposes, facilities and programs costing\nas much as $800 million through 1985 may be required. Specifically,\nwe might need:\nTo license the AGNS reprocessing plant at Barnwell,\nSouth Carolina; it was constructed at private\nexpense.\nTo build a facility to convert plutonium nitrate\n(the liquid AGNS product) to solid plutonium\noxide; the cost would be $175 million, but it\nwould be operated on a cost recovery basis.\nTo construct a waste disposal facility; the cost\nwould be $300-500 million.\nTo construct a prototype line to fabricate\nrecovered fuel (mixed oxide fuel) ; cost would\nbe $15 million (assuming use of an existing\nbuilding), and the private sector would build\na commercial facility later.\nTo undertake alternative technology and large\nplant design programs; cost would be around\n$50 million.\nThe issue is when, and to what extent, to commit to and\nto announce these facilities now. The considerations are:\nGESMO: The conversion facility is subject to\nNRC's GESMO finding.\nInternational negotiation: Since at least IAEA\nand Japan are involved, they should be consulted\non the program before major design work begins.\nCANFLORNTIAL\nCONFIDENTIAL\n-A6-\nAGNS: We must negotiate with AGNS our liability\nif we encourage its operation; we think our costs\nwill be nothing, but we cannot be sure. Further-\nmore, support to AGNS (owned by Gulf, Shell, and\nAllied Chemical) could be seen as a bailout to\nindustry unless we incur little or no cost. Any\nannouncement before November could be sensitive.\nWaste disposal solidification: It is desirable\nto announce commitment to demonstration, but\ncosts are large.\nBudget review: None of the above facilities have\nbeen considered by OMB as part of the overall budget.\nThe size of the two main facilities has not been\nfinally decided, nor have negotiations been conducted\nto determine how much, if any, of the cost might\nbe borne by the private sector.\nThere appear to be two options.\n1. Commit publicly now to a detailed program. You would\nannounce all the actions explicitly.\nPro\n- Sets the clearest basis for a domestic support\nof both international and domestic policies\n- Would be a clear decision endorsed by industry\n- Would be solid backing for the waste disposal\nprogram.\nCon\n- Forces the hand of IAEA and Japan somewhat\n- Could reduce our leverage with AGNS\n- May commit to a funding level before the\nprogram details are worked out.\n- Could be criticized as AGNS bailout and\npreemption of GESMO.\nCONFIDENTIAL\nCONAVDENTIAL\n-A7-\nThis was the only option presented for agency vote.\nState, ERDA, FEA, and Commerce favor it. ACDA, CEQ, and EPA\noppose it.\n2. Commit generally now, but save specific proposals\nuntil later. You would outline the purposes of the program,\ncommit the Government generally to assuring that the program\nobjectives will be met, but observe that the extent of\ngovernment support, the timetable, and other details need\nto be worked out. We would anticipate specific actions in\nnext year's budget.\nPro\n- Gives time to negotiate, firm up program details,\nand conduct budget review\n- Sidesteps AGNS and GESMO problem.\nCon\n- Not as strong as Option 1 in committing a\ndomestic program in support of international\ngoals.\nThis option, favored by OMB, was not presented for agency\nvote.\nThe Nuclear Policy Review Group concurs in the general\napproach of Option 2, provided that the commitment to the\nprogram is clearly supportive of your international policies.\nNegotiations should proceed to firm up program details, and\nbe concluded by the time your budget is presented in January.\nThis variation of Option 2 is listed below as Option 2A.\nPlease indicate your decision.\nOption 1: Detailed commitment\nOption 2: General announcement\nOption 2A: Firm commitment, but\nwithout details\nCERALD\nCONFIDENTIAL\nCONFIDENTIAL\n-A8-\nManagement Structure\nIssue: How should you ensure top level direction of\nthe implementation of your nuclear policy decisions?\nYour nuclear policy decisions will require a major\nimplementation effort, and very close coordination of\ndomestic and international programs. The Department of\nState, ERDA, and ACDA are the agencies mainly involved.\nDefense and the CIA have a smaller role, but should be kept\ninformed of progress.\nThe Nuclear Policy Review Group that has prepared this\ndecision paper recommends you establish a Nuclear Policy Council\nto implement your decisions embodied herein. There is dis-\nagreement over its membership and reporting relationship.\n1. Membership. There are three options.\na. Appoint the Deputy Secretary of State, the\nAdministrator of ERDA, and the Director of ACDA as a Nuclear\nPolicy Council, charged with implementing initiatives approved\nby you. This three-person Council would be supported by a\nsmall (two or three professionals) full-time staff, headed\nby a senior Executive Officer. The staff should represent\nthe elements of the agencies charged with implementing your\nnuclear policy.\nb. Same as above, but drop ACDA.\nC. Use the NSC Undersecretaries Committee\n(State, ACDA, NSC, Defense, CIA, Joint Chiefs of Staff)\naugmented by ERDA and Domestic Council representation.\nThe Nuclear Policy Review Group recommends Option 1.a. as\nthe most direct way to implement your policy.\nERDA recommends Option 1.b. (drop ACDA). However, ACDA\nplays an important role in this area and it seems difficult\nand unwise to ignore them.\nState recommends Option l.c. (NSC Undersecretaries\nCommittee). However, this Committee does not normally oversee\nthe programmatic implementation of decisions, includes agencies\nnot intimately involved in the main implementation tasks, and\ndoes not have staff from all the affected agencies. It should\nof course be kept informed, and, since the Committee is chaired\nby the Deputy Secretary of State, a direct channel of communication\nexists.\nCONFIDENTIAL\nCONFYDENTIAL\n-A9-\nApprove:\nOption l.a.\nOption 1.b.\nOption l.c.\n2. Reporting Relationship. Regardless of membership\nof the Council, it should report to you through advisers\nrepresenting both the domestic and international aspects of\nthe program. All agree that, on the international side, it\nshould be through the Assistant to the President for National\nSecurity Affairs.\nThere is dispute on the domestic side of this joint\nreporting relationship. Your options are to have the Council\nreport through:\na. The Assistant to the President for\nDomestic Affairs, as recommended by\nthe Nuclear Policy Review Group, State,\nACDA, EPA and ERDA.\nb. The Energy Resources Council, as recommended\nby Commerce and FEA. (FEA recommended that\nthe Council be a subgroup of the ERC.)\nThe main difference is that the first option would\nrequire reporting through an element of the White House staff,\nand the second would not.\nApprove:\nOption 2.a.\nOption 2.b.\nCONFIDENTIAL\nB\nCONFIDENTIAL\nTAB B\nAGREED NONPROLIFERATION INITIATIVES\nPolicy on Restraints\nWe have reviewed several possible revisions to our policy\nof bilateral restraints, applied to our agreements for nuclear\ncooperation; and have concluded that we should reaffirm as\nclear policy objectives the London Supplier Guidelines as\nrestraints over retransfer of material, replication of techno-\nlogy, and physical security. We believe, however, there is\na need for a clearer, and in some cases firmer, U.S. restraints\nthat ensure proper international controls of sensitive facilities\nand materials, and that give us leverage over the decision to\ncreate and potentially use separated plutonium.\nThe matter of shaping these restraints is a delicate one.\nThey cannot be so rigid that they foreclose cooperation with\nnations whose nuclear policy we seek to influence, even if, for\nexample, they are not parties to the NPT. They should be\nsusceptible to application by all suppliers, since constraints\nare enhanced if everyone imposes them equally and may prove\nineffectual if they do not. And they must recognize that nations\nwith an existing reprocessing capability present a different\nproblem from those who have no such capability. With these\nfactors in mind, we recommend that in new and amended agreements,\nand as a goal for common supplier acceptance, that the U.S.:\na. Reaffirm the Suppliers Guidelines as a mininum\nrequirement.\nb. Adhere, in addition to the above minimum requirement,\nto the following publicly-articulated criteria to be considered\nin the review of new and amended agreements.\nWhether nonweapon recipients are NPT parties, or\nare clearly planning to adhere to the Treaty or\nare prepared to submit to full fuel cycle safeguards\n(as well as physical security) in the interim pending\nNPT adherence, and\nWhether they are prepared to foreswear or postpone\nfor a substantial period the establishment of national\nDECLASSIFIED\n3.4\nMR 89-9. NSC etr. 7/26/94\nCy 163H\n8/11/94\nCONFIDENTIAL\nCONFIDENTIAL\n-B2-\nreprocessing or enrichment activities*, or (for\nnations having these capabilities) are prepared\nto consciously shape and schedule their reprocessing\nand enriching facilities to foster nonproliferation\nneeds by delaying until economic needs are real and\nby satisfying the requirements of others where feasible\nby accepting spent fuel for reprocessing or alteration\nthrough a multinational or binational approach*, and\nWhether they are prepared, in principle, to participate\nin an international storage regime under which excess\nspent fuel and separated plutonium would be placed\nin IAEA storage and custody pending use. (From our\nstandpoint, spent fuel is better than the storage of\nseparated plutonium since the latter assumes reprocessing.)\nIt would be understood that these would be significant\ncriteria that you would take into account in your review of\nnew agreements or amendments to these agreements, and that\ndepartures from these standards would require your personal\napproval.\nShould you approve these criteria for public use, you\nprobably will be commended for taking a tougher nonproliferation\nstance. However, some may favor an even tougher stance. Thus,\nthe problem of public presentation is a tricky one, given our\ndesire to preserve flexibility to deal with non-NPT countries\n(notably Egypt and Israel) in selected cases when it is in our\nnonproliferation interest. We believe this problem can be\nresolved in the preparation of the final text for any address\nthat you may give.\nSanctions\nYour advisers believe that the U.S. should communicate\nmore convincing signals to the world community that we would\nview either a material violation of any nuclear safeguards\nagreement, or a further spread of nuclear weapons, as an\nextremely grave development. Although Secretary Kissinger\nhas made this clear publicly, the relatively restrainted USG\n*\nWe would seek in all new agreements the necessary veto\nrights to enable us to carry out these agreements.\nCONFIDENTIAL\nCONFIDENTIAL\n-B3-\nreaction to the Indian situation called into question our\nattitude toward the sanctions question. Obviously, our\nentire nonproliferation policy will be impaired if a potential\ndiverter judges that it is relatively immune from sanctions.\nWe recognize that some initiatives in this area could\nprove to be seriously counterproductive by further aggravating\nthe political polarization between suppliers and recipients\nand unduly limiting to U.S. flexibility. Also, to be meaningful,\nany sanctions policy must gain multinational support, thus\nmeriting close continuing consultation. Most of your advisers\nrecommend that you issue a statement making the following points,\nwhich strike a balance between a vigorous U.S. posture and the\nneed for attracting multilateral supplier support, without\nexcessively alienating key recipients.\nNo nonproliferation and safeguards regime is likely to\nsucceed if a potential violator judges that his acquisition of\na nuclear explosive will be received with indifference by other\nnations. Fortunately, this is not the case, and we believe\nthat it is clear that nuclear safeguard undertakings enjoy a\nvery special sobriety and status among nations.\nFor its part, the United States would regard any\nmaterial violation of a nuclear safeguards agreement,\nsuch as a detected diversion, to be an extremely\nserious affront to the world community.\nAny further nuclear proliferation, regardless of\nwhether it is under the guise of developing a\npeaceful nuclear explosive device, would undoubtedly\ngreatly enhance global and regional instability\nand bring the world closer to a nuclear holocaust.\nAccordingly, if any state materially violated a\nsafeguards agreement to which we are a party, we\nwould, as a minimum, immediately cut off our nuclear\nfuel supply and cooperation. Moreover, regardless\nof whether we, ourselves, are a party to a safeguards\nagreement, we would judge a material violation of\nany safeguards agreement, and particularly one with\nthe IAEA, to be of such grievous concern to warrant\nimmediate reexamination and broad consultations\nwith all suppliers and consumers to discuss the\nnature of the punitive or remedial actions that should\nbe taken collectively.\nCONFIDENTIAL\nCONFIDENTIAL\n-B4-\nWe also recommend that the U.S. diplomatically: (a)\nseek supplier agreement to press for an IAEA decision to\ndirect the curtailment or suspension of nuclear assistance to\na state violating Agency safeguards; (b) seek a multilateral\nagreement to suspend or terminate cooperation with any additional\nnonnuclear weapons state hereafter acquiring or testing a\nnuclear device regardless of whether a safeguards violation is\ninvolved (while recognizing the difficulty of gaining adherence\nfrom certain key suppliers, particularly France), and (c)\nsystematically reinforce its position on sanctions in its\ncontacts with other nations.\nBefore any U.S. statement is issued, we recommend that\nthe Department of State consult with a broad spectrum of\ncountries to encourage the issuance of comparable statements.\nIf you make this statement you will be perceived as\nstrongly supportive of nonproliferation, although some foreign\nnations may judge us as too menacing while some at home may\ncriticize you for not taking even a tougher stand.\nERDA would favor tougher public statements indicating that\nU.S. nonnuclear as well as nuclear cooperation will be\njeopardized by a safeguards violation. Your other advisers\nfeel that this reduces our flexibility too much.\nStorage, Safeguards, and Physical Security\n1. Storage. Your advisers favor promotion of a new\nregime, under which spent fuel or excess national stocks of\nseparated plutonium would be placed under IAEA custody pending\nuse. Such a regime could reinforce IAEA safeguards against\ndiversion by reducing worrisome national stockpiles. The U.S.\nhas approached other suppliers and the IAEA Secretariat endorsing\nthis concept. Although many problems would have to be resolved\nto bring the concept to fruition, preliminary Congressional and\nworking-level supplier nation reactions are sympathetic.\nActual implementation, however, will depend on broad supplier\nand consumer support.\nCONFIDENTIAL\nCONFIDENTIAL\n-B5-\nWe recommend that you give your strong public support\nto the concept, and that:\nYou announce that the U.S., in principle, is prepared\nto place its own \"excess\" civil designated spent fuel\nand separated plutonium under IAEA custody, pending\nU.S. need, if a generally satisfactory and broadly\napplicable regime can be developed and established.\nYou also announce that the U.S., in principle, is\nprepared to submit a special grant to the IAEA for\nthe purpose of helping establish the regime (if\nneeded) and offer to provide a U.S. storage site.\nYou state that henceforth consumer willingness, in\nprinciple, to participate in such a regime will be\nadhered to as an important criterion for conclusion\nof new and amended U.S. agreements.\nSince the proposed U.S. pledge to participate in the\nregime may bring some pressure to bear on the U.K., France\nand others, the Department of State should consult with these\nnations, and State and ERDA should consult with key Congressional\nleaders prior to proposed announcement to verify that there is\nno serious opposition.\nIf you approve the pledge you may get credit for taking\na statesmanlike step that serves to demonstrate that the U.S.\nitself is prepared to accept the same constraints it is urging\non others. Some others, however, may view the pledge as\npremature.\nAll agencies agree with these recommendations. Dr. Ikle\nfavors a cautious approach.\n2. International Safeguards. To help preserve the\nefficacy of the IAEA system, your advisors believe that major\nCONFIDENTIAL\nCONFIDENTIAL\n-B6-\nU.S. support and some redirection in the Agency's program are\nrequired to keep pace with the growing quantities of weapons-\nusable materials that are becoming available. A greater\nproportion of the safeguards effort will need to be devoted\nto surveillance techniques to compensate for the inherent\nmeasurement uncertainties in material accountancy that are\ninvolved when large quantities are involved.\nAccordingly, we recommend that the U.S.:\nSponsor together with the IAEA, demonstrations in\nthis country to design new techniques to optimize the\neffective application of safeguards to sensitive\nfacilities.\nOffer one or two of ERDA's national laboratories to\nserve as \"sister\" institutions to support the IAEA\ntechnical Secretariat.\nPromptly explore whether more effective IAEA\nprocedures and rights for surveillance during construction\nand shutdown periods are technically warranted and are\nnegotiable.\nExercise leadership in augmenting scarce IAEA\nresources for needed staff and operating budget.\nIn this regard, we recommend that you direct a\nreexamination of how the U.S. can better contribute\nto the IAEA, including possible ways to augment the\nstaff of inspectors.\nYour endorsement of this idea would be consistent with\npast U.S. policy. However, ways to augment IAEA funding\nstaffing will require careful study.\n3. Physical Security. International (IAEA) safeguards\nrely on material accounting surveillance and inspection, and\ncontainment techniques, all designed to detect diversion of\nnuclear material from authorized use. Physical security\nmeasures, designed to protect sensitive materials, are the\nCONFIDENTIAL\nCONFIDENTIAL\n-B7-\nresponsibility of each nation's domestic authorities. Current\ntrends of international violence and terrorism clearly\ndemonstrate the urgency of effective physical controls.\nThe U.S. is the world leader in promoting effective physical\nprotection of civil nuclear materials and equipment. In this\nregard, the principal nuclear suppliers have recently agreed,\nas a matter of national export policy, to require of customers\nadequate physical security. An international convention on\nphysical protection has been discussed with interested countries\nwith only lukewarm response.\nOn the whole, we believe this is an area where progress is\nbeing made. We should continue to press for upgrading standards\nworldwide. Accordingly, your advisers recommend that the U.S.:\nPursue the international convention by taking diligent\nsoundings about the real prospects of broad inter-\nnational support.\nContinue to promote broad collaboration in the area.\nFor example, seek to develop a close association on\nphysical security measures with the European\nCommunity, recognizing their potential for framing\ncommon nuclear standards.\nYour approval of this activity would represent an endorse-\nment of an ongoing, noncontroversial activity.\nInformation on Diversions\nOur current capability is unsatisfactory for: (1) detecting\ndiversions or attempted diversions, and (2) tracking the world-\nwide buildup of nuclear capabilities. We recommend two actions\nto correct these situations.\nTimely Detection\nIAEA safeguards are frequently criticized as not susceptible\nto timely reporting of possible violations. This is a potentially\nserious problem, as weapons-grade material like separated\nplutonium can be fashioned rapidly (weeks to months) into an\nexplosive.\nWe recommend that all new U.S. supply commitments should\nensure that we receive timely information on effectiveness of\nCONFIDENTIAL\nCONFIDENTIAL\n-B8-\nIAEA safeguards in a cooperating state. In future agreements,\nwe should insist on being continually satisfied regarding\neffectiveness of IAEA safeguards, particularly on sensitive\nfacilities, and we should shape our veto rights to achieve this\nobjective. In some such cases, the U.S. should supplement IAEA\ninspectors with a U.S. presence should that prove essential to\nassure proper safeguarding.\nProliferation Intelligence\nU.S. tracking of worldwide stocks of plutonium and highly-\nenriched uranium can be significantly improved. We commend the\nrecent study of this subject by the Defense Department (Deputy\nSecretary Ellsworth) and urge its recommendations be promptly\nevaluated and quickly implemented. \"User\" agencies should be\ndirectly involved.\nIncentives\nOffering incentives is essential to move other nations to\nour view of reprocessing and to accept our export restraints.\nWe currently lack leverage in world nuclear markets, especially\ndue to lack of uranium enrichment capacity. Consequently, if\nyou approve an option to contain the spread of reprocessing\n(Major Policy Options 1 or 2), we recommend improving incentives\nwith nuclear consumer and supplier nations and with all nations\nin nonnuclear energy cooperation.\nConsumer Incentives\nAs incentives for nuclear consumer nations to forego develop-\nment of national reprocessing, we recommend that the U.S.:\nOffer to nations (those outside Europe and Japan and\npreferably NPT parties) that accept our tougher\nreprocessing conditions, an opportunity for the U.S.\nto acquire their spent fuel, with compensation in\ncash or fresh, low-enriched fuel. The amount of\ncompensation would be determined at the time the other\nnation was ready to reprocess its fuel, and would\nbe based on terms that would avoid economic disadvantages\nto the consumer. (This arrangement would be analogous\nto the formulation recently discussed in Iran by\nSecretary Kissinger. However, it could be viewed by\nsome countries as a constraint rather than an inducement.)\nCONFIDENTIAL\nCONFIDENTIAL\n-B9-\nOffer to these nations assistance in arranging\nfor spent fuel storage in the U.S. or overseas,\nin anticipation of the IAEA storage regime.\nExtend an offer for immediate fuel exchange at\na negotiated price to nations in highly sensitive\nareas where even the presence of spent fuel appears\nworrisome (India, for example).\nAssure, for nations accepting our restraints policy,\nenrichment supply under USG guarantee, subject to\ncapacity limits, covering both regular enrichment\nservices and additional services required to implement\nour fuel exchange agreements. This assurance would\nextend to private sector enrichment plants, in which\nthese nations would be invited to invest.\nGuarantee provision of enrichment services to\nimplement our fuel exchange agreements.\nSupplier Incentives\nTo help induce cooperation of other suppliers and Japan,\nwe should:\nApproach the FRG and France to offer tie-in agreements\nwhereby we would guarantee enrichment services at non-\ndiscriminatory prices to their reactor customers and/\nor offer separative work contract opportunities to\nEuropean enrichers in connection with U.S. reactor\nsales if they move significantly closer to our general\nconstraints policy on reprocessing. This guarantee\ncould be subject to capacity limits.\nIf interest is expressed in such arrangements, invite\nsuppliers' (as well as consumers') investment in U.S.\nprivate sector plants in return for assured supply\nfor tie-in sales.\nSeek binational arrangements with Japan leading to\njointly sponsored reprocessing of their fuel, perhaps\nin a regional plant, and encourage cooperation among\nEuropean suppliers to pursue the United Reprocessors\nventure (France, Germany, and the U.K.) as a model\nfor multilateral plants.\nCONFIDENTIAL\nCONFIDENTIAL\n-B10-\nWe should also communicate in a general way publicly\nthe need to develop an arrangement with other suppliers for\nneutralizing competition for fuel cycle services and facilities.\nThis idea requires further study before presenting it formally\nto other countries, and such study should proceed immediately.\nMeanwhile, exploratory talks with other suppliers could begin.\nFinally, your endorsement of a strategy favoring the\nconstrained spread of reprocessing would also entail your\nseeking other suppliers' agreement to a two-year moratorium\non the transfer of sensitive technology. A moratorium, if\nagreed to, would help cool off the existing concerns and would\nbuy time to undertake the diplomatic initiatives we otherwise\nsuggest. All of your advisers favor pursuing the moratorium\nidea. If we decide to publicly announce endorsement of a\nmoratorium we would be obliged to hold advance consultations\nwith the other suppliers, some of whom strongly favor pursuing\nthis matter on a confidential basis.\nEnrichment Capacity\nAbsence of uranium enrichment capacity in the U.S. calls\ninto question the foregoing initiatives. To support a policy\nof incentives for nuclear consumers and suppliers, we need new\nenrichment capacity. This is a fundamental precondition of\nreally credible fuel exchange guarantees. The more attractive\nand reliable we make our enriched uranium supply, in concert\nwith other suppliers, the more likely our success in containing\nnational reprocessing.\nAccordingly, depending on the status of the NFAA at the\ntime of a Presidential statement on nonproliferation, we\nrecommend that you:\nCall on the Congress to pass the NFAA in view\nof its central importance to your nonproliferation\npolicy.\nRestate the earlier Presidential pledge that the\nUSG will honor any enrichment contract made in the\nU.S., public or private.\nCommit publicly to construction of added capacity at\nERDA's Portsmouth, Ohio, plant.\nNonnuclear Technology Incentives\nThe U.S. has engaged in an aggressive domestic program\nCONFIDENTIAL\nCONFIDENTIAL\n-Bll-\nto develop new energy supplies from nonnuclear sources.\nIn principle, U.S. results are always available for sharing\nwith others. We recommend that collaboration on nonnuclear\ntechnologies be focused on nations that are prepared to\naccept our policy on nuclear export restraints.\nCEQ has recommended that you initiate an international\ninitiative of collaboration on energy conservation to reduce\ndemand, particularly for nuclear (fission) power, while\naccelerating development of solar and fusion energy.\nFor purposes of this review, we believe that benefits\ncould also be achieved near-term by providing selected\ncountries with: (a) assistance in energy systems analysis\nand assessment of energy development strategies; and (b)\ntechnological help in developing indigenous fossil energy\nresources.\nWe recommend that you assign to ERDA and the Department\nof State responsibility for a joint, detailed review of the\ncooperation possibilities in these areas, emphasizing countries\nof proliferation concern, with a report of action recommendations\nto you in ninety days.\nAlternative Technologies\nIf you accept Major Policy Option 3--oppose the use of\nreprocessing--your program for recovering the residual energy\ncontent of spent fuel would be directed toward research into\nalternate technical approaches not involving the separation\nof plutonium. (And even if reprocessing is pursued, many of\nthese alternate technology programs would be initiated.)\nInternationally, participants in our regime of foregoing\nreprocessing could obtain equitable access when these technologies\nare developed, and could obtain spent fuel storage under inter-\nnational auspices in the interim. If the alternative technology\nprogram were unsuccessful, the U.S. could support a throwaway\ncycle or reexamine the desirability of reprocessing.\nThe elements of the approach would be:\nA U.S. program initiated immediately, of construction\nof spent fuel storage capacity, probably initially at\nSavannah River. The U.S. would make the storage\nCONF IDENTIAL\nCONFIDENTIAL\n-B.12-\ncapacity available at no charge. The fuel owner\nwould pay for transportation.\nA vigorous program of examining alternative\ntechnologies would be launched immediately.\nThe U.S. would invite cooperation of other\nstates, both suppliers and consumers, in this\nassessment.\nThe U.S. would announce as U.S. policy that\nwhen any technical approach makes it feasible\nto extract economic benefits from spent fuel\ncompatible with nonproliferation objectives,\nthere would be equitable access to such\nbenefits for any fuel deposited in IAEA\nrepositories or in the U.S.\nThis approach also would share the following common\nfeatures of other Major Policy Options: (a) a U.S. option\nprogram to acquire spent fuel from selected countries as an\nalternate to national reprocessing; (b) active U.S. assistance\nin promoting a spent fuel storage regime; (c) a program of\nguaranteed enrichment supply for nations agreeing to our\nrestraints; (d) U.S. efforts to coordinate its fuel cycle\nprograms with other suppliers in the interest of promoting\nnonproliferation objectives.\nNuclear Waste Management\nThe Nuclear Policy Review examined the waste management\nprogram now underway, and, in general, found it to be soundly\nconceived.\nThe target date of 1985 for initial operation of\na disposal facility is a desirable objective, and\nit is attainable if given a high priority. The\nproposed facility supports the major policy options,\nincluding the throwaway option and the retention of\nforeign waste if that proves necessary.\nIt is essential that the program produce by 1978\nan initial demonstration of waste solidification,\ncanister design, repository design, and the avail-\nability of stable geologic formations. NRC criteria\nfor assessing a repository site should be available\nat the same time.\nCONFIDENTIAL\nCONFIDENTIAL\n-B13-\nThe initial repository should be licensed by NRC.\nThe prinicpal actions required are to ensure that all\nagencies act to meet the 1978 and 1985 dates. To this end,\nthe Administrator of EPA has agreed to propose \"generally\napplicable standards\" for permanent storage of high-level\nwaste by December, 1977. In addition, we recommend that:\n1. The Director of OMB designate a project coordinator\nfor the entire effort, and that the Federal Coordinating\nCommittee for Science, Engineering and Technology be designated\nto provide the coordinator with independent technical advice.\n2. The Administrator of ERDA be directed to publish a\nfinal Generic Environmental Impact Statement on the program\nby late 1977.\nGERAUG\nCONF IDENTIAL\nCONFIDENTIAL\nUNITED STATES ARMS CONTROL AND DISARMAMENT AGENCY\nWASHINGTON\nSeptember 3, 1976\nOFFICE OF\nTHE DIRECTOR\nMEMORANDUM TO THE PRESIDENT\nSUBJECT: ACDA Position on Nuclear Policy Review\nI strongly recommend the domestic and international\nOption 2:\n-- defer and discourage reprocessing;\n-- provide for storage of spent fuel; and\n-- vigorously pursue alternative technologies\nfor recovering the energy value in such\nfuel without separating the plutonium.\nYou are well aware of the intense public and\nCongressional concern over reprocessing. A major\nthrust of your Administration's nonproliferation\nefforts has been to head off reprocessing in countries\nsuch as Korea, Pakistan, Israel, Egypt and the Republic\nof China.\nThis is because reprocessing reduces plutonium\nto a form highly vulnerable to theft or seizure and\nquickly usable in nuclear explosives, as we saw in\nIndia. The output of one commercial size reprocessing\nplant would furnish enough nuclear explosive material\nfor several thousand atomic bombs per year. There\nis no reliable way to prevent plutonium from being\ncaptured by a government willing to violate its\nsafeguards agreements, and then being converted into\nnuclear weapons in a time shorter than we could\nprobably react.\nIn these circumstances, a decision now to assist\nand accelerate reprocessing in the United States by\nWith\nE.O. 12356, Sec. 1.3 (at) )\nCONFIDENTIAL\nmR 92 ACDA 8/28/92\nGERALD\nBy KBH NARA, Date 9/10/92\nCONFIDENTIAL\n-2-\na $1/2 billion Federal investment to permit operation\nof a reprocessing plant constructed by Allied Chemical,\nGulf, and Royal Dutch Shell, could have obvious domestic\npolitical repercussions. This would be especially true\nsince the current public proceedings by the Nuclear\nRegulatory Commission on whether or not to permit the\nuse of reprocessed plutonium in US reactors will not\nbe concluded for at least another year.\nMore importantly, such a decision would seriously\nundercut our efforts to head off reprocessing in other\ncountries, who look more to what we do than what we say.\nThe option I am recommending would avoid this risk and\ndirectly support our international efforts, including\nour call on the London Suppliers' Group to examine\nalternatives to national reprocessing.\nSuch alternative technologies exist, but require\nfurther development and demonstration. While we are\nworking on them, we can well afford to postpone the\nrecovery of the potential energy value in spent reactor\nfuel. The report makes it clear that the economic\nbenefits to reprocessing -- if any -- are small and\nuncertain. There is no question that we have sufficient\nuranium to fuel all US reactors likely to be built in\nthe next 15-20 years. By providing spent fuel storage\nfacilities (which are considerably less costly than\nreprocessing facilities) we would both be setting an\nexample for other countries and relieving our own\nutilities of their most immediate problem -- the need\nto remove the accumulated spent fuel from their reactor\nsites.\nYou, Mr. President, should be the first to establish\nthe principle of proliferation safety -- that commercial\ntechnologies can and must avoid access to weapons-usable\nmaterial. You can direct our superior technological\ncapabilities to this end and remove a major security\nrisk from the nuclear energy picture. And, with the\nforce of a powerful American example, you can lead the\nworld in the same direction.\nComments. on other issues are attached.\nFed C. Thee\nFred C. Ikle\nCONFIDENTIAL\nCONFIDENTIAL\nATTACHMENT\nACDA Position on Other Issues and Recommendations\nin Nuclear Policy Review\nIn keeping with our recommendations about reprocessing,\nwe attach very high priority to the recommendation that you\nsupport, through approaches at the highest level of other\nsupplier governments, our efforts to secure a two-year mora-\ntorium by such suppliers on transfers of sensitive technology.\nThe other central issue in the Review is how we should\ntighten our nuclear export controls, which is also the prin-\ncipal subject of the legislative proposals in this field\ncurrently being discussed with Congress. We consider the\nrestraints proposed on page 13 of the Review as desirable,\nexcept that we oppose any formulation that would accelerate\nreprocessing or provide reprocessing services involving the\nreturn of separated plutonium or mixed oxide fuel to third\ncountries, since these products are too readily convertible\nto use in nuclear weapons. We endorse the recommendations\non sanctions, and generally prefer the \"strong initiative on\nretroactivity\" described at pages 17-18 to unilateral insist-\nence on retroactivity, but believe judicious use of licensing\nleverage can also further our objectives.\nWith respect to the incentives discussed at page 22, we\ndisagree with the recommendations which would encourage co-\noperation in establishing early additional reprocessing\nfacilities in Europe or Japan.\nWe are in general accord with the recommendations on\nMaterial Storage (although the stress should be on spent fuel\nstorage, and you might wish to study further the wisdom and\nscope of the suggested U.S. voluntary offer), Safeguards and\nPhysical Security, Sanctions, Waste Management, Other Initia-\ntives, and Next Steps. With respect to the organizational\nrecommendation on organization of Executive Branch supervision\nof nuclear policy matters, we recognize that other arrange-\nments would also be workable, so long as they gave an appro-\npriate voice to this Agency on matters affecting our non-\nproliferation efforts. We believe the question of whether\nthe UN General Assembly would be a good forum for announcing\nyour international decisions would be highly dependent upon\nDECL/ Ssc. 3.4\nCONFIDENTIAL\nWith PORTIONS EXEMPTED\nE.O. 12356, Sec. 1.3 (a) ( )\nmR 92-44 #5 ACDA tr. seed 8/28/92\nBy KOH NARA, Date 9/16/92\nCONF IDENT IAL\n- 2 -\nthe nature of your decisions and the extent to which they\nmay appear coercive and discriminatory rather than cooperative\nand self-restraining.\nFinally, while the report rightly focusses on the partic-\nularly pressing problems of reprocessing and plutonium,\nnuclear weapons can also be made with highly enriched uranium.\nSince most power reactors use only slightly enriched uranium\n(2-3%), the related nonproliferation problem is primarily one\nof controlling the spread of enrichment facilities and tech-\nnology (which could also produce highly enriched uranium),\nand of meeting foreign fuel needs through enrichment services,\ninvolving low enrichment. For this purpose, we well as for\nproviding fresh fuel as an alternative to reprocessing and\navoiding waste of our uranium resources, the prompt expansion\nof uranium enrichment capacity in the United States is indis-\npensable, and we endorse the recommendations on this subject\non page 23. We also recommend a separate review of our policy\non the export of highly enriched uranium itself, and intensified\ndiplomatic efforts to prevent the spread of enrichment technology.\nWe have not commented on the annex to the report, which we\nhave not seen in the final form.\nCONF IDENTIAL\nCONFIDENTIAL\nEXECUTIVE OFFICE OF THE PRESIDENT\nOFFICE OF SCIENCE AND TECHNOLOGY POLICY\nWASHINGTON; D.C. 20500\nSeptember 2, 1976\nMEMORANDUM FOR\nThe President\nSUBJECT: Nuclear Policy Review\nI am in general agreement with the recommendations of your Nuclear\nPolicy Review Group. They have done an excellent job of clarifying\na very complex topic and identifying major decision points. The\nfollowing paragraphs include my specific comments on major points in\ntheir report to you, in the order in which they were raised.\nI fully endorse the recommendation to strengthen IAEA controls, safe-\nguards and physical security as it applies to sensitive materials, while\ncautioning that this recommendation should be accompanied by additional\nattention to improvement of U.S. assurance of safeguards effectiveness\nas suggested under \"Other Initiatives\" in the Group's report.\nWith respect to the options presented on the retroactive application of\nrestraints, it would appear that immediate and unilateral application\nwould not serve our best interests and therefore I favor the strategy defined\nwhich calls for broader application of restraints through a three component\napproach. Since there have already been diplomatic efforts to gain\nacceptance of stronger restraints, there should be special attention given\nto an explanation of how your policy now represents a new (and more\nintensive) initiative in this area.\nThe Group's report includes two extensive discussions of options for\nreprocessing--both internationally and domestically--that require your\ndecision. I support the general philosophy that reprocessing can not be\neffectively halted worldwide and that the option that calls for the U.S. to\noppose reprocessing is not a realistic approach for the U.S. at this time.\nHowever, in the option defined as \"Controlled Spread of Reprocessing\" there\nis an important element of restraint that needs to be emphasized. In order\nto strengthen this option I believe the proposal for a two-year moratorium\non transfer of sensitive technology should be accompanied by the\nadditional point that work on alternative technologies will be pursued\nduring this period in order to develop a better assessment of the applicability\nDECLASSIFIED\nE.O. 12356, Sec. 3.4.\nMR 89-13,#16 OSTP ltr 2/27/90\nCONFIDENTIAL\nBy VBH NARA, Date 4/10/90\nCONFIDENTIAL\n2\nof these technologies to any future reprocessing capabilities that may be\nestablished. If one of these technologies, despite some of the pessimistic\nviews on their long-term viability, should prove to be attractive it could\nbe pursued as a reprocessing option for non-nuclear weapons nations for\nwhich there would be some concern about the availability of sensitive\nmaterials. Thus, the incorporation of continued technology development\nin this option provides an additional buffer between the supplier and\nconsumer nations that is supportive of our non-proliferation objectives.\nI also support the domestic reprocessing option that includes govern-\nment assistance to the development of limited reprocessing capacity in\nthe U.S. but again with an effort to explore alternative technologies for\nuse on the domestic scene as well as internationally. This would not\ninclude demonstration of the technology without further careful evaluation\nof the costs and expected returns from the options that are then available.\nThe waste management question, while not an issue in the non-prolifer-\nation area is nevertheless an important, and possibly decisive, issue\nof national concern and should also be accorded a high visibility\nin your messages on nuclear policy. I am in agreement with the assess-\nment of the Nuclear Policy Review Group on waste management. In\nparticular, as chairman of the Federal Coordinating Council for\nScience, Engineering and Technology I will be prepared to convene a\ngroup within the council to provide the necessary technical coordination\nand independent technical advice to the Project Manager as recommended\nin the Group's report. My suggestion is that you authorize a separate\nstatement with respect to the organization of this group in order to give\nadditional support to our determination that the necessary preparatory\nwork be carried out to ensure a sound program of waste management that\nis sensitive to environmental and social concerns.\nFinally, I should note my strong support for an expanded U.S. role in\nproviding assistance to other nations in the development of other non-\nnuclear and advanced energy technologies including conservation. It\nis my recommendation that responsibility for review of cooperative\npossibilities in these areas and the development of possible new initiatives\nbe assigned to this office in coordination with the Department of State\nand ERDA since this is a multiple agency matter and requires the close\ncontact and coordination of the Executive Office if it is to be effectively\nimplemented.\nHfuyford\nH. Guyford Stever\nDirector\nCONFIDENTIAL\nEXECUTIVE OFFICE OF THE PRESIDENT\nCOUNCIL ON ENVIRONMENTAL QUALITY\n722 JACKSON PLACE, N. W.\nWASHINGTON, D. C. 20006\nSeptember 3, 1976\nDear Mr. President:\nThis letter provides the comments of the\nCouncil on Environmental Quality on the report of\nthe Nuclear Policy Review Group. The Council has\nparticipated actively in this effort and we have\nbeen impressed with the leadership that Bob Fri has\nprovided.\nWe believe that you should view nuclear policy\nin broad perspective. U.S. nuclear policy (both\ndomestic and international) is part of a broader\nU.S. policy to provide adequate supplies of safe,\nreliable energy at reasonable costs. It is also\npart of a broader arms control and disarmament\npolicy. Moreover, these policies and our overall\nenvironmental quality objectives should be consis-\ntent. We believe that it is important for you to\nview the decisions before you in this context,\nparticularly the decision on whether or not to go\nahead with the reprocessing of spent fuel from\nnuclear reactors.\nAlthough countries with nuclear weapons ambi-\ntions, but without such capability, undoubtedly see\nreprocessing as a direct route to achieving their\ngoal, the driving force behind reprocessing is the\ndesire by the United States and other countries for\na reliable, economical supply of energy. Viewed in\nthis light - as a technology whose value rests\nprimarily on its ability or inability to provide a\nsafe, reliable and economic fuel supply - repro-\ncessing can be compared even-handedly with other\nenergy development strategies, both nuclear and\nnon-nuclear.\n-2-\nFrom an energy supply standpoint, the U.S.\ndoes not need to commit to reprocessing now. The\neconomics of reprocessing appear to be questionable\nat best. From a resource perspective, our uranium\nsupplies are more than ample through the end of this\ncentury, and likely beyond then. Moreover, reprocessing\nbrings safeguards problems for which effective solutions\nhave not been demonstrated.\nIn contrast, an opportunity exists to take the\ninitiative and aggressively explore alternative\nroutes to satisfying our long term energy needs. We\nrecommend a two pronged approach.\nFirst, the United States should explore alter-\nnative technologies for recycling spent reactor\nfuel. Some of these technologies appear promising\nand could permit recovery of the residual energy in\nspent fuel without separating weapons-grade pluto-\nnium. This would have the effect of opening up new\nenergy development options without losing ground on\nthe non-proliferation front, and without closing\nthe door on eventual use of existing technologies.\nSecond, we recommend that you initiate a U.S.\neffort to organize a major world-wide commitment to\nenergy conservation, solar, and nuclear fusion\ntechnologies. These non-fission alternatives are\nsafer, environmentally superior and, in the final\nanalysis, may be more reliable and economical than\nthose which rely on reprocessing. Such a commit-\nment could enable the world to meet long term\nglobal energy needs without permanent reliance on\nfission power. They offer the only long term\npossibility of reducing the connection between energy\nsupply and nuclear weapons proliferation.\nWith respect to non-proliferation, we agree\nwith the concern that any U.S. government decision\nto support reprocessing - as a demonstration or as\na commercial operation - signals to the world a\nU.S. belief that reprocessing is an acceptable\ntechnology. We share the concern that such a message\nwould greatly damage U.S. non-proliferation efforts.\nWe believe that such a decision is unnecessary and\nunwise at this time.\n-3-\nReprocessing is unnecessary now because there\nis little energy related justification for it.\nWe believe it is unwise because we have been\npersuaded that the proliferation risks of such a\ncommitment are extremely grave. The world reaction\nto India's detonation of a simple device, made\npossible by reprocessed plutonium, testifies to the\ngreat fear that this technology generates. The\nproliferation of nuclear weapons as armaments and\nas terrorist tools is, in our judgment, a certain\nconcomitant to the proliferation of nuclear fuel\nreprocessing.\nWe also believe that alternatives to present\nfission technologies have not been adequately\nevaluated to determine if they could meet our\nenergy needs and present fewer risks to our non-\nproliferation objectives. We believe this is\nessential before a U.S. commitment to reprocessing\nis made.\nWe strongly urge that you aggressively pursue\nthe development of technological alternatives to\nreprocessing, and that you defer any U.S. com-\nmitment to reprocessing. We also strongly support\nthe various international initiatives on improving\ncontrols on nuclear facilities and materials, and\nthe domestic initiatives on tightening U.S. export\nconditions, recommended in the Task Force Report.\nWe believe these latter initiatives should be\npursued regardless of your decision on reprocessing.\nWe believe that this course presents the opportunity\nfor the U.S. to establish itself as a bold leader\nin developing safe and reliable energy technologies.\nEqually important, we can take this step without\nlosing the chance to return to existing technologies\nif new ones do not prove feasible. Finally, we\ngain time and credibility internationally to move\nforcefully to stem the spread of national repro-\ncessing facilities.\n-4-\nWe have the time we need to take this bold and\nimportant step now. But we will not have it for\nmuch longer. We believe that the benefits could be\nenormous, while the risks are modest.\nRespectfully,\nRuss Peterson\nRussell W. Peterson\nChairman\nThe President\nThe White House\nWashington, D.C. 20500\nDIPARTMENT OF COMMERCE\nTHE SECRETARY OF COMMERCE\nUNITED STATES OF AMERICA\nWashington, D.C. 20230\nCONF IDENTIAL\nSeptember 3, 1976\nMEMORANDUM FOR THE PRESIDENT\nSUBJECT: Nuclear Policy Review\nWe have reviewed the Nuclear Policy Review Decision\nMemorandum prepared by the Task Force headed by Bob Fri\nand believe it sets out sufficient background and analysis\non which you can make a decision on this important subject.\nWe also believe the realistic alternatives have been\nadequately posed. I believe the Task Force, and Bob Fri\nin particular, have done an outstanding job.\nBefore giving you our position on the various\nrecommendations and alternatives posed in the Memorandum,\nI would like to note my personal belief that there is no\nmore important issue facing the nation and the world than\nthe issue of proliferation of nuclear weapons grade materials\nwithout adequate safeguards. In this regard, I would have\nliked to have seen a bolder, more sweeping plan than that\npresented to you.\nOn reflection, however, it is clear that our leverage\nis not unlimited. Other industrialized countries either\nhave or are gaining the necessary capability to build their\nown enrichment or reprocessing plants and export nuclear\nfuel services to others. Some emerging developing countries\nmay also soon have such a capability. At the same time,\nit will require a major act of political will on our part\nto build the necessary nuclear fuel services capacity\nwhich will provide credibility to the assurances of adequate\nfuel services we would offer to those who are either parties\nto NPT, adopt adequate safeguards or agree to impose restraints\nsimilar to ours. If you decide to proceed, therefore, your\nannouncement will have to give a sense of urgency to the\nCongress as well as the international community. And, I\nbelieve it will be this sense of urgency, of first steps\nsoundly taken, that will give impetus to the perforce\nlimited initiatives set out.\nCONF IDENTIAL\nKBH 2/24/89\nCLASSIFIED BY\nRGDarman, A/S for Policy\nSUBJECT TO GENERAL DECLASSIFICATION\nSCHEDULE OF EXECUTIVE ORDER 11652\nAUTOMATICALLY DECLASSIFIED ON DEC. 31\n1978\nREVOLUTION\nAMERICAN\nBICENTENNIAL\n1776-1976\n®\nTM\nCONFIDENTIAL\n-2-\nHaving noted these caveats, I believe, nevertheless,\nthat you should proceed with the maximum possible force\nof leadership. In this regard, I believe it is at the\nUnited Nations General Assembly that the initiative should\nbe launched. We should be able to attract adequate press\nand media coverage, and any adverse international comments\nwould probably assist you domestically.\nThere follow below our positions on the recommendations\nand alternatives set out in the paper:\nA. Storage, Safeguards and Physical Security\nWe agree with the recommendations on storage,\nsafeguards and physical security. It makes sense\nto provide for IAEA custody of excess plutonium\n(including US \"excess\" civil designated spent fuel\nand plutonium), to strengthen the IAEA safeguard\nsystem, and to attempt to achieve treaty agreement\non international guidelines for physical security\nas well as rapid measures to recover lost or stolen\nmaterials.\nB. Restraints (U.S. Conditions on Nuclear Exports\nunder New Bilateral Agreements or Amendments to\nExisting Agreements for Nuclear Cooperation)\nWe agree with the recommendations on restraints.\nIt is important in this respect to come up with\nexport restraints which have some realistic possibility\nof being effective in connection with the end objective\nof reducing proliferation. Effectiveness in turn depends\non the willingness of other supplier nations to adopt\nsimilar restraints. At the same time, there must be\nsome flexibility. We believe that the recommendation,\nwhich would be based on the recently agreed Supplier\nGuidelines, strikes the necessary balance.\nC. Sanctions\nWe agree with the initiatives to (1) seek a supplier\nagreement to press for an IAEA decision to direct\ncurtailment or suspension of nuclear assistance to\na state violating IAEA safeguards, (2) seek a multi-\nlateral agreement to suspend or terminate cooperation\nwith any additional non-nuclear weapon state (NNWS)\nhereafter acquiring or testing a nuclear explosive\nCONF IDENTIAL\nCONFIDENTIAL\n-3-\ndevice, and (3) announce that violations of\nsafeguards agreements would warrant immediate\nreexamination of our overall relations with the\nviolating state as well as concerted international\naction to consider collective sanctions. We believe\nthis is as far as we can go without disrupting our\nother international interests.\nD. Application of Restraints to Existing Agreements\non Nuclear Cooperation\nWe believe that, of the two options proposed, the\nfirst, unilateral imposition of new export restraints\non countries with which we already have agreements\nof nuclear cooperation, would have serious repercussions\non our foreign relations. It would also penalize a\nnumber of supplier nations, whose cooperation we need\nif we are to be successful in any non-proliferation\npolicy, and might cause a massive shift of nuclear\ntrade elsewhere. We therefore support a strong\ninitiative which would be based primarily on the\ncurrently agreed Supplier Guidelines but with Presidential\nauthority to override a negative NRC finding in exceptional\ncases. (Option 2). The approach would also include\na strong diplomatic initiative aimed at upgrading\nexisting agreements consonant with the Supplier Guidelines.\nWhile the approach will have to be sold to the Congress,\nwe believe we can be successful if we work at it. At\nthe same time, Congressional confidence in this approach\nwill depend on their perception of our sincerity in\nundertaking a major diplomatic initiative to negotiate\nthe necessary amendments to existing agreements. Your\ndirection to the State Department and ERDA in this\nregard must, therefore, be unequivocal.\nE. International and Domestic Options on Reprocessing\nWe believe the first set of options to contain the\nspread of national reprocessing capability and provide\nUSG assistance to demonstrating the commercial feasibility\nof reprocessing makes more sense economically and\ntechnologically and is more realistic from an inter-\nnational point of view. First, technologically, we\nbelieve that alternative technologies are unlikely to\nprove feasible between now and the year 2000 and that\nCONFIDENTIAL\nCONFIDENTIAL\n-4-\nan accelerated effort to develop them will be\nunlikely materially to change this assessment.\nSecondly, we believe that a U.S. decision not\nto go forward with domestic reprocessing will\nhave only marginal effect on restraining other\nsupplier nations with reprocessing capability.\nThirdly, we have a better chance of negotiating\ninternationally appropriate restraints if we take\nthe lead in developing technology which is likely\nto prove feasible in closing the nuclear fuel\ncycle and then offer internationally to provide\nnuclear fuel services to countries which adopt\nour restraint policy. Fourthly, our ability to\ndevelop fully a nuclear option using known domestic\nuranium resources will depend in large part on\nclosing the fuel cycle; if alternate technologies\nare unlikely to achieve this result between now and\nthe year 2000, we will in essence create a major\nimpediment to the development of U.S. nuclear\nelectric generating capacity. We do not believe\nthe argument to the contrary that additional U.S.\nuranium resources will be discovered if the economics\nare right will materially alter this conclusion.\nI should note, however, that, if our primary\ngoal is non-proliferation, the fuel assurance portion\n(whether through reprocessing or enrichment services)\nwill be all important. Why should a consumer nation\nat the behest of the U.S. agree not to acquire its\nown nuclear fuel capability (whether through enrich-\nment or reprocessing) if the U.S. or another supplier\ncountry does not provide fuel services assurances?\nHowever, we should note that U.S. assurances\nwill take considerable resources. The Memorandum\nonly offers fuel services to countries other than\nthose with which we have fuel exchange agreements\nto the extent of capacity. Our present enrichment\ncapacity is inadequate to make assurances to other\ncountries credible. The recommendations on the\nNuclear Fuel Assurances Act are therefore critical.\nCONFIDENTIAL\nCONF IDENTIAL\n-5-\nIn sum, we believe we must at a minimum go\nforward with Barnwell and design of a 3000 MTU\nplant in conjunction with the contained spread\ninternational option if we are to make any progress\nat all in achieving the following two objectives:\n(1) reduction of proliferation, and (2) maximum\ndevelopment of the U.S. nuclear energy alternative\nin accordance with your energy policy.\nFinally, it seems to me that if you decide to\nproceed with this set of options, we should offer\nthe Barnwell demonstration as an international\nventure, perhaps under the aegis of IAEA. Such a\nproposal would have the benefit of demonstrating\nto the world our commitment to develop internation-\nally technological solutions to maximize the energy\ncontent of spent nuclear fuel with appropriate\nproliferation and environmental safeguards.\nF. Waste Management\nWe agree with continuing the present waste manage-\nment program coordinated by OMB.\nG. Other Initiatives\nIt makes sense to continue to expand our non-nuclear\nenergy assistance to other nations and improve our\nown assurance of safeguards effectiveness.\nH. Nuclear Policy Organization\nWe believe a major thrust of the initiative involves\nenergy policy as well as security policy. We there-\nfore suggest the reporting mechanism for the Nuclear\nPolicy Council be through the Energy Resources Council\nand the National Security Council rather than through\nthe Domestic Council and the National Security Council.\nThe ERC meets as a body more often and has the appropri-\nate membership for this purpose including relevant mem-\nbers of the Domestic Council. The ERC also has under\nits aegis a Nuclear Subcommittee which is charged with\ndeveloping the all important domestic nuclear decision\nschedule which must support any initiative you take in\nthis area. This type of organization would be more\nconsistent with the procedures already in place in\nconnection with other energy policy matters.\nCONT IDENTIAL\nCONFIDENTIAL\n-6-\nI. Next Steps\nWe agree with the next steps outlined in the\nMemorandum.\nI believe the above outlined initiative would be\nvery much in the interests of the country and the world.\nTo give it credence will require your personal leader-\nship. I very much urge your agreement to proceed.\nIf you decide to proceed, we shall of course have\nto pay particular attention to how the initiative is\ncoordinated with the various Congressional bills, one\nof which I understand may come to the Floor of the\nSenate as early as September 16.\n-2\nElliot L. Richardson\nCONFIDENTIAL\nCONFIDENTIAL\n& DEVELOPMENT )\nUNITED STATES\nENERGY RESEARCH AND DEVELOPMENT ADMINISTRATION\nWASHINGTON, D.C. 20545\nUSA\nSEP 7\n1976\nThe President\nThe White House\nDear Mr. President:\nAs I stated in my letter to you of June 9, 1976, I believe there is\na need for the United States to undertake major initiatives to reduce\nthe risk of proliferation of nuclear explosive devices and to meet\nour domestic energy needs by resolving uncertainties that now pose\nimpediments to closing the nuclear fuel cycle. The nuclear policy\nreview which Bob Fri's Task Force has undertaken at your direction\nprovides recommendations for your decisions on these important policy\nissues.\nAs discussed in more detail below and in the enclosure, we generally\nsupport the Task Force recommendations and urge their adoption.\nI believe that your decision on these matters should be driven by two\nprincipal objectives:\nTo assure that we are able to exert maximum international\ninfluence toward the nonproliferation of nuclear weapons\nand safeguarding of nuclear materials, and\nTo assure the viability and continued growth of domestic\nnuclear power.\nWe can accomplish our nonproliferation objectives only if we are in\na position to influence other nations, particularly the supplier nations.\nOur leverage in these matters depends on our credibility as a nuclear\nsupplier, which in turn requires that we take action now to:\nIncrease our uranium enrichment capacity, as you have proposed\nin the Nuclear Fuel Assurance Act;\nEstablish a reprocessing capability; and\nImplement an effective and responsible waste management effort.\nREVOLUTION\nSUBJECT\nNATIONAL SECURITY\nGENERAL\nEXECUTIVE\nORDER\nAMERICAN\nBICENTENNIAL\nINFORMATION\nA!\nINC\nYEAR\nINTERVALS\nthmauthorized Disclosure Subject to\nCriminal Sanctions.\nyears\n1776-1976\nTM\nCONFIDENTIAL\nKBH 2/24/89\nCONFIDENTIAL GONI IDENTIAL\nThe President\n- 2 -\nPositive action in these areas is also compatible with our domestic energy\nneeds and objectives. It would restore the confidence of the energy\nindustry and the general public in the viability and acceptability of the\nnuclear option. This is essential since nuclear energy, together with\ncoal, must meet the majority of U.S. electrical energy needs for the\nremainder of this century.\nThe most important decision is whether to proceed with a U.S. reprocessing\ninitiative now, or defer reprocessing until a later date. We recommend\nthat you adopt Option 1 of the Task Force, which would enable the government\nto take an active role in assisting industry to develop and demonstrate\nreprocessing. In supporting this recommendation, however, we would point\nout that Federal assistance beyond that contemplated by the Task Force\nmay be required for success.\nThe key to achieving our international nonproliferation objectives is the\ndemonstrated capability of the U.S. to provide complete fuel cycle services\nto discourage non-supplier nations from developing their own reprocessing\nplants. It is essential also to obtain cooperation of the other nuclear\nsupplier nations in adopting similar nonproliferation policies. As you\nknow, a number of other countries are committed to reprocessing; a decision\nto defer reprocessing in the U.S. would cripple our efforts to influence\nthese countries in view of their continued commitment to nuclear power\nas an essential ingredient of their own efforts toward energy security.\nReprocessing could extend by as much as 50 percent the amount of nuclear\ncapacity which can be supported by a given resource base through recycle\nof valuable uranium and plutonium. Reprocessing is also needed to provide\nthe initial fuel for the breeder reactor, a near commercial reality (early\n1980's) in several European countries. Without reprocessing, the breeder\nmust be discarded as an energy option.\nIn the recommendations on both international and domestic reprocessing,\nan option is proposed that the U.S. could forego reprocessing in lieu of\ndeveloping alternative technologies. ERDA is strongly of the opinion that\nthere are no viable alternative technologies to reprocessing at this time.\nIn summary, we believe that proceeding with reprocessing (Option 1) is\nthe minimum approach which together with an expanded enrichment capacity,\nwould permit the U.S. to exercise effective influence in the international\nsphere, and to meet its domestic needs.\nCONFIDENTIAL\nCONFIDENTIAL\nThe President\n- 3 -\nOur detailed comments on the specific Task Force recommendations are\npresented in the enclosure to this letter. There are two matters of\nconcern to us in the international nuclear policy area that deserve\nhighlighting. First, we believe that the role of IAEA should be much\nmore clearly articulated before any U.S. commitment is made to place\nU.S. plutonium under its control. Second, we believe that efforts\nto improve the quality and effectiveness of the international safeguards\nsystem must go even further than those recommended by the Task Force.\nRespectfully yours,\nRobert C. Seamans, Jr.\nAdministrator\nEnclosure:\nAs stated\nCONFIDENTIAL\nCONFIDENTIAL\nENCLOSURE\nDETAILED COMMENTS ON SPECIFIC RECOMMENDATIONS\nERDA comments on specific recommendations of the Task Force are presented\nbelow. Headings and titles follow those of the Task Force Report.\nInternational Nuclear Policy\nA. Materials Storage, Safeguards and Physical Security\nERDA agrees with the Task Force recommendation for an IAEA storage\nprogram for sensitive materials, further development of physical\nsecurity systems, and significant re-enforcement of IAEA safeguards.\nHowever, we wish to emphasize strongly our conviction that the U.S.\nmust initiate strenuous efforts to redirect the international safe-\nguard system toward a higher level of quality and effectiveness in\nlight of the accelerated growth of nuclear power worldwide and the\nimplications for the spread of nuclear explosive devices.\nB. Restraints and Sanctions\nWe agree with the Task Force recommendations on restraints and\nsanctions. We recognize that, to be meaningful, any sanctions\npolicy must gain multinational support. On the other hand, we urge\nthat your statement on sanctions be firm and explicit that a\nmaterial violation of a safeguards agreement will call into question\nthe entire range of our associations with the violating state (rather\nthan simply our nuclear supply relationships).\nC. Existing Agreements and Export Licensing\nWe do not believe that unilateral insistence on retroactive\napplications of restraints as a condition of supply is a viable\napproach. While we recognize that such mandatory retroactivity has\na certain appeal to many here at home, we feel that it would not\npreserve the necessary flexibility required to achieve our non-\nproliferation goals. We therefore recommend adoption of a strong\n(but not mandatory) initiative on retroactivity. It should be\nemphasized, however, that success in renegotiating existing agreements\nwill be critically dependent on the nature and scope of the supply\nincentives we are prepared to offer.\nD.\nAlternatives to National Reprocessing\nThe Task Force presents two options on reprocessing: (1) contain\nNA Senctions. authorize NATIONAL Disclosure SECURITY\nSubject\nthe spread of national reprocessing, or (2) develop alternatives to\nreprocessing. ERDA's strong recommendation here is for Option 1--\nto contain the spread of reprocessing--as the most effective action\nwe can take to ensure that proliferation of nuclear materials will\nbe kept to a minimum.\nJUBJECT TO GENERAL DECLASSIFICATION SCHEDULE OF\nEXECUTIVE ORDER 11852 AUTOMATICALLY DOWNGRADED\nCONFIDENTIAL\ntwo YEAR INTERVALS AND DECLASSIFIED ON DEC. JI\nminal\nKB4\n2/24/89\n- 2 -\nCONFIDENTIAL\nIn implementing Option 1, we should be prepared to aggressively pursue\na wide range of activities to provide real alternatives to countries\nwho would otherwise wish to independently undertake the development of\ntheir own national reprocessing centers. These activities should include\ncooperative ventures to establish fuel centers serving regional needs\nwith U.S. involvement to ensure appropriate operation of such centers;\ninternational cooperation in pursuing solutions to the management and\ndisposal of nuclear wastes; assistance in development of indigenous\nuranium supplies in other countries; and assurances of availability\nfrom the U.S. of complete fuel cycle services, including enrichment.\nOur major concern with Option 2--develop alternatives to national\nreprocessing--is that it fails to recognize the ongoing reprocessing\nneeds and plans of other nuclear-oriented nations. If the U.S. defers\nreprocessing, it will only serve to weaken our bargaining strength in\nobtaining effective international controls on proliferation.\nThe Domestic Fuel Cycle\nA. Domestic Reprocessing\nThe Task Force identified two options for closing the domestic nuclear\nfuel cycle: (1) assist industry to gain experience with reprocessing, or\n(2) develop alternative technologies. ERDA strongly endorses Option 1\nas a vital first step in developing and demonstrating the technological,\neconomic, safeguards, and licensing bases for fuel reprocessing and recycle.\nERDA favors Option 1 in that it:\n(1) Provides the U.S. with greater credibility as a supplier\nin the international nuclear market to support our role\nin limiting proliferation,\n(2) Provides the U.S. nuclear industry and the public with\na positive basis for renewed confidence in nuclear power\nthrough the expeditious closing of the fuel cycle, and\n(3) Assures maximum utilization and benefits of the unused\nenergy content of spent nuclear fuel, thus expanding this\ncritical national resource.\nCONFIDENTIAL\nCONFIDENTIAL\n- 3 -\n(4) Provides a technology base and fuel supply for the breeder.\n(Without reprocessing, the breeder must be discarded as an\nenergy option, since the breeder uses plutonium as its fuel).\nWe view Option 1 as representing the minimum program necessary\nto meet U.S. international objectives and domestic energy\nrequirements. As described in the Task Force report, Option 1\ninvolves completion of a privately-owned reprocessing demonstration\nfacility (AGNS), with government-owned waste solidification\nand plutonium conversion facilities. Option 1 contemplates\ngovernment support for only the design phase of a larger (3,000\nton) reprocessing plant. In our judgment, a more extensive\ncommitment to a larger plant may ultimately prove necessary.\nERDA's technical judgment is that Option 2--develop alternative\ntechnologies--does not represent a viable option. At the present time,\nthere is no evidence that available technological alternatives provide\nsignificant international safeguards improvement or practical potential\nfor closing the fuel cycle. The only viable option to proceeding\nwith reprocessing is to defer reprocessing and store spent fuel elements\nfor possible reprocessing at some later time.\nB. Waste Management\nWe concur in the recommendation of the Task Force that the domestic\nwaste management program be given a high priority in support of closing\nthe fuel cycle in a timely manner. We agree with the recommendation that\na project coordinator be identified for the overall effort in order\nto obtain the appropriate interagency actions necessary to keep the\nprogram on schedule.\nOther Initiatives\n1. Assist Other Nations with Non-Nuclear and Advanced Energy Technologies\nWe concur with the Task Force recommendation that ERDA and State\nundertake a review of possibilities for cooperative development\nprograms with other countries.\n2. Improve U.S. Assurances of Safeguards Effectiveness\na. Proliferation Intelligence\nERDA concurs in the recommendations regarding better proliferation\nintelligence.\nCONFIDENTIAL\nCONFIDENTIAL\n- 4 -\nb. Timeliness\nERDA endorses the Task Force recommendation regarding the need\nfor timely information on the effectiveness of IAEA safeguards.\n3. Improve Organization of U.S. International and Domestic Nuclear Policy\nand Program\nERDA concurs with the need for improved oversight of international\nand domestic nuclear policy and programs, and we also believe that\na nuclear policy council would be an organizational improvement.\nIn our judgment, however, the lead agencies are State and ERDA.\nWhile ACDA obviously has an important mission in this area, our\ninterpretation is that oversight of the implementation of your\ninternational initiatives would be primarily the responsibility of\nthe Department of State. The structure and role of such a council\ndeserve further consideration.\nCONFIDENTIAL\nUNITED\nSTATES.\nAGENCY\nUNITED STATES ENVIRONMENTAL PROTECTION AGENCY\nPROTECTION\nWASHINGTON, D.C. 20460\nSEP\n3\n1976\nTHE ADMINISTRATOR\nMEMORANDUM FOR THE PRESIDENT\nSUBJECT: NUCLEAR POLICY REVIEW\nThe purpose of this memorandum is to present our views on the\nrecommendations and alternative courses of action developed by the\nNuclear Policy Review Group. I appreciated very much the opportunity\nto assist in the resolution of a problem of such vital importance to\nboth the U.S. and international security. I would also like to\ncongratulate Bob Fri and his staff for the amount of work accomplished\nin such a short time, and for their fairness in considering divergent\nviews concerning this complex and controversial subject.\nEPA supports those recommendations which would improve the organi-\nzation of the International Atomic Energy Agency and its safeguards\ncapability. We also concur with the recommendations to strengthen\ninternational restraints and sanctions against proliferation. These\nimportant initiatives should be undertaken immediately. We fully\nendorse the concept of strengthening our existing nuclear bilateral\nagreements, but we recognize the need for some flexibility in the\napplication of retroactivity to these agreements (Option 2).\nThe Policy Group has submitted two reprocessing issues for your\nconsideration. If you believe that you must make an immediate\ndecision on reprocessing, we would recommend Option 2 for both issues,\ni.e., oppose spread of reprocessing internationally and discourage\ndomestic reprocessing in favor of development of alternative tech-\nnologies. However, we believe that it is premature for you to make\neither of these reprocessing decisions at this time. A decision now,\ncould reduce U.S. bargaining power to foster international commitment\nto non-proliferation. We recommend, instead, that you pursue a two\nstep process. First, you would take a major new initiative seeking\nworld agreement on more effective safeguards and non-proliferation\nrestraints. As an indication of U.S. credibility in this effort,\nand to belie any charge that commercial advantage was being sought,\nyou would suspend further domestic reprocessing work indefinitely,\nthereby also indicating that this could be part of any international\n2\nagreement. The reactions of other countries to your initiatives would\nthen provide you with more information for the second step of selecting\nthe most feasible strategy for resolving the reprocessing issue. Our\nrecommended approach would provide you with maximum flexibility to make\nsubsequent decisions on reprocessing. Any decision to support either\ninternational or domestic reprocessing, at least without first improv-\ning the present inadequate safeguards systems, would be viewed with\nalarm by everyone concerned with proliferation of plutonium.\nWith respect to EPA's role in the nuclear policy area, we have\nsignificant responsibilities concerning environmental standards for\nthe management of nuclear waste. As indicated on page 33 of Mr. Fri's\npaper, we have agreed to accelerate our schedule in order to publish\nFundamental Criteria and draft Generally Applicable Standards by\nDecember 1977. This should enable us to promulgate final standards\nno later than June 1978 which is consistent with the schedules of the\nNuclear Regulatory Commission and the Energy Research and Development\nAdministration. We support the recommendation for the establishment\nof a Nuclear Policy Council headed by a senior Executive Officer. In\nfact, we recommend that this Council, rather than the Director of the\nOffice of Management and Budget, designate the project manager for\nwaste management in order to minimize fragmentation of future efforts.\nIn conclusion, we have appreciated very much the opportunity to\nassist the Nuclear Policy Review Group. We will be happy to provide\nwhatever further assistance may be appropriate.\nRussell 2000les E. Train\nFEDERAL\nENERGY\nFEDERAL ENERGY ADMINISTRATION\nWASHINGTON, D.C. 20461\nINGV\nADMINISTRATION\nSEP 3 1976\nOFFICE OF THE ADMINISTRATOR\nMEMORANDUM FOR THE PRESIDENT\nFROM:\nFRANK G. ZARB\nJob\nSUBJECT:\nDECISION PAPER ON NUCLEAR POLICY\nAlthough the Nuclear Policy Review Group has done an\nadmirable job under extremely tight deadlines, I have\nserious reservations concerning its recommendations and\ngeneral direction. In addition, I do not believe the\ninitiatives presented in the review group's decision\npaper provide an adequate basis for a major Presidential\nstatement announcing new unilateral United States policy\nin this area. This position is based on several key\nshortcomings in the recommendations:\n-- The proposed policies are not sufficient to\ncontrol proliferation.\n-- There is inadequate consideration of the\ntremendous difficulty of implementing the\nproposed initiatives worldwide.\n-- The paper gives inadequate attention to the\neffect of our international posture on domestic\nnuclear energy development.\n-- The cooperation of other supplier nations is\ncritical, but as yet unknown. There is no\nassurance that the past marginal support of IAEA\nprograms by other nations can be improved significantly\nas a result of these policy recommendations.\nIt is true that nuclear power must expand dramatically\nboth at home and abroad as an energy resource. However,\nthe possible diversion to weapons use of nuclear fuel\nmaterials must be prevented, both for national security\nreasons and to ensure further development of our domestic\nnuclear program. A continuation of current approaches will\nnot be acceptable either to the public or to decision-makers.\n-2-\nI support the view that the Administration should take\nsome action on this matter at this time. Nuclear power\nand nonproliferation are of such great importance to this\nnation and the rest of the world that I feel it imperative\nfor us to take a more deliberative approach that will stand\npublic scrutiny not only as a viable policy, but also one\nthat can contain the problems of proliferation effectively.\nFEA's positions on the specific issues presented in the\npaper are as follows:\nApplication of restraints policy to existing agreements.\n-- FEA prefers option 2 (strong initiative on retro-\nactivity), but sees implementation problems with\neither option.\nInternational position on reprocessing.\n-- FEA supports option 1 (control spread), however,\nimplementation of this option depends critically\nupon the U. S. obtaining full cooperation from\nall supplier nations. Analysis to date has not\ndetermined whether or how U. S. can obtain such\ncooperation.\nDomestic reprocessing.\n-- FEA strongly endorses option 1 (assist reprocessing),\nsince this is a necessary step towards control of\ninternational reprocessing.\nWaste management.\n-- FEA concurs with expedited implementation of\nplanned program.\nOther initiatives.\n-- FEA concurs with all recommendations, but urges that\nthe proposed Nuclear Policy Council serve as a sub-\ngroup of the ERC.\nNext steps.\n-- Direct the Nuclear Policy Council to develop concurrent\nproposals for strengthening international controls\nand obtaining the necessary full cooperation from\nall supplier nations. Such proposals would be\nviewed as a major initiative justifying a Presidential\nstatement on these issues.\nOF THE INTERIOR\nUnited States Department of the Interior\nOFFICE OF THE SECRETARY\nMarch 3, 1849\nWASHINGTON, D.C. 20240\nSeptember 3, 1976\nMemorandum\nTo:\nThe President\nFrom:\nSecretary of the Interior\nSubject: Nuclear Policy Review Decision Memorandum\nWe have collaborated with your Nuclear Policy Review Group under the\ndirection of Mr. Robert Fri and have reviewed the draft of the decision\nmemorandum being prepared for you. In our judgment, this decision\nmemorandum adequately sets out the issues and appropriate options for\nyour decision.\nOur specific responsibilities in the Department of the Interior, as\nthey related to the issues and options presented in the decision\nmemorandum, concern (1) adequacy of domestic uranium resources and\nreserves and (2) waste disposal.\nOur knowledge of the present domestic uranium resource and reserve\nbase indicates supply limits for a nuclear fuel capacity based\nexclusively on burner reactors. Also, our understanding of potential\ngeologic hosts indicate that secure disposal of radioactive wastes,\nthough attainable, will be a challenge to accomplish by 1985.\nA decision in favor of reprocessing technology would augment uranium\nresource supply and would result in a lower level of radioactive waste\nfor ultimate disposal. Further implications of your decision, which\nI appreciate are immense, are beyond the expertise and responsibilities\nof my Department.\nI'm Kleppe\nAMERICAN REVOLUTION 1776-1976 INFONTENNIAL\nT\nCONFIDENTIAL\nNUCLEAR\nSTATES\nUNITED\nCommission\nUNITED STATES\nWE\nNUCLEAR REGULATORY COMMISSION\n*****\nWASHINGTON, D. C. 20555\nCHAIRMAN\nSeptember 3, 1976\nThe President\nThe White House\nDear Mr. President:\nThe Nuclear Regulatory Commission welcomes the invitation to give you\nits views on the non-proliferation alternatives developed in the Nuclear\nPolicy Review.\nThe Commission fully supports the fundamental conclusion of the report,\nthat the United States should take strong new initiatives to inhibit the\npotential for the spread of nuclear weapons capability among the nations\nof the world. We believe that initiatives are particularly desirable to\ndeal with risks associated with the disposition of plutonium in the\ninternational community. Increasing numbers and growing quantities of\nnational plutonium stockpiles progressively increase the risk that some\nof this material might be diverted to nuclear explosives programs.\nThere are no instant solutions to foreclose such an eventuality: the\nfactors bearing on national nuclear programs throughout the world are\ndiverse and complex; the limitations on this country's ability to compe1\naction by others are real; and it should be frankly recognized that no\n\"safeguards\" regime provides absolute guarantees against diversion to\nweapons use, especially where separated plutonium is involved.\nPositive steps are nevertheless feasible, as well as necessary. The\nCommission supports the review group's recommendations for strengthening\nthe international safeguards regime and improving recipient-country\nphysical security arrangements, along with appropriate provisions for\nU. S. and international sanctions. In addition, we support the recom-\nmendations in the study than an IAEA regime be established to place\nnational stockpiles of civilian plutonium --preferably in the form of\nspent fuel -- and highly enriched uranium under direct IAEA custody,\nalthough there is considerable work which needs to be done to bring such\na system into being. While such a system would make a valuable con-\ntribution to our non-proliferation objectives, it cannot provide a\ncomplete answer to problems involved in protecting the material against\nsudden diversion.\nSUBJECT TO GENERAL DECLASSIFICATION SCHEDULE OF\nEXECUTIVE ORDER 11652 AUTOMATICALLY DOWNGRADED\nNATIONAL SECURITY\nAL TWO TEAR INTERVALS AND DECLAOSIRIED ON DEC. 01\n1982\nINFORMATION\nUnauthorized Disclosure Subject to\n(insert year)\nCriminal Sanctions.\nCONFIDENTIAL\nKBH 2/24/89\nCONFIDENTIAL\nMr. President\n-2-\nBeyond these immediate measures, the Commission supports vigorous\npursuit -- in cooperation with other supplier countries -- of additional\nrestraints in international nuclear commerce. Those restraints could\ninclude international agreements to supply only to NPT parties (or,\nalternatively, countries that have placed all of their nuclear activities\nunder IAEA safeguards), and to require that recipient countries participate\nin an IAEA storage regime for spent fuel and separated plutonium. Moreover,\ninternationally agreed restraints should include a requirement that\nrecipient nations not expand existing small-scale reprocessing or\nenrichment facilities, and that recipient nations not having such\ncapabilities forego their development.\nWe believe that the basic goal of U.S. policy, as it relates to reprocessing\nin other countries, should be to inhibit the initiation of reprocessing\nprograms in countries that do not yet have them. Furthermore, to the\nmaximum extent possible, we should seek the integration of ongoing\nreprocessing programs in non-nuclear weapons states into an acceptable\ninternational regime that will be designed with the overriding objective\nof inhibiting the spread of nuclear explosives capability.\nWe believe that a key to achievement of United States non-proliferation\nobjectives lies in a stable and predictable nuclear export policy.\nThere is particular need in this regard for a revised legislative framework,\nwhich would establish sensible and clear criteria to guide NRC's export\nlicensing determinations and recognize the role which the Executive\nBranch must properly play in the export licensing process. We are\nprepared to cooperate with the Executive Branch in an accelerated effort\nto formulate legislation to establish appropriate criteria to govern the\nlicensing of nuclear exports. In our view, such legislation should, at\nthe same time, permit latitude on the part of the President to authorize\nexports where the overriding national interest warrants. In framing the\nstandards, it is important that they be both sound and workable, and\nthat they not require repeated recourse to a Presidential national\ninterest determination.\nWe believe that criteria modeled on the London supplier guidelines would\nprovide a sound basis for U.S. export licensing legislation. Those\nguidelines also provide a framework for seeking, in conjunction with\nother suppliers, more stringent requirements for the future. While the\nprovisions of existing agreements for cooperation should be taken into\naccount in charting future United States policy, we would urge that\nUnited States policy also provide for reexamination of existing agree-\nments.\nCONFIDENTIAL\nCONFIDENTIAL\nMr. President\n-3-\nThe Commission supports the recommendation in the report to improve\nUnited States intelligence on nuclear proliferation. Current and\ncomplete information on worldwide nuclear developments is essential to\ninformed export licensing judgments. As a necessary \"user\" of such\ninformation, the Commission requests the full cooperation of the\nExecutive Branch in ensuring that needed information will be fully and\nregularly available to the Commission. The Commission also supports the\nrecommendation that a Nuclear Policy Council be established to implement\ninternational and domestic nuclear policy initiatives. We recommend\nthat the Commission be associated with this Council in a consultative\nrole.\nThe analysis of domestic fuel cycle options in the review group's report\naddressed the major issue of domestic reprocessing. With respect to\nthis issue, the Commission, as you know, is presently engaged in rule-\nmaking concerning wide-scale plutonium recycle in light water reactors.\nIn addition, license applications for particular fuel cycle facilities\nare under review by our agency. Since we should not prejudge or appear\nto prejudge any matters pending before us, we have refrained from\ncommenting on the recommendations in this portion of the report. We do\nnote that our staff has recently published a detailed environmental\nstudy of a broad range of nuclear fuel recycle options, including prompt\nrecycle, delayed recycle, and no recycle. An additional staff study of\nsafeguards considerations will be published in the near future. We will\nbe giving careful consideration to all options contained in the environ-\nmental statement.\nThe Commission appreciates having been given the opportunity to participate\nwith the Nuclear Policy Review Group in addressing these issues, which\nwe view as vital to the future security of this country and the in-\nternational community.\nRespectfully,\nMarcus Marcus A. Rowden Rowden\nMarcus A. Rowden\nChairman\nCONTIDENTIAL\nTHE SECRETARY OF STATE\nWASHINGTON\nCONFIDENTIAL\nSeptember 6, 1976\nEXDIS\nMEMORANDUM FOR: THE PRESIDENT\nFrom:\nHenry A. Kissinger If\nSubject:\nNuclear Policy Review and\nNon-Proliferation Initiatives\nI wish to take this opportunity not only to\ntransmit my Department's response to the nuclear\npolicy report, but also to offer my personal\nrecommendations on the international aspects of\nyour policy choices, their public presentation,\nand their diplomatic implementation. The State\nDepartment has participated actively in the\nformulation of the foreign policy elements of this\nstudy. I strongly concur in the review group's\nemphasis on the international basis for your\nnuclear policy, and I believe it of central impor-\ntance both that we maintain consistency between\ntheir expression and execution and that we ensure\nbroad multilateral support for the positions you\ntake.\nAttached are the specific State Department\npositions, which I fully endorse, on the proposals\nand options prepared by your interagency group.\nI concur in the report's recommendations for\neffective diplomatic consultations and action, in\nwhich we played an active role in developing and\nwhich we are prepared to undertake as soon as you\ngive your approval. I need hardly emphasize that\nthe more advance notice of proposed policies and\nstatements we give our nuclear partners and allies,\nthe more likely they will be to provide the support\nso necessary for the success of our non-proliferation\npolicies. Therefore, this memorandum specifically\nseeks your early authorization for proposed diplomatic\napproaches, on the basis of which you could refine\nDECLASSIFIED\nCONT IDENTIAL\nE.O. 12356, Sec. 3.4\nMR 92-45, #6, state letter 12/3/92\nBy KBH NARA, Date 12/30/92\nCONFIDENTIAL\n- 2 -\nthe international policy elements of your eventual\npublic statement.\nNon-Proliferation Objectives\nIn reviewing and developing further our nuclear\npolicies, it is essential for the US to:\n1. Ensure that our non-proliferation policies\nare cast in the framework of our overall foreign\npolicy interests and close relationships with nuclear\npartners and allies.\n2. Retain multilateral support for our non-\nproliferation policies, without which our political\nrelationships will be set back and our non-proliferation\nefforts will be rendered ineffective.\n3. Develop a policy which marries the restraints\nwhich we require with the incentives we can offer.\n4. Prevent our non-proliferation efforts from\nbeing distorted by international commercial competition.\n5. Make domestic decisions which will effectively\nsupport, rather than undercut, the primary objective\nof deterring nuclear proliferation.\nMeeting Policy Objectives\nThis Administration can justly claim credit for\nthe concerted and productive US efforts to develop\nstrengthened and uniform nuclear safeguards and\ncontrols, through bilateral discussions with such key\nsuppliers and consumers as France and Iran and multi-\nlateral consultations in the London meetings of major\nnuclear suppliers. The US has achieved significant\nnon-proliferation results through high-level,\nconfidential diplomacy, consistent with our broad\nforeign policy interests and relationships. At the\nsame time, we have openly advocated strengthened\nnuclear safeguards and controls, in public statements\nand testimony to the Congress. But domestic pressures\nhave substantially increased for fuller public\nexpressions of what we have pursued privately and for\nvisible improvement and strengthening of our policies.\nCONFIDENTIAL\nCONFIDENTIAL\n- 3 -\nIt therefore continues to be necessary to make\nchoices as to what balance is to be struck between\ndiplomatic imperatives and public perceptions of a\nvigorous, coherent nuclear policy. We should make\nno apologies for past performance, but we should\nalso not hesitate to stake out new territory.\nThe fundamental need to meet the non-proliferation\nobjectives set our above leads, in my view, to the\nfollowing policy choices and presentational require-\nments which are consistent with but often carry further\nthe group's recommendations:\n1. New conditions of nuclear supply, however\ndesirable, should not be imposed by the US unilaterally,\nbut rather pursued and adopted multilaterally. I must\nstress that a unilateral approach will damage us\npolitically, with our allies and partners, and will lead\nthe US to lose both commercially and in non-proliferation\nterms, as other less committed nations pre-empt the\nnuclear market. It should be recognized that if the\nsuppliers, many of whom are also our allies, do not wish\nto follow a US initiative voluntarily, then we will\neither have to coerce them or jeopardize our non-\nproliferation policy. Clearly, we should not select a\nstrategy which could so easily trap us in such a dilemma.\nAt the same time, we should continue to make best\ndiplomatic efforts to make non-proliferation gains, as\nI believe we have in our proposed nuclear agreements\nwith Egypt and Israel and in our current negotiations\nwith Iran. I believe that a strong public statement\ncould be built around the crucial importance of multi-\nlateral consensus in nuclear safeguards and controls,\nthe need for this country not to isolate itself and\nlose its non-proliferation influence, and your\ndetermination to pursue a responsible nuclear export\npolicy while obtaining strong international support for\nour non-proliferation efforts.\n2. It is essential to offer non-proliferation\ninducements in the areas of fuel buy-back and exchange,\nworking in concert with other suppliers. Nuclear\nconsumers, particularly those of proliferation concern\nwho already enjoy less constrained agreements, will\nnot voluntarily accept new restraints unless it is\nCONFIDENTIAL\nCONF IDENTIAL\n- 4 -\ndemonstrably in their interest to do SO. I therefore\nstrongly endorse the review group's recommendations\nfor assured and equitable front-end fuel services in\nexchange for spent fuel, which is at the heart of our\ncurrent negotiating approach with Iran.\n3. Nuclear consumers will become less disposed\nto relying on the US if we arbitrarily impose more\nstringent conditions on nuclear agreements after their\nterms have been mutually agreed. We must therefore\nensure that the NRC licensing procedures are responsive\nto national policy as executed by the President, within\nlegislative requirements. Nuclear export licenses\nshould not be used as a lever for obtaining new\nconstraints from countries which live up to their\nobligations to us. NRC procedures should be perceived\ninstead as a means of predictably implementing our\npolicies of providing inducements, such as guaranteed\nreactor fuel supply, for countries accepting effective\nnon-proliferation constraints.\n4. We should move to engage other major nuclear\nsuppliers in intensified and multilateral efforts to\nensure that uranium enrichment and reprocessing\nfacilities are located in supplier nations. To achieve\nthis, it is necessary to prevent commercial competition\nfrom leading to proliferation of such sensitive nuclear\nfacilities. While I support the review group's\nimportant recommendations for joint supplier fuel-service\nsupport for reactor sales, I recommend that you set a\nlong-term framework for effective supplier coordination\nof fuel assurances, by calling for an examination by\ninterested nations of an \"international nuclear fuel\nbank\" concept, as described in the second section of\nmy Department's position paper, which would combine fuel\nstorage and supply arrangements under international\nguarantees. With your approval, I will ask my deputies\nto work with Bob Fri in integrating this new element\ninto your nuclear policy statement.\n5. In this essential multilateral context, I\nconclude that a limited domestic reprocessing decision\nwould serve our non-proliferation and foreign policy\nobjectives. In so doing, however, it would be desir-\nable to provide for appropriate foreign participation\nand essential to identify the proposed program as an\nCONFIDENTIAL\nCONF IDEN TAL\n- 5 -\n\"experiment,\" without prejudging its outcome. I can\nsupport the demonstration project associated with the\n\"assist reprocessing option\" presented by the review\ngroup, subject to what I believe are necessary\npresentational and policy precautions elaborated in\nthe attached position paper, designed to reinforce\nour overriding non-proliferation interests.\n6. I agree that you should seize the opportunity\nto press for rapid Congressional approval of the\nNuclear Fuel Assurances Act, as a crucial means for\nexpanding US enriched uranium capacity needed to\nprovide credible non-proliferation inducements. In\naddition to providing greater US enriched uranium\ncapacity to meet foreign needs in the near-term, we\nshould redouble our efforts to develop more efficient\nand controllable forms of enrichment technology which\ncould very substantially reduce the cost of enriched\nuranium and expand available supplies. This would\npermit us to shape an international system which could\noffer a combination of the \"carrot and stick\" required\nto bring about a regime which might dramatically slow\nthe spread of national reprocessing in non-supplier\nstates.\n7. Nuclear policy message and management. Your\nreview group has suggested the UNGA as a possible forum\nfor your nuclear policy statement. I believe that the\nUNGA would be an inappropriate forum for you to discuss\nour new non-proliferation policies which will inevitably\nconvey a tougher approach toward constraints. Even if\ntempered by offers of inducements, such a message would\nlikely be viewed by the majority of your audience as\nrestrictive, discriminatory, and targetted against the\ncountries they represent. Nevertheless, if you choose\nto address the General Assembly on this subject, I\nwould urge that you focus on the cooperative elements\nof these policies, such as the recommended international\nspent fuel and plutonium regime and our interest in\nexploring an international nuclear fuel bank concept.\nI believe that, in any event, you should reserve for a\nreceptive US audience (or in a message to the Congress)\nthe stronger aspects of our policies, as well as any\ndecision to proceed with domestic reprocessing. As a\nsubsidiary consideration, I am not convinced that a new\nbureaucratic layer -- the proposed Nuclear Policy Council\n-- will enhance management effectiveness. You\nCONFIDENTIAL\nCONFIDENTIAL\n- 6 -\nmight consider using instead existing interagency\ncommittees, such as the specially constituted Under\nSecretaries Committee described in the attachment,\nto coordinate US nuclear policies.\nProposed Diplomatic Approaches\nYour review group has identified the important\nneed for diplomatic consultations prior to, and\nactions following, your nuclear policy statements.\nI believe that your statement will afford a signifi-\ncant opportunity to catalyze multilateral support\nfor the safeguards, physical security, restraints,\nincentives and sanctions components of our nuclear\npolicies. Pursuant to the review group's recom-\nmendations for next steps, I propose that you\nauthorize:\n1. Rapid, advance consultations with the IAEA\nand my counterparts in Canada, France, the FRG, Japan,\nUK and USSR on the broad nuclear policy initiatives\nyou desire to announce; and incorporation into your\nnuclear policy message of the results of these advance\nconsultations by the NSC and the Department, working\nwith the Domestic Council.\n2. Exploration of your new nuclear policy\nproposals (including, if you approve, our recommendations\nfor fuel pooling and an international nuclear fuel\nbank concept) with other supplier and consumer states,\nprior to my development of the comprehensive negotiating\nplan suggested by your review group.\n3. Active pursuit of our standing proposals for\nan export moratorium on reprocessing facilities and\ntechnology, use of supplier-based reprocessing services,\nand international plutonium management, in the framework\nof the London nuclear suppliers' meetings, consistent\nwith your nuclear policy decisions.\n4. Accelerated interagency review of technological,\neconomic and commercial alternatives for maximizing\nuse of enriched uranium incentives, under effective\ncontrols, to support policies of greater non-proliferation\nrestraint.\nCONF IDENT IAL\nCONFIDENTIAL\n- 7 -\nRecommendations:\n1. That you authorize the diplomatic approaches\nand follow-on actions proposed above.\nApprove\nDisapprove\n2. That you direct incorporation in the Presidential\nmessage of the international nuclear policy elements I\nhave described above, consistent with your decisions on\nthe recommendations of the nuclear policy review group.\nApprove\nDisapprove\nAttachment:\nState Department Positions on Nuclear Policy Report\nCONF IDENTIAL\nCONFIDENTIAL\nSTATE DEPARTMENT POSITIONS ON\nNUCLEAR POLICY REPORT TO THE PRESIDENT\n1. Non-Proliferation Restraints. The Department\ngenerally supports a firmer policy on restraints in US\nnuclear cooperation which stresses cooperation with NPT\nparties or ccuntries accepting full safeguards and with\ncountries prepared to forego or restructure their re-\nprocessing options. We also support an approach which\nmakes a clear distinction between (1) cooperation under\nnew and amended agreements and (2) cooperation under\nexisting agreements. For both categories of recipients,\nwe would underscore the general need for a multilateral\napproach. US leadership in non-proliferation is important\nand consistent with our past policies and recent\ninitiatives in forming the London Suppliers' Group. But\nexcessively stringent or rigid unilateral US policies\nwill at best have limited benefits, since we no longer\ndominate the international nuclear market and will not be\nable to obtain new restraints without concerted supplier\nactions.\nOn the more specific restraint recommendations:\nFor negotiating new or amended US nuclear co-\noperation agreements, we strongly support the recom-\nmendation that the US apply these restraints as non-\nbinding criteria for engaging in new or expanded nuclear\ncooperation. We should recognize, however, the importance.\nof gaining common supplier policies on these restraints,\nand be prepared to state that we will apply them as\nconditions as soon as other suppliers agree to do the\nsame. The President's public statement would make this\nbasic approach explicit. We support the Review Group's\nconclusion that new restraints should not be mandatory\nrequirements in the absence of multilateral agreement.\n(In this connection, the options on \"retroactive\nsanctions\" must be seen as possible elements of a\nlegislative strategy that must be accomplished in co-\nordination with the Congress.) Even with a Presidential\noverride, such a unilateral policy could impair our\nflexibility in pursuing non-proliferation objectives\nwith specific suppliers and recipients.\n-- For cooperation under existing agreements, we\nstrongly endorse the proposal to use diplomacy and a\nstrategy of inducements to persuade the many key target\nCONFIDENTIAL\nDECI ASSIFIED\nE.O. 12556, Sec. 3.4\nMR 92-45,#7 State ltr. 12/3/92\nBy KBH NARA, Date 12/30/92\nCONFIDENTIAL\n- 2 -\ncountries in this category to voluntarily renegotiate\nexisting agreements with new restraints. In addition,\nin connection with our attempts to find an acceptable\ncompromise with the JCAE on its Nuclear Export Bill, we\nsee merit in the recommendation that NRC use the agreed\nLondon Supplier Guidelines as criteria in granting\nexport licenses under existing agreements. But even\nwith the proposed Presidential override, we are concerned\nthat such ar. approach could be viewed as an attempt by\nthe US to impose these guidelines retroactively, to the\ndetriment of our relations with a number of major allies\nand our overall credibility as a supplier. Finally, we\noppose the imposition of new restraints as a condition\nof further US supply until common supplier agreement is\nachieved on this point. Even then, such a course of\naction would contravene the legal terms of our inter-\nnational agreements, thereby risking adverse legal, foreign\npolicy, and even non-proliferation consequences.\nAs a fundamental point for recipients in both\ncategories, we would emphasize the vital link between\ngaining new restraints and offering attractive inducements\nthrough fuel buy-back and exchange, and possible leasing.\nAll such inducements should be coordinated with other\nsuppliers, since uncoordinated inducements may look to\nother suppliers as a US attempt to preempt a larger share\nof nuclear fuel and realted reactor markets. In parti-\ncular, the more attractive and reliable we make our en-\nriched uranium supply using existing and planned facilities\nwithin the broad framework of the Nuclear Fuel Assurances\nAct, the more success we will have in obtaining effective\nrestraints on reprocessing. The President's public state-\nment should relate inducements to restraints to the degree\nof specificity judged feasible in light of our ability to\nconsider offering new fuel supply or service arrangements.\nThese issues are discussed further below in the context of\nour recommendations regarding alternatives to national\nreprocessing.\nIn general, nuclear consumers will become less disposed\nto relying on the US if we arbitrarily impose more stringent\nconditions on nuclear agreements after their terms have\nbeen mutually agreed. We must therefore ensure that the\nNRC licensing procedures are responsive to national policy\nas executed by the President, within legislative require-\nments. Nuclear export licenses should not be used as a\nlever for obtaining new constraints from countries which\nCONF IDENT\nCONFIDENTIAL\n- 3 -\nlive up to their obligations to us. NRC procedures\nshould be perceived instead as a means of predictably\nimplementing our policies of providing inducements,\nsuch as guaranteed reactor fuel supply, for countries\naccepting effective non-proliferation constraints.\n2. Alternatives to National Reprocessing. The\nDepartment supports the first option, \"contain the\nspread of national reprocessing.\" We share the Review\nGroup's recognition of the need for strong and specific\nUS initiatives to achieve an international fuel-exchange\nregime based upon:\n-- inducements for recipients, in the form of\nassured and equitable front-end fuel services in exchange\nfor their spent fuel; and\n-- inducements for suppliers, in the form of joint\nfuel-service support for reactor sales in non-nuclear\nweapon states, in exchange for withholding sensitive\nnuclear technology from further spread under national\ncontrol.\nThe Department supports the steps recommended to\nfurther these objectives. However, we further recommend\nthat the President call for the exploration by interested\nnations of an \"international nuclear fuel bank\" concept,\nthrough which the potential benefits of plutonium recycle\nwould be shared under international controls, while the\nreprocessing activities incidental to achieving those\nbenefits would be confined, initially to a few major\nsupplier countries, but eventually include a few carefully\nsited multinational plants. The Department has developed\nfurther proposals for making significant forward movement\nin establishing an effective fuel exchange regime. These\nproposals are consistent with but go further than the\nreview group's recommendations in relating restraint re-\nquirements to fuel inducements. With the President's\napproval, the following approaches would be integrated into\nthe fuel-exchange elements already presented in the nuclear\npolicy report:\n-- As a matter of national policy, the President\nwould express:\nCONF FIDENTIAL\nCONFIDENTIAL\n- 4 -\n(i) For recipients accepting our tightest non-\nproliferation restraints, notably no national reprocessing\nand enrichment facilities, US willingness to acquire some\nor all spent fuel of US origin, at the customer's option,\nin exchange for fresh enriched uranium under attractive\nterms (i.e., guaranteed feed and enrichemnt services)\n(ii) For recipients who do not agree to renounce\nnational reprocessing and enrichment facilities but are\nnot constructing such facilities now and are prepared to\nplace all spent fuel under internatioral storage, future\nenrichment guarantees at market rates but repurchase of\nspent fuel only at US option.\n(iii) For recipients unwilling to accept our\nrestraints in new or amended agreements, including\nstorage under international auspices, US insistence on\na purchase or exchange option for US supplied or derived\nspent fuel. All suppliers would be urged to offer such\noptions.\n-- To lend multilateral impetus to the foregoing\narrangements, the President would express publicly US\nreadiness to explore with interested supplier nations\npossible arrangements for pooling fuel-exchange capa-\nbilities through such means as tie-in fuel sales, cross-\ninvestment in enrichment and reprocessing facilities,\njoint enrichment and reprocessing facilities, joint\nenrichment guarantees, spent fuel storage as needed to\nsupport such arrangements, and an eventual international\nfuel bank.\nFinally, the Department supports the Review Group's\nrecommendations for strengthened fuel assurances, in-\ncreased enrichment capacity which could support fuel\nexchange arrangements, and an appeal for passage of the\nNFAA as an essential ingredient in our non-proliferation\nstrategy. It strongly supports strengthened high-level\ndiplomatic approaches to other supplier governments, on\na confidential basis in the first instance, seeking a\none-to-two year moratorium on exports of sensitive\nfacilities and pursuing possible fuel pooling arrange-\nments as a means of minimizing commercial competition\nin fuel cycle services.\nCONFIDENTIAL\nCONFIDENTIAL\n- 5 -\n3. Domestic Reprocessing Options. The Department\nis not in a position to make a comprehensive judgment\non the domestic benefits of the various reprocessing\noptions presented in the report. As the report notes,\nthe economic benefits of domestic reprocessing are\nuncertain and possibly marginal.\nFrom the point of view of our international and non-\nproliferation interests, domestic decisions on reprocessing\nand recycle may have an important impact in two respects:\n-- A perception internationally that the US has taken\na decisive step toward plutonium recycle may make national\nreprocessing appear both more respectable and more\neconomically attractive. We could argue that such a step\nis justified because of the size of the US nuclear program,\nbut it is not clear whether this would overcome such perceptions,\nparticularly when announced as a Presidential initiative.\n-- The possession or lack of a US reprocessing\ncapability may have an important effect on our ability\nto negotiate workable joint fuel-exchange arrangements\nwith other suppliers.\nNegative international perceptions could probably\nbe reduced to an acceptable level if the US were to\nbegin a limited program, but only if its size, sub-\nstance, and rationale were consistent with a larger US\nnon-proliferation program which received general\ninternational credence. In sum, our domestic and inter-\nnational choices must be part of an integrated whole.\nProvided that an international policy along the\nlines we have recommended is also adopted, the Depart-\nment can support adoption of Option 1, to \"assist\nindustry to gain experience with reprocessing, with\ncertain modifications, along the following lines:\n-- The program should be identified from the out-\nset as experimental in nature without prejudging its\noutcome, and its content should justify this description;\nCONFIDENTIAL\nCONFIDENTIAL\n- 6 -\n--- We do not object to a demonstration project as\nproposed, consisting of Government support for the AGNS\nplant plus design of a larger plant with no near-term\ncommitment to construct this second facility;\n-- The possibility of substantial Government involve-\nment in any second plant should, however, be held open;\n-- There should be aggressive pursuit of alternative\ntechnologies to reprocessing and recycle as an element\nof the program;\n-- The program should explicitly allow for financial\nparticipation by other nations (both suppliers and con-\nsumers) and joint exploration of service arrangements,\nbut should specifically exclude service commitments or\ntechnology transfers except as part of agreed arrangements\namong suppliers.\n-- The program should be presented as an integral\npart of our overall strategy, with emphasis upon its\npotential role in improving safeguards, supporting joint\nfuel-exchange arrangements, developing alternative\ntechnologies, and possibly as a future element of an\ninternational fuel bank.\n-- The program should be reviewed at the end of\ntwo years to assess the economic and technological\nbenefits of reprocessing in the light of what has been\nlearned, and the advisability of proceeding with con-\nstruction of a plant beyond AGNS, in the light of pro-\ngress made toward an international fuel-exchange regime.\n4. Strengthened Sanctions. We support a publicly\narticulated sanctions policy along the lines proposed\nas a means of balancing our non-proliferation and over-\nall foreign policy objectives. The proposed approach\nincludes at least automatic cut-off of US nuclear supply\nif our safeguards are clearly breached, reaffirms the\nseriousness with which the US would view any safeguards\nviolations, and stresses the need for consultations\namong suppliers and consumers to determine what collective\nCONFIDENTIAL\nCONFIDENTIAL\n- 7 -\nactions should be taken. We do not believe that a US\npolicy should go further than these steps, either in\nterms of incorporating explicit non-nuclear responses\nor in terms of adopting more rigid lateral policies.\nThe Department will consult in advance of a public\nstatement with other countries, and in particular seek\nto elicit comparable statements from other key suppliers.\nWe will also pursue diplomatic efforts to gain multi-\nlateral supplier support for IAEA-related initiatives\nin this area and seek supplier agreement to curtail\nnuclear cooperation with any non-nuclear weapons state\nhereafter testing a nuclear device, regardless of whether\nsafeguards obligations are violated (recognizing that\nit is unlikely that France would agree).\n5. IAEA Storage Regime: We support promotion of\nthis concept, with particular near-term emphasis on\nstorage arrangements for spent reactor fuel. A Presi-\ndential statement endorsing this concept and expressing\na willingness of the US to participate, can provide\nimpetus to our on-going diplomatic efforts in the context\nof the London Suppliers' Group and in the IAEA to trans-\nlate the international storage objective into reality.\nWe will consult in advance of such a statement with key\nsuppliers and the IAEA Director General. In both public\nstatements and private consultations, when discussing\nthe role of such a storage regime for separated plutonium\nwe should be wary of appearing to condone national\nreprocessing.\n6. Strengthened IAEA Safeguards. We support the\nproposed program to sponsor safeguards demonstrations\nfor sensitive facilities, offer an ERDA laboratory to\nsupport development of new techniques, and explore\npossibilities for greater US contributions to improving\nagency capabilities. The Department is prepared to seek\ncooperation from other suppliers and recipients in rein-\nforcing our initiatives, and believes that a public\nstatement surfacing these proposals would be useful in\nthis connection.\nCONFIDENTIAL\nCONF IDENTIAL\n- 8 -\n7. Strengthened Physical Security. We support a\npolicy of strengthening and standardizing physical\nsecurity over nuclear materials. We have made significant\nprogress in establishing physical security guidelines\nfor suppliers to follow as result of the London Suppliers'\nunderstandings. Before going beyond these agreed standards,\nthe US should first seek to bring its own national stan-\ndards up to these levels. The concept of an international\nconvention -- which has been proposed internationally in\n1974 and again in 1975 in the UNGA and explored diplomatically\nwith other suppliers and in the IAEA context -- could be\nmentioned as part of an overall nuclear policy statement.\nBut it should be recognized that the prospects for strong.\nmandatory provisions as well as early negotiation of such\na convention are limited.\n8. Waste Management. We support the review group's\nrecommendations on waste management, but further recommend\nthat the US publicly propose the pursuit of international\nR&D initiatives in this field. We also propose that specific\nattention be given to the question of whether the US could\naccept foreign waste, if we ever entered into an inter-\nnational reprocessing service program.\n9. Non-Nuclear Technologies. The Department supports\nthese proposals and will work with ERDA in studying pos-\nsibilities. However, we do not see substantial opportunities\nemerging which could provide an effective near-term deter-\nrent to smaller countries desiring to obtain nuclear power\nplants. In the proper context, on the other hand, initiatives\nin non-nuclear energy cooperation may be helpful in dis-\nsuading certain countries from acquiring sensitive\nnuclear facilities, such as reprocessing plants. In\nformulating and implementing any such program, we should\ndraw upon the efforts we are making in the IEA and in\nCIEC to cooperate with LDCs in the energy field. Of\nparticular importance might be the US proposal for an\nInternational Energy Institute which we are discussing\nwithin the IEA and CIEC, following up the various pro-\nposals we made at the UN Seventh Special Session.\n10. US Safeguards Effectiveness. We support the\nproposals for assuring the effectiveness of US safe-\nguards, with the understanding that upgraded intel-\nligence efforts should be responsive tc our broader\nCONFIDENTIAL\nCONFIDENTIAL\n- 9 -\nnon-proliferation policy needs and not injurious to the\nIAEA. We would also seek other supplier support for\nfall-back bilateral safeguards and work with them to\ngain timelier access to IAEA safeguards information.\n11. Public Statement. The Department does not\nbelieve that the UNGA would be an appropriate forum\nto discuss new non-proliferation policies emphasizing\ntougher constraints. While the drama and worldwide\nscope of a Presidential UNGA address are positive\nfactors, such a message would likely be attacked as\nrestrictive and discriminatory by the less developed\ncountries, even if balanced by offers of inducements.\nOn the other hand, a domestic message, perhaps to the\nCongress, would present an opportunity to underline\nboth the safeguards and constraints inherent in our\nnuclear policies and the experimental character of\nany domestic reprocessing program. If the President\nnonetheless selects the UNGA as the forum for a state-\nment on nuclear policy, the Department would recommend\nthat he emphasize the cooperative aspects of our non-\nproliferation policy.\n12. Nuclear Policy Organization. Rather than\nthe proposed Nuclear Policy Council including State,\nERDA and ACDA, we believe that consideration should be\ngiven to continuation of the existing NSC/VPWG mechanism\nor a specially constituted Under Secretaries Committee\nreporting to the President through the NSC and the\nDomestic Council. Instead of establishing another\nbureaucratic layer, the Department favors the option\nof an Under Secretaries Committee as the most flexible\nand coherent means of effectively representing the\ninterests of the domestic and foreign policy agencies.\nWhatever the institutional arrangement, the Department\nof course welcomes the review group's support of its\nlead responsibility (in coordination with other\nrelevant agencies) in the diplomatic and foreign policy\nelements of US nuclear policies.\nSeptember 4, 1976\nCONFIDENTIAL"
}