ML20205G674

Requests Commission Review of Proposed Issuance of License to Export U to India

ML20205G674
Person / Time
Issue date:	02/22/1978
From:	James Shea NRC OFFICE OF INTERNATIONAL PROGRAMS (OIP)
To:
References
SECY-78-105, SECY-78-105-R, NUDOCS 9904070341
Download: ML20205G674 (29)

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COMMISSIONER ACTION Gi sp}

For:

The Comissioners TG From:

James R. Shea, Director Office of International Programs

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ExecutiveDirectorforOperationsh Thru:

PROPOSED LICENSE TO EXPORT LOW ENRICHED URANIUM

Subject:

TO INDIA (APPLICATION XSNM-1060)

Comission review of proposed issuance of subject

Purpose:

license to Edlow International Company.

Discussion:

In January 1977, Edlow International applied for a license to export 7,638 kilograms of uranium, en-riched to a maximum of 2.15% U-235, to India for conversion and fabrication into fuel elements for the Tarapur Atomic Pcwer Station (TAPS).

C6 pies of the Apolication and end-use statement are at Appendix A.

The Executive Branch response on this application notes that the material, composed of two enrich-ments, will keep the Indian conversion / fabrication facility in normal operation for about eighteen weeks, including a three-week period for clean out between enrichment campaigns (State memorandum of January 25, as forwarded to the Commission on Fc-oru-ary 3, at Appendix B).

An application for further material, XSNM-1222 filed in November 1977, is still under Executive Branch review.

In response to our January 17, 1977 request for views, the Executive Branch has (1) concluded that issuance of the subject license would not be inimi-cal to the comon defense and security, and (2) confirmed that the material will be subject to all the terms and conditions of the US-India Agreement for Cooperation (Appendix B).

Contact:

M. A. Guhin (492-7866)

. Dunn (492-7984) 9904070341 780222 PDR SECY 78-105 R PDR

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COMMISSIONER ACTION gn EM For:

The Commissioners

1. 3 From:

James R. Shea, Director Office of International Programs ExecutiveDirectorforOperationsh Thru:

PROPOSED LICENSE TO EXPORT LOW ENRICHED URANIUM

Subject:

TO INDIA (APPLICATION XSNM-1060)

Commission review of pmposed issuance of subject

Purpose:

license to Edlow International Company.

Discussion:

In January 1977, Edlow International applied for a license to export 7,638 kilograms of uranium, en-riched to a maximum of 2.15% U-235, to India for conversion and fabrication into fuel elements for the Tarapur Atomic Power Station (TAPS).

C6 pies of tne Apolication and end-use statement are at Appendix A.

i The Executive Branch response on this application notes that the material, composed of two enrich-ments, will keep the Indian conversion / fabrication facility in normal operation for about eighteen weeks, including a three-week period for clean out between enrichment campaigns (State memorandum of January 25, as forwarded to the Commission on Febru-ary 3, at Appendix B). An application for further material, XSNM-1222 filed in November 1977, is still under Executive Branch review.

In response to our January 17, 1977 request for I

views, the Executive Branch has (1) concluded that I

issuance of the subject license would not be inimi-cal to the common defense and security, and (2) confirmed that the material vill be subject to all the terms and conditions of the US-India Agreement for Cooperation (Appendix B).

Contact:

M. A. Guhin (492-7866)

. Dunn (492-7984) 1 9904070341 790222 PDR SECY 78-105 R PDR

E Discussion:

The US-India Agreement for Cooperation includes a (continued) guarantee by India that no material, equipment, or device supplied by the US under the agreement will be used for atomic weapons or for research on or development of atomic weapons or for any other military purpose.

To supplement this guarantee, in 1974 the Indian Government provided written assurances to the US that the special nuclear material that has been or is hereafter made available for, or used, or produced in the TAPS will be devoted exclusively to the needs of that Station unless both govern-ments.specifically agree that such material may be used for other purposes.

This written assurance resolved a possible ambi-guity in the agreement for cooperation about nonmilitary applications of nuclear explosives in a manner consistent with the US understanding that no material or e:,uipment supplied by the US, or material produced therefrom, may be used for any nuclear explosive purposes.

As the Executive Branch response notes, the US obviously would not agree to use of such material in any nuclear ex-plosive device (Appendix B).

l In the documentation concerning the issuance of XSNM-845 for export to India, in June 1977, it was noted that the then newly elected Prime Minister, Mr. Desai, had strongly voiced his op-position to nuclear weapons, reiterated Indian policy not to use nuclear energy for military purposes, and expressed uncertainty as to whether the testing of such devices is necessary.

Since that time, as noted in the Executive Branch response (Appendix B), the Prime Minister has not only stated that India has "no need whatsoever for l

an atomic bomb" and expressed strong opposition to atomic explosions, for which he said there was no need, but also given assurances that he will l

not authorize further explosions such as the one in 1974.

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' I Discussion:

The US-India Agreement for Cooperation also prohibits (continued) the reexport of US-supplied material without US ap-

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proval and stipulates that US-supplied material may not be reprocessed unless there is a joint US-India determination that safeguards may be effectively ap-plied.

In the latter regard, the Executive Branch

• response reiterates that the Indian Government has been advised that the US is not prepared to make such a determination regarding the existing reprocessing facility, PREFERE, at Tarapur.

As for the disposition of spent fuel at the TAPS, the Commission will recall that:

o In issuing a previous license for export to India (XSNM-805) and in the July 1976 public hearing on continued supply to India, one of the key issues centered on the disposition and possible " buy-back" of spent TAPS fuel.

o This possibility has been explored in discussions between US and Indian officials and the Indian Government has agreed in principle to the return of spent fuel from the TAPS to the US.

(Thiswas also noted in documents concerning the issuance of license XSNM-845, including the Executive Branch's analysis of June 8, the staff's conclusions of June 22, and the Comission's memorandum and order of June 28, 1977.)

o Financial and logistical details have not been worked out and, in the absence of long-range disposition solutions, the US has undertaken to provide technical assistance to India to expand the spent fuel storage capacity at the TAPS.

The Executive Branch analysis on the subject applica-tion, XSNM-1060, provides the following update:

o The US is currently providing India with technical assistance in reracking the TAPS spent fuel stor-age pond to expand its capacity.

o The US and India still have a mutual interest in l

selving tne storage preolem, as evicencec :/

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Discussion:

several recent visits of US officials to India (continued)

(during which they had extensive access to the TAPS).

o The Executive Branch is prepared to explore further the possibility of accepting spent TAPS fuel for storage in the US should this become necessary or desirable at some later date.

The staff has participated in the interagency review of long-term disposition options for spent fuel at the TAPS.

In view of the ongoing discussions be-tween the US and Indian Governments on broader non-proliferation matters, and in view of the ongoing review within the US Lovernment of impacts associ-ated with the return of spent power reactor fuel to the US for storage in general, the staff has no further questions with respect to this status report on the " buy-back" option.

India has not signed the NPT and has unsafeguarded nuclear facilities and material.

US-supplied ma-terial, however, is subject to IAEA safeguards under the US-India-IAEA Safeguards Agreement of 4

January 1971.

The Executive Branch response notes that, while recognizing that some deficiencies exist in the IAEA safeguards system, the IAEA Secretariat has concluded, in the SSIR for calendar year 1976, that in none of the 41 States in which inspections were carried out was there any diversion of a significant quantity of IAEA safeguarded material.

The SSIR notes that this conclusion is based on both quantitative analyses and elements of judg-ment.

Other information in the SSIR indicates that (1) the quantitative capabilities of the IAEA safeguards system need to be improved, and (2) raises doubts that the IAEA had sufficient information to verify, in strictly quantitative terms, the Secretariat's conclusion.

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-s-Discussion:

As detailed in the recent letter on IAEA safe-(continued) guards to the chairmen of the cognizant l

congressional comittees, the staff is not able to provide independent evaluations of the effective-ness of IAEA safeguards implementation on a country-l by-country basis in the absence of country-specific detailed information.

(This matter has also been explored in depth in several meetings with the Consnission. )

However, neither the staff nor the Executive Branch has reason to believe that the IAEA Secretariat's conclusion is not a valid one i

with specific regard to nuclear material subject to the US-India Agreement for Cooperation.

With respect to other safeguards matters, the Execu-tive Branch response has noted:

During January 1978, Prime Minister Desai (1) dis-o cussed India's position toward acceptance of " full-scope" international safeguards on Indian nuclear facilities with President Carter, a US congressional delegation, and British Prime Minister Callaghan, and (2) took the consistent position that India would accept such safeguards when at least the US, the United Kingdom, and the USSR agreed to a complete nuclear test ban, agreed not to add further to their nuclear arsenals, and came to 1

agreement to have a gradual reduction of nuclear stockpiles with a view to the eventual destruction of such stockpiles.

o Indian officials have stated on several occasions that they do not plan to export sensitive nuclear technology, materials, or equipment, or to make nuclear exports without requiring international safeguards.

o In conjunction with the USSR providing heavy water to India, India and the IAEA have reached agreement on the application of IAEA safeguards to the Rajas-than Atcmic Pcwer Station, Units I and II.

The Executive Branch (1) believes that the shipment proposed under the subject license, approved at the highest levels, is in the best interest of US foreign i

policy objectives, particularly those related to non-proliferation, and (2) recommends prompt issuance of l

the proposed license.

'4 Discussion:

The Executive Branch response also indicates that (continued) the proposed export would meet the immediately applicable export criteria enumerated in the Administration's " Nuclear Nonproliferation Policy Act of 1977." The staff notes that the imediately applicable export criteria as proposed in that bill are essentially identical to those included in the Nuclear Nonproliferation Act of 1978, as recently passed by the Congress.

On February 13, the Natural Resources Defense Council, the Sierra Club, and the Union of Concerned Scientists filed two motions with the Comission: the first requesting that the Comission order a resumption of the hearing regarding the continued export of low-enriched uranium to India, and the second requesting that the Comission consolidate the subject applica-tion (XSNM-1060) with the application still under r,eview by the Executive Branch (XSNM-1222).

In a February 21 letter from Mr. Tarnoff to Mr. Chilk, State opposed resumption of a hearing in conjunction with the issuance of the proposed license XSNM-1060.

On February 21, in response to the motions by NRDC, UCS, and the Sierra Club, the staff also opposed a hearing in conjunction with the issuance of this license.

(Papers on these motions have been provided to the Comission through the Office of the Secretary.)

In view of the extensive analysis of US nuclear sup-ply to India, spanning almost two years and as updated by the Executive Branch analysis of the proposed li-cense, the staff has concluded that the overall framework provides adequate assurance for the purposes of the propose'd export.

Copies of the staff's conclusions and proposed license are at Appendices C and 0 respectively.

The staff conclusions, which the Comission may wish to have olaced in the PDR prior to a public meeting on the proposed license, have been expanded beyond the standard format.

o i

1 Recomendation:

That the proposed license to Edlow International Com-pany be issued.

Coordination:

OELD has no legal objection.

NMSS wishes to inform the Comission that it has not received country-specific information which permits it to make an independent conclusion as to the effectiveness of IAEA material control and accounting safeguards to deter and detect national diversion in India.

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0-Jam} '.: he, Director n

Of ca jdternational Programs

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Enclosures:

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Appendix A - Application dtd 1/3/77 and end-use statement dtd 1/4/77.

2.

Appendix B - State memorandum dtd

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1/25/78 with attachments.

j 3.

Appendix C - Staff conclusions j

dtd 2/21/78.

j 4.

Appendix D - Proposed license.

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NOTE:

Commissioner coments should be provided directly to the Office of the Secretary by c.o.b.

Mondav. February 27, 1978 Comission staff office comments, if any, should be submitted to the Comissioners NLT February 24, 1978

, with an information i

copy to the Office of the Secretary.

1 DISTRIBUTION Comissioners Commission Staff Offices Executive Director for Operations Secretariat i

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APPENDIX A APPLICATION DATED 1/3/77 AND END-USE STATEMENT DATED 1/4/77 i

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No. B/ TAPS /10-E-III GOVERNMENT OF INDIA January 4, 1977.

f HETH M TI mFTTIm ATOMIC POWER AUTHORITY

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Mr. MLchaal Onhin US flielear Regulatory Comr11ssion jJ.S. PSCECEIVED Office of International Programs Dcport/ Import and Safeguards Washington DC 20555 13TI JAN 11 Pl,1 1 32

Dear Sir,

WeconfirmhavingtelexedonJanuarh,%7ggfonag P

g for you through Edlow's talex machine:

liiTERNAT'L SFGROS "MR MICHAEL GUHIN US NUCLEAR REGULATORY COMMISSION OFFICE OF INTERNATIONAL PROGRAIS EXPORr/ IMPORT AND SAFEGUARD 3 WASHI!GTON DC 20555 WE HEREBY CERTIFY THAT THE APPLICATION FOR ETJORT LICE!GE IN DS 3(4) DATED JAN. 3, 77 SUBMITTED BY EDLOW INTERNATIONAL C0.

WILL BE USED FOR MAKI!G FUEL ASSEMBLIE REQUIRED FOR THE RELOAD FUEL REQUIRElENTS OF TARAPUR ATOMIC POWER STATION STOP ASiUlG!

MAXIMUMS, DE QUAllTITY APPLIED FOR IS:

158.12 KGS U-235 CONTAINED IN 7638 KGS U ENRICHED TO A MAXIMUM OF 2.15 PERCENI STOP R.S. VERHA COMlERCIAL MANAGER AT0!GC POWER AUDIORITY BOMBAY" Yours truly, A

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Commercial Fhnager Copy to:

1.

Edlow Internationci Co., Suite 404-5,17th Street, N.W.

W2shington, D.C. 20063, U.S. A. (Atten: Mrs. Diane Hannon) 2.

Mr. J. A. Garrett, Jr., Chief, Materials & Services Branch, DLvision of International Programs, LG Energy Fesearch &

Development Administration, Washington, D.C. 20545, USA.

3.

Mr. William F. Courtney, Consul General, Consulate General of the U.S. A., Bhulabhai Desai Boad, Bombay.

4.

Dr. M. Anandakrishnan, Counsellor (Science), Dnbassy of Indir q},,l l.

2107, thssachusetts Avenue, N.W., Washington, D.C. 20008, U3, 7

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APPENDIX B -

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STATE MEMORANDUM DATED 1/25/78 WITH ATTACHMENTS

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MEMORANDUM FOR LEE V. GOSSICF NUCLEAR REGUTJ "ORY COMMISSION ~ ",", 7 Ot~S:3

Subject:

Comments to NRC on Nuclear Export License Application Your letter of January 17, 1977 requested the views of the Executive Branch on the proposed license for the export to India of 156.12 kilograms of U-235 contained in 7,638 kilograms of uranium enriched to a maximum of 2.15% U-235.

On the basis of the factors covered by the attached analysis the Executive Branch has concluded that issuance of the proposed license would not be inimical to the com-mon defense and security and is of the view that the license should be issued.

The supply of this low enriched uranium is subject to all of the terms and conditions of the Agreement for CooperationfBetween the United States and India.

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Peter Tarnoff A

Executive Secretary Attachments:

1.

License Application Analysis 2.

Letters from Embassy of India dated January 5, 1977, January 13, 1977, and December 8, 1977 9

9 APPFNDiY R.1 I

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%c LICENSE APPLICATION ANALYSIS Transaction:

The export of 156.12 kilograms of U-235 con-tained in 7638 kilograms of uranium enriched to a maximum of 2.15% U-235 to India.

Applicant:

Edlow International Company Applicant's

Reference:

INDS-3(5)

Dat of Application:

January 3, 1977 1.

What is the purpose of the export?

This' material, composed of 1520 kilograms of uranium enriched to 1.6% U-235 and 6080 ki.lograms of uranium en-riched to 2.1% U-235 is to be used in fabricating fuel assemblies for the reload requirements of Tarapur Atomic Power Station (TAPS), Bombay, India.

The station is com-posed of two 200 megawatt electric, GE built boiling water reactors, Tarapur I and II, each of which is estimated to need at least between 65 and.70 fuel assemblies annually.

(The Indian preference is to reload about 85 assemblics, but they have been unable to attain this to date.)

Each I

fuel assembly contains 36 rods - 22 rods containing 85.6 kilograms uranium with an enrichment of 2.66%, 11 rods containing 42.8 kilograms uranium with an enrichment of 2.1% and 3 rods containing 11.6 kilograms uranium with an enrichment of 1.6% - for a total of 140.0 kilograms of uranium per assembly, or a total of approximately 9,520 kilograms of uranium per reactor per year.

The total quantity of uranium covered by this license, while almost 2,000 kilograms less than required for a full reactor reload,is sufficient to keep the Indian fuel fabri-cation facility in normal operation for approximately A

eighteen weeks including a three week period required for cleaning out the facility when uranium of one enrichment is changed to another.

One hundred sixty fresh fuel assemblies are currently available ?t TAPS from material supplied earlier, therefore enough fuel is available for refueling TAPS, Unit II in December 1977.

A shipment of enriched uranium must be in Bombay four weeks before it is delivered to the fuel fabrication facility to allow for customs clearance, internal transportation, material accounting and any adjustments to suit the operation of the fabricating facility.

Normal operatitn of the facility would recuire that material considered in this license application should be in Bombay as soon as possible.

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T 3 2-2.

Does the recipient country have an Agreement for Co-operation with the United States under Section 123 of the Atomic Energy Act, as amended?

And, if so, is the export in question covered by the agreement?

This supply of low enriched uranium is subject to all of the terms and conditions of the Agreement for Cooperation for Civil Uses of Atomic Energy between the United States and India.

This was confirmed in letters from the Govern-ment of India dated January 5, 1977, January 18, 1977 and December 8, 1977, copies of which are attached.

The Agree-ment for Cooperation first came into effect in October 1963.

3.

Has the recipient country accepted and implemented IAEA safeguards and/or other appropriate supplementary bi-lateral conditions (including, where applicable, under-standings regarding reexport) imposed by the U.S.?

The United States, India and the International Atomic Energy Agency signed a trilateral agreement January 27, 1971 for Application of Safeguards by the IAEA to the United States-India Cooperation Agreement.

This Agreement, which has been fully implemented, prohibits reexport of special nuclear materials supplied to India by the United States without agreement by the United States.

The Agreement also provides that special nuclear material supplied to India by the United States may not be reprocessed unless there is a joint determination of the Parties to the Agreement that safeguards may be effectively applied.

The Government of India has been advised that the U.S.

is not prepared to make such a determination regarding the existing Tarapur reprocessing facility (PREFERE).

Alternative methods of disposition of TAPS spent fuel which would be mutually acceptable have been explored with the Government of India.

We are currently providing India with technical assistance in re-racking of the TAPS spent fuel storage pond to expand its capacity, which would be otherwise unable to meet its spent fuel storage requirements over the next several years.

The United States and India have a mutual interest in solving the problem of storage of i

increasing quantities of spent fuel as is evidenced by several recent visits of U.S. Government officials to India during which they have had extensive access to TAPS, including opportunity to observe the spent fuel pool.

We are prepared to further explore the possibility of accepting spent TAPS fuel f(

storage in the U.S.

should this become necessary or desirable at some later date.

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4.

In Cases in which the recipient country is not re-quired by the NPT to accept IAEA safeguards, does the recipient country or organization have accounting and inspection procedures such as to assure compliance with the requirements of the relevant US Agreement?

IAEA safeguards are in effect under the aforementioned trilateral acreement for the application of safeguards by the IAEA to the US-India Cooperation Agreement.

These safe-guards are being applied following guidelines provided in l

i l

INFCIRC 66/Rev.

2.

l 5.

Does the recipient country have adequate physical security arrangements to deal with threats to sub-national diversion of significant quantities of nuclear weapon materials (plutonium or highly-enriched j

uranium)?

This is a shipment of low-enriched uranium which is not a nuclear weapon material.

An ERDA Physical Security Review Team judged the security measures observed at the Tarapur Atomic Energy Station adequate to protect the nuclear material at the station and in accordance with physical se-curity recommended by the IAEA in INFCIRC 225.

6.

What is the position of the recipient country with regard to non-proliferation (e.g.,

party to NPT, LANFZ, public statements)?

India has not signed the Nuclear Non-Proliferation Treaty on the grounds that they consider it discriminatory against non-nuclear weapons states.

A In an interview in September 1977 Prime Minister Desai stated, "Since the very beginning, my policy has been that we have no need whatsoever for an atomic bomb.

We definitely want to utilize nuclear energy for peaceful pur-l poses."

He also bxpressed strong.pposition to atomic ex-plosions, for which he said there was no need.

The Prime Minister has given assurances that he will not authorize further explosions such as the one in 1974.

He has stated l

that India will support all non-discriminatory measures toward nuclear disarmament.

Indian officials have on several occasions stated that they do not plan to export sensitive nuclear technology, materials, or equipment, or to make nuclear exports without recuiring international safeguards.

APPENDIX B-4

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7.

What understandings does the United States have with the recipient country with respect to use of US-supplied-material or equipment to acquire or develop nuclear explosive devices for any purpose, and as to the recipient country's policies and actions as to such development using eauipment and material from any source?

The Government of India has given the United States

(

written assurance that "...the special nuclear material i

that has been or is bareaf ter made available for, or used, or produced in the Tarapur Atomic Power Station located at Tarapur will.be devoted exclusively to the needs of that Station unless our two Governments hereafter specifically agree that such material be used for other purposes."

Ob-i viously, the US would not agree to use of such material l

in any nuclear explosive device.

Prime Minister Desai has provided assurance that he l

will not authorize nuclear explosive devices or any further i

nuclear explosions.

8.

What other f actors are there which bear on the issuance of the export license, such as further US understandings with the recipient country, other supplier countries or interested regional countries?

The IAEA Secretariat has concluded in its Special Safecuards Implementation Report that with regard to nuclear material subject to IAEA safeguards, while some deficiencies exist in the system, "in none of the 41 states in which in-l spections were carried out was there any diversion of a signi-g ficant quantity of nuclear material".

Although recognizing I

the need to correct existing deficiencies in safeguards imple-mentation, the Executive Branch has no reason to believe that the IAEA Secretariat's conclusion is not a valid one with 1

specific regard to nuclear material subject to the US-India Agreement for Cooperation.

In the light of this and other factors associated with the proposed export, the Executive 1

Branch believes the framework of commitments, re urances, and safeguards is adequate for the purposes of this export.

India and the IAEA have reached agreement concerning the application of IAEA safeguards to the Rajasthan Atomic t

Power Station, Units I and II, in conjunction with the pro-vision of heavy water to India by the USSR which will be used as moderator and coolant'in either or both reactors.

Now both of India's operating nuclear power stations are under inter-national safeguards.

APPENDD( B t

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During January 1978, Indiar. Prime Minister Desai had discussions on India's position toward acceptance of " full-l scope" international safeouards on Indian nuclear facilities with President Carter, a US Congressional delegation, and with British Prime Minister Callaghan.

In each of these discussions, Mr. Desai took the consistent position that

' India would accept such safeguards when at least the US, the UK, and the USSR agreed to a complete nuclear test ban, acreed not to add further to their nuclear. arsenals, and came to agreement to have a gradual reduction of nuclear stockpiles, with a view to the eventual destruction of such stockpiles.

The Executive Branch recommends the prompt issuance of XSNM-1060.

This shipment, approved at the highest levels, l

is believed to be in the best interest of US foreign policv objectives, particularly those related to non-prolife, ration.

The proposed shipment meets near-term criteria for export under existino aareements for coooeration as set out in Section 503 of the Administrations " Nuclear Non-Proliferation Policy Act of 1977".

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DR. M. AN AND AKRf SHNAN T E L., (29'd. 265 5050 g 0>ipte rd -26 5-7 888 SCIENTIFIC. COUNSELLOR } ,, m,, c, n ,,,,y,,,,, CMBAssY OF INDI A s'h wasainc ron, o.c. 2coes mm ) No. ? -SC/76 January 5, 1977 Mr. Vance H. Hudgins, Assistant Director for Political-- Military Security Affairs, Division of International Security Affairs, Energy Research and Development Adrainistration, Washington D.C. 20545. Re: Edlow International Company application Reference Number IN/DS/3-5.

Dear Mr. Hudgins,

Reference is made to the above mentioned application for export license. We hereby certify that the Depar:tment of Atomic Energy, Nuclear Fuel Complex, Maula Ali, Ilyderabad-4( India, is an authorised person to receive material and that the material which will be transferred for usage in the Tarapur Atomic Station will be subject to all terms and conditions of the Additional Agreement for Cooperations between the U.S. Government and the country of India. l Further, this is to let you know that Edlow Internatior Company is authorised to apply for an export license for the ) shipment of 5000 lbs of UF6 (1.6/ enrichment) and 20000 lbs of l UF6 (2.17. enrichment). Yours sincerely, .}( Q w.)aob m e... (H. Anandaktishnan) aooruntv n 7

($$A $ f VEL.t (202) 269 5050 l "]" DR, M. AN AND AKRISHNa 'g $ ton scr:). 265 888 SCIENTIFIC COUNSELLOR y i EMB ASSY OF INDI A D. C. 2 000s' " ' *

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W A $ HING TO N, j ewe *r4 No.7/SC/77 January 18, 1977 Mr. Vance H. Hudgins, Assistant Director for Political Military Security Affairs, l Division of Internaticnal Security Affairs, Energy Research and Development Administration, l Washington D.C. 20545. Re: Edlow International Company application - Reference number IN/DS/3-5.

Dear Mr. Hudgins,

l In partial modification of my letter dated l the 5th January, 1977, this is to let you know that Edlow International Company is authorised to apply for an export license for the shipment of 156.12 kgs. U235 contained in 7638 Kgs. uranium enriched to a maximum of 2.15 per cent. l Yours sincerely, S

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(M. Anandakrishnan) ( ',

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APPENDIX B-8

oft. E ANANDA KRISHNAN fc ^I"! ' SCIENCE COUNSELLOR q{ ' EMBASSY oF INDI A 210mmAcHusmS AUENUE,N W

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1.. WASHINGTON,0 C. 20006 No.7-SC/77 December 8, 1977 Mr. Vance H. Hudgins, ' Acsistant. Director for Political- . Military Security Affairs, ' Division of International Security Affairs, U.S. Department'of Energy, 20 Mass Avenue, N.W. Washington D.C. 20545. l l l Re: Edlow International Company Application l Reference No. IN/DS/3-5;

Dear Mr. Hudgins,

Reference is made to the above mentioned application for export license. We hereby certify that the Department. of Atomic Energy, Nuclear Fuel Complex, Maula Ali, Hyderabad-40, India, is an authorised person to receive material and that the . material which will be transferred for usage in the Tarapur Atomic Station will be subject to all terms and conditions of the Agreement for Cooperation between the U.S. Government and the country of India. Further, this is to let you know that Edlow International Company is authorised to apply for an Export i g License for the shipment of 156.12 Kgs. U235 contained in 7638 Kgs. uranium enriched to a maximum of 2.15 per cent. This letter is in partial modification of our letters dated January 5,1977 and January, 18, 1977. Yours sincerely, d f'/,L ~jbNenh,w. (M. Anandakrishnan) l 4 APPENDIX B-9

TJ Z s + : i.c4 4 l ENCLOSURE 3 \\ APPENDIX C -- STAFF CONCLUSIONS DATED 2/21/78

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M, unirco stares [. ' ' g NUCLEAR REGULATORY CO' MISSION >a M 4y WASHINGTON, D. C. 205S5 l %, *..../ February 21, 1978 Note to Files i STAFF CONCLUSIONS REGARDING PROPOSED LICENSE TO EXPORT LOW ENRICHED URANIUM TO INDIA (APPLICATION XSNM-1060) In January 1977, Edlow International Company applied for a license i to export 7,638 kilograms of uranium, enriched to a maximum of 2.15% U-235, to India for converstion and fabrication into fuel elements for the Tarapur Atomic Power Station (TAPS). The Executive Branch response on this application, dated January 25, l 1978, notes that the material, composed of two enrichments, will keep the Indian conversion / fabrication facility in normal operation for about eighteen weeks, including a three-week period for clean out between enrichment campaigns. An application for further material, XSNM-1222 filed in November 1977, is still under Executive Branch re-l view. In response to our January 17, 1977 request for views, the Executive Branch has (1) concluded that issuance of the subject license would not be inimical to the common defense and security, and (2) confirmed that the material will be subject to all the terms and conditions of the US-India Agreement for Cooperation. The US-India Agreement for Cooperation includes a guarantee by India i that no material, equipment, or device supplied by the US under the agreement will be used for atomic weapons or for research on or de-A velopment of atomic weapons or for any other military purpose. l To supplement this guarantee, in 1974 the Indian Government provided l written assurances to the US that the special nuclear material that j has been or is hereafter made available for, or used, or produced in j the TAPS will be devoted exclusively to the needs of that Station unless both governments specifically agree that such material may be used for other purposes. This written assurance resolved a possible ambiguity in the agreement for cooperation about nonmilitary applications of nuclear explosives in a manner consistent with the US understanding that no material or APPENDIX C

tZ 1 ._ y A Note to Files, l equipment supplied by the US, or material produced therefrom, may be used for any nuclear explosive purposes. As the Executive Branch response notes, the US obviously would not agree to use of such ma-terial in any nuclear explosive device. In the documentation concerning the issuance of XSNM-845 for export to India, in June 1977, it was noted that the then newly elected Prime Minister, Mr. Desai, had strongly voiced his opposition to nuclear weapons, reiterated Indian policy not to use nuclear energy for military purposes, and expressed uncertainty as to whether the testing of such devices is necessary. Since that time, as noted in the Executive Branch response, the Prime j Minister has not only stated that India has "no need whatsoever for an atomic bomb" and expressed strong opposition to atomic explosions, for which he said there was no need, but also given assurances that he i will not authorize further explosions such as the one in 1974. t i The US-India Agreement for Cooperation also prohibits the reexport of l US-supplied material without US approval and stipulates that US-supplied l material may not be reprocessed unless there is a joint US-India de-I tennination that safeguards may be effectively applied. In the latter regard, the Executive Branch response reiterates that the Indian Gov-ernment has been advised that the US is not prepared to make such a determination regarding the existing reprocessing facility, PREFERE, at Tarapur. As for the disposition of spent fuel at the TAPS, the staff recalls l that: r l o In issuing a previous license for export to India (XSNM-805) i A and in the July 1976 public hearing on continued supply to India, one of the key issues centered on the disposition and possible " buy-back" of spent TAPS fuel. o This possibility has been explored in discussions between US and Indian officials and the Indian Government has agreed in principle to tne return of spent fuel from the TAPS to the US. (This was also noted in documents concerning the issuance of license XSNM-845, including the Executive Branch's analysis of June 8, the staff's conclusions of June 22, and the Com-mission's memorandum and order of June 28, 1977.) o Financial and logistical details have not been worked out and, in the absence of long-range disposition solutions, the w 4m.w p, y 'ame *

~. Y % ;:. Y wuq Note to Files 3-l l l US has undertaken to provide technical assistance to India to expand the spent fuel storage capacity at the TAPS. l The Executive Branch analysis on the subject application, XSNM-1060, provides the following update: o The US is currently providing India with technical assistance in reracking the TAPS spent fuel storage pond to expand its l capacity. l l o The US and India still have a mutual interest in solving the storage problem, as evidenced by several recent visits of US officials to India (during which they had extensive access to the TAPS). o The Executive Branch is prepared to explore further the possi-bility of accepting spent TAPS fuel for storage in the US should this become necessary or desirable at some later date. l The staff has participated in the interagency review of long-term disposition options for spent fuel at the TAPS. In view of the ongoing discussions between the US and Indian Governments on broader nonprolifera-tion matters, and in view of the ongoing review within the US Government of impacts associated with the return of spent power reactor fuel to the l US for storage in general, the staff has no further questions with respect l to this status report on the " buy back" option.- India has not signed the NPT and has unsafeguarded nuclear facilities and ma terial. US-supplied material, however, is subject to IAEA safeguards l under the US-India-IAEA Safeguards Agreement of January 1971. ) A The Executive Branch response notes that, while recognizing that some deficiencies exist in the IAEA safeguards system, the IAEA Secretariat has concluded, in the SSIR for calendar year 1976, that in none of the 41 l States in which inspections were carried out was there any diversion of a significant quantity of IAEA safeguarded material. The SSIR notes that this conclusion is based on both quantitative analyses and elements of judgment. Other information in the SSIR indicates that (1) the quantitative capabilities of the IAEA safeguards system need to [ be improved, and (2) raises doubts that the IAEA had sufficient informa-tion to verify, in strictly quantitative terms, the Secretariat's conclusion, As detailed in the recent letter on IAEA safeguards to the chairmen of the cognizant congressional comittees, the staff is not able to provide + w seem o e

+*

D l *'i Note to Files 1 independent evaluations of the effectiveness of IAEA safeguards implementa-tion on a country-by-country basis in the absence of country-specific l detailed information. (This matter has also been explored in depth in several meetings with the Commission.) However, neither the staff nor the l Executive Branch has reason to believe that the IAEA Secretariat's j conclusion is not a valid one with specific regard to nuclear material l subject to the US-India Agreement 'for Cooperation. l With respect to other safeguards matters, the Executive Branch response 1 has noted: l o During January 1978, Prime Minister Desai (1) discussed India's position toward acceptance of " full-scope" international safe-guards on Indian nuclear facilities with President Carter, a US congressional delegation, and British Prime Minister Callaghan, and-(2) took the consistent position that India would accept such safeguards when at least the US, the United Kingdom, and the USSR agreed to a complete nuclear test ban, agreed not to add further to their nuclear arsenals, and came to agreement to have a gradual reduction of nuclear stockpiles with a view to the eventual destruction of such stockpiles. o Indian officials have stated on several occasions that they do not plan to export sensitive nuclear technology, materials, or equipment, or to make nuclear exports without requiring inter-national safeguards. o In conjunction with the USSR providing heavy water to India, India and the IAEA have reached agreement on the application of IAEA safeguards to the Rajasthan Atomic Power Station, Units I and II. g The Executive Branch believes that the shipment proposed under the subject license, approved at the highest levels, is in the best interest of US foreign policy objectives, particularly those related to nonproliferation, and recomends prompt issuance of the proposed licenre. The Executive Branch response also indicates that the proposed export would meet the immediately applicable export criteria enumerated in the Administration's " Nuclear Nonproliferation Policy Act of 1977." The staff notes that the immediately applicable export criteria as proposed in that bill are essentially identical to those included in the Nuclear Nonproliferation Act of 1978 as recently passed by the Congress. On February 13, the Natural Resources Defense Council, the Sierra Club, and the Union of Concerned Scientists filed two motions with the Commission: the first requesting that the Commission order a resumption of the hearing 1 l l

70 l ,9 Note to Files regarding the continued export of low-enriched uranium to India, and the second requesting the Commission to consolidate the subject application (XSNM-1060) with the application still under review by the Executive Branch (XSitM-1222). In a February 21 letter from Mr. Tarnoff to Mr. Chilk, State opposed resumption of a hearing in conjunction with the issuance fo the proposed license XSNM-1060 for the reasons stated therein. On February 21, in response to the motions by f1RDC, UCS, and the Sierra Club, the staff also opposed a hearing in conjunction with the issuance of this license for reasons stated. In view of the extensive analysis of US nuclear supply to India, spanning almost two years and as updated by the Executive Branch analysis on the proposed license, the staff has concluded that the overall framework provides adequate assurance for the purposes of the proposed export. As required by Section 57 of the Atomic Energy Act and 10 CFR 70.31, i the staff has concluded that the export to be made pursuant to the pro-posed license (1) would be subject to the Agreement for Cooperation l between the United States and India; and (2) would not be inimical to the interests of the United States, including the common defense and security. Y >= - g , cha in, Assistant Director Export / Import and International Safeguards Office of International Programs k

p.... ~.1 a. I l l l 1 l l l l l r I l l l ENCLOSURE 4 l l APPENDIX D - PROPOSED LICENSE i I I l m.%.m

I Ja ^ EXPORT LICL NSE & Rem:umzwrsecrzmwcatwsmu:xstuewr.swrzufw11mer:narrzrrmwarrr.xy. ;i h{j rosa Nec 250 Nec ceNst No .I 5- ( W.rsi 9 {g V (#g ills LICE.%SE EXPIRES T i XSNM-1060 'p -=2 f Muitch 8taten of America 9L f s 5 {\\ $ Nuclear Regulatory Commission } N 4 z' Pursuant to the Atomic Energy Act of 1954,os amended.ond the the licensee, a license is hereby issued to the licensee author. h ' y, c i ing the e= port of the materialiand/or production or utilization pl ?s Energy Reorganirotion Act of 1974 and the regulations of the t [' Nuclear Regulatory Commission issued pursuant thereto, and in facilities listed below, subiect to the terms and conditions herein. p! 3 reliance on statements and representations heretofore made by b ik, ' UCENsEE ultiMAff CoNslGNf[ IN FOfflGN CouNTEV b Chief Superintendent j Edlow International Company l 1% ~~e ww E as agent for Government of Tarapur Atomic Power Station I Department of Atomic Energy I India ,oo.ess aooniss l 'p,, 1100 - 17th Street, N.W. Bombay, India lJJ .h

1. 404 l

l Washington, D.C. 20036 Ei p .[<j iurieuvoiare cousicNee in scesiG9 countiv orsie risties to expont '[ h Department of Atomic Energy f sme ~; Nuclear Fuel Complex NONE 4 h Maula Ali, Hyderabad, 40 India y B' fg N 3 ADofEss .'.' b j f I E INDS-3(5) cou~rev o, utnere oesnnanos India

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j M a 156,12 kilograms uranium-235 Contained in 7,638 kilograms uranium, n ij lh' asuraniumhexafluoride(UF),enrichedk 6 s to 2.15 w/o maximum. N y# a M4 Conditions 1,3,5 and 6 on page two of this license apply to this l E d export. ) /////////////////////////////////////////END/////////////////////////////////////$

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's l yg ) ? a. M g ~ .A l u n g e s v M Neither this license nor any right under this license shall be ossign-THI$ Lt((Ns( ls INV AllD uMllss slGNID SttOW tv AufwoNto Nec timMNTAnW ed or otherwise transferred in violotion of the provisiens of the If g Atomic Energy Act of 19$4, os amended and the Energy Reorgon-E g g iration Act ol 1974 Michael A. Guhin, Assistant Director Export / Import and International f This license is subject to the right of recopture or control by Section 108 of the Atomic Energy Act of 1954, os amended and to oil of the Safeguards F % other provisions of soid Acts, now of hereofter in effect and to oil Office of International Programs j ' ' O' ' ' d U a valid rules and regulations of the Nuc'leor Regulatory Commission. Er w w w ww ww w m rrww ww w ww w v_nvm'a y v., y,v,v v w w w WWs v w w twt,,%WM J kM P ~ V. M1:

Wi#su y EXPORT. LICENSE

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XSNM-1060 h'P Conditions License Number e. s,.. V Condition 1,- Licensee shall file with the Customs Officer or the Postmaster two copies,in addi-G Ition to those otherwise required,'of the Shipper's Export Dectoration covering ', y ) 'ecch export and mark one of such copies for transmittal to the U.S. Nuclear Regua lotory Cui. mission, Washington, D.C. 20555. The following declaration should oc.

Q company or be placed on the Shipper's Export Declarations for such exports

?k. Ed "This shipment is being made pursuant to specific license number (specific ~ u ,y license numt,er) filed at (location of Customs office where license is filed), '.1 ? on (date license was filed). This license expires on (expiration date of y(5 cover the shipment described on this declaration." license), and the unshipped balance remaining on this license is sufficient to -[. 'V, Condition 2 - Exports authorized in any country or destinction, except Country Groups Q, S, W, sq X, Y, and Z in Port 370, Supplement No.1, of the Comprehen','ve Export Schedule f,J of the U.'S. Department of Commerce. Condition 3 - This license covers only the nuclear content of the material. i. Condition 4 - The material to be exported under this license shall be shipped in accordance with the physical protection requirements for special nuclear material in 10 CFR 73. Condition 5 - Special nuclear material authorized for export under this license shall not be transported outside the United States in possenger corrying aircraft in shipments exceeding (1) 20 grams or 20 curies, whichever is less, of plutonium or uranium 233, or (2) 350 grams of uranium 235. Condition 6-This license authorizes export only and does not authorize the receipt, phys; col possession, or use of the nuclear material. g l Condition 7 - The licensee shall cor,plete and submit on NRC Form 741 for each shipment of l source material exported under this license. Condition 8 -- The licensee shall advise the NRC in the event there is any change in the designa- - tion of the company who will package the nuclear material to be exported under this license, or any change in the location of the packaging operation, at least three weeks prior to the scheduled date of export. t b l g. 0 .Q.ge! .t-SDDrNntY n_?}}