ML23156A605

PR-110 - 37FR00092 - Unclassified Activities in Foreign Ae Programs

ML23156A605
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Issue date:	01/05/1972
From:	Wiggin E NRC/EDO
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PR-110, 37FR00092
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ADAMS Template: SECY-067 01/05/1972 PR-110 - 37FR00092 - UNCLASSIFIED ACTIVIES IN FOREIGN AE PROGRAMS PR-110 37FR00092 RULEMAKING COMMENTS Document Sensitivity: Non-sensitive - SUNSI Review Complete

P.O. Box608 President March 6, 1972 San Diego, California 92112 Tel: (714) 453-1000 Secretary of the Commission United States Atomic Energy Commission Washington, D. C. 20545

Dear Sir:

DO CKETED tl&lro 81972 ~

omcs 61 the secretary Publ!; Prccec~lngs Braue:,

In response to the Atomic Energy Commission's notice of intent to amend 10 CFR Part 110 as published in the Federal Register on January 5, 1972, Gulf Energy & Environmental Systems offers the following views.

Gulf is vitally interested in the proposed regulation changes due to our direct involvement in Allied-Gulf Nuclear Services, a fuel reprocessing organization, and our develop-ment and commercialization of the HTGR which includes reprocessing of graphite base fuels.

The Atomic Industrial Forum has submitted general and specific comments concerning many issues that are of deep concern to the nuclear industry should the AEC decide to adopt the proposed changes to the 10 CFR Part 110 regulation.

Gulf Energy & Environ-mental Systems fully supports the position taken by the Atomic Industrial Forum in whose preparation Gulf participated.

It is generally accepted that foreign technology is available in the fields singled out by the proposed regulation change.

We are not aware of plans by the United Kingdom, France, Canada, The Netherlands, or others to restrain or control their citizens with regard to foreign activities in the area of these technological subjects.

Unless such plans are adopted by such Governments, the desirability of unilaterally curtailing efforts by United States firms in this area should be thoughtfully considered.

The January 5 statement did not clearly indicate the need for changes in regulation or the criteria under which the AEC would implement the proposed changes. If the AEC is to go forward with this policy it should spell out the criteria.

Sincerely,

LAW O F FICES 8ECHHOEFER, SNAPP & TRIPPE S U ITE 6 12, 1726 K STREET, N, W.

BERNHA RD 0. B ECHHOEFE R ROY B. S N A PP J E RRY C. TRIPPE WASHINOTON, D. C. 20006 TELE PHONE : (202) 223 - 1036 CABLE: BESNA T March 2, U.S. Atomic Energy Corrunission Washington, D. C.

20545 Gentlemen:

DO CKETED OOAEC MAR 71972

• Office of tile sacratlll Publlc Prnt:";Odlnp nnmcll J OSE PH F, HENN E SSEY M A SON WIL LRICH OF C O UNSEL The Atomic Energy Conmission has published (Federal Register, January 5, 1972) proposed amendments to its regulations, 10 CFR Part 110, to require specific authorization for certain activities outside the United States by U.S. firms or individuals in the fields of uranium enrichment, chemical processing and heavy water. These activities include the design or assistance in design of facilities for the separation of isotopes of uranium or components especially de-signed for such a facility; constructing or fabricating such a facility; fabricating or furnishing equipment or components especially designed for use in such facilities; training foreign personnel *in the design, construction, operation, or maintenance of such a facility or equipment or components especially designed therefor; and furnishing information not available to the public in published form for use in the design, construction, fabrication, operation or maintenance of such facilities, equipment or components.

Electro-Nucleonics, Inc., our client, is presently engaged in the design, fabrication, and sale of continuous flow zonal ultracentrifuges and is engaged in further research and development looking toward im-provement of these machines.

These centrifuges are currently produced in two models -- Model Kand Model RK.

The Model K ultracentrifuge was based upon the development work performed by Dr. N. G. Anderson and others in the AEC-NIH Molecular Anatomy Program at Oak Ridge National Laboratory, and satisfied a need for high resolution separation of cells and sedimentable sub-cellular components in quantities sufficient for detailed study.

Electro-Nucleonics has supplied production-scale Model K centrifuges to a number of major pharmaceutical companies for the pro-duction purification of influenza virus vaccine.

The Model RK centrifuge is a scaled-down version of the Model Kand is designed for the smaller volumes of material typical of the research laboratory and pilot plant.

U.S.A.E.C.

2.

March 2, 1972 The ultracentrifuges produced by Electro-Nucleonics are being used extensively in the production of purified viruses for cancer research in higher concentrations than had been previously attainable. They are also used to produce a wide range of other inmunological and viral diagnostic reagents.

Viral insecticides for use on agricultural crops have been produced.

To date Electro-Nucleonics has exported its ultracentrifuges to the United Kingdom, France, Germany, Italy and Japan.

As knowledge of the superior capabilities of their equipment becomes more widespread, Electro-Nucleonics expects to increase its shipments to foreign countries.

Some customers may well develop in 11Sino Soviet bloc" countries.

It is conman knowledge that gas centrifuges have the capability of separating the isotopes of uranium in significant quantities and with a significant separation factor.

Extensive development work on uranium separation by gaseous centrifugation is now being carried on in Europe and other locations around the world.

It is this burgeoning centrifuge activity that prompts us to bring the Electro-Nucleonics situation to your attention.

A perusal of the enclosed literature describing the design parameters of the Electro-Nucleonics liquid centrifuges, Models Kand RK, and the purposes for which they can be utilized, should demonstrate clearly that they lack the capacity to effect any meaningful separation of the isotopes of uranium.

The technology employed is in the open literature and the Oak Ridge National Laboratory has issued a widespread invitation for its further development for research and commercial applications.

We note the statement in the notice of proposed rule-making that it is not the intention of the Commission to prevent by this regulation the transfer of standard off-the-shelf items or the communication of information which is available to the public in published form.

Electro-Nucleonics considers its Model Kand RK centrifuges to be standard, off-the-shelf items and the basic technology and drawings have been made publicly available by the Oak Ridge National Laboratory.

In the context of the proposed amendment to Part 110, it seems complete-ly clear that, with respect to the Model Kand Model RK zonal centrifuges produced by Electro-Nucleonics, these centrifuges and their components are not especially designed for use in facilities for the separation of the isotopes of uranium, and that the design, fabrication or furnishing of their components, the training of foreign personnel in the design, construction, operation, or maintenance of these centrifuges or their components, and the furnishing of information concerning the design, construction, fabrication, operation, or maintenance of these centrifuges or their components, would not be activities for which specific authorization would be required under Part 110 as it would be amended by the proposed rule.

U.S.A.E.C.

3.

March 2, 1972 I would appreciate your advice as to whether you are in agreement with the understanding expressed in the immediately preceding paragraph.

I will be pleased to answer questions or provide additional background, if that would be helpful.

Sincerely yours, Roy B. Snapp BECHHOEFER, SNAPP & TRIPPE Attorneys for Electro-Nucleonics, Inc.

REC[IV 0 1972 MAR 6 p 3 2 4 DIVISION OF INTERNATIO, AL SECURITY AFFAIRS

Secretary of the Commission United States Atomic Energy Commission Washington, D. C.

20545

Dear Sir:

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Bechtel Corporation '.?~

Engineers - Constru ctors Fifty Beale Street San Francisco, California 94119 March 3, DOCKETED il&4£-0 MAR 61972-.

Office Of the Secretary PubJ!c Pnrvaet11ao Branch VUl..

You have published in the Federal Register on January 5, 1972, a proposed amendment to 10 CFR Part 110 dealing with foreign atomic energy programs.

It is our understanding that comments received within 60 days of the publica-tion will be considered.

Several members of Bechtel's staff have taken the opportunity to discuss the proposed amendment in considerable detail with AEC representatives directly concerned with the current implementation of AEC regulations relating to foreign atomic energy programs. You may also be aware that Bechtel requested AEC approval to engage in a preliminary engineering feasibility study for a European firm on a new and unclassified enrichment process. The review process required over two months, at which time we were informed that the AEC did not approve our undertaking the proposed contract.

Our concern is not with the basic desire of the United States to meet its obligations under the Non-Proliferation Treaty, but with the apparent disregard for the principles of NPT which encouraged making available the benefits of peaceful applications of nuclear energy to the adherents to the treaty. The proposed regulations will certainly deter, if not totally prevent, the effective and continuing flow of the type of information and assistance which is so essential to the effective application of peaceful nuclear technology.

In addition, we cannot help but express misgivings with respect to an admin-istrative system which has in it inherent uncertainties and inevitable admin-istrative delays which will only serve as a deterent to American industries attempting to do business overseas.

It is our firm belief that the impediments implicit in the elaborate subdivision of activities requiring AEC approval will be interpreted by potential foreign

Bechtel Corporation Secretary of the Commission Mar ch 3, 197 2 these can be met without the imposition of the serious, if not completely negative, impact on the ability of American engineering firms to do business abroad. We would urge that the proposed rule-making change not be placed into effect until further consideration has been given to less onerous procedures to assure conformance to the requirements of the NPT.

We would also like to observe that the wording used in the proposed new Section 110. 7 indicates that the Atomic Energy Commission has deter-mined that the activities listed in subparagraphs (a) (4) (i)-(v) are inimical to the interest of the United States. This interpretation derives from the double negative utilized in this subparagraph. The AEC staff has com-mented that this language is consistent with the present subparagraph (4).

A re-reading of the current Section 110. 7 does not support that contention; and we, therefore, continue to interpret the choice of language to indicate that the AEC has pre-determined that the activities listed are, in fact, inimical.

Under this interpretation and in the light of our own experience with the specific case cited above which was not approved by the Commission, we are apprehensive that the strict interpretation of the new Section 110. 7 will be consistently applied to deny American firms the right to engage in any of the activities identified in the new subparagraph.

Our concern is further amplified by the reading of a paragraph in the Federal Register text which states:

11 *** In considering requests for authorization the Commission will give special attention to the extent to which the communication of information, the pro-vision of services, and the export of equipment and components are of significant or substantial assistance to the foreign activity. "

There is a strong implication that the Commission will apply these criteria in an inverse fashion.

In other words, the greater the significance or the more substantial the assistance to the foreign activity, the lower the probability of approval. If, in fact, this is the basis upon which the AEC

Bechtel Corporation Secretary of the Commission 2 -

March 3, 1972 clients of American firms as additional reasons to seek goods and services from non-American organizations. In identifying the range of activities requiring AEC determination, the full spectrum of services offered by an engineering-construction firm are encompassed from the provision of preliminary data drawn from published information through the design, procurement and construction of facilities for enrichment, nuclear fuel reprocessing, or heavy water production.

From our reading of the new Section 110. 7 and from our discussions with the AEC staff, it is our understanding that AEC approval must be obtained for each step in the above-mentioned scope of services, with the clear possibility that approval might be granted for the first few steps and denied at the time of detailed engineering and construction. Such a system of approvals places the American firms at a clear disadvantage, since there is little incentive for a foreign client to retain the servi ces of an American organization for early stages of a project only to have their services denied at the time when the most significant part of the project is expected to proceed expeditiously. The prospect that a client of an American engineering firm would have to turn to a non-American firm at some mid-way point in a project could well be sufficient argument to utilize non-American firms exclusively.

As you are well aware, American firms are already at a disadvantage in competing for overseas projects due to labor and equipment costs. This additional disadvantage will soon be recognized by our potential foreign clients. This additional burden is one that we believe need not be placed upon American industry because, in doing so, one can foresee a substantial reduction in the provision of services and equipment abroad with consequent further deterioration of our balance payments.

As a responsible engineer-constructor, Bechtel would feel obliged to inform our prospective clients of the step-wise approval requirements of the AEC and the potential need to withdraw from a project at some interim period. To do less than this would be to ignore our responsibilities to a client in assuring them of the most effective and timely completion of an engineering-construction project. Clearly, neither the client nor the engineer can operate freely in the framework of the proposed rule change.

We are fully in support of the desire of the United States to meet its obligations under the Non-Proliferation Treaty. We are certain that

e Bechtel Corporation Secretary of the Commission March 3, 1972 will operate, it is easy to conclude that there is no incentive for an American firm to seek a substantial position in a foreign activity involving nuclear fuel reprocessing, enrichment or heavy water production.

Based upon our discussions with the staff of the Commission, this inter-pretation does reflect the intent of those who will be administering this regulation.

Consequently, we urge that the amended regulation not be put into effect.

As you can conclude from the various comments presented in this letter, it is Bechtel 1 s c onsidered judgment that the proposed amendment to 10 CFR Part 110 is not in the best long-term interests of the United States, whether measured by international security; economic benefit to the U. S.

tax payer or to the American industry; U. S. balance of payments; economic development of nuclear power; or U.S. international relations. The issues involved seem to go far beyond the stated justification of meeting the U.S.

obligations under the Non-Proliferation Treaty.

We have serious doubt that the proposed approval procedures are necessary to meet this com-mendable goal, and urge that serious thought be given by all parties con-cerned to more effective means of doing so.

We would recommend that the issues be considered by such government agencies as the Department of State, Export-Import Bank, Depart:Inent of Commerce, as well as the Office of Management and Budget. Private enterprise, including financing institutions, manufacturing organizations and professional services companies, such as Bechtel, should also have the opportunity to develop with the Government an approach to serve the interests of all in this most complex area.

We understand that the Atomic Industrial Forum is submitting an independent response to the AEC urging that the proposed amendment not be put into effect.

Bechtel is in full support of the Forum1s position in this matter.

In conclusion, we would like to restate our support of the U.S. AEC and the U.S. Government in their efforts to satisfy our obligations under the Non-Proliferation Treaty. It is our firm belief that these can be met in a much less ponderous fashion than is implicit in the new proposed change to

e Bechtel Corporation Secretary of the Commission March 3, 1972 10 CFR Part 110. We would welcome the opportunity to discuss in further detail our comments and are prepared to approach this matter in a manner which can serve both the interests of the U.S. Government and of U.S.

industries, which should, in fact, be compatible.

Very truly yours, BECHTEL CORPORATION

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. Ko -::r)i_;s-ecutive Vice President JWK:mp

4 75 PARK AVENUE SOUTH* NEW YORK, N. Y. 10016 * (212) 725-8300 Secretary of the Commission U.S. Atomic Energy Conmission Washington, D. C.

20545 Dea r Sir:

OCKEHD U&AEC AR 3 1972 omce o! the sacretao

,, ~H~ Prottedlngs Branch Feb ruary 29, 1972 On January 5, the Atomic Energy Commission published in the Federal Register notice of its intent to amend 10 CFR Part 110 to require any U.S. individual or company to obtain specific Commission authorization before engaging in any activity relating to chemical processing of irradiated special nuclear material, the production of heavy water or the separation of isotopes of uranium outside the U.S.

This letter is in response to the invitation for public comment contained in the Federal Register notice.. The comments contained herein have b~en developed by the following ad hoc group of Forum member representatives:

H. W. Brook Kenneth H. Campbell L. J. Col by, Jr.

W. Kenneth Davis Kenneth R. Osborn Erik Pedersen Nuclear Fuel Services, Inc.

NUS Corporation Gulf General Atomic Bechtel Corporat~on Allied Chemical Corporation Nuclear Fuel Services, Inc.

Further, this letter has been reviewed and its contents endorsed by the following additional Forum member representatives:

John K. Davidson E. R. Johnson John L. Kuranz Salomon Levy Bruce Old James K. Pickard Paul Reinker Walton A. Rodger Alex Stewart R. L. Witzke Nuclear Associates International Corp.

E. R. Johnson Associates, Inc.

Nuclear-Chicago Corporation General Electric Company Arthur D. Little, Inc.

Pickard, Lowe and Asseciates The Babcock & Wilcox C0111pany Nuclear Safety Associates NL Industries Westinghouse Electric Corporation

IN r..

Secretary February 29, 1972 We have four general comments and a number of detailed comments on the proposed rule change.

All are intended to support our conviction that adoption of the proposed amendment in its present form would not be in the public interest.

General Comments Absent any stated reason in the propo~ed amendment as to why the Com-mission proposed its adoption, other than the imp! ication that the speci-fied activities may be inimical to the interest of the United States, absent any stated objectives which the proposed amendment would purport to se rve, and absent any indication of the criteria which AEC would apply in implementing the proposed amendment, we are concerned that its adoption could have an adverse impact on nuclear power development in free world count r ies, including the United States.

As to ou r second general comment, it is not at all clear to us on what basis the Commission selected the three areas of activity for special surveillance.

They seem to have 1 ittle in common a~d, aside from enrich-ment, which is extensively covered by Restricted Data rules, appear to be no more sensitive than a number of other activities that might have been designated.

Our third general comment relates to the Commission 1s authority for the proposed amendment which it cites as residing in the provisions of section 57(b) of the Atomic Ene rgy Act of 1954.

Although it is not our intent to challenge this authority, the scope of information covered by the proposed amendment appears to extend far beyond that generally ascribed to 11technology 11

• To clarify this point and to assist affected parties in understanding its ramifications, we suggest that the Com-mission1s General Counsel publish an opinion on the autho Fity for and the scope of the proposed r ule change.. The importance we attach to this suggestion is underscored by the unfortunate confusion which still attends the Comm ission 1s 1967-68 publication of proposed 10 CFR Part 26 and proposed amendments to 10 CFR Part 25 which have neither been adopted nor withdrawn, but which are still informally referred to as reflecting Commission pol icy.

Further to this third general comment, we note the Commission 1s reference to the Treaty on the Non-Proliferation of Nuclear Weapons (NPT) under which 11the United States undertakes not to assist, encourage, or induce any nonnuclear-weapon State to manufacture or otherwise acquire nuclear weapons or nuclear explosive devices or control over such weapons or devices. 11 Inasmuch as any information exchange ascribed to--this type of activity would presumably involve Restricted Data, we find it diffi-cult to understand why the Commission 1s attitude toward the exchange of unclassified information would not be dictated by Article IV of the NPT.

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Secretary February 29, 1972 Article IV reads, in part:

"All the Parties to the Treaty undertake to facilitate, and have the right to participate in, the fullest possible exchange of equipment, materials and scientific and technological informa-tion for the peaceful uses of nuclear energy.

Parties to the Treaty in a position to do so shall also cooperate in contributing alone or together with other States or international organizations to the further develop-ment of the applications of nuclear energy for peaceful purposes, especially in the territories of nonnuclear-weapon States Party to the Treaty, with due consideration to the needs of the developing areas of the world. 11 The intent of the proposed amendment seems, however, to conflict with these formal commitments inasmuch as the proposed amendment states:

"In considering requests for authorization the Commission will give special attention to the extent to which the communication of informa-tion, the provision of services, and the export of equipment and components are of significant or substantial assistance to the foreign activity."

Our fourth general comment takes the form of a question:

Has the Com-mission explored alternative means of accomplishing the 0bjectives of the proposed amendment?

If the Commission is concerned about the flow of certain unclassified information, services or equipment from the United States to certain countries outside the United States, we would hope that concern could be accommodated by one or more of the f0llowing means:

(1) add to 10 CFR Part 110.7 (a) (1) the names of those countries to which such information, services and equipment cannot be supplied without prior authorization of the Commission or (2) restrict the list of countries to which such information, services and equipment can be supplied without prior Commission authorization to:

(a) those having entered into an agreement for cooperation with the U.S., (b) those having signed or ratified the NPT, or (c) those having signed agreements to accept IAEA safeguards.

Detailed Comments Beyond these four general comments, a number of detailed comments on the proposed rule change have been brought to our attention.

However, lest we divert attention from the importance we attach to our general comments and lest we mistakenly imply that accommodation of some of these detailed comments will satisfactorily resolve the more fundamental concerns we have raised, we have indicated here, simply by way of example, the sense of some of these detailed comments in the following questions:

What mechanism should U.S. parties wishing to engage in any activity cited in the proposed amendment employ in seeking Commission authorization?

IN f:.

Secretary February 29, 1972 Will the requirements of the proposed amendment apply to existing contractual arrangements between U.S. and non-U.S.

parties and in what manner?

At what stage should conversations and negotiations between U.S. and non-U.S. parties relating to the type of activities specified in the proposed amendment be brought to the Com-mission1s attention and to whom should they be referred?

What assurance will the Commission be prepared to give to the parties of a Commission-authorized activity that such Com-mission authorization wil I not subsequently be withdrawn at the risk of severe financial loss to the parties involved?

Do the requirements of the proposed amendment apply to the

• visitation of non-U.S. nationals, including IAEA safeguards inspection personnel, to U.S. commercial facilities engaged in the type of activities specified in the amendment?

What steps would be taken by the Commission to prevent cir-cumvention of the requirements of the proposed amendment simply by pub! ishing and disseminating the unclassified information in question?

In what way, if any, will adoption of the proposed amendment impact adversely on current AEC efforts to sell U.S. enrich-ment technology to non-U.S. countries?

What steps should be taken by a U.S. party in attempting to serve a program objective of the Department of State or the Department of Commerce which appears to conflict with the requirements of the proposed amendment?

We feel strongly that if it is the intent of the Commission to adopt the proposed rule change in the present or some modified form, the Commission should, at a very minimum, schedule a public meeting to explain to all interested and affected parties its objectives, to describe the manner in which it is to be implemented, and to answer such questions as are raised above.

As indicated earlier, we are opposed to adoption of the proposed amend-ment in its present form.

As drafted, it is not clear that it would serve any purpose other than threatening to remove U.S. technology in the specified areas of activity from the world marketplace.

This, in our opinion, would be a disservice to the U.S. nuclear industry and to many of the free world nations.

Sincerely yours, 2cl~d* 0~~~

Edwin A. Wiggin Assistant Executive Manager EAW:j r i

INTERDEVELC>PMENT, INC.

11 176 SECOND AVENUE. WALTHAM, MASS. 02154 TEL. 617 890-3909 Secretary of the Commission US ATOMIC ENERGY COMMISSION Washington, D. C. 20545

Dear Sir:

DOCKETEU U&A£C MAR 31972 Office of the Secretary PubHc Proceedings Branch March 1, 1972 (l.50.1)

U.S.A.

Reference is made to the proposed amendment to 10 CFR Part 110, FOREIGN ATOMIC ENERGY PROGRAMS, Unclassified Activities, as published in the Federal Register of January 1972. Our attention was called to this proposal only recently, and we hope that our comments can still be considered. We understand that fortunately the deadline for the submission of comments and suggestions has been extended from 4 February to 6 March.

The first paragraph of the announcement in the Federal Register refers to the Treaty on the Non-Proliferation of Nuclear Weapons. The pertinence of this introductory statement to the subsequent sections is not at all clear to us. As pointed out in it, "Each nonnuclear-weapon state undertakes to accept safe-guards, as set forth in an agreement to be negotiated and concluded with the INTERNATIONAL ATOMIC ENERGY AGENCY, designed to verify the fulfill-ment of that state's obligations assumed under the treaty with a vldw to preventing diversion of nuclear energy from peaceful uses to nuclear weapons or other nuclear explosive devices. 11 Had the Commission made the proposed amendment applicable only to non-nuclear-weapon states which are not signatories to the treaty, its reason for proposing the change would have been clear. Since the proposal as it stands would be applicable to the projects of any foreign countries, signatories or not, we can only assume that the important statement in the preamble is the following:

".... the Commission believes that some activities in these three areas should also be subject to its approval in each case to assure that such activities will not be inimical to the interests of the United States". The question of what is

March 1, 1972 (1. 50. 1) inimical to the interests of the United States in the transfer of unclassified technology is a very broad and complicated one, and it would be surprising if the members of the Commission were unanimous on this point. We should like to plead for the following point of view.

- 2 In the case of countries which are our allies and which have signed the non-proliferation treaty, it appears, at least on the surface, ridiculous to establish a complicated and vague administrative review procedure which seems designed to throttle the transfer of unclassified technology. In the announcement of 5 January it is stated that "it is not the intention of the Commission to prevent by this regulation the transfer of standard, off-the-shelf items or the communication of information which is available to the public in published form." By inference, anything which involves an interpretation of information available to the public in published form, even though this interpretation be completely unclassified, is subject to review and probably to refusal for export if it might "provide substantial assistance to the foreign activity". As you may be aware, the United States Government has had an active policy of selling unclassified reports abroad, presumably to aid our balance-of-payments problem. If the majority of the Commission believes that the United States has a monopoly on brain power, then it is sadly in error. With the availability of the unclassified information in publish-ed form, any interpretation which is possible in the United States is also possible abroad, although the time required may be slightly longer because of distance and communications problems. To us it seems incongruous to promote the sale of unclassified government reports abroad and at the same time to propose a procedure which seems likely to limit significantly the extent to which U.S.

organizations can interpret the information contained in such reports and other unclassified publications for foreign clients. May we point out that such activities also contribute to an improvement in our balance-of-payments situation?

A more important point is the fact that other countries which have reached policy decisions to be active in the fields of uranium-isotope-separation plants, chemical-processing plants, and heavy-water plants possess, in the cases of which we are aware, the potential to develop such plants successfully with or without the help of the United States. If we provide at least some assistance, it will be remembered; if we drop an iron curtain to prevent such assistance, this fact will also be remember-ed. If we take the enrichment field as an example, it is our impression that both the British and the French, who certainly possess significant know-how, are actively interested in selling it to others and, in fact, have done so in at least one case.

We believe that it would be in the best interests of the United States to reconsider

March 1, 1972 (1. 50. 1) its entire policy relating to foreign projects associated with the three types

- 3 of plants cited. We also believe that the United States would benefit and that the American taxpayers would be saved money if agreements for cooperation in connection with such projects were negotiated. Obviously such agreements should take proper account of the vast know-how available in the United States and should include proper safeguards for the information supplied.

To summarize, it is our opinion that the proposed amendment is not in the best interests of the United States and that, in fact, our entire policy relating to foreign projects in the fields cited in the Federal Register announcement of 5 January 1972 should be subjected to critical review. We recommend respect-fully that the amendment not be adopted. If, contrary to our recommendation, it is adopted, very specific guide lines indicating what will and will not be approved should be published, so that organizations will know whether it is worthwhile to request the approval of the Commission for work on foreign projects. This point is particularly crucial for small-business firms, which cannot afford the administrative expenses associated with complicated bureau-cratic procedures.

The opportunity to submit our comments is appreciated.

fef/ml Very truly yours, INTERDEVELOPMENT, INC.,

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Frank E. Faris President Jlt)

D~aECED tl&AEC GENERALfj ELECTRIC COMPANY, 175 CURTNER AVE., SAN JOSE, CALIF. 95125 Phone (408) 297-3000, TWX NO. 910-338-0116 uc~::n r<uMBt:R pf 1 fROPOSEO RULE

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NUCLEAR ENERGY DIVISION February 7, 1972 O'T\\C! ft! Iha sea,1117 PJb!!~ -~c*,~11111 lir,mr.:1 VIO 6l

• ed States Atomic Energy Commission 717 H Street, N. W.

Washington, D. C. 20545 Gentlemen:

On January S, 1972, the Commission announced a proposed revision to 10 CFR 110. 7 whereby specific Commission authorization will be required for foreign activities of U. S. citizens and corporations with respect to irradiated fuel reprocessing, heavy water production, and uranium isotope separation. Comments were invited, and following are those of General Electric Company.

1.

Under present regulations, activities in any of these fields which did not involve Restricted Data or a foreign entity in countries listed in 10 CFR 110. 7(a) (1) were generally authorized as not inimical to the interests of the United States, subject to a written notice to the Commission within 30 days following commencement of such activity as required by 10 CFR 110.10. We have rather long standing contractual arrangements with a corporation in a foreign country pertaining to irradiated fuel reprocessing. Does the Commission intend that such prior arrangements be subject to the proposed regulation, and that a specific authorization after the fact will be required?

2.

We have underway discussions to reach similar arrangements with various organizations in other foreign countries. We can, we believe, make such discussions dependent upon securing appropriate approvals of cognizant U. S. Government agencies. However, it would markedly facilitate these present and all future such discussions if we had some idea of the criteria the Commission intended to apply in approving or disapproving applications for specific authorizations under the proposed regulations. We urge that such criteria be stated in the proposed regulation or otherwise made available. Similarly, the Commission should define any criteria that might ap~l to subsequent contractual modifications.

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The power of the Commission to grant specific authorizations implies the power to revoke them after contracts have been entered and activities have begun. We have serious reservations about the possible consequences of such a revocation, specifically our inability to perform our agreed undertaking. Consequently, we urge that criteria for such revocations also be expressed as clearly and fully as possible so that relationships with commercial enterpris es in friendly foreign nations undertaken pursuant to the bilateral agreements for peaceful uses of atomic energy can be established and continued with the least possible interference.

Very truly yours,

(jJ G.

. Stathakis Vic President & General Manager GJS:eg

WILI.IAM P', HAI.I. (1897*191)

JOSEPH V. HOUIIHTDON auccEaa11 Ta SPEAR. DDNALD8DN A NALL LAW DP'P'IC£8 HALL & HOUGHTON AMERICAN BUILDINli. 1317 f° BT., N. W.

WASHINGTON, D. C.

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... 1 [D PATENT, TRADEMARK AND UNP'AIR COMPETITION CAU&U TELEPHONE NATIONAL 9.0407 CADLE ADDIU88 "HALI. WAIIHINOTDN" January 31, 1972 Secretary of the Commission U.S. Atomic Energy Commission Washington, D. C. 20545 Attention:

Chief, Public Proceedings Branch Sirs:

DOCKETED i.lSIAEC Objection:

Objection to the proposed amendment of Section 110.7 of Title 10 of the Code of Federal Regulations, published January 5, 1972 (37 F. R. 92)

I.

Exception is taken to the proposed amendment above caption-ed, which would extend the asserted power of the Atomic Energy Commission in respects not authorized by law.

Ob~ection is especially made to the inclusion of the phrase "facilities for the production of heavy water,"

in part (i) of the new subparagraph (a)(4) proposed to be added, for the following reasons:

(1) said inclusion, by implication, treats "designing",

"constructing", and "fabricating" of facilities for the production of heavy water" (as well as "furnishing

equipment or components" or "training foreign personnel" therefor or "furnishing information" of privately owned trade secrets relating thereto) as "di.rectly or indirectly engaging in the production of *** special nuclear material".

It thus assumes, by indirection, an extension of the Commission' s authority under Section 57(b) of the Atomic Energy Act of 1954 (The Act) beyond that-which has been authorized by law.

"Heavy water" is not a "special nuclear material", as such term is defined by Section 11 of the Act, and is not a material "which the Commission, pursuant to the provisions of Section 51" has determined to be "special muclear material"_; and "the production of heavy water" does not constitute "directly or indirectly engaging in the pro-duction of any special nuclear material".

_ (2) by said inclusion, part (v) of the said proposed subparagraph (a)(4) would by inference be extended to empower the Atomic Energy Commission to control the dissemination of privately owned information not consti-tuting "Restricted Data", as such term is defined in the Act, which extension is not authorized by Section 141 of the Act and would be ultra vires.

(3) by said inclusion, a United States citizen or corporation privately owning foreign patent rights or other proprietary information relating to "the production of heavy water", could by inference have his Constitutional 2 -

Rights, and his treaty rights under the International Convention for the Protection of Industrial Property --

in which the United States has agreed that its nationals shall, as respects their individual property, enjoy in all other countries of the Union the advantages that their respective laws grant --, subjected to the 11let and hindrance" of the Atomic Energy Commission.

United States law does not authorize any such extension of power by AEC Regulations either directly, indirectly, or by inference, or by implied threat thereof.

(4)

(a) said inclusion, via part (v) of the proposed subparagraph, would ostensibly require the private owner of any trade secret or know-how concerning the production

,of heavy water to destroy the same by publication, to avoid being subjected to the let and hindrance of the Atomic Energy Commission, illegally sought by the proposed sub-paragraph.

(b)

Moreover, since publication of information relating to "the production of heavy water" not previously available in "published form" would of itself furnish information to those outside the United States, said inclu-sion, by inference, would by let and hindrance of the Atomic Energy Commission, interfere with the rights of free speech and publication guaranteed by the Constitution, and such interference by inference and implied threat would constitute a deprivation of liberty and private property rights, enjoined by the Constitution.

(5)

(a)

The official A.E. C. News Release No. 0-274 issued December 30, 1971 (News Release Vol. 3, No. 1, for the week ending January 5, 1972, page 1) states that "The objective of the proposed regulatory change is to assure that U.S.

policy with regard to assistance to for-eign nuclear energy programs and U. s.

obligations under the Treaty on the Non-Proliferation of Nuclear Weapons are satisfactorily met."

Neither the Congress nor the said Treaty have set any policy to be met with respect to the production of heavy water; which i s not a "special nuclear material", not "source material" and not " special fissionable material" as therein contemplated.

It is the function of Congress to set UIS. policy, and to implement treaties.

It is not the function of the A.E. C. to create new policy by regulation without authority from Congress, merely because it believes certain activities should be subjected to its approval, or because it believes it should be in a position to review s ervices for foreign customers to be performed by American industry, even though said services involve no communication of classified technology or restricted data (37 FR 92).

(5)

(b)

Said News Release also states that "under the proposed amendment, the general authorization would be withdrawn and s1 ecific authorization requ red, for certain activities in *** heavy water production" (emphasis supplied).

This A.E.C. interpretation of the intended purpose of the said inclusion, and the statements of purpose in 37 Fed. Reg.

92, make very evident the intention of the A.E. C. to exert a power of let and hindrance over the use of private property not granted to the A.E. C. by Congress, and clearly would negate any profession to the contrary.

(6) Finally, since the let and hindrance of the A.E. C., under said inclusion, would apply only to United States citizens and corporations, and not to foreign parties, it would constitute discrimination against domestic business interests and be in favor of foreign business interests who now offer to design, or construct, fabricate, and otherwise engage in the provision of facilities for heavy water production throughout the world, and as such clearly would not be in the interest of the United States.

II.

The foregoing expresses my own views and also the views of my clients, Deuterium Corporation of White Plains, New York, and Jerome S. Spevack, who are owners of United States and Foreign Patents and other proprietary information concerning the production of heavy water.

As said clients consider themselves to be principal private United States owners of proprietary informa-tion and foreign patents in this field, they justifiably feel that the proposed amendment to Section 110. 7 could be used to harass them and put them at a competitive disadvantage vis-a-vis the A.E. C., which currently is the sole U. S. producer of heavy water, and vis-a-vis foreign competitors as well as domestic competitors in privi~y with the A.E. C.

The proposed amendment thus would clearly not be consistent with the objectives of the Act.

III.

For the information of the Joint Committee on Atomic Energy, as to the proposal of the A.E. C. by regulation to invade the provinces of Congress, a copy of this communication is being submitted to the members of that Committee.

IV.

Since the foregoing was prepared, my clients have been invited by Atomic Industrial Forum, Inc., to contribute to a 6 -

discussion of the proposed rule change, and on their instruction a copy of this communication is also being sent to that body.

Respectfully, l

E. R. JOHNSON ASSOCIATES, INC.

SUITE 312, BARR BUILDING 910 - 17TH STREET, N. W.

WASHINGTON, D. C. 20006 C

Secretary of the Commission U. S. Atomic Energy Commission Washington, D. C.

20545 TELEPHONE: (202) 659-8808 January 27, 1972

SUBJECT:

Proposed amendment to 10 CFR 110.7 (Reference Federal Register 37:2, page 92, January 5, 1972).

Dear Sir:

As the U. S. representative of overseas industrial organizations active in the nuclear field, we are quite interested in the substance of the proposed amendment to 10 CFR 110.7, as recently published in the Federal Register.

Inasmuch as our activities in irradiated fuel reprocessing and radioactive waste treatment and management could lead us into a situation in which we might be providing engineering assis-tance to our overseas principals in these areas, we seek either a con-firmation of our interpretation of the intent and substance of this proposed amendment, or a clarification of its proposed application.

As we interpret the amendment, in the light of the statement of considerations, the following are true statements:

l. It is not the intent of the AEC to restrict the transmittal of unclassified, published process or engineering information in the areas of plutonium separation, isotopic separation, or heavy water production to overseas recipients.

2.

Processes for treatment of radioactive wastes, or equipment or components specially designed for use in radioactive waste treatment systems, or any technical information relating there-to, do not come under the purview of the proposed amendment.

3.

The flow from overseas sources towards the U. S. of process or engineering information, or of specialized equipment or components, relating to the areas of concern as set forth in 10 CFR ll0.7(a)(4)(i) is in no way affected by this amendment.

Page 2.

4.

In the application of the restri.ctions implied by this pro-posed amendment, the AEC would be principally concerned with proposed transfer of technology in the specified areas to countries which are not signatories to the Treaty on Non-Proliferation of Nuclear Weapons.

If the above points accurately interpret the intent of the AEC with respect to application of this proposed amendment, we have no objection to its adoption.

If our interpretation is not correct, we would appreciate a clarification from the AEC and an opportunity to comment further.

Very truly yours, E. R. JOHNSON ASSOCIATES, INC.

By Jtf. A. ~cB: de Vice-President vlh

475 PARK AVENUE SOUTH* NEW YORK, N.Y. 10016 * (212) 725-8300 Secretary U.S. Atomic Energy Co11111ission Washington, D. C.

20545

Dear Sir:

January 24, 1972 We are writing in reference to the Federal Register notice of January 5, 1972 in which the Co11111ission proposes to amend 10 CFR Part 110 on Foreign Atomic Energy Programs in such a manner as to put the Commission *11 in a position to review assistance involving the communi-cation of technology, which is not subject to NPT safeguards, in the three areas..* uranium isotope separation plants, chemical processing plants and heavy water plants *.*. 11 The purpose of this letter is to respectfully request the Commis-sion to extend for at least 30 days, that is until March 6, 1972, the period set for public comment.

Your consideration of this request will be appreciated.

EAW:jri 60CKEJED U~c.C Sincerely yours, a.,.....,~;,~

Edwin A. Wiggin Assistant Executive Manager Acknowiedged by card _l/:ktg-f,.i:J..-,..faa--