Appendix 1. Organizations Represented by Persons Interviewed by Panel Arms Control and Disarmament Agency Atomic Energy Commission Office of the General Manager Division of Inspection Division of Intelligence Division of International Affairs Division of Military Application Division of Nuclear Materials Management Division of Security Director of Regulation Division of Compliance Division of Materials Licensing Department of State European Atomic Energy Community (EURATOM) Idaho Nuclear Corporation Institute of Nuclear Materials Management Nuclear Fuel Services, Inc. Nuclear Materials and Equipment Corporation Union Carbide Nuclear Company Appendix 2. Nuclear Sites Visited by Panel General Electric Co., San Jose, Calif. Type of plants - Fuel processing and fabrica- Chemical processing plant. Idaho Nuclear Corp., Idaho Falls, Idaho.. Fuel processing plant. Union Carbide Nuclear Co., division of Union Weapon processing and fabriCarbide Corp., Oak Ridge, Tenn. cation plant. Appendix 3. Essential Elements of an Adequate Safeguards System In the Panel's comments under Recommendation 8, emphasis has been placed on the broader concept of internal control as a foundation to an adequate safeguards system. All of those comments, therefore, are incorporated by reference as a prefatory statement to the following summary of some of the essential elements of an adequate safeguards system in the management and control of special nuclear materials. Essential elements include: 1. A written description of procedures to be used and measurements to be made by the possessor of special nuclear materials, whereby his material inventory, transfer and process losses would be currently recognized, measured and recorded, and whereby his material would be protected against theft or diversion, should be submitted to the safeguarding agency (AEC. IAEA, or Euratom) for review and approval prior to the receipt of material. Commentary. Prior to receiving strategic quantities of special nuclear materials an organization must reduce to written form an appropriate program or procedures for safeguarding the material. These plans and procedures will then serve as a basis for hiring appropriate personnel and procuring necessary equipment so that the materials can be adequately safeguarded. These written procedures must be reviewed by the safeguarding agency to insure itself that adequate safeguards provisions have been made. The written procedures are evidence that the organization receiving special nuclear materials has given adequate thought and planning to the problem, and adequately understands methods whereby the materials will be safeguarded. Recent amendments to 10 CFR 70 will generally bring all domestic activities under this requirement. Both Euratom and IAEA incorporate a requirement for prior review of the accounting control procedures. 2. The safeguarding agency should have the right to review construction plans and to conduct physical inspection during construction of proposed plants that will use, store or produce special nuclear materials. Commentary. The construction of new plants or substantive modification of old facilities may significantly influence the ability to physically secure and to account for the materials. Hence, construction plans should be reviewed to ensure that these aspects of safeguards are adequately included in the planned construction. Also, on-site inspections should be made to ensure that the safeguards features are appropriately built into the facility. Current AEC regulations provide for pre-construction review of utilization and production facilities only, and then solely for health and safety purposes. The Euratom and IAEA safeguards systems provide for a review of construction plans and include inspection during construction. 3. Physical transfers of special nuclear materials between possessors must be documented. The shipper and the receiver in each case should independently measure the quantities transferred and provide the safeguarding agency with the transfer data on a current basis. Commentary.-An independent measurement of transfers eliminates the need for the safeguarding agency to rely entirely on the data provided by a single facility. Both domestically and internationally, the need for independent shipper and receiver measurements is recognized and incorporated in the various safeguards programs. 4. A material balance, including a statement of inventory, transfers, production, losses, and other data affecting the material balance, should be reported periodically to the safeguarding agency. The required frequency of such reports should depend upon the material quantities in inventory, and the form and through-put of the materials. Commentary. A material balance statement appropriately developed and supported reflects the degree of control being achieved over special nuclear materials much as the profit and loss statement reflects the economic health of an organization. The frequency of such reports should bear a relationship to the degree of risk for diversion associated with the operation. For the major installations, any frequency less often than monthly would seem to be inappropriate. With adoption of proposed amendments to 10 CFR 70, all domestic materials will be covered by a requirement for a material balance statement. The frequency of reporting should be reviewed with a view to optimizing the utility of the information. Internationally, both IAEA and Euratom require routine material balance statements. 5. Physical inventories must be taken periodically by the possessor to verify the existence of the material and the validity of his records, and where indicated, adjustments must be made to the inventory records. The results of such inventories should be reported to the safeguarding agency and the data should be retained for audit. The frequency of such inventories should depend upon the form of the material and the ease with which the material may be diverted. Commentary. If the material balance statement is to appropriately reflect the degree of control being achieved, it must be based upon a physical inventory of the materials on hand. If independent shipper and receiver measurements have been made, and a physical inventory has been taken which can be tested and verified by the safeguarding agency, then the materials discarded, measured losses, and materials unaccounted for become true indicators of the degree of control achieved by the organization, and the safeguarding agency is in a position to make a judgment as to the adequacy of the control. With recent changes in the regulatory program, virtually all domestic materials will be covered by a physical inventory requirement. Internationally, while physical inventories are not explicitly required, all inventories are physically verified periodically by the IAEA and Euratom. 6. Unmeasured quantities, or quantities estimated only with large potential errors, should not be permitted to accumulate to significant amounts in the physical inventory. Commentary. The material balance statement is highly sensitive to the statement of physical inventory. The degree of control achieved at any facility is directly dependent upon the validity of the physical inventory. Consequently, confidence in control is inversely proportional to the unmeasured quantities or quantities with large limits of error. At the present there are no formal criteria either domestically or internationally with respect to action limits for such quantities nor are there any general policies or procedures specifically relating to this problem in the international programs. 7. The safeguarding agency must have the right to examine and inspect all facilities using, storing or producing special nuclear materials at all times to currently appraise all elements of internal control and to examine and verify to the extent deemed appropriate: records and reports, inventories, losses, physical protection, authorized use of material and any other matters related to special nuclear materials safeguards. Commentary.-Without free access to all facilities, materials and data relating to the utilization of special nuclear materials, the safeguarding agency is in no position to render an independent judgment as to the adequacy of the safeguards or the appropriateness of the utilization of the materials. Both the domestic and international safeguards programs make provision for this right of access and examination. 8. The safeguarding agency must make independent tests of measurement procedures and inventory. Consequently, it must have available to it an independent laboratory to prepare standard samples and process inventory samples. Commentary.-Without an independent test of the measurement procedures and a physical inventory, the safeguarding agency is in no position to render an independent opinion concerning the adequacy of control of the materials. Domestic and international safeguards programs currently provide for such tests. An AEC analytical qualification program is currently underway which should expand the number of laboratories available to support the domestic testing program. 9. In implementing the safeguards system, the effort applied should take cognizance of the quantities in inventory, through-put, the different forms and combinations of material and its suitability for weapons use. Where quantities, forms or through-put of materials are not of strategic importance, the plant or site should be exempt from safeguards. Commentary. It is inappropriate to waste manpower and effort applying detailed safeguards procedures to small quantities of materials or to forms of material having little strategic importance. It is equally inappropriate to apply casual surveillance and infrequent material balance requirements to massive quantities of strategically valuable materials. A proper balance must be struck and the application of the safeguarding effort should be optimized in a manner appropriate for the form and quantities of materials safeguarded. In the past, the policy and procedures of the AEC did not take sufficient cognizance of minimum quantities especially in providing for exemptions from safeguards requirements. Recent amendments to the regulations, which extended more definitive safeguards coverage to privately owned material, recognize differences in quantities (requirements are imposed if the quantity is in excess of 5,000 grams of contained special nuclear materials) and form (materials incident to the operating of a reactor or in the form of sealed sources are exempted from certain requirements). Both the IAEA and Euratom procedures provide for special handling in the case of small quantities of materials. Inspections are scheduled in accordance with the quantities and form of the materials handled at the facilities. 10. The safeguarding agency must insist on the maintenance of, and continually evaluate, safeguard control indicators such as shipper-receiver differences, material unaccounted for, and process losses. These are integral parts of the safeguards system. Unusual quantities in these categories must be reported and investigated, and follow up actions taken to correct deficiencies. Commentary. A continuing review of these indicators of control will place the safeguarding agency in a position of recognizing unusual circumstances. An immediate follow-up when such unusual circumstances are recognized will ensure timely detection of diversions or early recognition of circumstances which might contribute to a potential diversion. In the case of non-licensed contractors, AEC procedures require the maintenance of the necessary information and provide for routine AEC review of the safeguard control indicators. With recent amendments to the regulations, all licensees are also required to maintain the necessary information, and under the April, 1966 agreement between the Director of Regulation and the General Manager, a review of these indicators was extended to all licensees (37). Such data are routinely supplied to IAEA and Euratom by each significant nuclear facility. Special reports are required whenever the quantities become exceptional. However, the lack of a requirement by these agencies for a physical inventory to be associated with the material balances reduces the utility of material unaccounted for data. Nonetheless, it should be noted that periodic verification of physical inventories by these agencies minimizes the reliance they place on such indicators. Future demands on manpower may force more reliance on these indicators and, hence, impose physical inventory requirements. 11. Physical protection to guard against the theft, diversion and unauthorized use of special nuclear materials is needed. Guards, fences, vaults, locks, seals, or use of sophisticated electronic, mechanical or other protective sealing or alarm devices are all protective measures which should be applied where appropriate. Commentary.-Unauthorized physical movement of material can be deterred and detected by such means. Domestically such physical protection is important because once moved outside of authorized channels there are no other physical barriers to protect against transfer out of the country. The AEC has depended in large measure upon the financial value of the material and the criminal penalties of the Atomic Energy Act of 1954, to assure that licensees establish adequate protection for the materials, except that physical protection standards have been prescribed for AEC contractors handling materials without financial responsibility. Although the Panel understands that experience to date under these policies and procedures has been good, the Panel recommends that minimum standards for physical protection be developed and applied. There is no requirement under either of the international safeguards programs for physical protection of the materials, although each nation is required to guarantee that the materials will not be transferred into the hands of unauthorized parties. 12. All personnel having access to significant quantities of special nuclear materials should be subject to a security check equivalent to the present “L” clearance procedures. Commentary-One means of minimizing the probability of criminal diversion of special nuclear materials is to ensure that the individual is loyal and has no prior record of criminal activities. The type of security check equivalent to the present "L" clearance procedures provides this type of assurance. Obviously with respect to the international systems this type of assurance has no merit as regards protection against the diversion of materials for national objectives of the country granting these clearances. In the case of cost-type contractors, such procedures are in effect. However, there is no requirement that licensees follow such procedures, although many licensees have voluntarily provided such security checks. Neither the IAEA nor the Euratom programs formally require a security clearance of employees in the plants subject to safeguards. However, national interests generally will assure such clearances, and the practice of many countries to maintain complete dossiers on individuals will automatically provide such a check. 13. Appropriate penalties and sanctions should be available, and the organizational structure of the safeguarding agency should be such as to assure that appropriate and timely action will be taken, in the event of recognized deficiencies in nuclear materials handling and accountability systems, and in the event of deficiencies in the safeguards detection program. Commentary.-It is essential that when such deficiencies are recognized that the safeguarding agency be in a position to move rapidly and have available appropriate sanctions so that an early correction of the deficiency can be achieved. Otherwise, control can be lost, a potential for diversion developed, and actual diversions obscured. The responsibility for safeguards policy establishment and implementation is presently divided between the General Manager and the Director of Regulation. Within the Office of the General Manager, two Assistant General Managers have responsibility for safeguards, one in the area of domestic safeguards and one in the area of international safeguards. With such a diffusion of responsibility, overlaps, omissions, varying standards and varying objectives have resulted. Similarly, and perhaps as a consequence, it appears that in some licensee and contractor organizations safeguards have not had the high level management attention appropriate for the problem. Responsibility for the safeguards program in IAEA and Euratom is clearly defined and appropriately placed in the structure of each organization. The available sanctions as applied to nations appear to the Panel to be appropriate. There are no criminal sanctions provided in the IAEA and Euratom programs. 14. Penalties for improper use of special nuclear materials must be severe enough to be a significant deterrent to diversion. Commentary.—An individual or organization contemplating diversion will not only weigh the risks of detection, but also the consequences of detection. If the penalty is large enough, it will act as a significant deterent to diversion. Under the Atomic Energy Act of 1954, severe penalties (including death) are applicable to the diversions intended to injure the U.S. or to provide advantage to a foreign power. However, where the intent is simple personal gain, such as the theft of material for intended sale in the black market, the five years and/or $10,000 fine appear to be inadequate. The penalties for improper use of special nuclear materials established under the IAEA and Euratom systems include the interruption of cooperation with the nation and the recovery of the IAEA and Euratom distributed materials. The severity of such penalties is highly dependent upon the credibility of their implementation. With regard to the penalties employed by nations against its peoples, there are no provisions for establishing standards or for evaluating current national programs. 15. There should be provision for a reward for information regarding diversions of special nuclear materials to unauthorized use. Commentary.—If diversion is about to take place or has taken place, information relating to it from persons having personal knowledge of the circumstances is vital to the safeguards program. Personal gain, political gain, patriotism are all motives which may result in the provision of such information. Of these, perhaps personal gain is the strongest, although all possible motives should be reinforced. There presently is no provision for reward for such information. The Atomic Weapons Rewards Act does provide for rewarding an individual for information with regard to the importation of a nuclear weapon or the construction within the continental limits of a nuclear weapon, but it is completely silent on the diversion of special nuclear materials for unauthorized use. Neither of the international agencies have any such reward provisions. 16. There should be provision for incentive awards for exercising good safeguards over special nuclear materials. Commentary.-When work is performed for the AEC under contract, such contracts should provide financial incentives for good safeguards practices. For example, graduated fees based upon quantities of lost or unaccounted for special nuclear materials would stimulate better material control measures. Also, penalties could be imposed for material not returned to AEC in acceptable forms at the conclusion of the contract. 17. There should be a mechanism for prompt notification of the safeguarding agency by the investigative and intelligence agencies regarding potentials for diversion, suspected, attempted or planned diversions, or the fact of a diversion, as well as coordinated programs for recovery of diverted material and apprehension of divertors whenever politically possible. Commentary.-Properly coordinated information from the intelligence community can potentially forewarn the agency of the potential diversion, and hence, provide for the reinforcing of the many safeguards features to deter or detect a diversion. Once detected, a properly coordinated intelligence community will materially assist in the pursuit of the material and apprehension of the divertors. There presently is an informal relationship between the AEC and most of the interested government agencies, but there is no formal mechanism established at a sufficiently high level in the interested organizations to assure that the safeguards program gets the attention it warrants. There is no indication that the international agencies have access to intelligence information except on an informal voluntary basis. AEC-Owned Plants Appendix 4. Domestic Safeguards Program AEC contractors are required to describe the procedures they will follow in accounting for special nuclear materials. Procedures manuals are subject to the approval of the manager of the AEC Regional Office. Certain basic accountability requirements are common to all contractors; they vary only in degree. These basic requirements are: the recording and reporting of transactions, inventories and losses; maintenance of adequate internal control, measurement. and physical inventory procedures (at the option of the manager of the AEC |