1. Complying with Export Controls Governing
Nuclear Material, Equipment and Technology
American Conference Institute’s
13th National Forum on Export Controls
Ajay Kuntamukkala, Partner
May 19, 2010
2. Agenda
• Overview of Export Control Laws
• Nuclear Export Controls – Structure of Legal Regime
– Nuclear Regulatory Commission
– Department of Energy
– Department of Commerce
– Department of State
• Current Issues
• Compliance Programs
• Questions?
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3. Nuclear Export Controls
• Why are they relevant?
– U.S. companies may need to work collaboratively with
non-U.S. companies during the course of a nuclear
power project
– U.S. companies may have foreign national employees
or consultants
– U.S. companies may have foreign affiliates that
participate in projects for U.S. nuclear power clients
– U.S. companies may have nuclear power projects
abroad
– International suppliers with projects in the United States
may need to receive U.S.-origin controlled technology
– International suppliers may also establish U.S. offices
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4. Overview of U.S. Export Control Laws
• These laws and regulations:
– Define whether and under what conditions U.S.-origin goods,
software, technology and services may be legally exported or
reexported to specific destinations or persons
– Prohibit or restrict certain types of activities by U.S.
companies and U.S. individuals
– Are extra-territorial and follow U.S.-origin goods, software and
technology, when located abroad and handled by non-U.S.
persons
• Support the U.S. Government’s objectives of protecting U.S.
national security and furthering foreign policy interests
• Controls are administered by various agencies, including
the Nuclear Regulatory Commission, Department of Energy,
Department of Commerce, and Department of State
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5. Penalties
• Severe criminal and civil risks are associated with
the improper export and reexport of controlled
goods, technology, software or services
• Regulating agencies have discretion to impose
severe penalties, including
– Up to $1 million per violation in fines and life
imprisonment for individuals
– Up to $1 million per violation in fines for companies
– Suspension or loss of export privileges, and
debarment from government procurements for
companies
• Reputational risk should also be considered
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6. What Transactions Are Controlled?
• Transfers of nuclear-related technology to non-U.S. persons
located in the United States or worldwide (e.g., transfer of nuclear
design information to a foreign national employee or consultant
located in the United States)
• Consulting and engineering services, technical assistance or
training to foreign countries or foreign persons regarding the
design, engineering, construction, operation, maintenance and
repair of nuclear reactors, other nuclear facilities, related
components, or nuclear materials
• Export or reexports of nuclear reactors, components, equipment,
software, nuclear material, as well as “dual-use” items
• Imports of nuclear reactors, components, equipment, software,
and nuclear material
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7. Structure of U.S. Nuclear Export Controls
Nuclear Regulatory
Department of Energy
Commission
Part 110 Regulations Part 810 Regulations
Nuclear Nuclear technology
reactors, equipment, comp and technical
onents and materials assistance
Department of Commerce: State Department:
Bureau of Industry and Directorate of Defense Trade
Security (BIS) Controls (DDTC)
Export Administration International Traffic in Arms
Regulations (EAR) Regulations (ITAR)
Commercial and “dual use” Military items, including
commodities and nuclear weapons
technology
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8. NRC Regulations
• The NRC regulates the export and import of nuclear
reactors, facilities, equipment and material
(10 C.F.R. Part 110)
• Exports of related technology and software are subject to
DOE not NRC control
• In general, the NRC requires that an export license be
obtained for the export of nuclear reactors, certain plants or
facilities related to the nuclear fuel cycle, related
assemblies or components and certain nuclear materials
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9. NRC Regulations
• The export and import of the following items are regulated
by the NRC:
– Nuclear reactors and related equipment and components
(NSSS);
– Plants for certain enrichment, separation, reprocessing and
conversion activities and related assemblies and components;
– Plants for the fabrication of nuclear reactor fuel elements and
related assemblies and components;
– Plants for the production, separation, or purification of heavy
water, deuterium, and deuterium compounds and related
assemblies and components;
– Certain plants for the production of special nuclear material; and
– Special nuclear material, source material, byproduct material,
Deuterium, and nuclear grade graphite for nuclear end use.
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10. NRC Regulations: Licenses
• The NRC issues two types of licenses: a General
License and a Specific License
• Under certain limited circumstance, a General
License under the NRC Regulations authorizes
selected exports or imports without the need to
request written authorization
• For all other exports of items subject to NRC
jurisdiction, a Specific License is required from
the NRC
– Unlike the other agencies, Specific License
applications to the NRC are available to the public
for review and comment
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11. DOE Regulations
• The DOE administers controls over the export of technology
related to “special nuclear materials”
• Examples of controlled activities include:
– Exports of any technology, software and assistance
(including services and training) related to nuclear reactors,
and related equipment and components
– Exports of any technology, software and assistance related
to nuclear fuel cycle facilities, and related equipment and
components
– Exports of any technology and assistance related to special
nuclear materials
• Controlled activities require either a General
Authorization or Specific Authorization
from DOE
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12. DOE Regulations: Authorizations
• General Authorization - Permits exports or transfers of
controlled technology, software or services without prior
written authorization from DOE under limited
circumstances
– Advance notification to the DOE may be required depending
on the nature of the activities at issue
– Exports of technology, software or services related to
nuclear power generation permitted to certain countries
without prior written authorization; not available for:
• “Restricted countries” (Part 810.8(a) - see next slide)
• Nuclear fuel cycle activities and “sensitive nuclear
technology”
• Specific Authorization - Prior specific authorization
required for all other controlled transactions not eligible for
General Authorization
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14. Commerce Department –
Export Administration Regulations (EAR)
• The Commerce Department has jurisdiction over the export of
“dual-use” commodities, software or technology, including
certain items related to nuclear power activities
(“balance of plant”)
• The DOC controls certain items and technology
for nuclear nonproliferation reasons, including:
– Certain valves controlled for nuclear nonproliferation
reasons (ECCN 2A226)
– Generators and other equipment specially designed,
prepared, or intended for use with nuclear plants
(ECCN 2A290)
– Equipment related to nuclear material handling and processing
and to nuclear reactors (ECCN 2A291)
• Example: N-stamped components
– The technology and information related to the development,
production, or use of these items are also controlled
(e.g., ECCNs 2E001, 2E002, 2E201, and 2E290)
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15. Commerce Department – EAR (cont.)
• Licensing - Whether a particular commodity,
software or technology subject to the EAR requires
an export license depends on
– the export classification of the item,
– its reason for control, and
– the destination country or foreign person at issue
• Depending on the nature of the commodities,
software or technology at issue, they may be
controlled at different levels (e.g., NP column 1 or
NP column 2)
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16. EAR Nuclear End-Use Controls
• Unless the export involves only “Nuclear Approved”
countries (see next slide), a license is required to
export ANY items or services subject to the EAR that
will be used directly or indirectly in support of certain
nuclear end uses.
• Examples:
– Almost all activities related to nuclear explosive
devices, components or subsystems;
– Almost all activities related to unsafeguarded nuclear
facilities such as nuclear reactors, critical facilities,
facilities for fuel fabrication, and facilities for
conversion of nuclear materials; and
– Certain activities related to safeguarded and
unsafeguarded fuel-cycle facilities or components
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17. Countries Not Subject to EAR Nuclear
End-Use Controls
• Australia • Japan
• Austria • Luxembourg
• Belgium • Netherlands
• Canada • New Zealand
• Denmark
• Norway
• Finland
• Portugal
• France
• Spain
• Germany
• Greece • Sweden
• Iceland • Turkey
• Ireland • United Kingdom
• Italy (includes
San Marino, Holy See)
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18. State Department Regulations
• The State Department controls certain nuclear-
related commodities and technology under the
International Traffic in Arms Regulations (ITAR),
including:
– Category XVI: Nuclear weapons, design and testing
related items
– Category VI: Naval nuclear propulsion plants and
related items
– Category XXI: Submersible vessels powered by
nuclear propulsion systems
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19. Example: Civil Nuclear Power Facility
Simplified Rendering of a PWR
Nuclear Steam Supply “Balance of Plant”
System (NSSS)
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20. Jurisdiction Summary
• In very summary terms:
– NRC: NSSS items - nuclear reactors, other nuclear
facilities, materials and related items
– DOE: NSSS technology, software and services
– DOC: “Balance of plant” technology or items
– DOS: Nuclear weapons/explosive technology and items
Jurisdictional issues must be reviewed on a case-by-case
basis given the ambiguity of the regulations
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21. Current Issues:
Jurisdictional Issues between Agencies
• The regulations do not clearly define each agency’s
jurisdiction over certain nuclear-related items
• Of special importance is whether the equipment or
technology has been “especially designed, modified
or adapted for use” for nuclear reactors or fuel
fabrication facilities
– Example: N-stamped components vs. “especially
designed” components
• Depending on which agency has jurisdiction, a
license or other authorization may be required prior to
export/transfer of controlled items or technology
• Government agencies can help resolve these issues,
but often require detailed specifications and guidance
regarding the item at issue
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22. Current Issues: Deemed Exports
• The transfer of technology or source code or provision of
services to a foreign person in the United States is “deemed” to
be an export to that person’s home country
– Release of controlled technology to Chinese employee on an H-
1B worker visa = export to China
• Under the export control laws, a U.S. person is defined as:
– U.S. citizen or a U.S. legal permanent resident (“green card”
holder)
• H-1B and L visa holders do not qualify
– U.S. corporation, partnership, trust, society or other entity
incorporated or organized to do business in the United States
• U.S. companies involved in the nuclear industry should screen
contractors, affiliates, suppliers, and customers to confirm that
the release of controlled technology or services to these entities
or individuals is consistent with U.S. law
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23. Current Issues:
Americanized Technology
• As nuclear cooperation worldwide is growing, U.S. companies
may rely on processes and other technology developed abroad
• Companies may “Americanize” this technology for use in the
United States by conforming it to U.S. standards, codes, and
capabilities
• DOE takes the view that any “Americanized” technical data is
subject to its jurisdiction and may require authorization prior to
export of such technology, including back to the originator of
the technology
• Companies should take steps to protect any “Americanized”
technology from unauthorized release
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24. Current Issues: New Markets
• The U.S. is negotiating or has concluded Section 123
Agreements with a number of countries, including:
– India
– United Arab Emirates
– Vietnam (negotiations to begin in near future)
• However, the fact that a Section 123 Agreement has been
negotiated does not authorize the release of controlled
technology to these countries or foreign nationals of these
countries
• Licenses or other authorizations may be required from the
NRC, DOE or DOC
• Substantive discussions with foreign persons can involve
the release of controlled technology
– Basic marketing information, cost data, or scheduling
information generally does not constitute controlled
technology
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25. Compliance Programs
• Given the “globalization” of the nuclear industry
and increased enforcement of export control laws,
it is critical that U.S. civil nuclear companies
implement effective export control compliance
programs
• Compliance programs are a strong mitigating
factor in any enforcement action
• Recommended under U.S. sentencing guidelines
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26. Compliance Programs:
Key Components
• Written statement of management commitment
• Assignment of export compliance personnel and
responsible officials
• Export compliance operational
procedures/manual (e.g., procedures for
screening, classification, and technology
control plan)
• Compliance training and education
• License application and implementation process
• Policy and procedures regarding recordkeeping
• Internal audit function
• Policy and procedures for handling suspected
violations
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