On September 8, 2008, President Bush announced that he was withdrawing the proposed civil nuclear cooperation deal with Russia. The much publicized agreement, which was pending before Congress for approval, was the product of over two years of tough negotiation between both parties. Discussion of international agreements for nuclear cooperation have been popping up in the news frequently over the last couple years leaving many to question what are these agreements and what exactly do they entail.  

Background  

An international agreement for nuclear cooperation is a bilateral agreement for peaceful nuclear cooperation between the United States and other nations. It is also known as a Section 123 Agreement because the United States enters into such agreements pursuant to Section 123 of the Atomic Energy Act of 1954, as amended (AEA).  

A Section 123 Agreement provides a comprehensive legal framework for trade in nuclear commodities and technology. It typically permits the transfer of civilian nuclear energy technology, material, and equipment, including reactors and related components for power generation. Because the AEA requires U.S. reactor and nuclear fuel exports to be subject to the terms of a Section 123 Agreement, a Section 123 Agreement generally must be in place in order for the U.S. to authorize the transfer of significant nuclear energy technology and equipment from one country to another. In exchange, the receiving country agrees to abide by certain nonproliferation safeguards.  

Creating a Section 123 Agreement  

Section 123 Agreements are negotiated by the U.S. Secretary of State. During the negotiation process, the Secretary of State will receive technical assistance and concurrence from the Secretary of Energy and will also consult with the Nuclear Regulatory Commission. After it is negotiated, the proposed agreement must be submitted to the President for review and approval.  

After approval by the President, the proposed agreement is generally submitted to Congress for review. The Congressional review process is essentially a negative consent one, that is, a proposed agreement will not become effective if Congress adopts and enacts a joint resolution of disapproval during the specified time period.  

Oversight of Section 123 Agreements  

Once the Section 123 Agreement is in place, several U.S. federal government agencies have responsibility for regulating the export of nuclear equipment, material, information, and technology including the following:

  • Nuclear Regulatory Commission. Operating under the authority of the AEA, the Nuclear Regulatory Commission has jurisdiction over the export of reactors and reactor components, other nuclear facilities and equipment, and nuclear materials.
  •  Department of Energy. Also operating under the AEA, the Department of Energy regulates the export of nuclear technology and technical data.
  • Department of Commerce. Operating under the Export Administration Act, the Department of Commerce regulates export of certain dual-use commodities, software, and technology that could be of significance for nuclear weapons purposes.  

Withdrawal of the U.S./Russia Proposed Agreement  

The United States has entered into Section 123 Agreements with most countries with significant nuclear energy programs. One glaring exception is Russia. Mutual distrust and a relatively stagnant nuclear industry in the United States helped maintain the status quo during the last few decades. Further, Russia’s assistance to Iran, a country that raises significant proliferation concerns, continued to remain an impediment to the United States entering into an agreement for nuclear cooperation with Russia.  

In the summer of 2006, during a meeting of the G-8 leaders in St. Petersburg, George W. Bush and Vladimir Putin announced that bilateral negotiations would begin. Negotiations continued over the next few years, and on May 13, 2008, the President transmitted the proposed Section 123 Agreement to Congress for its review. The proposed agreement met the legal requirements set forth in the AEA. The nonproliferation safeguards included, among other things, a prohibition on retransfers of equipment, material, and technology covered under the agreement without U.S. approval; a guarantee that Russia would maintain adequate physical protection measures over the equipment, material, and technology covered under the agreement; and a guarantee that nuclear material transferred under the agreement would not be enriched or reprocessed without the prior approval of the United States.  

After Russia’s increased acts of aggression in the past few months, especially its invasion of Georgia, President Bush withdrew the proposed Section 123 Agreement from Congressional consideration. As Secretary of State, Condoleezza Rice stated through a spokesman, “[w]e make this decision with regret. Unfortunately, given the current environment, the time is not right for this agreement.”  

Implications for U.S. Businesses  

Russia is a potentially lucrative market for U.S. nuclear-related businesses. While DOE may authorize some transfer of nuclear technology and assistance pursuant to 10 CFR Part 810 without a Section 123 Agreement, significant nuclear technology, as well as nuclear equipment and material, may generally not be exported to Russia absent such an agreement. With the international boom in nuclear energy development, the failure of this agreement also hinders business relationships between U.S. and Russian entities in this area.

Conclusion  

By President Bush withdrawing the proposed agreement from Congressional review, rather than letting it potentially be rejected on Capitol Hill, he essentially put the proposed agreement on pause, so that President Bush, or future Presidents, could revisit the proposed agreement at a later point in time. If the President, or his successor, determines that the agreement is in the best interest of the United States, he could then resubmit it to Congress for approval. Secretary Rice indicated that this is the Administration’s intent when she stated that they will follow developments closely and revisit the situation at a later point in time.