Index

<DOC>
[106 Senate Hearings]
[From the U.S. Government Printing Office via GPO Access]
[DOCID: f:59453.wais]

                                                        S. Hrg. 106-349

 
DUAL-USE AND MUNITIONS LIST EXPORT CONTROL PROCESSES AND IMPLEMENTATION 
                      AT THE DEPARTMENT OF ENERGY

=======================================================================


                                HEARING

                               BEFORE THE

                              COMMITTEE ON
                          GOVERNMENTAL AFFAIRS
                          UNITED STATES SENATE

                       ONE HUNDRED SIXTH CONGRESS

                             FIRST SESSION

                               __________

                             JUNE 10, 1999

                               __________

      Printed for the use of the Committee on Governmental Affairs


                               <snowflake>


                    U.S. GOVERNMENT PRINTING OFFICE
59-453cc                     WASHINGTON : 2000
_______________________________________________________________________
For sale by the Superintendent of Documents, Congressional Sales Office
         U.S. Government Printing Office, Washington, DC 20402


                   COMMITTEE ON GOVERNMENTAL AFFAIRS

                   FRED THOMPSON, Tennessee, Chairman
WILLIAM V. ROTH, Jr., Delaware       JOSEPH I. LIEBERMAN, Connecticut
TED STEVENS, Alaska                  CARL LEVIN, Michigan
SUSAN M. COLLINS, Maine              DANIEL K. AKAKA, Hawaii
GEORGE V. VOINOVICH, Ohio            RICHARD J. DURBIN, Illinois
PETE V. DOMENICI, New Mexico         ROBERT G. TORRICELLI, New Jersey
THAD COCHRAN, Mississippi            MAX CLELAND, Georgia
ARLEN SPECTER, Pennsylvania          JOHN EDWARDS, North Carolina
JUDD GREGG, New Hampshire
             Hannah S. Sistare, Staff Director and Counsel
            Christopher A. Ford, Chief Investigative Counsel
              Curtis M. Silvers, Professional Staff Member
      Joyce A. Rechtschaffen, Minority Staff Director and Counsel
               Laurie Rubenstein, Minority Chief Counsel
                 Darla D. Cassell, Administrative Clerk



                            C O N T E N T S

                                 ------                                
Opening statements:
                                                                   Page
    Senator Thompson.............................................     1
    Senator Lieberman............................................     2
    Senator Akaka................................................    16
    Senator Domenici.............................................    22

                                Witness

Hon. Gregory H. Friedman, Inspector General, Department of 
  Energy, accompanied by Sandra L. Schneider, Assistant Inspector 
  General for Inspections, Department of Energy, and Alfred K. 
  Walter, Office of the Inspector General, Department of Energy
    Testimony....................................................     4
    Prepared statement...........................................    29

                                Appendix

Letter from Chairman Thompson, dated Aug. 26, 1998, sent to six 
  agencies.......................................................    25
``The Department of Energy's Export Licensing Process for Dual-
  Use and Munitions Commodities,'' Inspection Report, Department 
  of Energy, Office of Inspector General, Office of Inspections, 
  dated May 1999, submitted by Hon. Gregory H. Friedman, 
  Inspector General, Department of Energy........................    43
Memo for the Secretary, Department of Energy, from Hon. Gregory 
  H. Friedman, Inspector General, Department of Energy, dated May 
  28, 1999.......................................................    98
Letter sent to Hon. Bill Richardson, Secretary, Department of 
  Energy, from Chairman Thompson and Senator Lieberman, dated 
  June 16, 1999, with answers to questions from the Department of 
  Energy.........................................................   100
Letter to Hon. Gregory H. Friedman, Inspector General, Department 
  of Energy, from Chairman Thompson, dated June 11, 1999, 
  containing questions for the record submitted by Senator Akaka.   103
Letter from Hon. Gregory H. Friedman, Inspector General, 
  Department of Energy, sent to Chairman Thompson, dated June 25, 
  1999, with answers to questions submitted by Senator Akaka.....   103
Letter from Ernie J. Montz, Under Secretary of Energy, Department 
  of Energy, sent to Chairman Thompson, dated July 14, 1999, with 
  supplemental answers to questions for the record submitted by 
  Senator Akaka, from the Export Control Task Force, Department 
  of Energy......................................................   106
Letter sent to Hon. Gregory H. Friedman, Inspector General, 
  Department of Energy, from Chairman Thompson, dated July 9, 
  1999, with answers to questions from the Department of Energy..   110


DUAL-USE AND MUNITIONS LIST EXPORT CONTROL PROCESSES AND IMPLEMENTATION 
                      AT THE DEPARTMENT OF ENERGY

                              ----------                              


                        THURSDAY, JUNE 10, 1999

                                       U.S. Senate,
                         Committee on Governmental Affairs,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10:05 a.m., in 
room SD-342, Dirksen Senate Office Building, Hon. Fred 
Thompson, Chairman of the Committee, presiding.
    Present: Senators Thompson, Voinovich, Domenici, Lieberman, 
and Akaka.

             OPENING STATEMENT OF CHAIRMAN THOMPSON

    Chairman Thompson. Let us come to order, please.
    In June of last year, the Committee heard testimony 
regarding a general breakdown of our licensing and control of 
dual-use items. As a result, I requested an agency review last 
August by the inspectors general of six different agencies. I 
asked them to review the licensing processes for dual-use and 
munitions commodities in an effort to determine what weaknesses 
still exist and what efforts we make to assess other countries' 
handling of these items after export. Dual-use items are those 
that have both civilian and military applications and munitions 
are those that have to do with strictly military applications.
    This was an update of a similar report that was issued by 
four of the agencies back in 1993, so this, in a real sense, is 
an update of these conclusions. But, obviously, since that 
request, a great deal of additional information about the 
problems of our weapons labs with regard to controlling 
information has surfaced.
    The six agencies from whom I requested this report are the 
Departments of Defense, Energy, Treasury, State, Commerce, and 
the Central Intelligence Agency. Each of these agencies plays a 
key role in controlling dual-use and munitions commodities.\1\
---------------------------------------------------------------------------
    \1\ Chairman Thompson's letter, sent to six agencies, dated Aug. 
26, 1998, appears in the Appendix on page 25.
---------------------------------------------------------------------------
    The first agency to complete their work is the Department 
of Energy, and because they have highlighted some particular 
problems within our nuclear weapons labs, they are here today 
to discuss their findings. We look forward to, of course, 
having the other agencies in the not-too-distant future. We are 
going to have individual reports from the inspectors general of 
these various agencies and a comprehensive report that tries to 
tie all of it together so we can look at it from a 
comprehensive standpoint.
    Senator Lieberman.

             OPENING STATEMENT OF SENATOR LIEBERMAN

    Senator Lieberman. Thanks, Mr. Chairman, for holding this 
hearing today which addresses a topic of genuine urgency and 
importance. The export control process is of vital interest to 
our national security and economic strength and the complex and 
serious nature of the issues demand the kind of careful and 
reasoned examination of the process that you requested the 
Inspectors General of Defense, Commerce, Treasury, State, CIA, 
and Energy to undertake. So I appreciate the lead that you have 
taken on this issue.
    Let me also thank the witnesses from the DOE Inspector 
General's office for their very good work in this report on 
their agency's export control procedures. The report, I think, 
will help place in context the important issues surrounding a 
wide range of national security concerns related to American 
trade and security policies, a matter that has obviously taken 
on renewed importance in light of the recent release of the Cox 
report, with its allegations that some American companies had 
business dealings with the PRC that circumvented or violated 
the current export control process.
    What makes this such a difficult area to deal with, I 
think, are the complex issues associated with export control. 
In some cases, controlling high-tech equipment that has both 
commercial and military application, so-called dual-use 
commodities, may not be easy. High-performance computers 
provide an excellent example of this, because technology that 
is considered sensitive today, or maybe in that case has been 
considered sensitive yesterday, may be in widespread commercial 
use today. In other words, it is sometimes going to be 
difficult to define precisely what technology should or should 
not, or realistically can or cannot be adequately controlled.
    A second difficulty in the crafting of our export control 
policies is that the United States may not be the only country 
that produces a specific controlled technology. As the authors 
of the Cox report have reminded us, other nations around the 
world may be quite willing to sell to countries that we would 
consider a possible security threat. So if we undertake 
unilateral action to place advanced technologies, such as 
satellites or supercomputers, on our restricted lists, we may 
in the end not prevent a potential adversary from obtaining it 
elsewhere, and, of course, we may also be doing some damage to 
American companies' international market positions. So the best 
course, though clearly not an easy course, is to arrive at a 
system of controls on a multilateral basis.
    There is also a larger question, I think, that we will need 
to consider as these hearings go on. The export control system 
focuses on products, but there are overall industrial 
capabilities in critical defense areas where we need to ensure 
that our companies continue to dominate or retain significant 
market share. So I think we have really got to think big about 
export controls and look at this larger question of whether the 
United States will retain industrial capability in the key 
defense needed technologies.
    The answer to the question will have an effect on whether 
we have a fully robust American defense or whether parts of 
that capacity emigrate abroad. In other words, we have a 
problem here not just of individual products, but of overall 
technologies.
    That, of course, does not mean we should relax our export 
controls. As the Cox report well reminded us, there is still a 
great deal of technology in commercial use that can have 
military applications and there are still many individuals and 
nations who we obviously cannot count on to use that technology 
in a manner that coincides with our national security 
interests. We must take care not to unwittingly provide 
technologies to nations which may use it to our detriment.
    So I think our challenge here is to create an export 
control regime that protects our national security interests 
around the world while recognizing that we will harm our 
national interest if we unduly curtail the legitimate export of 
American technology for commercial use. By telling us how the 
current process works, the information discussed in this report 
that we will hear testimony on today and the additional 
material we expect from the other inspectors general will 
assist in framing these issues, and I think in this, Mr. 
Chairman, this Committee has a unique opportunity under your 
leadership to really provide some information and, hopefully, 
reasoned judgment on these complicated issues.
    Before closing, let me just make a few brief comments on 
the specifics of the report that we are going to hear about 
today.
    Most importantly, I guess, I was heartened to read in it 
that, on a whole, from the perspective of this review of the 
DOE, the current control process is working. But, I must say, I 
am also disappointed with some of the report's findings, most 
significantly the apparent failure by DOE officials to follow 
proper procedures regarding obtaining licenses for visiting 
foreign scientists at our national labs. I understand that 
there are now efforts to remedy this problem, but it is very 
troubling to learn in this report, or to see here another 
example of insufficient focus at the labs on the protection of 
sensitive information. I will be interested in hearing from our 
witnesses this morning how serious they believe this problem to 
be and whether they have any reason to believe that sensitive 
information was, in fact, improperly transferred to parties who 
should not have seen it.
    Mr. Chairman, once again, I thank you for holding this 
hearing. I look forward this morning to a good, constructive 
discussion with the witnesses and I thank them for doing a 
first-rate job in their report.
    Chairman Thompson. Thank you very much.
    Senator Voinovich, did you have any opening comments?
    Senator Voinovich. No. I am looking forward to hearing the 
testimony.
    Chairman Thompson. Thank you very much.
    With us today is the Inspector General for the Department 
of Energy, Gregory Friedman. Accompanying him are Sandra 
Schneider and Alfred Walter, also from the Inspector General's 
office.
    Your report covers a number of areas and recommendations. I 
was particularly interested in your findings regarding the 
deemed export licensing process. I look forward to your 
explaining to us today what your findings and recommendations 
are, and particularly as they apply to scientists visiting our 
labs from other countries, so we appreciate your being with us 
today.
    Mr. Friedman, would you like to make an opening statement? 
I think we all read your report, but any summary statement you 
might want to make, we would appreciate it.

 TESTIMONY OF HON. GREGORY H. FRIEDMAN,\1\ INSPECTOR GENERAL, 
   DEPARTMENT OF ENERGY, ACCOMPANIED BY SANDRA L. SCHNEIDER, 
  ASSISTANT INSPECTOR GENERAL FOR INSPECTIONS, DEPARTMENT OF 
ENERGY, AND ALFRED K. WALTER, OFFICE OF THE INSPECTOR GENERAL, 
                      DEPARTMENT OF ENERGY

    Mr. Friedman. Thank you, Mr. Chairman. Mr. Chairman and 
Members of the Committee, I am pleased to be here today to 
testify on the Office of Inspector General's review of the 
Department of Energy's export licensing process for dual-use 
and munitions commodities. This review was part of an 
interagency effort by the Inspectors General of the Departments 
of Commerce, Defense, Energy, State, and Treasury and the 
Central Intelligence Agency. It was requested by the Chairman 
of this Committee as a follow-up to a similar IG review in 
1993.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Friedman appears in the Appendix 
on page 29.
---------------------------------------------------------------------------
    I am joined today at the witness table by Sandra Schneider, 
the Assistant Inspector General for Inspections, and Alfred 
Walter, the Director of the Office of Management Operations of 
the Office of Inspections. They will also be available to 
respond to the Committee's questions concerning our review.
    In short, we determined that the Department of Energy's 
process for reviewing nuclear dual-use and munitions license 
applications generally appeared adequate, subject to certain 
concerns which I will discuss. Our review also identified 
indicators of possible problems with the licensing of deemed 
exports.
    Certain commodities and technologies are designated as 
dual-use. That is, they have both a civilian and military 
application. Some are also designated as nuclear dual-use, 
items controlled for nuclear nonproliferation purposes. For 
example, carbon fibers are used in the manufacture of tennis 
rackets, golf clubs, and fishing poles, yet they are also used 
in the manufacture of centrifuges for uranium enrichment 
activities. Another group of controlled commodities is 
designated as munitions, which are goods and technologies that 
have solely military uses, such as high explosives.
    The Nuclear Transfer and Supplier Policy Division of the 
Office of Nonproliferation and National Security is responsible 
for reviewing export license applications and recommending to 
the Departments of Commerce or State either approval or 
disapproval of an application. Procedures for processing dual-
use license applications submitted to the Department of 
Commerce are clearly articulated in relevant regulations. 
However, there is no equivalent process for reviewing munitions 
cases referred by the State Department.
    As part of the interagency review, the Department of 
Commerce provided a statistically-based sample of 60 export 
license applications that it had provided to the Department of 
Energy in the first 6 months of 1998. We determined that all of 
the 60 cases in the sample were appropriately referred by the 
Department of Commerce. Our analysis of the 60 cases disclosed 
that the Proliferation Information Network System, commonly 
referred to as PINS, contained the required records concerning 
the recommendations and decisions on the 60 cases. The data in 
PINS was appropriately secured. PINS provided an adequate audit 
trail. The Department of Energy analysts were provided an 
adequate level of training. The escalation process for 
resolving agency disagreements regarding approval or 
disapproval of specific license applications appeared 
satisfactory, and there was no evidence that the Department of 
Energy analysts were being pressured improperly regarding their 
recommendations.
    We also reviewed whether the Department of Commerce was 
appropriately referring cases to the Department of Energy 
through an analysis of an additional random sample of 60 cases 
provided by the Department of Commerce not previously referred 
to the Department of Energy. Of the 60 cases not previously 
referred, a Nuclear Transfer and Supplier Policy Division 
analyst concluded that one case should have been referred, 
based on the involvement of a nuclear end user for the 
commodity. However, the Department of Commerce maintains that 
the license application was not required, therefore, neither 
was a referral.
    The Department of Energy has delegated to the Department of 
Commerce the authority to process export licenses for certain 
commodities without referring them to the Department of Energy. 
Based on the Department of Energy's review of a sample of the 
delegated cases, the Department of Energy officials determined 
that approximately 1 percent should have been referred but were 
not. The Department of Energy officials plan to rescind the 
delegations of authority to the Department of Commerce and 
determine whether they should be continued.
    The international traffic in arms regulations implemented 
by the State Department include the U.S. munitions list, which 
identifies munitions commodities that are subject to export 
controls. These items include those used in the design, 
development, or fabrication of nuclear weapons or nuclear 
explosive devices. The regulations do not require the State 
Department to refer license applications for munitions 
commodities to other agencies for review, and there is no 
formalized system for escalating and resolving differences 
among agencies.
    As a result, the Department of Energy's role in reviewing 
munitions license applications is not clear. Historically, the 
State Department has received few requests for export of 
nuclear-related commodities but routinely refers any such 
applications to the Department of Energy for review. The 
Department of Energy handles munitions license applications in 
the same manner as dual-use applications referred from the 
Department of Commerce.
    In our 1993 report on the Department of Energy's export 
license process, it contained 11 recommendations for corrective 
actions and some still need additional review and action. For 
example, an assessment of the adequacy of the staffing level 
for the Nuclear Transfer and Supplier Policy Division is 
required.
    Two other recommendations require the Department of Energy 
to coordinate with the Department of Commerce to obtain 
information regarding the shipment of commodities. The 
remaining recommendation requires the Department of Energy to 
coordinate with the State Department to obtain information 
regarding whether a license application was approved by the 
State Department for a munitions commodity and whether the 
commodity was actually shipped. This type of information for 
both Departments of Commerce and State would assist the 
Department of Energy analysts in their review of license 
applications for possible proliferation implications.
    I would now like to address our concerns with regard to 
deemed exports. During our review, there were indicators that 
the Department of Energy laboratories were not seeking export 
licenses for foreign nationals having access to certain 
unclassified information. According to the Export 
Administration Regulations, any release to a foreign national 
of technology or software that is subject to those regulations 
is, ``deemed to be an export'' to the home country of the 
foreign national.
    Our review included a relatively small judgmental sample of 
foreign national assignees from China, India, Iran, Iraq, and 
Russia who were involved for more than 30 days in unclassified 
activities at four the Department of Energy laboratories. We 
then identified several cases where an export license may have 
been required because of the information being accessed or the 
individual's employer. We found that laboratory guidance was 
not clear. We believe this stems from the fact that the Export 
Administration Regulations and internal the Department of 
Energy guidelines do not clearly explain when a deemed export 
license may be required.
    We also found the laboratories we surveyed generally rely 
on the hosts of the foreign national assignee to determine 
whether there are export concerns. We found several hosts who 
were not aware of or did not understand the requirements for 
deemed export licenses and several hosts who did not appear to 
exercise appropriately their host responsibilities. Our review 
also disclosed that there is no organization within the 
Department of Energy that has management responsibility for the 
deemed export license process.
    In response to our report and our recommendations, the 
Department has told us that it is clarifying its policies and 
has initiated a number of other corrective actions, including 
the establishment by the Under Secretary of an export control 
task force to review export control issues relating to the 
Department of Energy facilities, including deemed exports.
    Mr. Chairman, this concludes my testimony. My colleagues 
and I would be pleased to answer any questions you might have.
    Chairman Thompson. Thank you very much, Mr. Friedman, for a 
good presentation and a good report. We thank you and your 
entire staff for that.
    As I said earlier, this is going to be the first of several 
hearings on these subjects, and it is a subject that is going 
to be with us for a while. It has become very high profile. It 
is of obvious importance.
    The dual-use commodities matter, of course, is regulated 
primarily by the Export Administration Act. We are going to 
hear a lot about that. The Export Administration Act of 1979 
expired in 1994, and its policies have been continued pursuant 
to executive order since that time, but Congress is going to 
take up the matter of the Export Administration Act now for the 
first time in a long time. There have been some amendments to 
it, but, basically, the 1979 framework is pretty much what we 
have been operating under. We are going to readdress that.
    One of the things we are dealing with here today is the 
body of rules and regulations that have been promulgated by the 
Commerce Department pursuant to the Export Administration Act, 
the Export Administration Regulations. So that is what we are 
dealing with.
    Here today, the Department of Energy primarily has to do 
with nuclear-related dual-use items. These items are referred 
to the Department of Energy by the Department of Commerce. I 
think, as everyone knows now, the Department of Commerce pretty 
much runs this show in terms of dual-use items and when matters 
come in, they make a determination as to what should be handed 
out to these other agencies. That is a gross 
oversimplification, but that is kind of the way it works. We 
are looking here at what is normally handed to the Department 
of Energy, and that is nuclear-related dual-use items.
    You mentioned some problems on the munitions side, and 
those are points well taken, I think. But as far as I am 
concerned, today, I want to talk primarily about the dual-use 
part regulated by the Department of Commerce as opposed to the 
munitions part that is handled primarily by the State 
Department.
    In your report, there is some good news, as Senator 
Lieberman pointed out. The responses, the timely responses, the 
training appears to be adequate. The escalation process as it 
goes through the potential appeal process, that seems to be 
working pretty well from the Department of Energy's standpoint. 
We will get into perhaps a little bit later what still is left 
over from the 1993 inquiry. As you know, in 1993, the 
Inspectors General conducted a similar review, and you did make 
some recommendations. One of the things we want to talk about 
is the extent to which those recommendations have been 
implemented. But it looks like, pretty much, most of them have. 
There are still some lingering problems in some other areas.
    One of the things you pointed out, of course, is the 
problem with deemed exports, and this is one of those things, 
of course, that makes your work so wonderful. Although lots of 
times we think that we are trying to ask you to come up with 
something that will, in effect, verify what we already believe, 
quite often, you come up with something that has not occurred 
to anybody. I do not know about anybody else, but I was not 
aware of the deemed export problem at all.
    You point out a problem here where foreign nationals are 
visiting our laboratories. As you know, we have had a policy 
now for some years, certainly in the 1990s, of pushing 
visitation programs between our labs, labs in China, and labs 
in Russia, and in connection with cooperative efforts in the 
nonproliferation area, which, I guess, in the wrong hands can 
turn to proliferation instead of nonproliferation.
    But all that has been going on and you highlight a problem 
where foreign nationals come and visit our labs and have access 
to dual-use or munitions information. As you point out, under 
the regulations, or under the law, we have all assumed that the 
law says that when these people have this kind of access, it is 
deemed to be an export. It is just like an export. I mean, you 
are giving them the information, in effect, and if you have got 
a problem with that, you have got just as big a problem with it 
by showing it to someone, giving them access for a month, 
maybe, or 2 months, as if you shipped it to them.
    So that is the basis of the situation. As I understand it, 
it is based on the nature of the information that they might be 
exposed to and it is also based on their citizenship. 
Obviously, some countries are more sensitive than others. It is 
also based on, perhaps, their employer--that is, who the 
foreign national might be working for.
    My understanding is that your methodology was that you 
looked at assignments, and the definition of assignments is 
when the foreign national is, let us say, at a lab for more 
than 30 days, is that correct?
    Mr. Friedman. That is correct.
    Chairman Thompson. Did you look at all assignments over a 
period of time?
    Mr. Friedman. No. We looked at a selected, small judgmental 
sample.
    Chairman Thompson. Do you know how many assignments there 
have been over the last year or 2 years or any particular 
period of time?
    Mr. Friedman. Mr. Chairman, at the four labs that we looked 
at, Sandia, Lawrence Livermore, Los Alamos, and Oak Ridge, 
according to the information that was provided to us by the 
Department, there were 3,100 assignments in 1998. But I want to 
caution you and the other members of the Committee that we 
think that number may not be accurate and we are working with 
the Department to try to figure out what the right number is. 
It is a significant number, and I also want to caution you that 
a large percentage of those were people from non-sensitive 
countries.
    Chairman Thompson. Could you elaborate on that a little 
further, as to why you think the information might be off and 
in what direction and to what extent?
    Mr. Friedman. Well, in the information that was provided to 
us, there were anomalies in terms of two of the labs in that 
the numbers are so low that it does not look reasonable. We 
will be trying to clarify that with the Department. So, 
therefore, we think the number may be understated.
    Chairman Thompson. I see. There are also those that are 
denominated as visitors, which, as I understand it, are those 
who come for 30 days or less. You only looked at the 
assignments and did not look at the visitors, is that correct?
    Mr. Friedman. That is correct.
    Chairman Thompson. Do you have any feel for how many 
visitors there have been over this same period of time to these 
four labs?
    Mr. Friedman. I would ask that Ms. Schneider respond to 
your question.
    Ms. Schneider. The numbers that Mr. Friedman referenced----
    Senator Lieberman. Ms. Schneider, would you take the 
microphone and speak into it, please?
    Ms. Schneider. I am sorry. The number that Mr. Friedman 
references, the 3,200 number, is the best number that we have 
been able to identify from the Department at this point in 
time. However, they advise us that the laboratories may have 
substantially higher numbers of visitors and assignees which 
they have not been able to provide.
    Chairman Thompson. I had 3,100. Is it 3,100 or 3,200?
    Ms. Schneider. Actually, the number we got was closer to 
3,200.
    Mr. Friedman. Thirty-two-hundred.
    Chairman Thompson. All right. Does that indicate both 
assignments and visitors, or just assignments?
    Mr. Friedman. No. Let me clarify. The visits, and I can 
total them very quickly, it is 953 at Oak Ridge, 525 at 
Lawrence Livermore, 88----
    Chairman Thompson. A little bit slower. It is 953 at Oak 
Ridge----
    Mr. Friedman. Five-hundred-twenty-five at Lawrence 
Livermore, 88 at Los Alamos, and 53 at Sandia.
    Senator Lieberman. And what is the period of time there?
    Mr. Friedman. In calendar year 1998.
    Senator Lieberman. Ninety-eight?
    Chairman Thompson. Are these assignments or visitors?
    Mr. Friedman. Those are visits.
    Chairman Thompson. Those are visits?
    Mr. Friedman. Yes.
    Chairman Thompson. What does that total to, do you know?
    Mr. Friedman. About 1,600.
    Chairman Thompson. About 1,700? You have 3,200 assignments, 
with the caveats that you indicated, and about 1,700 visitors?
    Mr. Friedman. Right.
    Chairman Thompson. For the four labs.
    Mr. Friedman. And I would attach the same caveat to the 
visitors, as well.
    Chairman Thompson. That same caveat, for 1998?
    Mr. Friedman. Correct.
    Chairman Thompson. All right. Is there any reason to 
believe that the numbers have substantially increased or 
decreased over the last few years, or would you think that 
would be a static number?
    Mr. Friedman. I really could not answer that.
    Chairman Thompson. You do not know that? All right. That 
gives us some sense of the level, and we might contrast that 
with the number of--let us see. The deemed export problem is a 
potential problem with visitors as well as assignments, perhaps 
not as big a problem, but potentially, I suppose, it is still a 
problem?
    Mr. Friedman. That is one of the points we have made, is 
that there is a lack of clarity in the procedures and the 
processes that govern that, Mr. Chairman. One of the issues 
that came up was there are people at the Department of Commerce 
who apparently have informed people at the Department of Energy 
that visitors, that is, people who are here 30 days or less, 
are not subject to those same requirements, and we are not 
positive that is the case. That is one of the issues that needs 
to be clarified.
    Chairman Thompson. Apparently in some people's mind, there 
is some question as to whether people on assignment come under 
the regulations.
    Mr. Friedman. Given the lack of clarity of the policy, yes, 
that is right.
    Chairman Thompson. So it is all a little hazy?
    Mr. Friedman. That is correct.
    Chairman Thompson. But in terms of a potential problem, a 
person there 30 days could be as much of a problem as a person 
there 35 days?
    Mr. Friedman. Absolutely.
    Chairman Thompson. All right. So we are dealing with 4,900 
or almost 5,000 assignments and visitors in 1998. How many 
applications were there for deemed exports in 1998?
    Mr. Friedman. The information we were provided is that 
there were two applications.
    Chairman Thompson. Two? I think that pretty much speaks for 
itself.
    Mr. Friedman. Mr. Chairman, let me be very clear about 
that. The number of these individuals were from non-sensitive--
--
    Chairman Thompson. I understand. Certainly, not all of them 
are a problem, or I am assuming that most of them are going to 
be people from countries that present less of an export-control 
problem. These are rough numbers, we understand. But we do know 
that there was in the neighborhood of 4,900 foreign nationals 
visiting our labs under some kind of program in 1998 and there 
were, apparently, two applications for deemed export licenses.
    Now, the nature of the problem, of course, has to do with--
well, there are several elements to it, but one of them 
certainly has to do with who is responsible. As you understand 
it, from your inquiry, the host to the foreign national has 
primarily been given the responsibility for complying with 
deemed export rules. Is that also a matter that is in some 
dispute, as to whether or not the host is the correct person to 
make the initial determination as to whether a license is 
needed, or is that pretty clear?
    Mr. Friedman. It is clear at the laboratory level. However, 
when you talk to the host, as our report points out, it is not 
clear to too many of the hosts.
    Chairman Thompson. So from a policy standpoint, as far as 
the Department of Energy is concerned, it is clear.
    Mr. Friedman. No. I do not believe it is codified in the 
Department of Energy's policies, but at the labs we visited, 
the hosts were the focal point and had responsibility in the 
lab policies for submitting export license applications.
    Chairman Thompson. All right. Taking it down to the 
laboratory level, then, as far as the administration of the lab 
is concerned, the people in charge would tell you that the 
hosts make that determination?
    Mr. Friedman. That is correct.
    Chairman Thompson. All right. But what you are saying is 
that when you get down and actually talk to the hosts it's a 
bit different. Describe the hosts. Who is the host?
    Mr. Friedman. The host is a laboratory employee who 
invites, perhaps, a foreign national to visit him or her at the 
laboratory to collaborate on some work that they may be doing.
    Chairman Thompson. What level of employee do you have to be 
in order to do this? I assume not any employee could invite a 
foreign national.
    Mr. Friedman. I really do not know the answer to that, Mr. 
Chairman.
    Chairman Thompson. All right. So what did you find when you 
went into these labs and actually talked to these hosts in 
terms of their carrying out this responsibility?
    Mr. Friedman. A number of them, and the report gives the 
specifics and Ms. Schneider can elaborate on this, but a number 
of them at all the labs simply did not understand, did not 
recognize, or did not realize that it was their responsibility 
to make that kind of a determination.
    Chairman Thompson. So they did not realize they were 
supposed to be making that determination?
    Mr. Friedman. That is correct. They were not educated, they 
were not trained, and they did not seek guidance in these 
cases.
    Chairman Thompson. Were they familiar with the deemed 
export concept?
    Mr. Friedman. Many were not.
    Chairman Thompson. They were not familiar with the concept 
of a deemed export?
    Mr. Friedman. I think that is correct.
    Chairman Thompson. They did not know they were supposed to 
be doing that sort of thing.
    Mr. Friedman. That is correct.
    Chairman Thompson. Then you pointed out that there was a 
problem with the Export Administration regulation, actually, 
that set this up. In looking at your report, as you say, ``A 
reader could conclude from the way it is worded that an export 
license is not required for research conducted by the 
Department of Energy laboratories and federally funded research 
and development centers. Virtually all of the Department of 
Energy laboratories have been designated as these centers. 
However, we conclude that a blanket exemption for work at these 
centers was probably not intended.'' I think that is probably 
an understatement. So, in other words, you could read this 
regulation and potentially conclude that all labs were exempted 
from this deemed export policy, even though I would assume, our 
nuclear weapons laboratories would be the primary place that 
you would want it to be applied.
    Mr. Friedman. Precisely.
    Chairman Thompson. That is a problem as far as the 
regulation is concerned. Then you pointed out a problem as far 
as the DOE order is concerned, and then the guidelines pursuant 
to the order. Could you characterize the ambiguity there in 
terms of guidance?
    Mr. Friedman. They are largely silent on the question of 
deemed exports.
    Chairman Thompson. I notice there is one reference here 
under the guidelines that says the private sector would need an 
export license. The language in the guidelines could give the 
impression that while the private sector would need an export 
license, that the Department of Energy would not. So if you 
talk about private-sector requirements, the implication might 
be that it pertains only to private-sector and not to 
government requirements.
    Mr. Friedman. That is correct.
    Chairman Thompson. Clearly, that is something that you 
brought to the attention of the appropriate authorities at the 
Department of Energy, and what has been their response to that?
    Mr. Friedman. We brought this to the attention of the Under 
Secretary in March. He was the Acting Deputy Secretary at the 
time.
    Senator Lieberman. Who was that?
    Mr. Friedman. Dr. Moniz. He immediately created a task 
force, which included the Offices of Intelligence, 
Counterintelligence, General Counsel, and Defense Programs, and 
they are attacking the problem as we speak.
    Chairman Thompson. All right. There are several more 
specifics I want to get into a little later, but I am going to 
relent right now. Senator Lieberman?
    Senator Lieberman. Thanks, Mr. Chairman. Let me just pursue 
the question of deemed exports for a few moments more. With all 
the concern lately about security at the DOE facilities, can 
you determine if any sensitive information might have been 
compromised by the apparent shortcomings in the deemed export 
license process?
    Mr. Friedman. We could not make that determination, 
Senator, and frankly, it was not part of our task. I am not 
sure we have the competence, to be honest with you. It requires 
a very keen sense of end use, end users, home countries, 
employers, and expertise that is really beyond us.
    Senator Lieberman. I appreciate that. The numbers are so 
startling that you have come up with. It looks like it is about 
a total of 5,000 in 1998, the 3,200 assignees and about 1,700 
visitors, and out of that total, only two licenses applied for. 
It makes me concerned, obviously, about what might have been 
compromised.
    Am I correct in saying that, again, that these visiting 
foreign scientists presumably were not gaining access to 
information that was classified? Is that correct?
    Mr. Friedman. The context in which we are presenting this 
is that these were people who were here for unclassified visits 
and had access to only unclassified functions, matters, 
software, and technology. So we have no indication that they 
had access to classified material.
    Senator Lieberman. But, nonetheless, it has previously been 
determined that even the unclassified information might be 
sufficient to deem it an export and, therefore, require a 
license?
    Mr. Friedman. That is correct.
    Senator Lieberman. Your report does not, and understandably 
so, address the issue of whether American scientists traveling 
abroad might require an export license under certain 
circumstances, although, and as you follow the story unfolding 
around DOE and the labs, it is easy to see why similar concerns 
might be present for information that might be shared by DOE 
scientists as they travel abroad. I wonder what policies, if 
any, cover deemed exports by lab employees traveling overseas 
in meeting with foreign nationals.
    Mr. Friedman. Well, to be candid with you, Senator 
Lieberman, we did not pursue that matter. Again, it went beyond 
our charter in this particular review. But the general question 
of deemed exports does apply to U.S. citizens traveling to a 
number of foreign countries.
    Senator Lieberman. So as you read the current state of law 
and regulation, the deemed export license requirement covers 
not just contacts here in the U.S. but for our scientists 
traveling abroad?
    Mr. Friedman. That is correct.
    Senator Lieberman. That is something we may want to ask DOE 
to look at more closely. Let me just ask you to flesh out a 
little bit more, what is DOE now doing as far as you understand 
to establish more control over this deemed export license 
process?
    Mr. Friedman. We understand that the Department and the 
task force has been working with the Department of Commerce and 
the Department of State to try to clarify the requirements. It 
has been rewriting its own internal order to try to make it 
more clear to everyone, both Feds and to the contractor 
laboratory and personnel, what a deemed export is, when it is 
required, and when an export license is required to be sought. 
Those are the efforts that are now being undertaken.
    Senator Lieberman. Would you judge them at this point to be 
adequate or inadequate, or is it too early to say?
    Mr. Friedman. Well, it is too early to say, but I must say, 
Senator, that we are gratified by the reaction that has taken 
place. It was very prompt. We met within a week after we had 
first sent our memo to the Under Secretary with the task force, 
so that we think is a prompt response.
    Senator Lieberman. Do you think they are dealing also with 
this question of the hosts and informing the hosts of their 
responsibility under the----
    Mr. Friedman. Yes.
    Senator Lieberman. You do? OK. Let me turn to the 
delegation of authority, which you have covered in the report, 
certain categories of applications that the Department of 
Energy has been allowing the Department of Commerce to handle 
without referring to the Department of Energy. Apparently, this 
procedure, which covers some 1,000 or 1,500 cases a year, is 
now being reevaluated by the Department of Energy. I gather 
that DOE analysts determined that 1 of the 60 randomly selected 
non-referred cases examined by your office should have been 
referred. Is that correct?
    Mr. Friedman. That is correct.
    Senator Lieberman. That was a situation involving the 
provision of software, hardware, and a Fortran compiler to a 
Russian nuclear power facility, which should have been 
referred, according to DOE, because it involved a nuclear end 
user, right?
    Mr. Friedman. That is correct.
    Senator Lieberman. How was this case resolved, to the best 
of your knowledge?
    Mr. Friedman. It has not been resolved.
    Senator Lieberman. It has not?
    Mr. Friedman. There is a difference between the Department 
of Energy and the Department of Commerce. At least to the best 
of my knowledge, at this point, it has not been resolved, and 
it is one of the issues we are going to be talking to the task 
force about.
    Senator Lieberman. Good. Does this suggest larger concerns 
that you have with the delegation of authority process?
    Mr. Friedman. As we indicated, the Department itself 
undertook a review of the cases that were subject to the 
delegation and came up with roughly a 1 percent error rate.
    Senator Lieberman. What prompted that reevaluation, as far 
as you know?
    Mr. Friedman. I am not sure I have that information right 
now. I suspect they were concerned about the way the 
delegations were being handled, as well.
    Senator Lieberman. Go ahead.
    Mr. Friedman. They came up with a 1 percent error rate, so 
they are taking a closer look at the delegation to see if that 
process is working properly or not.
    Senator Lieberman. So it is as yet unresolved, but they are 
continuing to work with the Department of Commerce on that?
    Mr. Friedman. That is right.
    Senator Lieberman. Let me ask you one or two questions 
about the munitions exports and State Department procedures. I 
gather that the State Department receives few requests for the 
export of nuclear weapons or explosive devices as components 
but refers certain of these cases to DOE and consults on 
others. While the procedures for the Department of Commerce's 
processing dual-use applications are clearly articulated in 
regulations, no comparable procedures exist for reviewing these 
munitions cases by the State Department.
    Your report determined that, in fact, there was no process 
in place, in contrast to the more formalized procedures on 
dual-use applications, for the resolution of the interagency 
disputes on munitions cases, and I wanted to ask you whether 
you think that that has proved to be a problem, and if so, what 
steps might be undertaken to improve the situation.
    Mr. Friedman. At this point, Senator, we cannot point to a 
problem. In all candor, this whole process is part of an 
intricate system, of course, for ensuring national security, 
and our concern is if there is a vulnerability in terms of the 
ability to reconcile differences of recommendations or judgment 
with regard to the Department of Energy or another department, 
that there be a formal escalation process to resolve those 
differences, as there is for dual-use commodities.
    Senator Lieberman. I thank you for that. Let me ask you 
just one or two final policy questions. Your examination of the 
export control processes employed by DOE, based on that 
examination and other relevant agencies, I wonder what 
recommendations regarding some of the larger policies that 
guide these decisions that you might have.
    For instance, does the system we have in place, to the best 
of your knowledge, appear to adequately assure that all 
national security and commercial interests are taken into 
account? Can you reach a judgment on that?
    Mr. Friedman. Our overall judgment, in terms of the 
evaluation process itself, is that it was adequate in virtually 
all respects, so that we are comfortable with that, based on 
the sampling that we have done.
    Senator Lieberman. Do you have any knowledge from your own 
experience--I know that COCOM expired and there are other 
attempts at multilateral cooperation, but they are not, to my 
knowledge or in my opinion, very successful--do you have any 
judgment about the multilateral regimes with voluntary 
restraints set by individual governments that are in effect 
now, and do you have any thoughts about this dilemma that we 
have that we can decide not to sell and we can protect our own 
secrets, as it were, but other industrialized nations can go 
ahead and effectively do business and proliferate?
    Mr. Friedman. We really have not thought that through.
    Senator Lieberman. OK. Thanks very much. It is a good 
report, and thanks for your responses.
    Chairman Thompson. Thank you. Senator Voinovich.
    Senator Voinovich. We have various Committees in Congress 
that are involved in this and there are two aspects of it. One 
is that some things got out that should not have and people are 
concerned about it. The other aspect is, what are we going to 
do to tighten this up? I am interested in knowing, from your 
observations, has everyone got the message? Are you satisfied 
that the effort being made by the administration in terms of 
dealing with this problem of tightening it up is adequate, and 
if you do not think it is adequate, what other things do you 
think they should be doing so they can come back to Congress in 
a month or 2 months.
    The point I am making is that there are a lot of people in 
Congress that want to write an administrative policy that is 
going to take care of the situation, and as a former mayor and 
governor, I do not think that is the way to get the job done. 
You have a problem, you go to the administration and you say it 
is a problem. We know it is a problem. You know it is a 
problem. What are you doing to solve it? Come back to us with 
your recommendations.
    From your perspective, do they get it and are they moving 
forward with it and are we going to come up with something that 
is really going to tighten this thing up so that we do not have 
what we have had in the past?
    Mr. Friedman. Senator, at this point, we are gratified with 
the action that the Department has taken. It is our intent to 
go back at some point in the future to take another look at 
this issue, to make sure that the fix that has been implemented 
is, in fact, addressing the issues. That is the only assurance 
that I can give you at this point in time.
    Senator Voinovich. The task force that is in place, is that 
task force just in the Department of Energy, or is it involving 
the other agencies?
    Mr. Friedman. It is a Department of Energy task force, but 
they are interacting and coordinating with State and Commerce 
Departments and I am comfortable that they are doing the right 
things at this point.
    Senator Voinovich. Is there a facilitator or a process in 
place to get everybody's input into this?
    Mr. Friedman. The task force has the imprimatur of the 
Under Secretary and certainly one of the leaders is a deputy 
chief of staff, so I think it has the right people to get the 
right people involved.
    Senator Voinovich. In your testimony, on page 9, you note 
that the Nuclear Transfer and Supplier Policy Division of the 
Office of Nonproliferation and National Security may be 
understaffed. How big a shortfall are you talking about?
    Mr. Friedman. We did not do a formal staffing study, so I 
cannot answer that question specifically. I think that is the 
Department's responsibility because they have taken on a number 
of additional responsibilities within that division and I think 
they need to be adequately staffed to evaluate the numerous 
export license applications that come in.
    Senator Voinovich. Mr. Chairman, I would suggest that we 
ask the question about what they are doing, if they have a 
staff problem, what are they doing to remedy the problem there. 
I would be interested in getting a report back on that.
    You also note that the Department's intelligence 
capabilities are not being fully utilized in the processing of 
export cases. What is the Department doing to address that 
situation?
    Mr. Friedman. Actually, the situation, we understand, has 
been largely remedied, with the advent of PDD-61, the 
Presidential Decision Directive, as a result of which, the 
Department has established the Offices of Intelligence and 
Counterintelligence as separate stand-alone offices within the 
Department. We think, in large measure, that issue has been 
addressed.
    Senator Voinovich. From your observations, we have, what, 
5,000 visitors of one sort or another, and you say most of them 
are from countries where we have not any problem, but is there 
anyplace where, before somebody can become a host, that it has 
to be approved by someone? Do you know?
    Mr. Friedman. I am not here formally representing the 
Department, but the Secretary, under his sweeping 
reorganization, has established an Office of Foreign Visits and 
Assignments Policy Office, and that is the first time that such 
an office will have been established, as I understand it, 
certainly in recent history, and they will be, as I understand 
it, addressing the issues that you are referring to. So there 
will be a centralized accountability office within the 
Department to address those issues.
    Senator Voinovich. Mr. Chairman, again, I think that it 
would be interesting to get a report back from them on just 
exactly who is going to do it, what the procedures are, and the 
standards that they are going to set. Also, I think that they 
should be recommending a whole new education policy where they 
decide that somebody can be a host and what the 
responsibilities are of that host.
    Chairman Thompson. We will be expecting to hear from the 
Department of Energy on that. Anything further?
    Senator Voinovich. Nothing more.
    Chairman Thompson. Senator Akaka.

               OPENING STATEMENT OF SENATOR AKAKA

    Senator Akaka. Thank you very much, Mr. Chairman. I have a 
statement and I ask that it be placed in the record.
    Chairman Thompson. It will be made a part of the record.
    [The prepared statement of Senator Akaka follows:]
                  PREPARED STATEMENT OF SENATOR AKAKA
    Mr. Chairman, I am pleased to join you in welcoming the witnesses 
today from the Department of Energy's Office of the Inspector General 
to discuss their report on ``Inspection of the Department of Energy's 
Export Licensing Process or Dual-Use and Munitions Commodities.''
    I thank you, Mr. Chairman, for requesting the Inspectors General of 
the Departments of Energy, Defense, State, Commerce, Treasury and the 
Central Intelligence Agency to conduct an expanded review of their 
agency's export licensing processes.
    This review ill flush out the distressing problems with our export 
control licensing process raised by Dr. Peter Leitner, senior strategic 
trade advisor with the Department of Defense's Agency of Defense Threat 
Reduction, in his June 1998 testimony before this Committee.
    It is important to note that the Inspector General's review of the 
Department of Energy's export licensing process was relatively 
positive. His recommendations for improving the transparency and 
efficiency in the process were accepted by the Energy Department's 
Nuclear Transfer and Supplier Policy Division.
    The report criticizes the lack of procedures, or understanding of 
the procedures, for licensing foreign nationals working at the national 
weapons laboratories who may be exposed to controlled dual-use and 
munitions technical data. This is referred to as a ``deemed export'' 
because the United States views the transfer of controlled technology 
to a foreign national as an export to his or her home country. It is 
very evident that the Department of Energy and the national weapons 
laboratories do not understand how to determine what constitutes 
controlled technical data for which an export license is necessary.
    We cannot tell from the IG's report whether or not additional 
losses of dual use and critical military technology occurred from the 
failure to screen foreign visitors.
    Rather than dwelling on the failures of the past, we need to focus 
on improving the screening process. This hearing is an excellent first 
step in that direction.
    I am pleased, however, that the report concluded that licensing 
analysts have not been forced to change their recommendations on 
license applications as Dr. Leitner reported happened at the Defense 
Department. I am also pleased to learn that DOE's computer system for 
processing license applications was found to contain complete, accurate 
and consistent information with Commerce's database with the minor 
exception of a few cases, apparently caused by a glitch in the Commerce 
Department's computer system.
    There is larger issue at stake here: How do we maintain the free 
flow of ideas needed to maintain our technical edge without sacrificing 
our national security. In the area of exports, I hope this Committee 
will examine even more closely how to maintain a choke-hold on critical 
dual use exports in an environment of rapid technological revolution.
    I welcome our witnesses once again and I thank them for taking the 
time to testify before us this morning.

    Senator Akaka. Mr. Chairman, I also want to add my welcome 
to the panel this morning and to point out that I felt that the 
Inspector General's review of the Department of Energy's export 
licensing process was relatively positive. But there are 
problems, and I want to mention that some of the problems with 
DOE was because of the export licensing process. One problem 
was a lack of clarity in what constitutes a deemed export and 
confusion about who is responsible for determining when a 
deemed export license is required. So one of my questions is, 
who is responsible for determining when a deemed export license 
is required? Is this DOE or the Department of Commerce, or DOE 
in cooperation in the Department of Commerce?
    Mr. Friedman. It is within the Department of Energy family, 
Senator.
    Senator Akaka. So within the Department of Energy?
    Mr. Friedman. Yes.
    Senator Akaka. So it is not done in cooperation with the 
Department of Commerce?
    Mr. Friedman. In terms of the determination that an 
application needs to be submitted, it is the Department of 
Energy responsibility.
    Senator Akaka. How many deemed export licenses have been 
granted for the lab-to-lab programs?
    Mr. Friedman. I do not have that information, Senator.
    Senator Akaka. Have any deemed export licenses been 
requested for the U.S.-China lab-to-lab program, do you know?
    Mr. Friedman. I do not have information to that 
specificity.
    Senator Akaka. Do you know whether any foreign students who 
are attending U.S. universities working on lab-sponsored 
programs have been included in this?
    Mr. Friedman. I am afraid I am striking out, Senator. I do 
not know the answer to that question, either. I apologize.
    Senator Akaka. Very well. Mr. Chairman, thank you. I am 
very interested in export licensing and I hope maybe we can 
discuss this later. Thank you.
    Chairman Thompson. Thank you. Thank you very much.
    I was looking at some of the details of your report here. 
At Los Alamos, they told you that they were allowing their 
hosts to make the threshold deemed export determination, but 
you say, however, 9 of the 14 hosts who were interviewed 
contended that they were not responsible for making this 
determination, right?
    Mr. Friedman. That is correct.
    Chairman Thompson. At Lawrence Livermore, they indicated 
that hosts had received memoranda regarding their 
responsibilities, but two of the eight hosts you interviewed 
said they had never received any guidance on possible export 
control issues relating to foreign nationals they were hosting, 
correct?
    Mr. Friedman. Correct.
    Chairman Thompson. At Los Alamos, a security specialist 
said the hosts were made aware of their responsibilities, but 
only 7 of the 14 hosts that were interviewed said that they had 
received guidance. At Oak Ridge, one Oak Ridge contractor said 
that he was listed as the host of a Chinese national assignee 
but that in reality, another Chinese national was the actual 
host.
    Mr. Friedman. Correct.
    Chairman Thompson. So you had a Chinese national acting as 
the host of another Chinese national?
    Mr. Friedman. That is correct.
    Chairman Thompson. Getting to these numbers, I think I can 
see where you think you may have some under-reporting here. It 
seems to me like that Lawrence Livermore, Los Alamos, and 
Sandia should all be in the same ballpark. Is that kind of the 
assumption that you would operate under?
    Mr. Friedman. Yes, sir.
    Chairman Thompson. And yet, Lawrence Livermore reports over 
500 and Los Alamos and Sandia only reports 88 and 53.
    Mr. Friedman. In fairness to the office that gave us this 
information, they indicate that they are trying to improve the 
quality of their data, if you will. They also indicate that 
there may have been some direction from the Office of 
Counterintelligence related to restricting the publication of 
some of the information of the foreign nationals. So there may 
be some reasons for these anomalies, Senator----
    Chairman Thompson. That would be pretty ironic, would it 
not? The information is so sensitive, you cannot give the 
number of foreign nationals, but we have absolutely no clue as 
to any deemed export policy and what the foreign nationals are 
doing while they are there. How are we going to follow up on 
those numbers? Are you going to follow up on that?
    Mr. Friedman. We are going to follow up on the numbers, 
yes.
    Chairman Thompson. Let us know what you come up with. Oak 
Ridge, for example, is a science lab. I can see why their 
number of scientific visitors would be pretty high. Lawrence 
Livermore might have a little less than that, substantially 
less, really. But the reported figures from these other two, I 
mean, clearly are low, and those are weapons facilities. We 
need to know what the numbers are there. If they do not have 
accurate numbers or cannot get their arms around their numbers, 
as to just the gross numbers of foreign nationals coming there, 
that is a hell of a problem in and of itself. So we will not 
throw any more rocks until we know that it is justified, but 
this is something on which we need some follow-up.
    Another area, too. You talked about some areas where the 
Department of Energy delegates its authority back to the 
Department of Commerce, basically, when the commodity is not 
intended for a nuclear end user. My concern there is all the 
information that we have come across now shows that some of 
these countries are extremely deceptive as to their end user 
controls. They refuse to let us have any control over end 
users, and some of our own manufacturers, or sellers, I think, 
in this country have tacitly participated in such deceptions in 
order to make the sales. We send it to these countries and we 
do not know what happens to it.
    Now, we are learning bit by bit that, in many cases, we 
have been deceived. Some of these dual-use items are supposed 
to go to one facility and they go to another facility, a 
nuclear-related facility or a military facility. Who makes this 
end user analysis? Who makes this kind of determination as to 
the potential problem there?
    If they send it to the Department of Energy, you have your 
PINS database there where they collect all this information. It 
is a sophisticated computer program. They have a great deal of 
the information, as I understand it, with regard to all export 
license applications, and presumably, if someone would use it 
properly, you would be able not only to tell something about 
the cumulative effect of these exports to these various 
countries, but also to help with regard to potential 
proliferation issues and the end-user problem. But if you are 
going to delegate such research to the Department of Commerce, 
which is trying to sell the stuff, it looks to me like you have 
a potential problem there. What do you think?
    Mr. Friedman. I will give you my judgment, as best I can, 
but before I do that, they have thought through this question 
of the delegations of authority and there is a basis for them, 
and if I can, let me refer to Mr. Walter to describe that 
process, and then I will give you my best judgment on that.
    Chairman Thompson. Mr. Walter.
    Mr. Walter. Under Executive Order 12981, agencies, 
including the Department, are authorized to review any license 
application. The Executive Order also provides the agency the 
authority to notify the Department of Commerce of the types of 
applications that they do not need to see. DOE has provided the 
Department of Commerce delegations of authority for certain 
things, for example, items going to the Nuclear Suppliers' 
Group. Also commodities not intended for nuclear end use and 
end users. So, basically, DOE has said, we want to see all 
items that involve nuclear end use or end users, but there are 
these other items that, for whatever reason, we do not need to 
see.
    One of the things you mentioned was that DOE, through its 
PIN system, has information, historical information, on export 
license applications. This is limited to only applications that 
the Department of Energy has received or that have been 
referred to the Department of Energy by the Department of 
Commerce, not the entire universe of export license 
applications. So in the Department of Energy's process of----
    Chairman Thompson. But even there, I understand that PINS 
does not know what the disposition of any of these license 
applications are, either. That is another potential problem.
    Mr. Walter. That is correct, and if the Department of 
Energy would have that information, that would help in its 
proliferation review.
    Chairman Thompson. All right. Mr. Friedman, do you want to 
follow up on that?
    Mr. Friedman. I was hoping to buy more time. [Laughter.]
    Mr. Friedman. I think, given the current environment, 
clearly, this could be a problem. I mean, I am not going to----
    Chairman Thompson. Is this something that has been 
discussed or analyzed? Have you talked to the Department of 
Energy, or to the Department of Commerce, in particular, about 
that particular problem? What I am concerned about, of course, 
is an export to a sensitive country but for some ostensible or 
alleged commercial use. Well, we know that we have sent some 
goods to China for commercial airline purposes that have been 
diverted for military-related purposes. That is what I am 
trying to get at. If you have not had that discussion with the 
Department of Energy or the Department of Commerce----
    Mr. Friedman. Well, we have had the discussion with the 
Department of Energy, and what the Department of Energy has 
told us is that they are going to withdraw the delegations of 
authority to review the process.
    Chairman Thompson. So they do not know what they do not 
know. So we are talking about a process here, not just what the 
Department of Energy knows. I think it is a matter for 
consideration by the Department of Energy and the Department of 
Commerce.
    Senator Lieberman.
    Senator Lieberman. Thanks, Mr. Chairman. I was struck in 
the report--and I suppose this is because we are coming after a 
day of closed meetings with people from Justice and the FBI and 
others about the ongoing investigation that has resulted from 
the Cox report and its preliminaries, but I was struck to note 
that in this policy, that is, the existing DOE policy, that 
U.S. citizens must serve as hosts of visiting U.S. foreign 
nationals, is not very well known.
    You cite one case not followed as it should be where there 
was a visiting Chinese scientist for whom an American citizen 
was listed as the host, but, in fact, the visiting Chinese 
scientist was going to work with and did work with a fellow 
Chinese national. And this was a Chinese national who was a 
temporary resident of the United States, I presume.
    Mr. Friedman. I do not have his precise category.
    Senator Lieberman. But he was a----
    Mr. Friedman. The laboratory policy was, though, that a 
U.S. citizen be the host. So, in effect, there was a surrogate 
host, because the Chinese national could not serve in that 
capacity.
    Senator Lieberman. But everyone knew that the visiting 
Chinese scientist was working with the Chinese national.
    Mr. Friedman. I do not know if everyone knew, Senator, but, 
I mean, the people involved certainly knew.
    Senator Lieberman. Right. Then I gather another host stated 
that his name is officially assigned as the host for many 
visitors, but he does not actually know them all.
    Mr. Friedman. Correct.
    Senator Lieberman. Do I assume that as part of the DOE 
review, that they are going to focus in on, to the best of your 
knowledge, on this question, along with others?
    Mr. Friedman. Yes. I am informed that they are going to be 
looking at the question of educating the hosts as to their 
responsibilities and ensuring that they can carry out those 
responsibilities. Yesterday, the Secretary's advisory board 
issued a number of recommendations concerning the foreign 
assignee and visitors' program. One of the recommendations 
concerned forcing or directing the laboratory directors to get 
more directly involved in this program, and that may be a 
quality check in this whole process. It may be a useful quality 
check.
    Senator Lieberman. Yes. Perhaps I should ask you, this is a 
very sensitive area, because while I know in some cases of 
security concern there is a particular concern about what might 
be called ethnic espionage, on the other hand, obviously, in 
the best traditions of our country, we do not want to begin to 
be automatically suspicious of people who are not U.S. 
citizens. So I suppose the more important lapse here is the 
failure to carry out the program of deemed export licenses than 
the question of the citizenship of the host. Did you make a 
recommendation on that? Do you think that is an important part 
of this security policy, which is to say that a U.S. citizen 
would have to be the host for a foreign visitor?
    Mr. Friedman. We did not make a direct recommendation on 
that point.
    Senator Lieberman. Do you have an opinion on that?
    Mr. Friedman. I think that would be a wise policy judgment.
    Senator Lieberman. In other words, you think the current 
policy should continue, but be enforced?
    Mr. Friedman. I think the policy should be that a U.S. 
citizen should be the host. That assumes, Senator, that the 
hosts continue to play a pivotal role in determining whether 
deemed export licenses ought to be sought.
    Senator Lieberman. Right.
    Mr. Friedman. If that continues, if they are the focal 
point, I think you need that kind of assurance, or something 
similar to that. There may be exceptions, and I have not 
necessarily thought that through entirely, either.
    Senator Lieberman. Again, I think you have done a superb 
job, and I guess in light of all our questions about the areas 
of our worry, we should come back and say for the record that, 
basically, you have said that the DOE system is working, and 
where it is not working, the Department has now organized a 
review which, hopefully, will make it work better. But I think 
on the deemed export licenses, particularly, you have produced 
some information that is very unsettling and part of the 
general sense that I think a lot of us are receiving that our 
guard was down here. Even when we had a good policy, which we 
seem to have had in the DOE policy on deemed export licenses, 
it was not being implemented at all.
    Five-thousand visitors and assignees and only two licenses 
applied for is a pretty shocking incongruence or discontinuity 
in the statistics that you provided. I am sure the Chairman and 
I will be asking the Department to respond to that, and I will 
be particularly interested in the other subject we talked 
about, which is whether anything is being done in regard to 
deemed export licenses for our scientists when they travel 
abroad. Again, we do not want to stop that, but if we think 
there is merit to this policy that the transfer of information 
is effectively an export, or can be, and it requires a license 
and the kind of equal protection, almost, then it ought to 
relate to transfers of information that occur here as well as 
those that occur abroad. I hope that we will continue to pursue 
it and push DOE on those questions.
    Thanks very much, again, to all of you for the quality of 
your work here.
    Chairman Thompson. Thank you very much.
    Just on that point, is it your opinion that the laws and 
the regulations now require our foreign travelers there, if 
they impart the right kind of information, to obtain an export 
license?
    Mr. Friedman. Yes.
    Chairman Thompson. So that two number would include our 
people abroad, also?
    Mr. Friedman. I am not sure of that.
    Chairman Thompson. All right. Thank you. Senator Domenici.

             OPENING STATEMENT OF SENATOR DOMENICI

    Senator Domenici. I came principally because I wanted to 
congratulate you on your report and I strongly concur with the 
deemed export issue. I also think it needs to be carefully 
considered. I would encourage the Department to develop 
procedures that do not stifle the international scientific 
interactions between the laboratory scientists and foreign 
scientists that remain essential for the laboratories to remain 
on the cutting edge. I think procedures should be devised at 
the labs and the Department that will allow rapid 
identification of any potential export issues, and wherever 
possible, I would encourage that entire facilities or 
technologies be evaluated for export consideration and placed 
on approved lists for action. Sometimes, long delays are good 
for no one in this respect.
    Could I ask a question with reference to scientists 
overseas versus visitors to this country. As part of your 
evaluation, would you be able to determine whether the effort 
to obtain information from American scientists who go to China 
is more severe or more pronounced than what we know about 
Chinese coming here and gathering information? I have an 
impression that American scientists are really pushed when they 
go to China and other countries for information that they might 
have and that they have to be very well trained in order to 
avoid that kind of pressure. Did you have any observations on 
that?
    Mr. Friedman. We do not, Senator Domenici. That is way 
beyond the scope of what we looked at.
    Senator Domenici. Let me just say to the Senators, I have 
very reliable information that there is far more pressure on 
American scientists who go to China and speak the language 
because they are of the same culture and educated at the same 
schools and because there is such a fraternity of scientists on 
nuclear matters, including the whole hierarchy of the Chinese 
scientists who build their nuclear weapons and do what they do 
to push it forward. Their American-educated leader, has a Ph.D. 
from UCLA or University of California, and taught here in 
America.
    Chairman Thompson. I think we have discovered, too, or at 
least our law enforcement officers have made it more clear, I 
believe, that some countries as a part of their information 
gathering techniques, I am talking about improper information 
gathering things, that we would consider improper--that is a 
fundamental part of there approach to use the attempted 
debriefing of our scientists abroad.
    Senator Domenici. Frankly, we can talk about technologies 
and making sure we do not get the wrong ones exported. But, we 
have got to be awfully careful that our scientific minds are 
not transferring the information too. Frequently, such 
transfers of ideas are much more desirable buying something 
from the commercial market that might be further changed, and 
other applied. That is not the subject of this hearing, but it 
is the subject of your very serious investigation about what we 
could do to help with this matter. I just want to thank you for 
the excellent job you have done. Thank you, Mr. Chairman.
    Chairman Thompson. Thank you.
    I just, finally, want to ask you to give us an assessment 
of any problems lingering from the 1993 era. You did an 
analysis in 1993. You highlighted some problems. They have set 
about addressing most of them, I think. But what is there left 
on the table? Where are we not making as much progress as we 
should be?
    Mr. Friedman. Senator, let me ask Mr. Walter to address 
that question.
    Chairman Thompson. All right.
    Mr. Walter. Basically, there are two areas, I think, that 
we need some additional work on, and they involve interagency 
actions. They involve Department of Commerce and Department of 
State. What we had requested in our 1993 report was that the 
Department of Energy get with the Departments of Commerce and 
State to obtain what is referred to as ``final disposition'' of 
export cases. Final disposition includes not only whether the 
license application was approved or denied, but also whether 
the item was purchased and/or shipped.
    We talked about this briefly earlier, where, from the 
Department of Commerce, we are currently getting information on 
approval/denial of license applications, but we are still not 
getting information regarding whether the item was actually 
purchased or shipped. This information would be helpful to our 
analysts for their proliferation reviews.
    Chairman Thompson. How does that work? If it is denied, how 
can it be shipped?
    Mr. Walter. If a license application was not approved, the 
item should not be shipped.
    Chairman Thompson. So if it is approved, the assumption is 
that it is shipped, but that might not necessarily be valid? Is 
that the point?
    Mr. Walter. Yes. We understand now that there is a process 
in place at the Department of Commerce to try to get this 
information from Customs and to be able to send it out 
electronically to DOE. But the system that they would send it 
to DOE under has not been completed yet.
    Now, from the standpoint of the State Department, we are 
not getting either piece of information. We do not know 
whether, in fact, the munitions application, for example, was 
approved or disapproved and we also do not know, if it was 
approved, whether, in fact, it was purchased and/or shipped, 
and again, that would be helpful for DOE from a proliferation 
standpoint.
    Senator Lieberman. Mr. Chairman, if I may, am I right that 
the information that we are not getting adequately now would be 
critical to our own effort to track possible proliferation of 
security items?
    Mr. Walter. I would say it would be very helpful. I could 
not characterize it as critical, but it would be very helpful.
    Chairman Thompson. Thank you very much. We will be 
certainly hearing from the Department of Energy on these things 
as we proceed along. The Department of Commerce, too, for that 
matter. But thank you very much. This is a valuable 
contribution.
    I think none of us certainly want to see the destruction of 
our visitors' program. We understand that there is very much to 
be gained all around by scientists talking to each other. You 
cannot build a fortress around your country or even all your 
technology. But when we let our guard down so substantially, 
when we go to sleep, when we see that our most sensitive 
technologies are being taken and that we are participating in 
allowing them to be taken under various guises, whether it be 
espionage or exports or what not, we are actually harming the 
visitation program. That is the kind of thing that will destroy 
it, unless we plug some of these holes that we have clearly got 
now. By identifying them, I think that is the first step and we 
appreciate your work. Thank you very much.
    Mr. Friedman. Thank you very much.
    Chairman Thompson. We are adjourned.
    [Whereupon, at 11:20 a.m., the Committee was adjourned.]
                            A P P E N D I X

                              ----------                              

[GRAPHIC] [TIFF OMITTED] T9453.001

[GRAPHIC] [TIFF OMITTED] T9453.002

[GRAPHIC] [TIFF OMITTED] T9453.003

[GRAPHIC] [TIFF OMITTED] T9453.004

[GRAPHIC] [TIFF OMITTED] T9453.005

[GRAPHIC] [TIFF OMITTED] T9453.006

[GRAPHIC] [TIFF OMITTED] T9453.007

[GRAPHIC] [TIFF OMITTED] T9453.008

[GRAPHIC] [TIFF OMITTED] T9453.009

[GRAPHIC] [TIFF OMITTED] T9453.010

[GRAPHIC] [TIFF OMITTED] T9453.011

[GRAPHIC] [TIFF OMITTED] T9453.012

[GRAPHIC] [TIFF OMITTED] T9453.013

[GRAPHIC] [TIFF OMITTED] T9453.014

[GRAPHIC] [TIFF OMITTED] T9453.015

[GRAPHIC] [TIFF OMITTED] T9453.016

[GRAPHIC] [TIFF OMITTED] T9453.017

[GRAPHIC] [TIFF OMITTED] T9453.018

[GRAPHIC] [TIFF OMITTED] T9453.019

[GRAPHIC] [TIFF OMITTED] T9453.020

[GRAPHIC] [TIFF OMITTED] T9453.021

[GRAPHIC] [TIFF OMITTED] T9453.022

[GRAPHIC] [TIFF OMITTED] T9453.023

[GRAPHIC] [TIFF OMITTED] T9453.024

[GRAPHIC] [TIFF OMITTED] T9453.025

[GRAPHIC] [TIFF OMITTED] T9453.026

[GRAPHIC] [TIFF OMITTED] T9453.027

[GRAPHIC] [TIFF OMITTED] T9453.028

[GRAPHIC] [TIFF OMITTED] T9453.029

[GRAPHIC] [TIFF OMITTED] T9453.030

[GRAPHIC] [TIFF OMITTED] T9453.031

[GRAPHIC] [TIFF OMITTED] T9453.032

[GRAPHIC] [TIFF OMITTED] T9453.033

[GRAPHIC] [TIFF OMITTED] T9453.034

[GRAPHIC] [TIFF OMITTED] T9453.035

[GRAPHIC] [TIFF OMITTED] T9453.036

[GRAPHIC] [TIFF OMITTED] T9453.037

[GRAPHIC] [TIFF OMITTED] T9453.038

[GRAPHIC] [TIFF OMITTED] T9453.039

[GRAPHIC] [TIFF OMITTED] T9453.040

[GRAPHIC] [TIFF OMITTED] T9453.041

[GRAPHIC] [TIFF OMITTED] T9453.042

[GRAPHIC] [TIFF OMITTED] T9453.043

[GRAPHIC] [TIFF OMITTED] T9453.044

[GRAPHIC] [TIFF OMITTED] T9453.045

[GRAPHIC] [TIFF OMITTED] T9453.046

[GRAPHIC] [TIFF OMITTED] T9453.047

[GRAPHIC] [TIFF OMITTED] T9453.048

[GRAPHIC] [TIFF OMITTED] T9453.049

[GRAPHIC] [TIFF OMITTED] T9453.050

[GRAPHIC] [TIFF OMITTED] T9453.051

[GRAPHIC] [TIFF OMITTED] T9453.052

[GRAPHIC] [TIFF OMITTED] T9453.053

[GRAPHIC] [TIFF OMITTED] T9453.054

[GRAPHIC] [TIFF OMITTED] T9453.055

[GRAPHIC] [TIFF OMITTED] T9453.056

[GRAPHIC] [TIFF OMITTED] T9453.057

[GRAPHIC] [TIFF OMITTED] T9453.058

[GRAPHIC] [TIFF OMITTED] T9453.059

[GRAPHIC] [TIFF OMITTED] T9453.060

[GRAPHIC] [TIFF OMITTED] T9453.061

[GRAPHIC] [TIFF OMITTED] T9453.062

[GRAPHIC] [TIFF OMITTED] T9453.063

[GRAPHIC] [TIFF OMITTED] T9453.064

[GRAPHIC] [TIFF OMITTED] T9453.065

[GRAPHIC] [TIFF OMITTED] T9453.066

[GRAPHIC] [TIFF OMITTED] T9453.067

[GRAPHIC] [TIFF OMITTED] T9453.068

[GRAPHIC] [TIFF OMITTED] T9453.069

[GRAPHIC] [TIFF OMITTED] T9453.070

[GRAPHIC] [TIFF OMITTED] T9453.071

[GRAPHIC] [TIFF OMITTED] T9453.072

[GRAPHIC] [TIFF OMITTED] T9453.073

[GRAPHIC] [TIFF OMITTED] T9453.074

[GRAPHIC] [TIFF OMITTED] T9453.075

 LETTER TO HON. BILL RICHARDSON, SECRETARY, DEPARTMENT OF ENERGY, FROM 
                CHAIRMAN THOMPSON AND SENATOR LIEBERMAN
                         Committee on Governmental Affairs,
                                               U.S. Senate,
                                            Washington, DC.
                                                      June 16, 1999
The Honorable Bill Richardson
Secretary, Department of Energy
1000 Independence Avenue, S.W.
Washington, DC 20585

    Dear Secretary Richardson: On June 10, 1999, the Senate Committee 
on Governmental Affairs held a hearing on the Department of Energy 
Inspector General's report regarding the Department's Export Control 
process. We were pleased to learn that the Inspector General determined 
that, for the most part, the Department's process for reviewing nuclear 
dual-use and munitions commodities appears to be adequate. We were 
troubled, however, by the IG's finding that the Department appears not 
to be complying with applicable rules that require certain foreign 
nationals visiting DOE's nuclear labs to obtain licenses before gaining 
access to controlled technology or information.
    According to the testimony of Inspector General Friedman, there may 
have been as many as 3,200 foreign national assignees staying more than 
30 days at DOE labs in 1998. He also indicated that over 1,600 foreign 
nationals may have visited the labs for shorter periods during that 
year. In that same year, only two deemed export license applications 
were filed regarding visitors to the DOE labs.
    Although there may be legitimate reasons why many of these visitors 
did not require licenses during their stay at the labs, the stark 
contrast between the number of visitors and the number of license 
applications, combined with other information the IG provided at the 
hearing, raises serious questions about DOE's compliance with export 
control requirements. In order to help us more accurately assess the 
extent to which this truly is a problem, we would appreciate your 
providing some additional information. Specifically:

        (1) LPlease provide an exact number of visitors and assignees 
        to each DOE nuclear lab during calendar year 1998.

        (2) LIn each of these categories, how many foreign nationals 
        were from countries to which we restrict the release of 
        sensitive technical information? Which countries were involved? 
        Please provide a breakdown of the number of visitors and 
        assignees from each country named.

        (3) LHow many of these individuals had access to controlled 
        information or technology?

        (4) LHow many export licenses did DOE apply for on behalf of 
        these visitors and assignees?

        (5) LWith respect to the foreign nationals described in 
        response to Question 2, were all of these assignees and 
        visitors working under the supervision of U.S. citizens? If 
        not, who did supervise them? Did the absence of supervision by 
        a U.S. national comply with applicable requirements?

        (6) LHas the Department attempted to determine whether those 
        individuals may have used any controlled information or 
        technology to which they had access at the DOE labs when they 
        returned to their home country?

        (7) LHow many DOE employees traveled abroad in 1998 to work 
        with nationals of countries to which we restrict the release of 
        sensitive technical information? Did these DOE employees' 
        interactions with the foreign nationals involve the exchange of 
        any information or technology that would require a license 
        under our export control laws? How many of these individuals 
        received export licenses?

        (8) LAre DOE employees with access to controlled information 
        and technology counseled before trips abroad regarding the need 
        to protect controlled information?

    Finally, we understand that after the IG provided a memo to the 
Under Secretary regarding the deemed export issue in March, the 
Department formed an Export Control Task Force to address issues 
related to the Agency's export control process, including the 
Department's treatment of deemed exports. Please advise what steps that 
are being taken to (1) define oversight responsibility for deemed 
exports, (2) clarify the Department's guidance on visits and 
assignments of foreign nationals, and (3) ensure that guidance is 
understood and adhered to by Department personnel. Also please provide 
an indication of when completion of these initiatives is expected.
    We appreciate your prompt attention to these important questions. 
Please contact Christopher Ford of the Committee's Majority staff at 
(202) 224-4751 and Laurie Rubenstein of the Minority staff at (202) 
224-2627 to discuss a time frame for your response.

            Sincerely,

        Joseph I. Lieberman
        Ranking Minority Member
    Fred Thompson
    Chairman

                               __________

           ANSWERS TO QUESTIONS FROM THE DEPARTMENT OF ENERGY
    Question 1: Please provide an exact number of visitors and 
assignees to each DOE nuclear lab during calendar year 1998.

          Answer: Total: 11,136.

          Los Alamos National Laboratory (LANL) 3,325
          Lawrence Livermore National Laboratory (LLNL) 2,624
          Oak Ridge National Laboratory (ORNL) 2,684
          Sandia National Laboratory (SNL) 2,503

    Question 2: In each of these categories, how many foreign nationals 
were from countries to which we restrict the release of sensitive 
technical information? Which countries were involved? Please provide a 
breakdown of the number of visitors and assignees from each country 
named.

          Answer: Controls on transfers of technology differ from 
        country to country, based upon the reason for controlling the 
        technology. Some export controls are applicable to all 
        countries, others applicable only to a select few countries. 
        For example, technology associated with machine tools, which is 
        controlled for nuclear proliferation reasons, is restricted to 
        a different group of countries than technology associated with 
        production of kevlar jackets, which are controlled for anti-
        terrorism reasons. Some technologies, such as munitions items, 
        require a license to any country. We are providing the 
        information below with respect to visitors and assignees from 
        countries on DOE's sensitive country list.

          A total of 2,876 national visitors and assignees held 
        citizenship (not necessarily residence) from countries on DOE's 
        sensitive country list, and these visits and assignments 
        involved the following laboratories:

        LANL    1,063
        LLNL     525
    ORNL     741
    SNL       547

          DOE Order 1240.2b, Unclassified Visits and Assignments by 
        Foreign Nationals, which was in effect during the time of these 
        visits, defines a foreign national as ``any person who is not a 
        U.S. National or is a stateless person. An Immigrant Alien is 
        considered a foreign national for the purposes of this Order.'' 
        Therefore, in 1998, immigrant aliens were considered foreign 
        nationals and are included in these numbers. For example, at 
        Lawrence Livermore National Laboratory, of 155 sensitive 
        country national assignees, 80 were in resident alien status; 
        and of 370 sensitive country national visitors, they estimate 
        about a quarter of them (approximately 90) were in resident 
        alien status in 1998.

          Many of the visits were short term in nature and involved one 
        day tours of unclassified areas, arms control conferences, and 
        in some instances, job interviews. For example, the North 
        Korean visit occurred at Sandia National Laboratories' 
        Cooperative Monitoring Center under the aegis of DOE and the 
        State Department to help promote North/South Korea arms control 
        dialogue. The Iraqi visits occurred at Oak Ridge National 
        Laboratory and Sandia. The Oak Ridge visit was by a permanent 
        resident alien, employed by a private firm in Wisconsin, who 
        was seeking employment at the lab. The Sandia visitor (an 
        Iraqi-born Hungarian who is listed as Iraqi because of his 
        place of birth) was part of a University of New Mexico class 
        visiting an unclassified microelectronics facility.

          The breakdown of the number of visitors and assignees from 
        each country is as follows:

          India 511, Iran 43, Iraq 2, Israel 127, North Korea 1, 
        Pakistan 8, Peoples' Republic of China 930, and Russian 
        Federation 1,131. Other sensitive countries 123.*

          * Other sensitive countries include: Algeria, Armenia, 
        Azerbaijan, Belarus, Cuba, Georgia, Kazakstan, Kyrgyzstan, 
        Libya, Moldova, Sudan, Syria, Taiwan, Tajikistan, Ukraine, and 
        Uzbekistan.

    Question 3 and 4: How many of these individuals had access to 
controlled information or technology? How many export licenses did DOE 
apply for on behalf of these visitors and assignees?

          Answer: The majority of interactions between DOE laboratory 
        scientists and foreign nationals occur in the realm of public 
        domain information or fundamental research. Such interactions 
        fall outside the scope of U.S. export controls. Additionally, a 
        transfer of controlled technology to a foreign national 
        requires a license only when the technology is export 
        controlled to the home country of the foreign national. It is 
        for this reason DOE has seen very few requests for export 
        licenses, and the number of those compares favorably with 
        private industry and other U.S. Government agency practices.

          According to our records, these four laboratories have 
        applied for export licenses for transfers of commodities and 
        technology under DOE programs, but no applications for 
        individual validated export licenses were submitted directly in 
        connection with visits and assignments of foreign nationals to 
        the weapons laboratories in 1998. For example, the DOE 
        Materials Protection, Control, and Accounting (MPC&A) Program, 
        a cooperative program with the Russian Federation to ensure the 
        secure storage of their special nuclear material, operated 
        under a special comprehensive export license granted by the 
        Department of Commerce (DOC) in 1997, valid for a four year 
        period. The license grants authorization for transfers of 
        certain controlled technologies to the participating Russian 
        institutes regardless of whether the transfer occurs here or 
        abroad.

    Question 5: With respect to the foreign nationals described in 
response to Question 2, were all of these assignees and visitors 
working under the supervision of U.S. citizens? If not, who did 
supervise them? Did the absence of supervision by a U.S. national 
comply with applicable requirements?

          Answer: The hosts of record for all of the visitors/assignees 
        were U.S. citizens. However, as identified in previous reports 
        to Congress, the Department needs to strengthen its policy and 
        procedures regarding hosts. Under the new policy statement and 
        Notice, to be released later this month, all hosts must be a 
        DOE or DOE contractor employee. A visitor cannot be a host. 
        Additionally, a sensitive country foreign national cannot be a 
        host of another sensitive country foreign national.

          Program reviews shall be conducted periodically by the Office 
        of Foreign Visits and Assignments Policy and the Office of 
        Counterintelligence to assess policy effectiveness and identify 
        improvement areas. In addition, independent oversight of the 
        overall performance of the Foreign Visits and Assignments 
        Program shall be the responsibility of the Office of 
        Independent Oversight and Performance Assurance.

    Question 6: Has the Department attempted to determine whether those 
individuals may have used any controlled information or technology to 
which they had access at the DOE labs when they returned to their home 
country?

          Answer: As we have responded above, only a very small number 
        of foreign national visitors/assignees have had access to 
        controlled information or technology. The Department does not 
        have the ability to determine what foreign nationals do once 
        they return home. However, by careful review and screening 
        prior to a visit or assignment, we believe we can minimize any 
        risks associated with foreign nationals access to the DOE 
        laboratories.

    Question 7: How many DOE employees traveled abroad in 1998 to work 
with nationals of countries to which we restrict the release of 
sensitive technical information? Did these DOE employees' interactions 
with the foreign nationals involve the exchange of any information or 
technology that would require a license under our export control laws? 
How many of these individuals received export licenses?

          Answer: Routinely, DOE employees and DOE contractor employees 
        travel to foreign countries, including sensitive countries, in 
        support of diverse programs and initiatives. In many instances, 
        these interactions pertain to policy and scientific exchanges, 
        including basic research, and international conferences that 
        crosscut the broad spectrum of activities within the Department 
        and do not involve sensitive information requiring special 
        controls. Such travel allows the Department to leverage its 
        resources against those of other countries, helps to reduce 
        duplication of effort in the international arena, and allows 
        the United States to coordinate and influence policies and 
        actions by other countries.

          Official foreign travel by DOE employees and DOE contractor 
        employees, including those working at the nuclear laboratories, 
        requires approval by the sponsoring program office. In the 
        event the employee is traveling to a designated ``sensitive 
        country'' and/or discussing a ``sensitive subject,'' prior to 
        approval by the sponsoring program office, additional reviews 
        and concurrence are required. While no export licenses have 
        been granted, during the review/concurrence process DOE has 
        denied travel requests and required modifications to joint 
        activities and presentations to comply with the export control 
        regulations.

    Question 8: Are DOE employees with access to controlled information 
and technology counseled before trips abroad regarding the need to 
protect controlled information?

          Answer: Yes. DOE employees traveling to sensitive countries 
        are required to have a security briefing prior to departure.
                               __________
 LETTER TO HON. GREGORY H. FRIEDMAN, INSPECTOR GENERAL, DEPARTMENT OF 
                     ENERGY, FROM CHAIRMAN THOMPSON
                         Committee on Governmental Affairs,
                                               U.S. Senate,
                                            Washington, DC.
                                                      June 11, 1999
The Honorable Gregory H. Friedman
Inspector General
United States Department of Energy
1000 Independence Avenue, S.W.
Washington, DC 20585

    Dear Mr. Friedman: Enclosed are additional questions from the 
hearing which was held on June 10, 1999 regarding the Dual-Use and 
Munitions List Export Control Processes and Implementation at the 
Department of Energy that have been directed to you and submitted for 
the record by Senator Akaka. In order to ensure a complete hearing 
record, I would appreciate it if you would return your written 
responses to these questions to the Committee on Governmental Affairs 
by Friday, June 25, 1999.
    If you have any questions, please contact Christopher Ford of the 
Committee staff at (202) 224-4751. thank you for your kind attention to 
this request.

            Sincerely,
                                     Fred Thompson,
                                                   Chairman

                               __________
LETTER FROM HON. GREGORY H. FRIEDMAN, INSPECTOR GENERAL, DEPARTMENT OF 
                      ENERGY, TO CHAIRMAN THOMPSON
                                      Department of Energy,
                                            Washington, DC.
                                                      June 25, 1999
The Hon. Fred Thompson, Chairman,
Committee on Governmental Affairs,
U.S. Senate,
Washington, DC.

    Dear Mr. Chairman: This is in response to your letter of June 11, 
1999, which contained questions from Senator Daniel Akaka concerning 
the hearing that was held on June 10, 1999, regarding the dual-use and 
munitions export control processes at the Department of Energy. Your 
letter was received by this office on June 23, 1999.
    Several of the questions are within the scope of our review. Our 
responses are enclosed. The remaining questions most appropriately can 
be answered by the Department's Export Control Task Force. Therefore, 
we have referred these questions to Ms. Rebecca Gaghen, who heads the 
Department's Export Control Task Force, and requested she respond 
directly to you.
    Please contact me if I can be of further assistance.

            Sincerely,
                                        Gregory H. Friedman
                                          Inspector General
Enclosure

QUESTIONS AND ANSWERS FROM HON. GREGORY H. FRIEDMAN, INSPECTOR GENERAL, 
            DEPARTMENT OF ENERGY, SUBMITTED BY SENATOR AKAKA
    In your report, you stated the State Department does not have an 
established interagency fora to discuss routine munitions license 
applications and that there is no process for escalating disputed 
applications. You concluded that this issue should be addressed.

    Question 1: What steps have DOE taken with the State Department to 
rectify these issues?

        Answer: This question was referred to the Department's Export 
        Control Task Force for response.

    You indicated that the NTSP Division (Nuclear Transfer and Supplier 
Policy Division) believes the dual-use dispute resolution escalation 
process works adequately.

    Question 2: Do you believe the process could be improved and if so, 
how?

        Answer: Our review of the Department's export licensing process 
        did not identify any major concerns with the escalation 
        process. A concern was raised regarding the level of the 
        Department's representation at meetings of the Advisory 
        Committee for Export Policy. However, this concern was 
        subsequently addressed by the Under Secretary in his April 21, 
        1999, letter to the Department of Commerce on this issue.

    I understand the Commerce Department, including concurrence from 
the Departments of State and Defense, granted DOE a special 
comprehensive license (SCL) authorizing the export of dual-use nuclear 
controlled items to certain entities in Russian and the Newly 
Independent States. A SCL authorizes the export of specific categories 
of items to pre-approved end-users for pre-approved end-uses without 
the requirement to obtain individual licenses for each export order or 
shipment.

    The SCL requires, however, the implementation of an Internal 
Control Program (ICP) to ensure compliance with the license conditions 
and administrative and screening elements.

    Question 3: Did you conduct a review of this license? If not, do 
you plan to conduct a review of the Internal Control Program (ICP) for 
this sensitive license to ensure DOE is adequately implementing the ICP 
requirements?

        Answer: We did not review the special comprehensive license, 
        which was not within the scope of our review of the 
        Department's export licensing process. We are continuing to 
        evaluate potential export control issues for possible future 
        reviews. The ICP is one of the issues which we shall consider 
        in this process.

    Your review of the 60 dual-use ``non-transferred'' cases indicated 
that Commerce should have referred one (1) case to DOE because the end-
user was a nuclear end-user. Your report further notes that Commerce 
ultimately returned the application without action.

    Question 4: Do you know why Commerce returned the application 
without action?

        Answer: The nuclear end-user was a Russian nuclear power plant. 
        It was included in an agreement on safeguards between the USSR 
        and the International Atomic Energy Agency (IAEA) in 1985 and 
        was on the 1997 list of Russian/USSR IAEA-safeguarded nuclear 
        facilities. As a safeguarded civilian nuclear power plant, 
        Commerce determined that it is not subject to Section 744.2 of 
        the Export Administration Regulations and the license was 
        returned without action to the applicant. The Department of 
        Energy, we are informed, is not in agreement with the Commerce 
        position. We have recommended that Energy resolve this matter 
        with the responsible Department of Commerce officials.

    In your 1993 report, you recommended an assessment of the staffing 
level in the NTSP Division. In this report you also recommend a review 
of the staffing levels.

    Question 5: What is the status of this review?

        Answer: This question was referred to the Department's Export 
        Control Task Force for response.

    Question 6: In your opinion, how many employees should the NTSP 
Division have to properly fulfill its licensing function?

        Answer: We are not in a position to determine the appropriate 
        level of staffing necessary to perform export license review 
        activities. As was evident from the information elicited at the 
        June 23 hearing on this matter, there are a substantial number 
        of export license applications to be reviewed by the 
        Department. We concluded that this workload justifies our 
        recommendation that the Department conduct a review of the NTSP 
        Division workload to determine the appropriate staffing level.

    Based upon your 1993 report recommendation and subsequent 
information you received, you requested your Office of General Counsel 
to opine on a possible conflict between Section 12(c) of the Export 
Administration Act of 1979 regarding the protection of company 
proprietary information and the 1981 Executive Order 12333 regarding 
the ``United States Intelligence Activities.''

    Question 7: What are the specific issues that may be in conflict?

        Answer: A concern was raised by the Department's Senior 
        Intelligence Officer (SIO) that he was not able to 
        appropriately exercise his intelligence oversight 
        responsibilities under Executive Order 12333. Reportedly, the 
        SIO was unable to access information regarding intelligence 
        analyses that were conducted in support of the export license 
        review process. This lack of access was purportedly the result 
        of protections afforded to export control information by 
        Section 12(c).

    Question 8: What is the status of your General Counsel's review of 
this issue?

        Answer: This question was referred to the Department's Export 
        Control Task Force for response.

    I believe it is critical for NTSP Division analysts to have access 
to raw intelligence data to complete their analysis of license 
applications.

    Question 9: What measures has the Assistant Secretary for 
Nonproliferation and National Security taken with the Office of 
Intelligence to rectify this critical problem?

        Answer: This question was referred to the Department's Export 
        Control Task Force for response.

    Question 10: The IG Report recommends redrafting the policy on 
foreign visits and drafting new guidance for hosting foreign nationals, 
including new guidelines for deemed exports.

        <bullet> LWho is responsible for determining when a deemed 
        export license is required?
        <bullet> LIs the U.S.-Russia Lab-to-Lab program subject to 
        these requirements?
        <bullet> LWhat is the Lab-to-Lab program's record of requesting 
        deemed export licenses?
        <bullet> LHow many deemed export licenses have been granted for 
        the Lab-to-Lab program?
        <bullet> LHave any deemed export license [sic] been requested 
        for the U.S.-China Lab-to-Lab program?
        <bullet> LHave any deemed export licenses been granted for 
        Chinese nationals associated with this program?
        <bullet> LWhat are the criteria for requesting deemed export 
        licenses for sensitive countries?
        <bullet> LHas DOE requested any deemed licenses for exports of 
        sensitive information to India?

        Answer: This question was referred to the Department's Export 
        Control Task Force for response.

    Question 11: The IG Report does not address foreign students.

    <bullet> LAre foreign students who are attending U.S. universities 
working on lab-sponsored projects?

        Answer: During our review, we determined that there were a 
        number of foreign national students, including post-doctoral 
        students, at our laboratories.

    <bullet> LAre any of those projects sensitive in nature? Are any 
such projects related to DOE's Stockpile Stewardship program?

        Answer: This question was referred to the Department's Export 
        Control Task Force for response.

    <bullet> LAre background checks done on foreign students from U.S. 
universities who are working on lab-sponsored research?

        Answer: This question was referred to the Department's Export 
        Control Task Force for response.

    <bullet> LHave such students been granted security clearances?

        Answer: This question was referred to the Department's Export 
        Control Task Force for response.

    <bullet> LWill the IG recommendations be applied to foreign 
students?

        Answer: Foreign students at the laboratories are subject to the 
        same export licensing requirements as foreign nationals. 
        Accordingly, any recommendation regarding foreign nationals 
        will include foreign students at the laboratories.

 LETTER FROM ERNIE J. MONIZ, UNDER SECRETARY OF ENERGY, DEPARTMENT OF 
                      ENERGY, TO CHAIRMAN THOMPSON
                                      Department of Energy,
                                            Washington, DC.
                                                      July 14, 1999
The Hon. Fred Thompson, Chairman,
Senate Committee on Governmental Affairs,
U.S. Senate,
Washington, DC 20510

    Dear Mr. Chairman: On June 10, 1999 Gregory Friedman, Inspector 
General of the Department of Energy, testified regarding the Dual-Use 
and Munitions List Export Control Processes and Implementation at the 
Department of Energy.
    Enclosed are answers to questions 1, 5, 8, 9, 10 and 11, submitted 
for the record by Senator Akaka. The remainder of the questions, 2, 3, 
4, 6 and 7, has been submitted to you in a separate letter from the 
Inspector General's Office.
    If we can be of further assistance, please have your staff contact 
John C. Angell, Assistant Secretary for Congressional and 
Intergovernmental Affairs.

            Sincerely,
                                     Ernie J. Moniz

Enclosures

SUPPLEMENTAL ANSWERS TO QUESTIONS SUBMITTED BY SENATOR AKAKA, FROM THE 
            EXPORT CONTROL TASK FORCE, DEPARTMENT OF ENERGY
    Question 1: In your report, you stated the State Department does 
not have an established interagency fora to discuss routine munitions 
license applications and that there is no process for escalating 
disputed applications. You concluded that this issue should be 
addressed. What steps have DOE taken with the State Department to 
rectify these issues?

          Answer: The Assistant Secretary for Nonproliferation and 
        National Security (NN) has signed a letter to the Assistant 
        Secretary for Political Military Affairs at the Department of 
        State requesting the convening of an interagency meeting to 
        initiate discussions regarding the need for an interagency 
        dispute resolution process for escalating munitions license 
        applications under dispute between reviewing agencies.

    Question 5: In your 1993 report, you recommended an assessment of 
the staffing level in the NTSP Division. In this report you also 
recommend a review of staffing levels. What is the status of this 
review?

          Answer: The review is ongoing. The Department of Energy (DOE) 
        is going over staffing levels for the Nuclear Transfer and 
        Supplier Policy (NTSP) Division in conjunction with its overall 
        annual budget preparation and submission process. The issue is 
        also receiving the attention of a special Secretarial task 
        force on export controls. The assignment of Federal personnel 
        to any given function is dependent upon several factors, 
        including available funding and overall allotment of Full Time 
        Equivalent (FTE) slots provided to DOE. Staffing levels for the 
        Nuclear Transfer and Supplier Policy (NTSP) Division are 
        developed through a periodic review of existing, as well as 
        anticipated requirements. Future requirements are identified at 
        the division level and coordinated with the Director, Office of 
        Arms Control and Nonproliferation, and the Assistant Secretary 
        for Nonproliferation and National Security (NN) to ensure that 
        NTSP's staffing needs are considered along with those of other 
        NN offices and DOE at large. Ultimately, NTSP's final 
        allocation is dependent upon the number of Federal slots 
        available to the Department, and the prioritization of staffing 
        needs by the Department.

    Question 8: Based upon your 1993 report recommendation and 
subsequent information you received, you requested your Office of 
General Counsel to opine on a possible conflict between Section 12(c) 
of the Export Administration Act of 1979 regarding the protection of 
company proprietary information and the 1981 Executive Order 12333 
regarding the ``United States Intelligence Activities.''

    What is the status of your General Counsel's review of this issue?

          Answer: The Office of the General Counsel has concluded that 
        there is no conflict and the basis for that conclusion will be 
        described in a memorandum the Office of the General Counsel 
        expects to complete no later than this month.

    Question 9: I believe it is critical for the NTSP Division analysts 
to have access to raw intelligence data to complete their analysis of 
license applications. What measures has the Assistant Secretary for 
Nonproliferation and National Security taken with the Office of 
Intelligence to rectify this critical problem?

          Answer: The NTSP has been discussing with the current 
        Director of the Office of Intelligence arrangements for greater 
        access to Intelligence Community resources for its export 
        control analysts. In the meantime, the Office of Intelligence 
        has established a permanent liaison position with the NTSP to 
        provide relevant intelligence analyses on an as-needed basis, 
        until a more permanent solution can be implemented.

    Question 10: The IG Report recommends redrafting the policy of 
foreign visits and drafting new guidance for hosting foreign nationals, 
including new guidelines for deemed exports.

    Question 10A: Who is responsible for determining when a deemed 
export license is required?

          Answer: Responsibility for export control compliance is 
        shared among DOE headquarters, laboratory and facility 
        managers, and program officials. By the end of the month, the 
        Department will have a new policy with respect to unclassified 
        foreign national visits and assignments and DOE foreign travel. 
        The new policy will ensure that the consideration of the need 
        for an export license is part of the visits and assignments and 
        foreign travel approval processes. The Secretary of Energy has 
        undertaken steps to ensure that ``deemed export'' controls are 
        made an integral part of the approval process for foreign 
        national visits and assignments throughout the DOE complex.

          The Under Secretary of Energy has chartered an export control 
        task force with representatives from the Secretary's office and 
        relevant headquarters program offices. This group has reviewed, 
        and will continue to review, export control issues relating to 
        DOE facilities, including the issue of deemed exports. The task 
        force has updated the DOE Guidelines on Export Control and 
        Nonproliferation, which provides guidance on when an export 
        license may be required. Specialized training programs are 
        planned for laboratory personnel who participate in 
        collaborative programs with foreign nationals. An active, 
        flexible communications channel between headquarters and export 
        control experts in the field will be established to ensure all 
        DOE facilities receive appropriate guidance on export control 
        policies.

    Question 10B: Is the U.S.-Russia Lab-to-Lab program subject to 
these requirements?

          Answer: The U.S.-Russia Materials Protection, Control, and 
        Accounting (MPC&A) program and all other DOE cooperative 
        programs with Russia and the Newly Independent States are 
        subject to U.S. export control requirements. To ensure 
        compliance with export control regulations, the MPC&A program 
        has hired two staff members and detailed one Department of 
        Commerce (DOC) employee to DOE headquarters to assist in 
        acquiring export control licenses from DOC. Other DOE 
        cooperative programs also have taken steps to ensure that all 
        initiatives are reviewed by export control experts and that all 
        appropriate export licenses are obtained.

    Question 10C: What is the Lab-to-Lab program's record of requesting 
deemed export licenses?

          Answer: In large part, the MPC&A Program operates under an 
        international cooperative license granted by the Department of 
        Commerce (DOC) in 1997, valid for a four-year period and can be 
        extended for one additional four-year period with the 
        concurrence of DOC. The license grants authorization for 
        transfers of certain controlled technologies to participating 
        Russian institutes. More than 560 requests to use this license 
        have been approved by DOC. This covers approximately 17,000 
        items and totals more than $20M in goods.

    Question 10D: How many deemed export licenses have been granted for 
the Lab-to-Lab program?

          Answer: Approximately 250 individual validated licenses 
        (IVLs) were granted by the Department of Commerce, authorizing 
        the transfer of both commodities and technologies to specified 
        Russian institutes under the DOE Lab-to-Lab programs. There is 
        no special application for a ``deemed export'' license; the 
        IVLs obtained by the programs authorize the transfer of 
        technology to the Russian institute regardless of whether the 
        transfer occurs here or abroad.

    Question 10E: Have any deemed export licenses been requested for 
the U.S.-China Lab-to-Lab program?

    Question 10F: Have any deemed export licenses been granted for 
Chinese nationals associated with this program?

          Answers: Steps have been taken to ensure that Chinese 
        assignees to the National Laboratories working on arms control 
        and nonproliferation projects of mutual interest, under the 
        U.S.-China Arms Control Exchange program, formerly known as 
        U.S.-China Lab-to-Lab program, such as atmospheric modeling, 
        are given access only to software or other technologies that do 
        not require export licenses. DOE laboratories applied for only 
        a small number of licenses from the Department of Commerce--
        seven were equipment-related; none would have fallen into the 
        realm of deemed exports.

          In keeping with legal and political constraints on the U.S. 
        side, all activities were unclassified and avoided any 
        technical discussion of nuclear weapons matters. They focused 
        instead on exclusively non-sensitive public domain information, 
        which was limited to arms control, nonproliferation (including 
        export controls), and safeguards.

          The U.S.-China Arms Control Exchange program was recognized 
        to be sensitive from the outset because of the institutions 
        involved, and special measures were taken to oversee and 
        control the proposed U.S.-China interactions to preclude 
        discussion of any sensitive subject material or inappropriate 
        transfer of information or technology. All of the interactions 
        under the program were closely monitored by the U.S. Government 
        through an Interagency Contact Group, chaired by the Department 
        of State (DOS), which was organized to review plans, specific 
        activities, progress, and in some cases, complete briefing 
        packages. The Group included the Departments of Energy (DOE), 
        State (DOS), and Defense (DOD), the former Arms Control and 
        Disarmament Agency (ACDA), the National Security Council (NSC) 
        and the Intelligence Community (IC).

    Question 10G: What are the criteria for requesting deemed export 
licenses for sensitive countries?

          Answer: The majority of interactions between DOE laboratory 
        scientists and foreign nationals occur in the realm of public 
        domain information and fundamental research, and therefore, 
        fall outside the scope of U.S. export controls. When a DOE 
        program has been determined to involve a transfer of technology 
        not in the public domain, the proposed transfer undergoes a 
        thorough review by export control experts at the DOE laboratory 
        or facility to determine if the technology requires an export 
        license to the country involved. A transfer of controlled 
        technology to a foreign national requires a license only when 
        the technology is export-controlled to the home country of the 
        foreign national.

          The process used to determine which interactions require an 
        export license application includes the following steps:

          <bullet> LCareful subject matter review within the U.S. 
        laboratories by the program manager at each laboratory;
          <bullet> LReview by classification experts and the Export 
        Control Coordinator at the laboratory/facility; and
          <bullet> LReview by DOC upon request of the Export Control 
        Coordinator at the laboratories.

          Additionally, other steps in the review process can include:

          <bullet> LSubsequent review by DOE personnel overseeing the 
        program;
          <bullet> LReview by DOE Headquarters of any sensitive-country 
        foreign travel and foreign visits and assignments; and
          <bullet> LFinal review by an interagency group (such as that 
        overseeing the China Arms Control Exchange Program).

    Question 10H: Has DOE requested any deemed licenses for exports of 
sensitive information to India?

          Answer: According to our records, DOE has not applied for an 
        export license to transfer any sensitive information to India. 
        DOE currently has no active programs of cooperation with India 
        that involve the transfer of export-controlled technology. 
        After the 1998 nuclear tests and in keeping with U.S. sanctions 
        policy, DOE suspended all programs of cooperation with India 
        and Pakistan.

    Question 11A: The IG Report does not address foreign students. Are 
foreign students who are attending U.S. universities working on lab-
sponsored projects?

    Question 11B: Are any of those projects sensitive in nature?

    Question 11C: Are any such projects related to DOE's Stockpile 
Stewardship program?

          Answers: Much like the Department of Defense, the Department 
        of Energy and its laboratories maintain relationships with 
        universities. These relationships make significant 
        contributions to our scientific research. Foreign students 
        attending U.S. universities may be involved in unclassified 
        research projects related to the Stockpile Stewardship program. 
        Foreign students on-site access to DOE labs are subject to the 
        same restricted security measures as other foreign scientists 
        access.

    Question 11D: Are background checks done on foreign students from 
U.S. universities who are working on lab-sponsored research?

          Answer: Background, or ``indices'' checks, are conducted on: 
        (1) all foreign nationals from sensitive countries, and (2) all 
        foreign nationals from any country who are to visit a secure 
        area or discuss a sensitive technology while at DOE. These 
        checks are completed by both the FBI and CIA, and the results 
        are routed through the Office of Counterintelligence to the 
        requesting facility.

          Personnel security background investigations, on the other 
        hand, are only done in instances where an individual is an 
        applicant for a DOE access authorization (personnel security 
        clearance).

    Question 11E: Have such students been granted security clearances?

          Answer: All requests for access authorization for any foreign 
        national are processed through the Office of Security Affairs. 
        In order for a foreign national to be granted access 
        authorization, there must be a bilateral agreement between the 
        United States and the individual's country of citizenship which 
        covers the specific information that would be released to the 
        individual. Such bilateral agreements exist only with the 
        United Kingdom and France. In addition, the program office 
        having responsibility for the information to be released must 
        attest that the individual is uniquely qualified for the work 
        and that there are no U.S. citizens available having the 
        necessary skills, knowledge, and ability to do the work. There 
        are no more than 12 foreign nationals holding DOE access 
        authorization in the entire DOE complex. These are all high-
        level professionals, most from the United Kingdom and Canada. 
        None of the foreign nationals holding DOE access authorization 
        are from sensitive countries.
 LETTER TO HON. GREGORY H. FRIEDMAN, INSPECTOR GENERAL, DEPARTMENT OF 
                     ENERGY, FROM CHAIRMAN THOMPSON
                         Committee on Governmental Affairs,
                                               U.S. Senate,
                                            Washington, DC.
                                                       July 9, 1999
The Honorable Gregory H. Friedman
Inspector General
United States Department of Energy
1000 Independence Avenue, S.W.
Washington, DC 20585

    Dear Mr. Friedman: During the hearing on June 10, 1999 regarding 
the Dual-Use and Munitions List Export Control Processes and 
Implementation at the Department of Energy, you were requested to 
provide the Committee with the following items for the official record:

        1. LChairman Thompson: Follow up on the precise number of 
        foreign nationals visiting the Oak Ridge, Lawrence Livermore, 
        Los Alamos and Sandia Laboratories;

        2. LSenator Voinovich: Report on the adequacy of staffing at 
        the Nuclear Transfer and Supplier Policy Division of the Office 
        of Nonproliferation and National Security at the Department of 
        Energy and what that office is doing to remedy any problems in 
        this regard; and

        3. LSenator Voinovich: Report on current and planned Energy 
        Department policies regarding who may host a foreign national 
        visitor to a national laboratory and what responsibilities such 
        hosts have.

    In order to ensure a complete hearing record, I would appreciate it 
if you would return your written responses to these requests to the 
Committee on Governmental Affairs by Friday, August 20, 1999.

    If you have any questions, please contact Christopher Ford of the 
Committee staff at (202) 224-4751. Thank you for your kind attention to 
this request.

            Sincerely,
                                      Fred Thompson
                                           Chairman

ANSWERS TO QUESTIONS FROM HON. GREGORY H. FRIEDMAN, INSPECTOR GENERAL, 
                          DEPARTMENT OF ENERGY
    Question 2: According to the Inspector General's testimony, 
Energy's intelligence capabilities are not being fully utilized in the 
processing of export cases. What measures are being taken to ensure 
that Energy's intelligence capabilities are fully utilized?

          Answer: Since the initial IG's report on the Department's 
        Export Control activities, collaboration between the Nuclear 
        Transfer and Supplier Policy (NTSP) Division and the Office of 
        Intelligence has been strengthened. This effort is helping to 
        ensure that export control analysts have ready access to 
        intelligence information required to make informed decisions on 
        export applications. Because of these changes, NTSP now has 
        more flexibility to utilize the Field Intelligence Elements at 
        the National Laboratories, including Lawrence Livermore 
        National Laboratory to provide independent assessments of end-
        users on export license applications. The NTSP is discussing 
        with the current Director of the Office of Intelligence 
        arrangements to provide NTSP export control analysts greater 
        access to Intelligence Community resources. Until a more 
        permanent solution can be implemented, the Office of 
        Intelligence has established a permanent liaison position with 
        the NTSP to provide relevant intelligence analyses on an as-
        needed basis.

    Question 3: According to the Inspector General's testimony, the 
Nuclear Transfer and Supplier Policy Division in the Office of 
Nonproliferation and National Security may not be adequately staffed.

    Question 3A: How is the staffing level determine?

          Answer: The assignment of Federal personnel to any given 
        function is dependent upon several factors, including available 
        funding and overall allotment of Full Time Equivalent (FTE) 
        slots provided to the Department. DOE determines staffing 
        levels for the Nuclear Transfer and Supplier Policy (NTSP) 
        Division through a periodic review of existing and anticipated 
        requirements. Future requirements are identified at the 
        division level and coordinated with the Director, Office of 
        Arms Control and Nonproliferation, and with the Assistant 
        Secretary for National Security and Nonproliferation (NN) to 
        ensure that NTSP's staffing needs are considered along with 
        those of other NN offices and the Department of Energy at 
        large. Ultimately, NTSP's final allocation is dependent upon 
        the number of Federal slots available to the Department, and 
        the prioritization of staffing needs by the Department.

    Question 3B: What is the staff shortfall?

          Answer: Given the importance that the Department attaches to 
        export control and the increasing responsibilities of the NTSP 
        Division, the Department is committed to ensuring that the 
        Division has the resources necessary to carry out its mission. 
        The Secretarial task force on export control is currently 
        reviewing options for strengthening DOE's implementation of 
        these requirements and is assessing, among other matters, the 
        need for increased staff in the NTSP Division and at the 
        National Laboratories.

    Question 3C: Are there vacant positions, do additional positions 
need to be authorized, or both?

          Answer: The NTSP Division currently has one position that is 
        vacant, for which recruitment is currently under way. The 
        possible need for additional positions is a subject of the on-
        going review of Departmental export control activities noted 
        above.

    Question 3D: What measures are being taken to address this?

          Answer: The Department is reviewing NTSP's staffing needs in 
        conjunction with the work of the Secretarial task force to 
        strengthen DOE export control efforts. In addition, possible 
        future staff increases are being considered as part of the 
        development of the FY 2001 budget. In the meantime, one 
        laboratory technical expert has been assigned to Headquarters 
        to provide on-sight technical support to DOE's export license 
        review activities.

    Question 3E: How long will it be before the division is adequately 
staffed?

          Answer: The mission of the division is rapidly expanding. 
        Several of the contributing factors include: (1) implementation 
        of a major export control initiative designed to address full 
        compliance with all export control laws in the DOE complex; (2) 
        increased responsibility related to the review of Department of 
        Commerce dual-use licenses; (3) the re-enactment of the Export 
        Administration Act; (4) declassification and decommissioning 
        activities within the DOE complex; and (5) future multilateral 
        activities. Once the on-going review of staffing needs is 
        completed, any recruiting of new personnel that may be approved 
        could be completed in a matter of months.

    Question 4: According to the Inspector General's testimony, there 
appears to be widespread noncompliance with regulations requiring 
foreign nationals visiting the labs to obtain deemed export licenses 
prior to having access to unclassified, but sensitive, information. 
Apparently, internal Energy guidelines are unclear. As a result, Energy 
hosts were not aware of, or did not understand, the regulations, and 
several hosts did not appear to appropriately exercise their host 
responsibilities. The Inspector General did note that your new security 
initiative includes establishing the Office of Foreign Visits and 
Policy Assignments (``Office'') within the Office of Security Affairs. 
Please explain the process through which the Office will approve 
foreign scientists for visits to or work at the labs, and how the 
Office will determine the level of access granted to foreign 
scientists. Please outline how the Office will control the access of 
foreign scientists, who are either visiting or working at the national 
labs, to sensitive unclassified or classified information for which a 
deemed export license would be required? What are the criteria for an 
Energy employee to be a host to a foreign scientist? Will this Office 
issue guidance to employees regarding the responsibilities of being a 
host? Please explain the process. Will this Office conduct oversight to 
hosts to ensure that regulations are being followed? Please explain the 
process.

          Answer: Revision of DOE's existing Foreign Visits and 
        Assignments policy is currently underway. The Department of 
        Energy is continuing to improve its efforts to establish an 
        effective policy, including the development of a systematic 
        approach to the DOE review and approval process, as well as 
        providing a mechanism for management accountability. This 
        effort also will include the improvement of standard DOE-wide 
        operating procedures and the implementation of education and 
        training programs for management officials and hosts. DOE 
        expects to complete the process shortly at which time we will 
        more fully respond to the questions posed here.


                                   <all>ns posed here.