Order Code RL30143
CRS Report for Congress
Received through the CRS Web
China: Suspected Acquisition of
U.S. Nuclear Weapon Secrets
Updated December 20, 2000
Shirley A. Kan
Specialist in National Security Policy
Foreign Affairs, Defense, and Trade Division
Congressional Research Service ˜ The Library of Congress

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China: Suspected Acquisition of
U.S. Nuclear Weapon Secrets
Summary
This CRS Report discusses China’s suspected acquisition of U.S. nuclear
weapon secrets, including that on the W88, the newest U.S. nuclear warhead, since
the late 1970s. This current controversy, began in early 1999, raises policy issues
about whether U.S. security is further threatened by the PRC’s suspected use of U.S.
nuclear weapon secrets in its development of nuclear forces, as well as whether the
Administration’s response to the security problems is effective or mishandled and
whether it fairly used or abused its investigative and prosecuting authority.
The Clinton Administration acknowledged that improved security was needed
at the weapon labs but says that it has taken actions in response to indications in 1995
that China may have obtained U.S. nuclear weapon secrets. Critics in Congress and
elsewhere argued that the Administration was slow to respond to security concerns,
mishandled the too narrow investigation, downplayed information potentially
unfavorable to China and the labs, and failed to notify Congress fully.
On April 7, 1999, President Clinton assessed the situation, saying that partly
“because of our engagement, China has, at best, only marginally increased its
deployed nuclear threat in the last 15 years” and that the strategic balance with China
“remains overwhelmingly in our favor.” On April 21, 1999, Director of Central
Intelligence (DCI) George Tenet, reported the Intelligence Community’s damage
assessment. It confirmed that “China obtained by espionage classified U.S. nuclear
weapons information that probably accelerated its program to develop future nuclear
weapons.” It also revealed that China obtained information on “several” U.S. nuclear
reentry vehicles, including the Trident II submarine-launched missile that delivers the
W88 nuclear warhead as well as “a variety of” design concepts and weaponization
features, including those of the neutron bomb.
On May 25, 1999, the Cox Committee raised serious questions about nuclear
weapon security by reporting that China has stolen classified information on the W88
and six other U.S. nuclear warheads. On June 15, 1999, the President’s Foreign
Intelligence Advisory Board (PFIAB) reported that the Department of Energy is a
“dysfunctional bureaucracy” and called for a semi-autonomous or independent agency
to oversee nuclear weapons. In September 1999, Congress passed the FY2000
Defense Authorization Act to create a National Nuclear Security Administration
(NNSA) within DOE on March 1, 2000.
The FBI investigated former Los Alamos scientist Wen Ho Lee, whose case was
a result of, but unrelated to, the probe of PRC espionage. In December 1999, the
Justice Department indicted Lee for mishandling nuclear weapons information, but not
for espionage. Lee was jailed without bail, until a plea agreement on September 13,
2000, when Lee pleaded guilty to one felony count of mishandling nuclear
information. Meanwhile, in April 1999, the FBI expanded its investigation on the
PRC (originally called “Kindred Spirit” and now called “Fall-out”), beyond the Los
Alamos lab. In 2000, the unsolved investigation shifted significantly to missile secrets
and to the Pentagon and its facilities and contractors.

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Contents
Challenges to U.S. Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Congressional Concern and Policy Issues . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Reported Cases of Security Compromises . . . . . . . . . . . . . . . . . . . . . . . . . 1
“Tiger Trap” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
“Royal Tourist” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
“Kindred Spirit”/“Fall Out” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Continued in 1990s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Damage Assessments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
President on U.S. Superiority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Intelligence Community’s Damage Assessment . . . . . . . . . . . . . . . . . . . . . 5
Cox Committee’s Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Findings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Prather Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
China Confirmed Its Neutron Bomb . . . . . . . . . . . . . . . . . . . . . . . . . . 9
PFIAB (Rudman) Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Findings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Stanford Critique . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Congressional Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Investigations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Hearings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Major Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Moratorium on Foreign Visits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
New National Nuclear Security Administration (NNSA) . . . . . . . . . . 16
Concerns about Compliance with the Law . . . . . . . . . . . . . . . . . . . . 18
Other Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Administration’s Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Response to Security Concerns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Issues about the Response . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Timeliness and Responsiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Law Enforcement vs. Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Wiretaps and Computer Monitoring . . . . . . . . . . . . . . . . . . . . . . . . . 27
Scope of Investigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Indictment of Wen Ho Lee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Lee’s Plea Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Sylvia Lee, Deutch Case, and Other Issues . . . . . . . . . . . . . . . . . . . . 38
Racial Profiling and Selective Prosecution . . . . . . . . . . . . . . . . . . . . 42
Notification to Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Role of the White House . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Export Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Nuclear Cooperation with China . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Criticisms of Partisanship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Implications for U.S. Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

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Counterintelligence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Nuclear Nonproliferation and Lab Exchanges . . . . . . . . . . . . . . . . . . . . . . 53
U.S.-China Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

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China: Suspected Acquisition of
U.S. Nuclear Weapon Secrets
Challenges to U.S. Security
Congressional Concern and Policy Issues
In early 1999, serious congressional concerns about security over nuclear
weapon data at the U.S. nuclear weapon laboratories (Lawrence Livermore, Los
Alamos, and Sandia) were heightened after public reports said that the People’s
Republic of China (PRC) may have acquired the design of the W88 nuclear warhead
in the 1980s. This is the third reported case involving the PRC’s suspected
compromise of U.S. nuclear weapon secrets.
In April 1999, President Clinton stated that the PRC has fewer than two dozen
long-range nuclear weapons, compared to 6,000 in the U.S. arsenal. Nevertheless,
some are concerned that China is developing a new DF-31 solid-fuel, mobile
intercontinental ballistic missile (ICBM), with a range of about 5,000 miles, for
deployment perhaps after 2000, reportedly with a smaller warhead (700 kg; 1,500 lb.)
than the current DF-5A ICBMs. In addition, there are reportedly programs to
develop a next-generation JL-2 submarine-launched ballistic missile (SLBM) and a
longer-range DF-41 ICBM.1
This controversy raises policy issues about whether U.S. security is further
threatened by the PRC’s suspected use of U.S. nuclear weapon secrets in its
development of smaller nuclear warheads and new ICBMs, as well as whether the
Administration’s response to the security problems is effective or mishandled and
whether it fairly used or abused its investigative and prosecuting authority. The
controversy has also raised questions about the roles of the media and Congress.
Reported Cases of Security Compromises
Suspicions about PRC attempts to acquire secrets from U.S. nuclear weapon labs
are longstanding, including congressional concerns discussed below. A 1994 book
on PRC intelligence cited the head of counterintelligence at the Federal Bureau of
Intelligence (FBI) in Los Angeles as saying that the PRC had tried to recruit people
at Los Alamos and Lawrence Livermore labs.2 In the three public cases that occurred
1 See CRS Report 97-391, China: Ballistic and Cruise Missiles, by Shirley A. Kan; and CRS
Report 97-1022, Chinese Nuclear Testing and Warhead Development, by Jonathan Medalia.
2 Eftimiades, Nicholas. Chinese Intelligence Operations (Annapolis: Naval Institute Press,
(continued...)

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CRS-2
in the late 1970s to 1980s, China may have conducted clandestine operations at the
labs or benefitted from voluntary disclosures or lapses in security. In these cases, the
reported suspects were U.S. scientists working at the labs who were born in Taiwan.
A fourth case, reported by the media in April 1999, suggests that China sought more
neutron bomb data in 1995. However, it is uncertain whether this reported incident
involves any of the Department of Energy (DOE) labs.
“Tiger Trap”. In the first public case, the press reported in 1990 that China had
stolen data on the neutron bomb from the Lawrence Livermore lab sometime in the
late 1970s to early 1980s, and the FBI began an investigation on this case perhaps in
1986. This case, code-named Tiger Trap, reportedly has remained open.3 The PRC
allegedly used U.S. secrets about the W70 neutron warhead to make an experimental
neutron bomb that was tested in 1988 and also passed the information to Pakistan.
The U.S. scientist involved was fired after being investigated for two years, but,
because of insufficient evidence, was never charged with a crime.4 In late 2000, the
suspect’s name was reported to be Gwo Bao Min.5 Saying he was unaware of the
investigation, the suspect in the third case reportedly made a call to this person.
“Royal Tourist”. The second case came to light when a U.S. scientist, Peter
H. Lee, admitted on December 8, 1997, in a plea bargain that, during a trip to China
in January 1985, he gave PRC nuclear scientists classified information about his work
at Los Alamos on using lasers to simulate thermonuclear explosions and problems in
U.S. simulations of nuclear weapon testing. He also admitted failure to disclose his
lectures in China in May 1997 on his work on sensitive satellite radar imaging to track
submarines at TRW, Inc. (developed at Lawrence Livermore lab). Lee disclosed the
information on anti-submarine warfare at the Institute of Applied Physics and
Computational Mathematics (IAPCM), a PRC nuclear weapon facility. Lee was not
charged with espionage, in part because the information on the laser device was
declassified by Energy Secretary Hazel O’Leary in 1993 and the Navy did not want
open discussion of the sensitive radar technology. Lee’s attorney, James Henderson,
said that Lee is not a spy but did made mistakes. He reportedly explained that he was
trying to help PRC scientists and boost his own reputation in China. After a seven-
year investigation by the FBI that began in 1990 (code-named “Royal Tourist”), Lee
was sentenced in March 1998 to one year at a halfway house. This case was briefed
to National Security Advisor Sandy Berger by DOE intelligence officials in July 1997
and included in a classified counterintelligence report completed in November 1998
2 (...continued)
1994), p. 6.
3 Pincus, Walter and Vernon Loeb, “Other Spy Probes Run More Quietly Than Lee’s,”
Washington Post, November 6, 2000.
4 San Jose Mercury-News and New York Times, November 22, 1990; Wall Street Journal,
January 7, 1999; Washington Post, February 17, 1999; CRS Report 96-767, Chinese
Proliferation of Weapons of Mass Destruction: Background and Analysis, September 13,
1996, by Shirley A. Kan.
5 Gertz, Bill, “China Whistleblower Says FBI Harassment was Payback,” Washington Times,
November 14, 2000.

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CRS-3
that was sent to the White House.6 At hearings in 2000, Senator Specter criticized
the prosecution of this case.
“Kindred Spirit”/“Fall Out”. The third case is the subject of the current and
most serious controversy about leaks of nuclear weapon secrets to China. The case
became public as a result of a comprehensive investigation into technology transfers
to China conducted in 1998 by the bipartisan House Select Committee on U.S.
National Security and Military/Commercial Concerns with China (popularly known
as the “Cox Committee”). The press first reported in January 1999 that U.S.
intelligence discovered in 1995 that secrets about the W88, the most advanced
miniature nuclear warhead (deployed on the Trident II SLBM), may have leaked from
Los Alamos to China between 1984 and 1988. U.S. intelligence reportedly was given
a secret PRC document from 1988 containing designs similar to that of the W88. The
discovery prompted an FBI investigation (code-named “Kindred Spirit”) that began
in September 1995.7
Suspicions that China may have W88 data also led analysts to reexamine a series
of nuclear explosions detonated by China prior to its announcement of a moratorium
on nuclear testing (in July 1996) and new willingness to sign the Comprehensive Test
Ban Treaty (CTBT) (in September 1996). After China became the last of the five
declared nuclear weapon states to begin a moratorium, there were some suspicions
that China took the step, not just because of arms control, but because it had reached
its goals in nuclear weapon modernization or achieved the capability to simulate
nuclear explosions. Some speculated that China received test data from Russia or
France.8
Separate from the W88 case, however, the investigation resulted in the criminal
investigation and indictment in 1999 of Los Alamos scientist Wen Ho Lee9 for
mishandling defense information and questions about whether Taiwan was involved.
6 Reuters, December 9, 1997 and March 26, 1998; Washington Post, December 12, 1997;
testimony of FBI Director Louis Freeh before the House Appropriations Subcommittee on
Commerce, Justice, State, and Judiciary, March 17, 1999; Walter Pincus and Vernon Loeb,
“For Chinese Scientists, a Subtle System of Espionage,” Washington Post, May 9, 1999; Jeff
Gerth and James Risen, “Reports Show Scientist Gave U.S. Radar Secrets to Chinese,” New
York Times, May 10, 1999.
7 Gerth, James and Eric Schmitt, “Bipartisan Report Finds Theft of Nuclear Technology That
Hurt National Security,” New York Times, December 31, 1998; Carla Anne Robbins, “China
Got Secret Data On U.S. Warhead,” Wall Street Journal, January 7, 1999; Walter Pincus,
“U.S. Cracking Down On Chinese Designs On Nuclear Data” and “Spy Suspect Fired At Los
Alamos Lab,” Washington Post, February 17 and March 9, 1999; James Risen and Jeff
Gerth, “China Stole Nuclear Secrets From Los Alamos, U.S. Officials Say,” New York Times,
March 6, 1999; testimony of FBI Director Louis Freeh before the House Appropriations
Subcommittee on Commerce, Justice, State, and Judiciary, March 17, 1999.
8 Lim, Benjamin Kang, “China Nuclear Halt May Stem From Deal,” Reuters, July 30, 1996;
Robert Karniol, “Nuclear Blast Heralds A Chinese Moratorium,” Jane’s Defense Weekly,
August 7, 1996.
9 Risen, James, “U.S. Fires Nuclear Scientist Suspected of Spying for China,” New York
Times, March 9, 1999, quoting Secretary of Energy Bill Richardson.

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CRS-4
Meanwhile, apparently reassessing “Kindred Spirit” and finding it to have been
too narrowly focused on one lab (Los Alamos) and one suspect (Lee), the FBI, in
April 1999, reportedly started an expanded investigation (code-named “Fall-out”).
In October 2000, it was reported that the investigation had shifted significantly to
examine the Pentagon and its facilities and contractors, after intelligence agencies
concluded that PRC espionage acquired more classified U.S. missile technology,
including that on the heat shield, than nuclear weapon secrets.10
Continued in 1990s. In a fourth case that was reported in April 1999, there are
allegations that PRC espionage directed at U.S. nuclear weapon designs continued
into the 1990s. U.S. intelligence reportedly learned in early 1996 from one of its spies
that China sought in 1995 to acquire more U.S. information on the neutron bomb
design that it obtained sometime in the late 1970s to 1980s from Livermore. Some
speculate that China may have been seeking more data, because its 1988 test of a
neutron bomb was not successful. Intelligence concerns reportedly led to: a criminal
investigation by the FBI and a report from the FBI to DOE on March 27, 1996; a
briefing in April 1996 for Sandy Berger (then Deputy National Security Advisor) on
concerns about PRC acquisition of neutron bomb and W88 data; and an analysis of
the neutron bomb case completed at DOE in July 1996 (that raised the possible
involvement of Wen Ho Lee, the suspect in the W88 case). However, the U.S.
government reportedly has no evidence that China has been able to improve its
neutron bomb nor that any of the nuclear weapon labs was involved in this case.11
Damage Assessments
There are concerns that China’s suspected acquisition of the W88 data could
have increased the threat to the United States by helping China’s modernization of its
nuclear-armed ballistic missile force, which reportedly has included efforts to develop
a miniaturized nuclear warhead and more reliable and mobile missiles, possibly with
multiple independently targetable reentry vehicles (MIRVs). China is believed to have
deployed over 100 nuclear warheads on its ballistic missiles, with more warheads in
storage and a stockpile of fissile material.12 Of those missiles, there are reportedly
about 20 DF-5A strategic, long-range (13,000 km.; 8,000+ mi.) ICBMs that could
reach all of the United States. China is developing a new DF-31 solid-fuel, mobile
ICBM, with a range of about 5,000 miles, for deployment perhaps after 2000,
reportedly with a smaller warhead (700 kg; 1,500 lb.) than the DF-5A ICBMs. In
addition, there are reportedly programs to develop a next-generation JL-2 SLBM and
a longer-range DF-41 ICBM.13
10 Pincus, Walter and Vernon Loeb, “China Spy Probe Shifts to Missiles,” Washington Post,
October 19, 2000; “Pentagon to Add 450 Experts to Protect Defense Secrets,” October 27,
2000.
11 Gerth, Jeff and James Risen, “Intelligence Report Points to Second China Nuclear Leak,”
New York Times, April 8, 1999.
12 Secretary of Defense, Proliferation: Threat and Response, November 1997.
13 See CRS Report 97-391, China: Ballistic and Cruise Missiles, by Shirley A. Kan; and
(continued...)

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CRS-5
President on U.S. Superiority
On April 7, 1999, President Clinton presented a public assessment that in the
U.S.-China strategic balance, U.S. nuclear forces still maintain decisive superiority
over China’s relatively limited strategic nuclear forces. He declared,
Now, we have known since the early 1980s that China has nuclear armed missiles
capable of reaching the United States. Our defense posture has and will continue
to take account of that reality. In part, because of our engagement, China has, at
best, only marginally increased its deployed nuclear threat in the last 15 years. By
signing the Comprehensive Test Ban Treaty, China has accepted constraints on its
ability to modernize its arsenal at a time when the nuclear balance remains
overwhelmingly in our favor. China has fewer than two dozen long-range nuclear
weapons today; we have over 6,000.14
Intelligence Community’s Damage Assessment
At the end of 1998, the House Select Committee on China chaired by
Congressman Cox approved a report that urged, among other recommendations, that
“the appropriate Executive departments and agencies should conduct a comprehensive
damage assessment of the strategic implications of the security breaches that have
taken place” by China at the nuclear weapon labs.15 The Intelligence Community
assessed the difficult question of how much PRC nuclear weapon designs might have
benefitted if China obtained the W88 data. On this question, National Security
Advisor Berger acknowledged soon after the news reports that, “there’s no question
they benefitted from this.”16
DCI George Tenet further announced on March 15, 1999, that after an
interagency team completes a damage assessment by the end of March, an
independent panel led by retired Admiral David Jeremiah will review the findings.
The damage assessment of the Intelligence Community was completed by the end of
March, and the independent panel reviewed that assessment and made
recommendations for changes by early April. Some say that an independent review
was needed to give the assessment greater credibility against any charges of
politicization intended to protect the policy of engagement toward China and other
policies. Some reports suggested that NSC official Gary Samore (in August 1997,
as the White house was preparing for President Clinton’s first summit with the PRC)
had requested an alternative assessment from the CIA that downplayed DOE’s
13 (...continued)
CRS Report 97-1022, Chinese Nuclear Testing and Warhead Development, by Jonathan
Medalia.
14 President William Jefferson Clinton, speech sponsored by the U.S. Institute for Peace at the
Mayflower Hotel, Washington, D.C., April 7, 1999.
15 National Security Council’s response (unclassified version) to the House Select
Committee’s recommendations, February 1, 1999.
16 Sandy Berger’s interview on NBC’s “Meet the Press,” March 14, 1999.

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CRS-6
conclusion that successful PRC espionage was primarily responsible for the leaks at
Los Alamos.17
The DCI briefed the final assessment to the appropriate congressional
committees and the White House on April 21, 1999. Robert Walpole, the National
Intelligence Officer for Strategic and Nuclear Programs, led the damage assessment,
which was prepared by the CIA, DOE, Department of Defense, the Defense
Intelligence Agency, the National Security Agency, the State Department’s Bureau
of Intelligence and Research, the FBI, the National Counterintelligence Center, and
nuclear weapon experts from Los Alamos, Livermore, and Sandia labs.18 After being
briefed on the Intelligence Community’s damage assessment on April 21, 1999,
President Clinton said that he has further asked the National Counterintelligence
Policy Board to assess potential vulnerabilities at nuclear weapon institutions other
than the national labs.19
According to the unclassified key findings released by the DCI, the Intelligence
Community’s damage assessment, with concurrence by the independent panel,
confirmed that “China obtained by espionage classified U.S. nuclear weapons
information that probably accelerated its program to develop future nuclear
weapons.” That successful PRC espionage effort, which dates back to at least the late
1970s, benefitted PRC nuclear weapon design program by allowing China to “focus
successfully down critical paths and avoid less promising approaches to nuclear
weapon designs.” Furthermore, the assessment found that China obtained “basic
design information on several modern U.S. nuclear reentry vehicles, including the
Trident II” that delivers the W88 warhead as well as “a variety of U.S. weapon design
concepts and weaponization features, including those of the neutron bomb.” The
information on U.S. nuclear weapons has made an “important contribution” to PRC
efforts to maintain a second strike capability and develop future nuclear weapon
designs. However, it is uncertain whether China obtained documentation or
blueprints, and China also benefitted from information obtained from a wide variety
of sources, including open sources (unclassified information) and China’s own efforts.
The assessment also states that the PRC has not demonstrated any “apparent
modernization” of the deployed strategic force or any new nuclear weapons
deployment. (China has not conducted nuclear tests since July 1996.) The
assessment also confirmed that China has the “technical capability” to develop a
MIRV system for the currently deployed ICBM, but has not done so. Nonetheless,
U.S. intelligence reported that “U.S. information acquired by the Chinese could help
them develop a MIRV for a future mobile missile.”
On the continuing need for effective counterintelligence and intelligence, the
assessment confirms that, even today, the PRC is using “aggressive collection efforts”
17 Risen, James and James Gerth, “China Stole Nuclear Secrets From Los Alamos, U.S.
Officials Say,” New York Times, March 6, 1999.
18 CIA, “The Intelligence Community Damage Assessment On the Implications of China’s
Acquisition of U.S. Nuclear Weapons Information On the Development of Future Chinese
Weapons,” (unclassified release), April 21, 1999.
19 Statement by the President, April 21, 1999.

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CRS-7
directed at U.S. nuclear weapon secrets in order to fill significant gaps in China’s
programs. Adding further to questions about possible politicization and erosion of
expertise in the Intelligence Community, the independent review panel warned that
the Intelligence Community has “too little depth.” The panel also added that multiple
countries “have gained access to classified U.S. information on a variety of subjects
for decades, through espionage, leaks, or other venues,” and such losses are “much
more significant” in today’s context of diminished U.S. research efforts intended to
ensure a “protective edge” over those countries using U.S. information.
Cox Committee’s Report
Findings. According to its declassified report released in May 1999,20 the Cox
Committee reported that, since the late 1970s and “almost certainly” continuing
today, the PRC has pursued intelligence collection that includes not only espionage,
but also review of unclassified publications and interaction with U.S. scientists at the
DOE’s national laboratories, including Los Alamos, Lawrence Livermore, Oak Ridge,
and Sandia. The PRC has “stolen” classified information on the most advanced U.S.
thermonuclear weapons, giving the PRC design information on thermonuclear
weapons “on a par with our own.” The information includes classified information
on seven warheads, including “every currently deployed thermonuclear warhead in the
U.S. ballistic missile arsenal;” on the neutron bomb; and on “a number of” reentry
vehicles of U.S. missiles. The PRC acquired information on seven U.S. nuclear
warheads, including the W88, the most advanced, miniature U.S. nuclear warhead
deployed on the Trident D-5 submarine-launched ballistic missile (SLBM):
W88: deployed on the Trident D-5 submarine-launched ballistic missile (SLBM)
W87: deployed on the Peacekeeper intercontinental ballistic missile (ICBM)
W78: deployed on the Minuteman III ICBM
W76: deployed on the Trident C-4 SLBM
W70: previously deployed on the Lance short-range ballistic missile (SRBM)
W62: deployed on the Minuteman III ICBM
W56: previously deployed on the Minuteman II ICBM.
The committee focused on potential implications for U.S. national security,
judging “that the PRC will exploit elements of the U.S. design information on the
PRC’s next generation of thermonuclear weapons.” The PRC successfully tested
smaller thermonuclear warheads in 1992 to 199621 (prior to its July 1996
announcement of a nuclear testing moratorium and its September 1996 signing of the
Comprehensive Test Ban Treaty (CTBT)). The committee reported that information
lost from the DOE labs accelerated PRC nuclear weapon modernization and “helped
the PRC in its efforts to fabricate and successfully test its next generation of nuclear
20 Select Committee, U.S. House of Representatives, H.Rept. 105-851, U.S. National Security
and Military/Commercial Concerns with the People’s Republic of China, (classified report
issued on January 3, 1999; declassified version issued on May 25, 1999); See also: CRS
Report RL30220, China’s Technology Acquisitions: Cox Committee’s Report — Findings,
Issues, and Recommendations, June 8, 1999, by Shirley A. Kan.
21 For information, see CRS Report 97-1022, Chinese Nuclear Testing and Warhead
Development, by Jonathan Medalia.

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CRS-8
weapons designs. These warheads give the PRC small, modern thermonuclear
warheads roughly equivalent to current U.S. warhead yields.” The PRC “could begin
serial production” of such weapons during the next decade in connection with the
development of its next generation of solid-fuel mobile ICBMs, including the DF-31
that “may be tested in 1999" and “could be deployed as soon as 2002.” Although the
PRC currently deploys nuclear-armed ICBMs, “with stolen U.S. technology, the PRC
has leaped, in a handful of years, from 1950s-era strategic nuclear capabilities to the
more modern thermonuclear weapons designs.” Regarding whether the PRC’s
nuclear program continues to require testing, the committee judged that if the PRC
successfully steals U.S. nuclear test codes, computer models, and data, and uses them
with the U.S. HPCs already imported, the PRC “could diminish its need for further
nuclear testing to evaluate weapons and proposed design changes.”
As for the strategic balance, the report noted that “the United States retains an
overwhelming qualitative and quantitative advantage in deployed strategic nuclear
forces” over the PRC’s up to two dozen CSS-4 ICBMs. Nonetheless, the report
stated that “in a crisis in which the United States confronts the PRC’s conventional
and nuclear forces at the regional level, a modernized PRC strategic nuclear ballistic
missile force would pose a credible direct threat against the United States.”
On the question of whether having smaller nuclear warheads would facilitate
PRC development of multiple independently targetable reentry vehicles (MIRVs) for
its nuclear missile force, the committee reported that it had “no information on
whether the PRC currently intends to develop and deploy” MIRVs.
A complicating factor is that, as the committee revealed, the CIA obtained, in
1995 someplace outside of the PRC, a secret PRC document containing “design
information” on the W88 and “technical information” on another five U.S.
thermonuclear warheads from a “walk-in” directed by PRC intelligence. The “walk-
in” volunteered various materials to the CIA and to Taiwan, according to
Representative Cox.22 There are questions about the credibility and motivation of the
“walk-in” who provided documents showing PRC possession of U.S. nuclear weapon
secrets. As the Cox report noted, “there is speculation as to the PRC’s motives for
advertising to the United States the state of its nuclear weapons development.” PRC
intelligence could have sought to raise the credibility of the “walk-in;” increase the
credibility of China’s nuclear arsenal as a deterrent to U.S. intervention in a regional
crisis; trigger a disruptive “spy hunt” in the United States; or raise suspicions of PRC
students working in the United States to bring them back to China.23 Also, China
could have made a major blunder or had another unknown objective. In addition, a
rival of the PRC could have planted the documents in Taiwan,24 or the “walk-in”
could have sold them in self-interest. In any case, as the Cox report said, PRC nuclear
tests conducted from 1992 to 1996 had already raised suspicions in U.S. intelligence
22 Pincus, Walter, “Prescriptions for Keeping Secrets,” Washington Post, May 27, 1999.
23 Loeb, Vernon and Walter Pincus, “Planted Document Sows Seeds of Doubt,” Washington
Post, May 28, 1999.
24 Weiner, Tim, “Nuclear Thriller With Ending As Yet Unwritten,” New York Times, May 25,
1999.

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CRS-9
that China had stolen U.S. nuclear weapon information, and the information provided
by the “walk-in” in 1995 “definitely confirmed” those suspicions.
Prather Report. A report by a nuclear physicist Gordon Prather, released by
Jack Kemp on July 8, 1999, questioned the Cox Report’s findings about PRC
espionage, but criticized the Clinton Administration (particularly former Energy
Secretary Hazel O’Leary) for its policies. Prather cited three policies as responsible
for security problems at the labs: support for the CTBT; a “reckless policy” of
unprecedented “openness” that declassified much nuclear weapon information, so that
spying is unnecessary; and engaging the PRC nuclear weapon establishment with the
DOE’s lab-to-lab exchanges.25
China Confirmed Its Neutron Bomb. On July 15, 1999, the PRC government
issued a response denying the Cox Committee’s charges that China stole U.S. secrets.
In the report was a short paragraph acknowledging that China has the neutron bomb.
The statement said China mastered “in succession the neutron bomb technology and
nuclear weapon miniaturization technology.” In addition, “since China has already
possessed atom bomb and H-bomb technologies, it is quite logical and natural for it
to master the neutron bomb technology through its own efforts over a reasonable
period of time.”26
PFIAB (Rudman) Report
For a parallel review, on March 18, 1999, President Clinton appointed former
Senator Warren Rudman, head of the President’s Foreign Intelligence Advisory Board
(PFIAB), to undertake a review of how the government has handled security
challenges at the labs over the last 20 years. The PFIAB’s special investigative panel,
with four members, reviewed over 700 documents and interviewed over 100
witnesses — who apparently had concerns about reprisals and asked that they not be
named. On June 15, 1999, the PFIAB issued an unprecedented unclassified report,
with findings and recommendations for both the Executive and Legislative branches.27
These findings and recommendations are summarized below.
Findings.
! Twenty years after the creation of DOE, most of its security
problems “still exist today.”
25 Prather, James Gordon, “A Technical Reassessment of the Conclusions and Implications
of the Cox Committee’s Report,” July 8, 1999. See also: Jack Kemp’s press release, July 8,
1999, and Robert D. Novak, “Republican China-Bashing,” Washington Post, July 12, 1999.
For copies of report, contact Jack Kemp’s office or Home Page of Polyconomics, Inc.
26 PRC, Information Office of the State Council, “Facts Speak Louder Than Words and Lies
Will Collapse by Themselves — Further Refutation of the Cox Report,” July 15, 1999.
27 President’s Foreign Intelligence Advisory Board, Special Investigative Panel, Science at its
Best, Security at its Worst: A Report on Security Problems at the U.S. Department of
Energy, unclassified, June 1999.

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CRS-10
! The national weapons labs “have been and will continue to be a
major target of foreign intelligence services, friendly as well as
hostile.”
! “Organizational disarray, managerial neglect, and a culture of
arrogance — both at DOE headquarters and the labs themselves —
conspired to create an espionage scandal waiting to happen.”
! “Increasingly nimble, discreet, and transparent in their spying
methods, the Chinese services have become very proficient in the art
of seemingly innocuous elicitations of information. This modus
operandi has proved very effective against unwitting and ill-prepared
DOE personnel.”
! “Both Congressional and Executive Branch leaders have resorted to
simplification and hyperbole in the past few months. The panel found
neither the dramatic damage assessments nor the categorical
reassurances of the Department’s advocates to be wholly
substantiated.”
! “We concur with and encourage many of Secretary Richardson’s
recent initiatives to address the security problems. . . “
! Energy Secretary Richardson “overstated the case when he asserts,
as he did several weeks ago, that ‘Americans can be reassured: our
nation’s nuclear secrets are, today, safe and secure’.”
! Both intelligence officials at DOE and the Cox Committee “made
substantial and constructive contributions to understanding and
resolving security problems at DOE. . . we concur on balance with
the damage assessment of the espionage losses conducted by the
Director of Central Intelligence. We also concur with the findings of
the independent review of that assessment by Admiral David
Jeremiah and his panel.”
! “On one end of the spectrum is the view that the Chinese have
acquired very little classified information and can do little with it. On
the other end is the view that the Chinese have nearly duplicated the
W88 warhead. . . . None of these extreme views holds water. . . .
The most accurate assessment . . . is presented in the April 1999
Intelligence Community Damage Assessment.”
! “Despite widely publicized assertions of wholesale losses of nuclear
weapons technology from specific laboratories to particular nations,
the factual record in the majority of cases regarding the DOE
weapons laboratories supports plausible inferences — but not
irrefutable proof — about the source and scope of espionage and the
channels through which recipient nations received information.”
! “Particularly egregious have been the failures to enforce cyber-
security measures. . .”
! “Never before has the panel found an agency with the bureaucratic
insolence to dispute, delay, and resist implementation of a
Presidential directive on security, as DOE’s bureaucracy tried to do”
to PDD-61 in February 1998.
! DOE is “incapable of reforming itself — bureaucratically and
culturally — in a lasting way, even under an activist Secretary.”

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CRS-11
Recommendations.
! “Reorganization is clearly warranted.” Two alternative solutions for
a new Agency for Nuclear Stewardship (ANS) to be established by
statute:
1. A new semi-autonomous agency with DOE (similar to the National Security
Agency (NSA), Defense Advanced Research Projects Agency (DARPA) or the
National Oceanographic and Atmospheric Administration (NOAA)) reporting
directly to the Secretary of Energy.
2. An independent agency (similar to the National Aeronautics and Space
Administration (NASA)) reporting directly to the President.
! “The labs should never be subordinated to the Department of
Defense.”
! “DOE cannot be fixed with a single legislative act. . . Congress and
the executive branch . . . should be prepared to monitor the progress
of the Department’s reforms for years to come.”
! “The Foreign Visitors’ and Assignments Program has been and
should continue to be a valuable contribution to the scientific and
technological progress of the nation.”
! “Abolish the Office of Energy Intelligence.”
! “Congress should abolish its current oversight system for national
weapons labs” with about 15 competing committees. The report
recommends a new Joint Committee for Congressional Oversight of
ANS/Labs.
Stanford Critique
In December 1999, four scholars at Stanford University’s Center for
International Security and Cooperation issued their critique of the Cox Committee’s
unclassified report.28 In the section on nuclear weapons, W. K. H. Panofsky found
that the Cox Committee’s report “makes largely unsupported allegations about theft
of nuclear weapons information, but the impact of losses is either greatly overstated
or not stated at all.” Further, the author wrote that “there is no way to judge the
extent, should China field a new generation of thermonuclear weapons, of the benefit
derived from publicly available knowledge, indigenous design efforts, and
clandestinely obtained information.” Panofsky also doubted the Cox Committee’s
assertion that stolen U.S. nuclear secrets give the PRC design information on
thermonuclear weapons on par with our own.
The Senate Intelligence Committee’s staff director, Nicholas Rostow, (formerly
the deputy staff director of and counsel to the Cox Committee) issued a response to
the critique by the group at Stanford.29 He maintained that the Cox Committee report
28 Johnston, Alastair Iain, W. K. H. Panofsky, Marco Di Capua, and Lewis R. Franklin,
(edited by M. M. May), “The Cox Committee Report: An Assessment,” December 1999.
29 Rostow, Nicholas, “The ‘Panofsky’ Critique and the Cox Committee Report: 50 Factual
(continued...)

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CRS-12
“is valuable” and “factually accurate.” He explained that “the important findings of
the Select Committee are almost all based on classified information.” He assessed the
critique as “an attempt to foster debate and to reiterate the authors’ views on U.S.
relations with the People’s Republic of China.”
Congressional Action
Congress has voiced long-standing concerns about security at the nuclear
weapon labs. Some attention focused on the foreign visitor program, which was
reportedly not the primary concern in the public cases involving alleged leaks by U.S.
scientists to China. In 1988, Senator John Glenn, chairman of the Senate
Governmental Affairs Committee, held a hearing, and the General Accounting Office
(GAO) presented a report on the extent to which foreign nationals work at the nuclear
weapon labs and the effectiveness of security checks there. Senator Glenn also said
that back in October 1979, his committee began to examine access by foreign visitors
to mistakenly declassified documents at the public library at the Los Alamos lab.30
More recently, the House National Security Committee requested in May 1996
that the GAO again study controls over foreign visitors at the labs.31 In October
1998, Congressman Hunter held a hearing on DOE’s foreign visitor program.32
The National Defense Authorization Act for FY 1997 (P.L. 104-201) prohibited
DOE from using funds for cooperative activities with China related to nuclear
weapons or nuclear weapons technology, including stockpile stewardship, safety, and
use control. (Stockpile stewardship relates to the evaluation of nuclear weapons
without testing.) The National Defense Authorization Act for FY 1998 (P.L. 105-85)
banned the DOE’s use of funds for activities with China in cooperative stockpile
stewardship, and similar legislation for FY 1999 (P.L. 105-261) made the ban
permanent.
Investigations
Prompted by reports that missile technology was transferred to China in
connection with satellite exports,
the Senate Intelligence Committee, in 1998,
29 (...continued)
Errors in the Four Essays,” December 1999.
30 Senate Governmental Affairs Committee hearing, “Security Weaknesses at the Nuclear
Weapons Laboratories,” October 11, 1988; Nuclear Nonproliferation: Major Weaknesses
in Foreign Visitor Controls at Weapons Laboratories (GAO/RCED-89-31), October 1988.
31 GAO/RCED-97-229, DOE Needs To Improve Controls Over Foreign Visitors to Weapons
Laboratories, September 1997.
32 Hearing of the House National Security Subcommittee on Military Procurement,
“Department of Energy’s Foreign Visitor Program,” October 6, 1998.

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CRS-13
carried out an investigation and issued its unclassified report on May 7, 1999.33 On
March 25, 1999, Senator Shelby, the committee’s chair, announced that it voted
unanimously to begin an investigation into whether China obtained U.S. nuclear
weapon secrets and how the Administration dealt with espionage at the labs.34 On
January 27, 2000, the committee’s staff director, Nicholas Rostow, said that the
committee will independently confirm that the DOE has improved security at the
labs.35
In the House, the Cox Committee, in the last half of 1998, examined broader
technology transfers to China, including possible leaks of missile and nuclear weapon-
related know-how. The bipartisan committee unanimously approved a classified
report, with 38 recommendations, on December 30, 1998 and, after working with the
Clinton Administration, issued a declassified version on May 25, 1999. (See section
on Damage Assessment below.)
The Senate Governmental Affairs Committee conducted 13 hours of closed
hearings to review the investigatory steps of the Departments of Energy and Justice,
and the FBI. It issued a bipartisan report on August 5, 1999, under the names of both
Chairman Fred Thompson and Ranking Minority Member Joseph Lieberman. The
committee did not take a position on whether the W88 or other nuclear weapons were
compromised, but concluded that the federal government’s handling of the
investigation since 1995 consisted of “investigatory missteps, institutional and
personal miscommunications, and ... legal and policy misunderstandings and mistakes
at all levels of government.” The Senators said that “the DOE, FBI, and DOJ must
all share the blame for our government’s poor performance in handling this matter.”36
On October 26, 1999, Senator Specter, under the jurisdiction of the Senate
Judiciary Subcommittee on Administrative Oversight and the Courts, held the first
hearing in his investigation into the Justice Department’s handling of the PRC nuclear
espionage investigation, satellite exports, campaign finance, Waco, and other issues.
(See also Hearings below.) Senator Specter criticized the Department’s prosecution
of Peter H. Lee in 1997, which resulted in a plea bargain. Defenders have argued that
the information involved has been declassified, and the defendant is a not a spy and
33 Senate Select Committee on Intelligence, “Report On Impacts To U.S. National Security
Of Advanced Satellite Technology Exports to the People’s Republic of China (PRC), and
Report on the PRC’s Efforts to Influence U.S. Policy,” May 1999.
34 “Senate Intelligence Committee Votes Unanimously to Begin Formal Investigation into
Chinese Espionage at Nuclear Research Labs,” news release, March 25, 1999.
35 “Senate Panel Wants Independent Energy Dept. Security Check,” CQ Weekly, January 29,
2000.
36 Senate Governmental Affairs Committee, “Department of Energy, FBI, and Department of
Justice Handling of the Espionage Investigation into the Compromise of Design Information
on the W88 Warhead,” August 5, 1999; Walter Pincus, “China Spy Probe Bungled, Panel
Finds,” Washington Post, August 6, 1999.

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CRS-14
did not pass nuclear weapon secrets.37 On March 8, 2000, Senator Specter issued a
report critical of the investigation of Wen Ho Lee.38
Hearings
Congressional open and closed hearings in the 106th Congress on the question
of suspected PRC acquisition of U.S. nuclear weapon secrets, first reported by news
media in January 1999, included these held by the following panels:
Senate Armed Services, and Energy and Natural Resources, March 16, 1999;
House Appropriations Subcom. on Commerce, Justice, State, and Judiciary, March
17, 1999;
Senate Select Intelligence, March 17, 1999;
Senate Armed Services, March 25, 1999;
Senate Armed Services, April 12, 1999;
Senate Energy and Natural Resources (closed), April 14, 1999;
House Armed Services Subcom. on Military Procurement, April 15, 1999;
House Commerce Subcom. on Oversight and Investigations, April 20, 1999;
Senate Energy and Natural Resources, April 28, 1999;
Senate Intelligence (closed), April 29, 1999;
Senate Energy and Natural Resources, May 5, 1999;
Senate Judiciary, May 5, 1999;
House Commerce, May 5, 1999;
Senate Energy and Natural Resources, May 12, 1999;
Senate Intelligence (closed), May 12, 1999;
Senate Intelligence (closed), May 19, 1999;
Senate Energy and Natural Resources, May 20, 1999;
Senate Energy (closed), May 20, 1999;
Senate Government Affairs (closed), May 20, 1999;
House Science, May 20, 1999;
House International Relations Subcom. on Asia and Pacific, May 26, 1999;
Senate Governmental Affairs Subcom. on International Security, Proliferation, and
Federal Services, May 26, 1999;
House Intelligence (closed), June 8, 1999;
Senate Judiciary (closed), June 8, 1999;39
Senate Governmental Affairs (closed), June 9, 1999;
Senate Intelligence, June 9, 1999;
Senate Governmental Affairs, June 10, 1999;
37 Vernon Loeb, “Justice Accused of Laxity in Spy Case,” Washington Post, October 27,
1999; “Questions About Another Chinese Spy Case,” Washington Post, April 4, 2000; Bill
Gertz, “Specter Berates Justice’s Spy Case Handling,” Washington Times, April 6, 2000;
John Solomon, “U.S. Gave Spy A Plea Bargain Prior to Damage Report,” Philadelphia
Inquirer, May 21, 2000.
38 Senator Arlen Specter, “Report on the Investigation of Espionage Allegations Against Dr.
Wen Ho Lee,” March 8, 2000.
39 On December 21, 1999, the Senate Judiciary Committee released an unclassified transcript
of its closed hearing with Attorney General Janet Reno on June 8, 1999.

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CRS-15
Senate Banking, Housing, and Urban Affairs, June 10, 1999;
Senate Armed Services, Energy, Governmental Affairs, and Intelligence, June 22,
1999;
House Commerce, June 22, 1999;
Senate Armed Services, June 23, 1999;
House Armed Services, June 24, 1999;
House Government Reform, June 24, 1999;
House Science, June 29, 1999;
Senate Intelligence (closed), June 30, 1999;
House Commerce, July 13, 1999;
House Armed Services, July 14, 1999;
Senate Energy and Natural Resources, July 16, 1999;
House Commerce, July 20, 1999;
Congressional Asian Pacific American Caucus (briefing), on October 5, 1999;
Senate Governmental Affairs and Energy, October 19, 1999;
House Armed Services Subcom. on Military Procurement, October 20, 1999;
Senate Judiciary Subcom. on Administrative Oversight and the Courts, October 26,
1999;
House Commerce Subcom. on Oversight and Investigations, October 26, 1999;
House Armed Services Subcom. on Military Procurement, November 10, 1999;
Senate Judiciary Subcom. on Administrative Oversight and the Courts (closed),
December 16, 1999;
Senate Judiciary Subcom. on Administrative Oversight and the Courts, March 29,
2000;
Senate Judiciary Subcom. on Administrative Oversight and the Courts, April 5, 2000;
Senate Judiciary Subcom. on Administrative Oversight and the Courts, April 12,
2000;
Senate Judiciary and Select Intelligence, September 26, 2000;
Senate Intelligence (closed), September 26, 2000;
Senate Judiciary Subcom. on Administration Oversight and the Courts, September
27, 2000;
Senate Judiciary Subcom. on Administration Oversight and the Courts, October 3,
2000.
Major Legislation
Moratorium on Foreign Visits. Some Members expressed concerns about
foreign visitors to the national labs, but the Administration has said that foreign
visitors have not compromised U.S. nuclear weapon secrets. Representative Ryun
introduced H.R. 1348 on March 25, 1999, to prohibit foreign nationals who are on
the DOE’s Sensitive Countries List40 from visiting the nuclear weapon labs, unless the
Secretary of Energy notifies Congress ten days before waiving the prohibition.
Senator Shelby introduced similar legislation (S. 887) on April 27, 1999.
40 DOE, “Sensitive Countries List,” May 1999. Because of reasons of national security,
terrorism, or nuclear proliferation, the following are included: Algeria, Armenia, Azerbaijan,
Belarus, PRC, Cuba, Georgia, India, Iran, Iraq Israel, Kazakstan, Kyrgyzstan, Libya,
Moldova, North Korea, Pakistan, Russia, Sudan, Syria, Taiwan, Tajikistan, Turkmenistan,
Ukraine, and Uzbekistan.

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CRS-16
On May 27, 1999, the Senate agreed by voice vote to Senator Lott’s amendment
to the National Defense Authorization Act for FY 2000 (S. 1059). The amendment
sought to improve the monitoring of satellite exports and strengthen safeguards,
security, and counterintelligence at DOE facilities.41 On June 9, 1999, Representative
Cox introduced an amendment42 to the House’s version (H.R. 1401). The amendment
consisted of 27 sections, with 25 sections requiring reports or other actions, or
amending the law; a section simply providing a short title; and a section providing a
definition of “national laboratory.” The sections or subsections of the Cox
amendment addressed fully or partially 21 of the 38 recommendations of the Cox
Committee. The House agreed to the Cox amendment by 428-0 on that day and
passed H.R. 1401 on June 10, 1999. Meanwhile, Representative Ryun’s amendment
(to impose a two-year moratorium on foreign visitors from sensitive countries to the
national labs) failed by 159-266 on June 9, 1999. Section 3146 of the FY 2000
National Defense Authorization Act (P.L. 106-65), enacted on October 5, 1999,
requires background checks on foreign visitors and imposes a moratorium on visits
to the national labs by foreign nationals of countries on the Sensitive Countries List,
until DOE’s Director of Counterintelligence, the Director of the FBI, and the DCI
issue certifications about security measures for the foreign visitors program. The
Secretary of Energy, though, may waive the ban on a case-by-case basis. Secretary
Richardson said on December 2, 1999, that he will begin to issue such waivers for
foreign scientists, in order to “restore the proper balance between security and
science.”43
New National Nuclear Security Administration (NNSA). In May 1999,
Senators Kyl, Murkowski, and Domenici drafted an amendment to the Defense
Authorization bill (S. 1059) to create a new agency within DOE, but Senate leaders
removed the language on May 27 after Secretary Richardson threatened to
recommend a Presidential veto.44 The Administration, represented by Richardson,
opposed the Senators’ proposal, saying it would undermine his authority and create
a new “fiefdom.”45 A critic of the proposal wrote that “DOE is indeed a dysfunctional
bureaucracy, but the labs are not better. Making the labs more autonomous is the
wrong way to go.”46 Other opponents have said that the labs need to retain openness
in order to advance scientific research that is important to national security.
On the other side, the President’s Foreign Intelligence Advisory Board (PFIAB),
chaired by former Senate Warren Rudman, recommended, on June 15, 1999, a new
Agency for Nuclear Stewardship (ANS) and argued that semi-autonomous or
independent “organizations like NASA [National Aeronautics and Space
41 For language of amendment, see Congressional Record, May 26, 1999, p. S6073-6074.
42 Congressional Record, June 8, 1999, p. H3862-3866.
43 Pincus, Walter, “Energy Chief to Allow Foreign Scientists to Visit Labs,” Washington
Post, December 3, 1999.
44 Congressional Quarterly, June 19, 1999, p. 1475-76.
45 Congressional Quarterly, June 26, 1999, p. 1559-60.
46 Eldredge, Maureen (director of the Alliance for Nuclear Accountability, a watchdog group
on DOE), “Don’t Trust Our Nuclear Labs,” Washington Post, June 28, 1999.

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CRS-17
Administration] and DARPA [Defense Advanced Research Projects Agency] have
advanced scientific and technological progress while maintaining a respectable record
of security.”47 Secretary Richardson agreed with the PFIAB that DOE’s
organizational structure requires serious change but expressed “strong reservations”
about the recommendation for a semi-independent or independent agency.48
On June 7,1999, Representative Thornberry introduced H.R. 2032 to establish
a Nuclear Security Administration in the Department of Energy. Some Members also
looked at introducing language to reorganize DOE in the Senate Intelligence
Authorization bill for FY 2000 (S. 1009).
On July 7, 1999, however, Secretary Richardson agreed to the proposal to set
up a new ANS, as long as it would be a semi-autonomous agency within DOE, under
his control, and not a fully autonomous agency.49 By a vote of 96-1, the Senate on
July 21, 1999, approved an amendment (S.Amdt. 1258, Kyl) to the Senate-passed FY
2000 Intelligence Authorization Act (H.R. 1555) to create the ANS. Richardson
praised the bill, saying it was “a good start” in codifying reforms at DOE.50 The ANS
would be a separately organized agency within the DOE, under the direction of the
Energy Secretary, to be headed by the Under Secretary for Nuclear Stewardship who
shall also serve as director of the ANS. Democratic Senators Bingaman and Levin
sought changes to the amendment, including explicit authority for the Energy
Secretary to continue to use the field offices51 and to control counterintelligence and
security operations. The House’s options included agreeing to the Senate’s plan or
opting for another option, including leaving the organization of DOE unchanged,
creating an independent agency outside of DOE, and changing the contractual
arrangements for running the labs (under the University of California (UC), for
example). Some have asserted that UC, whose contract has not been subject to
competitive bidding since 1943, provides “marginal” oversight of and “political
protection” for some DOE labs.52 (UC operates the Lawrence Livermore and Los
Alamos labs, while Lockheed Martin Corporation runs Sandia.)
47 President’s Foreign Intelligence Advisory Board, Special Investigative Panel, Science at its
Best, Security at its Worst: A Report on Security Problems at the U.S. Department of
Energy, unclassified, June 1999. Also called the Rudman Report.
48 DOE, “Statement by Secretary of Energy Richardson on the President’s Foreign Intelligence
Advisory Board Report,” June 15, 1999.
49 Pincus, Walter, “Richardson Accepts Nuclear Agency Plan,” Washington Post, July 8,
1999.
50 DOE, news release, “Statement of Secretary of Energy Bill Richardson on the Senate Bill
to Reorganize the Department of Energy,” July 21, 1999.
51 The Rudman Report called for streamlining DOE’s system of 11 field offices, with 6,000
employees, in addition to 5,000 at headquarters, that resulted in a “convoluted and bloated
management structure.”
52 Trujillo, Manuel and Chuck Montano (Los Alamos employees), “Compromised: The Los
Alamos Lab,” letter to the editor, Washington Post, July 7, 1999. UC runs Los Alamos and
Lawrence Livermore. Lockheed Martin Corp. runs Sandia.

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CRS-18
Then, the House Armed Services Committee argued that it has jurisdiction over
nuclear weapons and that the FY 2000 National Defense Authorization Act (S. 1059;
P.L. 106-65) ought to legislate organizational changes at DOE.53 Conferees adopted
H. Rept. 106-301 on August 6, 1999, that would create a National Nuclear Security
Administration (NNSA) within DOE effective March 1, 2000. However, the
Administration and some Democrats on the Senate Armed Services Committee
objected to what they argued would undermine the Energy Secretary’s authority.
Senator Levin said that “the final product on DOE reorganization appears to go
beyond creation of a new, separately organized entity within DOE, which I support.”
He said that the Energy Secretary would have direct control over the administrator
of NNSA, but not its employees. Representative Thornberry contended that the
secretary would have no restraints on his authority over the new administrator.54
Richardson initially wanted to recommend that President Clinton veto the bill,
as its provision on DOE reorganization differed from the Senate-passed intelligence
authorization act he supported in July 1999. Richardson objected to the conference
report because, he says, it would undermine his authority; blur the lines of
responsibility in security, counterintelligence, environment, safety and health; and
direct budgetary proposals be made directly to Congress.55 In addition to some
Democrats in Congress, 46 state attorneys general also urged a Presidential veto.56
After the House and Senate passed S. 1059 in September 1999, Richardson
announced on September 26, 1999, that he would not oppose the bill. He said, “I
believe we can interpret the provisions so there are clear lines of responsibility and the
secretary is in charge and we protect our national security.”57
Concerns about Compliance with the Law. Upon signing the FY 2000
National Defense Authorization Act into law (P.L. 106-65) on October 5, 1999,
President Clinton raised concerns in Congress when he criticized the DOE
reorganization (Title 32) as “the most troubling” part of the act and said that
legislative action to “remedy the deficiencies” will help in the process of nominating
the new Under Secretary for Nuclear Security who will head the NNSA. “Until
53 Also see: CRS Report RL30569, Department of Energy: Status of Legislated Security and
Counterintelligence Measures, by Jonathan Medalia; CRS Issue Brief IB10036,
Restructuring DOE and its Laboratories: Issues in the 106th Congress, by William Boesman.
54 McCutcheon, Chuck and Pat Towell, “Defense Bill Negotiators Fail to Placate
Administration on Nuclear Security Proposal,” Congressional Quarterly Weekly, August 7,
1999.
55 Pincus, Walter, “Richardson May Urge Veto of Nuclear Agency,” Washington Post,
August 7, 1999; “Richardson Likely to Urge Authorization Bill Veto Over DOE Language,”
Inside the Pentagon, August 12, 1999.
56 Pincus, Walter and Vernon Loeb, “Veto Urged for Energy Revamp,” Washington Post,
September 9, 1999.
57 “Energy to Clinton: Sign Defense Bill,” Associated Press, September 27, 1999;
“Richardson Relents,” CQ Weekly, October 2, 1999.

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CRS-19
further notice,” the President directed the Secretary of Energy to act as the Under
Secretary for Nuclear Security and to direct all personnel of the NNSA.58
At a Senate Armed Services Committee hearing two days later, Senator
Domenici charged that the Administration was trying to circumvent the new law.59
Representative Spence, chairman of the House Armed Services Committee, wrote to
the President that his order would undermine congressional intent.60 On October 19,
1999, the Senate Government Affairs, and Energy and Natural Resources Committees
held a joint hearing to warn Secretary Richardson against failure to implement the law
to establish the NNSA. Richardson assured Members that he will comply with the
law but urged Congress to use the Intelligence Authorization Act (H.R. 1555) to
correct what he saw as deficiencies in the Defense Authorization Act. Some
Members said it was premature to allege noncompliance, since the effective date is
March 1, 2000. In November 1999, the House and Senate passed H.R. 1555 without
provisions on security at the DOE labs.
A CRS legal memorandum for Representative Thornberry (that has been made
public) agreed that President Clinton’s statement and directions raise legal and
constitutional issues on the question of the Administration’s compliance with the law
creating the NNSA.61
On January 7, 2000, Secretary Richardson submitted DOE’s plan for
implementation of legislation to establish the NNSA on March 1, 2000 and named a
committee to search for the first Under Secretary for Nuclear Security who is to serve
as the head of NNSA.62
However, Richardson’s plan raised questions about the semi-autonomous status
of the NNSA, calling for some DOE officials to “serve concurrently” in some
functions, including nuclear security and counter-intelligence. He cited reasons such
as “program continuity,” “shortness of time for implementation,” and the “scheduled
change in executive branch administration next January.” Field managers at some
field operations will also “serve concurrently in dual positions.”
Indeed, a special panel of the House Armed Services Committee, with
Representatives Thornberry, Tauscher, Hunter, Graham, Ryun, Gibbons, Sisisky, and
58 White House, “Statement by the President,” October 5, 1999.
59 Towell, Pat, “Nuclear Agency Eruption,” CQ Weekly, October 9, 1999.
60 Pincus, Walter, “DOE Plan Riles Senate GOP,” Washington Post, October 19, 1999.
61 CRS Memorandum, “Assessment of Legal Issues Raised by the President’s Directions to
the Secretary of Energy With Respect to the Implementation of the National Nuclear Security
Administration Act in His Signing Statement of October 5, 1999,” November 1, 1999, by
Morton Rosenberg. The congressional office has released the memo.
62 DOE, “Implementation Plan: National Nuclear Security Administration,” January 1, 2000;
“Energy Department Proceeds with Implementation of National Nuclear Security
Administration,” news release, January 7, 2000.

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CRS-20
Spratt, reviewed DOE’s implementation plan and cited some “serious flaws.”63 While
the panel was encouraged by DOE’s recent actions, it criticized the plan for “dual-
hatting” DOE and NNSA officials; continuing the confused and inadequate lines of
authority (e.g., with no changes in the field office structure); emphasizing DOE
authority; lacking improvements to NNSA programming and budgeting; lacking
specificity and comprehensiveness; and reflecting little outside consultation. The
panel’s report concluded that the implementation plan, if carried out, would “violate
key provisions of the law.” However, Representative Spratt offered his dissenting
views. While he agreed that the implementation plan fell short of the legal
requirements, he objected that the panel’s report was too conclusive and lacked a
critical review of the law that created NNSA and whether it is workable.
Other Action. In other action, Members of Congress have expressed concern
about possible racial profiling used in the investigation of Wen Ho Lee and
ramifications of this case on Americans of Asian Pacific heritage. The House, on
November 2, 1999, passed H.Con.Res. 124, introduced by Representative Wu to
express the sense of Congress that the Attorney General, Secretary of Energy, and the
Commissioner of the Equal Employment Opportunity Commission should enforce
security at the labs and investigate allegations of discrimination. On August 5, 1999,
Senator Feinstein introduced S.Con.Res. 53, condemning prejudice against individuals
of Asian and Pacific Island ancestry, which the Senate passed on July 27, 2000. (See
also Racial Profiling and Selective Prosecution below.)
The Senate, led by Republican Members, voted (51-48) to reject the
Comprehensive Test Ban Treaty (CTBT) on October 13, 1999, because of
reservations about the implications for U.S. national security. Some supporters of the
CTBT argued that the treaty may be one way to impede the PRC’s nuclear weapon
modernization, even if it acquired U.S. secrets, because Beijing needs to test, while
blueprints and computer codes are not enough. Democratic Senator Byron Dorgan
and Republican Senator Arlen Specter wrote in September 1999 that “most
Americans have heard that China may have obtained secret information about U.S.
nuclear weapon designs. What they haven’t heard is that China may not be able to do
much with that information — if the U.S. Senate does the right thing.”64
Administration’s Actions
Response to Security Concerns
The Clinton Administration has acknowledged that improvements to security
measures have been required at the nuclear weapon labs and said that it took a
number of corrective actions in response to indications in 1995 that China may have
63 House Armed Services Committee, Special Panel on Department of Energy Reorganization,
“Department of Energy National Nuclear Security Administration Implementation Plan: An
Assessment,” February 11, 2000.
64 Dorgan, Byron and Arlen Specter, “U.S. Wants, Needs Nuclear Test Ban Pact,” USA
Today, September 13, 1999.

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CRS-21
obtained secrets about the W88 in the 1980s. Officials have said that, by mid-1996,
DOE had reported to the FBI, National Security Council (NSC), and Intelligence
Committees in Congress that there were serious concerns about China. Prompted by
information from DOE and the CIA, the FBI had begun an investigation in September
1995. On April 7, 1997, the FBI completed an assessment of “great vulnerability”
due to inadequate counterintelligence at the labs and reported those findings and 16
recommendations to DOE as well as the Senate Intelligence Committee.65
Former Energy Secretary Federico Pena has defended DOE policies during his
tenure from March 1997 to June 1998, saying that the department took a number of
actions to strengthen security, including briefing the FBI, CIA, the Departments of
Justice and Defense, and the NSC. In July 1997, DOE officials briefed the White
House on its review of two decades of PRC efforts to acquire U.S. nuclear weapon
secrets. A special working group of the National Counterintelligence Policy Board
recommended ways to tighten lab security in September 1997, and, in February 1998,
the White House issued Presidential Decision Directive (PDD-61)66 to strengthen
counterintelligence at the labs. In October 1997, FBI Director Louis Freeh and
Director of Central Intelligence (DCI) George Tenet briefed Pena. In March 1998,
Freeh and Tenet briefed lab directors on weaknesses in counterintelligence efforts.
DOE established an Office of Counterintelligence, headed by a former FBI
counterintelligence official, Edward Curran, on April 1, 1998. Curran, on July 1,
1998, submitted a report to the Secretary of Energy, with 46 recommendations for
strengthening counterintelligence in response to PDD-61. The Secretary had 30 days
to respond to the National Security Advisor, but Richardson did not become
Secretary until September 1998. He issued an action plan on November 13, 1998.67
Energy Secretary Richardson testified on March 16, 1999, that after he took
over DOE in September 1998, he ordered some corrective measures. He said those
steps included a requirement for employees with access to classified information to
take polygraphs, making DOE the only agency besides the CIA to have the
requirement; the hiring of counterintelligence professionals at the nuclear weapon
labs; repeated doubling of DOE’s counterintelligence budget ($7.6 million in FY
1998, $15.6 million in FY 1999, and a request for $31.2 million in FY 2000); and a
requirement for background checks on foreign visitors to the labs. Richardson also
65 Testimony of FBI Director Louis Freeh before the House Appropriations Subcommittee on
Commerce, Justice, State, and Judiciary, March 17, 1999.
66 For an unclassified summary of PDD-61, see Appendix to the President’s Foreign
Intelligence Advisory Board’s June 1999 report, Science at its Best, Security at its Worst: A
Report on Security Problems at the U.S. Department of Energy.
67 Pena, Federico, “Alert At The Energy Department,” Washington Post, March 16, 1999;
Richardson, Bill (Secretary of Energy), “Guarding Our Nuclear Security,” Washington Post,
March 15, 1999; Energy Secretary Bill Richardson, testimony on March 16, 1999; Gary
Samore (NSC), briefing at Carnegie Endowment, March 17, 1999; Senate Armed Services
Committee Hearing, April 12, 1999.

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CRS-22
reported that DOE has implemented about 80 percent of the measures directed by
PDD-61 and was to have achieved full implementation by the end of March 1999.68
When he was fired from Los Alamos on March 8, 1999, the government’s only
suspect was identified publicly as Dr. Wen Ho Lee. Secretary Richardson said he fired
Lee, because the W88 case became public and Lee allegedly failed a polygraph test
in February 1999.69 Richardson also alleged that Lee failed to notify officials about
certain contacts with people in the PRC, to properly safeguard classified material, and
to cooperate on security matters. (DOE now considers Lee to be retired and pays him
a pension.70)
However, Richardson fired Lee before agents checked his computers at work
later in March 1999 and discovered that he had downloaded sensitive files to an
unclassified computer at Los Alamos, alleged crimes separate from the W88
espionage case. FBI Director Louis Freeh said on March 17, 1999, that this case “is
an active investigation. We’ve not made charges against anybody, so nobody should
be accused of anything.” The Cox Committee’s unclassified report released in May
1999 was careful not to name any suspects.
On March 17, 1999, appearing before the Senate Intelligence Committee,
Secretary Richardson announced seven initiatives to strengthen counterintelligence
at the Department of Energy, in addition to PDD-61. Those steps are to:
! improve security of cyber-information systems, including electronic
mail;
! improve security of documents containing weapon design data;
! review the foreign visitors’ program (to be led by former DCI John
Deutch);
! direct the deputy secretary and undersecretary to monitor the
program to strengthen counterintelligence;
! review all investigative files in the Office of Counterintelligence;
! report annually to Congress on the counterintelligence and foreign
visitors’ programs;
! begin an internal review to examine allegations that a top official
blocked notification to Congress.71
Furthermore, on April 2, 1999, Secretary Richardson ordered the nuclear
weapon labs to suspend scientific work on computers that contain nuclear weapon
secrets. This step was taken to prevent the possibility that sensitive data would be
copied from secure computers and sent electronically through unclassified computers.
Richardson acknowledged potential problems, saying that “our computer security has
68 Joint Hearing, Senate Armed Services and Energy Committees, March 16, 1999.
69 Risen, James, “U.S. Fires Nuclear Scientist Suspected of Spying for China,” New York
Times, March 9, 1999; Pincus, Walter, “Spy Suspect Fired At Los Alamos Lab,” Washington
Post, March 9, 1999.
70 “Lee Agrees to Answer Additional Questions,” Washington Post, November 19, 2000.
71 Department of Energy release, March 17, 1999.

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CRS-23
been lax, and I want to strengthen it, and the only way to do that is to stand down.”
The suspension was ordered in part because Lee was an expert in the computer
systems, and an internal review showed that security measures at Los Alamos and
Livermore labs were “marginal,” while Sandia received a “satisfactory” rating.72 In
September 1999, Richardson reported that Los Alamos improved its security and
received a “satisfactory” rating, while Livermore and Sandia got “marginal” ratings.73
On May 11, 1999, Energy Secretary Richardson announced further reforms of
DOE to increase control over the nuclear weapon labs, including the appointment of
a “security czar” who will report directly to the Secretary. One month later,
Richardson named retired Air Force General Eugene Habiger, former Commander in
Chief of the U.S. Strategic Command, as the Director of a new Office of Security and
Emergency Operations.74 Richardson also planned to consolidate security funds in
DOE under one $800 million budget and an additional $50 million over two years to
improve computer-related security. Also, there would be greater controls over floppy
disk drives that could transfer files out of the classified computer systems, and DOE
would require electronic “banners” on government computers warning users that they
computers are subject to monitoring.75 DOE originally requested $2 million for
computer security, but increased the request to $35 million after the PRC espionage
case came to light. However, Congress in September 1999 did not approve the
additional request in a conference committee on energy appropriations, and an
unnamed Member said the committee wants to see management reform before
approving a large funding increase.76 In December 1999, Habiger complained that
Congress did not provide all the funds he needs to improve security at the labs, but
Representative Cox countered that Habiger has not provided Congress with a detailed
plan for how the additional millions would be used.77
The first official to lose his job as a result of the Los Alamos controversy was
Victor Reis, the Assistant Energy Secretary in charge of defense programs since 1993,
who resigned on June 25, 1999.78 Testifying before the House Armed Services
Committee on July 14, 1999, Reis acknowledged that he has “some responsibility”
72 Risen, James, “Energy Department Halts Computer Work at Three Nuclear Weapon Labs,”
New York Times, April 7, 1999.
73 DOE, news release,”Energy Secretary Richardson Releases Results of Independent Security
Reviews at National Labs,” September 20, 1999.
74 DOE, news release, “Richardson Selects Security ‘Czar’,” June 16, 1999.
75 Risen, James, “Energy Secretary Announces Program to Strengthen Lab Security,” New
York Times, May 12, 1999.
76 Pincus, Walter and Vernon Loeb, “DOE Loses $35 Million for Cyber Security,”
Washington Post, September 29, 1999.
77 Suro, Roberto, “Energy’s Security Initiative Lacks Fuel,” Washington Post, December 2,
1999.
78 Pincus, Walter, “Nuclear Officials’ Future Uncertain,” Washington Post, June 25, 1999.

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CRS-24
for the security problems and he “could have pressed harder” to strengthen security,
but asserted that many other officials at DOE and FBI share the blame.79
In July 1999, DOE instituted a new policy that requires DOE employees with
security clearances to report any “close and continuing contacts” with foreigners from
the sensitive countries on DOE’s list.80 Also in July, Richardson issued revised
procedures to more closely monitor visits and assignments of foreign nationals to
DOE’s facilities, as part of implementing PDD-61. Lab directors no longer have
authority to grant waivers of DOE security requirements, and only the Secretary may
approve waivers. Richardson also derided discrimination against Americans of Asian
Pacific heritage, saying that the new order only affects foreign citizens, not
Americans.81
On August 12, 1999, Richardson announced the results of an internal DOE
inquiry by the inspector general and ordered that three individuals be disciplined. (See
Law Enforcement vs. Security below.)
In October 1999, Richardson decided to narrow the scope of controversial
polygraph tests, originally considered for over 5,000 lab employees, so that about
1,000 people working in the most sensitive areas, primarily at the three nuclear
weapon laboratories, will be tested. They include nuclear weapon designers, security
and counterintelligence officials, employees at nuclear weapon production plants, and
political appointees at DOE headquarters.82 In December 1999, Richardson narrowed
the number to about 800 employees who will have to take the lie-detector test.83
On December 10, 1999, as directed by Attorney General Reno, the Justice
Department arrested and indicted Lee for mishandling classified information – but not
for passing secrets to any foreign government. (See Indictment of Wen Ho Lee
below.)
On January 7, 2000, Secretary Richardson presented his plan to establish the new
NNSA. (See section on new NNSA above.)
Richardson, on January 19, 2000, received the report and recommendations from
the Task Force Against Racial Profiling that he had established in June 1999. (See
Racial Profiling and Selective Prosecution below.)
79 Pincus, Walter, “Plenty of Blame to Go Around on Spying, DOE’s Ex-Arms Chief Says,”
Washington Post, July 15, 1999.
80 Pincus, Walter and Vernon Loeb, “Isn’t It Romantic: Security Rules Exempt One-Night
Stands,” Washington Post, September 2, 1999.
81 DOE, news release, “Richardson Toughens Requirements for Unclassified Foreign Visits
and Assignments,” July 14, 1999.
82 Pincus, Walter, “Richardson Cuts Lab Lie Tests Sharply,” Washington Post, October 16,
1999.
83 DOE, “DOE Polygraph Implementation Plan Announced,” press release, December 13,
1999.

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CRS-25
On January 25, 2000, Secretary Richardson said that security and counter-
intelligence have been dramatically improved, including training for 700 computer
systems administrators in cyber-security. DOE security czar, Eugene Habiger, said
that it is now almost impossible for lab employees to transfer nuclear secrets from
classified to unclassified computer systems.84 With the tightening of security,
however, there are concerns that a worsened scientific environment at the labs has
hurt their mission.85
As of March 1, 2000, the NNSA began operations. Secretary Richardson
directed that about 2,000 DOE employees be realigned to be employees of NNSA.86
On May 3, 2000, President Clinton nominated U.S. Air Force General John A.
Gordon, Deputy Director of Central Intelligence since November 1997, to be the first
Under Secretary for Nuclear Security and administrator of NNSA, a decision
announced by Secretary Richardson on March 2, 2000.87 The Senate confirmed (97-
0) the nomination on June 14, 2000. Richardson swore in Gordon on June 28, 2000.
Issues about the Response
Timeliness and Responsiveness. Critics have argued that the Clinton
Administration was slow to respond to concerns about China and the labs and that
DOE officials have resisted reforms for years. They have said that in November 1996,
Charles Curtis (Undersecretary and then Deputy Secretary of Energy from February
1994 to April 1997), ordered new security measures (called the Curtis Plan)88, but
these steps — including requiring background checks again for all foreign visitors —
were not carried out by the labs nor followed up by DOE officials. They have also
voiced concerns about related developments reported in the press, specifically that in
April 1997, the FBI recommended changes at the labs, including reinstating
background checks on foreign visitors, but the DOE did not implement improvements
in counterintelligence until after Bill Richardson became Secretary of Energy (in
August 1998). In the spring of 1997, DOE had selected the suspect to head a
program to update the computer programming used in the stockpile stewardship
program that evaluates the performance of nuclear weapons without testing, and he
hired a PRC citizen to assist him.89 Moreover, some critics have questioned why the
President did not issue PDD-61 until February 1998, although the suspicions that
84 Loeb, Vernon, “Energy Chief Touts Security Upgrades at Nuclear Labs,” Washington Post,
January 26, 2000.
85 Loeb, Vernon, “From Coast to Coast, Fallout From a Probe at California Lab, Tightened
Security Too Much for Some,” Washington Post, December 21, 1999.
86 Secretary of Energy Richardson, “Memorandum for All Department Employees,” March
1, 2000.
87 DOE, “General John A. Gordon Selected to Head National Nuclear Security
Administration,” March 2, 2000.
88 Hearing of the Senate Armed Services Committee, April 12, 1999.
89 Risen, James, “Suspect Scientist Led Key Los Alamos Program,” New York Times, March
24, 1999.

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CRS-26
China obtained W88 data arose in 1995 and the FBI made recommendations to
tighten counterintelligence measures in April 1997.90
The President’s Foreign Intelligence Advisory Board (PFIAB), led by former
Senator Rudman, reported in June 1999 that “the speed and sweep of the [Clinton]
Administration’s ongoing response does not absolve it of its responsibility in years
past,” and “there is some evidence to raise questions about whether its actions came
later than they should have.” The PFIAB also noted that “the track record of
previous administrations’ responses to DOE’s problems is mixed.”91
The PFIAB noted that PDD-61 was issued on February 11, 1998, and after
Secretary Richardson was sworn in on August 18, he submitted the action plan to the
NSC on November 13. However, the DOE’s completed implementation plan was
delivered to Secretary Richardson on February 3, 1999 and issued to the labs on
March 4. The board said that “we find unacceptable the more than four months that
elapsed before DOE advised the National Security Advisor on the actions taken and
specific remedies developed to implement the Presidential directive, particularly one
so crucial.” PFIAB further declared that “the fact that the Secretary’s implementation
plan was not issued to the labs until more than a year after the PDD was issued tells
us DOE is still unconvinced of Presidential authority [PFIAB’s emphasis].”
On July 2, 1999, House Commerce Committee chairman Tom Bliley and Rep.
Fred Upton, chairman of the Oversight and Investigations Subcommittee, issued a
joint statement one day after receiving a classified briefing on DOE’s May 1999
inspection of security measures at Lawrence Livermore. They said that the briefing
had been “delayed repeatedly by Secretary Richardson without any legitimate basis.”
They stated that the inspection found “serious deficiencies” in the areas of computer
security, foreign visitor controls and clearances, and protection of nuclear materials.
They also questioned why DOE managers failed to detect deficiencies on their own.92
Law Enforcement vs. Security. There are additional concerns that the
Administration did not act promptly enough or investigated aggressively enough to
protect national security, because the prime suspect identified by DOE and the FBI
in the W88 case, though not charged with any crime, remained employed at Los
Alamos until March 8, 1999. The PFIAB’s report stated in June 1999 that “there
does not exist today a systematic process to ensure that the competing interests of law
enforcement and national security are appropriately balanced.”
90 Risen, James and Jeff Gerth, “China Stole Nuclear Secrets From Los Alamos, U.S.
Officials Say,” New York Times, March 6, 1999; David E. Sanger, “Clinton Aides Admit
Lapses On Espionage by Chinese,” New York Times, March 7, 1999; Jeff Gerth, “Nuclear
Lapses Known in ‘96, Aides Now Say,” New York Times, March 17, 1999; Vernon Loeb and
Juliet Eilperin, “GOP Attacks’ Impact on China Ties Concerns White House,” Washington
Post, March 17, 1999.
91 President’s Foreign Intelligence Advisory Board (PFIAB), Special Investigative Panel,
Science at its Best, Security at its Worst: A Report on Security Problems at the U.S.
Department of Energy, unclassified, June 1999.
92 “Bliley, Upton React to Briefing on Livermore Security Inspection,” press release, July 2,
1999.

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CRS-27
Although criminal investigations usually require leaving the suspects in place to
obtain evidence and assess damage, the suspect was only required to take polygraph
tests in December 1998 (conducted by DOE) and in February 1999 (given by the
FBI). DOE did not remove him from access to highly classified information in the X
Division until December 199893 and did not dismiss until March 8, 199994, even
though the Director of the FBI had informed DOE officials in a meeting on August
12, 1997, that there was not sufficient evidence to warrant keeping the investigation
a secret and that denying the suspect continued access to sensitive information may
be more important than the FBI’s stalled case.95 In congressional testimony on March
16, 1999, Energy Secretary Richardson confirmed that the FBI began its investigation
in 1995, and he asserted that DOE and the FBI have worked “extremely
cooperatively.” Yet, Secretary Richardson acknowledged concerns when he decided
to begin an investigation at DOE to determine how the prime suspect retained his
access to classified information and his job.96
On August 12, 1999, Richardson announced the results of the internal DOE
inquiry by the Inspector General into the espionage investigation. Richardson
declared, “there was a total breakdown in the system and there’s plenty of blame to
go around.”97 He said that “the espionage suspect should have had his job assignment
changed to limit his access to classified information much sooner than it was, and
cooperation with the FBI should have been stronger.” He also announced that of the
19 DOE officials identified by the Inspector General as bearing some responsibility
for counterintelligence and security, three employees would be disciplined. News
reports identified those three individuals as Sig Hecker, former director of Los
Alamos from 1986 to 1997 still employed as a scientist; Robert Vrooman, former
head of counterintelligence at Los Alamos serving as a consultant; and Terry Craig,
a former counterintelligence team leader working at a different part of the lab. In
addition, former secretary Federico Pena, former deputy secretary Elizabeth Moler,
and former deputy secretary Victor Reis reportedly would have been subject to
disciplinary action if still employed by DOE.98
Wiretaps and Computer Monitoring. There are also questions about why the
FBI did not conduct electronic surveillance of the suspect or search his office and
93 Cox Committee’s unclassified report, May 1999, Vol. 1, p. 90.
94 Pincus, Walter, “Spy Suspect Fired At Los Alamos Lab,” Washington Post, March 9,
1999.
95 Risen, James and Jeff Gerth, “China Stole Nuclear Secrets from Los Alamos, U.S. Officials
Say,” New York Times, March 6, 1999; Testimony of Louis Freeh, Director of the FBI, before
the House Appropriations Subcommittee on Commerce, Justice, State, and Judiciary, March
17, 1999.
96 Risen, James, “U.S. Inquires Why Suspect At Atom Lab Kept Access,” New York Times,
April 23, 1999.
97 DOE press release, “Richardson Announces Results of Inquiries Related to Espionage
Investigation,” August 12, 1999.
98 Loeb, Vernon, “Discipline Urged Against Los Alamos Employees,” Washington Post,
August 13, 1999.

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CRS-28
home computers earlier. FBI agents began to question him on March 5, 199999 and,
after he was fired, searched his office, including government computers, in March and
his home in April 1999.100 Some question the Department of Justice’s role in not
supporting the FBI’s requests to electronically monitor him through wiretaps. The
FBI said that the Justice Department’s Office of Intelligence Policy Review (OIPR)
denied the FBI’s applications for electronic surveillance, or wiretaps, of the suspect
in August 1997 and in December 1998, because there was insufficient evidence that
the suspected espionage activity was current. Because the OIPR did not approve the
applications, they did not reach the court established under the authority of the
Foreign Intelligence Surveillance Act (FISA).
On May 24, 1999, Reno said that the Justice Department has not authorized
intrusions in the lives of American citizens “when, as in this case, the standards of the
Constitution and the Foreign Intelligence Surveillance Act (FISA) have not been
met.” She further explained that “although I was not apprised of the details of the
case at the time the decision was made, I have reviewed the decision of the OIPR and
fully support it.” Also, contrary to some reports, the 1997 request for FISA coverage
“did not contain a request to search any computer.”101 At a closed hearing of the
Senate Judiciary Committee on June 8, 1999, Attorney General Janet Reno explained
that “the FISA application was legally insufficient to establish probable cause.”102
Among the reasons, she said the request focused on the Lees, while “the elimination
of other logical suspects, having the same access and opportunity, did not occur.”
The PFIAB said that “the Department of Justice may be applying the FISA in a
manner that is too restrictive, particularly in light of the evolution of a very
sophisticated counterintelligence threat and the ongoing revolution in information
systems.” The board also questioned “why the FBI’s FISA request did not include
a request to monitor or search the subject’s workplace computer systems.”
However, there are competing concerns about protection of civil liberties. As
the Washington Post stated, “the Lee case, for example, has been cited as evidence
of the need to relax civil liberties protections to make surveillance easier in national
security cases. This is a dreadful idea.” The Post also cautioned that Dr. Lee “is
entitled to a presumption of innocence that he has not typically received in public
discussions of the matter.”103
Some are concerned that the lack of monitoring over the prime suspect’s
computer use may have grave consequences for securing secrets of U.S. nuclear
99 Risen, James, “U.S. Fires Nuclear Scientist Suspected of Spying for China,” New York
Times, March 9, 1999.
100 Vernon Loeb and Walter Pincus, “FBI Searches Home Of Scientist Suspected Of Spying
For China,” Washington Post, April 11, 1999.
101 Department of Justice, “Statement by Attorney General Janet Reno on the Los Alamos
Laboratory Matter,” May 24, 1999.
102 On December 21, 1999, the Judiciary Committee released an unclassified transcript of the
hearing.
103 “The Espionage Scandal,” Washington Post, August 19, 1999.

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CRS-29
weapons. Additional reports have revealed that Secretary Richardson shut down the
lab computers on April 2, 1999, because investigators discovered after Lee was fired
and after obtaining permission to check his computer in March 1999 that he had
carried out a possibly significant compromise of computer security affecting nuclear
weapons. The FBI discovered that he had transferred enormous volumes of files
containing millions of lines of highly secret computer codes on nuclear weapon
designs (called “legacy codes”) from a classified computer to an unclassified computer
at Los Alamos. Moreover, someone who improperly used a password may have
subsequently accessed the files in the unclassified computer.104 Lee also tried to delete
some of the classified files.105 The FBI says that it was not able to obtain a search
warrant to search the computer at Los Alamos earlier, because the labs did not place
“banners” warning employees that the computers were outside the protection of
privacy rights and subject to government monitoring. However, in May 1999, a
report said that Lee, in 1995, had indeed signed a routine waiver giving Los Alamos
the right to audit his computer use.106
Speaking publicly for the first time in his own defense, Dr. Wen Ho Lee said in
a television interview on August 1, 1999, that he is innocent of wrongdoing, he did
not disclose nuclear secrets to China or any unauthorized person, and he transferred
the files on weapon data to an unclassified computer to protect the information, which
is “common practice” at the labs. Lee also said that he has been made a “scapegoat”
in the investigation even though he devoted “the best time of my life to this country,”
because he was the only Asian American working in the X Division, the group in
charge of weapon design at Los Alamos.107 Others have reportedly described the
transfer of computer files between classified and unclassified computers at the labs to
have been common practice, particularly after the computer network at Los Alamos
split into two networks in December 1994.108
On August 5, 1999, Senators Thompson and Lieberman of the Governmental
Affairs Committee reported on a bipartisan basis how DOE, FBI, and DOJ may have
mishandled the investigation, particularly in communications among them.109
104 Risen, James and Jeff Gerth, “U.S. Says Suspect Put Data on Bombs in Unsecure Files,”
New York Times, April 28, 1999.
105 Loeb, Vernon and Walter Pincus, “Los Alamos Security Breach Confirmed,” Washington
Post, April 29, 1999; James Risen and Jeff Gerth, “China Spy Suspect Reportedly Tried to
Hide Evidence,” New York Times, April 30, 1999.
106 Risen, James, “Energy Secretary Announces Program to Strengthen Lab Security,” New
York Times, May 12, 1999.
107 CBS, “60 Minutes,” August 1, 1999; Robert Pear, “Suspect in Atom Secrets Case Publicly
Denies Aiding China,” New York Times, August 2, 1999.
108 Carey, Pete, “Intricate System Adds Complexity to Spying Probe; Inner Workings of
Weapons Lab May Slow Search for Evidence,” San Jose Mercury News, June 10, 1999.
109 Senate Governmental Affairs Committee, “Department of Energy, FBI, and Department
of Justice Handling of the Espionage Investigation into the Compromise of Design Information
on the W88 Warhead,” August 5, 1999; Walter Pincus, “China Spy Probe Bungled, Panel
Finds,” Washington Post, August 6, 1999.

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In announcing the results of an inquiry by DOE’s Inspector General, Richardson
confirmed on August 12, 1999, that Lee had signed a computer privacy waiver in
April 1995, but a counterintelligence official failed to adequately search lab records
and missed the waiver. Thus, the FBI did not know about the waiver until May 1999.
Richardson recommended disciplinary action against the official.110
On March 8, 2000, Senator Specter, as part of his investigation under the
jurisdiction of the Senate Judiciary Subcommittee on Administrative Oversight and
the Courts, issued a report critical of the investigations of Wen Ho Lee. The report
criticized the FBI’s and DOE’s investigations as “inept.” It also criticized the
Department of Justice and Attorney General Janet Reno for not forwarding the FBI’s
request for a warrant to the FISA court, despite “ample, if not overwhelming,
information to justify the warrant.”111 However, Senator Charles Grassley, chairman
of the subcommittee, criticized the FBI for not telling Congress through most of 1999
that the bureau had found that Lee was not the prime suspect in the espionage case
at Los Alamos. Senator Grassley said that he, along with Senators Specter and
Torricelli, had asked the General Accounting Office to examine whether a senior FBI
official (believed to be Neil Gallagher, head of the National Security Division) had
withheld documents from Congress in 1999. (The FBI then asked that the
investigation be suspended after Wen Ho Lee’s indictment.) Senator Grassley sent
a letter to Senator Specter that disputed his report, saying that the evidence against
Lee was weak.112
Scope of Investigation. Reports have said that the investigation in the W88
espionage case (originally code-named “Kindred Spirit”) prematurely narrowed in on
one lab (Los Alamos) and one suspect (Wen Ho Lee). In June 1999, the PFIAB’s
report criticized the Administration’s investigation as focusing too narrowly “on only
one warhead, the W-88, only one category of potential sources — bomb designers
at the national labs — and on only a four-year window of opportunity.” The
investigation, it said, “should have been pursued in a more comprehensive manner.”113
The FBI reportedly had one or two agents to the case in 1996, increased the number
of agents to three or four in 1997, and assigned 40 agents by mid-1999.114
Acknowledging concerns about how the W88 case was handled, Attorney
General Reno said on May 6, 1999, that the Justice Department would establish a
panel of FBI agents and federal prosecutors to conduct an internal review of the
110 DOE, news release, “Richardson Announces Results of Inquiries Related to Espionage
Investigation,” August 12, 1999.
111 Senator Arlen Specter, “Report on the Investigation of Espionage Allegations Against Dr.
Wen Ho Lee,” March 8, 2000.
112 Loeb, Vernon, “GAO Probing Senior FBI Official,” Washington Post, March 9, 2000.
113 PFIAB.
114 Risen James and Jeff Gerth, “U.S. Is Said To Have Known Of China Spy Link in 1995,”
New York Times, June 27, 1999.

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investigation of Wen Ho Lee.115 Then, on September 23, 1999, Attorney General
Janet Reno and FBI Director Louis Freeh announced that the government had
expanded its investigation to conduct a more thorough examination of evidence and
possible alternative sources of information, including military facilities and defense
contractors.116 The FBI reportedly began this expanded espionage investigation in
April 1999 and gave it the code-name “Fall-out.”117
However, a report said that as early as January 1999, two months before Wen
Ho Lee’s arrest, the FBI had doubted that he was the source of the PRC’s information
on the W88 nuclear warhead. The FBI’s field office in Albuquerque, NM, wrote a
memo to headquarters on January 22, 1999, questioning whether Lee was the prime
suspect in the W88 case (code-named “Kindred Spirit”), in part because he passed the
December 1998 polygraph test. An earlier memo, written on November 19, 1998,
from the Albuquerque office to headquarters had stated that investigators would look
into 10 other people who had been named as potential suspects in DOE’s
administrative probe. Senator Arlen Specter, however, at whose hearing the
documents emerged, dismissed those doubts about Lee being the prime suspect,
saying that FBI agents were “thrown off” course by the 1998 polygraph.118
By November 1999, the FBI reportedly had acquired new evidence that the PRC
acquired information about U.S. nuclear weapons from a facility that assembles those
weapons. The evidence apparently stemmed from errors in the PRC intelligence
document said to contain a description of the W88 warhead. The errors were then
traced to one of the “integrators” of the weapons, possibly including Sandia National
Lab, Lockheed Martin Corporation (which runs Sandia), and the Navy.119
On May 16, 2000, Attorney General Janet Reno reportedly was briefed on the
classified, four-volume report of the Justice Department’s internal review of its
handling of the original investigation. The review is said to have found that the FBI
mishandled the espionage probe, in part because of internal turf wars, by not acting
sooner, not committing enough resources sooner, and prematurely focusing on Wen
Ho Lee as the only prime suspect. The report is said to state that the government
could have discovered Lee’s downloading of computer files years earlier, since he had
115 Walsh, Edward, “Reno Sets Review of `Process’ on China Spying Concerns,” Washington
Post, May 7, 1999.
116 Risen, James and David Johnston, “U.S. Will Broaden Investigation of China Nuclear
Secrets Case,” New York Times, September 23, 1999.
117 Loeb, Vernon, “Spy Probe Raised Doubts,” Washington Post, March 7, 2000.
118 Loeb, Vernon, “Spy Probe Raised Doubts,” Washington Post, March 7, 2000.
119 Loeb, Vernon and Walter Pincus, “FBI Widens Chinese Espionage Probe,” Washington
Post, November 19, 1999.

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signed a privacy waiver and a court order was not required.120 FBI agents have
acknowledged multiple mistakes in the investigation of Wen Ho Lee.121
In October 2000, it was reported that the investigation had shifted significantly
to examine the Pentagon and its facilities and contractors, after intelligence agencies
concluded that PRC espionage acquired more classified U.S. missile technology,
including that on the heat shield, than nuclear weapon secrets. Difficulties in
translating 13,000 pages of secret PRC documents resulted in this delayed finding.
The Pentagon then decided to hire 450 counter-intelligence experts.122
Indictment of Wen Ho Lee. Former Los Alamos scientist Wen Ho Lee’s
criminal case is a result of, but unrelated to, the government’s investigation of
whether the PRC obtained W88 secrets by espionage (the original probe called
“Kindred Spirit” and the expanded investigation called “Fall-out”). By November
1999, the Justice Department reportedly was not planning to charge Lee with
espionage, because there was no evidence that he passed nuclear weapon secrets to
the PRC.123 On December 4, 1999, the top law-enforcement, security, and DOE
officials held a meeting at the White House on whether to indict the prime suspect.
Attorney General Janet Reno, National Security Advisor Sandy Berger, Energy
Secretary Bill Richardson, FBI Director Louis Freeh, DCI George Tenet, and U.S.
Attorney John Kelly attended.124
By December 1999, the FBI completed the specific investigation that focused
on Lee’s transfers of computer files, which were discovered after he was fired in
March 1999 and FBI agents searched his home in April 1999. The case was
presented to a federal grand jury in Albuquerque, N.M. On December 10, 1999, as
directed by Attorney General Reno, the Justice Department arrested and indicted Lee
for allegedly “mishandling classified information” – but not for passing secrets to any
foreign government(s).125 Lee was charged with violations of the Atomic Energy Act,
including unlawful acquisition and removal of Restricted Data,126 that carry a
120 Vise, David A. and Vernon Loeb, “Justice Study Faults FBI in Spy Case,” Washington
Post, May 19, 2000.
121 Cohen P. Laurie and David S. Cloud, “How Federal Agents Bungled the Spy Case Against
Lee,” Wall Street Journal, December 8, 2000.
122 Pincus, Walter and Vernon Loeb, “China Spy Probe Shifts to Missiles,” Washington Post,
October 19, 2000; “Pentagon to Add 450 Experts to Protect Defense Secrets,” October 27,
2000.
123 Pincus, Walter, “U.S. Near Decision on Indicting Lee in Los Alamos Case,” Washington
Post, November 5, 1999.
124 Risen, James and David Johnston, “Decision Nears on the Fate of Ex-Los Alamos
Scientist,” New York Times, December 8, 1999.
125 Department of Justice, U.S. Attorney John J. Kelly, District of New Mexico, news release,
“Wen Ho Lee Indicted for Violating the Atomic Energy Act of 1954 and for Unlawful
Gathering and Retention of National Defense Information,” December 10, 1999.
126 Restricted Data means data concerning: 1) the design, manufacture, or utilization of atomic
(continued...)

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CRS-33
maximum penalty of life imprisonment.127 The charges included the “intent to injure
the United States” or “to secure an advantage to any foreign nation.” Furthermore,
Lee was charged with violations of the Federal Espionage Act, including unlawful
gathering and retention of national defense information, that carry a maximum penalty
of imprisonment for ten years.128
Specifically, the 59-count indictment alleged that Lee knowingly downloaded
and removed from Los Alamos extensive “classified files” relating to the design,
manufacture, and testing of nuclear weapons. The investigation, which included
holding over 1,000 interviews and searching more than 1,000,000 computer files,
found that Lee transferred classified files to 10 portable computer tapes and that seven
of the tapes were unaccounted for. The government charges that Lee, in 1993 and
1994, transferred Restricted Data on nuclear weapon research, design, construction,
and testing from the classified computer system to an unsecure computer at Los
Alamos, and then later downloaded the files to nine tapes. As recently as 1997, Lee
allegedly downloaded current nuclear weapon design codes and other data directly to
a 10th tape. These simulation codes are used to compare computer calculations with
actual nuclear test data.
Four hours before the indictment, Lee’s lawyer faxed a letter to the U.S.
Attorney, saying that Lee wanted to take another polygraph and to provide “credible
and verifiable” information to show that “at no time did he mishandle those tapes in
question and to confirm that he did not provide those tapes to any third party.”129
At a hearing in Albuquerque, N.M., on December 13, 1999, Wen Ho Lee
pleaded not guilty to the charges. Without elaboration, his defense attorneys
maintained that the seven tapes had been destroyed and that there is no evidence that
Lee has the tapes or has disclosed or attempted to disclose the tapes. Lee was
ordered to be held in jail without bail, until his trial, despite his attorneys’ offer to post
$100,000 bond and place Lee on electronic surveillance at his home.130 Lee was then
held in solitary confinement, placed in shackles for a significant time period, and
denied outdoor exercise. Lee’s trial was set to begin on November 6, 2000.
Meanwhile, on December 20, 1999, Wen Ho Lee and his wife filed a lawsuit
against the Departments of Energy and Justice and the FBI for alleged violations of
the Privacy Act of 1974. The Lees charge that, since at least early 1999, the
government has made numerous intentional, unauthorized disclosures about them,
126 (...continued)
weapons; 2) production of special nuclear material; or 3) the use of special nuclear material
in the production of energy.
127 42 USCS § 2275 and § 2276.
128 18 USCS § 793 (c) and § 793(e).
129 Loeb, Vernon, “Physicist is Indicted in Nuclear Spy Probe,” Washington Post, December
11, 1999.
130 Berthelsen, Christian, “Nuclear-Weapons Scientist Pleads Not Guilty; Held Without Bail,”
New York Times, December 14, 1999.

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CRS-34
causing them to be unfairly and inaccurately portrayed in the media as PRC spies.131
After being freed under a plea agreement in September 2000, Lee’s lawyers indicated
that he intends to continue the civil lawsuit.132
In April 2000, Lee’s attorney revealed that, in 1999, only after Lee was fired, the
government re-assigned a higher security classification to the computer files
containing nuclear secrets that Lee is charged with downloading. At the time that Lee
downloaded the files, they were not classified information, but considered “protect as
restricted data (PARD),” a category of security assigned to voluminous and changing
scientific data, not a security classification of Secret or Confidential, as the indictment
charged. Both sides are said to agree that the government had changed this
classification after the downloading, as shown in the prosecution’s evidence. While
Lee’s defense attorney argued that the indictment was “deceptive,” the Justice
Department maintained that Lee took the “crown jewels” of U.S. nuclear weapon
secrets. Lee’s lawyers also found that PARD’s security ranking was five on a scale
of nine, the highest being secret restricted data.133
There is another theory, that if Wen Ho Lee provided U.S. nuclear weapon
information to a third-party, it was not to the PRC, but to Taiwan, where he was
born.134 In 1998, after having allegedly downloaded files to portable computer tapes
in 1993, 1994, and 1997, Lee reportedly worked in Taiwan as a consultant to the
Chung Shan Institute of Science and Technology, which conducts military research
and development. During a visit to Taiwan in December 1998, Lee is said to have
dialed up the main computer at Los Alamos and used his password to access the
classified nuclear files he had downloaded. Lee’s trips to Taiwan were approved at
Los Alamos.135 Lee’s defense team requested, in May 2000, that the prosecution
name the foreign nation(s) that Lee allegedly sought to help, saying that it was unfair
of the government not to name the countries in charging Lee.136 The federal judge in
New Mexico then ordered the prosecution to disclose the foreign nation(s) by July 5,
2000.137 On that date, the U.S. Attorney filed a document that named eight foreign
governments that Lee may have sought to help in downloading the nuclear data.
Those places named are: the PRC, Taiwan, Australia, France, Germany, Hong Kong,
131 “Family of Dr. Wen Ho Lee Announces Filing of Privacy Act Lawsuit Against the
Department of Justice, the FBI, and the Department of Energy,” news release, December 20,
1999.
132 Loeb, Vernon, “Lee Will Pursue Suit for Breach of Privacy,” Washington Post, September
15, 2000.
133 Broad, William J., “Files in Question in Los Alamos Case Were Reclassified,” New York
Times, April 15, 2000.
134 Taiwan has been included on the DOE’s list of sensitive countries.
135 Pincus, Walter, “Lee’s Links to Taiwan Scrutinized,” Washington Post, Dec. 31, 1999.
136 Benke, Richard, “Defense Challenges Government’s Refusal to Name Foreign Country,”
Associated Press, May 30, 2000.
137 Pincus, Walter and Vernon Loeb, “U.S. Told to Name Nations That Lee Would Have
Aided,” Washington Post, June 27, 2000.

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Singapore, and Switzerland, places (except for the PRC) where Lee had expressed an
interest in applying for work in 1993, when he feared losing his job at Los Alamos.138
Another issue for the Administration and the prosecution was how much of the
classified information to release as evidence. Secretary Richardson was responsible
for part of the decision, based on recommendations from his new security czar.139 On
August 1, 2000, U.S. District Judge James Parker ruled in favor of Lee’s defense,
requiring that the government publicly explain to a jury the nuclear secrets Lee
allegedly downloaded, including any flaws in the tapes (which would not help any
possible recipients of the information).140
In August 2000, a dramatic turn of public events began, favoring Lee’s defense
and his release. At a hearing to secure release for Lee on August 16-18, 2000, a top
nuclear weapons expert, John Richter, countered the prosecution’s case, testifying
that 99 percent of the information that Lee downloaded were publicly available. Also
according to Richter, even if a foreign government obtained the information, there
would be no “deleterious effect” on U.S. national security, because other governments
cannot build the sophisticated U.S. nuclear warheads based on computer simulation
codes downloaded by Lee. Richter testified that the “crown jewels” of U.S. nuclear
weapons secrets are not the simulation codes that Lee downloaded, but the data from
over 1,000 nuclear tests. Richter also conceded to wanting Lee acquitted and that a
foreign power could use the codes to help design nuclear weapons, although not a
complete design. At the same hearing, Lee’s defense attorneys also argued that FBI
Special Agent Robert Messemer gave false testimony about Lee’s alleged deception
at the first hearing on his bail in December 1999. Messemer admitted that he gave
inaccurate testimony, an “honest mistake,” and that Lee did not lie to a colleague
(Kuok-Mee Ling) about writing a “resume,” but Messemer said that the error was not
meant to mislead the court.141
The hearing produced a major victory for Lee’s defense on August 24, 2000,
when U.S. District Judge James Parker reversed his decision from eight months earlier
and ruled that Lee may be released on bail to be kept under strict supervision at home.
Judge Parker’s ruled that the government’s argument to keep Lee in jail “no longer
has the requisite clarity and persuasive character.”142 Family, neighbors, and friends
planned a reception for Lee but had to repeatedly postpone it.
138 Loeb, Vernon and Walter Pincus, “Lee May Have Shared Copied Data with 8 Nations,
U.S. Says,” Washington Post, July 7, 2000.
139 Risen, James, “Security of Los Alamos Data Could Delay Trial U.S. Says,” New York
Times, August 7, 1999.
140 Pincus, Walter, “U.S. Judge Rules for Lee On Nuclear Data Issue,” Washington Post,
August 3, 2000.
141 Loeb, Vernon, “Nuclear Weapons Expert Urges Bail for Lee,” Washington Post, August
17, 2000; Vernon Loeb and Walter Pincus, “Judge: Lee Can Be Freed on Bail,” Washington
Post, August 25, 2000.
142 Loeb, Vernon and Walter Pincus, “Judge: Lee Can Be Freed on Bail,” Washington Post,
August 25, 2000; Order of U.S. District Judge, August 24, 2000.

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After a hearing on August 29, 2000, on the conditions of Lee’s release, the judge
ruled that Lee can be released on $1 million bail and with tight restrictions at home,
with a three-day stay for the prosecution to search his house, consult with the Justice
Department, and prepare for a possible appeal. The restraints would include
electronic monitoring of Lee, surveillance of his phone calls and mail, and restrictions
on visitors, including his daughter and son. However, the government argued,
unsuccessfully, that restrictions should also cover Lee’s communications with his
wife, Sylvia.143 Lee’s family and friends had offered over $2 million in assets for bail.
In an opinion, dated August 31, 2000, Judge Parker discussed at length new
revelations in the case that warranted his granting of release on bail after over eight
months. He said, “while the nature of the offenses is still serious and of grave
concern, new light has been cast on the circumstances under which Dr. Lee took the
information, making them seem somewhat less troubling than they appeared to be in
December.” He noted, among many points, that top weapons designers testified that
the information Lee downloaded is less sensitive than previously described; that FBI
Agent Robert Messemer “testified falsely or inaccurately” in December 1999 about
Lee; that the government has an alternative, less sinister, theory that Lee sought to
enhance prospects for employment abroad; that the government never presented
direct evidence that Lee intended to harm the United States; that family, friends, and
colleagues supported Lee’s character; and that what the government had described
as the “crown jewels” of the U.S. nuclear weapons program “no longer is so clearly
deserving of that label.”144
Meanwhile, several groups of scientists wrote to express concerns about what
they considered unfair treatment of Lee. For example, on August 31, 2000, the
National Academy of Sciences, National Academy of Engineering, and the Institute
of Medicine wrote to Attorney General Janet Reno expressing concerns that Lee
“appears to be a victim of unjust treatment” and “the handling of his case reflects
poorly on the U.S. justice system.”145
Then, very shortly before Lee’s scheduled release on bail on September 1, 2000,
the 10th U.S. Circuit Court of Appeals ordered a temporary stay of Lee’s release,
pending a hearing. Soon after, the U.S. Attorney filed a formal request, saying that
Lee’s release would pose “an unprecedented risk of danger to national security.”146
Lee’s Plea Agreement. Then, on September 10, 2000, the prosecution and
defense revealed that they had negotiated a plea agreement, under which Lee would
143 Vernon Loeb and Walter Pincus, “Lee Could be Freed on Bail Friday,” Washington Post,
August 30, 2000.
144 Walter Pincus and Vernon Loeb, “Judge Questions Nuclear Case,” Washington Post,
September 6, 2000; U.S. District Judge James Parker, Memorandum Opinion, August 31,
2000.
145 National Academy of Sciences, National Academy of Engineering, and Institute of
Medicine, open letter to the U.S. Attorney General, August 31, 2000.
146 Vernon Loeb, “At Last Minute, U.S. Court Bars Lee’s Release on Bail,” Washington Post,
September 2, 2000.

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plead guilty to one felony count of unlawful retention of national defense information,
help the government to verify that he destroyed the seven tapes (as he has
maintained), and the government would drop the other 58 counts and free Lee (with
sentence to the nine months he served in jail). U.S. Attorney General Janet Reno and
FBI Director Louis Freeh reportedly approved the plea agreement, which had been
negotiated over the previous several weeks.147 At times citing the Judge’s rulings,
Lee’s defense, some reporters, and critics said that the prosecution’s case had
crumbled and represented a gross injustice that threatened the rights of all Americans
because of politics. However, the prosecution and Clinton Administration officials
argued that Lee’s downloading of files was unlawful and finding out what happened
to the computer tapes was more important than proceeding to trial.
After three days of delays, the prosecution and defense reached final agreement
on the plea. On September 13, 2000, Wen Ho Lee pleaded guilty to unauthorized
possession of defense information (downloading files to tapes using an unsecure
computer). The judge sentenced Lee to 278 days in jail (the nine months Lee already
served) and freed him. Lee agreed to answer questions for 10 days over three weeks
starting on September 26, 2000. The government may prosecute Lee, have him take
a polygraph test, and nullify the plea agreement if the government believes Lee is
lying. Both sides agreed to withdraw pending motions, including that of the defense
on selective prosecution. In a dramatic conclusion to the case, Judge Parker noted
“the fact that [he] lost valuable rights as a citizen” and apologized to Lee for the
“unfair manner [he was] held in custody.” Parker said that he found it “most
perplexing” that the government now “suddenly agreed” to Lee’s release, despite its
earlier warnings of risks to national security. The judge blamed the executive branch,
particularly top officials of the Departments of Energy and Justice, saying they “have
embarrassed our entire nation and each of us who is a citizen of it.”148 As a result of
the Judge’s remarks, Attorney General Reno launched two internal reviews of the
prosecution of Lee.149
In response, U.S. Attorney Norman Bay argued that “this is a case about a man
who mishandled huge amounts of nuclear data and got caught doing it.” He added
that justice is served because Lee must “tell us what he did with the tapes ...
something he refused to do for approximately the past 18 months.”150 Attorney
General Reno said that “this is an agreement that is in the best interest of our national
147 Bob Drogin, “Scientist to Accept Plea Deal; Likely to Be Freed Today,” Los Angeles
Times, September 11, 2000; James Sterngold, “U.S. to Reduce Case Against Scientist to a
Single Charge,” New York Times, September 11, 2000.
148 Richard Benke, “Wen Ho Lee Set Free After Pleading Guilty to One Count,” AP,
September 13, 2000; Vernon Loeb, “Physicist Lee Freed, With Apology,” Washington Post,
September 14, 2000.
149 Vise, David A. and Ellen Nakashima, “Two Internal Reviews Launched in Lee Case,”
Washington Post, September 23, 2000.
150 Marcus Kabel, “Wen Ho Lee Freed Amid Apologies from Judge,” Reuters, September 13,
2000.

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security in that it gives us our best chance to find out what happened to the tapes.”151
FBI Director Louis Freeh stated that it was four weeks before the plea agreement –
even before the last bail hearings – that the plea bargaining began and that
“determining what happened to the tapes has always been paramount to
prosecution.”152 However, President Clinton criticized the pre-trail detention of Lee,
saying “I always had reservations about the claims that were being made denying him
bail.”153 (See also Role of the White House.)
Later, it was revealed that the delay in the plea agreement resulted from Lee’s
disclosure on September 11, 2000 that he had made copies of some or all of the tapes
and revisions to the agreement to cover information about the copies.154
As part of his plea agreement, Lee, now considered by DOE to be retired (not
fired), agreed to answer questions for up to 10 days about what happened to the
tapes. The questioning began on October 17, 2000.155 On November 7, Lee agreed
to 13 more hours of questioning over two days, beginning on December 11, 2000.156
Meanwhile, in late November and early December 2000, FBI agents searched a public
landfill in New Mexico, trying to find the tapes that Lee says he threw away in
January 1999 but reportedly did not find any of them.157
Sylvia Lee, Deutch Case, and Other Issues. A number of other issues
complicated the case on Wen Ho Lee. One issue was the relationship between the
FBI and the suspect and his wife, Sylvia Lee. Contrary to earlier reports that a trip
the Lees took to China in the 1985 was suspicious because Mrs. Lee, a secretary, was
the one invited to speak, it now appears that she had been informing on PRC visitors
for the FBI from 1985 to 1991 and that Los Alamos encouraged her to attend the
conference.158 In addition, it has been reported that Wen Ho Lee cooperated with the
FBI and passed a polygraph in 1982. Lee helped the FBI after he had made an
intercepted call to another scientist at Lawrence Livermore lab who was under
151 Department of Justice, “Statement of Attorney General Janet Reno on Today’s Guilty Plea
by Wen Ho Lee,” September 13, 2000.
152 FBI, “Statement by FBI Director Louis J. Freeh Concerning Wen Ho Lee Case,”
September 13, 2000.
153 White House, Remarks by the President on Patients’ Bill of Rights Upon Departure,
September 14, 2000.
154 Pincus, Walter and Vernon Loeb, “U.S. is Probing Lee’s Multiple Copying of Data,”
Washington Post, September 20, 2000.
155 Pincus, Walter, “FBI Agents Begin Interrogation of Scientist Lee,” Washington Post,
October 18, 2000.
156 “Lee Agrees to Answer Additional Questions,” Washington Post, November 19, 2000.
157 Loeb, Vernon and Walter Pincus, “FBI Seeks Computer Tapes in Lee Case,” Washington
Post, November 29, 2000; Walter Pincus, “Lee: Tapes Went in Trash,” Washington Post,
December 1, 2000; “For Government, Wen Ho Lee Mystery Deepens,” Washington Post,
December 15, 2000.
158 Pincus, Walter, “FBI Aided By Los Alamos Scientist’s Wife,” Washington Post, April 26,
1999.

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suspicion of espionage. The press reported in July 2000 that Sylvia Lee informed on
visiting PRC scientists for the CIA in the 1980s, and Wen Ho Lee also met with the
CIA officer who worked with his wife before the Lees visited the PRC in 1986.159
Another issue for Lee’s case is the government’s decision not to prosecute
former DCI John Deutch. There is a debate about whether Deutch’s case is
analogous to Lee’s, with some saying that the treatment of Lee is unfair and there is
a double-standard, and others arguing that the two people had different intentions.
The CIA investigated Deutch (DCI in 1995-1996) for repeatedly mishandling
classified information and moving many classified intelligence files to his unsecured
personal computers in his house, computers used to access the Internet and thus
vulnerable to attacks. The files reportedly include 17,000 pages of documents,
including top secret materials and files about presidentially-approved covert action.
Further, the CIA is said to have reported that Deutch may have tampered with
evidence allegedly showing his improper handling of classified files, including, on
December 20, 1996, trying to delete over 1,000 classified files stored on one of four
portable memory cards. Additional reports disclose that the CIA’s inspector general’s
classified report concluded that top CIA officials impeded the agency’s investigation
of Deutch, possibly to allow the time limit on appointing an independent counsel to
lapse, and that DCI George Tenet has set up a special panel to examine those findings.
The CIA’s investigation of Deutch began in December 1996, when he was
leaving office. The CIA did not notify the Justice Department until early 1998. The
Senate Intelligence Committee was notified of the case in June 1998. The Justice
Department decided in April 1999 not to prosecute, apparently without any FBI
investigation and before the CIA inspector general issued its report. After the
inspector general’s report was completed in July 1999, the current DCI, in August
1999, suspended Deutch’s security clearance indefinitely. According to the CIA’s
announcement, the inspector general concluded that while no evidence was found that
national security information was lost, “the potential for damage to U.S. security
existed.” The Senate Intelligence Committee received a copy of the inspector
general’s report in late August 1999.160
On February 18, 2000, the CIA’s inspector general released an unclassified
report of its investigation into Deutch’s case.161 The report found, among other
findings, that Deutch had processed classified information on unsecure computers that
were connected to the Internet and thus were “vulnerable to attacks by unauthorized
159 Stober, Dan, “Wen Ho Lee’s Wife Worked for CIA,” San Jose Mercury News, July 23,
2000.
160 Klaidman, Daniel, “Was the Spymaster Too Sloppy,” Newsweek, April 19, 1999; Steven
Lee Myers, “Former Chief of CIA Is Stripped of Right to Classified Information,” New York
Times, August 21, 1999; “Double Trouble,” Newsweek, November 8, 1999; James Risen,
“C.I.A. Inquiry of Its Ex-Director Was Stalled at Top, Report Says,” New York Times,
February 1, 2000; Senate Intelligence Committee, “Senate Select Committee on Intelligence
Chairman and Vice Chairman Comment on Deutch Allegations,” news release, February 1,
2000.
161 CIA Inspector General, “Report of Investigation: Improper Handling of Classified
Information by John M. Deutch (1998-0028-IG),” February 18, 2000.

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persons.” Moreover the information concerned covert action, Top Secret
communications intelligence, and the National Reconnaissance Program budget. The
report concluded that despite Deutch’s knowledge of prohibitions against processing
classified information on unclassified computers, he “processed a large volume of
highly classified information on these unclassified computers, taking no steps to
restrict unauthorized access to the information and thereby placing national security
information at risk.” The report also criticized “anomalies” in the way senior CIA
officials responded to the problem.
Reportedly concerned about appearances of unfairness in comparisons between
the cases involving Wen Ho Lee and John Deutch, Attorney General Janet Reno
announced on February 24, 2000, that her department would review Deutch’s case.162
Then, by May 2000, the Justice Department and the FBI began a criminal
investigation of whether Deutch had mishandled classified information – in a reversal
of Reno’s 1999 decision not to prosecute.163 By August 2000, the former prosecutor
whom Reno asked to review the case, Paul Coffey, reportedly decided to recommend
that the Justice Department prosecute Deutch, and Reno is to make the final
decision.164 By September 2000, the Senate Intelligence Committee met in closed
session with DCI Tenet on Deutch’s case, and Coffey reportedly may recommend a
charge of misdemeanor against Deutch for taking classified information home without
authorization.165
The resignation of Notra Trulock, DOE’s primary whistleblower, in August 1999
may also complicate the investigation. As the Washington Post wrote, “Mr. Trulock
may well have stated the overall problem in terms more dramatic than the evidence
clearly supported. And his single-mindedness with respect to Los Alamos and Mr.
Lee in particular — which is alleged by some detractors to have been related to Mr.
Lee’s ethnicity — also may have closed off significant investigative leads.”166 Trulock
blames the FBI for mishandling and delaying the W88 case.167
162 Loeb, Vernon and David A. Vise, “Reno Reviews CIA Probe of Ex-Director,” Washington
Post, February 25, 2000; Walter Pincus and Vernon Loeb, “U.S. Inconsistent When Secrets
are Loose,” Washington Post, March 18, 2000.
163 Risen, James, “Criminal Investigation Follows Review of Agency’s Internal Handling of
Deutch,” New York Times, May 6, 2000.
164 David A. Vise and Vernon Loeb, “Reno Weighs Whether to Prosecute Former CIA Chief,”
Washington Post, August 26, 2000; Jerry Seper, “Document-Misuse Charges Sought Against
Ex-CIA Boss,” Washington Times, August 29, 2000.
165 Robert L. Jackson, “Ex-CIA Director May Face Misdemeanor for Breach,” Los Angeles
Times, September 14, 2000.
166 “Mr. Trulock’s Resignation,” Washington Post, August 27, 1999.
167 CBS, “60 Minutes,” December 17, 2000.

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CRS-41
Further complicating the case is the debate over relative importance of the PRC’s
own modernization efforts as opposed to foreign technology acquisitions. Some say
that the investigation overstated the importance of PRC espionage.168
On Lee’s transfers of files to an unclassified computer at the lab that was
discovered after he was fired, Administration officials reportedly said that none of the
legacy codes that Lee had transferred to an unclassified computer appeared to have
been accessed by unauthorized people. Some say that lab employees may want to
transfer codes to unclassified computers with a better editing program.169
Further reports say that on numerous times in 1994, someone at the University
of California at Los Angeles (UCLA) used Wen Ho Lee’s password to access Los
Alamos’ computer system via the Internet. Lee’s daughter, Alberta, who was
majoring in mathematics at UCLA, has testified that she accessed the more powerful
computer systems at Los Alamos and also at the Massachusetts Institute of
Technology to play a computer game called “Dungeons and Dragons.” Prosecutors
have questioned this.170
Lee’s case is further complicated by the FBI’s reportedly aggressive tactics in
his interrogation on March 7, 1999, the day before he was fired from Los Alamos,
which was before the government discovered his downloading of files to tapes.
According to the transcript, FBI agents falsely told Lee that he had failed a polygraph
given by DOE in December 1998, when Lee had actually scored highly for honesty.
The agents also threatened Lee with arrest and execution for espionage. Lee
maintained his innocence throughout the interrogation. Some say the FBI was unfair
and biased in misleading Lee, but others say the tactic is accepted practice in law-
enforcement in trying to elicit confessions. At a hearing in late December 1999, the
prosecution conceded that Lee did pass the DOE’s polygraph but said that he failed
the polygraph given by the FBI in February 1999.171 Moreover, according to a report,
the FBI changed the results of Lee’s DOE polygraph, which showed a high degree of
truthfulness. Weeks after Lee had passed that test, DOE changed the finding to
“incomplete” instead, and the FBI later said that Lee failed the test.172
Another report said that Lee initially did not comprehend the severity of the
government’s investigation of him and that he was wholly naive and unprepared for
the FBI’s intensified interrogation, which actually began on March 5, 1999. Robert
Vrooman, then head of counterintelligence at Los Alamos, listened in another room.
He said that he and the agents came away convinced Lee was not a spy. However,
168 Broad, William J., “Spies Versus Sweat: The Debate Over China’s Nuclear Advance,”
New York Times, September 7, 1999.
169 Loeb, Vernon, “Spy Suspect Cooperated with FBI in ‘82,” Washington Post, May 2,
1999.
170 Pincus, Walter, “U.S. Probes Remote Accessing of Los Alamos Computer,” Washington
Post, January 24, 2000.
171 Loeb, Vernon and Walter Pincus, “FBI Misled Wen Ho Lee Into Believing He Failed
Polygraphy,” Washington Post, January 8, 2000.
172 CBS Evening News, “Wen Ho Lee’s Polygraph Results Questioned,” February 5, 2000.

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CRS-42
someone at the FBI then ordered two agents, Carol Covert and John Podenko, to
conduct the “hostile interview” of Lee on March 7, 1999, telling him falsely that he
had failed a polygraph, warned him of “electrocution” and never seeing his children
again, and demanded that he sign a confession of “espionage” with a potential death
penalty, all without the counsel of a lawyer. According to Vrooman, Covert was
“distraught” after that aggressive interview, because she did not believe Lee was
guilty, took three months sick leave, and transferred out of the Sante Fe office.173
Racial Profiling and Selective Prosecution. There are concerns that, in
rightfully protecting national security, racial profiling and selective prosecution have
been used in law-enforcement and that Lee, as an American entitled to a presumption
of innocence, may have been unfairly targeted as the prime suspect in a narrow
investigation and in media reports because of his Chinese ethnicity (although he was
born in Taiwan).174 Aside from the implications of these issues for Lee’s case, these
issues raise questions about the effectiveness of the government’s approach in
countering PRC espionage in general and in investigating the W88 case in particular.
In his public statement on “60 Minutes” on August 1, 1999, Lee said he believes
he has been made a scapegoat by investigators, because he was the only Asian
American working on nuclear weapon designs in the sensitive X Division at Los
Alamos in the last 18 years. Ed Curran, head of counterintelligence at DOE, is
quoted in the same show as expressing concern that “since Wen Ho Lee has not been
proven guilty of anything and thus must be presumed innocent, the surfacing of his
name has been devastating to his family and to his life.”
The National Asian Pacific American Legal Consortium wrote a letter to
Secretary Richardson on August 5, 1999, denouncing his accusation that Lee used the
“race card” and expressing concerns about racial profiling. On August 10, 1999, the
Committee of 100, an organization comprised of prominent Americans of Chinese
descent, sent a letter to Attorney General Reno and Secretary of Energy Richardson
expressing concerns about “selective investigation” based on Lee’s ethnicity. The
letter said, “Dr. Lee and the nation deserve a case made on the merits of a thorough
and professional investigation, not a racist witchhunt.” The Coalition of Asian Pacific
American Federal Employee Organizations (CAPAFEO) presented a position paper
to President Clinton on September 30, 1999, which urged the Administration “to take
strong and effective measures to protect the rights and civil liberties of Americans of
Asian descent by vigorously enforcing our nation’s laws which prohibit discrimination
based on race of national origin.” The group wrote that “while law enforcement and
counter-intelligence agencies must be ever vigilant, in their zeal, they must also be
careful to safeguard the civil and employment rights of all Americans.”175
173 Bob Drogin, “How FBI’s Flawed Case Against Lee Unraveled,” Los Angeles Times,
September 13, 2000.
174 Loeb, Vernon, “Spy Probe Worries Chinese Americans,” Washington Post, August 14,
1999.
175 Coalition of Asian Pacific American Federal Employee Organizations (CAPAFEO), “Los
Alamos Position Paper,” sent to President Clinton on September 30,1999 and presented to the
Congressional Asian Pacific Caucus on October 5, 1999.

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CRS-43
In August 1999, Robert Vrooman, former head of counterintelligence at Los
Alamos, publicly said that Wen Ho Lee was targeted because he is an American of
Chinese descent and that the case against “was built on thin air.” Vrooman issued his
comments after Secretary Richardson recommended disciplinary action against him
and two other former Los Alamos officials for alleged mishandling of the
counterintelligence investigation. Vrooman said that “Lee’s ethnicity was a major
factor” in targeting him, while “a lot of Caucasians” were not investigated. Vrooman
also said that a detailed description of the W88 warhead was distributed to 548
recipients throughout the government, military, and defense companies, so the
information could have leaked from many sources.176 Two others who were involved
in the investigation, Charles Washington and Michael Soukup, also said that Lee was
singled out as a suspect because of his ethnicity, not because of evidence.177
A news report said that Notra Trulock, who led the investigation until the
summer of 1996, had compiled a list of 70 people at Los Alamos who visited China
and then narrowed the list to 12 people. He said he give the list to the FBI, which
then eliminated the other 11 suspects, leaving Wen Ho Lee as the prime suspect. The
initial list of 70 people included those with no access to classified or weapons
information and who traveled to China on non-work related trips. One Caucasian
scientist, however, who was a specialist in the same field as Lee (hydrodynamics),
worked on classified information, and went to China on a professional trip, was not
among the 12. Further, Robert Vrooman said that there were 15 people who
conducted nuclear weapons research and visited China, but were not on the list of 12
suspects.178
However, Notra Trulock, who headed the counterintelligence investigation at
DOE, has insisted that “race was never a factor.”179 The DOE investigator who
focused on Lee, Daniel Bruno, said on November 1, 2000, that Lee was the prime
suspect because of his behavior, not because of his ethnicity.180
Senators Thompson and Lieberman, whose Governmental Affairs Committee
reviewed the investigation, wrote on August 26, 1999, that “the evidence we have
seen and heard provides no basis for the claim that the initial DOE-FBI inquiry
focused upon the Lees because of their race. Only much later in the process, once
Mr. Lee had already been identified as the chief suspect, did the investigation consider
the Lees’ ethnicity — and then only because, according to FBI counterintelligence
176 Loeb, Vernon, “Ex-Official: Bomb Lab Case Lacks Evidence,” Washington Post, August
17, 1999; William J. Broad, “Official Asserts Spy Case Suspect Was a Bias Victim,” New
York Times, August 18, 1999.
177 Loeb, Vernon and Walter Pincus, “Espionage Whistleblower Resigns,” Washington Post,
August 24, 1999.
178 James Sterngold, “U.S. to Reduce Case Against Scientist to a Single Charge,” New York
Times, September 11, 2000.
179 Broad, William J., “Official Denies Spy Suspect Was Victim of Bias,” New York Times,
August 19, 1999.
180 Loeb, Vernon, “Prober: Lee’s Ethnicity Wasn’t Factor,” Washington Post, November 2,
2000.

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CRS-44
experts, Beijing’s intelligence actively tries to recruit Chinese American scientists
working in sensitive U.S. facilities.”181 One of these experts, Paul Moore, who
headed the FBI’s counterintelligence efforts against China from 1978 to 1998, has
written publicly that “Chinese Americans are subjected to oppressive ethnic
intelligence profiling” by China and that “China’s espionage methodology, not a
particular spy, is the main threat.” He has explained the PRC’s unconventional
espionage by saying that “China doesn’t so much try to steal secrets as to try to
induce foreign visitors to give them away by manipulating them into certain
situations.”182
Others argue that even if the PRC targets ethnically Chinese people, the
government should not target Americans of Chinese heritage as a group, nor would
such efforts be effective to counter PRC espionage. The policy director of Chinese
for Affirmative Action and an associate professor of law at Howard University wrote
that Lee’s case “has raised disturbing allegations that the government uses a racial
profile when investigating espionage” and argued that “law enforcement based on
racial profiling is also ineffective.”183 Former Ambassador to China James Lilley
wrote that “the fact that China tries to recruit spies doesn’t mean that Chinese-
Americans as a group should be suspect.”184 In his statement in support of Wen Ho
Lee’s motion for discovery of materials related to selective prosecution, Charles
Washington, a former Acting Director of Counterintelligence at DOE, declared that
he is not aware of any “empirical data that would support a claim that Chinese-
Americans are more likely to commit espionage than other Americans.”185
Members of Congress have expressed concern about possible racial profiling
used in the investigation of Wen Ho Lee and ramifications of this case on Americans
of Asian Pacific heritage. In May 1999, Representative Wu introduced H.Con.Res.
124 to express the sense of Congress relating to recent allegations of espionage and
illegal campaign financing that have brought into question the loyalty and probity of
Americans of Asian ancestry. Among other provisions, the resolution calls upon the
Attorney General, Secretary of Energy, and the Commissioner of the Equal
Employment Opportunity Commission to vigorously enforce the security of America’s
national laboratories and investigate all allegations of discrimination in public or
private workplaces. The House passed H.Con.Res. 124 with the bipartisan support
of 75 cosponsors, on November 2, 1999. Moreover, on August 5, 1999, Senator
Feinstein introduced S.Con.Res. 53 to condemn prejudice against individuals of Asian
and Pacific Island ancestry in the United States. The Senate passed the resolution on
181 Thompson, Fred and Joseph Lieberman, “On the Chinese Espionage Investigation,” (letter
to the editor), Washington Post, August 26, 1999.
182 Moore, Paul D., “How China Plays the Ethnic Card,” Los Angeles Times, June 24, 1999;
“Spies of a Different Stripe,” Washington Post, May 31, 1999; “China’s Subtle Spying,”New
York Times, September 2, 1999.
183 Theodore Hsien Wang and Frank H. Wu, “Singled Out, Based on Race,” Washington
Post, August 30, 2000.
184 James Lilley (former ambassador to China and former CIA officer), “Undoing the Damage
of the Wen Ho Lee Case,” New York Times, September 12, 2000.
185 Declaration of Charles E. Washington, August 11, 2000.

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CRS-45
July 27, 2000. The Congressional Asian Pacific Caucus held a briefing on October
5, 1999, at which Secretary Richardson and others spoke. Chairman Robert
Underwood said in his opening statement that “suspicions about a Chinese American
connection to espionage have formed without evidence and with potential damage to
innocent individuals.”186
Energy Secretary Richardson has declared that “while U.S. national security is
a top priority at the labs, I am also concerned that Asian Pacific Americans as a group
are finding their loyalty and patriotism questioned in the wake of recent espionage
allegations. This behavior is unacceptable and I will not tolerate it.”187 In June 1999,
Richardson established a Task Force Against Racial Profiling, and he received its
report and recommendations on January 19, 2000.188 The task force included 19
government employees, contractors, and U.S. Civil Rights Commissioner Yvonne
Lee. In their visits to various DOE sites, they found that “an atmosphere of distrust
and suspicion was common.” Such a hostile work environment for Americans of
Asian heritage resulted from the media exploitation of the espionage and related
allegations, and from managers and co-workers questioning the loyalty and patriotism
of some employees based on race. The task force made a number of
recommendations for using leadership, building trust, improving communication, and
making assessments.
Since 1999, the Equal Employment Opportunity Commission (EEOC) has
investigated whether the Livermore and Los Alamos labs have discriminated against
Americans of Asian Pacific heritage.189
In August 2000, supporting their selective prosecution motion filed in June 2000,
Lee’s defense attorneys had statements from two former senior DOE counter-
intelligence officials, Robert Vrooman and Charles Washington, contending that Lee
has been a victim of racial profiling and selective prosecution, including in the probe
led by Notra Trulock. Finding relevance to Lee’s contention that he has been singled
out for investigation and prosecution because of his race, Judge James Parker, on
August 25, 2000, ordered the government to hand over documents, sought by the
defense, to him by September 15, 2000, for his review and decision as to whether they
should be given to the defense attorneys.190 However, on September 13, 2000, when
186 Congressional Asian Pacific Caucus, briefing on the Federal Investigations at the
Department of Energy National Laboratories, October 5, 1999.
187 DOE news release, “Richardson Toughens Requirements For Unclassified Foreign Visits
and Assignments,” July 14, 1999.
188 DOE, Task Force Against Racial Profiling, “Final Report,” January 2000; “Richardson
Releases Task Force Against Racial Profiling Report and Announces 8 Immediate Actions,”
news release, January 19, 2000.
189 “U.S. Nuke Lab Probed Over Possible Discrimination,” Reuters, August 1, 2000.
190 James Sterngold, “Judge Orders U.S. to Turn Over Data in Secrets Inquiry,” New York
Times, August 30, 2000; Vernon Loeb, “Affidavits Cite Race in Probe of Lee,” Washington
Post, September 1, 2000; Order of U.S. District Judge James Parker, August 25, 2000;
Declaration of Robert Vrooman, August 10, 2000; Declaration of Charles E. Washington,
(continued...)

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CRS-46
the government and Wen Ho Lee reached a plea agreement, they also agreed to
withdraw pending motions. Responding to charges of selective prosecution after
Lee’s release, U.S. Attorney Norman Bay, who is an American of Asian heritage, said
that “Mr. Lee was not prosecuted because of his race, he was prosecuted because of
what he did. He compiled his own personal library of nuclear secrets ... This is a case
about a man who mishandled huge amounts of nuclear data and got caught doing
it.”191
Notification to Congress. The chair and ranking Democrat of the House
Intelligence Committee, Rep. Goss and Dicks, have been quoted as saying that they
were not sufficiently informed of the problems at the labs and the information that was
provided was “underplayed.”192 In addition, the Cox Committee’s bipartisan report,
approved in December 1998, urged Congress to insist on notification by the
Administration, citing “the fact that the heads of Executive departments and agencies
of the Intelligence Community failed adequately to comply with congressional
notification requirements of the National Security Act.” The Clinton Administration
responded that it has fulfilled its responsibilities to keep appropriate committees
informed.193
Representative Hunter, chairman of the House National Security Subcommittee
on Military Procurement, has stated that Elizabeth Moler, then Deputy Secretary of
Energy, failed to testify about the W88 case in an October 6, 1998 hearing that
included a closed session.194 On April 15, 1999, Representative Hunter held a hearing
to examine whether Moler (now a lawyer outside government) failed to provide
accurate and complete testimony in the closed session of the October 1998 hearing
and whether she instructed Notra Trulock, Acting Deputy Director of DOE’s Office
of Intelligence, to withhold critical information, including the W88 case, from
Congress. Trulock testified that Moler edited his written testimony to remove
references to “successful espionage” at the U.S. labs, even though the information
was cleared by the CIA for notification to Congress, and thus did not provide the
subcommittee with a full picture of the threat against the United States. Moler stated
that she did not provide certain information, because the questions were directed at
Trulock and he failed to fully disclose information; the subject of the hearing was on
the foreign visitors’ program (which was not involved in the espionage cases); some
190 (...continued)
August 11, 2000.
191 Marcus Kabel, “Wen Ho Lee Freed Amid Apologies from Judge,” Reuters, September 13,
2000.
192 Risen, James and Jeff Gerth, “China Stole Nuclear Secrets From Los Alamos, U.S.
Officials Say,” New York Times, March 6, 1999; David Sanger, “‘No Question,’ U.S. Says,
Leak Helped China,” New York Times, March 15, 1999.
193 NSC’s unclassified response to the recommendations, February 1, 1999.
194 Loeb, Vernon and Juliet Eilperin, “GOP Attacks’ Impact on China Ties Concerns White
House,” Washington Post, March 17, 1999; Bill Gertz, “Senators Briefed Privately on Spy
Case,” Washington Times, March 17, 1999.

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CRS-47
information was highly classified; and damaging information about PRC espionage
would “unfairly impugn” important DOE exchange programs.195
Furthermore, Trulock told the Senate Armed Services Committee on April 12,
1999, that his concerns were “ignored,” “minimized,” and sometimes “ridiculed”
especially by lab officials and that senior DOE officials “refused to authorize
intelligence” for several months before he could brief then Secretary Pena in July
1997. Trulock also charged that Moler denied him approval to respond to
Congressman Goss’ July 1998 request to brief the House Intelligence Committee on
the W88 case. According to Trulock, DOE officials, including Moler, stated concerns
about negative impacts on the credibility of the labs and lab-to-lab programs with
China and Russia. In response to Senator Levin’s statement that the FBI did brief the
Intelligence Committees 19 times from 1996 to 1999 on alleged espionage at the labs,
Trulock stated that DOE briefed the Senate Intelligence Committee in July 1996 and
the House Intelligence Committee in August 1996, but did not participate in the other
17 briefings. After 1996, Trulock said, he did not return to brief Congress until his
testimony to the House Select Committee on China in September 1998.196
As pointed out by Senator Levin, the Administration has said that it provided
numerous briefings to the Intelligence Committees about the cases involving China
and the labs. Moler has denied that she prevented Trulock from briefing
Representative Goss and that she took allegations of PRC espionage at DOE
seriously. On the question of whether the Administration was trying to prevent the
W88 case from interfering with the policy of engagement with China, Trulock
acknowledged that Gary Samore, an NSC official in charge of nonproliferation policy,
did encourage DOE to proceed with “counterintelligence efforts in order to protect
sensitive information at the laboratories.”197
The House Government Reform Committee held a hearing on June 24, 1999, on
its concerns about firings, demotions, and harassment of “whistle-blowers,” officials
at the Energy and Defense Departments who expressed concerns to Congress about
security problems. On July 2, 1999, Chairman Dan Burton wrote a letter to Defense
Secretary Cohen criticizing an alleged gag order at the Defense Threat Reduction
Agency (DTRA) against employees speaking to committee staff.198
Energy Secretary Richardson recognized the allegation that Moler sought to
deny information to Congress, when he announced an internal inquiry as one of seven
initiatives announced on March 17, 1999. In August 1999, Richardson announced the
195 Hearing of the House Armed Services Subcommittee on Military Procurement,
“Counterintelligence Problems at Department of Energy Labs,” April 15, 1999.
196 Hearing of the Senate Armed Services Committee, “Alleged Chinese Espionage at
Department of Energy Laboratories,” April 12, 1999; James Risen, “White House Said to
Ignore Evidence of China’s Spying,” New York Times, April 13, 1999; Hearing of the House
Armed Services Subcommittee on Military Procurement, April 15, 1999.
197 Hearing of the Senate Armed Services Committee, April 12, 1999.
198 Hudson, Audrey, “Congressman Asks Cohen to Lift Gag Order,” Washington Times, July
8, 1999.

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CRS-48
results of the internal probe by DOE’s Inspector General, which investigated the
question of obstructing briefings to former Secretary Pena and Congress. However,
the report failed to “establish with any certainty that any Departmental official,
knowingly or intentionally, improperly delayed, prohibited, or interfered with briefings
to Mr. Pena or to the congressional intelligence committees.”199 Notra Trulock, who
led the investigation at DOE, criticized the Inspector General’s report as “a
whitewash” and resigned as acting deputy director of intelligence to work at TRW
Inc., a defense contractor. He expressed frustration that he had been removed from
further involvement in the espionage investigation, called “Kindred Spirit,” and that
the internal DOE report failed to support his assertions of political interference.200
On March 8, 2000, Senator Specter, as part of his investigation under the
jurisdiction of the Senate Judiciary Subcommittee on Administrative Oversight and
the Courts, issued a report critical of the investigations of Wen Ho Lee. The report
criticized the FBI’s and DOE’s investigations as “inept.” It also criticized the
Department of Justice and Attorney General Janet Reno for not forwarding the FBI’s
request for a warrant to the FISA court, despite “ample, if not overwhelming,
information to justify the warrant.”201 However, Senator Charles Grassley, chairman
of the subcommittee, criticized the FBI for not telling Congress through most of 1999
that the Bureau had found that Lee was not the prime suspect in the espionage case
at Los Alamos. Senator Grassley said that he, along with Senators Specter and
Torricelli, had asked the General Accounting Office to examine whether a senior FBI
official (believed to be Neil Gallagher, head of the National Security Division) had
withheld documents from Congress in 1999. (The FBI then asked that the
investigation be suspended after Wen Ho Lee’s indictment.) Senator Grassley sent
a letter to Senator Specter that disputed his report, saying that the evidence against
Lee was weak.202
Role of the White House. Some raise questions about how seriously National
Security Advisor Sandy Berger took concerns about PRC espionage at the labs and
when he informed President Clinton about the W88 case as well as the neutron bomb
case. Some Members called for Berger to resign over the suspected compromise to
national security. There are reportedly discrepancies between various accounts of
when the President was briefed by the NSC about the alleged espionage cases and
whether the President knew about suspected continued PRC espionage into the
1990s. The President said on March 19, 1999, that “to the best of my knowledge, no
one has said anything to me about any espionage which occurred by the Chinese
199 DOE, news release, “Richardson Announces Results of Inquiries Related to Espionage
Investigation,” August 12, 1999.
200 Loeb, Vernon and Walter Pincus, “Espionage Whistleblower Resigns,” Washington Post,
August 24, 1999; James Risen, “Official Who Led Inquiry Into China’s Reputed Theft of
Nuclear Secrets Quits,” New York Times, August 24, 1999.
201 Senator Arlen Specter, “Report on the Investigation of Espionage Allegations Against Dr.
Wen Ho Lee,” March 8, 2000.
202 Loeb, Vernon, “GAO Probing Senior FBI Official,” Washington Post, March 9, 2000.

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CRS-49
against the labs, during my presidency.”203 After the New York Times reported on
April 8, 1999, that China sought additional neutron bomb data in 1995, however,
President Clinton explained his earlier statement as a response to a question
specifically about alleged PRC espionage at the labs, which were apparently not linked
to the neutron bomb case.204
In 1998, Berger reportedly told the Cox Committee that President Clinton was
informed early that year. In May 1999, Berger said that he briefed the President in
July 1997, after DOE briefed the NSC.205 The press reports that intelligence and
DOE officials briefed Berger as early as April 1996 on the W88 and the neutron bomb
cases. Berger says that, in 1996, the reports to him were “preliminary” and that “the
FBI hadn’t even begun its investigation” and there was no suspect. Berger further
explained that after a second briefing in 1997 that was “far more extensive”and
suggested that “there was a potentially greater problem with respect to Chinese
acquisition of sensitive information,” he did brief the President. Berger also explained
that the President did not raise the issue of PRC espionage at the October 1997
summit with PRC President Jiang Zemin because of the need to protect the secrecy
of an ongoing investigation.206 Yet, FBI Director Freeh testified in March 1999 that
the FBI began its case (concerning the W88 data) in September 1995 and that, in
August 1997, he told DOE officials that the stalled case was not as important as the
protection of information.207
The PFIAB said in June 1999 that “although the current National Security
Advisor was briefed on counterintelligence concerns by DOE officials in April of
1996, we are not convinced that the briefing provided a sufficient basis to require
initiation of a broad Presidential directive at that time. We are convinced, however,
that the July 1997 briefing, which we are persuaded was much more comprehensive,
was sufficient to warrant aggressive White House action.”
Also, the PFIAB revealed that the White House knew about PRC espionage at
the nuclear weapon labs earlier than 1996. In discussing the track record of the
Clinton Administration, the report noted briefly that, in 1995, after DOE officials met
with the FBI on suspected PRC espionage of U.S. nuclear weapon data, an analysis
group was formed at DOE to review the PRC nuclear weapon program, and senior
DOE, CIA, and White House officials discussed options. The PFIAB also noted in
its chronology that, in July 1995, senior DOE officials discussed possibility that
203 Eric Schmitt, “Clinton Says He Is Unaware Of Nuclear Spying During His Presidency,”
New York Times, March 20, 1999.
204 Clinton, William Jefferson, remarks at joint press conference with Chinese Premier Zhu
Rongji, Washington, D.C., April 8, 1999.
205 Cox Committee’s report, Volume I, p. 95.
206 Risen, James and Jeff Gerth, “China Stole Nuclear Secrets From Los Alamos, U.S.
Officials Say,” New York Times, March 6, 1999; Sandy Berger’s interview on NBC’s “Meet
the Press,” March 14, 1999; Jeff Gerth and James Risen, “Intelligence Report Points to
Second China Nuclear Leak,” New York Times, April 8, 1999.
207 Hearing of the House Appropriations Subcommittee on Commerce, Justice, State, and
Judiciary, March 17, 1999.

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CRS-50
“China may have classified U.S. nuclear design information with CIA, FBI, and White
House senior officials in several meetings.” Former White House Chief of Staff Leon
Panetta reportedly said that he was informed by then Energy Secretary Hazel O’Leary
in July 1995. Afterwards, Panetta reportedly requested then DCI John Deutch to
work with the NSC on the matter. Deutch briefed then National Security Advisor
Anthony Lake in November 1995. The senior officials reportedly did not brief
President Clinton in 1995.208 Sandy Berger was the Deputy National Security Advisor
at that time.
Right before the indictment of Wen Ho Lee, on December 4, 1999, top law-
enforcement, security, and DOE officials held a meeting at the White House on
whether to indict. Attorney General Janet Reno, National Security Advisor Sandy
Berger, Energy Secretary Bill Richardson, FBI Director Louis Freeh, DCI George
Tenet, and U.S. Attorney John Kelly attended.209
Then, after Wen Ho Lee was freed after 9 months under a plea bargain in
September 2000, President Clinton expressed criticisms of the pre-trail detention of
Lee, saying:
I always had reservations about the claims that were being made denying
him bail. And let me say – I think I speak for everyone in the White House
– we took those claims on good faith by the people in the government that
were making them, and a couple days after they made the claim that this
man could not possibly be let out of jail on bail because he would be such
a danger – of flight, or such a danger to America’s security – all of a
sudden they reach a plea agreement which will, if anything, make his
alleged defense look modest compared to the claims that were made against
him. So the whole thing was quite troubling to me, and I think it’s very
difficult to reconcile the two positions, that one day he’s a terrible risk to
national security, and the next day they’re making a plea agreement for an
offense far more modest then what had been alleged.210
Export Controls. Some critics have linked the controversy over lab security
with the Administration’s export control policy toward China. They cited the export
of high-performance computers to China.211 The Department of Commerce reported
to Congress in January 1999 that 191 such computers were exported to China in
1998, for which three end-use checks were conducted.212 There were also concerns,
208 Risen James and Jeff Gerth, “U.S. Is Said To Have Known of China Spy Link in 1995,”
New York Times, June 27, 1999.
209 Risen, James and David Johnston, “Decision Nears on the Fate of Ex-Los Alamos
Scientist,” New York Times, December 8, 1999.
210 White House, Remarks by the President on Patients’ Bill of Rights Upon Departure,
September 14, 2000.
211 Laris, Michael, “China Exploits U.S. Computer Advances,” Washington Post, March 9,
1999.
212 Department of Commerce, “Commerce Report: Growing Demand For U.S. High
(continued...)

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investigated by Congress in 1998, that exports of U.S. satellites have resulted in
transfers of missile technology to China.213 Some argued that the Administration’s
export control policies have allowed dual-use exports “of great strategic value” to
China that have resulted in greater damage to U.S. national security than the leaks of
nuclear weapon data.214 President Clinton, nonetheless, said that his Administration
has been determined to prevent diversions of sensitive technology to China and has
placed controls on exports to China that are “tougher than those applied to any other
major exporting country in the world.”215
Nuclear Cooperation with China. Some question whether it was appropriate
for the Administration to have expanded nuclear ties with China, including exchanges
between the two nuclear weapon establishments, while it had suspicions about
security compromises. At the 1997 U.S.-China summit, President Clinton promised
to issue certifications (signed in January 1998) to implement the 1985 nuclear
cooperation agreement; during congressional review, the Administration did not
discuss problems at the labs.216 At the 1998 summit in Beijing, DOE signed a
governmental agreement on peaceful nuclear cooperation, including exchanges at the
labs.217 The Administration argues that lab-to-lab exchanges were not the cause of
the alleged security problems.
Criticisms of Partisanship
Still others urge policy-makers to move beyond partisan debates to urgently
upgrade U.S. security at the labs, assess the potential damage from China’s reported
compromise of U.S. secrets, and take corrective action. They also caution against
partisan attacks in this case that might damage broader and long-term U.S.-China
relations that are in U.S. interests, such as efforts on trade and weapon
nonproliferation. They point out that, as FBI Director Freeh confirmed, “great
vulnerability” to intelligence compromises of security at the nuclear weapon labs has
been identified since 1988, ten years prior to PDD-61. Freeh said, “unfortunately, this
situation has been well documented for over ten years.” Those concerns about
212 (...continued)
Performance Computers,” press release, January 8, 1999.
213 See CRS Report 98-485, China: Possible Missile Technology Transfers From U.S.
Satellite Export Policy — Background and Chronology, by Shirley A. Kan.
214 Wisconsin Project on Nuclear Arms Control, “U.S. Exports to China, 1988-1998: Fueling
Proliferation,” April 1999.
215 President William Jefferson Clinton, speech to the U.S. Institute of Peace, at the
Mayflower Hotel, Washington, D.C., April 7, 1999.
216 CRS Issue Brief IB92056, Chinese Proliferation of Weapons of Mass Destruction:
Current Policy Issues, by Shirley A. Kan.
217 Agreement between the Department of Energy of the United States of America and the
State Development Planning Commission of the People’s Republic of China on Cooperation
Concerning Peaceful Uses of Nuclear Technologies, June 29, 1998.

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CRS-52
counterintelligence at DOE included a hearing held by Senator John Glenn in 1988
and studies by the FBI, CIA, and GAO since then.218
Implications for U.S. Policy
Counterintelligence219
The Los Alamos incident led to several reassessments. As discussed above, the
Intelligence Community undertook an assessment of potential damage to national
security from possible leads of nuclear weapons secrets. DCI George Tenet asked a
group of outside experts headed by retired Admiral David Jeremiah, former Vice
Chairman of the Joint Chiefs of Staff, to review the in-house effort and they concurred
in its judgments.
Efforts to formalize the government’s counterintelligence efforts have been
underway since the aftermath of the arrest of Aldrich Ames, the CIA official convicted
of espionage. A Presidential directive was signed in May 1994 placing the policy and
coordinating machinery of counterintelligence in the hands of the NSC and created
a National Counterintelligence Policy Board composed of representatives of the
principal law enforcement and intelligence agencies, reporting to the National Security
Advisor. The Board was subsequently given a statutory charter in the FY1995
Intelligence Authorization Act (P.L. 103-359).
A major goal in establishing the Counterintelligence Policy Board was
coordination of CIA and FBI efforts with a focus on counterintelligence at intelligence
agencies; concerns about Energy Department laboratories were not public discussed
in 1994. It is generally agreed that coordination among law enforcement and
intelligence agencies has improved significantly in recent years. As a result, however,
of concerns dating from at least 1995 that China may have acquired sensitive
information from Los Alamos, PDD-61 was issued in February 1998, mandating a
stronger counterintelligence program within DOE laboratories. According to Energy
Secretary Richardson, writing in March 1999, steps taken in response to PDD-61
included new counterintelligence professionals based at the laboratories, a doubling
of the budget for counterintelligence, a new screening and approval process fo foreign
scientists seeking access to the laboratories, and more extensive security
reviews–including the use of polygraphs–for scientists working in sensitive
programs.220
The controversy has led to consideration of intelligence-related legislation.221
218 Testimony of FBI Director Louis Freeh before the House Appropriations Subcommittee
on Commerce, Justice, State, and Judiciary, March 17, 1999.
219 Prepared by Richard A. Best, Jr., Specialist in National Defense.
220 Bill Richardson, “Guarding Our Nuclear Security,” Washington Post, March 15, 1999.
221 See CRS Issue Brief IB10012, Intelligence Issues for Congress, by Richard Best.

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Nuclear Nonproliferation and Lab Exchanges
In addition to questions about PRC weapon designs, there are implications for
U.S. policy posed by China possibly passing U.S. nuclear weapon secrets to other
countries. As discussed above, in the late 1970s to 1980s, the PRC reportedly
acquired U.S. data on the neutron bomb from Livermore and passed it to Pakistan.
The United States and other countries have been concerned about PRC nuclear
proliferation, especially in Pakistan and Iran.222 Advanced U.S. warheads have
features of value to would-be nuclear weapon states. These features might permit a
nation to develop more efficient warheads, in which case it could build more bombs
with its supply of uranium or plutonium. They might solve engineering problems or
suggest production shortcuts. If China passed U.S. nuclear weapon information to
another country, it could develop and deploy a more potent nuclear force faster.
The CIA’s damage assessment, that was briefed to Congress and the
Administration on April 21, 1999, cited a greater concern for nuclear proliferation.
It acknowledged that China could pass U.S. nuclear weapon secrets to other
countries, although it is not known whether China has done so. The assessment
cautioned that, now that the PRC has more modern U.S. nuclear weapon information,
it “might be less concerned about sharing [its] older technology.”223
India or another country concerned about the advancement of PRC nuclear
weapons might pursue further development of nuclear weapons and the missiles to
deliver them in response to reports that China may have acquired designs for the
W88. Citing security concerns about China, India conducted several nuclear tests in
May 1998 and has not signed the CTBT.
Citing concerns about nuclear proliferation, Members looked at curtailing the
U.S.-China lab-to-lab program that the Clinton Administration initiated in July 1994
and formalized in a June 1998 official agreement. Leading a delegation to the Los
Alamos National Lab, Senator Shelby, Chairman of the Intelligence Committee, is
quoted as saying on April 12, 1999, that a “tourniquet” needs to be placed on the
“hemorrhaging” of bomb secrets to foreign countries.224 If there are security gaps at
the labs stemming from foreign exchanges, Congress may want to ensure that
adequate counterintelligence measures are in place. (See Legislation above.)
The Intelligence Community’s April 1999 damage assessment states concerns,
highlighted by some, about PRC “technical advances” based on contact with scientists
from the United States and other countries, among a variety of sources of
information. (Other countries may include Russia.) The review panel’s note on the
222 See CRS Issue Brief IB92056, Chinese Proliferation of Weapons of Mass Destruction:
Current Policy Issues, by Shirley A. Kan.
223 CIA, “The Intelligence Community Damage Assessment On the Implications of China’s
Acquisition of U.S. Nuclear Weapons Information On the Development of Future Chinese
Weapons,” (unclassified release), April 21, 1999.
224 Brooke, James, “Senator Tells Nuclear Bomb Labs To End Foreign Scientists’ Visits,”
New York Times, April 13, 1999.

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damage assessment also warned of the dangers of exchanges between U.S. and PRC
or Russian nuclear weapon specialists, urging that a separate net assessment be done
on such formal and informal contacts. Yet, the panel also noted that “the value of
these contacts to the U.S., including to address issues of concern — safety, command
and control, and proliferation — should not be lost in our concern about protecting
secrets.”
Another report on PRC espionage included warnings about exchanges at the
labs. According the CIA and FBI’s 1999 unclassified report, “PRC scientists, through
mutually beneficial scientific exchange programs, gather [science and technology]
information through U.S. national laboratories.”225
China’s nuclear weapon facilities include the China Academy of Engineering
Physics (CAEP), also known as the Ninth Academy, at Mianyang, Sichuan province;
Institute of Applied Physics and Computational Mathematics (IAPCM), in Beijing;
High Power Laser Laboratory, in Shanghai; and Northwest Institute of Nuclear
Technology (NINT), near Xian.226 China’s nuclear weapon installations have been in
transition since a reorganization of the defense industrial sector in the spring of 1998
that included the civilianization of the Commission of Science, Technology, and
Industry for National Defense (COSTIND) solely under the State Council. PRC
nuclear weapon facilities may now be partly or fully subordinate to the Chinese
military’s new General Equipment Department set up in April 1998 to centralize and
improve control over research and development, production, and deployment of
weapons.
Placing restrictions on the foreign visitor program, however, may have
implications for U.S. policy on arms control and nonproliferation. The Administration
argues that foreign exchanges have not compromised U.S. security and have not
involved weapon secrets. Moreover, contacts with foreign nuclear scientists allow
U.S. nuclear weapon labs to learn about the secretive nuclear weapon establishment
in China – especially as it is undergoing changes. In October 1998, John Browne,
Director of Los Alamos, testified that “access to classified information by foreign
nationals is not allowed” in DOE’s foreign visitor program.227 The Administration
says that engagement of PRC and other scientists fosters support for arms control and
nonproliferation objectives as well as advances U.S. interests in making sure that
foreign nuclear powers have sufficient control over nuclear materials so that they are
225 CIA and FBI, “Report to Congress on Chinese Espionage Activities Against the United
States,” December 1999, released March 8, 2000.
226 Department of Commerce, “Entity List, Entities of Proliferation Concern Listed in
Supplement No. 4 to Part 744 of the Export Administration Regulations,” updated November
19, 1998;” Defense Intelligence Agency, Defense Intelligence Reference Document DI-1921-
60A-98, “China’s International Defense-Industrial Organizations,” June 1998; Conference
at the Monterey Institute of International Studies, November 1997.
227 105th Congress, Hearing of the House National Security Subcommittee on Military
Procurement, “Department of Energy’s Foreign Visitor Program,” October 6, 1998.

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not leaked to rogue states.228 The former Director of Los Alamos argues that “any
contact with China’s nuclear weapons establishment needed to be clearly focused to
avoid aiding their weapons program. Hence, the Department of Energy authorized
only small, restricted interactions on nuclear materials protection and verification
technologies for arms control treaties. These activities were and still are clearly in our
national security interest.”229 Testifying before the Cox Committee in October 1998,
C. Paul Robinson, director of Sandia, stated that “the lab-to-lab program with China
has been beneficial in several ways. It provides the United States with perhaps its
only window on the Chinese nuclear weapons program. . . Moreover, the program
has helped promote the establishment of an arms control program in China.”230
U.S.-China Relations
The disclosures about suspected PRC espionage at the U.S. labs have further
complicated the Administration’s policy of engagement with China. Vice President
Gore said on March 9, 1999, that “having a relationship with [the Chinese] within
which we can try to affect their behavior and improve human rights, eliminate unfair
trade practices, and bring about the kinds of changes that will lead to further
democratization in China, these things are in our interest.”231 On March 11, 1999,
President Clinton first defended his policy against charges of laxity in dealing with
China and asserted that engagement “has paid dividends” for U.S. interests in weapon
nonproliferation, Korea, and the Asian financial crisis. He also argued against an
“isolated no-contact” relationship with Beijing.232 In a major speech on China policy
on the eve of PRC Premier Zhu Rongji’s visit, President Clinton again explained that
seeking to resolve differences with China cannot be achieved “by confronting China
or trying to contain her,” but through a “policy of principled, purposeful engagement
with China’s leaders and China’s people.”233
Some critics have charged that the W88 case shows that engagement has not
adequately protected U.S. national interests, and a more confrontational policy —
some call containment — should be pursued. They have said that the credibility of
the White House on China policy has been further eroded and that engagement has
228 Prindle, Nancy, “The U.S.-China Lab-to-Lab Technical Exchange Program,”
Nonproliferation Review, Spring-Summer 1998; Wen L. Hsu, “The Impact of Government
Restructuring on Chinese Nuclear Arms Control and Nonproliferation Policymaking,”
Nonproliferation Review, Fall 1999.
229 Hecker, Siegfried S., “Between Science and Security,” Washington Post, March 21, 1999.
230 Statement of C. Paul Robinson, U.S. House of Representatives Select Committee on U.S.
National Security and Military/Commercial Concerns with the People’s Republic of China,
October 14, 1998.
231 Harris, John F. and Walter Pincus, “Gore Defends U.S. Stance On China, Security Issues,”
Washington Post, March 10, 1999.
232 President William Jefferson Clinton, remarks at the signing ceremony and summit closing
in Guatemala, March 11, 1999.
233 President William Jefferson Clinton, speech sponsored by the U.S. Institute of Peace, April
7, 1999.

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brought more harm than benefits to U.S. interests. Senator Helms wrote on July 8,
1999, that the Cox Report presented “damning disclosures on the Clinton
Administration’s `engagement’ policy toward Beijing” and urged a “fundamental
reassessment”of U.S. policy toward China.234
Still other critics have pointed out that PRC espionage and the Chinese military
has and will continue to challenge U.S. interests and the question is not whether the
United States needs to remain engaged with China — as the President has said, but
how that long-standing policy of engagement is carried out by the Clinton
Administration. According to them, engagement — but with a tougher approach —
is still the most appropriate policy at this time. For example, James Lilley, former
ambassador and CIA station chief in China, argued, PRC spying and American spying
will continue, but exposing PRC espionage “should not derail our relationship with
China.”235
Concerns over PRC nuclear espionage have spurred even some supporters of
engagement to criticize the Clinton White House’s pursuit of what it calls a
“constructive strategic partnership” with China.236 Henry Kissinger, credited in part
with the opening to China, wrote that “a sustainable Sino-American relationship
requires something beyond presidential invocations of ‘engagement’ that imply that
contact between the two societies will automatically remove all latent tensions, or of
a ‘strategic partnership’ whose content is never defined.”237
Besides the immediate concerns about lab-to-lab exchanges, this W88 case also
has ramifications for other aspects of the relationship with China. In March 1999,
Representatives Gilman and Rohrabacher wrote letters to Defense Secretary William
Cohen questioning exchanges with the People’s Liberation Army (PLA).238 The
Pentagon pursues military-to-military ties with the PLA as a means to deter PRC
provocations, increase mutual understanding, and expand relations with important
leaders in China. Some observers are also concerned that a worsened political
atmosphere could affect trade relations, including assessments about China’s entry
into the World Trade Organization.
234 Helms, Jesse, “`Engagement’ With China Doesn’t Work. Now What?” Wall Street
Journal, July 8, 1999.
235 Lilley, James R., “Blame Clinton, Not China For The Lapse At Los Alamos,” Wall Street
Journal, March 17, 1999.
236 Notably, the Secretary of Defense’s November 1998 East Asia Strategy Report does not
use the term.
237 Kissinger, Henry, “Single-Issue Diplomacy Won’t Work,” Washington Post, April 27,
1999.
238 Representative Rohrabacher, letter to Secretary Cohen, March 18, 1999; Bill Gertz,
“General Postpones China Trip,” Washington Times, March 22, 1999.

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