Nuclear Nonproliferation: DOE Needs to Take Action to Further	 
Reduce the Use of Weapons-Usable Uranium in Civilian Research	 
Reactors (30-JUL-04, GAO-04-807).				 
                                                                 
Nuclear research reactors worldwide use highly enriched uranium  
(HEU) as fuel and for the production of medical isotopes. Because
HEU can also be used in nuclear weapons, the Department of	 
Energy's (DOE) Reduced Enrichment for Research and Test Reactors 
program is developing low enriched uranium (LEU), which would be 
very difficult to use in weapons, to replace HEU. To date, 39 of 
the 105 research reactors in the United States and abroad	 
targeted by DOE have converted to LEU fuel. GAO was asked to	 
examine (1) the status of the remaining research reactors in	 
converting to LEU fuel, (2) DOE's progress in developing new LEU 
fuels for reactors where conversion is not yet technically	 
feasible, (3) DOE's progress in developing LEU for the production
of medical isotopes, and (4) the status of DOE and Nuclear	 
Regulatory Commission (NRC) efforts to improve security at	 
research reactors.						 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-04-807 					        
    ACCNO:   A11110						        
  TITLE:     Nuclear Nonproliferation: DOE Needs to Take Action to    
Further Reduce the Use of Weapons-Usable Uranium in Civilian	 
Research Reactors						 
     DATE:   07/30/2004 
  SUBJECT:   Fuel research					 
	     Fuels						 
	     Research and development costs			 
	     Uranium						 
	     Nuclear weapons					 
	     Nuclear reactors					 
	     Nuclear facilities 				 
	     Nuclear facility security				 
	     Medical research					 
	     Safety standards					 
	     Standards and standardization			 

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GAO-04-807

United States Government Accountability Office

GAO	Report to the Chairman, Subcommittee on Emerging Threats and
Capabilities,

                    Committee on Armed Services, U.S. Senate

July 2004

NUCLEAR NONPROLIFERATION

DOE Needs to Take Action to Further Reduce the Use of Weapons-Usable Uranium in
                           Civilian Research Reactors

                                       a

GAO-04-807

Highlights of GAO-04-807, a report to the Chairman, Subcommittee on
Emerging Threats and Capabilities, Committee on Armed Services, U.S.
Senate

Nuclear research reactors worldwide use highly enriched uranium (HEU) as
fuel and for the production of medical isotopes. Because HEU can also be
used in nuclear weapons, the Department of Energy's (DOE) Reduced
Enrichment for Research and Test Reactors program is developing low
enriched uranium (LEU), which would be very difficult to use in weapons,
to replace HEU. To date, 39 of the 105 research reactors in the United
States and abroad targeted by DOE have converted to LEU fuel. GAO was
asked to examine (1) the status of the remaining research reactors in
converting to LEU fuel, (2) DOE's progress in developing new LEU fuels for
reactors where conversion is not yet technically feasible, (3) DOE's
progress in developing LEU for the production of medical isotopes, and (4)
the status of DOE and Nuclear Regulatory Commission (NRC) efforts to
improve security at research reactors.

GAO recommends that DOE consider converting the 6 U.S. university research
reactors, remove the HEU fuel from the reactors after their conversion,
and evaluate providing additional incentives to foreign research reactors
to convert to LEU. DOE agreed with our recommendations. GAO did not fully
evaluate, and is not making recommendations on, DOE and NRC efforts to
improve security at research reactors.

www.gao.gov/cgi-bin/getrpt?GAO-04-807.

To view the full product, including the scope and methodology, click on
the link above. For more information, contact Gene Aloise at (202)
512-3841 or [email protected].

July 2004

NUCLEAR NONPROLIFERATION

DOE Needs to Take Action to Further Reduce the Use of Weapons-Usable Uranium in
Civilian Research Reactors

Currently, conversion to LEU fuel is technically feasible for 35 of the 66
research reactors in DOE's program that still use HEU fuel, but most do
not have plans to convert. In the United States, 8 research reactors,
including 6 university research reactors, have not converted because DOE
has not provided the necessary funding. Of the 20 foreign research
reactors that use U.S.-origin HEU fuel, 14 do not have plans to convert
because they have a sufficient supply of HEU fuel and either do not want
to incur the additional cost of conversion or do not have the necessary
funding. Finally, only 1 of 7 Russian-supplied research reactors that
could use LEU fuel is scheduled to convert.

Conversion to LEU fuel is not technically feasible for 31 research
reactors worldwide that still use HEU fuel. DOE has experienced technical
setbacks in fuel development that have postponed the conversion of the 31
reactors until 2010 at the earliest. One fuel failed unexpectedly in
testing, and DOE may cancel further development, depending on the results
of additional tests. Initial testing of another LEU fuel produced positive
results, but additional testing is required and the fuel will not be
developed until 2010 at the earliest.

Separately from the development of LEU fuel, DOE is developing LEU to
replace HEU in the production of medical isotopes. DOE has not yet
completed the work that would enable conversion of large-scale medical
isotope production to LEU. One reactor has converted to LEU for smallscale
production. However, large-scale producers are concerned that the cost of
converting to LEU could be prohibitive.

DOE and NRC have taken steps to improve security at foreign and U.S.
research reactors. While operators at most research reactors we visited
said that security had been upgraded through DOE or NRC efforts, we
observed areas where further improvements could be made. Recognizing the
possible need for further improvements, DOE and NRC are engaged in
separate efforts to assess and improve security.

Conversion Status of Research Reactors Included in DOE's Reactor
Conversion Program

Contents

  Letter

Results in Brief
Background
Many Domestic and Foreign Research Reactors Are Still Using

Weapons-Usable Uranium Even Though They Could Operate on Low Enriched
Uranium Technical Setbacks in Developing New Fuels Limit Progress in
Converting the Largest Remaining Research Reactors Using Low Enriched
Uranium for Medical Isotope Production Is Feasible, but Concerns over Cost
Could Limit Its Use DOE and NRC Are Addressing Security at Foreign and
Domestic

Research Reactors Conclusions Recommendations for Executive Action Agency
Comments and Our Evaluation Scope and Methodology

1 4 7

12

20

25

27 29 30 30 31

Appendixes

Appendix I:

Appendix II:

Appendix III: Appendix IV:

Reactor Conversion Program Expenditures and Projected Costs

39 Research Reactors That Converted to LEU Fuel under the Reactor
Conversion Program

Comments from the Department of Energy

Comments from the Department of State

35

38 40 42

Tables	Table 1: Table 2: Table 3: Table 4: Table 5: Table 6:

U.S. Research Reactors Using HEU Fuel That Could
Convert to LEU 13
20 Foreign Research Reactors Still Using HEU Obtained
from the United States 16
Seven Foreign Research Reactors Using HEU from Russia
That Could Convert to LEU 19
31 Research Reactors That Cannot Convert Using
Currently Available LEU Fuels 21
Number of Research Reactors Selected for Site Visits or
Phone Interviews 32
DOE's Projected Costs to Complete the Reactor
Conversion Program 37

Contents

Figures Figure 1: Locations of 105 Research Reactors Included in DOE's     
                                  Reactor Conversion Program                8
           Figure 2:  Conversion Status of 105 Research Reactors Included  
                                              in                           
                               DOE's Reactor Conversion Program            11 
           Figure 3: Reactor Conversion Program Expenditures, Fiscal Years 
                                         1978 to 2003                      35 

Abbreviations

Argonne Argonne National Laboratory
DOE Department of Energy
HEU highly enriched uranium
INEEL Idaho National Engineering and Environmental Laboratory
LEU low enriched uranium
NDF Nonproliferation and Disarmament Fund
NRC Nuclear Regulatory Commission
RERTR Reduced Enrichment for Research and Test Reactors program

This is a work of the U.S. government and is not subject to copyright
protection in the United States. It may be reproduced and distributed in
its entirety without further permission from GAO. However, because this
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copyright holder may be necessary if you wish to reproduce this material
separately.

A

United States Government Accountability Office Washington, D.C. 20548

July 30, 2004

The Honorable Pat Roberts

Chairman, Subcommittee on Emerging Threats and Capabilities Committee on
Armed Services United States Senate

Dear Mr. Chairman:

Nuclear research reactors located throughout the world play a vital role
in medicine, agriculture, industry, and basic scientific research. Many of
the research reactors use highly enriched uranium (HEU) in one of two
ways, either as fuel or as an ingredient for the production of medical
isotopes used to treat cancer or conduct medical diagnoses. HEU is also a
key component in the construction of nuclear weapons-it takes as little as
25 kilograms of HEU to build a nuclear weapon. The amount of HEU located
at research reactors worldwide ranges from several kilograms to in excess
of 20 kilograms.

The United States has a long-standing policy of reducing and, to the
extent possible, eliminating the use of HEU in civilian research reactors.
To support this policy, the Department of Energy (DOE) initiated the
Reduced Enrichment for Research and Test Reactors (RERTR) program in 1978
to develop the technology to reduce and eventually eliminate the use of
HEU in civilian research reactors worldwide.1 DOE's Argonne National
Laboratory (Argonne) is the technical lead for the program and conducts
research and development to find alternatives to the two uses of HEU in
research reactors. The program's goal is to replace HEU with low enriched
uranium (LEU), which would be very difficult to use in nuclear weapons.2
The Secretary of Energy reiterated DOE's support for the reactor
conversion program and committed to the conversion of all U.S. civilian
research reactors by 2013 in a speech on May 26, 2004.

To achieve the program's objectives, Argonne conducts extensive tests on
new LEU fuels and materials for isotope production to find suitable

1In this report, we refer to the RERTR program as the reactor conversion
program.

2HEU is enriched in the isotope uranium-235 to 20 percent or greater. LEU
is enriched to less than 20 percent.

alternatives that do not negatively affect research reactors' performance,
operating costs, or operational safety. Part of Argonne's strategy is to
have multiple fuels under development to address the unique fuel needs of
the different types of research reactors included in DOE's reactor
conversion program. Research reactors are designed for different purposes
and have operating characteristics that affect their ability to convert to
LEU. As a result, an LEU fuel that can be used in one research reactor may
not be suitable for another.

The scope of DOE's reactor conversion program includes LEU fuel
development for 105 research reactors located in the United States and 40
other countries. Since the inception of the program through July 2004, 39
of the 105 reactors have either converted or are in the process of
converting to LEU. Argonne officials estimate that prior to converting to
LEU, these 39 research reactors used over 240 kilograms of HEU fuel per
year, enough to build about 10 nuclear weapons. In contrast, they estimate
that the remaining 66 research reactors, which have not converted to LEU,
continue to use over 800 kilograms of HEU fuel per year. Thirty-five of
these reactors could convert using currently available LEU fuels, and
Argonne is developing new LEU fuels for 31 research reactors that cannot
convert using any of the fuels already developed. In particular, after
screening a large number of potential LEU fuels, Argonne has identified
two fuels, dispersion fuel and monolithic fuel, for further testing and
development. Both of these fuels use an alloy of uranium and another metal
called molybdenum and differ in how the fuel is manufactured. Dispersion
fuel consists of spherical particles of uranium-molybdenum alloy that are
randomly dispersed in a thin layer of aluminum. In contrast, monolithic
fuel consists of a thin sheet of solid uranium-molybdenum alloy.3

The reactor conversion program also develops LEU alternatives for six
medical isotope producers, all located outside the United States, that use
an estimated 85 kilograms of HEU per year in their production processes.
The use of HEU for medical isotope production is separate from the type of
fuel used in research reactors. Developing the technology to convert to
LEU for medical isotope production requires a technical effort that is
separate from the development of new LEU fuels.

3In this report, we use the terms "dispersion fuel" and "monolithic fuel"
to refer specifically to the new LEU fuels being developed by the reactor
conversion program that use an alloy of uranium and molybdenum.

Concerned about the potential theft or diversion of HEU from research
reactors, DOE and the Nuclear Regulatory Commission (NRC) are engaged in
efforts to monitor and improve security at research reactors, many of
which are located on university campuses or other facilities used by
students and researchers. Since 1974, DOE has engaged in efforts to
improve nuclear material security in over 50 countries, including security
over nuclear material at research reactors. In the United States, NRC
regulates research reactors to ensure an acceptable level of safety and
security and conducts regular inspections to ensure compliance with
regulations on safety and security.

In response to your request concerning the use of HEU at civilian research
reactors, we examined (1) the status of research reactors worldwide in
converting to LEU fuels developed by DOE's reactor conversion program, (2)
the program's progress in developing new LEU fuels for use in research
reactors that cannot convert to currently available LEU fuels, and (3) the
program's progress in developing LEU for use in the production of medical
isotopes. In addition, because HEU continues to be used and stored at
research reactors worldwide, we gathered information on the status of DOE
and NRC efforts to improve the security of research reactors in the United
States and other countries.

To address these objectives, we analyzed documentation on the reactor
conversion program from DOE and Argonne, including information on the
status of reactors in converting to LEU, development of LEU fuels, and
development of LEU for medical isotope production. We visited research
reactors in the United States, Belgium, Germany, the Netherlands, Poland,
Portugal, Romania, Russia, and Ukraine; attended an annual international
conference on DOE's reactor conversion program; and obtained information
on the status of developing LEU fuels and LEU for the production of
medical isotopes from reactor conversion program officials at Argonne. We
also discussed the status of the program and security of HEU at foreign
and domestic research reactors with foreign officials in the countries we
visited and with DOE and NRC officials. However, we did not evaluate the
effectiveness of the security at research reactors or DOE and NRC efforts
to improve security. We conducted our review from July 2003 to July 2004
in accordance with generally accepted government auditing standards.

You also asked that we examine two other DOE programs closely related to
the reactor conversion program: the Foreign Research Reactor Spent Nuclear
Fuel Acceptance program and the Russian Research Reactor Fuel

Return program. The Foreign Research Reactor Spent Nuclear Fuel Acceptance
program is intended to recover and store U.S.-origin research reactor
fuel, including both HEU and LEU, from 41 eligible countries throughout
the world. The Russian Research Reactor Fuel Return program assists in the
return of Russian-origin research reactor fuel to Russia, mostly from
countries of the former Soviet Union and Central and Eastern Europe.
Together with DOE's reactor conversion program, these programs support the
objective of reducing and eventually eliminating the use of HEU for
civilian applications. As agreed with your office, we will address these
two programs in a follow-on report.

Results in Brief	According to Argonne's analysis, conversion to LEU fuel
is technically feasible for 35 of the 66 research reactors in DOE's
reactor conversion program that still use HEU fuel, but most do not have
plans to convert. In the United States, 8 research reactors, including 6
university reactors, could convert to LEU fuel, but DOE has not provided
the necessary funding (estimated by DOE at about $5 million to $10 million
per reactor). In addition, a university research reactor that converted to
LEU in 2000 is still storing HEU fuel because DOE has not removed it. DOE
officials said they have not made the conversion of the 6 university
research reactors a priority because the reactors use only a small amount
of HEU fuel. Officials at NRC, which regulates most of the U.S. research
reactors included in DOE's reactor conversion program, said that they
consider the conversion of the university reactors a security enhancement
and one of their priorities and that the delay is purely a matter of
funding. Operators of the 6 reactors said they would convert to LEU fuel
when DOE provides the funding. DOE's reactor conversion program cooperates
closely with operators of foreign research reactors and promotes
conversion from HEU to LEU. Ultimately, however, it is the owners of the
foreign reactors that make the decision to convert to LEU. Of the 20
foreign research reactors that use U.S.-origin HEU fuel, 14 do not have
plans to convert to LEU because they generally have a sufficient supply of
HEU and either do not want to incur the additional cost of conversion or
do not have the necessary funding. Finally, since DOE's reactor conversion
program initiated cooperation with Russia in 1993, no research reactors
that use HEU fuel supplied by Russia have converted. Only 1 of 7
Russian-supplied research reactors that could use LEU fuel is scheduled to
convert. DOE officials said that 5 other Russian-supplied reactors are
also likely to convert to LEU fuels that are currently available or are
expected to become available within the next year.

Technical setbacks in developing new LEU fuels have postponed the
conversion of 31 research reactors worldwide that cannot use currently
available LEU fuels until 2010 at the earliest. According to Argonne
officials, unexpected failures that occurred when testing dispersion fuel-
the worst they have ever experienced during fuel development-could render
the fuel unusable for most research reactors. As a result of the test
failures, Argonne has delayed the completion of dispersion fuel until 2010
and may recommend that DOE cancel further development altogether if the
fuel cannot be sufficiently improved. Canceling development of dispersion
fuel would leave monolithic fuel as the reactor conversion program's only
remaining option for converting the remaining 31 reactors. Initial testing
of monolithic fuel has produced positive results, and if tests continue to
be successful, it should perform better than dispersion fuel. However, the
development process is still at the beginning stages; additional testing
is required, and the fuel will not be developed until 2010 at the
earliest. Argonne officials said that the current fuel development
schedule is already compressed and that no further acceleration is
possible. Rather, any technical problems would likely result in further
delays. Furthermore, if both fuels fail, Argonne is not working on any
other LEU fuel that could replace HEU in the remaining research reactors.

DOE's reactor conversion program has not yet completed the work that would
enable conversion of large-scale medical isotope production to LEU, and
large-scale producers are concerned that the cost of converting to LEU
could be prohibitive. Currently, one reactor in Argentina has converted
from using HEU to LEU for the small-scale production of medical isotopes.
Argonne officials said that further development is necessary on using LEU
for large-scale production. Large-scale producers have built expensive
facilities designed to produce medical isotopes using HEU. Any attempt to
adapt the facilities to use LEU would involve additional costs.
Furthermore, using LEU instead of HEU would increase the amount of waste
generated by the production process. Argonne officials said they are
working to overcome these challenges and expect to complete development of
LEU for large-scale medical isotope production in 2 to 3 years. Two large
producers of medical isotopes told us that conversion to LEU would be
difficult and costly, and one of them is currently assessing the economic
feasibility of conversion.

While operators at most research reactors we visited said that security
had been upgraded through DOE or NRC efforts, we also observed areas where
further improvements could be made. Recognizing the possible need for
further improvements, DOE and NRC are engaged in separate efforts to

assess and improve security at foreign and domestic research reactors,
respectively. A DOE task force established in 2004 is currently gathering
information on all research reactors worldwide, including reactors that
have been shut down, and prioritizing the need for increased security at
reactors based on a number of factors, including how much HEU is stored on
site. According to DOE officials, the task force addresses the need to
combine data from different sources to identify potential security gaps.
The task force has submitted a report to the Secretary of Energy with
recommendations for possible implementation by DOE. The task force efforts
are in addition to assistance that DOE has provided since 1974 to other
countries to improve security at their research reactors. In the United
States, NRC is conducting assessments of the security at research reactors
under its jurisdiction and may increase security requirements based on the
results of the assessments. NRC took actions after the attacks of
September 11, 2001, to improve the security at domestic research
reactors-for example, by requiring that some reactors consider installing
additional physical barriers.

We are making recommendations to the Secretary of Energy and the
Administrator of the National Nuclear Security Administration to consider
placing a higher priority on converting the 6 U.S. university research
reactors that are able to convert with existing LEU fuel, to place a high
priority on removing the HEU fuel from the reactors after their conversion
and transporting it to the appropriate DOE facility, and to evaluate the
costs and benefits of providing additional incentives to foreign research
reactors that currently use U.S.-origin HEU fuel to convert to LEU.

We provided draft copies of this report to the Departments of Energy and
State and to NRC for their review and comment. DOE, State, and NRC
generally agreed with the recommendations in our report and provided
detailed comments, which we incorporated into the report as appropriate.

Background	Nuclear research reactors are used for training and research
purposes throughout the world. Research reactors are generally smaller
than nuclear power reactors, ranging in size from less than 1 to 250
megawatts compared with 3,000 megawatts generated by a typical power
reactor. In addition, unlike power reactors, many research reactors use
HEU fuel instead of LEU in order to produce the appropriate conditions in
the reactor cores for conducting a wide variety of research. DOE has
identified 161 operating research reactors that were designed to use HEU
fuel and has included 105 of them in the reactor conversion program. The
research reactors included in the program are spread out among the United
States and 40 other countries, including Canada, France, Germany, and
Russia (see fig. 1).

In addition to the 105 research reactors covered under the reactor
conversion program, DOE has targeted six medical isotope producers that
use HEU as an ingredient in their production processes, including four
large medical isotope producers located in Belgium, Canada, the
Netherlands, and South Africa.

For a variety of reasons, DOE has excluded from its reactor conversion
program 56 research reactors that use HEU fuel, including 9 in the United
States. Some of the reactors are used for military or other purposes, such
as space propulsion, that require HEU. Others are located in countries
such as China that so far have not cooperated with the United States on
converting their reactors to LEU. Finally, the time and costs associated
with developing LEU fuel for some of the reactors may exceed their
expected lifetime and usefulness.

The United States has historically provided nuclear technology to foreign
countries in exchange for a commitment not to develop nuclear weapons.
Starting in 1953, the Atoms for Peace program supplied research reactors
and the fuel needed to operate them to countries around the world. The
research reactors supplied by the Atoms for Peace program initially used
LEU fuel, but many countries gradually switched from LEU to HEU in order
to conduct more advanced research. In addition, HEU fuel could remain in
the reactor core longer and was less expensive than LEU fuel. By the late
1970s, most research reactors were using HEU fuel and the United States
was exporting about 700 kilograms of HEU a year to foreign research
reactors. Like the United States, the Soviet Union also exported research
reactors and the HEU fuel to operate them to other countries.

In order to achieve the program's objective of reducing the use of HEU in
civilian research reactors, Argonne is developing new LEU fuels in
cooperation with counterparts in other countries, including Argentina,
France, and Russia. Developing LEU fuels involves testing fuel samples in
research reactors to determine how the fuels behave under normal operating
conditions. Fuel manufacturers and reactor operators around the world
participate in the program by manufacturing and testing LEU fuels. Owners
of foreign research reactors fund conversion of their reactors from HEU to
LEU. In 1993, Argonne expanded the reactor conversion program to include
cooperation with Russia on the conversion of Russian-supplied research
reactors to LEU fuel. The Soviet Union had independently initiated a
program in 1978 to reduce the enrichment of HEU fuel in research reactors
but suspended the program in 1989 due to lack of funding. Russian-supplied
research reactors use fuels manufactured in

Russia that are not interchangeable with fuels used by U.S.-supplied
research reactors. Therefore, DOE's reactor conversion program
differentiates between U.S.-supplied and Russian-supplied research
reactors.

Since the reactor conversion program's inception in 1978, 39 of the 105
research reactors included in the program have either converted or are in
the process of converting to LEU fuel. (See app. II for a list of
converted research reactors.)4 Of the remaining 66 research reactors that
still use HEU fuel, 35 can convert using currently available LEU fuels but
have not done so, and 31 cannot convert to any currently available LEU
fuels and still require HEU in order to conduct the research for which
they were designed (see fig. 2).

Figure 2: Conversion Status of 105 Research Reactors Included in DOE's
Reactor Conversion Program

                      Source: Argonne National Laboratory.

4In comments on a draft of this report, the State Department also noted
that a growing number of new and planned research reactors have decided to
use LEU fuel.

A research reactor can begin the conversion process after a suitable LEU
fuel is developed and available commercially. The decision to convert from
HEU to LEU also depends on research reactor owners having the necessary
financial resources, including for the purchase of new fuel. In the United
States, NRC regulations require that research reactors under its
jurisdiction, including reactors operated by universities, convert to LEU
fuel when an LEU fuel that can be used to replace HEU fuel has been
developed and when federal funding is made available for the conversion.5
The conversion process begins with analyses to determine whether the
reactor can safely convert and the impact of conversion on the reactor's
performance. After the analyses are completed and regulatory approval for
conversion is obtained, the operator can remove the HEU from the reactor
and replace it with the new LEU fuel. The HEU fuel can be disposed of once
it has been removed from the reactor core and has cooled.

Many Domestic and Foreign Research Reactors Are Still Using Weapons-Usable
Uranium Even Though They Could Operate on Low Enriched Uranium

According to Argonne's analysis, conversion to LEU fuel is technically
feasible for 35 of the 66 research reactors worldwide that still use HEU
fuel. However, only 4 of the reactors-3 foreign reactors that use
U.S.origin HEU and 1 Russian-supplied reactor-currently have plans to
convert. Eight U.S. research reactors, including 6 university reactors,
could convert to LEU fuel, but according to DOE officials, DOE has not
provided the funding to convert them. In addition, DOE has not removed HEU
fuel from a university research reactor that has been storing HEU since it
converted to LEU in 2000. According to Argonne officials, of the 20
foreign research reactors that currently use U.S.-origin HEU fuel, 14 do
not have plans to convert to LEU because they generally have a sufficient
supply of HEU and either do not want to incur the additional cost of
conversion or do not have the necessary funding. Finally, since DOE's
reactor conversion program initiated cooperation with Russia in 1993, no
research reactors that use HEU fuel supplied by Russia have converted.
According to Argonne officials, only 1 of 7 Russian-supplied research
reactors that could use LEU fuel is scheduled to convert. They said that 5
other Russiansupplied reactors are likely to convert to LEU fuels that are
currently available or are expected to become available within the next
year.

510 C.F.R. S: 50.64. The NRC regulates most of the U.S. research reactors
included in DOE's reactor conversion program, with the exception of 4 DOE
research reactors.

Eight Research Reactors in the United States Could Convert to Low Enriched
Uranium but Still Use Weapons-Usable Uranium

In the United States, there are 6 university research reactors and 2 other
research reactors that could convert to LEU fuel but still use HEU fuel.
Although DOE has funded the conversion of 11 university research reactors
to LEU fuel, the last university reactor converted in 2000. DOE officials
said DOE has not provided the funding to convert the 6 remaining U.S.
university reactors. DOE recently added 2 other domestic reactors to the
reactor conversion program, and neither of these reactors currently has
plans to convert to LEU, also because DOE has not provided the necessary
funding. (See table 1 for a list of the 8 reactors.)

Table 1: U.S. Research Reactors Using HEU Fuel That Could Convert to LEU

                                    Reactor

Oregon State University

Purdue University

Texas A&M University

University of Florida

University of Wisconsin

                          Washington State University

                          General Electric NTR Reactor

DOE NRAD Reactor

Source: Argonne.

Note: The amount of HEU fuel used by these research reactors ranges from 0
to 0.2 kilograms per year. Reactors that use zero kilograms of HEU per
year use HEU fuel but operate at such low power levels that they use up
the fuel very slowly and can operate for many years or for their entire
lifetime without replacing fuel.

In addition, the university research reactor that converted to LEU in 2000
is still storing HEU fuel because DOE has not removed it. Because the
reactor now uses LEU fuel and has no need for HEU, the reactor operator
told us that he is eager to return the HEU to DOE for long-term storage
and disposal. DOE has a separate program that supports university research
reactors, including provision of DOE-owned fuel, and funds their
conversion to LEU and removal of spent fuel.6 According to the DOE

6DOE's Office of Nuclear Energy, Science and Technology administers the
program for supporting domestic university reactors. The program has an
annual budget of about $18 million and provides a variety of assistance
such as research grants, tuition assistance for nuclear engineering
students, and funding to upgrade reactor facilities.

official in charge of the university reactor support program, the program
has limited funding, and requests for additional funding to support
conversion have not been approved by the Office of Management and Budget.
Furthermore, the university reactor support program did not receive
additional funding to remove HEU fuel from the research reactor that
converted to LEU in 2000 until fiscal year 2004, after a group of domestic
research reactor operators successfully lobbied Congress to add $2.5
million to the program's budget to pay for the removal of spent fuel from
the reactors.

Officials at NRC, which regulates the 6 university reactors, told us that
they consider the conversion of the reactors to LEU, the timely removal of
HEU fuel after conversion, and the removal of HEU from the reactor that
converted to LEU in 2000 as a security enhancement and one of their
priorities. NRC officials said that converting the 6 reactors is
technically feasible and that the delay in converting the reactors is
purely a matter of funding and should be expedited by DOE. However, DOE
officials said that DOE had not made the conversion of these reactors a
priority. Furthermore, while operators at all 6 universities told us they
are willing to convert to LEU fuel, they said it is not a high priority
because they do not consider their HEU fuel to be a likely target for
theft. For example, one reactor operator explained that the reactor is
structured in such a way that the HEU is located inside a concrete
enclosure that even experienced reactor staff need almost 2 days to
access. These 6 reactors use only a small amount of HEU fuel-less than a
kilogram per year, which is not enough to make a nuclear weapon. In
contrast, there are other research reactors included in DOE's reactor
conversion program that are larger than the 6 university reactors and use
tens of kilograms per year.

Nevertheless, operators of the 6 university research reactors said they
would convert to LEU when DOE provides funding. Furthermore, the DOE
official in charge of the university reactor support program said that
converting domestic university reactors is an issue of U.S.
nonproliferation policy. He said that converting domestic reactors to LEU
would support U.S. efforts to influence foreign reactors to convert to LEU
in accordance with the U.S. nonproliferation policy to reduce the use of
HEU in civilian research reactors worldwide. Although they did not
consider conversion a priority from a security perspective, two of the
university reactor directors we spoke with recognized the importance of
converting university reactors to LEU as part of U.S. nonproliferation
policy.

According to DOE officials, conversion for each reactor is projected to
cost between $5 million and $10 million. However, a project engineer at
DOE's Idaho National Engineering and Environmental Laboratory who tracks
DOE expenditures on conversions of U.S. university reactors had originally
told us that conversion would cost between $2 million and $4 million per
reactor, depending on the type of reactor. DOE could not provide
documentation to support either of the estimates. DOE officials said that
conversion costs for 4 of the university reactors are higher because their
fuel is no longer manufactured in the United States and must be purchased
in France.7

Other than funding, there are no significant obstacles to converting the 6
university reactors to LEU. Based on our visits to 3 converted university
research reactors and interviews with Argonne officials and the operators
of the 6 remaining university reactors, converting to LEU does not reduce
the performance of the reactors to the point that they cannot be used to
conduct research and train students effectively. Operators at 5 of the 6
university reactors still using HEU fuel told us they expected performance
to be adequate after conversion. In addition, operators of converted
reactors told us that using LEU instead of HEU reduced security concerns
and had a minimal impact on the cost of operating the reactors. Argonne
officials said that one of their objectives when providing technical
assistance to convert reactors to LEU is to complete the process with only
minimal effects on performance and operating costs. In fact, two reactor
operators (one in Rhode Island and one in Massachusetts) told us that
performance at their reactors had improved as a result of conversion.

According to Argonne officials, 2 other reactors in the United States (the
DOE NRAD and General Electric NTR reactors) could convert to LEU but are
not currently planning to do so. The officials said they recently added
these 2 reactors to the scope of the reactor conversion program so that
the program would be comprehensive in its coverage of civilian research
reactors that use HEU. The NRAD research reactor is a DOE reactor, and DOE
would have to fund the purchase of new LEU fuel if a decision were made to
convert the reactor. According to a DOE official responsible for the
reactor, the budget for the NRAD reactor is limited, and purchasing new
LEU fuel to convert the reactor would take funding away from other

7If DOE provides funding for converting these 4 university reactors, the
schedule depends on the ability of the French manufacturer to supply the
fuel in a timely manner. However, the French supplier is not accepting new
requests for reactor fuel until 2007.

activities at the facility where the reactor is located. The DOE official
considers the conversion of this reactor a lower priority because it has a
sufficient supply of HEU fuel to last for the life of the reactor and
because the facility has other nuclear material that would be more
attractive to terrorists than the HEU fuel in the reactor. The General
Electric NTR is a privately owned reactor and is also not required to
convert until DOE provides funding.

Twenty Foreign Research Reactors Continue to Use Weapons-Usable Uranium
Fuel

Fourteen of the 20 foreign research reactors that currently use
U.S.-origin HEU fuel do not have plans to convert to LEU. According to
Argonne officials, these reactors generally have a supply of HEU
sufficient to last many years (in some cases for the life of the reactor)
and either do not want to incur the additional cost of conversion or do
not have the necessary funding. Three of the reactors are planning to
convert to LEU, and 3 others currently plan to shut down (or, in the case
of 2 reactors, convert to LEU fuel if they do not shut down). See table 2
for a list of the 20 reactors.

Table 2: 20 Foreign Research Reactors Still Using HEU Obtained from the
United States

                  Page 16 GAO-04-807 Nuclear Nonproliferation
                                                                                                                                                                                                                                                  Shutdown                                                                  Shutdown 
Country Reactor Status Argentina RA-6 Conversion Canada Slowpoke-Alberta   Slowpoke-Halifax   Slowpoke-Saskatchewan  France MINERVE   Ulysee-Saclay  Germany FRJ-2 Conversion Israel IRR-1 Shutdown Jamaica Slowpoke  Japan KUCA   UTR-10   KUR         or Mexico TRIGA  Netherlands    HFR Conversion  LFR           RPI         or 
                                         planned                                                                                                                      planned               planned                                 Kinki       conversion                           Petten    planned                    conversion 
                                                                                                                                                                                                                                                   planned                                                   Portugal        planned 

(Continued From Previous Page)

                             Country Reactor Status

South Africa SAFARI

                      United Kingdom Consort Neptune Viper

Source: Argonne.

Note: The amount of HEU fuel used by these research reactors ranges from 0
to 38.3 kilograms per year. Reactors that use zero kilograms of HEU per
year use HEU fuel but operate at such low power levels that they use up
the fuel very slowly and can operate for many years or for their entire
lifetime without replacing fuel.

Some of the foreign research reactors would like to convert but do not
have the necessary funding. For example, the operator of a research
reactor in Jamaica told us that converting to LEU would improve the
reactor performance but that purchasing LEU fuel for the reactor would
cost $1.5 million, which is more than the reactor operator can afford.
Therefore, the reactor operator is planning to continue using its current
supply of HEU, which will last possibly 20 years. Similarly, according to
Argonne officials, the reactor operator in Mexico would be willing to
convert to LEU but does not have the necessary funding. While funding may
not be an issue for other foreign reactors, many of them are designed to
operate on a small amount of fuel meant to last for the life of the
reactor. Converting to LEU would require the disposal of the fuel that the
reactor operator had already purchased and is still usable. According to
Argonne officials, operators of certain reactors in France, Japan, the
Netherlands, and the United Kingdom do not have plans to convert because
the reactors have lifetime cores that do not need to be replaced.

To support the objective of the reactor conversion program to reduce and
eventually eliminate the use of HEU in research reactors, the United
States has implemented policies designed to influence foreign research
reactors to convert to LEU. For example, DOE's Foreign Research Reactor
Spent Nuclear Fuel Acceptance program provides foreign reactors that use
HEU fuel of U.S.-origin the opportunity to return their spent fuel to the
United States if they agree to convert their reactors to LEU fuel. In
addition, the Energy Policy Act of 1992 authorizes NRC to approve the
export of HEU to foreign research reactors only if the recipients agree to
convert the reactors once a suitable LEU fuel is developed.8 Since there
are limited suppliers of HEU fuel and few options for disposing of spent
fuel, the U.S.

842 U.S.C. S: 2160d.

policies in support of the reactor conversion program have been effective
in influencing some research reactors to convert to LEU. In particular, of
the 20 foreign reactors that can convert to LEU but are still using HEU,
the 2 that use the greatest amount of HEU per year are planning to convert
by 2006. One research reactor in the Netherlands (HFR Petten) formally
agreed with the United States to convert to LEU in order to continue
receiving U.S.-origin HEU fuel until conversion could take place and to
ship spent fuel back to the United States. The U.S. policies in support of
conversion were effective in influencing the reactor operator because the
reactor uses 38 kilograms of HEU fuel per year and regularly needs to
obtain new HEU fuel and dispose of spent fuel. Similarly, the FRJ-2
reactor in Germany has an agreement with DOE to convert to LEU fuel as a
condition of returning spent fuel to the United States.

However, U.S. policies in support of the reactor conversion program do not
influence foreign reactors using so little HEU that they can operate for
many years without replacing their fuel or disposing of spent fuel. While
Argonne provides technical assistance for conversion, current DOE policy
precludes purchasing new LEU fuel for foreign reactors that use
U.S.-origin HEU fuel. Under this policy, purchasing new LEU fuel-which,
according to a DOE project engineer, is the main cost of conversion-is the
responsibility of the reactor operator. According to a DOE official, DOE
has paid for new LEU fuel only once, in Romania, in exchange for the
return of Russian-origin HEU fuel to Russia. DOE spent $4 million to
purchase LEU fuel for the Romanian reactor, which is still only partially
converted and requires more LEU fuel before conversion is complete. DOE
officials said that current DOE policy allows purchasing LEU fuel for
research reactors that use Russian-origin HEU fuel in exchange for
returning the HEU to Russia. However, DOE does not have a similar policy
for research reactors that use U.S.-origin HEU fuel. DOE officials said
they are considering revising this policy to allow purchasing LEU fuel for
U.S.-supplied research reactors.

Only One of Seven Russian-According to Argonne officials, 7
Russian-supplied research reactors, all
Supplied Reactors That Can located outside Russia, could convert using LEU
fuels that are currently
Use Low Enriched Uranium available or are expected to become available
within the next year.
Is Scheduled to Convert However, only 1 of the 7 reactors, located in
Ukraine, is scheduled to

             convert.9 (See table 3 for a list of the 7 reactors.)

Table 3: Seven Foreign Research Reactors Using HEU from Russia That Could
Convert to LEU

Country Reactor

Bulgaria IRT-Sofia

Germany ZLFR

Hungary VVR-SZM

Libya IRT-1

                            Libya Critical Facility

Ukraine VVR-M

Vietnam DRR

Source: Argonne.

Note: The amount of HEU fuel used by these research reactors ranges from 0
to 13.9 kilograms per year. Reactors that use zero kilograms of HEU per
year use HEU fuel but operate at such low power levels that they use up
the fuel very slowly and can operate for many years or for their entire
lifetime without replacing fuel.

The Ukrainian reactor operators told us that they expect to begin
conversion to LEU at the end of 2004 at the earliest and that they are
currently analyzing the safety of converting to LEU with the assistance of
DOE's reactor conversion program. Unlike many of the U.S.-supplied
research reactors that are not planning to convert because they have an
adequate supply of HEU, the Ukrainian reactor is running out of HEU fuel
and will have to place an order for new fuel by the end of 2004. The
reactor operators told us they support conversion to LEU fuel because the
negative impact on the reactor's performance will be tolerable, the
operating costs will be about the same after conversion to LEU, and
converting to LEU would eliminate the threat that HEU could be stolen from
the facility. The reactor operators are scheduled to complete the safety
analysis in

9The reactor conversion program includes 28 Russian-supplied reactors-14
in Russia and 14 outside Russia (primarily in countries of the former
Soviet Union and Eastern Europe). Conversion of 21 of the reactors,
including the 14 in Russia, requires development of new LEU fuels.

November 2004 and then submit an application to obtain approval for
conversion from the Ukrainian nuclear regulatory authority. However,
Argonne officials said the schedule for converting the Ukrainian reactor
is ambitious and conversion of the reactor could be delayed. According to
Argonne officials, if the Ukrainian reactor does not get regulatory
approval for conversion to LEU before it runs out of fuel, it may decide
to place an order with the Russian supplier for more HEU fuel instead.

According to DOE officials, 5 other Russian-supplied reactors that can use
LEU fuel are likely to convert. Conversion of the reactors in Bulgaria and
Libya depends on the commercialization of the Russian-origin LEU fuel,
which DOE expects to take place in 2004. DOE has also engaged in
discussions on conversion with the operators of the research reactor in
Vietnam. According to Argonne officials, conversion of the research
reactor in Hungary requires at least several more years of analysis. In
particular, the reactor must test an LEU fuel sample before the Hungarian
government approves conversion, and this process will take several years.
Argonne officials said the research reactor in Germany has a sufficient
supply of HEU fuel and therefore is not planning to convert to LEU.

Technical Setbacks in Developing New Fuels Limit Progress in Converting
the Largest Remaining Research Reactors

Technical setbacks in developing new LEU fuels have postponed the
conversion of 31 research reactors worldwide that cannot use currently
available LEU fuels until 2010 at the earliest. Argonne is pursuing the
development of LEU dispersion fuel and LEU monolithic fuel to convert
these reactors. Argonne officials said the failures during testing of
dispersion fuel are the worst they have ever experienced during fuel
development. As a result, Argonne has delayed completion of dispersion
fuel until 2010 and may recommend that DOE cancel further development
altogether if solutions cannot be found. This would leave the reactor
conversion program with only one alternative LEU fuel-monolithic fuel.
According to Argonne officials, monolithic fuel has performed well in the
one test conducted so far. However, many more tests are required. Because
of lessons learned from dispersion fuel failures, Argonne recently delayed
the projected completion date of monolithic fuel from 2008 to 2010 in
anticipation of the need for additional tests. Argonne officials said they
have compressed the development schedule of both dispersion and monolithic
fuel as much as possible and any further technical problems will result in
additional delays. Moreover, Argonne is focusing all LEU fuel development
efforts on dispersion and monolithic fuel, and if both fuels fail, no LEU
fuel will be available to convert the remaining reactors in the reactor
conversion program.

DOE May Cancel Development of One Low Enriched Uranium Fuel That Has Had
Significant Problems

The 31 research reactors worldwide that cannot convert to currently
available LEU fuels include some of the largest reactors in terms of
amount of HEU used per year. Argonne officials estimate the reactors use a
total of about 728 kilograms of HEU per year. Many of the 31 reactors are
used to conduct advanced scientific research that could not be done if
they were to convert to currently available LEU fuels. Representatives of
8 of the research reactors told us they need HEU fuel to operate and
conduct research until LEU fuel with the right performance characteristics
is developed. (See table 4 for a list of the 31 reactors.)

Table 4: 31 Research Reactors That Cannot Convert Using Currently
Available LEU Fuels

Country Reactor

Belgium BR-2

Czech Republic	LWR-15 VR-1

France	ORPHEE RHF

Germany FRM-II

Kazakhstan	VVR-K VVR-K Critical Facility

North Korea IRT-DPRK

Poland MARIA

                                     Russia

IRT-MEPhI
IR-8
IRT-T
VVR-TS
VVR-M
IVV-2M
MIR-M1
CA.MIR-M1
SM-3
CA.SM-3
RBT-6
RBT-10/2
PIK
PIK Physical Model

(Continued From Previous Page)

Country Reactor

           United States Massachusetts Institute of Technology (MITR)

University of Missouri (MURR)

         National Institute of Standards and Technology (NBSR) DOE HIFR

DOE ATR

                           DOE ATRC Uzbekistan VVR-CM

Source: Argonne.

Notes: The amount of HEU fuel used by these research reactors ranges from
0 to 120 kilograms per year. Reactors that use zero kilograms of HEU per
year use HEU fuel but operate at such low power levels that they use up
the fuel very slowly and can operate for many years or for their entire
lifetime without replacing fuel.

Research reactors located in the Czech Republic, Kazakhstan, North Korea,
Poland, Russia, and Uzbekistan are Russian-supplied reactors.

DOE's reactor conversion program has run into problems in developing new
LEU fuels intended to replace HEU in these research reactors. The most
serious problems have occurred in tests of dispersion fuel, the
development of which began in 1996. According to Argonne officials,
dispersion fuel would be usable in the Russian-supplied research reactors
and 1 U.S. reactor.10 Most recently, tests of the dispersion fuel have
revealed weaknesses that would make the fuel unsuitable for use in
research reactors. In particular, when samples of dispersion fuel were
tested in research reactors, the fuel failed unexpectedly under reactor
operating conditions the fuel was designed to withstand.

A number of factors illustrate the seriousness of the problems with the
dispersion fuel. First, according to Argonne officials, the same problems
have been encountered in separate tests and under different operating
conditions in reactors in the United States, Belgium, France, and Russia.
Second, the problems were unexpected and worse than encountered in

10The development of LEU dispersion fuel also has important consequences
for U.S.supplied foreign research reactors that have already converted to
LEU and participate in the Foreign Research Reactor Spent Nuclear Fuel
Acceptance program. Many of these reactors had planned to switch to LEU
dispersion fuel from the LEU fuel they are currently using because spent
dispersion fuel could be disposed of through reprocessing. With the
program scheduled to stop accepting fuel in 2009 and development of
dispersion fuel delayed until 2010, foreign research reactors that have
already converted to LEU fuel that cannot be reprocessed may not have a
way to dispose of spent fuel. We will address this issue in more detail in
a forthcoming report on the program.

previous LEU fuel development efforts. Finally, if the failures were
serious enough, the fuel could leak radioactive material into the reactor
coolant and cause facility contamination. If this occurred, the dispersion
fuel would not be approved for use in research reactors.

Argonne officials said that, as a result of these test failures, they have
delayed projected completion of dispersion fuel from 2006 until 2010 to
allow time for additional development and testing. Argonne officials plan
to pursue options to modify dispersion fuel to make it resistant to
failures. However, they said they would also consider recommending that
DOE cancel further development of dispersion fuel if it is determined the
fuel cannot be sufficiently improved. In addition, because of the problems
encountered in the development of dispersion fuel, Argonne has shifted its
primary focus to the development of monolithic fuel.

More Time Is Needed to Develop an Alternative Low Enriched Uranium Fuel

Initial testing of monolithic fuel has produced positive results under the
same operating conditions under which dispersion fuel failed. According to
Argonne officials, if they are successful in developing monolithic fuel,
it will offer better reactor performance than dispersion fuel and could be
used to convert the remaining research reactors in the reactor conversion
program to LEU.

Nevertheless, the successful development of this fuel is still uncertain,
and Argonne has not yet demonstrated that all remaining research reactors
still using HEU could convert to it. Argonne officials said they began
developing monolithic fuel relatively recently, in 2000, and to date have
conducted only one test. Additional testing could reveal problems that
have not yet surfaced. Furthermore, this fuel requires development of a
new manufacturing method because the methods used to manufacture other
research reactor fuels are not suitable for monolithic fuel. Argonne is
conducting research on different manufacturing options but has not yet
demonstrated that monolithic fuel can be manufactured on a large scale.
Three reactor operators hoping to convert to this fuel told us it is
impossible to predict whether the new LEU fuel will be successfully
developed and that creating a reliable LEU fuel could take many years more
than expected.

Development of monolithic fuel may be delayed if Argonne encounters any
problems in the fuel development process. Argonne officials said they have
already delayed projected completion from 2008 to 2010 to allow time for
additional testing. The schedule for developing monolithic fuel does not

factor in any technical problems that may occur during testing but rather
assumes that every phase of development will be successful. Argonne
officials said they have already compressed the schedule as much as
possible and that it would be difficult to significantly accelerate fuel
development any further because each set of tests requires a fixed amount
of time. The officials also stated that fuel development would have been
delayed even further had Congress not increased funding for the reactor
conversion program from $6.1 million in fiscal year 2003 to $8.5 million
in fiscal year 2004, which enabled Argonne to pursue a more aggressive
fuel development schedule. Assuming no further delays in fuel development,
Argonne officials said the first research reactors could begin ordering
new LEU for conversion within 6 months of completing the development of
either dispersion fuel or monolithic fuel in 2010.

Support for Conversion to Low Enriched Uranium Fuel Varies among Research
Reactor Operators

In our visits to foreign and domestic research reactors that cannot
convert to currently available LEU fuels, we found that reactor operators'
response to the prospect of conversion to LEU fuels varies widely. For
example, the operator of the BR-2 reactor in Belgium said it had agreed to
convert to LEU when feasible as a condition for continuing to receive
U.S.-origin HEU fuel. In contrast, a new German reactor at the Technical
University Munich designed to use HEU (the FRM-II reactor) may still not
be able to convert to LEU even if Argonne is successful in developing
monolithic fuel. The reactor operator has agreed to convert to a lower
enrichment of HEU that is less usable in nuclear weapons. However, during
our visit to the reactor, the operator said it had no plans to convert the
reactor to LEU fuel because conversion would require expensive
reconstruction.

Argonne has contracted with Russia to work jointly on development of new
LEU fuels, but DOE has not negotiated a formal agreement with the Russian
government to convert research reactors in Russia to LEU. DOE's reactor
conversion program includes 14 research reactors operating in Russia that,
combined, use 225 kilograms of HEU fuel per year. In 2002, the Secretary
of Energy and Russia's Minister of Atomic Energy issued a joint statement
identifying acceleration of LEU fuel development for both Russian-supplied
and U.S.-supplied research reactors as an area where joint cooperation
could lead to reduction in the use of HEU. However, the Russian officials
responsible for developing LEU fuels told us they are focusing on
converting Russian-supplied reactors in other countries first. The
officials also do not consider the conversion of research reactors in
Russia to LEU a priority because security has been improved at the
reactors and the reactors need HEU fuel to conduct advanced research.

Furthermore, Russian officials told us that under Russian law, operators
of HEU reactors in Russia are not required to convert to LEU. In fact,
since 1986, Russia has been building a new research reactor that is
designed to use HEU fuel rather than LEU.

Three U.S. research reactors (at the Massachusetts Institute of
Technology, the University of Missouri, and the National Institute of
Standards and Technology) where conversion is not currently feasible fall
under NRC regulations that would require conversion to LEU if the reactor
conversion program is successful in developing new LEU fuels.11
Furthermore, the Secretary of Energy committed to the conversion of all
U.S. research reactors by 2013 in a speech on May 26, 2004. However,
without federal funding to support the conversion, the reactors may
continue to use HEU. For example, the operator of the Massachusetts
Institute of Technology reactor said that conversion to LEU could be
delayed even after a new LEU fuel is developed if DOE does not provide
funding in a timely manner.

Using Low Enriched Uranium for Medical Isotope Production Is Feasible, but
Concerns over Cost Could Limit Its Use

The reactor conversion program has demonstrated the potential for using
LEU to produce medical isotopes on a small scale, but large-scale
producers are concerned that the cost of conversion could be prohibitive.
With assistance from the reactor conversion program, one reactor in
Argentina used for the production of medical isotopes converted from HEU
to LEU in 2003. However, Argonne officials said the conversion was
feasible only because the reactor produces medical isotopes on a small
scale, using a relatively small amount of material in the production
process. (Prior to converting to LEU, the Argentine reactor used less than
a kilogram of HEU per year. In contrast, four large medical isotope
producers targeted by the reactor conversion program, located in Belgium,
Canada, the Netherlands, and South Africa, each use as much as 25
kilograms of HEU per year.) Argonne is still working to overcome problems
with using LEU that limit the ability of the Argentine reactor to increase
its production capacity.

Argonne officials said they are 2 to 3 years away from completing work
that would allow the large medical isotope producers to convert from HEU
to LEU. Argonne officials said they have developed LEU materials that can
be used by all medical isotope producers and only the adaptation of the

1110 C.F.R. S: 50.64.

production processes from using HEU to LEU remains. They said that
adapting the medical isotope producers' processes, each of which is unique
in some aspect, is technically feasible and is just a matter of time. One
reason why the production processes must be modified is that almost five
times more LEU than HEU is required to produce the same amount of medical
isotopes. The increased amount of nuclear material creates obstacles to
conversion. For example, using LEU would produce more waste, which in turn
could increase the burden of treating and storing the waste. In addition,
the facilities, chemical processes, and waste management systems for
producing medical isotopes are customized to use HEU and would require
modifications to accommodate LEU.

In discussions with the two large medical isotope producers in Belgium and
Canada, both cited a number of factors that would make conversion to LEU
costly and difficult, including the fivefold increase in the amount of LEU
that would be required to achieve the same level of output when using HEU.
As part of its technical analysis, the Canadian producer is currently
conducting an assessment of converting to LEU to determine whether
conversion would be economically feasible. The Canadian producer currently
uses U.S.-origin HEU and, under U.S. law, must agree to convert to LEU
when a suitable LEU alternative is developed.12 (The other three large
medical isotope producers currently receive their HEU from countries other
than the United States and are therefore not subject to U.S. requirements
to convert to LEU.) U.S. law also allows for an exception to the
requirement to convert to LEU if conversion would result in a large
percentage increase in operating costs. Officials at DOE and NRC, which
implements the law governing U.S. HEU exports, acknowledge that medical
isotope producers operate on small profit margins, and as a result, the
cost of converting to LEU may be prohibitive. However, Argonne officials
said that conversion to LEU could result in a more economic process. DOE
officials said they would not accept a statement by the Canadian producer
that conversion of medical isotope production to LEU is not economically
feasible without documentation to support that conclusion.

1242 U.S.C. S: 2160d.

DOE and NRC Are Addressing Security at Foreign and Domestic Research
Reactors

Research reactor operators at most reactors we visited said that security
had been improved because of DOE or NRC efforts. However, DOE and NRC have
recognized the need to further improve security at research reactors
throughout the world, including in the United States, and are engaged in
separate efforts to assess research reactor security and its
effectiveness.

At the foreign research reactors we visited, we observed security
improvements to storage areas for HEU fuel, systems for controlling
personnel access to the reactors, and alarm systems, including motion
detectors and camera monitoring. DOE provided assistance to some of the
foreign reactors to make the security improvements; other reactor
operators had made the improvements with their own funding based on DOE
recommendations. At U.S. research reactors, we saw physical security
improvements around the reactor buildings, such as new fences and concrete
barriers. Several operators of university research reactors told us they
were using funding from DOE's university reactor support program to
purchase new security equipment.

We also observed areas where further improvement could be made. For
example, we visited one foreign research reactor's facility for storing
spent HEU fuel where DOE had provided only minimal assistance to improve
security. According to DOE officials, DOE has generally not provided
assistance to improve the security of spent HEU fuel because it is
radioactive and too dangerous for potential terrorists to handle. DOE has
placed a higher priority on protecting fresh fuel-fuel that has not been
irradiated in a reactor-because it is easier to handle. However, operators
of the fuel storage facility said that the spent fuel had been in storage
for a long time and had lost enough radioactivity to be handled and
potentially stolen.

During a visit to another foreign research reactor, we observed a new
alarm system monitoring the entrance to the reactor building, a fresh fuel
vault, and motion detectors that had been installed with DOE assistance.
DOE is in the process of adding further enhancements to the security of
the facility. However, we also observed that the fence surrounding the
facility was in poor condition, security guards at the front gate were
unarmed, and there were no guards at the reactor building, which we
entered without escort. At another research reactor, DOE identified
security weaknesses and offered assistance to make security improvements.
However, according to the U.S. embassy in the country where the reactor is
located,

the improvements had not been made as of March 2004 because the reactor
operator did not act on DOE's offer of assistance. We discussed examples
that raised questions about security of foreign research reactors with DOE
officials during meetings on March 12 and 22, 2004, and they agreed that
DOE needs to do more to address potential security concerns.

Recognizing that the security at some research reactors may need to be
improved, DOE established a task force in 2004 to identify the highest
risk reactors and to develop options for improving security at reactors
believed to be of greatest concern. The task force is currently gathering
information on all research reactors worldwide, including reactors that
are shut down, and prioritizing them based on a number of factors,
including how much HEU is stored on site, the vulnerability of the
reactors to theft of HEU or sabotage, plans for conversion to LEU and
removal of HEU fuel, and the potential terrorist threat to countries where
the reactors are located. The scope of the initiative comprises 802
research reactors and associated facilities, including 128 facilities
possessing 20 kilograms or more of HEU on site.13 DOE officials said the
task force addresses the need to combine and coordinate information from
different sources within DOE, which did not have a comprehensive database
prior to the task force to document visits and security observations made
by various DOE program officials to foreign research reactors. According
to DOE officials, the task force has submitted a report to the Secretary
of Energy with recommendations for possible implementation by DOE, such as
expediting conversion to LEU and providing additional assistance to
foreign research reactors to improve security. According to task force
members, security assistance to foreign reactors could be provided by DOE,
the International Atomic Energy Agency, or countries other than the United
States.

NRC is also engaged in efforts to assess and improve the security at the
U.S. research reactors it regulates. NRC took actions after the attacks of
September 11, 2001, to improve security at U.S. research reactors-for
example, by requiring some reactor operators to consider installing
additional physical barriers and strengthening screening requirements for
entrance to facilities. In addition, NRC is conducting assessments of the
security at the research reactors it regulates and may increase security

13The task force is looking at all research reactors worldwide, while the
reactor conversion program targets operating research reactors that use
HEU. Not every research reactor that possesses HEU is part of the
conversion program because some of the reactors have military applications
that require HEU fuel or use a unique HEU fuel that would require a
separate LEU fuel development effort.

requirements based on the results of the assessments. According to NRC
officials, the agency's security evaluations of U.S. research reactors
will be completed in December 2004. Based on the results of the
evaluations, NRC will decide to strengthen current regulations, leave
regulations as they are, or address security concerns at each reactor on a
case-by-case approach.

Conclusions	While several research reactors are scheduled to convert to
LEU fuel in the next few years, progress in converting many remaining
reactors has stalled. In part, converting these reactors is a matter of
completing development of new LEU fuels, which has been delayed by
unforeseen technical problems. However, if DOE's reactor conversion
program is to achieve its objective to reduce and eventually eliminate the
use of HEU in civilian research reactors, DOE may need to re-evaluate its
policies with regard to the program. Many of the research reactors that
could use currently available LEU fuels have not converted because they
lack incentives, funding, or both. Until recently, the policy of DOE's
reactor conversion program has been to provide technical assistance to
support conversion of research reactors to LEU but not to pay for
conversion or, in particular, purchase new LEU fuel. In the case of six
U.S. university reactors, DOE has not made purchasing LEU fuel for
conversion (and completing the conversion process at another reactor by
removing HEU fuel and shipping it to a DOE facility for disposal) a high
priority. While many of the U.S. reactors that could convert to LEU use
only a small amount of HEU per year, converting them would demonstrate
DOE's commitment to the nonproliferation objective of the reactor
conversion program.

DOE has generally expected the operators of foreign research reactors that
use U.S.-origin HEU fuel to purchase new LEU fuel with their own funds.
The policies DOE has relied on to influence operators to convert to LEU-
requiring that reactor operators agree to convert as a condition of
receiving U.S. HEU exports or returning spent fuel to the United States-do
not work for reactors using so little HEU that they can operate for many
years without replacing their fuel. Without funding for conversion, it is
possible these reactors could continue using HEU for years. DOE may need
to consider offering additional incentives to foreign reactors, including
purchasing new LEU fuel, to influence them to convert to LEU.

Regardless of progress in converting domestic and foreign research
reactors to LEU in the near term, delays in completing the development of
new LEU fuels mean that other research reactors will continue to use HEU
until at least 2010. If the reactor conversion program experiences

additional problems in one or both of the two LEU fuels currently under
development, some research reactors could be left without a viable option
for conversion to LEU. Given the continuing use of HEU at these research
reactors, DOE and NRC efforts to evaluate and improve reactor security are
essential components of the overall effort to reduce the risk of
proliferation of HEU at civilian research reactors.

Recommendations for Executive Action

In order to further reduce the use of HEU in research reactors in the
United States and abroad, we recommend that the Secretary of Energy and
the Administrator of the National Nuclear Security Administration take the
following three actions:

o 	consider placing a higher priority on converting the six remaining
university research reactors in the United States that can use currently
available LEU fuel;

o 	once a reactor has been converted, place a high priority on removing
the HEU fuel and transporting it to the appropriate DOE facility; and

o 	evaluate the costs and benefits of providing additional incentives to
foreign research reactors that use U.S.-origin HEU fuel to convert to LEU,
particularly to reactor operators that are willing to convert but do not
have sufficient funding to do so.

Agency Comments and Our Evaluation

We provided draft copies of this report to the Departments of Energy and
State and to NRC for their review and comment. Comments from the
Departments of Energy and State are presented as appendixes III and IV,
respectively. NRC's written comments were not for publication. DOE, State,
and NRC generally agreed with the recommendations in our report and
provided detailed comments, which we incorporated into the report as
appropriate.

In its comments, DOE noted that the United States has 11 more research
reactors to convert to the use of LEU fuels, with conversion currently
feasible for 6 of the reactors. However, DOE's February 2004 project
execution plan for its reactor conversion program identifies 14 U.S.
research reactors still using HEU fuel that are included in DOE's reactor
conversion program, with conversion currently feasible for 8 of the

reactors. We used the number of reactors from DOE's project execution plan
in our report.

In its comments, State questioned DOE's cost estimate for converting U.S.
research reactors where conversion to LEU fuel is currently feasible.
State noted that DOE's cost estimate of $5 million to $10 million per
reactor where conversion to LEU fuel is currently feasible seems much too
high, especially in comparison with DOE's expenditures of about $0.4
million to $1.6 million per reactor to convert 11 U.S. university reactors
to LEU fuel between 1984 and 2000. State wrote that the DOE office that
administers the program for supporting U.S. university research reactors
has been reluctant to fund the conversion of more research reactors and
has a tendency to overstate the potential costs to deflect pressure to
spend money on conversions. We asked DOE officials what support they had
for the cost estimate. In response, a DOE official said that DOE does not
have documentation to support its cost estimate.

In another comment, State suggested we include recognition of the growing
number of new and planned research reactors around the world that have
been designed to use LEU fuel. State wrote that modern worldclass reactors
do not need HEU fuel to conduct high-quality research. DOE officials also
provided information on the use of LEU fuel in new research reactors
constructed since the inception of its reactor conversion program in 1978.
Although our report does not focus on new research reactors designed to
use LEU fuel, we agree that this is a positive development in keeping with
the objective of DOE's reactor conversion program and we added a footnote
recognizing these new reactors.

Scope and	To review the progress of the reactor conversion program, we
analyzed program documentation, including DOE's February 2004 RERTR
Program

Methodology	Project Execution Plan. We also interviewed key DOE, Argonne,
NRC, and State Department officials; conducted site visits to foreign and
U.S. research reactors and interviewed reactor operators by telephone; and
attended an annual international conference organized by DOE's reactor
conversion program.

For site visits and telephone interviews, we selected foreign and domestic
research reactors from three categories: reactors that had converted to
LEU, reactors that could convert using currently available LEU fuels but
were still using HEU, and reactors that could not convert using currently
available LEU fuels. Within each of the three categories of reactors, we
selected a nonprobability sample of reactors based on a number of criteria
such as reactor types, including U.S.-supplied reactors, Russian-supplied
reactors, and reactors that use HEU in the production of medical
isotopes.14 We visited 5 research reactors in the United States, including
3 that had converted to LEU and 2 that cannot convert to currently
available LEU fuels and are still using HEU. We conducted phone interviews
with reactor operators from 1 other U.S. reactor that cannot use currently
available LEU fuels and all 6 of the U.S. university research reactors
that can convert to LEU but are still using HEU. We also visited 10
foreign research reactors in Belgium, Germany, the Netherlands, Poland,
Portugal, Romania, Russia, and Ukraine. These included 2 converted
reactors, 4 reactors that can use LEU fuel but have not yet converted, and
4 reactors that still require HEU. (See table 5.)

     Table 5: Number of Research Reactors Selected for Site Visits or Phone
                                   Interviews

                           U.S.-supplied        Russian-supplied 
               Reactor                                           
                status In the U.S. Abroad    In Russia Abroad           Total 
             Converted       3 of 11 2 of 28                  --      5 of 39 
           Convertible        8 of 8 3 of 20             -1 of 7     12 of 35 
               Not yet                                           
           convertible         4 of 6 2 of 4      2 of 14 1 of 7      9 of 31 
                 Total      15 of 25 7 of 52   2 of 14 2 of 14      26 of 105 

Source: GAO.

In our site visits and telephone interviews, we asked a standard set of
questions (depending on the conversion status of the reactor) on technical
aspects of converting to LEU, cost of conversion, impact of conversion on
reactor performance, and assistance provided by DOE's reactor conversion
program.

14Results from nonprobability samples cannot be used to make inferences
about a population because, in a nonprobability sample, some elements of
the population being studied have no chance or an unknown chance of being
selected as part of the sample.

To review the progress in developing new LEU fuels for use in research
reactors, we conducted in-depth interviews with Argonne officials
responsible for managing LEU fuel development; operators of reactors that
plan to convert to new LEU fuels when they are developed; and fuel
development experts at the Bochvar Institute in Russia, which is
collaborating with Argonne. At the annual international conference
organized by DOE's reactor conversion program, we participated in sessions
on LEU fuel development, and we reviewed technical papers on the progress
of fuel development. For technical expertise, we relied on GAO's Chief
Technologist, who participated in meetings with Argonne officials and
reviewed the information that Argonne provided. We used the interviews and
annual conference to also review progress in the development of LEU for
use in the production of medical isotopes. In addition, we interviewed two
of the four large medical isotope producers (in Belgium and Canada) that
are currently using HEU to produce medical isotopes and that would be
candidates for conversion to LEU once Argonne completes development.

To gather information on DOE and NRC efforts to improve research reactor
security, we interviewed officials at those agencies and discussed
security improvements with reactor operators we interviewed. We also
observed security improvements at research reactors we visited. However,
we did not evaluate the effectiveness of the security at research reactors
or DOE and NRC efforts to improve security.

We obtained data from DOE and Argonne on the conversion status of the 105
research reactors included in the reactor conversion program, the amount
of HEU used per year by the 105 reactors (including the amount used prior
to conversion for the 39 research reactors now using LEU), and DOE
expenditures for the reactor conversion program since its inception in
1978. All amounts are in constant 2003 dollars, unless otherwise noted. We
assessed the reliability of data we obtained through discussions with
Argonne officials. We also obtained responses from Argonne officials to a
series of data reliability questions covering issues such as quality
control procedures and the accuracy and completeness of the data. Based on
our assessment, we determined that the data we obtained from DOE and
Argonne was sufficiently reliable for our purposes.

We conducted our work from July 2003 to July 2004 in accordance with
generally accepted government auditing standards.

We are sending copies of this report to the Secretary of Energy; the
Administrator, National Nuclear Security Administration; the Secretary of
State; the Chairman, NRC; the Secretary of Homeland Security; the
Director, Office of Management and Budget; and interested congressional
committees. We will also make copies available to others upon request. In
addition, this report will be available at no charge on the GAO Web site
at http://www.gao.gov.

If you or your staff have any questions about this report, please call me
at (202) 512-3841. Key contributors to this report include Joseph Cook,
Jonathan McMurray, Kirstin B.L. Nelson, Peter Ruedel, F. James Shafer Jr.,
and Keith Rhodes, GAO's Chief Technologist.

Sincerely yours,

Gene Aloise Acting Director, Natural

Resources and Environment

Appendix I

Reactor Conversion Program Expenditures and Projected Costs

DOE estimates that the reactor conversion program will cost approximately
$213 million through the program's projected end in 2012.1 Expenditures
since the program's inception in 1978 through fiscal year 2003 totaled
approximately $139 million in constant 2003 dollars. (See fig. 3.)

Figure 3: Reactor Conversion Program Expenditures, Fiscal Years 1978 to
2003

Assistance to Russia

$9 million

Development of LEU for medical isotope production

$13 million

Reactor analysis

$37 million

Fuel development

$79 million

Source: GAO analysis of Argonne National Laboratory data.

Costs for the reactor conversion program are broken into four categories:

o 	Fuel development includes all of the activities associated with testing
and analyzing new LEU fuels, such as the LEU dispersion and monolithic
fuels that are currently under development. This activity also includes
developing the methods for manufacturing new LEU fuels. Most of the
reactor conversion program costs over the life of the program are in this
category.

o 	Reactor analysis includes studying the conversion of individual
research reactors, both domestic and foreign, once a suitable LEU has been
developed. For example, Argonne provides technical assistance to research
reactors to determine the impact of conversion on the reactors'
performance and safety. This category does not include the cost of

1Dollar figures cited throughout appendix I are in constant 2003 dollars,
unless otherwise noted.

Appendix I
Reactor Conversion Program Expenditures
and Projected Costs

purchasing LEU fuel for research reactors. For example, the responsibility
for purchasing LEU fuel for U.S. university reactors belongs to another
program in DOE that is separate from the reactor conversion program.

o 	Development of LEU for medical isotope production includes activities
associated with testing and analyzing LEU materials to replace HEU in the
production of medical isotopes. This activity also includes development of
manufacturing and waste management processes for using LEU instead of HEU
and technical assistance to medical isotope producers.

o 	Assistance to Russia includes funding to support research and
development on new LEU fuels for Russian-supplied reactors. It also
includes analysis of the impact of conversion to LEU on Russiansupplied
reactors. The assistance to Russia was previously funded through a
one-time grant of approximately $1.7 million, about two-thirds of which
has been spent, from the State Department's Nonproliferation and
Disarmament Fund (NDF).

In addition to the $139 million spent by the reactor conversion program,
DOE's university reactor support program spent approximately $10 million
between 1984 and 2000 to convert 11 university research reactors in the
United States, according to an official at the Idaho National Engineering
and Environmental Laboratory (INEEL). The cost of converting each reactor
varied from around $400,000 to $1.6 million and was primarily for the cost
of fabricating the fuel. The costs varied depending on the type of fuel
and where it was manufactured.

DOE's projected costs for completing the reactor conversion program total
about $74.7 million.2 (See table 6.) This amount includes $26.3 million
for reactor analysis, $25.8 million for fuel development, $4.8 million for
the development of LEU for medical isotope production, and $17.8 million
for assistance to Russia.

2The projected costs for the reactor conversion program are not in
constant 2003 dollars. Argonne adjusted these costs for inflation with an
increase of 5 percent for every year after 2004 and using 2004 as the base
year.

                                   Appendix I
                    Reactor Conversion Program Expenditures
                              and Projected Costs

 Table 6: DOE's Projected Costs to Complete the Reactor Conversion Program (in
                                   thousands)

                                    Development of LEU                
                                    for                               
                Reactor        Fuel     medical isotope Assistance to 
Fiscal Year analysis development          production    Russia       Total 
                 $1,125      $4,122                $890    $2,404      $8,541 
                  1,586       4,286                 946     2,709       9,527 
                  1,494       3,426               1,000     3,604       9,523 
                  1,692       4,526                 986     2,917      10,121 
                  3,259       3,023                 638     1,984       8,904 
                  3,835       2,189                 200     1,680       7,903 
                  5,320       2,284                  75     1,064       8,743 
                  4,784       1,544                  60      842        7,230 
                  3,250         409                   0      560        4,219 
      Total     $26,345     $25,809              $4,795    $17,763    $74,712 

Source: GAO analysis of Argonne data.

DOE's cost estimates are based on the assumption that at least one of the
two LEU fuels that Argonne is developing will be successful and will be
used for the reactor conversion program. DOE also assumes that Russia and
other countries will continue to assist Argonne in conducting fuel tests
as necessary for fuel development. DOE's estimates do not include the cost
of purchasing new LEU fuel to convert research reactors. These costs are
expected to be funded by other DOE programs or by the operators of foreign
research reactors.

Appendix II

39 Research Reactors That Converted to LEU Fuel under the Reactor
Conversion Program

Country Reactor Fully converted Partially converted

Argentina RA-3 X

Australia HIFAR X

Austria ASTRA X

TRIGA X

Brazil IEA-R1 X

Canada MNR X

NRU X

Slowpoke-Montreal X

Chile La Reina X

Colombia IAN-R1 X

Denmark DR-3 X

France OSIRIS X

Germany BER-II X

FRG-1 X

Greece GRR-1 X

Iran NRCRR X

Japan JMTR X X

JRR-4 X
Netherlands HOR X
Pakistan PARR X
Philippines PRR-1 X
Romania TRIGA X
Slovenia TRIGA X
Sweden R2 X X

R2-0 X
Switzerland SAPHIR X
Taiwan THOR X
Turkey TR-2 X

                                  Appendix II
                   39 Research Reactors That Converted to LEU
                   Fuel under the Reactor Conversion Program

                         (Continued From Previous Page)

              Country Reactor Fully converted Partially converted

United States Georgia Institute of Technology X

Iowa State University X

University of Massachusetts at Lowell X

Manhattan College Zero Power Reactor X

University of Michigan X

Ohio State University X

Rhode Island Nuclear Science Center X

Rensselaer Polytechnic Institute X

University of Missouri at Rolla X

University of Virginia X

Worcester Polytechnic Institute X

Source: Argonne.

Note: The amount of HEU fuel used by these research reactors prior to
conversion ranged from 0 to 70.1 kilograms per year. Reactors that use
zero kilograms of HEU per year use HEU fuel but operate at such low power
levels that they use up the fuel very slowly and can operate for many
years or for their entire lifetime without replacing fuel.

                                  Appendix III

                     Comments from the Department of Energy

Appendix III
Comments from the Department of Energy

                                  Appendix IV

                     Comments from the Department of State

Appendix IV
Comments from the Department of State

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