    Nuclear Safety: Concerns With the Continuing Operation of Soviet-Designed
    Nuclear Power Reactors (Chapter Report, 04/25/2000, GAO/RCED-00-97).

    Pursuant to a congressional request, GAO provided information on
    Soviet-designed nuclear power reactors, focusing on: (1) how much money
    has been spent by the United States and other countries for assistance
    to improve the safety of Soviet-designed nuclear power reactors--and the
    types of assistance being provided--as well as planned U.S.
    expenditures; (2) experts' views on the impact of the assistance; (3)
    the status of efforts to close high-risk Soviet-designed reactors; and
    (4) the management of the Department of Energy's (DOE) and the Nuclear
    Regulatory Commission's (NRC) safety assistance activities.

    GAO noted that: (1) the United States and 20 other countries and
    international organizations contributed about $1.9 billion to improve
    the safety of Soviet-designed nuclear reactors; (2) the $1.9 billion
    includes contributions for improving operational safety by providing
    better training, procedures, and equipment and strengthening regulatory
    authorities; (3) the U.S. safety program, which provides most of its
    funding through DOE and NRC, has supplied assistance that includes
    safety evaluations and reactor upgrades, training, and fire safety
    equipment; (4) although DOE plans to complete its assistance efforts by
    2005 at a projected cost of $709 million, the Commission has not
    determined when or at what cost it will complete its assistance efforts;
    (5) nevertheless, the Department of State believes that funding should
    continue for some time because the highest-risk reactors continue to
    operate; (6) nuclear safety experts from 32 countries and international
    organizations met in 1999 to assess the impact of the nuclear safety
    assistance provided to countries operating Soviet-designed reactors; (7)
    these experts concluded that progress has been made over the past decade
    in strengthening nuclear regulatory authorities, improving the operation
    of the nuclear reactors, and establishing safety improvement programs;
    (8) nevertheless, the experts maintained that further improvements are
    needed, particularly to strengthen the independence and effectiveness of
    nuclear regulatory authorities; (9) while safety improvements have been
    made, a major goal of the international donor community has not been
    realized--the permanent shutdown of the highest-risk Soviet-designed
    reactors; (10) although Ukraine decided to shut down one of its reactors
    at the Chornobyl nuclear power plant in 1996, the 25 reactors of
    greatest concern have continued to operate despite the efforts of the
    donor countries to obtain their closure; (11) many safety experts told
    GAO that countries will continue to operate these reactors as long as it
    is in their economic interests to do so; (12) DOE has funded several
    projects that may have worthwhile objectives but are not directly
    related to improving the safety of Soviet-designed nuclear reactors; and
    (13) in addition, DOE has funded several smaller projects or made other
    expenditures of program funds that some program officials believed were
    of questionable value in meeting the program's objectives.

    --------------------------- Indexing Terms -----------------------------

     REPORTNUM:  RCED-00-97
         TITLE:  Nuclear Safety: Concerns With the Continuing Operation of
    	     Soviet-Designed Nuclear Power Reactors
          DATE:  04/25/2000
       SUBJECT:  Nuclear reactors
    	     International relations
    	     Nuclear powerplant safety
    	     Internal controls
    	     Financial management
    	     Safety standards
    	     Foreign governments
    	     Foreign technical aid
    	     Interagency relations
    IDENTIFIER:  Soviet Union
    	     Soviet RBMK Reactor
    	     Soviet VVER 440 Reactor
    	     DOE Nuclear Safety Assistance Program
    	     Ukraine
    	     Bulgaria
    	     Lithuania
    	     Czech Federal Republic
    	     Slovak Federal Republic
    	     Chornobyl Nuclear Powerplant (Ukraine)
    	     NRC Nuclear Safety Assistance Program

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    GAO/RCED-00-97

    6

    16

    Background 16

    International Nuclear Safety Assistance Efforts 20

    U.S. Safety Assistance Activities 24

    Objectives, Scope, and Methodology 26

    Improve the Safety of Soviet-Designed Reactors

    30

    Total Donor Contributions 30

    U.S. Nuclear Safety Assistance Program 33

    DOE and NRC Have Unspent and Unobligated Funds 38

    Future Costs of U.S. Safety Program Are Uncertain 42

    Conclusions 42

    Recommendations to the Secretary of Energy and the Chairman
    of the Nuclear Regulatory Commission 43

    Agency Comments and Our Evaluation 43

    Soviet-Designed Reactors, but More Improvements Are Needed

    45

    Experts' Views on the Safety of Soviet-Designed Reactors 45

    Recipients Find U.S. Safety Assistance Beneficial 46

    Impact of U.S. Safety Assistance Is Difficult to Measure 50

    Been Limited

    52

    Goal of International Assistance Program Was to Encourage
    the Shutdown of the Highest-Risk Reactors 52

    Assistance May Be Used to Justify Continued Operation of
    Highest-Risk Plants 54

    Donors' Efforts to Shut Down the Highest-Risk Soviet-Designed
    Reactors Have Met With Limited Success 56

    Activities Has Raised Concerns

    60

    Some DOE Projects Are Not Directly Related to Improving
    the Safety of Soviet-Designed Nuclear Power Plants 60

    NRC's Safety Program Lacks a Strategic Plan and Coordinated
    Management 71

    Conclusions 74

    Recommendations to the Secretary of Energy and the Chairman
    of the Nuclear Regulatory Commission 76

    Agency Comments and Our Evaluation 76

    Appendix I: Status of Efforts to Shut Down Highest-Risk
    Soviet-Designed Nuclear Power Plants

    80

    Appendix II: Comments From the Department of Energy

    82

    Appendix III: Comments From the Nuclear Regulatory
    Commission

    85

    Appendix IV: GAO Contact and Staff Acknowledgments

    87

    Table 1: DOE's Cumulative Expenditures for the Nuclear
    Safety Assistance Program Through September 30, 1999 37

    Table 2: Cumulative Expenditures for the Nuclear Regulatory Commission's
    Safety Assistance Program Through
    September 30, 1999 38

    Table 3: Obligations and Expenditures for DOE's and NRC's
    Safety Assistance Programs, as of September 30, 1999 39

    Figure 1: Operational Soviet-Designed Nuclear Power Plants 19

    Figure 2: Chornobyl Shelter 23

    Figure 3: Countries Donating and Receiving International
    Nuclear Safety Assistance, as of November 1999 31

    Figure 4: Types and Amounts of Funds for Nuclear Safety
    Improvements as of November 1999 33

    Figure 5: DOE's and NRC's Expenditures of Nuclear Safety
    Funds Totaling $357 Million as of September 30, 1999 35

    Figure 6: Distribution of DOE's and NRC's Expenditures
    Totaling $357 Million to Recipient Countries 36

    Figure 7: Safety Parameter Display System at Khmelnytskyy
    Nuclear Power Plant 48

    Figure 8: Full-Scope Simulator at Khmelnytskyy Nuclear Power Plant 49

    Figure 9: Analytical Simulator Used by Ukrainian Nuclear Regulators 49

    Figure 10: Status of Construction of the Chornobyl Heat Plant, as of October
    1999 59

    Figure 11: Slavutych Laboratory of International Research and
    Technology 67

    Figure 12: Interior of the Slavutych Laboratory 68

    DOE Department of Energy

    GAO General Accounting Office

    IAEA International Atomic Energy Agency

    MINATOM Russian Ministry of Atomic Energy

    NRC Nuclear Regulatory Commission

    PHARE Poland and Hungary Assistance for Reconstruction of Economy

    PNNL Pacific Northwest National Laboratory

    TACIS Technical Assistance for the Commonwealth of Independent States

    USAID U.S. Agency for International Development

    Resources, Community, and
    Economic Development Division

    B-284374

    April 25, 2000

    The Honorable Ron Packard
    Chairman
    The Honorable Peter J. Visclosky
    Ranking Minority Member
    Subcommittee on Energy and
    Water Development
    Committee on Appropriations
    House of Representatives

    This report responds to your request that we review U.S. and international
    efforts to improve the safety of Soviet-designed nuclear power reactors and
    assess the management of the Department of Energy's and the Nuclear
    Regulatory Commission's nuclear safety assistance activities.

    As arranged with your offices, unless you publicly announce its contents
    earlier, we plan no further distribution of this report until 10 days after
    the date of this letter. At that time, we will send copies of this report to
    appropriate congressional committees, the Honorable Bill Richardson,
    Secretary of Energy; the Honorable Madeleine Albright, Secretary of State;
    the Honorable Richard Meserve, Chairman, Nuclear Regulatory Commission; and
    the Honorable Jacob Lew, Director, Office of Management and Budget. Copies
    will also be made available to others upon request.

    Please call me at (202) 512-3841 if you or your staff have any questions
    about this report. Key contributors to the report are listed in appendix IV.

    (Ms.) Gary L. Jones
    Associate Director, Energy,
    Resources, and Science Issues

    Executive Summary

    The United States and many other countries are concerned about the safety of
    59 Soviet-designed nuclear power reactors that operate in the Newly
    Independent States of the former Soviet Union, as well as in other nations
    throughout Central and Eastern Europe. Many of these reactors are similar in
    design to the Chornobyl reactor in Ukraine that exploded in 1986, causing
    the worst accident in the history of nuclear power. Deficiencies in the
    design of many of these reactors pose grave safety risks, which are
    exacerbated by problems affecting reactor operators, who in many cases are
    poorly trained and erratically paid. In addition, many nuclear regulatory
    authorities do not have the independence or effectiveness needed to oversee
    safety. To mitigate these problems, the United States, many European
    nations, Canada, Japan, and several international organizations have been
    providing assistance since the early 1990s to improve the safety of these
    nuclear reactors. The aim of this assistance is to improve the safety of the
    reactors without extending their operating lifetimes and to find replacement
    sources of energy so the reactors can be shut down as soon as possible.

    The Chairman and the Ranking Minority Member of the Subcommittee on Energy
    and Water Development, House Committee on Appropriations, asked GAO to (1)
    provide information on how much money has been spent by the United States
    and other countries for assistance to improve the safety of Soviet-designed
    nuclear power reactors--and the types of assistance being provided--as well
    as planned U.S. expenditures; (2) provide experts' views on the impact of
    the assistance; and (3) assess the status of efforts to close high-risk
    Soviet-designed reactors. In addition, GAO was asked to assess the
    management of the Department of Energy's and the Nuclear Regulatory
    Commission's safety assistance activities.

    After the Chornobyl reactor exploded in April 1986, radioactive
    contamination spread over Eastern Europe and Scandinavia, and fallout was
    detected in the United States. The transboundary effects of the accident
    raised concerns among the international community, including the United
    States, about the safety of Soviet-designed nuclear reactors, 59 of which
    are currently in operation at 18 nuclear power plants.1 Twenty-five of these
    reactors are of greatest concern because they fall below western safety
    standards and cannot be economically upgraded. Located in Armenia, Bulgaria,
    Lithuania, Russia, the Slovak Republic, and Ukraine, they include 14 RBMK
    Chornobyl-style reactors and 11 VVER 440 Model 230 reactors. The
    international community, including the United States, developed an
    assistance plan designed to quickly improve the safety of the highest-risk
    reactors and provide longer-term safety improvements. Under this plan, the
    donor countries have aimed for the earliest practicable shutdown of the
    highest-risk reactors.

    Responsibility for the U.S. contribution to this international safety
    assistance effort lies with four federal agencies--the departments of State
    and Energy, the U.S. Agency for International Development, and the Nuclear
    Regulatory Commission. The Department of State, with assistance from the
    U.S. Agency for International Development, provides overall policy guidance
    for the U.S. effort, generally known as the U.S. safety program. The
    Department of Energy, primarily through Pacific Northwest National
    Laboratory, focuses on, among other things, improving the physical condition
    of nuclear reactors and installing safety equipment, developing improved
    safety procedures and training operators in the use of these procedures, and
    conducting safety assessments. The Nuclear Regulatory Commission
    concentrates on strengthening the independence and effectiveness of the
    regulatory authorities in the countries that operate Soviet-designed nuclear
    power reactors.

    The United States and 20 other countries and international organizations
    contributed about $1.9 billion to improve the safety of Soviet-designed
    nuclear reactors; the United States contributed about $545 million of that
    amount. The $1.9 billion includes contributions for improving operational
    safety by providing better training, procedures, and equipment and
    strengthening regulatory authorities. The U.S. safety program, which
    provides most of its funding through the Department of Energy and the
    Nuclear Regulatory Commission, has supplied assistance that includes safety
    evaluations and reactor upgrades, training, and fire safety equipment.
    Russia and Ukraine are the leading recipients of U.S. assistance. It is
    uncertain how long the United States will continue its safety assistance
    program. Although the Department of Energy plans to complete its assistance
    efforts by 2005 at a projected cost of $709 million, the Commission has not
    determined when or at what cost it will complete its assistance efforts.
    Nevertheless, the State Department believes that funding should continue for
    some time because the highest-risk reactors continue to operate.

    Nuclear safety experts from 32 countries and international organizations met
    in 1999 to assess the impact of the nuclear safety assistance provided to
    countries operating Soviet-designed reactors. These experts concluded that
    progress has been made over the past decade in strengthening nuclear
    regulatory authorities, improving the operation of the nuclear reactors, and
    establishing safety improvement programs. Nevertheless, they maintained that
    further improvements are needed, particularly to strengthen the independence
    and effectiveness of nuclear regulatory authorities. Furthermore, the extent
    of safety improvements varies from country to country. According to safety
    experts, Hungary, the Czech Republic, and the Slovak Republic have made the
    most significant progress in implementing western safety practices, while
    Russia has made the least progress. Officials from the countries operating
    Soviet-designed reactors that have received U.S. safety assistance told GAO
    that the assistance has had a direct impact on improving the reactors'
    safety.

    While safety improvements have been made, a major goal of the international
    donor community has not been realized--the permanent shutdown of the
    highest-risk Soviet-designed reactors. Although Ukraine decided to shut down
    one of its reactors at the Chornobyl nuclear power plant in 1996, the 25
    reactors of greatest concern have continued to operate despite the efforts
    of the donor countries to obtain their closure. Many safety experts told GAO
    that countries will continue to operate these reactors as long as it is in
    their economic interests to do so. Some of these experts also told GAO that
    an unintended consequence of the safety assistance is that it has encouraged
    countries to continue operating these reactors. In May 1999, Russia's
    Minister of Economy stated that international assistance was enabling Russia
    to modernize its reactors, including those that the United States and other
    countries want shut down as soon as possible.

    Despite the favorable views of those who have received the Department of
    Energy's and the Nuclear Regulatory Commission's safety assistance, some
    U.S. safety program officials, including U.S. laboratory and Commission
    officials, have concerns about the management of both agencies' programs.
    The Department of Energy has funded several projects that may have
    worthwhile objectives but are not directly related to improving the safety
    of Soviet-designed nuclear reactors. In funding these projects, the
    Department has expanded the program beyond its original mission to upgrade
    the reactors' safety. These projects include international environmental and
    nuclear safety centers in the United States and Russia and laboratories in
    Ukraine. In addition, the Department has funded several smaller projects or
    made other expenditures of program funds that some program officials
    believed were of questionable value in meeting the program's objectives.
    Management responsibilities for the Nuclear Regulatory Commission's safety
    program are divided among different offices. Recent internal Commission
    audits and reviews have reported that this split in management
    responsibilities could cause duplication of effort and miscommunication with
    other federal agencies participating in the program. According to some
    Commission officials, the lack of coordination and communication between
    different offices responsible for the Commission's nuclear safety assistance
    activities contributed to the Commission's inability to obligate over
    $500,000 in program funds that were returned to the U.S. Treasury.

    This report contains recommendations to improve the management of the U.S.
    safety program and maximize the use of funds for projects directly related
    to improving nuclear safety.

    Soviet-Designed Nuclear Reactors

    The United States and 20 other countries and international organizations
    contributed about $1.9 billion to improve the safety of Soviet-designed
    nuclear power reactors. The European Union, which comprises 15 member
    nations, is the largest donor, and the United States is the second largest,
    with contributions totaling about $545 million. The major recipients of
    assistance are Russia, Ukraine, Bulgaria, Lithuania, and the Czech and
    Slovak republics. The international assistance is targeted toward several
    safety activities, including operational improvements, such as training
    nuclear reactor personnel, supplying equipment, and strengthening regulatory
    authorities.

    The U.S. contribution of about $545 million is divided into two
    components--$101 million for international nuclear safety initiatives
    administered by the European Bank for Reconstruction and Development and
    $444 million for safety activities managed by the Department of Energy and
    the Nuclear Regulatory Commission. These activities include reactor safety
    evaluations and upgrades, training for plant operators and regulatory
    authority personnel, and fire safety equipment and materials. Eighty-six
    percent of the agencies' expenditures were related to activities in Russia
    and Ukraine. As of September 30, 1999, GAO determined that the Department
    had not spent $78 million in appropriated funds carried over from prior
    years. Because of the large amount of carryover funds, the Congress reduced
    the Department's fiscal year 2000 budget request for the program by 55
    percent--from $34 million to $15 million. As of the same date, the
    Commission had about $9 million carried over from prior years. Furthermore,
    the Commission returned over $500,000 for Ukraine-related activities to the
    U.S. Treasury because the funds were not obligated within a 2-year statutory
    period covering the availability of those funds. It is uncertain how long
    the United States will continue its safety assistance program. Although the
    Department of Energy plans to complete its assistance efforts by 2005 at a
    projected cost of $709 million, the Commission has not determined when or at
    what cost it will complete its assistance efforts. Furthermore, the State
    Department believes that funding should continue for some time because the
    highest-risk reactors continue to operate.

    Improvements Are Needed

    According to the nuclear safety experts from 32 countries and international
    organizations who met in June 1999 at a conference sponsored by the
    International Atomic Energy Agency, the assistance provided over the past
    decade to countries operating Soviet-designed reactors has improved nuclear
    safety. The experts noted that these countries have strengthened the
    independence and technical competence of their nuclear regulatory
    authorities and made progress in implementing western safety practices and
    in implementing design and operational safety improvement programs. Despite
    these improvements, the experts found that the governments operating these
    reactors need to do more to ensure that their nuclear regulatory authorities
    have the financial resources and enforcement authority necessary to be
    effective. Furthermore, safety improvements varied from country to country
    and were affected by each country's economic conditions. According to safety
    experts, Hungary, the Czech Republic, and the Slovak Republic have made the
    most marked safety improvements. In contrast, Russia has made the least
    progress in terms of safety improvements, and Ukraine lacks the financial
    resources to meet its safety goals. According to representatives of donor
    and recipient countries, the assistance has improved the safety of
    Soviet-designed reactors, and U.S. assistance has been particularly helpful.
    U.S. safety experts cautioned, however, that it is difficult to quantify the
    extent to which safety assistance has reduced the risks of operating
    Soviet-designed nuclear reactors.

    Limited

    A major goal of the safety assistance program is to shut down the
    highest-risk Soviet-designed reactors at the earliest possible time.
    Although Ukraine decided to shut down one of the last two operating reactors
    at Chornobyl in 1996 (leaving one remaining reactor operating at the plant),
    all of the other highest-risk reactors have continued to operate despite the
    efforts of the international community to obtain their closure. Furthermore,
    it is uncertain whether Ukraine will shut down the last remaining operating
    reactor at the Chornobyl nuclear power plant this year in accordance with an
    existing agreement. Although the international community obtained agreement
    several years ago with Bulgaria to shut down some of its highest-risk
    reactors, these reactors have continued to operate because Bulgaria has been
    unable to obtain adequate replacement energy. According to Department of
    State officials, Bulgaria and Lithuania recently reaffirmed their commitment
    to shut down several reactors in the 2004-2005 time frame.

    The countries operating Soviet-designed reactors depend, to varying degrees,
    on nuclear power to meet their domestic energy requirements and believe that
    the reactors provide a low-cost energy supply. Each of the reactors also
    employs thousands of people who do not have alternative employment
    opportunities. Experts have recognized for many years that shutting down the
    highest-risk reactors would require a long-term energy strategy, which
    includes market reforms, adjustments to energy prices, and the
    identification of both nuclear and nonnuclear forms of replacement energy.
    The slow pace of economic reform in many of the countries operating these
    nuclear reactors has hampered efforts to find financing for replacement
    energy sources.

    According to many safety experts, the countries operating Soviet-designed
    nuclear reactors will continue to do so as long they perceive the operations
    to be in their economic interests. Several experts also told GAO that the
    safety assistance has the unintended consequence of encouraging the
    reactors' continued operation. In May 1999, Russia's Minister of Economy
    stated that international assistance was helping Russia continue its efforts
    to modernize its nuclear power plants, including the highest-risk reactors.
    A State Department official told GAO that the United States and other donors
    are concerned about Russia's position because the assistance was meant to
    protect public health and safety in the countries operating these reactors
    and throughout Europe until they could be shut down. Countries seeking entry
    into the European Union, such as Bulgaria, Lithuania, and the Slovak
    Republic, have an incentive to close their reactors because their entry
    depends on their shutting down their highest-risk reactors within
    agreed-upon time frames.

    Concerns

    Although the recipients of U.S. safety assistance have viewed it favorably,
    U.S. program officials have raised concerns about certain aspects of the
    Department of Energy's and the Nuclear Regulatory Commission's management of
    their safety activities. GAO found that the Department of Energy has funded
    several projects that may have worthwhile objectives but are not directly
    related to improving the safety of Soviet-designed nuclear reactors and do
    not meet the Department's project selection criteria. For example,
    environmental centers in Russia and the United States--established by the
    Department to address nuclear waste issues--are not directly related to
    improving the reactors' safety. Similarly, GAO questions whether nine joint
    research projects being performed at nuclear safety centers in the United
    States and Russia are directly improving the safety of currently operating
    nuclear power plants. Another project, the Slavutych Laboratory of
    International Research and Technology in Ukraine, has been described as an
    economic development project by a Pacific Northwest National Laboratory
    official and will not directly improve the reactors' safety. In total, the
    Department has budgeted over $16 million in safety funds to support the
    environmental centers, the safety centers, and the Slavutych Laboratory,
    including $1.7 million to renovate and furnish the building where the
    laboratory is located. The Department maintains that the laboratory will
    facilitate U.S. and other countries' efforts to shut down the Chornobyl
    nuclear power plant--the top priority for the donor countries--because it
    will employ about 100 displaced Chornobyl workers. However, GAO believes
    that the laboratory's influence is likely to be limited, given that the
    plant employs about 6,000 people, most of whom will be unemployed if the
    Chornobyl plant is closed.

    In addition, several officials from the Pacific Northwest National
    Laboratory told GAO that they were concerned about the Department's decision
    to fund projects that either did not improve the safety of Soviet designed
    reactors or were of questionable value to the program. Although not all of
    these projects involved large program expenditures, collectively they raised
    concerns among U.S. laboratory officials because program funds were being
    spent on low-priority activities. These expenditures included about $1
    million to partially finance the operations of offices for departmental
    representatives in Paris and Tokyo; $169,000 to print documents that had
    limited distribution; $16,200 to provide summer internships for seven
    Ukrainian students; and about $10,000 to provide robotics equipment to
    Ukraine for a test demonstration that Ukrainian officials did not request or
    want.

    Although the Nuclear Regulatory Commission has provided regulatory
    assistance to countries operating Soviet-designed nuclear reactors for over
    7 years, it has not developed a long-term strategic plan that clearly
    identifies overall goals and schedules and measures to quantify how the
    assistance is meeting these goals. According to Commission officials, they
    have a short-term view of the assistance and have managed it from year to
    year without a long-term strategy, particularly when it is related to
    Russia's and Ukraine's activities. Furthermore, the Commission's management
    of its safety assistance activities is divided among different offices.
    Recent internal Commission audits and reviews identified the split in
    management responsibilities as a potential weakness. One of the internal
    audits stated that this split in responsibilities could cause duplication of
    effort and miscommunication with other agencies participating in the nuclear
    safety program. According to some Commission officials, the lack of
    coordination and communication between different offices responsible for the
    Commission's nuclear safety assistance activities contributed to the
    Commission's inability to obligate over $500,000 in fiscal year 1997 and
    1998 program funds in accordance with a statutorily imposed 2-year period of
    availability. This period expired, and the funds were returned to the U.S.
    Treasury.

    To improve the management of the nuclear safety assistance program and
    maximize the use of program funds, GAO recommends, among other things, that
    (1) the Secretary of Energy review ongoing and proposed projects and
    eliminate those that do not have a strong and compelling link to improving
    the safety of Soviet-designed nuclear reactors and (2) the Chairman of the
    Nuclear Regulatory Commission integrate the assistance activities of offices
    that implement nuclear safety assistance to avoid duplication and
    inefficiencies.

    GAO provided copies of a draft of this report to the departments of Energy
    and State and to the Nuclear Regulatory Commission for their review and
    comment. The Department of Energy's and the Commission's written comments
    are presented in appendixes II and III, respectively. The Senior Coordinator
    for Nuclear Safety Assistance provided comments on behalf of the Department
    of State. In general, the agencies agreed with the facts presented in the
    report and the report's recommendations. The agencies provided technical
    comments that were incorporated in the report as appropriate.

    In commenting on the report's discussion of program carryover balances
    (unspent program funds), the Department of Energy stated that it would
    continue its efforts to reduce carryover balances, and it provided
    clarifying information about these balances. Both the Department of Energy
    and the Department of State's Senior Coordinator for Nuclear Safety
    questioned GAO's assessment of whether certain safety program projects
    funded by the Department of Energy directly improve the safety of
    Soviet-designed nuclear power reactors. The Department of Energy also
    disagreed with GAO's assertion that program funding for the International
    Chornobyl Center (referred to in the report as the Slavutych Laboratory of
    International Research and Technology in Ukraine) is not directly related to
    improving the reactors' safety. While GAO agrees that some of the projects
    have value, GAO continues to believe that urgent safety needs, such as
    replacing wooden fire doors with fire-resistant doors in Soviet-designed
    nuclear power plants, have not been adequately addressed by the Department's
    safety effort. GAO believes that the most urgent and pressing safety
    priorities should be addressed first to improve the safety of the
    highest-risk reactors--a fundamental and long-standing goal of the program.
    The Department of Energy commented that it would allocate additional funds
    to provide fire doors for nuclear power plants in Ukraine.

    Finally, the Department of State's Senior Coordinator for Nuclear Safety
    noted that while GAO's recommendations were useful, they proposed to set too
    narrow an objective for the international nuclear safety assistance program.
    The Senior Coordinator believes that the international safety program
    focuses on broader policy matters, such as the shutdown of the Chornobyl
    nuclear power plant. GAO recognizes that the safety program has broad goals
    and objectives. However, GAO's recommendations would focus limited resources
    on activities that directly affect the safety of Soviet-designed reactors
    and on improving the management of the Department of Energy's and the
    Nuclear Regulatory Commission's safety assistance efforts.

    Introduction

    The 1986 disaster at the Chornobyl nuclear power plant in Ukraine and
    subsequent investigations by western safety experts raised significant
    concerns about the risks involved in continuing to operate Soviet-designed
    nuclear reactors. Currently, 59 reactors--located at 18 nuclear power
    plants--are operating in the Newly Independent States of the former Soviet
    Union and in Central and Eastern Europe.2 Many of the reactors pose high
    risks because of deficiencies in design, construction, safety equipment,
    training for operators, and safety procedures. Problems have increased with
    the breakup of the Soviet Union and the slow pace of economic restructuring
    and reform, which have left these plants without adequate resources to fully
    fund their safety needs. Equipment shortages are common, many plant workers
    receive low or erratic pay, and the countries operating most of the
    Soviet-designed reactors do not have independent and effective nuclear
    regulatory organizations to oversee plant operations. Many countries,
    including the United States, have been providing assistance since the early
    1990s to reduce the risks associated with these reactors. The aim of this
    assistance is to improve the safety of the reactors without extending their
    operating lifetimes and to find replacement sources of energy so the
    reactors can be closed as soon as possible.

    On April 26, 1986, the worst accident in the history of nuclear power
    occurred at the Chornobyl nuclear power plant. As a result of the accident,
    the reactor core--containing approximately 200 tons of nuclear fuel--was
    destroyed. Large amounts of radioactive dust, gases, and debris rose into
    the atmosphere. The radioactive material contaminated more than 60,000
    square miles of Ukraine, Belarus, and Russia. Smaller amounts of material
    spread over Eastern Europe and Scandinavia, and fallout was detected in the
    United States. During the 2 weeks after the explosion, workers dropped 5,000
    tons of various compounds, sand, clay, and lead out of helicopters to limit
    the release of radioactive materials. Seven months after the accident, the
    construction of a 20-story-high metal and concrete shield--known as a
    sarcophagus--was completed to enclose the damaged reactor.

    The transboundary effects of the Chornobyl accident raised significant
    concerns among numerous countries and international organizations about the
    safety of all Soviet-designed nuclear power plants. According to DOE,
    Soviet-designed reactors in general exhibit deficiencies, including
    insufficient protection against fire, poor-quality materials and
    construction, and inadequate separation and redundancy of safety systems.
    Furthermore, many of these reactors are located in countries such as Russia
    and Ukraine that do not have fully independent or effective nuclear
    regulatory organizations that oversee plant safety. Of greatest concern are
    25 of the 59 reactors that western safety experts generally agree fall well
    below accepted international safety standards and cannot be economically
    upgraded. These 25 oldest reactors include 14 reactors known as RBMKs and 11
    reactors known as VVER 440 Model 230s. These reactors pose the highest
    risks, according to western safety experts, because of inherent design
    deficiencies, including the lack of a containment structure. The containment
    structure, generally a steel-lined concrete dome, serves as the ultimate
    barrier to the release of radioactive material in the event of a severe
    accident. Other deficiencies in these reactors include inadequate safety
    systems, insufficient safety backup equipment, unreliable systems that
    control the operation of the reactor, and deficient systems for cooling the
    reactor core in an emergency.

    Soviet-designed reactors were built under a philosophy that emphasized
    production over safety and assumed that timely human involvement would
    prevent accidents. Conversely, western reactor design philosophy stressed
    safety over production and sought to develop highly automated safety and
    shutdown systems with minimal reliance on operators' involvement. Because of
    operational and design priorities, the designers, constructors, operators,
    and regulators of Soviet-designed nuclear power plants did not believe they
    needed to follow international safety practices.

    The slow pace of political and economic reform following the breakup of the
    Soviet Union has further degraded nuclear safety conditions in several of
    these countries. Furthermore, expertise in both the design and the operation
    of Soviet-designed reactors was located primarily in Russia under the Soviet
    Union. After the breakup of the Soviet Union, the Newly Independent States
    had to establish their own technical and nuclear regulatory infrastructures.
    Over the past several years, however, the working relationships between
    employees at plants in these countries and the Russian organizations
    responsible for designing nuclear reactors have deteriorated significantly.
    Other factors also contribute to safety problems, including the following:

    � Replacement parts often are unavailable, resulting in makeshift
    arrangements, including the cannibalization of parts from partially
    completed nuclear power plants.

    � Payments to nuclear power plants for electricity production are rarely in
    cash, are sometimes delayed, and are often insufficient to pay operating
    costs, let alone the costs of making safety improvements.

    � Salaries for nuclear power plant operators are often not competitive with
    those for other jobs, and the payment of wages at some nuclear power plants
    in Russia and Ukraine has been delayed for several months. For example, in
    October 1999, workers at both the Chornobyl and Khmelnytskyy nuclear power
    plants had not been paid for 2 months, according to Ukrainian officials.

    � Regulators in most of these countries earn even less than plant operators.
    For example, according to the head of Ukraine's regulatory organization, the
    average salary of a nuclear power plant regulator is $40-$80 per month. As a
    result, the organization has difficulty hiring and keeping employees.

    Figure 1 shows the type and location of the 59 Soviet-designed reactors
    operating in the Newly Independent States of the former Soviet Union and
    countries of Central and Eastern Europe.

    Figure 1: Operational Soviet-Designed Nuclear Power Plants

    Notes:

    1. Numbers in parentheses show the total number of reactors in each country,
    and numbers within symbols show the number of reactors of a specific type at
    a site.

    2. DOE is providing assistance to five other nuclear power reactors in
    Russia. At one site, Bilibino, four small-scale RBMK reactors produce both
    steam and electricity. In addition, one fast-neutron reactor is located at
    Beloyarsk.

    Sources: GAO's presentation of information from DOE.

    Beginning in the early 1990s--with the breakup of the former Soviet
    Union--the international community coordinated efforts to address the safety
    risks posed by the Soviet-designed nuclear power plants. In July 1992, a
    group of western industrialized nations known as the G-7 3 developed an
    international assistance program designed to quickly address the most urgent
    safety needs at the highest-risk plants and provide for longer-term safety
    improvements. The G-7 program called for immediate measures to improve the
    safety of plant operations, make near-term technical improvements based on
    safety assessments, and strengthen countries' nuclear regulatory
    authorities. These types of improvements were expected to achieve early and
    significant safety benefits. In addition, the G-7 program was designed to
    establish a basis for longer-term safety improvements by examining the
    possibility of (1) replacing the highest-risk reactors with alternative
    energy sources and (2) upgrading reactors of more recent design, such as the
    VVER Model 1000 reactors. Under the G-7 program, the international donors of
    assistance have always aimed for the earliest practicable shutdown of the
    highest-risk reactors. However, the G-7 program did not establish any dates
    for shutting down the highest-risk reactors, nor did it directly link its
    assistance to the shutdown of these reactors.

    Because of their proximity to the Soviet-designed reactors, the western
    European countries have assumed a major responsibility for providing safety
    assistance, primarily under the auspices of the European Union, a union of
    15 independent countries that was founded to enhance political, economic,
    and social cooperation.4 The European Commission manages the European
    Union's assistance effort. The Commission is the European Union's executive
    body and has a staff of about 20,000. Nuclear safety assistance is funneled
    through two programs administered by the Commission--(1) Technical
    Assistance for the Commonwealth of Independent States (TACIS), which
    provides assistance to Russia, Ukraine, Kazakhstan, and Armenia and (2)
    assistance to Bulgaria, Lithuania, and the countries of Central and Eastern
    Europe--known as the (PHARE 5) program. The TACIS program, which had
    received over three-quarters of the Union's funds for safety assistance
    projects through 1998, has focused on several areas, including improving
    reactors' operational and design safety, managing nuclear waste, closing the
    Chornobyl reactor, and controlling nuclear materials.

    In addition to the two programs managed by the European Union, the United
    States and numerous other donor countries and organizations are providing
    assistance through bilateral agreements with individual countries. In 1992,
    a nuclear safety coordination center was established in Brussels, Belgium,
    by the G-24 countries 6 to coordinate individual countries' assistance
    efforts. This center is responsible for developing and disseminating a
    database that tracks international safety assistance projects. Its
    secretariat also (1) prepares, in conjunction with participants, annual
    country overview reports; (2) produces annual status reports on the adoption
    of nuclear liability legislation in countries operating Soviet-designed
    reactors; and (3) provides public information on the coordination and
    cooperation processes through various publications and the Internet.

    In 1993, the G-7 created a multilateral fund, the Nuclear Safety Account,
    directed by its donors and administered by the European Bank for
    Reconstruction and Development, to address immediate needs for safety
    improvement not covered in bilateral safety agreements. The bank's nuclear
    safety grants have conditionality clauses. Three of the
    beneficiaries--Bulgaria, Lithuania, and Ukraine--agreed to accept the funds
    with the understanding that they would close their high-risk reactors under
    certain conditions, such as obtaining adequate replacement energy. Russia is
    also a recipient of these grants, but its agreement focuses on establishing
    new licensing procedures for the high-risk reactors.

    The Nuclear Safety Account was initially given a 3-year period of operation.
    The term was extended for another 3 years in 1996 and was recently extended
    through 2002, although no additional funds are expected to be added. The
    remaining tasks to be administered by the bank are (1) completing short-term
    plant upgrades and implementing safety-related activities at Chornobyl; (2)
    monitoring compliance with Nuclear Safety Account agreements and their
    various provisions, such as those requiring closure of the high-risk
    Soviet-designed nuclear power plants; and (3) distributing funding to
    improve the independence and effectiveness of regulatory authorities.

    The bank also administers the Chornobyl Shelter Fund on behalf of its
    donors. Similar to the Nuclear Safety Account, it provides funds through
    grants. The purpose of the fund is to support projects and equipment to
    assist Ukraine in transforming the existing Chornobyl sarcophagus into a
    safe and environmentally stable system. The sarcophagus is an environmental
    and structural hazard because it was built partially on the remains of the
    ruined reactor building. It has holes and cracks, which allow radioactive
    contamination to escape, and experts are concerned that it could collapse.
    Figure 2 shows the shelter covering the remains of the destroyed reactor at
    Chornobyl.

    Figure 2: Chornobyl Shelter

    Several other international organizations have participated in efforts to
    improve the safety of Soviet-designed reactors:

    � The Nuclear Energy Agency, a semi-autonomous body within the Organization
    of Economic Cooperation and Development,7 has primarily provided information
    and training on nuclear law, especially third-party liability issues, and
    conducted some research and development work on RBMK reactors.

    � The International Atomic Energy Agency (IAEA) has provided several safety
    services, including completing more than 100 safety missions to countries
    operating Soviet-designed reactors and providing technical advice on
    numerous safety issues, including the possible effects of Year 2000 computer
    problems on the safety of these plants. In May 1999, IAEA published a report
    on the safety of VVER and RBMK nuclear power plants that focused on the
    scope of activities aimed at identifying safety deficiencies and areas where
    future work is necessary.

    � The Institute of Nuclear Power Operators--an organization established in
    1979 to enhance the safety and reliability of U.S. commercial nuclear power
    plants--has played a role in transferring emergency operating procedure
    technology to countries operating Soviet-designed reactors.

    � The World Association of Nuclear Operators--an organization that seeks to
    maximize the safety and reliability of nuclear power plants worldwide--has
    provided, among other things, technical assistance and expertise to improve
    safety at high-risk plants in Bulgaria.

    Four federal agencies share responsibility for the U.S. nuclear safety
    assistance effort--the departments of State and Energy, the U.S. Agency for
    International Development (US AID), and the Nuclear Regulatory Commission
    (NRC). The Department of State provides overall policy guidance with
    assistance from US AID. State Department officials told us that the goals of
    the U.S. program have remained the same since the program's inception in the
    early 1990s--encouraging the shutdown of the highest-risk Soviet-designed
    nuclear power reactors and reducing the risk of accidents.

    DOE implements a major part of the U.S international nuclear safety
    assistance program with support from the U.S. national laboratories.8 DOE's
    program objectives are to

    � improve the physical condition of nuclear power plants and install safety
    equipment;

    � establish a nuclear safety culture in which safety takes priority over
    power production;

    � develop improved safety procedures and train operators in their use;

    � conduct safety assessments that meet international standards;

    � establish regional centers for training reactor personnel and develop
    simulators for training control room operators;

    � develop an institutional framework for the design, construction, and
    operation of nuclear plants that is consistent with international practices;
    and

    � address issues at the Chornobyl nuclear power plant.

    DOE funds projects in several technical areas: operational safety, training,
    maintenance, safety systems, safety evaluations, and legal capabilities. DOE
    uses a pilot approach under which one or two plants, or in some cases
    several selected plants, receive training or physical upgrades. DOE uses
    this approach to create a model for other plants in a particular country.
    For example, the Zaporizhzhya nuclear power plant in Ukraine and the
    Smolensk nuclear power plant in Russia were selected as pilots for fire
    safety improvements, including fire doors, smoke detectors, and
    fire-proofing materials. Several years ago, DOE initiated projects to
    install this equipment at these locations, and some Smolensk-related
    projects are still under way. According to DOE, a few other nuclear power
    plants have received fire protection equipment, including Chornobyl (unit 3)
    in Ukraine, Leningrad (units 1 and 2) in Russia, and Metsamor in Armenia.
    DOE has also stressed technology transfer and training in an attempt to
    ensure that the host country will continue to apply safety improvements and
    training independent of U.S. assistance.

    The nuclear safety program is managed at DOE headquarters by an office
    director and is part of DOE's recently established National Nuclear Security
    Administration. The director has a staff of 17 technical and support
    personnel. Pacific Northwest National Laboratory (PNNL) provides the primary
    technical and management support for the program, including contracting and
    administrative support. In fiscal year 1999, PNNL had 70
    full-time-equivalent positions assigned to the program. PNNL maintains
    satellite offices in Moscow, Russia, and Kiev, Ukraine. Other national
    laboratories participating in the program include Brookhaven National
    Laboratory and Argonne National Laboratory. Brookhaven oversees the
    installation of training simulators and implementation of training programs.
    Argonne oversees the U.S. and Russian international nuclear safety centers
    and provides technical assistance and project direction on Soviet-designed
    plant safety evaluations.

    DOE's program involves other organizations as well. DOE has entered into
    contracts with more than 90 U.S. commercial organizations to provide
    assistance in implementing program activities. For example, Bechtel
    National, Inc., has provided fire protection equipment. In addition, DOE has
    entered into agreements with 16 nuclear power plants and 45 scientific
    institutes and government agencies in the countries operating
    Soviet-designed nuclear power plants.

    With the breakup of the former Soviet Union, the Newly Independent States
    had to establish independent nuclear regulatory organizations to oversee the
    safety of their nuclear plant operations. Furthermore, some of the countries
    of Central and Eastern Europe that had established regulatory organizations
    during the Soviet era were significantly understaffed and had limited
    resources. The objective of NRC's program is to promote the independence and
    effectiveness of these countries' nuclear regulatory authorities, primarily
    through training, technical exchanges, and the use of computer equipment and
    simulators. NRC has worked with these countries to develop a legal
    foundation that provides for a strong and independent regulator, which is
    essential for achieving and sustaining safety levels that are consistent
    with international practices. According to a former NRC chairman, one of
    NRC's goals is to help improve the enforcement authority and political
    stature of Russian and Ukrainian regulators so that they command the respect
    of both the nuclear ministries and the utilities that operate the power
    plants. He believed that strong and independent regulatory bodies might one
    day be capable of exercising the kind of authority over nuclear power
    operations in these countries that NRC exercises in the United States.

    NRC's safety assistance activities have included

    � training regulators in all aspects of safety reviews, licensing and
    inspection procedures, and information management;

    � advising on how to establish a legal basis for nuclear regulation;

    � creating emergency support centers in Russia and Ukraine;

    � developing a control and accounting system for nuclear materials; and

    � building and establishing regulatory training programs and providing
    computers and analytical equipment to support these programs.

    The Chairman and Ranking Minority Member of the Subcommittee on Energy and
    Water Development, House Committee on Appropriations, asked us to (1)
    provide information on how much money has been spent by the United States
    and other countries for assistance to improve the safety of Soviet-designed
    nuclear power reactors--and the types of assistance being provided--as well
    as planned U.S. expenditures; (2) provide experts' views on the impact of
    the assistance; and (3) assess the status of efforts to close the high-risk
    Soviet-designed reactors. In addition, as requested, we assessed the
    management of DOE's and NRC's safety assistance activities.

    To determine the amount and type of international assistance being provided
    to improve the safety of Soviet-designed reactors, we obtained data from the
    G-24's nuclear safety assistance coordination center in Brussels, Belgium.
    This center is responsible for maintaining a database for international
    nuclear safety assistance. According to G-24 officials, each country and
    international organization is responsible for the accuracy of the
    information it provides to the database. However, these officials do review
    the data to ensure that the information complies with reporting
    requirements. We compared the amounts reported for the U.S. contribution
    against the amounts reported by the U.S. agencies that participate in the
    program to ensure that the data were accurate. In addition, we converted all
    of the funding from either European currency units or Eurodollars to U.S.
    dollars, using the following exchange rates: 1 European currency unit equals
    $1.17, and 1 Eurodollar equals $1.04.

    We spoke with several DOE, NRC, and national laboratory program and budget
    officials on issues pertaining to uncosted and unobligated funds.9 We
    reviewed data on some of the largest DOE projects that had significant
    uncosted funds, including full-scope simulators, safety parameter display
    systems, and in-depth safety analyses. Those three types of projects
    accounted for about 65 percent of DOE's uncosted funds as of August 29,
    1999. We also reviewed several smaller projects to gain a better
    understanding of DOE's continuing problems with large carryover balances for
    its nuclear safety-related activities.

    We obtained information from a number of sources to assess the impact of the
    safety assistance. We attended the International Conference on the
    Strengthening of Nuclear Safety in Eastern Europe in June 1999. The
    conference, which took place in Vienna, Austria, brought together
    representatives from 32 countries and international organizations to
    discuss, among other things, the status of efforts to improve the safety of
    Soviet-designed nuclear power reactors. We interviewed experts from 25 of
    these countries and organizations to obtain their views on the impact of the
    assistance. Specifically, we met with nuclear safety officials from the
    following countries that have received assistance and are operating
    Soviet-designed reactors: Armenia, Bulgaria, the Czech Republic, Hungary,
    Lithuania, Russia, the Slovak Republic, and Ukraine. We also met with
    numerous donors of assistance, including representatives from the following
    international organizations: the European Bank for Reconstruction and
    Development, the G-24's nuclear safety assistance coordination center, the
    International Atomic Energy Agency, and the World Association of Nuclear
    Operators. We also met with officials from the following donor countries and
    organizations: Austria, Canada, Finland, France, Germany, Italy, Japan,
    Spain, Sweden, Switzerland, the United Kingdom, and the United States.

    In addition, we visited Ukraine in October 1999 to obtain information on the
    impact of both U.S. and international assistance. We chose Ukraine because
    it (1) is the largest recipient of U.S. nuclear safety assistance funds, (2)
    includes Chornobyl, the site of the worst nuclear power plant accident in
    history, and (3) faces severe economic hardships, which affect decisions
    about shutting down the Chornobyl nuclear power plant. In Ukraine, we
    visited the Khmelnytskyy nuclear power plant and the Chornobyl nuclear power
    plant. During our visit, we also spoke with representatives from several
    Ukrainian organizations that have received assistance or have direct
    knowledge of its impact. These included officials from Energoatom (the
    nuclear utility), the Ministry of Energy, and the Ministry of Environmental
    Protection and Nuclear Safety. We also met with officials from the
    International Chornobyl Center in Kiev, Ukraine, the Slavutych Laboratory of
    International Research and Technology, and the Slavutych International
    Radioecology Laboratory. We discussed economic conditions in Slavutych with
    its mayor.

    To assess the status of efforts to close high-risk Soviet-designed reactors,
    we met with U.S. and international officials who are focusing on these
    matters. Specifically, we met with officials from the European Bank for
    Reconstruction and Development, the European Commission, the World Bank, and
    the Department of State. We also discussed these matters with
    representatives from countries operating the high-risk reactors, including
    Russia, Ukraine, Bulgaria, Lithuania, Armenia, and the Czech and Slovak
    republics. Additionally, we reviewed documents produced by the European Bank
    for Reconstruction and Development, as well as other pertinent information,
    such as the 1995 G-7/Ukraine memorandum of understanding governing the
    shutdown of the Chornobyl nuclear power plant.

    To assess the management of DOE's nuclear safety assistance activities, we
    met or spoke with program officials from DOE, as well as representatives
    from PNNL, Brookhaven National Laboratory, and Argonne National Laboratory.
    We reviewed project lists provided by DOE and its national laboratories and
    other DOE documents that discussed project selection criteria. To examine
    issues pertaining to the Slavutych Laboratory of International Research and
    Technology, we met with both the director and deputy director of the
    laboratory in Ukraine as well as the deputy director of the International
    Chornobyl Center. We also met with other Ukrainian officials who addressed
    laboratory-related issues. In addition, we had discussions with PNNL
    contract specialists and project managers who are responsible for
    implementing contracts with the Slavutych Laboratory. Finally, we discussed
    these issues with senior DOE officials, including the director for the
    Office of International Nuclear Safety and Cooperation and the Acting Deputy
    Administrator for Defense Nuclear Nonproliferation.

    To assess the management of NRC's nuclear safety activities, we reviewed
    pertinent program files and spoke with officials from NRC's Office of
    International Programs, including its director, and Office of the Executive
    Director of Operations. We also reviewed reports and other documentation,
    prepared by NRC's Office of the Inspector General and NRC's Executive
    Council, which focused on the management of nuclear safety assistance.

    We provided copies of a draft of this report to the departments of Energy
    and State and to the Nuclear Regulatory Commission for their review and
    comment. The Department of Energy's and the Commission's written comments
    are presented in appendixes II and III, respectively. The Senior Coordinator
    for Nuclear Safety Assistance provided comments on behalf of the Department
    of State. Summaries of the agencies' comments and our responses to them
    appear at the end of chapters 2 and 5.

    We performed our work from April 1999 through March 2000 in accordance with
    generally accepted government auditing standards.

    The United States' and Other Countries' Contributions to Improve the Safety
    of Soviet-Designed Reactors

    About $1.9 billion has been contributed to improve the safety of
    Soviet-designed nuclear power plants. Of this amount, the United States
    contributed about $545 million, and 20 other countries and international
    organizations contributed the rest. The U.S. contribution comprises two
    components--$101 million to accounts established for funding international
    nuclear safety initiatives, administered by the European Bank for
    Reconstruction and Development, and $444 million available to the Department
    of Energy and the Nuclear Regulatory Commission to implement nuclear safety
    activities. This assistance has been used to train plant operators and
    representatives of national regulatory authorities, as well as to purchase
    fire safety equipment. Neither DOE nor NRC has been able to spend all of the
    funds it has received for the program in a timely manner. How long the
    United States will continue its safety assistance program is uncertain.
    While DOE's safety activities are expected to end around 2005, assuming
    certain funding levels, State Department and NRC officials believe that U.S.
    assistance should continue for some time because the highest-risk
    Soviet-designed reactors have not been shut down.

    The United States and 20 other countries and international organizations
    have contributed about $1.9 billion toward improving the safety of
    Soviet-designed reactors, according to data compiled by the G-24's Nuclear
    Safety Assistance Coordination Center. The majority of the assistance has
    been provided through bilateral agreements with recipient countries. The
    European Union is the leading provider of this assistance and obtains
    funding through the contributions of member nations. The United States
    contributed about $545 million of the total amount. In addition to
    contributing to the European Union program, the donors have also provided
    assistance through bilateral programs.

    In addition to the European Union, the major donors are the United States,
    Germany, Japan, France, the United Kingdom, Sweden, and the International
    Atomic Energy Agency. Together, these donors have contributed $1.8 billion,
    or 94 percent of the total. Several other countries have contributed the
    remaining $115 million, or 6 percent. The major recipients of the assistance
    are Russia, Ukraine, Bulgaria, Lithuania, and the Czech and Slovak
    republics. Russia and Ukraine are targeted to receive about $1.4 billion, or
    71 percent of the total. Figure 3 identifies the donors of the $1.9 billion
    contributed for international nuclear safety assistance and shows its
    distribution to the recipient countries.

    Figure 3: Countries Donating and Receiving International Nuclear Safety
    Assistance, as of November 1999
    Notes:

    1. Contributions to the Nuclear Safety Account are included in the amounts
    shown for each donor country.

    2. The $532 million listed here as the U.S. contribution differs from the
    $545 million we identified because of the method used by the G-24 to
    classify projects and exchange rate variables. In addition, the G-24 data do
    not include amounts pledged by the United States for the Chornobyl Shelter
    Implementation Plan.

    3. The cumulative contributions of Austria, the World Bank, and the
    Organization for Economic Cooperation and Development, which total less than
    $1 million, are not included in the figure.

    aNuclear Safety Account funds not yet allocated to specific recipients have
    been divided equally among these recipients.

    bOther recipient countries include Azerbaijan, Belarus, Estonia, Georgia,
    Kyrgyzstan, Latvia, Moldova, Poland, Romania, Slovenia, and Uzbekistan.

    Source: GAO's presentation of data from the G-24's database.

    In 1992, the G-7 countries developed an emergency action plan to address the
    safety problems of Soviet-designed reactors. The plan falls into three broad
    categories--operational safety improvements, near-term technical (safety)
    improvements, and regulatory enhancements. In general, operational safety
    improvements, such as training plant personnel, can be implemented at all
    plants regardless of the reactor type. Near-term safety improvements have
    been implemented at specific reactors, such as the highest-risk reactors.
    Such improvements include installing metal fire doors and other fire
    protection material and conducting engineering studies. Donors have also
    provided assistance aimed at strengthening independent regulatory
    organizations through training and helping these countries establish a legal
    basis for their regulatory authorities. Projects covering a wide variety of
    other areas have also been funded, including

    � longer-term safety upgrades that would be targeted toward more recently
    designed Soviet reactors, including assistance to VVER Model 1000 reactors;

    � radiation protection, which would include monitoring systems to protect
    against the consequences of nuclear accidents; and

    � fuel cycle activities, such as storing spent nuclear fuel and managing
    radioactive waste.

    Figure 4 shows how the donors' contributions, totaling $1.9 billion, are
    divided among the various types of safety activities.

    Figure 4: Types and Amounts of Funds for Nuclear Safety Improvements as of
    November 1999

    Note: The "Other" category includes decommissioning studies, nuclear
    engineering courses, and related training and safeguards support.

    Source: GAO's presentation of data from the G-24's database.

    The U.S. contribution of $545 million has been used to provide plant safety
    evaluations and upgrades, training, fire safety equipment and materials, and
    regulatory assistance. Most of the U.S. assistance has been spent to improve
    safety in Russia and Ukraine. However, DOE and NRC have had problems
    spending appropriated program funds in a timely manner, and NRC returned
    over $500,000 to the U.S. Treasury because it did not obligate these funds
    within a 2-year statutorily imposed period covering their availability.

    The U.S. contribution is divided into two components: $101 million to two
    international accounts administered by the European Bank for Reconstruction
    and Development--the Nuclear Safety Account and the Chornobyl Shelter
    Implementation Plan--and $444 million in appropriations for safety
    activities managed by DOE and NRC. Of this amount, $294 million, or 66
    percent, was transferred to DOE and NRC from the U.S. Agency for
    International Development (US AID) through various interagency agreements.
    The remainder came from direct appropriations to DOE ($139 million, or 31
    percent) and through funds transferred to DOE by the Department of Defense
    ($11 million, or 3 percent).

    Of the $444 million in total funding available to DOE and NRC for nuclear
    safety assistance, both agencies had spent about $357 million as of
    September 30, 1999. As shown in figure 5, these expenditures were for safety
    improvements to nuclear power plants, plant safety evaluations, operator
    training, fire safety equipment, and training and efforts to improve nuclear
    regulatory authorities.

    Figure 5: DOE's and NRC's Expenditures of Nuclear Safety Funds Totaling $357
    Million as of September 30, 1999

    Notes:

    1. All amounts shown above, except for regulatory enhancements, are related
    to DOE's assistance activities. Strengthening nuclear regulatory authorities
    is one of NRC's assistance activities.

    2. Program management includes national laboratory salaries and fringe
    benefits, overhead costs, and miscellaneous costs, such as those for
    printing, interpreters, and travel.

    3. The "Other" category includes funds for, among other things, fuel cycle
    safety, decommissioning, the Slavutych Laboratory of International Research
    and Technology, studies to identify alternatives for replacing and
    eventually closing high-risk reactors, and the international nuclear safety
    centers.

    Sources: GAO's presentation of data from DOE and NRC.

    DOE and NRC have targeted their nuclear safety expenditures primarily to the
    countries operating the most Soviet-designed nuclear power plants--Russia
    and Ukraine. As shown in figure 6, 86 percent of these expenditures have
    gone to those two countries. The other major recipients are the countries of
    Central and Eastern Europe and Armenia.

    Figure 6: Distribution of DOE's and NRC's Expenditures Totaling $357 Million
    to Recipient Countries

    Note: Expenditures for Armenia total $11.8 million, and expenditures for
    Kazakhstan total $1.4 million. In 1999, Kazakhstan shut down a
    Soviet-designed fast breeder reactor that it had been operating since 1972.

    Sources: GAO's presentation of data from DOE and NRC.

    DOE's and NRC's cumulative expenditures through fiscal year 1999 comprise
    several program elements, as shown in tables 1 and 2. DOE incurred the bulk
    of its costs under three categories--materials/subcontracts, overhead, and
    labor--which account for 93 percent of its total expenditures. The largest
    of these costs was for materials and subcontracts, which made up 65 percent
    of the total. PNNL, which administers the safety program for DOE, spent the
    most of any DOE organization--$219 million. (See table 1.) NRC incurred the
    bulk of its total expenditures in three categories--training, equipment, and
    travel--which accounted for 84 percent of its total expenditures. (See table
    2.)

    Table 1: DOE's Cumulative Expenditures for the Nuclear Safety Assistance
    Program Through September 30, 1999

     Dollars in thousands
                                                     DOE Activity
                                                                                               Percent
     Cost element           PNNL     DOE             BNL    ANL       CH      BAO/ORNLTotal    of
                                     headquarters
                                                                                               total
     Labora                 $23,381  $0              $10,674$9,473    $0      $41     $43,569  13
     Travelb                4,375    1,209           2,340  1,388     0       6       9,318    3
     Materials/subcontractsc156,534  8,362           32,110 4,475     10,350  0       211,831  65
     Other direct costsd    6,123    1,479           4,351  509       0       0       12,462   4
     Overheade              28,625   0               14,790 3,855     0       0       47,270   15
     Total                  $219,038 $11,050         $64,265$19,700   $10,350 $47     $324,450 100

    Legend:

    DOE − Department of Energy
    PNNL − Pacific Northwest National Laboratory
    BNL − Brookhaven National Laboratory
    ANL − Argonne National Laboratory
    CH − Chicago Area Office
    BAO/ORNL − Brookhaven Area Office and Oak Ridge National Laboratory

    aIncludes salaries, wages, fringe benefits, and pensions that are directly
    chargeable to the international nuclear safety program. DOE headquarters
    employees' salaries are not charged directly to the program but are funded
    through DOE's Office of Nonproliferation and National Security's program
    direction account. DOE estimated that the fiscal year 1999 salaries and
    expenses for headquarters employees assigned to the international nuclear
    safety program totaled $1.7 million.

    bIncludes the travel and per diem costs--foreign and domestic--of DOE and
    laboratory officials. Does not include the travel and per diem costs of
    foreign nationals under the program; these costs are included in the
    "materials/subcontracts."

    cIncludes directly applicable purchase orders, subcontracts (both foreign
    and domestic), and consulting services. Contractor labor, travel, and
    overhead charges are included in this category.

    dIncludes the costs of certain centralized services, such as document
    translation, office supplies, and computer services.

    eIncludes charges for organizational overhead, general and administrative
    expenses, and service assessments.

    Source: GAO's presentation of data from DOE.

    Table 2: Cumulative Expenditures for the Nuclear Regulatory Commission's
    Safety Assistance Program Through September 30, 1999

     Dollars in thousands
     Cost element                      Amount   Percent
     Traininga                         $13,671  42
     Equipment                         8,588    26
     Other travel paid by NRCb         3,739    11
     Computer codesc                   3,047    9
     NRC staff travel                  1,574    5
     Interpreters/translation services 1,085    3
     NRC staff salaries and expensesd  821      3
     Total                             $32,525  99e

    aIncludes the costs of hiring contractor personnel from DOE's national
    laboratories.

    bRepresents the travel and per diem costs of foreign national officials.

    cTransfer and training in the use of computer programs used by NRC for
    safety analysis and participation in user groups.

    dRepresents NRC staff costs that were reimbursed by US AID in fiscal year
    1999 for program activities related to Armenia, Kazakhstan, Russia, and
    Ukraine. All other staff costs were funded from NRC's appropriations. With
    the exception of fiscal year 1999, NRC did not track actual staff costs but
    did estimate full-time-equivalent positions for budgeting and planning
    purposes. These full-time-equivalent estimates ranged from approximately 35
    in fiscal year 1994 to approximately 7 in fiscal year 1999.

    eTotal does not equal 100 percent because of rounding.

    Source: GAO's presentation of data from NRC.

    As of September 30, 1999, DOE had carried over a balance of $78 million in
    appropriated funds from prior years. As shown in table 3, this figure
    includes about $27 million in unobligated funds 10 and about $51 million in
    funds that had been obligated but not yet spent. The large amount of
    carryover funds has concerned the Congress, which reduced DOE's request for
    additional funds by more than half in fiscal year 2000. Furthermore, NRC had
    carried over $9 million from prior years as of September 1999; more than
    half of this amount consisted of unobligated funds and obligated but unspent
    funds that NRC had received for safety activities in Ukraine. In addition,
    NRC returned over $500,000 to the U.S. Treasury because the funds for
    Ukraine were not obligated within a 2-year statutorily imposed period
    covering the availability of US AID funds transferred to the program.

    Table 3: Obligations and Expenditures for DOE's and NRC's Safety Assistance
    Programs, as of September 30, 1999

                                Dollars in thousands

      Agency and     Funds       Funds      Funds       Funds         Funds
      recipient   available  unobligated  obligated   obligated   obligated but
                                                      and spent     not spent
     DOE
     Ukraine      $178,379   $17,262      $161,117   $134,000     $27,117
     Russia       172,629    4,889        167,740    148,914      $18,826
     Central and
     Eastern      34,243     1,209        33,034     30,558       2,476
     Europe
     Armenia      16,000     2,744        13,256     10,500       2,756
     Kazakhstan   1,000      515          485        477          8
     DOE subtotal $402,251   $26,619      $375,632   $324,449     $51,183
     NRC
     Ukraine      $16,613    $2,550       $14,063    $11,417      $2,646
     Russia       13,877     1,093        12,784     12,413       371
     Central and
     Eastern      7,894      719          7,175      6,491        684
     Europe
     Armenia      1,915      82           1,833      1,299        534
     Kazakhstan   1,545      82           1,463      905          558
     NRC subtotal $41,844    $4,526       $37,318    $32,525      $4,793
     Total        $444,095   $31,145      $412,950   $356,974     $55,976

    Sources: GAO's presentation of data from DOE and NRC.

    As we noted in a prior report,11 DOE, PNNL, and NRC officials acknowledged
    that their obligation and expenditure rates for the safety
    program--particularly for Russia and Ukraine--had lagged over time. In
    particular, DOE continues to have large amounts of carryover funds. In its
    report on the fiscal year 2000 Energy and Water Development appropriations
    bill, the House Appropriations Committee recommended that DOE's request for
    international nuclear safety assistance funds be reduced because the program
    was carrying excessive balances of unspent funds from prior years. The
    committee noted that the program had unspent funding balances that were
    double the amount of the total new funding provided to DOE in fiscal year
    1999. Ultimately, the Congress decided to cut DOE's fiscal year 2000 budget
    request for the program by 55 percent, from $34 million to $15 million.

    According to DOE, three major factors account for its current carryover
    balances:

    � A lag occurs between the date work is performed and the date costs are
    recorded at DOE headquarters.

    � Many projects are executed over several years, but the majority of the
    funding for these projects is requested and received in advance for
    contracting purposes. As a result, funds may be obligated during the early
    years of the projects, but expenditures are spread over several years.

    � Difficulties, such as problems with customs and other unforeseen delays,
    are frequently associated with doing work in the Newly Independent States.
    For example, in January 1999, the United States imposed sanctions on the
    Russian designer of RBMK reactors--the Research and Development Institute of
    Power Engineering--after determining that it had provided sensitive missile
    or nuclear assistance to Iran. As a result, DOE's nuclear-safety-related
    contracts with this organization, totaling about $2 million, were suspended
    and funds, which had been obligated, could not be spent. DOE is now
    deobligating these funds for reprogramming to other projects or seeking
    alternative vendors.

    According to DOE, although some contracts allow for progress payments, most
    payments are not made until the end of a project, when deliverables are
    received and determined to be acceptable. This accounts for the lag between
    the time program funds are obligated and spent. For example, funds were
    obligated for projects, such as training simulators, with long procurement
    cycles. As a result, although DOE obligated funds early on to finance the
    projects, expenditures were to be made over several years, creating unspent
    balances during the course of the projects. Thus, for simulators and related
    training activities, DOE reported an unspent balance of $22.9 million as of
    August 29, 1999. We found several other instances when program funds were
    obligated for several years and expenditures lagged. Examples include the
    following:

    � A fire protection project with the Smolensk nuclear power plant has been
    carrying large unspent balances since the mid-1990s. According to DOE,
    almost one-quarter of these funds, or approximately $1.3 million, has
    remained unspent because of delays associated with Russian contractor
    personnel. The DOE project manager said he believes the funds, which have
    been obligated, will be spent in early 2000.

    � Several other projects for developing emergency operating instructions
    showed that $505,000 of $1.8 million had not been spent as of September
    1999. According to PNNL officials, work had begun on these projects in
    fiscal years 1994 and 1995 but had not yet been completed. Specifically,
    these projects are proceeding slower than originally anticipated, and delays
    have occurred during Russia's and Ukraine's performance of the analyses
    necessary to validate the instructions. One such project, at the Balakovo
    nuclear power plant in Russia, was started in December 1995, at which time
    DOE obligated $120,000. As of September 1999, one half of the funding
    originally obligated for the project had been spent. About $10 million for
    in-depth safety analyses at five power plants in Ukraine was unspent as of
    August 1999. According to a DOE official, the Ukraine projects have been
    delayed primarily by a lack of technical expertise and resources at these
    plants.

    When we asked why NRC was unable to obligate and spend $506,000 of its
    fiscal year 1997 and 1998 program funds in accordance with a statutorily
    imposed 2-year period of availability, we obtained differing and conflicting
    views. These funds were designated for projects and activities in Ukraine.
    NRC officials provided several reasons for this problem, including (1)
    abrupt changes in the management of NRC's Russian and Ukrainian assistance
    activities, (2) difficulties in adjusting the Ukrainian program to
    accommodate the 2-year availability of funds, and (3) NRC's inability to
    accept US AID funding on a timely basis. According to an NRC official, NRC
    did not effectively monitor the flow of funds from US AID or coordinate
    efforts to ensure that the funds could be obligated or reprogrammed. This
    official also stated that Ukraine has numerous pressing needs related to the
    enhancement of its regulatory authority and could have used these funds for
    that purpose. However, another NRC official told us that the funds were
    turned back because he did not believe that NRC staff had adequately
    justified the use of these funds. According to the State Department, because
    NRC continues to maintain a large unobligated balance of funds for Ukraine,
    US AID will not provide any funds to support fiscal year 2000 projects or
    activities for Ukraine unless some unusual requirement surfaces concerning
    Chornobyl's closure.

    Although the Department of Energy plans to complete its safety activities by
    2005, State Department and NRC officials did not have a date for completing
    U.S. safety assistance efforts. According to DOE's Strategy Document, issued
    in June 1998, DOE estimates the cost to complete its remaining safety
    activities at Soviet-designed reactors by 2005 at $372 million. DOE based
    this estimate on its plan for completing individual safety projects at
    Soviet-designed reactors. For example, at the Balakovo nuclear power plant
    in Russia, DOE anticipates that funds will be allocated for in-depth safety
    analyses through fiscal year 2005. Once these projects are completed,
    according to DOE, the program will have achieved its objectives. The
    projected costs of DOE's activities will be about $709 million. According to
    the director of DOE's nuclear safety program, the time frames could increase
    if anticipated funding during the next several years is not received.
    However, the Department of State's Senior Coordinator for Nuclear Safety
    told us that U.S. assistance should continue for some time because the
    highest-risk reactors have not been shut down and safety culture problems
    remain. Such a culture implies an awareness of, and commitment to, the
    importance of safety on both individual and organizational levels. She said
    that the United States will be engaged for a considerable time in Russia,
    Ukraine, Armenia, and Bulgaria. Furthermore, she believes that safety
    assistance should concentrate on regulatory assistance because (1) the role
    of the regulator is not yet firmly established in most of these countries
    and (2) strong regulatory bodies are necessary to sustain safety
    improvements over the long term. In addition, assistance should also focus
    on improving operational safety through training and safety assessments.

    NRC officials also said they believe the role of the regulator must continue
    to be supported by the United States and other countries. However, given the
    original short-term nature of NRC's safety assistance effort, NRC has not
    thus far established a long-term funding strategy. The director of NRC's
    Office of International Programs said NRC would continue to provide some
    undetermined level of regulatory assistance as long as unsafe
    Soviet-designed reactors continue to operate.

    A troubling aspect of DOE's implementation of its safety assistance effort
    has been a large and continuing carryover of unspent program funds. This
    raises the question of whether certain projects, which contribute to the
    carryover, are still viable or needed. While DOE has some plausible reasons
    for the lags in spending program funds, a number of projects with slow
    spending rates have been "on the books" for several years. In our view,
    there is a question as to whether these projects are still important to
    meeting the program's objectives. In addition, NRC's inability to obligate a
    portion of its funds for Ukraine within a statutory 2-year period of
    availability also raises concerns because Ukraine needs assistance in
    establishing a sound regulatory infrastructure. Furthermore, according to
    the State Department's Senior Coordinator for Nuclear Safety, future U.S.
    safety assistance will be in the realm of strengthening the nuclear
    regulatory authorities in the Newly Independent States to ensure that safety
    benefits are sustained and NRC is expected to play a continuing key role in
    this effort.

    Nuclear Regulatory Commission

    To maximize the use of U.S. safety assistance program funds, we recommend
    that

    � the Secretary (1) review all DOE projects with significant carryover
    balances and consider ways to accelerate the projects' completion, to the
    extent feasible, and (2) determine whether projects whose progress has been
    continuously slow or limited are still viable, given the program's current
    goals and objectives and

    � the Chairman consistently monitor the funding for NRC's safety assistance
    program to ensure that these funds are obligated on a timely basis in
    accordance with the program's priorities.

    DOE agreed with our recommendations and said it would continue its efforts
    to reduce carryover balances (unspent program funds). DOE also provided
    clarifying information about these balances. The Department stated that two
    of the projects we identified as moving slowly and contributing to the
    carryover problem accounted for less than 3 percent of the total unspent
    balances. However, DOE's response did not cite another type of
    project--in-depth safety analyses--with a balance of about $10 million (or
    about 12 percent of the total carryover balance) that we referred to in the
    report as well. Furthermore, as stated in the report, we reviewed a number
    of diverse projects to obtain a better understanding of the Department's
    continuing problems with large carryover balances for its nuclear
    safety-related activities. Our recommendation to the Secretary of Energy is
    intended to encourage the Department to review all of its projects with
    significant carryover balances and consider ways to accelerate the projects'
    completion or determine if the projects are still viable. The Department's
    comments are presented in appendix II. NRC agreed with our recommendation
    and its comments are presented in appendix III.

    Experts Believe That Assistance Has Improved the Safety of Soviet-Designed
    Reactors, but More Improvements Are Needed

    In June 1999, nuclear safety experts from 32 countries and international
    organizations met at a conference in Vienna, Austria, to assess the impact
    of nuclear safety efforts over the past decade in countries operating
    Soviet-designed reactors and to focus on future international cooperation
    and assistance. The experts concluded that while progress had been made in
    improving the safety of Soviet-designed nuclear power plants, more
    improvements are needed, especially in areas such as strengthening the
    independence and effectiveness of nuclear regulatory organizations.
    Officials from many countries operating Soviet-designed reactors said U.S.
    assistance had a direct impact on improving the reactors' safety. However,
    according to U.S. safety experts, it is difficult to quantify the extent to
    which safety assistance has reduced the risks of operating these reactors.

    In June 1999, the International Atomic Energy Agency, in cooperation with
    the European Commission and the Nuclear Energy Agency, organized the
    International Conference on Strengthening Nuclear Safety in Eastern
    Europe.12 The objectives of the conference were to assess the impact of
    nuclear safety efforts over the past decade in countries operating
    Soviet-designed reactors and to focus on areas where future international
    cooperation and assistance should be targeted. The conference was chaired by
    the Department of State's Senior Coordinator for Nuclear Safety and included
    representatives from all of the countries operating Soviet-designed nuclear
    reactors and all of the major donors of assistance, including a delegation
    from the departments of State and Energy and the Nuclear Regulatory
    Commission.

    The safety experts from 32 countries and international organizations who
    attended the conference concluded that the countries operating the
    Soviet-designed reactors had made significant progress on nuclear safety
    issues, such as

    � strengthening the independence and technical competence of nuclear
    regulatory authorities,

    � demonstrating clear progress in improving the way plants are operated, and

    � establishing design safety improvement programs.

    The conference reported that the governments operating Soviet-designed
    reactors need to ensure that their nuclear regulatory authorities have the
    financial resources and enforcement authority required to fully execute
    their missions. Furthermore, the conference concluded that significant
    additional efforts--and further assistance--were required to maintain and
    enhance an effective safety culture. The conference report further noted
    that improvements in the design of nuclear reactors varied from country to
    country and were affected by economic conditions.

    According to the U.S. Mission to International Organizations in Vienna,
    Austria, while the conference clearly established that safety has improved
    in all countries operating Soviet-designed nuclear power plants, only
    Hungary, the Czech Republic and, to a certain extent, the Slovak Republic
    showed real progress in implementing western safety practices. However,
    according to the U.S. representatives, Ukraine lacks the financial resources
    to achieve its stated safety goals, and Russia was behind all of the
    countries in terms of safety improvements and safety culture.

    Several officials from countries that have received U.S. safety assistance
    provided us with their views on the quality and effectiveness of the
    assistance. These officials told us that the assistance had a direct impact
    on improving safety because it focused on equipment and training. The
    officials cited examples of useful projects, including the following:

    � The Director-General of the All-Russian Research Institute for Nuclear
    Power Plant Operations (VNIIAES 13) characterized U.S. training and
    simulator equipment as effective. He noted that the U.S. assistance
    complemented Russia's own efforts to improve the safety of its reactors.

    � The vice president of Armenia's Nuclear Power Plant Company said that
    U.S.-supplied equipment, specifically the safety parameter display system,
    improved plant operators' ability to systematically monitor various safety
    systems. This system collects and displays safety information at a computer
    workstation in the control room of a nuclear power plant.

    � A Hungarian nuclear safety official told us that U.S. safety assistance
    has contributed to major changes in how plant operators view the importance
    of safety.

    In October 1999, we visited two nuclear power plants in Ukraine--Chornobyl
    and Khmelnytskyy--and met with officials from Ukraine's nuclear regulatory
    organization and nuclear utility to obtain their views on the impact of U.S.
    assistance. These officials told us that the assistance provided by DOE and
    NRC was important, and they showed us functioning safety equipment, such as
    full-scope simulators, fire extinguishers and metal fire doors, and safety
    parameter display systems, that they received through the U.S. safety
    assistance program. A full-scope simulator is a replica of a nuclear
    reactor's control room.

    At Khmelnytskyy, nuclear power plant officials told us that the full-scope
    simulator provided by DOE in 1998 is an excellent training tool. Before
    receiving the simulator, the plant obtained all of its training through
    books and the training was theoretical. Simulator training, by contrast, is
    practical and "hands on." One plant official told us that U.S.-provided
    simulator training enabled plant operators to avoid shutting down the plant
    during an actual safety incident because plant personnel were familiar with
    the correct procedures to follow. According to these officials, they would
    have lost $600,000 in potential electricity revenues if they had been forced
    to shut down the plant's operations. A Chornobyl control room shift
    supervisor told us that the emergency operating instructions developed with
    assistance from the United States were very valuable because they made the
    operators think about the importance of safety in the day-to-day operations
    of the plant. Emergency operating instructions specify actions for operators
    to take in response to changes in a plant's conditions and allow the
    operators to stabilize the reactor without having to first determine what
    caused the changes.

    Ukrainian officials also showed us safety-related projects funded by NRC
    that they said had helped strengthen the effectiveness of their regulatory
    organization:

    � An emergency response center at the headquarters of Ukraine's nuclear
    regulatory organization, which became operational in 1998, serves as a
    countrywide coordinating center in the event of a nuclear accident.

    � Analytical simulators, used by Ukrainian nuclear safety regulators for
    training purposes, familiarize them with plant operations. Analytical
    simulators use computer screens with graphic displays that imitate plant
    systems. Operators enter computer commands to "operate" equipment, rather
    than using switches and controls as they would with a full-scope simulator.

    Fire safety has been a component of the U.S. safety assistance program since
    its inception. According to DOE, over 100 fires occurred in nuclear power
    plants in the former Soviet Union from 1980 through 1988. In response to
    this concern, DOE has funded a limited number of fire safety projects at
    selected sites, but these projects are almost completed. Some Ukrainian
    officials identified a need for additional fire safety equipment,
    particularly metal fire-retardant doors, which they said are needed to
    replace the wooden doors now found in Soviet-designed reactors. According to
    representatives of a Ukrainian company that is manufacturing and installing
    metal fire doors, the company has stopped producing the doors because the
    plants cannot afford to pay for them. They said that Ukraine plants need
    about 2,000 more fire doors and Russian plants also need more doors. Figures
    7, 8, and 9 illustrate safety equipment provided through the U.S. safety
    assistance program.

    Figure 7: Safety Parameter Display System at Khmelnytskyy Nuclear Power
    Plant

    Figure 8: Full-Scope Simulator at Khmelnytskyy Nuclear Power Plant

    Figure 9: Analytical Simulator Used by Ukrainian Nuclear Regulators

    U.S. safety experts told us that although they believe the safety of
    Soviet-designed nuclear power plants has improved, it is difficult to
    quantify the extent to which safety assistance has reduced the risks of
    their operation. According to a 1999 PNNL study, objective performance
    measurement is very difficult because nuclear power plants operating in
    these countries have only recently started recording and reporting standard
    safety performance activities. Thus, historical data are not available to
    establish a baseline for gauging the impact of improvements. Notwithstanding
    these limitations, DOE has developed two sets of performance indicators.
    These include (1) quantifiable measures of progress to reflect the transfer
    of equipment, procedures, and software and the effectiveness of training and
    (2) indicators in six key technology areas--operational safety, training,
    maintenance, safety systems, safety assessments, and regulatory and
    institutional policy and capabilities.

    DOE has provided examples of how U.S. safety projects were being implemented
    as measures of the program's success. For example, in its fiscal year 2001
    budget request, DOE identified several quantifiable activities, including

    � training over 6,000 nuclear plant operators in programs that were based on
    U.S. methodology,

    � installing seven training simulators and manufacturing six additional
    training simulators,

    � installing safety parameter display systems at eight reactors and
    manufacturing five additional systems, and

    � completing fire safety upgrades at five reactor sites and conducting
    upgrades at two other reactor sites.

    NRC officials told us that they also gauge the program's impact by
    quantifying the results of projects, such as the number of Russian and
    Ukrainian regulators who have received training from NRC. In addition, the
    regulators have provided NRC with numerous examples of regulations and
    regulatory-related documents that have been produced as a result of NRC's
    assistance.

    A major issue that arose during the 1999 International Conference on
    Strengthening Nuclear Safety in Eastern Europe was the use of probabilistic
    risk assessments by countries operating Soviet-designed reactors to show
    that plant safety had been significantly improved. According to PNNL
    officials, probabilistic risk assessments have been used for about 25 years
    in the United States to provide insights for improving the safety of nuclear
    power plants. The results of the assessments are reported in terms of the
    chances, or frequencies, that certain events may lead to an accident. The
    assessments, however, have limitations, and their results can vary widely
    depending on the accuracy of the input data, the depth of analysis, the
    software used, and the amount of peer review. According to DOE, the value of
    such assessments is their systematic evaluation of the safety of a plant's
    design, not the bottom-line frequencies that they generate. As a result,
    changes to the bottom-line frequencies should not be used alone to
    demonstrate that safety has improved or declined, unless the frequencies
    reflect the results of a complete safety assessment (performed with valid
    input data, validation of computer codes, and international peer review).

    U.S. officials expressed concern that countries operating Soviet-designed
    nuclear power plants were misusing the results of probabilistic risk
    assessments. For example, Lithuanian officials at the safety conference
    sponsored by IAEA cited bottom-line frequencies to demonstrate safety
    improvements at one of Lithuania's RBMK reactors. Several U.S. safety
    experts believed that Lithuania's presentation, based on the reactor's
    safety assessment, were misleading. According to PNNL officials, nearly all
    Soviet-designed plants have had a probabilistic risk assessment performed to
    some degree, and the results of these assessments are increasingly being
    used to determine that the plants are now safe. The officials noted that
    this practice continues despite warnings by experts that the results are
    uncertain and subject to manipulation.

    Progress Toward Shutting Down Soviet-Designed Reactors Has Been Limited

    For donor countries, the goal of nuclear safety assistance continues to be
    the earliest practicable shutdown of the highest-risk Soviet-designed
    reactors. Although Ukraine decided to shut down one of its reactors at the
    Chornobyl nuclear power plant in 1996, all of the other highest-risk
    reactors continue to operate despite the efforts of the international
    community to obtain their closure. The countries operating Soviet-designed
    reactors depend, to varying degrees, on nuclear power to meet their domestic
    energy requirements, and, in their view, the reactors provide a low-cost
    energy supply. Furthermore, safety experts from several countries and IAEA
    told us that the assistance provided to improve the safety of the reactors
    has had the unintended consequence of encouraging plant operators to
    continue operating them despite their inherent safety flaws.

    Shutdown of the Highest-Risk Reactors

    In 1992, the donors of safety assistance began working toward the early
    shutdown of the highest-risk reactors as part of the G-7 nuclear safety
    assistance program. The United States has consistently supported this
    objective. The 1992 Lisbon Initiative on Multilateral Nuclear Safety, which
    established the U.S. safety assistance program, also noted that these
    reactors should be shut down. In addition, the Congress, in the 1992 Freedom
    Support Act, viewed U.S. assistance as providing short-term upgrades to
    civilian nuclear power plants and seeking to shut down those plants where
    economically feasible. In 1996, Ukraine shut down a reactor at the Chornobyl
    nuclear power plant because it lacked the resources to replace deteriorating
    reactor components. Currently, only one of the plant's four originally
    functioning reactors remains operational. However, it appears unlikely that
    many, if any, of the other highest-risk Soviet-designed reactors will be
    closed in the near future.

    During our review, officials from Finland, France, Italy, Sweden, the United
    Kingdom, and IAEA told us it was unrealistic to believe that these plants
    would be shut down quickly because the countries operating them all rely, to
    a certain extent, on nuclear power for their energy needs. For example, as
    of 1997, the nuclear share of electricity production was 14 percent in
    Russia, 47 percent in Ukraine, and 83 percent in Lithuania. Further
    complicating efforts to obtain their early closure, these nuclear power
    plants each employ several thousand people who do not have alternative
    employment opportunities. Additionally, the plants are a primary source of
    domestic heat.

    Officials from these countries, as well as DOE and State Department
    officials, have also noted that when the shutdown policy was begun in the
    early 1990s, the G-7 countries believed that the countries operating these
    reactors would adopt market economies and attract investment capital to
    acquire replacement energy. Some of these officials said that certain
    economic and political assumptions have not proved to be accurate. For
    example, Ukraine has been unable to restructure its energy sector to
    implement sustainable energy reforms. A nuclear safety official from Sweden
    told us that the G-7 document advocating the early shutdown of the high-risk
    reactors is unachievable and irrelevant, and although some Soviet reactor
    designs are inherently unsafe, economic and political factors will prevent
    their closure in the near future. The Department of State's Senior
    Coordinator for Nuclear Safety told us that no one fully understood how much
    political resistance to closure would be raised by the countries operating
    these reactors.

    As we noted in our 1994 report,14 international nuclear safety officials
    recognized that closing the highest-risk reactors would require an
    integrated, long-term energy strategy. Nuclear safety assistance is
    considered one part of a larger effort that must include market reforms,
    adjustments to energy prices, and the identification of both nuclear and
    nonnuclear forms of replacement energy. In 1993, a study by the World Bank
    and other international institutions concluded that it would it would be
    technically feasible to shut down the highest-risk reactors and replace them
    with alternative energy sources by the mid- to late 1990s at a cost of about
    $21 billion. However, a World Bank official told us that the original
    estimate assumed that economic conditions in these countries would improve.
    He noted that economic conditions had not improved, political systems in
    some of the countries are unstable, and the amount of money required to
    facilitate the shutdown of the highest-risk reactors would be significantly
    greater than originally estimated.

    Highest-Risk Plants

    Many safety experts told us that the countries operating Soviet-designed
    nuclear power plants will continue to do so as long as they perceive the
    operations to be in their best economic interests. However, safety experts
    from Austria, Finland, Sweden, the United Kingdom, and IAEA told us that the
    assistance provided to improve the safety of the reactors has had the
    unintended consequence of encouraging plant operators to continue operating
    them despite their inherent safety flaws. A United Kingdom safety expert
    said he recognizes this dilemma but believes that the donor countries must
    continue to reduce the risks involved in the operation of the highest-risk
    plants. According to the State Department's Senior Coordinator for Nuclear
    Safety, all donor countries determined that it was worth the risks to
    provide the assistance to improve the reactors' safety because of the known
    health and safety dangers posed by the operation of the highest-risk
    reactors. She noted that it was later that the donors recognized that the
    assistance might encourage the continued operation of these plants.

    Russia has taken advantage of international nuclear safety assistance to
    bolster its claims that its highest-risk reactors are likely to operate for
    many more years. In a May 1999 letter to a personal representative of the
    German Chancellor, Russia's Minister of Economy expressed his appreciation
    for the safety assistance provided by the international community to improve
    the safety of Russia's nuclear power plants. He noted that this assistance
    was helping Russia continue its wide-scale efforts to modernize its plants,
    including the highest-risk reactors. The Minister stated that in 1998,
    Russia had adopted a program of nuclear energy development, whose principal
    task is improving the safety of all nuclear power plants, including those
    posing the highest risks, through 2010.

    The Department of State's Senior Coordinator for Nuclear Safety told us that
    the United States and other donors were concerned about Russia's position.
    She stated that the assistance was meant to protect public health in the
    countries operating these reactors and to protect people in Europe and other
    locations from needless exposure to radiation until the reactors were shut
    down. In her view, the assistance was never intended to extend the lives of
    these reactors, although the countries operating them never accepted this
    view. The May 1999 letter made it clear, for example, that Russia did not
    intend to close any of its RBMK and VVER 440 Model 230 reactors. The Senior
    Coordinator said that in response to Russia's position on closure, the
    donors would have to reassess their position on continuing to provide safety
    assistance to Russia. She thought the donors might focus more attention on
    strengthening the role of Russia's nuclear regulatory organization to help
    it develop the ability to close the reactors that, according to safety
    assessments, pose the highest risks.

    Safety experts from the United States, Japan, the European Commission, and
    the European Bank for Reconstruction and Development told us that the donor
    countries have tried not to provide equipment that could be used to extend
    the lives of the highest-risk reactors. As we reported in 1996,15 however,
    DOE had allocated about $8.5 million to a project that transferred western
    maintenance practices, training methods, and technology to staff operating
    RBMK reactors. DOE stated that it was not providing any equipment that would
    extend the lives of these reactors, such as larger components or major
    piping or wiring systems. More recently, we found that DOE had rejected
    projects proposed by Russia's Ministry of Atomic Energy (MINATOM) because of
    concerns about extending of the lives of certain reactors. In June 1999, for
    example, DOE informed MINATOM that it could not support the replacement of a
    main steam isolation valve at a VVER 440 Model 230 plant because the project
    could extend the plant's operation. DOE noted that the policy of the U.S.
    government was to assist in improving the safety of these plants but not to
    undertake activities that would extend their lives.

    According to Russian nuclear safety officials, no technical analysis or
    requirement has conclusively demonstrated that the older reactors should be
    shut down. They noted that it is impossible to predict how long these
    reactors will continue to operate and stated that Russia is currently
    studying this matter. If technical analysis demonstrates that it is possible
    and economically efficient to continue to operate these plants, then Russia
    will continue to do so. One official noted that it is now time to start
    conducting the technical analysis, while there are still 5 to 6 years to
    make a decision. However, another high-level official from Russia's nuclear
    regulatory organization told us that RBMKs are inherently unsafe and should
    be shut down. According to him, a similar generalization about VVER reactors
    is more difficult because they include a variety of models and have been
    modified in different ways. One IAEA official told us that it was "wishful
    thinking" to believe that Russia would shut down its RBMK reactors. Another
    IAEA official said that no one should be surprised that Russia is publicly
    stating its intention to continue operating these reactors. He noted that
    Russia has stated the same position for many years.

    Reactors Have Met With Limited Success

    The donor countries, including the United States, believe that using the
    multilateral nuclear safety fund administered by the European Bank for
    Reconstruction and Development is the most probable way to link safety
    assistance to a plant's shutdown. Although the bank negotiated closure
    agreements with Bulgaria and Lithuania, efforts to obtain shutdown are
    tenuous. For example, Bulgaria is continuing to operate its reactors beyond
    the agreed-upon time frames in the bank agreement. In 1993, Bulgaria agreed
    to a phased shutdown of its four VVER 440 Model 230 reactors by 1998 in
    exchange for a $28 million equipment grant from the bank, assuming the
    availability of adequate replacement energy. However, Bulgaria has not had
    the resources to develop sources of replacement energy. According to a
    high-ranking representative of Bulgaria's nuclear safety organization, it
    was very clear that the first two VVER 440 Model 230 reactors would be shut
    down in 2004 or 2005 because these plants have design deficiencies that can
    never be fixed.

    In 1994, Lithuania agreed to stop producing electricity at one its two RBMK
    reactors by mid-1998 unless Lithuania's safety authority granted a new
    operating license for that reactor. The safety authority granted the
    license, authorizing the plant to operate the reactor until it requires a
    major upgrade. Lithuania's government has prepared an energy strategy that
    assumes the reactor will be shut down not later than 2005, but no decision
    will be made on the second reactor until 2004, when a revised energy
    strategy is due. According to State Department officials, recent decisions
    by both Bulgaria and Lithuania to reaffirm closure conditions are
    significant because they demonstrate a commitment on the part of these
    countries to shut down some of their highest-risk reactors.

    Agreements with Russia do not specify dates for closing its VVER 440 Model
    230 or RBMK reactors. Russia has agreed to continue operating these reactors
    in accordance with the results of in-depth safety analyses being conducted
    for each plant, licensing extensions granted by the Russian regulator within
    specified time frames, and the development of a power sector strategy that
    includes measures to promote energy efficiency. In 1998, the European Bank
    for Reconstruction and Development concluded that there have been major
    difficulties getting Russian authorities to accept the conditions
    established in bank agreements for reactors' continued operation and that
    Russia's regulatory organization did not feel bound by these conditions. As
    a result, it was doubtful that the safety analyses would be completed on
    time. A bank official told us that his organization has limited capacity to
    influence closure despite the agreements that are in place. The bank alone
    cannot insist that the countries operating the highest-risk reactors shut
    them down. This official--as well as other European safety experts--said the
    grants that the bank provides to countries operating the highest-risk
    reactors are not sufficient to be a determining factor when a country makes
    a decision about closing its reactors. The bank official noted that the
    entire international community of banks and governments needs to use its
    collective influence to encourage closure. (App. I provides more information
    on the status of efforts to obtain the closure of the highest-risk
    reactors.)

    Some officials noted that the most effective way to bring about the shutdown
    of some reactors is through the expansion of the European Union. The Union
    is considering expanding and extending its membership to certain countries
    of Central and Eastern Europe. Countries that wish to join must demonstrate
    their commitment to nuclear safety. This includes the earliest possible
    closure of reactors that cannot be upgraded to internationally accepted
    safety levels at a reasonable cost. Timetables for closure are required to
    be consistent with the requirements of the Bank's Nuclear Safety Account
    agreements. Countries with high-risk reactors interested in joining the
    European Union include Bulgaria, Lithuania, and the Slovak Republic.

    The G-7's top priority is closing the last operating reactor (unit 3) at the
    Chornobyl nuclear power plant in Ukraine. In 1995, the G-7 nations and
    Ukraine signed a memorandum of understanding that includes Ukraine's
    commitment to close the plant by 2000. Although the agreement does not
    identify specific funding levels to help achieve closure, it does indicate
    that about $2.3 billion in loans and grants were anticipated to facilitate
    the shutdown of Chornobyl.

    According to several U.S., European, and Ukrainian officials, the closure of
    Chornobyl in 2000 is uncertain. Several impediments to closure exist,
    including a lack of funding to provide replacement nuclear reactors that
    Ukraine believes would compensate for Chornobyl's closure and concerns about
    the social and economic well-being of workers who would be displaced once
    Chornobyl is closed. Ukraine's First Deputy Minister of Energy told us that
    the G-7 nations are not honoring their financial commitments to help Ukraine
    facilitate the shutdown of Chornobyl. Furthermore, in his view, the
    agreement commits the G-7 countries to help complete two nuclear power
    reactors in Ukraine that can provide adequate replacement energy. He noted
    that in order to obtain financing for the completion of the two plants, the
    European Bank for Reconstruction and Development is requiring expensive
    safety improvements that will significantly increase the cost of completing
    the unfinished reactors.

    The First Deputy Minister said he would advise his government not to shut
    down Chornobyl unless it receives adequate financial support from the G-7
    nations. The head of Ukraine's regulatory organization told us that Ukraine
    will abide by its commitment to close Chornobyl. However, Ukraine expects
    the G-7 nations to abide by their commitments to provide financial
    assistance. The director and assistant chief engineer of Chornobyl told us
    that the plant should not be closed. The director, who is responsible for
    operating the entire plant and its surrounding support institutions, said
    that the positions of thousands of plant employees would have to be
    terminated, significantly increasing unemployment in the local area. He
    noted that closure was a political issue. The assistant chief engineer said
    concerns about the premature shutdown of the plant are affecting the
    attitudes of Chornobyl workers toward safety. He believes that Chornobyl
    requires maintenance to correct safety problems and that it would be better
    to repair the old plant than to build new ones.

    There are other impediments to Chornobyl's closure. For example, Ukrainian
    officials stated that the plant will not be closed until there is an
    adequate supply of heat for the workers who will be performing
    decommissioning activities, which could last for a few decades. Currently,
    an obsolete plant is providing heat. The United States plans to spend about
    $30 million to finish the construction of a new heat plant. According to
    PNNL representatives, Chornobyl fire department officials have been
    uncooperative and have delayed issuing fire permits for the construction
    site because the Chornobyl plant's management owes the fire department
    money. They further noted that the plant's management has not been
    aggressive in trying to resolve these differences because it does not want
    to shut down the plant. During our visit to Chornobyl in October 1999, the
    construction of the heat plant was about 4 months behind schedule. The U.S.
    heat plant project manager told us that he seriously doubted the heat plant
    would be finished by the end of 2000--a delay that could jeopardize the
    plant's shutdown.

    U.S. officials also expressed concern about Ukraine's ability to contribute
    to the heat plant's construction. Ukraine is expected to contribute
    approximately $7.5 million in in-kind support, including an 18-kilometer
    pipeline to carry fuel to the heat plant. As we noted in our 1996 report,
    Ukraine has had difficulty meeting its cost-sharing obligations under a
    number of joint U.S.-Ukraine nuclear safety projects. Officials from the
    U.S. embassy in Kiev and from PNNL told us that it was uncertain if Ukraine
    would meet its cost-sharing obligations for the heat plant. According to the
    State Department's Senior Coordinator for Nuclear Safety, DOE has recently
    obtained a commitment from the President of Ukraine to provide support for
    the heat plant. Figure 10 shows the status of the heat plant's construction
    at the time of our visit.

    Figure 10: Status of Construction of the Chornobyl Heat Plant, as of October
    1999

    Management of Some DOE and NRC Safety Assistance Activities Has Raised
    Concerns

    Despite the generally favorable views of the countries that have received
    DOE's and NRC's safety assistance, some U.S. program officials have raised
    concerns about the management of both agencies' programs. Specifically, DOE
    has funded several projects that do not meet its own project selection
    criteria. Although these projects may be worthwhile, they are not directly
    related to improving the safety of Soviet-designed nuclear reactors. As a
    result, DOE appears to have expanded the program beyond its original mission
    to upgrade the reactors' safety. In addition, DOE has funded several other
    projects that have raised concerns among program officials, who told us that
    the projects are of questionable value in meeting the program's objectives.

    NRC has managed its nuclear safety assistance program from year to year
    without adopting a long-term strategy. Furthermore, NRC's program management
    responsibilities are divided among several offices, making the program
    vulnerable, according to NRC's Inspector General and others, to duplication
    of effort and miscommunication with other federal agencies participating in
    the program. These management weaknesses contributed to NRC's inability to
    obligate over $500,000 in program funds for fiscal years 1997 and 1998. The
    funds were subsequently returned to the U.S. Treasury.

    of Soviet-Designed Nuclear Power Plants

    DOE established goals for its nuclear safety program and related project
    evaluation criteria in three documents--its 1997 strategic plan (which
    includes, as an objective, the improvement of international nuclear safety),
    in a 1997 strategy document for nuclear safety, and in a March 1999 report
    to the Congress on improving the safety of Soviet-designed nuclear power
    plants. According to the 1999 report, proposed projects are first screened
    by program staff to ensure that they will improve the safety of operating
    plants, prevent or contain damage to reactors in the event of accidents, and
    apply established technologies. Projects that meet the screening criteria
    are evaluated in more detail by program staff and host country experts, who
    apply the following criteria to determine if a project meets the program's
    mission: impact on safety, cost-effectiveness, and the host country's
    commitment. On the basis of this evaluation and the availability of
    resources, priorities and schedules are established for the project.
    According to DOE, this process ensures that projects are consistent with the
    policies and goals under which U.S. financial support is committed, the
    needs of the host countries are met, and the required resources are
    available.

    Several projects that we reviewed do not, in our view, meet DOE's project
    selection criteria because they do not support the mission of improving
    nuclear safety. The former manager of the international nuclear safety
    program at PNNL told us that some of these projects are indicative of
    efforts by DOE's program management to find new ways of expanding the
    program. In his view, these types of projects may be worthwhile but should
    not be funded at the expense of projects that are focused on improving the
    Soviet-designed reactors' safety--the primary objective of DOE's effort.

    The projects that we consider outside the scope of DOE's efforts to upgrade
    unsafe reactors are summarized below and fall into two areas. The first area
    includes environmental and nuclear safety centers that DOE is funding in
    several countries. It also includes two laboratories that were established
    in Ukraine to address the social impact of closing the Chornobyl nuclear
    power plant and support research on the environmental and biological effects
    of the Chornobyl accident. The second area comprises a number of projects or
    expenditures that either fall outside the scope of reducing the risks of
    accidents or otherwise represent a questionable use of program funds.

    In fiscal year 1999, DOE's international nuclear safety program allocated
    $100,000 for the establishment of international centers for environmental
    safety in the United States and Russia. According to DOE, the centers are
    expected to provide a way for the United States and Russia to coordinate
    efforts to mitigate the effects of Cold War nuclear activities on the
    environment, including developing strategies to manage radioactive waste and
    spent nuclear fuel. Idaho National Energy and Environmental Laboratory and
    Argonne National Laboratory were responsible for starting up the centers in
    coordination with Russia's Ministry of Atomic Energy. DOE officials,
    including the director of the international nuclear safety program, told us
    that the project is consistent with the goals of the nuclear safety program
    because radioactive waste and environmental cleanup issues are components of
    broader nuclear safety issues facing Russia.

    Some Members of Congress have criticized the project because it is not
    directly related to upgrading unsafe reactors. Specifically, in its fiscal
    year 2000 conference report, issued in July 1999, the House Committee on
    Appropriations, Subcommittee on Energy and Water Development, noted that
    each year DOE seeks to expand the international nuclear safety program
    beyond its original mission--to upgrade unsafe reactors. According to the
    report, previous efforts to expand the program included international
    nuclear safety centers and research laboratories. The report noted that such
    efforts are of particular concern because of (1) continuing delays in
    implementing the original program and (2) large carryover balances
    indicating that the program's implementation is lagging. According to DOE,
    the administration proposed in fiscal year 2000 that the environmental
    centers be funded entirely on their own merit. The Congress did not approve
    this activity and no funds are being spent in this area.

    DOE has used program funds to support nuclear safety centers in Russia,
    Kazakhstan, and Ukraine. The mission of the U.S.-Russian center, which is
    the largest of the three centers, is to facilitate ongoing technical
    exchanges between the United States and Russia and to improve nuclear safety
    technology and safety culture through joint research projects. DOE has
    allocated over $20 million since fiscal year 1995 (including $8.8 million in
    safety funds) to pay for research activities both in the United States and
    Russia. About $1.7 million of the total has been provided to the center in
    Russia to buy equipment, pay overhead costs, and supplement the salaries of
    about 20 to 25 Russian scientists who work on research projects. Currently,
    the centers are managing nine joint research projects, including the
    preparation of a safety database. The database provides information on
    nuclear power plants, research reactors, and fuel cycle facilities and is
    available to the public through the Internet. According to DOE, the database
    also contains important analytical information. The centers are also
    involved in a variety of other projects.16

    In our view, while several of the centers' joint projects appear to involve
    worthwhile research, it is questionable whether these projects directly
    improve the safety of currently operating nuclear power plants. For example,
    one of the projects dealing with in-depth safety assessments in Russia may
    in the future be a useful part of Russia's licensing program, according to
    an Argonne National Laboratory official. Furthermore, a DOE official told us
    that projects related to Russia's nuclear research facility and the
    development of a strategic plan for safety research do not contribute to
    improving the safety of Soviet-designed nuclear power plants.

    Lithuania and Kazakhstan have independently established safety centers, and
    DOE has spent $211,800 to further the centers' infrastructure-building and
    safety culture objectives. DOE funds have been used by the Lithuanian safety
    center to develop a nuclear safety Web site at the Lithuanian Energy
    Institute. The Kazakhstan center was established to reduce Kazakhstan's
    technical isolation following the breakup of the former Soviet Union and
    support that country's need to close a breeder reactor that poses both
    safety and proliferation risks.

    The International Radioecology Laboratory performs studies on the wide-scale
    biological and environmental effects of the Chornobyl accident. DOE has used
    two sources of funds to support the development of the laboratory. First,
    DOE's Office of Environmental Management provided about $400,000 to purchase
    supplies and equipment for the laboratory. Second, PNNL, which was tasked by
    DOE to purchase the equipment and supplies, spent $8,560 in safety funds
    during fiscal year 1999 to provide administrative support in the areas of
    procurement, customs, and taxation issues. According to the former manager
    of PNNL's international nuclear safety program, the project has no relation
    to improving nuclear safety, but DOE directed PNNL to support the project
    because of PNNL's expertise in providing program support for safety
    activities in Ukraine. After we brought this matter to DOE's attention, DOE
    determined that no safety funds should have been used to support this
    activity. As a result, DOE is charging the $8,560 against the Office of
    Environmental Management's project account.

    According to DOE officials, the Slavutych Laboratory of International
    Research and Technology is an important component of U.S. efforts to
    facilitate the shutdown of the Chornobyl nuclear power plant. DOE expects
    the laboratory to become self-sufficient and employ Chornobyl workers who
    will be displaced when the Chornobyl nuclear power plant is closed. At the
    time of our review, the laboratory had approximately 25 full-time employees.
    DOE's goal is to transform it into an enterprise that can eventually employ
    about 100 people. Such a goal, however, would not accommodate the
    approximately 6,000 personnel who work at the Chornobyl nuclear power plant,
    most of whom will be unemployed if the plant shuts down. DOE has allocated
    about $7.5 million to support the laboratory through fiscal year 1999,
    including about $1.7 million to renovate and furnish a building that houses
    the laboratory.

    The laboratory has relied heavily on DOE funds for financial assistance. It
    has, however, also received some support from the United Kingdom, Japan,
    France, and Germany. Some U.S. and Ukrainian officials questioned the value
    of the laboratory, and one PNNL official described it as a "middleman" for
    contract support, rather than a true laboratory that conducts research. The
    laboratory has provided, among other things, translation services and
    logistics support and has performed various technical studies in areas such
    as computer modeling and training. The director of DOE's international
    nuclear safety program told us that the laboratory has not done a good job
    of attracting clients other than DOE. He said that if it is to become
    self-sufficient, it will have to develop good business relationships with
    other organizations and countries.

    One PNNL official told us he questioned whether nuclear safety funds should
    be used to support economic assistance projects such as the laboratory. In
    addition, the former chief engineer of the Chornobyl nuclear power
    plant−who is also the former head of Ukraine's nuclear regulatory
    agency−told us that the use of these funds for the Slavutych
    Laboratory has caused some Ukrainian officials to question DOE's safety
    assistance priorities because it is difficult to determine what the United
    States has received for its investment of over $7 million. Rather than
    spending money on the Slavutych Laboratory, he said the U.S. nuclear safety
    program could target funds to pay the salaries of workers at nuclear plants
    or buy certain spare parts needed to operate the plants more safely.

    During the course of our review, 14 U.S. and Ukrainian officials expressed
    their concerns to us about the Slavutych Laboratory's business practices.
    Specifically, many officials told us that there was a perception that the
    laboratory's management lacked business ethics or an understanding of
    western business practices. Furthermore, several PNNL officials stated that
    the laboratory routinely submitted inflated cost estimates for proposed
    contracts to PNNL and other firms.

    We presented these concerns to DOE, which subsequently tasked PNNL with
    investigating them. In December 1999, PNNL reported that allegations of
    corruption have come from various sources, including former laboratory staff
    from the Chornobyl Shelter Project Management Unit who have done business
    with the laboratory's management. According to PNNL, the employees of
    Westinghouse, Bechtel, Electricite de France, and Batelle Memorial Institute
    (including PNNL) who are part of the project management unit also shared
    this negative perception of the laboratory. PNNL determined that some of
    these allegations stem from instances when the laboratory tried to charge
    the project management unit extremely high prices for basic services, such
    as photocopying, equipment rentals, and parking. According to PNNL
    officials, they did not find evidence to support the allegations of
    corruption but did determine that the laboratory's management "engaged in
    activities that reflect their misunderstanding of appropriate business
    practices in a market economy and represent a serious misperception of what
    is acceptable business practice." According PNNL's acting nuclear safety
    manager, PNNL has implemented several corrective measures including

    � funding a financial audit of the laboratory by KPMG, an international
    audit firm,

    � funding a project to introduce a western-style accounting system at the
    laboratory, and

    � amending PNNL-funded contracts to require that the laboratory's management
    and staff certify that agreed-upon salary payments have been made and
    received for all work.

    During our review, we found that DOE made cash payments totaling $38,570 to
    the Slavutych Laboratory over 4 years. These cash payments concerned us
    because of the allegations of mismanagement at the laboratory. Furthermore,
    according to DOE's accounting handbook, adequate internal controls are
    required to ensure that cash payments are controlled from the receipt of a
    payment to its final disposition. According to PNNL officials, they are
    aware that cash payments are often indicators of bribery or corruption but
    have documented cash payments to allow for audit transparency.

    Specifically, Oak Ridge National Laboratory officials made cash payments for
    translation, interpreter, and support services totaling $7,044. Oak Ridge
    officials said that Ukraine is a cash economy and it made sense to conduct
    the transactions in this fashion. They said they requested and received
    receipts for these payments. Other cash payments totaling $31,525 were made
    to Slavutych Laboratory from 1996 through 1999. That amount included $4,354
    to support the Secretary of Energy's visit in 1999 and $1,278 for a luncheon
    attended by the Deputy Secretary of Energy's delegation in May 1999. When we
    told the director of DOE's nuclear safety program about these cash payments,
    he said he is opposed to providing cash payments because they present a
    security risk to travelers and can lead to paperless transactions. However,
    DOE's Acting Deputy Administrator for Defense Nuclear Nonproliferation told
    us that Ukraine is not a credit card society and that under certain
    circumstances, the use of cash is appropriate. She noted that she had
    reviewed DOE's procedures on the use of cash payments and believed that
    officials acted correctly when making these payments.

    In January 2000, KPMG completed a financial audit of the Slavutych
    Laboratory in order to evaluate whether the laboratory's management had
    performed any improper activities with funds received from PNNL. The audit
    comprised two parts--(1) a financial audit, which covered the period from
    January 1, 1999, through September 30, 1999, and (2) a review of a number of
    cash payments made by PNNL to the laboratory. For the limited period covered
    by the audit, KPMG did not identify any misappropriation of funds by the
    Slavutych Laboratory's management, nor did it find any evidence that the
    laboratory had performed any illegal or unlawful activities. It did note,
    however, that some invoices relating to 1997 PNNL task orders were not
    found. The audit also found that a former laboratory employee, who accepted
    cash payments of $4,334 from Oak Ridge National Laboratory officials on
    behalf of the laboratory, did not immediately deposit the dollars into a
    local bank where the funds would be converted into Ukrainian currency.
    Rather, the employee kept the funds in U.S. dollars longer than necessary.
    The managing partner of KPMG (Ukraine) told us that the former employee
    appears to have kept the excess funds realized by waiting for a more
    favorable exchange rate.

    The audit also found that the laboratory's office building is owned by the
    Chornobyl nuclear power plant and that there is no formal lease between the
    plant and the laboratory. However, the two parties have signed a 10-year
    cooperation agreement under which the laboratory is allowed to use the
    building for its operational activities. If the plant decided to cancel the
    agreement and no longer allowed the laboratory to use the office space, the
    laboratory would not be reimbursed for any expenditures made to improve the
    facility. According to DOE, the laboratory has submitted a formal, long-term
    lease agreement that is in the process of being approved by Ukrainian
    authorities. Furthermore, the laboratory and the Chornobyl nuclear power
    plant are seeking to transfer ownership of the building to the International
    Chornobyl Center.

    The KPMG (Ukraine) managing partner told us that KPMG was unable to perform
    a financial audit of the International Chornobyl Center, the parent
    organization of the Slavutych Laboratory. According to KPMG officials, the
    center has been unable to provide all necessary information, primarily
    because its accounting staff has changed several times. The current
    accounting staff had no idea what previous accountants had been doing. As a
    result, the center could not prepare a reconcilable balance sheet. DOE had
    paid the center about $45,000 for translation and interpreter services as of
    March 2000. Figures 11 and 12 show the exterior and interior of the
    laboratory.

    Figure 11: Slavutych Laboratory of International Research and Technology

    Figure 12: Interior of the Slavutych Laboratory

    During the course of our audit, several PNNL officials told us they were
    concerned about DOE management's decision to fund projects that either did
    not improve the safety of Soviet-designed nuclear reactors or were of
    questionable value to the program. While individual projects did not
    generally represent large program expenditures, the projects collectively
    raised concerns because program funds were being spent on low-priority
    activities.

    DOE Representatives' Offices in Paris and Tokyo

    DOE spent about $1.04 million in nuclear safety program funds to partially
    finance the operations of its representatives' offices in Paris and Tokyo
    during fiscal years 1998 and 1999. According to DOE, these representatives
    support the Department in a variety of activities related to nuclear safety
    and nonproliferation through interactions with the European Bank for
    Reconstruction and Development; the Organization for Economic Cooperation
    and Development; and coordinating committees, workshops, and student
    exchanges. The director of DOE's nuclear safety program said that these
    offices used to be funded from other DOE accounts in the Office of Nuclear
    Energy. When the nuclear safety function was transferred to the Office of
    Nonproliferation and National Security in 1998, the funding responsibility
    was transferred as well. According to DOE, it has submitted a reprogramming
    request to fund all expenses for the Paris and Tokyo offices from another
    departmental account in fiscal year 2000 and has requested that these
    representatives be funded from this same account in fiscal year 2001.

    Printing Costs

    DOE spent about $78,000 to print a limited number of copies of a report to
    the Congress on the status of the nuclear safety program. This report went
    to full publication (50 copies) four different times because of changes made
    by the director of DOE's international nuclear safety program. PNNL, which
    was responsible for preparing the report, assumed that the initial draft of
    the report was ready for publication and printed 50 copies. However, the
    director was not satisfied with the report and made changes. This occurred
    three times, and each time PNNL assumed the report was ready for publication
    and printed it. A DOE official told us that the reports should not have cost
    more than $500 per copy, including labor and printing costs. However,
    because of all the revisions, it cost about $1,554 per copy for the 50
    reports that were finally delivered. In addition, PNNL reported that over 3
    years, the program spent about $91,000 for various graphic presentations.
    One of the presentations, which included about 100 overhead slides, was
    revised eight times for the director of DOE's international nuclear safety
    program, who was planning to give the presentation to members of the
    Ukrainian parliament. At one point, the director required changes that had
    to be made by a Ukrainian printing company at a cost of about $2,500.
    According to DOE, although the director never gave the presentation, several
    program managers have used the documents for other presentations.

    Summer Internships

    In mid-1999, DOE hired seven Ukrainian college students for a summer
    internship program. The cost of the program was $16,200 and was paid from
    nuclear safety assistance program funds. The students worked at six
    locations in Ukraine, including the PNNL Adjunct Office, the Slavutych
    Business Development Agency, the International Chornobyl Center, and Kiev
    State University. Their work included developing database information,
    translating technical manuals, and supporting energy efficiency projects.
    Three PNNL officials, including the former manager of the safety program,
    were concerned that the internship project, while worthwhile in its intent,
    did not support the program's overall goal of improving the safety of
    Soviet-designed nuclear power plants. Furthermore, PNNL officials
    responsible for overseeing the internship project and employing some of the
    students said that although the project had benefits, some of the students
    were engaged in "busywork."

    The director of DOE's international nuclear safety program, who initiated
    the project after meeting with some of these students at an energy
    conference in Ukraine, said the internship program provided these students
    with a unique opportunity to learn about western business practices, which
    supported the goals of the program. He believes that all of the students did
    useful work at a minimal cost to the United States. Furthermore, DOE's
    Acting Deputy Administrator for Defense Nuclear Nonproliferation said that
    it was important for the United States to engage these students in
    activities that could be beneficial in the longer term by promoting broad
    nonproliferation and nuclear safety policy goals. She believes these
    students are critical to Ukraine's future and it is important for the United
    States to engage them in useful and productive activities as a gesture of
    goodwill. She said she would recommend continuing the program in the future
    if funds were available.

    Robotics Equipment

    PNNL and Ukrainian officials expressed their concerns to us about the value
    of robotics equipment that was shipped to the Chornobyl nuclear power plant
    for a test demonstration in May 1999. The equipment was developed to collect
    visual and physical data from areas in the damaged Chornobyl reactor that
    are too contaminated for human access. The robotics project has been funded
    as part of a joint research program between DOE and the National Aeronautics
    and Space Administration. DOE provided $487,000 to PNNL to modify the
    equipment and arrange for its shipment to Ukraine. In addition, DOE has
    spent about $10,000 in program funds over the past few months to support the
    transfer of the equipment to the Chornobyl nuclear power plant.

    According to two PNNL officials, Ukrainian officials did not ask for the
    equipment and did not want it. After the robot was shipped and the
    demonstration test was completed, the equipment was placed in storage at
    Chornobyl for several months. The director of the Chornobyl nuclear power
    plant said he had reservations about the equipment but was not against its
    use if realistic tasks could be developed. However, the deputy chief of the
    Chornobyl shelter project told us that Ukraine never requested the robot and
    does not have the funds to support research for it. According to DOE, the
    Chornobyl nuclear plant has recently decided to accept ownership of the
    equipment for use in its decommissioning activities.

    Since fiscal year 1992, NRC and DOE have spent about $1.9 million for
    interpreters who live in the United States and are under contract with the
    Department of State. Because the interpreters live in the United States,
    NRC's and DOE's expenditures for the interpreters include--in addition to
    standard service fees--travel and per diem costs. Neither agency has
    developed a policy to determine when and whether it would be more
    advantageous to hire in-country interpreters--an option that could, in some
    circumstances, be more cost-efficient.

    NRC estimates that it has spent about $1.1 million for interpreters hired by
    the State Department but has never formally analyzed whether it might be
    cost-effective to hire in-country interpreters. DOE has spent about $791,000
    since fiscal year 1992 for these interpreters' trips to Russia, Ukraine,
    Bulgaria, Belgium, the Slovak Republic, Lithuania, Hungary and Austria.
    According to DOE, high-quality State Department translators were required to
    deal with complex technical and nuclear terms, and the rate for an
    interpreter's service was $475 per day, as of November 1999. Over the past 2
    years, DOE estimates it has used in-country interpreters in over 90 percent
    of the cases. U.S. officials from the Kiev, Ukraine, embassy told us that a
    local company charges about $140 for 8 hours of translation. Embassy
    officials noted, however, that the quality of local interpreters is uneven.

    The director of DOE's international nuclear safety program asked that the
    services of one particular interpreter be obtained under a PNNL contract on
    very short notice in the fall of 1998 at a cost of $16,713. The former
    manager of PNNL's safety program questioned the use of a directed contract
    and asked whether this approach complied with a U.S. government policy
    requiring that arrangements for interpreters for senior officials be made
    through the Department of State. Since that time, PNNL has not entered into
    other such directed contracts, although the director has used this
    interpreter under arrangements made with the Department of State.

    Management

    NRC has traditionally managed its nuclear safety assistance program from
    year to year without adopting a long-term strategy. In the last few months,
    it has started to take a longer-term approach for its activities in Russia
    and Ukraine, but it is still too early to assess the impact of this new
    strategy. The responsibilities for managing NRC's program are divided among
    several offices, making the program vulnerable, according to NRC's Inspector
    General and others, to duplication of effort and miscommunication with other
    federal agencies participating in the program. According to some NRC
    officials, the lack of coordination and communication between different NRC
    offices responsible for nuclear safety assistance activities contributed to
    NRC's inability to obligate over $500,000 in fiscal year 1997 and 1998
    program funds.

    Although NRC has been providing regulatory assistance to the Newly
    Independent States and other countries in Central and Eastern Europe for
    over 7 years, it has not developed a long-term strategic plan that clearly
    identifies the regulatory program's overall goals, ways to quantify how well
    the program is meeting these goals, and time frames for meeting these goals.
    In our view, such a plan is necessary if, as the State Department's Senior
    Coordinator for Nuclear Safety believes, NRC will play a more prominent role
    in future assistance efforts.

    Several years ago, NRC officials and Russian and Ukrainian officials jointly
    developed project plans and priorities, and NRC staff periodically review
    the progress made in meeting these priorities. NRC staff told us that they
    also periodically meet with officials from Kazakhstan, Armenia, and Central
    and Eastern European countries to review projects and develop plans for
    future work. Central and Eastern European safety projects are also reviewed
    with US AID officials to determine the status of projects and identify any
    additional resource requirements. NRC has taken a short-term view of the
    assistance, particularly for Russia and Ukraine, and has managed it from
    year to year without a long-term strategy.

    Although NRC has provided assistance since 1992, it has not significantly
    changed its management approach--described by the director of NRC's Office
    of International Programs as "cautious" and by others as being in a
    maintenance mode for assistance to Russia and Ukraine. NRC is phasing out
    its assistance in some countries in Central and Eastern Europe. Within the
    past several months, however, NRC has revised its planning process for
    assistance to Russia and Ukraine in order to obtain a longer-term
    perspective. According to NRC, this effort should provide a more coherent
    view of the program than has been evident in the past and should provide
    additional support to sustain improvements that have resulted from NRC's
    prior assistance.

    NRC officials noted that the agency's ability to develop a longer-term
    approach to nuclear safety assistance has been complicated by concerns about
    the use of NRC funds to finance the salaries of staff working on
    international programs. NRC typically recovers nearly 100 percent of its
    annual budget through licensing and inspection fees assessed on the U.S.
    nuclear industry. As we pointed out in a prior report,17 the U.S. nuclear
    industry has generally opposed the use of NRC funds to support international
    activities. Over the past few years, NRC has reduced its staff allocations
    and level of effort for international activities. In fiscal year 1999,
    however, US AID and the Department of State allowed NRC to use a portion of
    the funds US AID provides for nuclear safety assistance activities to
    finance NRC staff costs related to nuclear safety activities in the Newly
    Independent States. For fiscal year 2000, these staff costs are being funded
    from NRC's general fund appropriation--that portion of the agency's budget
    that is not subject to fee recovery from NRC licensees.

    Divided

    The management of NRC's international nuclear safety assistance effort is
    divided between two offices--the Office of the Executive Director for
    Operations and the Office of International Programs. The Office of the
    Executive Director for Operations supervises and coordinates the activities
    of several offices within NRC. The Office of International Programs plans
    and recommends policies on international cooperation and assistance in
    nuclear safety and radiation protection. The Executive Director for
    Operations has responsibility for Russia and Ukraine, while the Office of
    International Programs has responsibility for Armenia, Bulgaria, the Czech
    Republic, Hungary, Lithuania, Kazakhstan, and the Slovak Republic. Within
    the Office of International Programs, the programs for Armenia and
    Kazakhstan are managed by one program manager, while a different program
    manager manages the Bulgarian, Czech, Hungarian, Lithuanian and Slovak
    programs. For Russia and Ukraine, the technical program manager within the
    Office of the Executive Director for Operations has overall management
    responsibility for assistance activities, while responsibility for
    individual projects is divided among several other additional offices.
    Different staff in the Office of International Programs support the
    technical program manager in the administration of the Russian and Ukrainian
    assistance programs.

    The split of management activities among these offices has raised concerns.
    In December 1997, NRC's Program Review Committee found, and NRC's Executive
    Council recommended, that the agency should develop options to integrate or
    consolidate the Office of International Programs and the support office
    staff providing assistance in order to minimize duplication of effort.18 In
    April 1998, NRC's Office of Inspector General observed that the lack of a
    management structure for the international nuclear safety program could
    cause duplication because each program requires similar activities, such as
    travel, funding coordination, and reporting to US AID and the Department of
    State. It could also lead to possible duplication of assistance procured
    through DOE's national laboratories and to miscommunication.

    A major impact of NRC's fragmented program management was NRC's inability to
    obligate $506,000 in fiscal year 1997 and 1998 US AID funds for Ukraine.
    These expired funds were returned to the U.S. Treasury because the money
    could not be obligated within a statutory 2-year period of availability. NRC
    officials provided us with differing reasons as to why the funds were not
    obligated. For example, some officials told us that the funds were not
    obligated because of a lack of coordination and communication between the
    different offices responsible for Ukrainian assistance activities.

    In managing its nuclear safety program, DOE has funded a number of projects
    that may be worthwhile in their own right but do not directly contribute to
    improving the safety of Soviet-designed nuclear reactors. Consequently, by
    funding these projects, DOE is diverting limited resources from other
    pressing needs. For example, we question why DOE used program funds to
    create environmental centers in Russia and the United States and to operate
    support offices for DOE representatives in Tokyo and Paris. We also question
    DOE's decision to allocate about $7.5 million, including $1.7 million for
    building renovations and furnishings, to the Slavutych Laboratory of
    International Research and Technology in Ukraine. We believe that it is
    problematic that this laboratory will facilitate the closure of the
    Chornobyl nuclear power plant. These expenditures, as well as others, raise
    questions about the program's priorities. It was clear to us during our
    visit to Ukraine that basic safety needs still need to be addressed. For
    example, according to Ukrainian officials, there is still a need to purchase
    2,000 additional fire doors for Ukrainian nuclear power plants, but the
    Ukrainians do not have the funds to do so.

    Regarding the Slavutych Laboratory in Ukraine, we believe, and DOE officials
    recognize as well, that if the Laboratory is to become self-sufficient and
    change the perception of mismanagement, it, at a minimum, needs to establish
    sound accounting systems and business practices in order to attract clients.
    Furthermore, for this project, as well as for other projects where similar
    arrangements exist, we believe that DOE must exercise extreme caution when
    paying for services and/or deliverables in cash. We are concerned that cash
    payments are being made to an organization that does not have adequate
    internal controls or western-style accounting systems. We are also concerned
    that there is no formal lease agreement between the Chornobyl nuclear power
    plant and the Slavutych Laboratory, although it appears that efforts are now
    under way to clarify this matter. DOE needs to ensure that the U.S.
    investment in this laboratory is protected to the extent feasible.

    Both DOE and NRC need to look for ways to increase the program's efficiency.
    For example, both agencies have made extensive use of U.S.-based
    interpreters when traveling to countries operating Soviet-designed reactors.
    There may be valid reasons to use these interpreters, given the sensitive
    and/or technical nature of meetings. However, NRC, in particular, has not
    formally reviewed its use of these interpreters, and there might be
    instances when it would make sense to hire in-country interpreters and
    reduce the program's costs.

    NRC's management of the safety program also raises concerns. Without a
    long-term strategic plan, it appears to us that NRC cannot effectively
    manage its assistance activities because it lacks firm program goals and
    time frames for meeting these goals. Furthermore, we agree with NRC's
    internal reviews, which concluded that the lack of an integrated management
    approach could lead to duplication of effort and other inefficiencies. NRC's
    inability to obligate program funds in a timely manner raises questions
    about its future funding requirements. If NRC is to play a more prominent
    role in future assistance efforts, as the State Department's Senior
    Coordinator for Nuclear Safety believes, these management issues must be
    addressed.

    Nuclear Regulatory Commission

    To improve the management of the nuclear safety assistance program, we
    recommend that the Secretary

    � review ongoing and proposed projects and eliminate those that do not have
    a strong and compelling link to improving the safety of Soviet-designed
    nuclear power plants.

    To improve the Nuclear Regulatory Commission's program management, we
    recommend that the Chairman

    � develop a strategic plan for the Commission's nuclear safety assistance
    activities that, at a minimum, establishes program priorities and goals,
    ways to measure how well the goals are being met, and time frames for
    meeting the goals;

    � integrate the assistance activities of offices that implement nuclear
    safety assistance to avoid duplication and inefficiencies; and

    � consistently monitor funding requirements to ensure that funds are
    obligated on a timely basis in accordance with the program's priorities.

    To help ensure that DOE's and NRC's nuclear safety assistance efforts are
    economical and efficient, we recommend

    � that the Secretary

    � ensure to the extent possible that, when cash is paid for services and/or
    deliverables, organizations in the Newly Independent States have internal
    controls to adequately document the flow of cash from its receipt to its
    final disposition; and

    � clarify the lease arrangements between the Slavutych Laboratory and the
    Chornobyl nuclear power plant to ensure that the U.S. investment in the
    laboratory is protected to the extent possible; and

    � that the Chairman

    � hire in-country interpreters when feasible to do so.

    Both DOE and the Department of State's Senior Coordinator for Nuclear Safety
    questioned our assessment of whether certain projects directly improve the
    safety of Soviet-designed nuclear power reactors. The Senior Coordinator
    said that while she believes our recommendations are valuable, they set too
    narrow an objective for the safety assistance program. In her view, the
    international nuclear safety assistance program focuses on broader policy
    matters, such as the shutdown of the Chornobyl nuclear power plant. She
    noted that assistance funds are needed for projects designed to help set up
    the conditions to enable shutdown, such as the heat plant for workers
    decommissioning the Chornobyl reactor and other efforts that have a small
    social impact, such as the Slavutych Laboratory of International Research
    and Technology. While we recognize that the safety assistance program
    focuses on broad goals and objectives, our recommendations would focus
    limited resources on activities that directly affect the reactors' safety
    and on improving the management of DOE's and NRC's safety assistance
    efforts.

    DOE strongly disagreed with our assertion that the program funding it
    provides for the International Chornobyl Center (referred to in the report
    as the Slavutych Laboratory) is not directly related to improving safety.
    DOE stated that it understands that the Slavutych Laboratory played a
    critical role in Ukraine's recent commitment to shut down the last operating
    reactor at the Chornobyl nuclear power plant. Furthermore, DOE noted that
    one of the major functions of the Russian International Nuclear Safety
    Center is to be a long-term voice in Russia to challenge potentially unsafe
    practices at the nuclear power plants, as well as an active proponent of
    creating a sound safety culture. DOE believes that the center will
    eventually contribute to improved nuclear safety in all other countries
    operating Soviet-designed reactors. In addition, DOE believes that about
    one-half of the center's projects directly contribute to nuclear safety
    because they play a necessary part in conducting in-depth safety analyses of
    nuclear reactors in Russia.

    Regarding the impact of the Slavutych Laboratory on the shutdown of
    Chornobyl, we continue to maintain, on the basis of our discussions with
    Ukrainian officials, that the government of Ukraine will ultimately base its
    decision to shut down the Chornobyl nuclear power plant on broader economic
    and political factors. As noted in our report, the Slavutych Laboratory has
    an eventual goal of employing 100 people. Reaching that goal will not
    accommodate the approximately 6,000 personnel who could become unemployed if
    the Chornobyl nuclear power plant shuts down. Furthermore, the director of
    the nuclear safety program acknowledges that the laboratory, which relies
    heavily on DOE funds for financial assistance, has not done a good job of
    attracting clients other than DOE. If the laboratory is to become
    self-sufficient, it needs to change the perception of mismanagement and
    establish sound accounting systems and business practices in order to
    attract clients.

    Regarding the Russian International Nuclear Safety Center, while we agree
    that some of the projects are worthwhile and even important to understanding
    the operation of Soviet-designed nuclear power reactors, these projects do
    not directly address the most urgent safety needs at these reactors. We
    continue to believe that urgent safety needs at these reactors, such as
    replacing wooden fire doors with fire-resistant doors in Soviet-designed
    nuclear power plants, have not been adequately addressed by DOE's safety
    effort. We believe that the most urgent and pressing safety priorities
    should be addressed first to improve the safety of the highest-risk
    reactors--a fundamental and long-standing goal of the program. DOE stated in
    its response that it would allocate additional funds for fire doors in
    Ukraine's nuclear power plants.

    Finally, DOE also noted in its response that no safety funds were used to
    fund the International Radioecology Laboratory in Ukraine. As we noted in
    our report, DOE spent $8,560 in safety funds related to this laboratory.
    After we brought this matter to DOE's attention, the Department determined
    that no safety funds should have been used to support this project. As a
    result, DOE subsequently used an environmental management project account to
    pay for this effort. DOE's comments are presented in appendix II.

    NRC agreed with all of our recommendations, and its comments are presented
    in appendix III.

    Status of Efforts to Shut Down Highest-Risk Soviet-Designed Nuclear Power
    Plants

    Continued

      Name of plant
     and number and             Agreed-upon
         type of     Country      date for    Conditions of     Funding       Status
      highest-risk             reactor(s) to    shutdown       linked to
        reactors                 shut down                     shutdown
                                              G-7/Ukraine
                                              agreement
                                              establishes                 Ukraine is
                                              four- point    More than $2 tying closure
     Chornobyl/1RBMK                          program,       billion in   to funding for
     reactor        Ukraine   2000            including      loans and    replacement
                                              energy         grants       reactors and a
                                              investments in              new
                                              exchange for                sarcophagus.
                                              shutdown
                                                                          One reactor is
                              One reactor was                             licensed to
                              to stop                                     operate until
                              producing                                   it receives a
                              electricity in  Bank agreement $38 million  major upgrade
     Ignalina/2 RBMK          mid-1998 unless was tied to    for          around 2005. A
     reactors       Lithuania it was granted  energy needs   short-term   decision on
                              a new operating and licensing  safety       the date of
                              license. The    renewal        improvements the second
                              license was                                 reactor's
                              granted.                                    closure is
                                                                          scheduled for
                                                                          2004.

                              Decommissioning 1993 bank                   Reactors
                                                                          continue to
     Kozloduy/4 VVER          of two reactors agreement tied $28 million  operate. First
     440 Model 230  Bulgaria  was to begin in closure to     grant for    two reactors
     reactors                 1998. No dates  obtaining a    safety       are to be
                              were set for    replacement    upgrades
                              the others.     energy source               closed
                                                                          2004-2005.
                                                                          Slovak
                                                                          Republic
                                                                          decided in
     Bohunice/2 VVER          2006 for unit   European Union              November 1999
     440 Model 230  Slovak    1, 2008 for     accession      No funding atto comply with
     reactors       Republic  unit 2          requirement    this time    the European
                                                                          Union's
                                                                          requirement
                                                                          for shutdown
                                              Possible loan
                                              from bank to
                                              build gas
                                              plant is
     Metsamor/1VVER                           conditioned on Loan amount
     440 Model 230  Armenia   2004            closure plus   estimated at Reactor is
     reactor                                  no restart of  $70 million  operating.
                                              another unit
                                              that was
                                              closed in
                                              1988.
                                              1995 grant
                                              from bank                   Units are
                                              calls for      $23 million  operating
     Kola/2 VVER 440                          annual         in short-termunder annual
     Model 230      Russia    No date         operating      safety       permits;
     reactors                 established     permits and    upgrades to  safety
                                              in-depth       the plant    assessments
                                              safety                      are under way.
                                              analysis.

                                              1995 bank                   Reactors are
                                              agreement                   operating
                                              requires                    (although one
                                              longer-term                 reactor is
                                              operating                   currently shut
                                              license for                 down for
                                                             No funding   repairs);
     Kursk/2 RBMK             No date         reactors.      associated   safety
     reactors       Russia    established     Annual         with         assessment for
                                              operating
                                              license is     agreement    one reactor is
                                              authorized on               stalled
                                              the basis of                because of
                                              safety                      U.S. sanctions
                                              analysis                    imposed on
                                              reports.                    Russian
                                                                          organization.
                                              1995 bank
                                              agreement                   Units are
                                              calls for                   operating;
     Leningrad/4              No date         operating      $32 million  safety
     RBMK reactors  Russia    established     permits and    for upgrades assessment for
                                              safety                      one reactor is
                                              analysis                    almost
                                              reports                     complete
                                              1995 bank
                                              agreement
                                              calls for
                                              safety
                                              analysis
                                              reports and
                                              annual
                                              operating
                                              permits. One
                                              of the
                                              reactors was
                                              not supposed
                                              to have annual
                                              permits
                                              granted beyond
                                              2002. The                   Units are
                                              other reactor               operating
     Novovoronezh/2                           could be       $24 million  under annual
     VVER 440 Model Russia    No date         operated with  in short-termpermits;
     230 reactors             established     an annual      safety       safety
                                              permit until   upgrades     assessments
                                              mid-1997                    are under way.
                                              (unless
                                              embrittlement
                                              in the reactor
                                              vessel was
                                              shown to be a
                                              problema).
                                              Beyond that
                                              time,
                                              regulator was
                                              required to
                                              base future
                                              operation on
                                              cost and
                                              technical
                                              issues.

    Note: The "bank" is the European Bank for Reconstruction and Development

    aReactor vessel steel tends to lose ductility (become more brittle) as a
    result of neutron irradiation. A European Union study found that the reactor
    vessel's condition was satisfactory.

    Source: GAO's presentation of information from the Department of State.

    Comments From the Department of Energy

    Comments From the Nuclear Regulatory Commission

    GAO Contact and Staff Acknowledgments

    Gene Aloise(202) 512-3841

    In addition, Duane Fitzgerald, Jonathan Gill, Glen Levis, Victor Sgobba, and
    Jim Wells made key contributions to this report.

    (141316)

    Table 1: DOE's Cumulative Expenditures for the Nuclear
    Safety Assistance Program Through September 30, 1999 37

    Table 2: Cumulative Expenditures for the Nuclear Regulatory Commission's
    Safety Assistance Program Through
    September 30, 1999 38

    Table 3: Obligations and Expenditures for DOE's and NRC's
    Safety Assistance Programs, as of September 30, 1999 39

    Figure 1: Operational Soviet-Designed Nuclear Power Plants 19

    Figure 2: Chornobyl Shelter 23

    Figure 3: Countries Donating and Receiving International
    Nuclear Safety Assistance, as of November 1999 31

    Figure 4: Types and Amounts of Funds for Nuclear Safety
    Improvements as of November 1999 33

    Figure 5: DOE's and NRC's Expenditures of Nuclear Safety
    Funds Totaling $357 Million as of September 30, 1999 35

    Figure 6: Distribution of DOE's and NRC's Expenditures
    Totaling $357 Million to Recipient Countries 36

    Figure 7: Safety Parameter Display System at Khmelnytskyy
    Nuclear Power Plant 48

    Figure 8: Full-Scope Simulator at Khmelnytskyy Nuclear Power Plant 49

    Figure 9: Analytical Simulator Used by Ukrainian Nuclear Regulators 49

    Figure 10: Status of Construction of the Chornobyl Heat Plant, as of October
    1999 59

    Figure 11: Slavutych Laboratory of International Research and
    Technology 67

    Figure 12: Interior of the Slavutych Laboratory 68

    1. In addition, the Department of Energy is providing assistance to four
    small RBMK-type reactors and one fast neutron reactor in Russia.

    2. In addition, DOE is providing assistance to four small RBMK-type reactors
    and one fast-neutron reactor in Russia.

    3. The G-7 comprises Canada, France, Germany, Italy, Japan, the United
    Kingdom, and the United States.

    4. The member states are Austria, Belgium, Denmark, Finland, France,
    Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain,
    Sweden, and the United Kingdom.

    5. Also known as Poland and Hungary Assistance for Reconstruction of
    Economy.

    6. The G-24 includes the G-7 countries plus Australia, Austria, Belgium,
    Denmark, Finland, Greece, Iceland, Ireland, Luxembourg, the Netherlands, New
    Zealand, Norway, Portugal, Spain, Sweden, Switzerland, and Turkey.

    7. The Organization of Economic Cooperation and Development provides its 29
    member countries with a setting to discuss and develop economic and social
    policy. The Nuclear Energy Agency's objective is to contribute to the
    development of nuclear energy as a safe, environmentally acceptable, and
    economical energy source through cooperation among the participating
    countries.

    8. DOE manages the largest laboratory system of its kind in the world.
    Originally created to design and build atomic bombs, these laboratories have
    since expanded to conduct research in many disciplines--from high-energy
    physics to advanced computing--at facilities throughout the United States.
    Nine of DOE's 23 national laboratories are multiprogram, and the remainder
    are program- and mission-dedicated facilities.

    9. When DOE commits funds, appropriated by the Congress as budget authority,
    against a project by awarding a contract, placing an order, or using a
    service, the funds are obligated. When DOE pays the contractor, vendor, or
    service provider, the funds are expended or spent. Conversely, unobligated
    funds represent budget authority that is available because DOE has not yet
    committed it. Unspent funds include budget authority that may be either (1)
    unobligated or (2) obligated but not spent.

    10. According to DOE, the $27 million in unobligated funds were fiscal year
    1999 funds transferred by US AID to DOE in June 1999. DOE obligated these
    funds by January 2000.

    11. Nuclear Safety: Status of U.S. Assistance to Improve the Safety of
    Soviet-Designed Reactors (GAO/RCED-97-5 , Oct. 29, 1996).

    12. The Eastern European countries operating RBMK and VVER reactors were
    Armenia, Bulgaria, the Czech Republic, Hungary, Lithuania, Russia, the
    Slovak Republic, and Ukraine.

    13. VNIIAES assists nuclear power plants with startup activities,
    operations, and training in Russia. It also manufactures full-scope and
    analytical simulators.

    14. Nuclear Safety: International Assistance Efforts to Make Soviet-Designed
    Reactors Safer (GAO/RCED-94-234 , Sept. 29, 1994).

    15. Nuclear Safety: Status of U.S. Assistance to Improve the Safety of
    Soviet-Designed Reactors (GAO/RCED-97-5 , Oct. 29, 1996).

    16. Projects include the measurement and review of material properties data;
    compilation of information on Russian nuclear safety research facilities;
    experiments and computer codes; development of advanced coupled neutronic
    codes; accident management technology development for Russian nuclear power
    plants; validation of U.S. computer codes for transient analysis of
    design-based accidents; validation of three-dimensional structural analysis
    software and models; development of techniques for monitoring and
    diagnostics of sensors, systems, and equipment; and development of a
    strategic plan for Russian nuclear safety research.

    17. Nuclear Safety: Information on the International Nuclear Regulators
    Association (GAO/RCED-99-243 , Aug. 6, 1999)

    18. The Program Review Committee and Executive Council are internal NRC
    groups that periodically examine the operations and effectiveness of various
    NRC functions and activities.
    *** End of document. ***