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:

ï¿½ Replacement parts often are unavailable, resulting in makeshift
arrangements, including the cannibalization of parts from partially
completed nuclear power plants.

ï¿½ 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.

ï¿½ 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.

ï¿½ 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:

ï¿½ 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.

ï¿½ 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.

ï¿½ 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.

ï¿½ 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

ï¿½ improve the physical condition of nuclear power plants and install safety
equipment;

ï¿½ establish a nuclear safety culture in which safety takes priority over
power production;

ï¿½ develop improved safety procedures and train operators in their use;

ï¿½ conduct safety assessments that meet international standards;

ï¿½ establish regional centers for training reactor personnel and develop
simulators for training control room operators;

ï¿½ develop an institutional framework for the design, construction, and
operation of nuclear plants that is consistent with international practices;
and

ï¿½ 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

ï¿½ training regulators in all aspects of safety reviews, licensing and
inspection procedures, and information management;

ï¿½ advising on how to establish a legal basis for nuclear regulation;

ï¿½ creating emergency support centers in Russia and Ukraine;

ï¿½ developing a control and accounting system for nuclear materials; and

ï¿½ 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

ï¿½ longer-term safety upgrades that would be targeted toward more recently
designed Soviet reactors, including assistance to VVER Model 1000 reactors;

ï¿½ radiation protection, which would include monitoring systems to protect
against the consequences of nuclear accidents; and

ï¿½ 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:

ï¿½ A lag occurs between the date work is performed and the date costs are
recorded at DOE headquarters.

ï¿½ 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.

ï¿½ 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:

ï¿½ 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.

ï¿½ 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

ï¿½ 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

ï¿½ 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

ï¿½ strengthening the independence and technical competence of nuclear
regulatory authorities,

ï¿½ demonstrating clear progress in improving the way plants are operated, and

ï¿½ 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:

ï¿½ 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.

ï¿½ 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.

ï¿½ 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:

ï¿½ 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.

ï¿½ 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

ï¿½ training over 6,000 nuclear plant operators in programs that were based on
U.S. methodology,

ï¿½ installing seven training simulators and manufacturing six additional
training simulators,

ï¿½ installing safety parameter display systems at eight reactors and
manufacturing five additional systems, and

ï¿½ 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

ï¿½ funding a financial audit of the laboratory by KPMG, an international
audit firm,

ï¿½ funding a project to introduce a western-style accounting system at the
laboratory, and

ï¿½ 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

ï¿½ 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

ï¿½ 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;

ï¿½ integrate the assistance activities of offices that implement nuclear
safety assistance to avoid duplication and inefficiencies; and

ï¿½ 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

ï¿½ that the Secretary

ï¿½ 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

ï¿½ 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

ï¿½ that the Chairman

ï¿½ 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. ***