Nuclear Nonproliferation: Concerns With U.S. Delays in Accepting Foreign
Research Reactors' Spent Fuel (Letter Report, 03/25/94, GAO/RCED-94-119).

A key nonproliferation goal of the United States is to discourage the
use of highly enriched uranium, a material that can be used to make
nuclear bombs, in civilian nuclear programs worldwide. Research reactors
are of particular concern because the major civilian use of highly
enriched uranium is as fuel in these reactors.  U.S. officials question
the safety of spent highly enriched uranium fuel left in interim storage
at reactor sites worldwide and, for security reasons, would prefer that
this spent fuel be consolidated and stored permanently in the United
States. Under its Off-Site Fuel Policy, the Energy Department (DOE) has
since 1968 been taking back the spent fuel, reprocessing it, and storing
the resulting waste at the Savannah River Site in South Carolina.  But
DOE stopped this practice in the late 1980s, arguing that the fuels
policy could not be renewed until environmental studies were done.  No
spent fuel of U.S. origin has been taken back since the fuels policy
expired, despite warning from operators of foreign research reactors
that they were facing fuel storage problems. This report provides
information on (1) the effects of delays in renewing the Off-Site Fuels
Policy on U.S. nonproliferation goals and programs--specifically, the
reduced enrichment program, (2) DOE's efforts to renew the fuels policy,
and (3) the price to be charged to the operators of foreign reactors for
DOE's activities in taking back the spent fuel.

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

 REPORTNUM:  RCED-94-119
     TITLE:  Nuclear Nonproliferation: Concerns With U.S. Delays in 
             Accepting Foreign Research Reactors' Spent Fuel
      DATE:  03/25/94
   SUBJECT:  Nuclear proliferation
             Nuclear fuel plants
             Treaties
             Nuclear energy
             Nuclear reactors
             Uranium
             Nuclear waste storage
             Nuclear waste management
             Nuclear fuel reprocessing
             Energy research
IDENTIFIER:  DOE Reduced Enrichment for Research and Test Reactors 
             Program
             DOE Off-Site Fuels Policy
             Belgium
             Germany
             DOE Foreign Research Reactor Spent Fuel Acceptance Policy
             Netherlands
             European Community
             Russia
             United Kingdom
             Dounreay (Scotland)
             Japan
             Canada
             
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Cover
================================================================ COVER


Report to Congressional Requesters

March 1994

NUCLEAR NONPROLIFERATION -
CONCERNS WITH U.S.  DELAYS IN
ACCEPTING FOREIGN RESEARCH
REACTORS' SPENT FUEL

GAO/RCED-94-119

Nuclear Nonproliferation


Abbreviations
=============================================================== ABBREV

  DOE - Department of Energy
  EURATOM - European Atomic Energy Community
  GAO - General Accounting Office
  HEU - highly enriched uranium
  LEU - low enriched uranium
  NNPA - Nuclear Nonproliferation Act of 1978
  UK - United Kingdom

Letter
=============================================================== LETTER


B-256337

March 25, 1994

The Honorable Charles E.  Schumer
House of Representatives

The Honorable John Glenn
Chairman, Committee on Governmental
 Affairs
United States Senate

A key nonproliferation goal of the United States is to discourage the
use of highly enriched uranium fuel (HEU), a material that can be
used to make nuclear bombs, in civilian nuclear programs worldwide. 
Research reactors are of particular concern because the major
civilian use of HEU is as fuel in these reactors.  U.S.  officials
question the safety of spent (used) HEU fuel left in interim storage
at reactor sites throughout the world and, for security reasons,
would prefer that this spent fuel be consolidated and permanently
stored in the United States. 

The Reduced Enrichment for Research and Test Reactors Program was
created to convert research reactors from HEU to low enriched uranium
(LEU)--a material not directly usable in nuclear weapons.  A primary
motivation for research reactors to participate in the program was
the willingness of the United States to take back their spent fuel. 
Since 1959, operators of foreign research reactors have been using
HEU fuel that they leased or purchased from the United States for
such things as medical research, materials testing, and the
production of medical isotopes.  Beginning in 1968, the Department of
Energy (DOE) took back the spent HEU fuel, reprocessed it, and stored
the resulting waste at the Savannah River Site, a DOE weapons
production facility in South Carolina.  Spent LEU fuel was taken back
beginning in 1986.  However, in 1988 and 1992, respectively, DOE
allowed these practices, known as the Off-Site Fuels Policy, to
expire.  DOE determined that the fuels policy could not be renewed
until the necessary environmental studies were completed.  No spent
HEU or LEU fuel of U.S.  origin has been taken back since the fuels
policy expired, despite warnings from operators of foreign research
reactors that they were facing fuel storage problems. 

This report provides you information on (1) the effects of delays in
renewing the Off-Site Fuels Policy on U.S.  nonproliferation goals
and programs--specifically, the reduced enrichment program, (2) DOE's
efforts to renew the fuels policy, and (3) the price to be charged to
the operators of foreign reactors for DOE's activities in taking back
spent fuel. 


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :1

Delays in renewing the Off-Site Fuels Policy have made participation
in the reduced enrichment program less desirable to those
participants that have converted their reactors, at substantial
expense, to LEU, a fuel that offers reduced reactor performance at
higher cost.  DOE officials acknowledge that failure to renew the
fuels policy could lead these reactor operators to revert to HEU
fuel--especially since it now may be available from Russia and other
sources.  Furthermore, because the United States did not take back
their fuel, two foreign research reactors--one in Belgium and the
other in Germany--had their spent HEU fuel reprocessed, an activity
that is inconsistent with U.S.  nonproliferation goals. 

DOE officials plan to renew the fuels policy as soon as DOE can
address the environmental impact of transporting the fuel and storing
it in both existing and new storage units, possibly by June 1995. 
Under the policy, DOE proposes to accept up to about 15,000 fuel
elements containing HEU or LEU of U.S.  origin over a 15-year period. 
In the near term, DOE plans to accept spent fuel from foreign
research reactors that it has identified as those that may be forced
to reprocess their spent fuel or shut down their reactors because of
fuel storage problems, as soon as an environmental assessment is
approved.  DOE proposes to store this spent fuel in existing storage
space at DOE's Savannah River Site.  The remaining spent fuel
elements from the foreign reactors will not be accepted until a more
complex environmental impact statement has been completed.  Once all
outstanding issues have been resolved, DOE officials plan to build
new storage units at the existing DOE facilities and take back the
remaining spent HEU and LEU fuels.  The amount eligible for return
under a renewed policy--approximately 75 metric tons--will be minimal
compared to the approximately 96,000 metric tons of U.S.  spent fuel
that DOE estimates will have to be permanently disposed of by the
year 2020. 

If the fuels policy is renewed, DOE officials plan to charge the
operators of foreign research reactors for accepting the spent fuel,
storing it, preparing it for disposal, and disposing of it
permanently in a U.S.  repository.  As of March 1994, DOE officials
had not completed work on estimates of the prices necessary to
recover DOE's costs, but a preliminary analysis estimated the cost at
about $3,500 per kilogram of spent fuel.  Operators of research
reactors told us that they would look for alternative solutions, such
as reprocessing, if DOE's charges for returning spent fuel are so
costly that research reactors cannot afford to pay them. 


   BACKGROUND
------------------------------------------------------------ Letter :2

Because research reactors are smaller than commercial power reactors,
generally they have less space on-site for storing spent fuel.  When
storage pools are filled, the reactor operators must either close
down the reactors or remove some of the spent fuel elements from
temporary storage space.  The options for dealing with the spent fuel
include reprocessing it or storing it for an indefinite period at the
reactor sites.  As a result, some U.S.  officials have encouraged the
renewal of the Off-Site Fuels Policy.  Under its proposed plan, DOE
will take back 15,000 spent fuel elements from 130 research reactors
in 42 countries--about 75 metric tons. 

In attempting to renew the fuels policy, DOE published an
environmental assessment in February 1991.  The environmental
assessment contained a proposed finding of "no significant impact,"
which would have enabled DOE to renew the policy and accept new
shipments.  The proposed finding of no significant impact was
negatively received by environmental groups, and according to a DOE
official, no follow-up action to revise the environmental assessment
or to address the renewal of the policy was undertaken until April
1992.  At that time, DOE issued a press release announcing its
decision to phase out the reprocessing of spent fuel and began an
internal review of the fuels policy. 

In a recent meeting, DOE officials characterized their actions to
take back the spent fuel as creating a new Foreign Research Reactor
Spent Fuel Acceptance Policy instead of renewing the Off-Site Fuels
Policy.  For the purpose of clarity and consistency in this report,
we will refer to DOE's actions as renewing the fuels policy, not
establishing a new one. 


   DELAYS IN TAKING BACK SPENT
   FUEL NEGATIVELY AFFECT U.S. 
   NONPROLIFERATION GOALS
------------------------------------------------------------ Letter :3

Because DOE has not renewed the fuels policy, participation in the
reduced enrichment program has become less desirable because a
primary motivation for research reactors to participate in the
program was the willingness of the United States to take back their
spent fuel.  As a result of the delay, two foreign research reactors
have already reprocessed spent HEU fuel.  Moreover, failure to renew
the fuels policy may also affect the negotiations for the Treaty on
the Nonproliferation of Nuclear Weapons, which expires in 1995. 


      PARTICIPATION IN THE REDUCED
      ENRICHMENT PROGRAM MAY BE
      AFFECTED BY THE LAPSE OF THE
      FUELS POLICY
---------------------------------------------------------- Letter :3.1

DOE and State Department officials have said that further delays in
renewing the fuels policy, leaving spent HEU fuel at research
reactors abroad, can threaten the success of the reduced enrichment
program and result in an increased use of HEU fuel--an outcome
inconsistent with U.S.  nonproliferation goals. 

Through the reduced enrichment program, the United States has had
success in encouraging the operators of foreign research reactors to
convert to LEU fuel.  According to an official at Argonne National
Laboratory (a DOE contractor), 12 of the 41 operating research
reactors have been fully converted.  These 12 reactors use fuel of
U.S.  origin and have power of at least 1 megawatt.  Three other
reactors have been partially converted.  Twelve of the remaining 26
research reactors are operating in steps that could lead to
conversion, and more than half of the 12 are already planning to
convert.  Furthermore, some of the reactor operators not currently
planning conversion provide other support to the reduced enrichment
program.  For example, the operators of a research reactor in the
Netherlands contracted with Argonne National Laboratory to test LEU
fuels for reactor conversion.  (App.  I summarizes the status of
foreign research reactors that have and have not converted to LEU
fuel.)

Despite the success of the reduced enrichment program, operators of
research reactors and DOE officials warn that the program could be
jeopardized by the lapse of DOE's fuels policy.  A primary motivation
for the reactor operators to participate in the reduced enrichment
program was the willingness of the United States to take back their
spent fuel.  The operators of research reactors that have converted
to LEU fuel have questioned why they should continue to participate
in the reduced enrichment program, especially since HEU fuel is
available within the European Atomic Energy Community (EURATOM)\1 and
since Russia may offer a supply of HEU as well.  According to these
participants, fewer tests can be conducted with the reactors
operating on LEU fuel, and conversion will result in higher
fuel-cycle costs and, in some cases, in licensing problems.  DOE
acknowledges these limitations and told us that the reactor operators
that have already converted might revert to HEU fuel and obtain fuel
from another supplier. 

In its February 1994 draft environmental assessment, which was
developed to enable DOE to accept a limited number of spent fuel
elements in the near term, DOE states that if the operators reprocess
this fuel, they will likely continue to operate on, or revert to, HEU
fuel.  The only available reprocessing facility for research reactor
fuel is AEA Technology, part of the United Kingdom's Department of
Trade and Industry, located in Dounreay, Scotland; it will reprocess
only HEU, not LEU, fuel elements.  Furthermore, an AEA official told
us that AEA Technology faces shutting down its reprocessing plant if
new commitments from research reactors for reprocessing are not
received by the spring of 1994.  If the operators rely upon
reprocessing for spent fuel management, they will have to maintain
HEU fuel operations, contrary to U.S.  nonproliferation goals. 


--------------------
\1 EURATOM is composed of 12 countries:  Belgium, Denmark, France,
Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands,
Portugal, Spain, and the United Kingdom.  These countries are treated
as a single entity for the purposes of trade in and transfer of
nuclear materials to the United States. 


      DOE DOES NOT REQUIRE U.S. 
      RESEARCH REACTORS TO CONVERT
      TO LEU
---------------------------------------------------------- Letter :3.2

Participation in the reduced enrichment program requires converting,
at substantial expense, to LEU, a fuel that offers reduced
performance at higher cost, and DOE has not required U.S.  research
reactors to convert.  DOE officials acknowledge that this situation
is unfair to the foreign operators that have converted their reactors
under the reduced enrichment program. 

DOE leases HEU fuel to 35 U.S.  university research reactors. 
However, only five have been converted, and eight others have plans
for conversion.  The remaining 22 university reactors have enough HEU
fuel to last the duration of their operating life; therefore,
operators are not planning to convert them.  Furthermore, DOE
officials recently asked the operators of the eight university
reactors planning to convert to postpone their conversion and
maintain their fuel elements on-site so that all storage spaces
available at the Savannah River Site can be used to alleviate the
storage crises facing the foreign research reactors.  However, DOE
officials do expect these eight U.S.  university reactors to convert
to LEU fuel, once the environmental impact statement is approved for
building additional dry storage.  In the meantime, DOE has
coordinated with Nuclear Regulatory Commission officials and
representatives of the university reactors to ensure that the U.S. 
reactors will not encounter storage or licensing problems as a result
of the postponement. 

Despite U.S.  pressure on the foreign research reactors to
participate in the reduced enrichment program, the four DOE-operated
research reactors also continue to use HEU fuel.  In September 1993,
the U.S.  Assistant Secretary of State for Politico-Military Affairs
wrote a letter to DOE requesting that it convert its research
reactors to LEU fuel, acknowledging that conversion would require the
development of a new high-density LEU fuel.  The letter said that: 

     Failure [to ensure that LEU is used in our domestic programs]
     would send a powerful, negative signal to governments in Western
     Europe, Canada, Australia and Japan which have been cooperating
     with us in the effort to reduce the use of HEU worldwide.  The
     message would not be lost on the Russian Government, which could
     be expected to ignore any U.S.  pleas not to step in and start
     selling HEU for research reactors and medical isotopes to
     customers around the world. 


      TWO FOREIGN RESEARCH
      REACTORS REPROCESS HEU FUEL
      BECAUSE OF DOE'S INACTION
---------------------------------------------------------- Letter :3.3

In a September 1993 letter, the Director General of the Belgian BR2
reactor notified DOE officials that BR2 was experiencing an emergency
situation.  According to the Director General, licensing authorities
had determined that the reactor's storage pool was overloaded and
that the reactor would have to be shut down if 144 spent fuel
elements were not removed from the storage pool by the end of the
year so that repairs could be made to the storage area.  To ensure
the removal of these 144 elements, reactor officials entered into
negotiations with AEA Technology to reprocess the fuel; shipments of
spent fuel from Mol, Belgium, to Dounreay, Scotland, were scheduled
to take place during the last quarter of 1993.  In the letter, the
Director General also told DOE officials that if a firm guarantee to
take back the fuel could be made by October 1, 1993, BR2 officials
would be willing to reconsider their decision to reprocess. 

DOE officials did not reply to the BR2 representatives' letter;
consequently, BR2 officials signed a contract with AEA Technology to
reprocess 144 fuel elements.  On October 26, 1993, following
consultations with the Council on Environmental Quality and other
interested agencies, in order to prevent the reprocessing of BR2's
spent fuel, the Secretary of Energy approved the implementation of
emergency provisions to allow DOE to accept the first 144 spent fuel
elements, before completing its environmental assessment.  In a
letter to BR2 officials, DOE officials agreed to pay up to $600,000
to terminate BR2's contract with AEA and established a price for the
spent fuel that was less than DOE's full cost of taking it back. 
However, BR2 officials did not withdraw from their contract
obligations to reprocess fuel at AEA Technology. 

In a similar case, a German reactor shipped 132 fuel elements for
reprocessing at AEA Technology during September and October 1993. 
The operator noted that he no longer felt he could rely on the
renewal of the fuels policy.  Furthermore, according to DOE
officials, German law stipulates that reactors may not operate
without a firm plan for storage and disposal of spent nuclear fuel. 
(For additional information, see app.  II.)


      EURATOM AGREEMENT PERMITS
      REPROCESSING OF FUELS OF
      U.S.  ORIGIN
---------------------------------------------------------- Letter :3.4

An Agreement for Cooperation Between the United States of America and
the European Atomic Energy Community Concerning Peaceful Uses of
Atomic Energy permits members to reprocess spent fuel within the
Community without consent from the United States.  This agreement
will expire in December 1995, and negotiations are currently under
way to develop a new agreement.  (For additional information about
the U.S.-EURATOM agreement, see app.  III.)


      FAILURE TO RENEW POLICY MAY
      NEGATIVELY AFFECT TREATY
      NEGOTIATIONS
---------------------------------------------------------- Letter :3.5

The lapse of DOE's fuels policy may also affect the 1995 Nuclear
Nonproliferation Treaty conference.  Since it took effect in 1970,
the Treaty on the Nonproliferation of Nuclear Weapons has been the
principal tool used by the international community to prevent the
spread of nuclear weapons.\2 If research reactors operators are
forced to shut down their reactors or seek reprocessing, DOE
officials believe that these affected countries are likely to accuse
the United States of not having fulfilled its treaty obligations. 


--------------------
\2 Under the treaty, nuclear weapons states pledged to facilitate the
transfer of peaceful nuclear technology to nonnuclear weapons states
but not to assist them in acquiring nuclear weapons.  Because the
treaty expires in 1995, the conference will determine whether the
treaty should continue indefinitely or be extended for an additional
fixed period.  The United States strongly supports indefinite
extension of the treaty, and according to U.S.  officials, the key to
its success is likely to be the ability of the United States to
convince other parties to the treaty that the United States has
fulfilled its obligations to share with nonnuclear weapons countries
the benefits of peaceful nuclear cooperation. 


   DOE PLANS TO TAKE BACK SPENT
   FUEL OF U.S.  ORIGIN
------------------------------------------------------------ Letter :4

DOE officials plan to renew the fuels policy as soon as an
environmental impact statement can be completed and approved,
possibly in June 1995.  However, in the near term, DOE plans to
accept spent fuel from those reactors for which the expiration of
DOE's acceptance of spent fuel may threaten participation in the
reduced enrichment program.  This threat could occur, for example, if
the failure to take back the fuel would discourage the reactors'
participation in the program.  If fuel is accepted in the near term,
it will be accommodated in existing storage facilities at Savannah
River and will require an environmental assessment limited to
addressing the impact of the fuel's transport to and storage in these
facilities.  Final approval of the draft environmental assessment is
planned for March 1994, and DOE officials hope to begin receiving
this fuel later this year.  The more comprehensive environmental
impact statement needed to renew the fuels policy will assess the
impacts of building additional storage units at Savannah River as
well as the impacts of transporting the fuel to and storing it at
Hanford, Washington; the Idaho National Engineering Laboratory; and
other locations.  According to DOE officials, the remaining spent HEU
fuel and some spent LEU fuel cannot be taken back before the
completion of an environmental impact statement. 

Although DOE officials had previously surveyed the foreign research
reactors to determine their near-term spent fuel storage needs, a
U.S.  delegation visited the 11 research reactors in Europe and
Australia in January 1994.  These site visits, conducted by
representatives from DOE and the State Department, provided them with
first-hand observations of the reactors' spent fuel storage
situation.  In addition, the U.S.  delegation discussed all feasible
alternatives to returning spent fuel to the United States before
December 1995. 

As a result of these site visits, DOE officials have determined that
359 spent fuel elements from nine European reactors need to be
returned to the United States in the near term to ensure that the
reactor operators that have the option to reprocess are not forced to
exercise that option--a position consistent with U.S. 
nonproliferation policy.  This figure of 359 spent fuel elements is
significantly less than the amount obtained in the earlier survey, in
which the 11 reactor operators requested that DOE accept 970 spent
fuel elements.  The transport of 359 spent fuel elements would
require a total of 16 casks.  The capacity of those same 16 casks is
448 spent fuel elements.  Accordingly, DOE proposes to allow each
reactor to transport full rather than partially full casks. 
Therefore, in fact, DOE plans to accept 448 fuel elements in order to
utilize the full capacity of those casks. 

Figure 1 shows the 33 countries that have research reactors eligible
to send back spent HEU fuel elements under a renewed fuels policy and
highlights the 8 countries with reactors that DOE has determined will
face storage crises by January 1996.  (See app.  IV for additional
information on the crisis situations at these reactors.) The majority
of spent HEU fuel elements of U.S.  origin are in the EURATOM
countries, Japan, and Canada. 

 

   Figure 1:  Foreign Distribution
   of HEU Fuel of U.S.  Origin for
   Research Reactors

   (See figure in printed
   edition.)

   .

   (See figure in printed
   edition.)

If the environmental impact statement is successfully completed and
all outstanding issues are addressed, DOE can then renew the fuels
policy and accept all of the remaining spent HEU fuel from the
foreign research and test reactors as well as the LEU fuel from the
participants in the reduced enrichment program.  Reactor operators
would then be permitted by DOE to return LEU fuel for 10 years
following their first order of LEU fuel for conversion.  However, DOE
would require the reactor operators to place LEU orders within 5
years of the renewal of the fuels policy in order to qualify for this
return.  According to DOE officials, the existing storage space at
Savannah River can accommodate about 2,350 of the approximately
15,000 fuel elements that may be eligible for return.  DOE officials
plan to store the remaining waste in dry storage facilities. 

DOE officials expect that the environmental impact statement required
to reinstate the fuels policy will be issued in June 1995, but this
date assumes that the supporting studies will reveal no significant
environmental impacts requiring a change in DOE's transport or
storage plans.  The return of some of the spent fuel will also depend
on the readiness of dry storage.  One expert told us that,
realistically, construction of new storage facilities will take 2
years or more to complete.  DOE officials told us that storage
conditions for some of the reactors needing to ship fuel in early
1996 might be strained because of this time frame.  However, these
officials are considering options to provide an additional 1,000
spaces in existing storage in the event that the dry storage
facilities are not ready by that time. 

If the fuels policy is renewed, the amount of spent fuel eligible for
return would be minimal compared to the quantity of spent fuel
already stored in the United States.  DOE has estimated that the
amount of nuclear waste for permanent disposal will total around
96,000 metric tons by the year 2020.  This figure includes waste
generated at commercial U.S.  nuclear power plants as well as waste
produced at DOE's nuclear facilities.  In comparison, under the
proposed plan, DOE will take back 15,000 spent fuel elements from 130
research reactors in 42 countries--about 75 metric tons.\3 The
75-metric-ton figure includes about 2 metric tons that will be
eligible for return in the near term under an approved environmental
assessment for storage at the Savannah River Site and about 73 metric
tons that will be eligible when the more complex environmental impact
statement is satisfactorily completed. 


--------------------
\3 These figures are useful for comparison only.  DOE officials
caution that spent fuel elements vary in size and weight; the average
spent fuel element weighs about 5 kilograms.  We have estimated that
15,000 fuel elements equal about 75 metric tons. 


   PRICE CHARGED TO RETURN FUEL
   WILL INFLUENCE REACTOR
   OPERATORS' CHOICE OF OPTIONS
------------------------------------------------------------ Letter :5

If the fuels policy is renewed, DOE officials plan to charge the
operators of foreign research reactors for accepting the spent fuel,
storing it, preparing it for disposal, and disposing of it
permanently in a U.S.  repository.  DOE officials told us that
although they are considering a price that would cover DOE's full
costs of taking back the spent fuel, no final decision on price has
been made.  One exception to full cost recovery is DOE's price to
developing countries; they will be reimbursed for the costs of
shipping their spent fuel and will not be charged for storage and
permanent disposal.  As of March 1994, DOE officials had not
completed work on estimates of full cost recovery, but a preliminary
analysis estimates the present value of the cost at about $3,500 per
kilogram. 

These DOE figures differ substantially from charges levied before the
Off-Site Fuels Policy lapsed.  In the past, DOE officials charged
reactor operators $1,000 per kilogram to accept the spent fuel and,
in addition, gave the operators credits toward purchasing fresh HEU
fuel.  DOE officials note that the policy offered the reactor
operators a lower cost and simpler solution for managing the research
reactors' spent fuel than was otherwise available, and it was seen by
the operators as an essential quid pro quo for incurring the
substantial technical and financial expenses of converting to LEU
fuel.  However, at that time the United States had an active
reprocessing program as a part of its weapons complex, and the costs
for reprocessing incremental amounts of spent fuel from research
reactors were minimal. 

If DOE's charges for taking back the spent fuel are so costly that
the research reactors cannot afford to pay them, the operators told
us that they would look for alternative solutions.  Yet few options
are currently available to the operators of foreign research
reactors.  For instance, while one option is reprocessing at AEA
Technology, in some countries reprocessing research reactor fuel is
against national policies or politically unpopular, and reactor
operators are prohibited from shipping fuel elements for
reprocessing.  Several reactor operators are considering the option
to construct dry storage facilities, and at least one has already
begun storing spent HEU fuel in this way.  However, the political
unpopularity of any nuclear installation in some countries makes
reactor operators reluctant to apply for a license to expand their
existing storage facilities, for fear of the negative publicity that
could result in shutting down a reactor. 


   CONCLUSIONS
------------------------------------------------------------ Letter :6

By renewing the Off-Site Fuels Policy, DOE officials can encourage
the continued success of the reduced enrichment program by (1)
offering the reactor operators an alternative to either reprocessing
the spent fuel or storing it for the long term at the reactor sites
and (2) providing them with additional time to develop their own
plans for future permanent disposal.  In the near term, accepting a
minimal number of spent fuel elements will enable nine foreign
research reactors to continue operating without reprocessing spent
fuel of U.S.  origin. 

The acceptance of the fuel in the near term and the ultimate renewal
of the fuels policy suggest that U.S.  officials are concerned with
maintaining consistency in U.S.  nonproliferation policy.  As a
result, in the forthcoming Nuclear Nonproliferation Treaty conference
and other future negotiations with the affected countries, especially
EURATOM members, the United States may be in a stronger position by
demonstrating this consistency. 

The price of accepting spent fuel from the operators of foreign
research reactors will partly determine the success of the fuels
policy.  DOE officials have not yet decided if they will try to
recover full costs from the charges levied on reactor operators to
accept spent fuel or if they will accept a partial recovery in order
to take back as much spent fuel as possible.  However, if renewing
the fuels policy is intended to support the U.S.  nonproliferation
goals, the price should be affordable to the reactor operators and
not encourage them to turn to other solutions that may be
inconsistent with the U.S.  nonproliferation policy. 


   RECOMMENDATIONS TO THE
   SECRETARY OF ENERGY
------------------------------------------------------------ Letter :7

To ensure that operators of foreign research reactors are not forced
to reprocess spent fuel of U.S.  origin or shut down reactors as a
result of the lapse of the Off-Site Fuels Policy, we recommend that
the Secretary of Energy accept the minimum amount of spent fuel from
the foreign research reactors that DOE has determined will constitute
storage crises in the near term. 

To minimize the civilian use and commerce of highly enriched uranium,
we recommend that the Secretary of Energy take immediate action to
complete all environmental requirements to renew the Off-Site Fuels
Policy and begin accepting the spent fuel within a time period that
circumvents future crisis situations. 

To secure the return of the maximum amount of spent highly enriched
uranium fuel, we recommend that the Secretary assess the operators of
foreign research reactors a charge for returned spent fuel that
balances the need to minimize the cost burden on the United States
with the reactor operators' need for a reasonable, affordable charge. 


   AGENCY COMMENTS
------------------------------------------------------------ Letter :8

We discussed the facts presented in this report with the State
Department's Director, Nuclear Energy Affairs, Bureau of
Politico-Military Affairs; the Acting Director, Office of Nuclear
Export Controls, Bureau of Politico-Military Affairs; DOE's Acting
Director, Program Management Division, Spent Fuels Management and
Special Projects; and the Director, Project Activities, Environmental
Safety and Health Division.  In general, these officials agreed with
the facts presented and gave us additional clarifying information. 
We revised the text, as appropriate.  However, as requested, we did
not obtain written agency comments on a draft of this report. 


   SCOPE AND METHODOLOGY
------------------------------------------------------------ Letter :9

To address our objectives, we interviewed officials and reviewed
documentation from DOE and the Departments of State and
Transportation, the Nuclear Regulatory Commission, the U.S.  Coast
Guard, the Council on Environmental Quality, and Sandia National
Laboratory.  We met with EURATOM Safeguards and Supply Agency
officials in Luxembourg City, Luxembourg, and Brussels, Belgium, to
obtain their views on the lapse of the Off-Site Fuels Policy and its
effect on the negotiations for the U.S.-EURATOM agreement. 

To better understand the effects of the fuels policy lapse on
research reactors, at a meeting in Washington, D.C., we interviewed
representatives from seven foreign research reactors directly
affected by the status of the fuels policy and discussed their
various waste management options.  We also met with officials of the
Petten Research Reactor and the Mol BR2 Research Reactor in Petten,
the Netherlands, and Brussels, Belgium, respectively.  In addition,
we interviewed representatives of the AEA Technology reprocessing
plant in Dounreay, Scotland, to discuss reprocessing options for
research reactor operators. 

We performed our review between August 1993 and February 1994, in
accordance with generally accepted government auditing standards. 


---------------------------------------------------------- Letter :9.1

As agreed with your offices, unless you publicly announce its
contents earlier, we plan no further distribution of this report
until 30 days from the date of this letter.  At that time, we will
send copies of the report to appropriate congressional committees;
the Secretaries of Defense, Energy, and State; and the Chairman,
Nuclear Regulatory Commission.  We will make copies available to
others upon request. 

This report was prepared under the direction of Victor S.  Rezendes,
Director, Energy and Science Issues, who may be reached at (202)
512-3841.  Other major contributors to this report are listed in
appendix V. 

Keith O.  Fultz
Assistant Comptroller General


STATUS OF FOREIGN RESEARCH AND
TEST REACTORS' CONVERSION TO LEU
FUEL, AS OF JANUARY 1994
=========================================================== Appendix I



                                    Table I.1
                     
                     Conversion Status of Reactors with Power
                       Equal to or Greater than 1 Megawatt

                            Kilograms
                                   of     Begin
Rea              Power in    uranium-       LEU
cto              megawatt     235 per  conversi     End LEU
r    Country            s        year        on  conversion  Comment
---  ----------  --------  ----------  --------  ----------  -------------------
Reactors fully converted
--------------------------------------------------------------------------------
RA-  Argentina        2.8         2.0      1990        1990  Fully converted
3

AST  Austria          8.0         1.8      1983        1990  Fully converted
RA

NRU  Canada         125.0        65.2      1992        1993  Fully converted

DR-  Denmark         10.0         7.5      1988        1990  Fully converted
3

OSI  France          70.0        44.3      1979        1979  Fully converted
RIS

FRG  Germany          5.0         2.3      1991        1991  Fully converted
-1

NRC  Iran             5.0         0.0      1991        1991  Fully converted
RR

JMT  Japan           50.0        34.5      1993        1994  Fully converted
R

PAR  Pakistan         5.0         0.6      1991        1991  Fully converted\a
R

PRR  Philippine       1.0         0.4      1987        1987  Fully converted
-1   s

R2   Sweden          50.0        27.0      1990        1993  Fully converted

THO  Taiwan           1.0         0.0      1978        1987  Fully converted
R

================================================================================
Tot                 332.8       185.6
al


Reactors partially converted
--------------------------------------------------------------------------------
IEA  Brazil           2.0         1.0      1981     1995 or  Partially converted
-                                                     later
R1

TRI  Romania         14.0        11.0      1992     1995 or  Partially converted
GA                                                    later

SAP  Switzerlan      10.0         5.6      1986        1996  About 50 percent
HIR  d                                                       converted

================================================================================
Tot                  26.0        17.6
al


Reactors that have ordered LEU fuel elements for conversion
--------------------------------------------------------------------------------
GRR  Greece           5.0         2.7      1994     1997 or  LEU fuel ordered
-1                                                    later

HOR  Netherland       2.0         1.7      1994     1997 or  LEU fuel ordered
     s                                                later

TR-  Turkey           5.0         1.5      1994     1997 or  LEU fuel ordered
2                                                     later

================================================================================
Tot                  12.0         5.9
al


Reactors now irradiating or which have irradiated LEU prototypes
--------------------------------------------------------------------------------
MNR  Canada           5.0        1.91   1995 or     1995 or  Conversion feasible
                                          later       later

SIL  France          35.0        22.5   1995 or     1995 or  Conversion planned
OE                                        later       later

FRJ  Germany         23.0        17.9   1995 or     1995 or  Conversion planned
-2                                        later       later

KUR  Japan            5.0         2.1   1998 or     1998 or  Conversion planned
                                          later       later

JRR  Japan            3.5         0.9      1996        1996  Conversion planned
-4

HFR  Netherland      45.0        35.6                        Conversion feasible
Pet  s
ten

================================================================================
Tot                 116.5        80.9
al


Reactors planning conversion
--------------------------------------------------------------------------------
Lo   Chile           10.0         0.0   1995 or     1995 or  Conversion planned.
Agu                                       later       later  All HEU is of
irr                                                          French origin\a
e

La   Chile            5.0         1.0   1995 or     1995 or  Conversion planned.
Rei                                       later       later  Half of HEU used
na                                                           originated in the
                                                             United Kingdom\a

BER  Germany         10.0         4.8                        Conversion planned
-2

================================================================================
Tot                  25.0         5.8
al


Reactors that can be converted
--------------------------------------------------------------------------------
HIF  Australia       10.0         7.5                        Conversion
AR                                                           feasible. Half of
                                                             HEU fuel supplied
                                                             by United Kingdom

FMR  Germany          1.0         1.0                        Conversion feasible
B

FRM  Germany          4.0         2.6                        Conversion feasible

IRR  Israel           5.0         0.0                        Conversion
-1                                                           feasible\a

TRI  Korea            2.0         1.0                        Conversion feasible
GA

TRI  Mexico           1.0         0.7                        Conversion feasible
GA

RPI  Portugal         1.0         0.9                        HEU core on hand
                                                             since 1974

SAF  S. Africa       20.0        11.7                        Uses own 60 percent
ARI                                                          enriched uranium,
                                                             with the exception
                                                             of 1 percent HEU of
                                                             U.S. origin

================================================================================
Tot                  44.0        25.4
al


Reactors that cannot be converted with current technology
--------------------------------------------------------------------------------
BR-  Belgium         80.0        27.0                        Suitable LEU fuel
2                                                            not available

RHF  France          57.0        51.0                        Suitable LEU fuel
                                                             not available

ORP  France          14.0        14.7                        Suitable LEU fuel
HEE                                                          not available

================================================================================
Tot                 151.0        92.7
al


Lifetime cores
--------------------------------------------------------------------------------
Sca  France          20.0         0.0                        Lifetime core
rab
ee

R2-  Sweden           1.0         0.0                        Lifetime core
0

================================================================================
Tot                  21.0         0.0
al


Reactors to be shut down
--------------------------------------------------------------------------------
JRR  Japan           10.0         9.9                        To be shut down in
-2                                                           1995

================================================================================
Tot                  10.0         9.9
al


Reactors shut down
--------------------------------------------------------------------------------
NRX  Canada          24.0         1.0                        Shut down in 1993

FRG  Germany         15.0        10.7                        Shut down in 1993
-2

HER  UK               5.0         3.0                        Shut down in 1990
ALD

DID  UK              25.5        11.3                        Shut down in 1990
O

PLU  UK              25.5        11.3                        Shut down in 1990
TO

================================================================================
Tot                  95.0        37.3
al
--------------------------------------------------------------------------------
\a The country in which this reactor is located is not a party to the
Treaty on the Non-Proliferation of Nuclear Weapons. 

Source:  GAO's analysis of data provided by Argonne National
Laboratories. 



                          Table I.2
           
           Conversion Status of Reactors With Power
                   of Less Than 1 Megawatt

                                                   Kilograms
                                                          of
                                        Power in    uranium-
                                        megawatt         235
Reactor                     Country            s  per year\a
--------------------------  ----------  --------  ----------
Reactors fully converted\b
------------------------------------------------------------

Reactors partially converted
------------------------------------------------------------
TRIGA                       Austria         0.25        ~0.0
TRIGA                       Slovenia        0.25        ~0.0

Reactors that have ordered LEU fuel elements for
conversion\b
------------------------------------------------------------

Reactors now irradiating LEU prototype elements\b
------------------------------------------------------------

Reactors planning conversion
------------------------------------------------------------
IAN-R1                      Columbia        0.03        ~0.0

Reactors that can be converted
------------------------------------------------------------
RA-6                        Argentina        0.5        ~0.0
MOATA                       Australia        0.1        ~0.0
SAR-GRAZ                    Austria         0.01        ~0.0
Slowpoke Toronto            Canada          0.02        ~0.0
Slowpoke Montreal           Canada          0.02        ~0.0
Slowpoke Halifax            Canada          0.02        ~0.0
Slowpoke Alberta            Canada          0.02        ~0.0
Slowpoke Saskatchewan       Canada          0.02        ~0.0
Ulyssee-Saclay              France           0.1        ~0.0
Ulyssee-Strasbourg          France           0.1        ~0.0
EOLE                        France          0.01        ~0.0
Silotte                     France           0.1        ~0.0
Apsara                      India            0.4        ~0.0
RB-3                        Italy           10.4        ~0.0
Slowpoke                    Jamaica         0.02        ~0.0
KUCA                        Japan           10.4        ~0.0
JMTRC                       Japan           10.5        ~0.0
UTR-10 Kinki                Japan           10.7        ~0.0
LFR                         Netherland      0.03        ~0.0
                             s
AGN-211 P                   Switzerlan     0.002        ~0.0
                             d
ZPRL                        Taiwan          0.01        ~0.0
SRRC-UTR                    United           0.3        ~0.0
                             Kingdom
Consort                     United           0.1        ~0.0
                             Kingdom
URR                         United           0.1        ~0.0
                             Kingdom
Nestor                      United          0.03        ~0.0
                             Kingdom
Jason                       United          0.01        ~0.0
                             Kingdom
Neptune                     United           0.0        ~0.0
                             Kingdom
Vulcan                      United           0.0        ~0.0
                             Kingdom

Reactors that cannot be converted with current technology\b
------------------------------------------------------------

Reactors to be shut down\b
------------------------------------------------------------

Reactors shut down
------------------------------------------------------------
BR-02                       Belgium       0.0005        ~0.0
PTR                         Canada          0.01        ~0.0
Slowpoke Ottawa             Canada          0.02        ~0.0
Slowpoke AECL (Kanata)      Canada          0.02        ~0.0
Tammuz-2                    Iraq             0.5        ~0.0
SMR                         Germany       0.0005        ~0.0
------------------------------------------------------------
\a Numbers expressed in the last column indicate that the average
amount of uranium-235 burned each year in these reactors is positive,
but rounds to zero. 

\b No reactors currently meet this criterion. 

Source:  GAO's analysis of data provided by Argonne National
Laboratories. 


LATE ACTION BY DOE FAILS TO
PREVENT BELGIUM'S BR2 REACTOR FROM
REPROCESSING HEU FUEL
========================================================== Appendix II

In an October 1992 letter, representatives of the Belgian BR2 reactor
notified then-Secretary of Energy Watkins that they believed that DOE
might be reneging on some of its obligations to them if it did not
renew the Off-Site Fuels Policy.  In addition, they noted that they
were considering reprocessing their spent fuel, if DOE did not
reaffirm its commitment to renew the policy and take action to do so. 

In a September 1993 letter, the Director General of the BR2 reactor
notified DOE officials that BR2 was experiencing an emergency
situation.  Licensing authorities had determined that the reactor
storage pool was overloaded and that the reactor would have to be
shut down if 144 spent fuel elements were not removed from the
storage pool by the end of the year so that repairs could be made to
the storage area.  In order to ensure the removal of these 144
elements, reactor officials entered into negotiations with AEA
Technology, part of the United Kingdom's Department of Trade and
Industry, to reprocess the fuel; shipments of spent fuel from Mol,
Belgium, to Dounreay, Scotland, were scheduled to take place during
the last quarter of 1993.  In the letter, the Director General also
told DOE officials that if a firm guarantee to take back the fuel
could be made by October 1, 1993, BR2 officials would be willing to
reconsider their decision to reprocess. 

DOE officials did not reply to the BR2 representatives' letter;
consequently, BR2 officials signed a contract with AEA Technology to
reprocess 144 fuel elements.  DOE officials told us they did not
respond to the letter because they were heavily committed to the
production of the draft environmental assessment when the letter was
received.  According to these officials, in order to accept a first
shipment of 144 spent fuel elements in 1993, DOE had to either
complete the environmental assessment in 1993 or invoke the emergency
provisions of the Council on Environmental Quality.  In invoking
these provisions, DOE had to identify to the Council an alternative
means of fulfilling the requirements of an environmental review. 
Subsequently, on October 26, 1993, following consultations with the
Council and other interested agencies, in order to prevent the
reprocessing of BR2's spent fuel, the Secretary of Energy approved
the implementation of the emergency provisions to allow DOE to accept
the first 144 spent fuel elements immediately. 

DOE officials agreed to pay up to $600,000 of BR2's contract
termination fees and established a price that was less than DOE's
full cost of taking back the spent fuel.  The lower price made the
return of the spent fuel affordable for the reactor officials. 
According to DOE officials, the BR2 officials rejected the offer
because of political pressure from British authorities to fulfill the
obligations of the reprocessing contract.  However, in a November
1993 letter to DOE officials, BR2's Director General explained that
because of upcoming inspection and maintenance activities imposed by
the Belgian safety authorities and because of the continued operation
of the BR2 reactor, the spent fuel storage situation may again become
critical during the next 18 months.  He noted that at times one-third
to one-half of BR2's storage capacity will be lost because of the
successive unavailability of individual storage pool compartments
that are being inspected and repaired.  Finally, he stated that: 

     Politically, it is crucial and of utmost importance that a
     shipment of BR2 fuel to the United States effectively takes
     place in 1994.  If not, the credibility of the US DOE and our
     faith in US DOE's capability to effectively implement its
     policies might completely be lost, and the return of spent fuel
     of the BR2 [reactor] to the United States might no longer be
     considered a viable option by [BR2's] Board of Directors and by
     Belgian Authorities. 

In its February 1994 draft environmental assessment, DOE proposed the
acceptance of 48 spent fuel elements from BR2 officials to deter the
reprocessing of these elements.  BR2 officials had requested that DOE
accept 150 spent fuel elements. 

German Reactor Operator Had Previously Reprocessed Spent HEU Fuel

In a similar case, a German reactor shipped 132 fuel elements for
reprocessing at AEA Technology during October 1993.  The operator
noted that he no longer felt he could rely on the renewal of the
fuels policy.  Furthermore, German law stipulates that reactors may
not operate without a firm plan for the storage and disposal of spent
nuclear fuel.  In the past, operators of German reactors had
convinced the German licensing authorities that, on the basis of
DOE's past practices, the United States was committed to taking back
spent HEU fuel.  As the years passed and the fuels policy was not
renewed, according to the operators, they were forced to consider
alternatives for dealing with their spent fuel. 

In October 1993, the operator of the German reactor offered to DOE
for purchase 16 kilograms of HEU that will result from the
reprocessing of spent HEU fuel at AEA Technology.  Initially, DOE
officials responded that because of budget constraints, DOE was not
interested.  However, DOE officials are now reconsidering the
purchase. 


STATUS OF THE AGREEMENT FOR
COOPERATION BETWEEN THE UNITED
STATES OF AMERICA AND THE EUROPEAN
ATOMIC ENERGY COMMUNITY CONCERNING
PEACEFUL USES OF ATOMIC ENERGY
========================================================= Appendix III

Every year since 1980, the President of the United States has issued
an executive order implementing for successive 1-year periods a
provision of the Nuclear Nonproliferation Act of 1978 (NNPA) that
authorizes the continuation of peaceful nuclear cooperation with
EURATOM in the interests of nonproliferation and of the common
defense and security.  These annual executive orders waive the effect
of a statutory provision that would otherwise prohibit such exports
on the ground that the U.S.-EURATOM Agreement for Peaceful Nuclear
Cooperation does not afford the United States a consent right over
reprocessing nuclear material of U.S.  origin within the EURATOM
community. 

The NNPA, which amended the Atomic Energy Act of 1954, strengthens
U.S.  controls on the nonproliferation of nuclear weapons and
materials by establishing new procedures and criteria for nuclear
exports.  The NNPA amendments required compliance with new criteria
governing nuclear exports, including reprocessing restrictions, as a
condition of license approval by the Nuclear Regulatory Commission. 
The NNPA amendments addressed the conflict between the new prior
consent requirement for reprocessing and the absence of such a
consent right in the existing EURATOM agreement, by providing that
cooperation under the agreement would continue for 2 years without
compliance with the new criteria, so that the agreement could be
renegotiated and made consistent with new agreements that would be
negotiated under the NNPA. 

Continued cooperation with EURATOM after this 2-year period required
an annual executive order waiving the prior consent provision, after
a presidential determination that failure to cooperate would
seriously prejudice the achievement of nonproliferation objectives or
otherwise jeopardize the common defense and security. 

Although the NNPA authorizes the issuance of waivers indefinitely,
the legislative history of the amendments reveals that the committees
reporting the bills containing the waiver provision were concerned
whether such indefinite waivers were prudent.  In their joint report,
the Senate Committees on Governmental Affairs, Energy and Natural
Resources, and Foreign Relations stated: 

     .  .  .  it must be noted that the committees deem 24 months to
     be a realistic amount of time to reach agreement.  Hence, while
     there is provision for extensions, we hope that they will not
     become necessary. 

The House Committee on International Relations similarly stated in
its report: 

     Any undue prolongation of the exemption would set an unfortunate
     precedent and undermine the central aim of the bill, which is to
     assure that rational criteria are evenly and consistently
     applied. 

Despite these cautionary words, however, the United States has no
right under the EURATOM agreement to demand renegotiation, and the
original terms are still in effect.  The EURATOM agreement is
currently scheduled to expire in 1995, and negotiation talks on a new
agreement meeting all the requirements of U.S.  law are now
occurring. 

According to a State Department official, if a new agreement is not
concluded prior to the expiration date, significant nuclear commerce
between the two parties must be suspended.  In addition, other
agreements, such as the U.S.-Japan agreement, which depend upon the
existence of a U.S.-EURATOM agreement for implementation of some of
their provisions, may also be affected.  The State Department
official did not speculate on the prospects for concluding an
agreement. 


SELECTED ACCEPTANCE SCENARIOS FOR
SPENT HEU FUEL OF U.S.  ORIGIN
PRIOR TO COMPLETION OF
ENVIRONMENTAL IMPACT STATEMENT
========================================================== Appendix IV

                                       Minimum
                                     amount of
                                          fuel
                                  elements DOE
                                           has
                       Number of    determined
                      spent fuel       it must
                        elements  accept prior
                            that    to 1/96 to         DOE's
                        reactors         avert      proposed
                    asked DOE to  reprocessing   acceptance,
Name and location   accept prior    or reactor      based on
of facility            to 1/96\a      shutdown  full casks\b
------------------  ------------  ------------  ------------
BR2/Belgium                  150            48            72
HOR/Netherlands               33            20            33
HFR/Netherlands               66            24            33
DR-3/Denmark                  72            12            36
R-2/Sweden                    64            58            64
BER-2/Germany                105            52            52
FRG-1/Germany                132             0             0
SAPHIR/                      100          53\c            66
 Switzerland
ASTRA/Austria                 26            26            26
GRR-1/Greece                 108          66\d            66
HIFAR/Australia              114             0             0
============================================================
Total                        970           359           448
------------------------------------------------------------
\a These reactors indicated that they would face crisis situations,
such as forced shut down or reprocessing, if DOE did not take back at
least this amount of spent fuel by December 1995. 

\b According to DOE officials, the cost of shipping nuclear materials
is calculated by weight.  Because the shipping container weighs much
more than the fuel rods inside, it is economical to fill each
container to capacity. 

\c According to DOE, shipment of 33 spent fuel elements provides for
continued operations, but 53 resolves a safety concern. 

\d According to DOE, shipment of 40 spent fuel elements provides for
continued operations, but 66 resolves a safety concern. 


MAJOR CONTRIBUTORS TO THIS REPORT
=========================================================== Appendix V

RESOURCES, COMMUNITY, AND ECONOMIC
DEVELOPMENT DIVISION, WASHINGTON,
D.C. 

Jim Wells, Associate Director, Energy and Science Issues
Gene Aloise, Assistant Director
Patricia J.  Metz, Evaluator-in-Charge
Lauren V.  A.  Waters, Staff Evaluator

OFFICE OF THE GENERAL COUNSEL

Susan Irwin, Senior Attorney

