United States General Accounting Office

GAO Report to the Ranking Minority Member,

Committee on Commerce, House of

Representatives

June 1995 NUCLEAR SAFETY

U.S. Assistance to

Upgrade

Soviet-Designed

Nuclear Reactors in the

Czech Republic

GAO/RCED-95-157

GAO United States

General Accounting Office

Washington, D.C. 20548

Resources, Community, and

Economic Development Division

B-261096 

June 28, 1995

The Honorable John D. Dingell

Ranking Minority Member

Committee on Commerce

House of Representatives

Dear Mr. Dingell:

On March 10, 1994, the Export-Import Bank of the United States1

 approved

a decision to guarantee a loan of $317 million for the work performed by

Westinghouse Electric Corporation on the Temelin nuclear power plant in

the Czech Republic. The U.S. government’s strong support of the Bank’s

loan guarantee facilitated the first attempt to integrate Western technology

into a Soviet-designed VVER 1000 pressurized water reactor. U.S. officials

saw the opportunity to gain more than $330 million in U.S. exports and to

make the reactors safer, but the government of Austria, a neighbor of the

Czech Republic, and some Members of Congress expressed concern about

the safety of the Soviet-designed reactors and the extent of potential U.S.

liability in case of a nuclear accident.

To address concerns about the safety and potential liability of the project,

this report provides you with information on (1) the reasons for the

Export-Import Bank’s loan guarantee for the Temelin nuclear power plant;

(2) the actions the Export-Import Bank took to ensure the soundness of

the project, including the project’s safety; and (3) issues involving the U.S.

government’s potential liability as a result of the Export-Import Bank’s

loan guarantee.

Results in Brief U.S. government officials believe that Western technology can make the

Soviet-designed Temelin reactors safer as well as provide more than

$330 million in U.S. export earnings. As a result, U.S. officials strongly

supported U.S. industry’s participation in the Temelin project and worked

with Westinghouse and the Czech government to help bring about the

acceptance of a U.S. firm for the project. Furthermore, after the

Export-Import Bank had approved a preliminary commitment, the U.S.

Embassy assured Czech officials that if awarded the contract,

Westinghouse would have access to competitive financing through the

U.S. Export-Import Bank for the instrumentation and control systems and

1

The Export-Import Bank is the U.S. government agency that helps finance export sales of American

goods and services. In its 60 years of operation, the Bank has used loan, guarantee, and insurance

programs to support more than $290 billion in U.S. exports.

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B-261096 

the specially designed nuclear fuel developed for the Temelin reactors.

U.S. officials believe that without the U.S. government’s support,

Westinghouse would not have acquired the contract because competing

foreign bidders were supported by their governments.

To determine whether the project complied with the administration’s

policies—particularly U.S. environmental policy—and to draw on the

administration’s expertise, the Bank’s Chairman requested guidance from

the National Security Council, which conducted an interagency review of

the safety of the reactors’ design and of the technical capabilities of the

Czech regulatory authorities. The established process for an interagency

review of applications for financing nuclear exports did not apply because

the Temelin project was unique in that the proposed Westinghouse

contract covered only the reactors’ instrumentation and control system as

well as the initial nuclear fuel for the plant. The standard environmental

review procedures—as required of U.S. agencies to further the purposes of

the National Environmental Policy Act abroad2

—apply only to exports of a

complete nuclear production or utilization facility or a nuclear waste

management facility, not to the components of systems. The results of the

National Security Council’s review and the engineering and environmental

evaluation by the Bank’s nuclear engineer satisfied the Bank’s Board of

Directors, and the loan guarantee was approved. However, Bank officials

recognized the shortcomings inherent in the complicated and

unprecedented review of the Temelin project and are in the process of

drafting review procedures that incorporate expertise from other agencies

to address future exports of this type. At the time of our review, however,

these procedures had not been completed.

The Bank’s Office of the General Counsel examined the question of

whether the Bank, since it is guaranteeing a loan for equipment and

nuclear fuel to complete the reactors, could be held liable for damages in

the event of a nuclear incident at the Temelin plant. The Bank’s General

Counsel concluded that the chances are small that the Bank would be held

liable in any court for damages. This conclusion was based on an analysis

of the Vienna Convention on Civil Liability for Nuclear Damage, proposed

Czech law, the domestic law of the United States and other countries, and

international law. On the basis of the Bank’s analysis and supporting

documentation, we believe that the Bank’s decision is reasonable.

2

Executive Order 12114 entitled “Environmental Effects Abroad of Major Federal Actions” specifies

the actions to be taken by federal agencies to further the purposes of the National Environmental

Policy Act with respect to the environment outside of the United States, its territories and possessions.

The unified nuclear procedures are the implementing procedures for environmental reviews of nuclear

exports covered by the Executive Order.

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Background The Temelin nuclear power plant is located approximately 60 miles south

of Prague, the Czech capital, and less than 40 miles from the Austrian

border. A construction permit for four nuclear power reactors was issued

in 1986 under the Communist regime, and work on the site started in 1987.

In December 1989, after the Czechoslovakian “Velvet Revolution”, a new

government was appointed that was no longer dominated by the

Communist Party. Free parliamentary elections took place in 1990, and

new elections were held 2 years later. On January 1, 1993, the state of

Czechoslovakia was divided, creating the Czech and Slovak republics.

In March 1993, after a 2-month discussion on the fate of the Temelin

project, the Czech government passed Resolution No. 109, which allowed

the Czech electric utility, Ceske Energeticke Zavody Koncern (CEZ), to

complete two of the four planned Temelin reactors and to substantially

upgrade and improve the design and operational safety of the reactors.

Acting on recommendations from the International Atomic Energy Agency

(IAEA), a U.S. consulting firm, and others, Czech utility officials chose to

implement technological improvements to make the plants licensable in a

manner comparable to Western standards. Contract proposals were

accepted for both the Temelin nuclear fuel supply and the instrumentation

and control system. Bids were received from 11 foreign suppliers,

including the German firm Siemens, the French consortium Framatome,

and Asea Brown-Boveri of Germany. Following extensive negotiations,

Westinghouse Electric Corporation signed a contract with the Czech utility

in May 1993 to supply both items.

Controversy over the project heightened when members of the Austrian

government objected to the United States’ involvement in completing a

nuclear power plant so close to the Austrian border. Austria’s Director of

Nuclear Coordination and Nonproliferation told us that Austrians have a

basic consensus against nuclear power and that the Chernobyl reactor

accident had further strengthened this view. In February 1994, 1 month

before the Bank gave final approval for the loan guarantee, a delegation

representing the Austrian Chancellery came to the United States and met

with about 60 groups over a 3-week period. State Department officials

characterized the visit as an attempt by the Austrians to persuade U.S.

officials not to guarantee the loan. A member of the Austrian delegation

told us that the United States should give the Temelin reactors the same

scrutiny—such as administering an environmental impact statement with

public comment or providing a preliminary safety review—that it would if

the reactors were located in Cuba or Mexico. The delegation’s visit

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B-261096 

coincided with congressional hearings at which the issues of the Temelin

project’s nuclear safety and liability were discussed.

U.S. Government

Supports Bank Loan

Guarantee for Safety

and Commercial

Reasons

By supporting Westinghouse, U.S. officials promoted U.S. exports and

facilitated an opportunity for the American firm to participate in future

contracts to upgrade Soviet-designed reactors. U.S. officials believe that

upgrading the Temelin reactors with Western technology will make the

reactors safer and will comply with the shared goals of the Group of 7

(G-7)3

 countries to increase the safety of Soviet-designed reactors.

Furthermore, in completing the Temelin reactors, Westinghouse is

providing equipment and nuclear fuel designed to address the most

important of the technical concerns identified by IAEA and an independent

nuclear consulting firm. However, some Czech and Russian officials

disagree about whether or not Westinghouse has all the Russian design

information needed to develop these components.

U.S. Officials Gave Early

and Strong Support to Win

Temelin Contract for U.S.

Firm

U.S. officials strongly supported Westinghouse’s participation in the

Temelin project and worked with Westinghouse and the Czech

government to help bring about the acceptance of a U.S. firm for the

project. In supporting Westinghouse, U.S. officials saw the opportunity to

gain more than $330 million in U.S. export earnings and to strengthen U.S.

influence in important safety matters related to Soviet-designed reactors.

The Czech Minister of Industry and Trade and the Chairman of the Board

of the Czech utility told us that the successful completion of the Temelin

reactors could lead to future contracts for Westinghouse to upgrade other

Soviet-designed reactors throughout Eastern Europe. Because other

interested bidders, such as Germany’s Siemens Corporation and France’s

Framatome consortium, were strongly supported by their governments,

U.S. officials believe that without U.S. government support, Westinghouse

would not have acquired the contract.

In June 1991, Westinghouse submitted an application to the Export-Import

Bank for a preliminary commitment on a loan guarantee for its proposed

sale of an instrumentation and control system to be exported to the Czech

Republic. Westinghouse officials believed that the government’s financial

backing was necessary to attain the contract to supply this equipment for

use in the Temelin nuclear power plant. The Export-Import Bank approved

this preliminary commitment in September 1991. Earlier, in

3

The seven major industrialized countries that make up the G-7 are Canada, France, Germany, Italy,

Japan, the United Kingdom, and the United States.

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November 1990, Westinghouse had applied to the Nuclear Regulatory

Commission (NRC) for an export license for the instrumentation and

control system. According to Bank officials, requesting an export license

and arranging for financial support at this early stage are typical steps in

the international bidding process.

As early as October 1991, the U.S. Ambassador to the Czech Republic

assured Czech officials that if awarded the bid, Westinghouse would have

access to competitive financing for the project through the U.S.

Export-Import Bank. In February 1992, letters from the Departments of

State and Commerce to Czech officials further encouraged the selection of

Westinghouse to promote increased cooperation between Czech and U.S.

firms in nuclear energy and other industries. In March 1992, Westinghouse

followed up its earlier application to the Bank with a request for a

preliminary commitment on a loan guarantee for the initial supply of

nuclear fuel to Temelin. This preliminary commitment was approved in

July 1992. The Bank amended the preliminary commitments on both

requests in October 1992.

Temelin Project Attempts

to Integrate Western

Technology Into

Soviet-Designed VVER

1000 Reactors

In 1990, IAEA reviewed the Temelin plant’s design and between 1990 and

1993 sponsored a series of meetings of nuclear safety experts from

Western countries as well as Russia and Ukraine to review the design,

operational safety, and licensing aspects of VVER 1000 reactors. IAEA review

teams recommended modernizing VVER 1000 plants by using more

advanced Western technology to improve performance and safety. A 1991

audit by a U.S. consulting firm assessed the potential licensability of the

Temelin reactors in accordance with Western standards and concluded

that although Temelin could be licensable to Western standards, its

licensability could not be ensured unless the audit team’s technical and

programmatic recommendations were implemented. (For additional

information on the studies’ recommendations, see app. I.)

In late 1994, IAEA convened a meeting of consultants in Vienna, Austria, to

exchange information on the design modifications and safety

improvements being implemented at the Temelin plant. CEZ officials and

independent experts discussed how some of the concerns raised by the

U.S. consulting firm have been addressed. (For information on the results

of the meeting, see app. II.)

In July 1992, at the Munich Summit, the G-7 countries endorsed a nuclear

safety assistance program to address the problems of Soviet-designed

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B-261096 

reactors. U.S. experts concluded that the least safe Soviet-designed

reactors—the RBMKs and VVERs 440/230—should be shut down as soon as

is practicable but that the West should explore the feasibility of upgrading

the VVER 440/213 and VVER 1000 models to acceptable safety standards. The

VVER 1000 reactor has greatly improved safety features, including full

physical containment, emergency core cooling systems similar to those in

Western plants, and significant safety system redundancy. By completing

the newer models with safer Western technology, U.S. officials believe that

it is more likely that the older, less safe Soviet-designed models will be

taken out of service.

Disagreements Continue

on the Availability of

Russian Information

Needed to Complete

Temelin Reactors

Because the Temelin reactors were designed by engineers in the former

Soviet Union, some experts have questioned whether Westinghouse has

been able to obtain all the information it needs to adequately design the

instrumentation and control systems and nuclear fuel for the two reactors.

Both Westinghouse and CEZ officials told us that they had obtained all

needed information from the Russians. A Westinghouse official told us

that the company had received enough information from Russia, Bulgaria,

and Ukraine to adequately predict the behavior of the reactors and that

Westinghouse had purchased data from operating Soviet-designed plants.

Furthermore, Westinghouse officials developed safety analyses for the

Temelin plant incorporating plant data that they believe are sufficient to

indicate that safety acceptance criteria were met. (For information on

Westinghouse’s safety analyses of VVER 1000 reactors, see app. III.)

Concerning CEZ’s contract with the Russians, the utility’s officials told us

that they paid for the design information but were not permitted to

provide the information to a third party. Now they have approval from the

Russians to turn the data over to Westinghouse, and CEZ officials are

negotiating with Russian officials to obtain information on the VVER 1000

reactors. Westinghouse and the Russian Ministry of Atomic Power signed

an agreement for information exchange whereby Westinghouse paid the

Russians directly for information. According to CEZ officials, by the end of

1992, all requests for information from the Russians had been filled. These

same officials told us later that they met with the Russians in 1994 to

request additional documents but were not successful in obtaining all of

them.

CEZ officials told us that the Czechs have had substantial experience with

Soviet-designed reactors. Czech workers at the Temelin site include

personnel from the Czech Republic’s Dukovany nuclear power plant,

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which consists of four Soviet-designed VVER 440/213 reactors. The Czech

company, Energoprojekt, provided secondary design work for three other

Soviet-designed nuclear power plants located in the Czech Republic and

Slovakia, as well as for the Temelin plant. In addition, the officials noted

that six or seven Russian workers have remained on-site.

According to the Director of Administration for the Czech nuclear

regulatory authority, Russian officials were unhappy with the Czechs’

decision to purchase nuclear fuel from Westinghouse. He told us that

although Czech officials believe that the choice was a good one, they

regret the loss of cooperation with the Russians. He also explained that

the decision to integrate a Western instrumentation and control system

was based largely on an earlier experience when the Czechs tried to

acquire an advanced system from the Russians for two other

Soviet-designed reactors. The Russians were unable to supply the system,

and the Czechs had to obtain it from the Germans.

An official with a Russian firm that designs selected reactor parts and has

provided consulting services to the Czechs for the Temelin project told us

that the Russians were concerned that they were no longer participating in

the project, even though they were the original designers of the Temelin

reactors. Russian officials fear that if an accident occurred at the plant,

they would be blamed as the original designers. Furthermore, since

Russian involvement has been eliminated, they cannot ensure that the

original design integrity has been maintained. He also told us that the

Russian consultants onsite were not involved in day-to-day decisions and

do not have the freedom or responsibility to get help from other Russian

specialists on questions for which the consultants may not have expertise.

The Export-Import

Bank’s Review

Process for the

Temelin Loan

Guarantee

Because the proposed exports for the Temelin nuclear power plant did not

constitute the entire nuclear reactor or nuclear steam supply system, the

unified procedures established for the interagency review of projects were

not triggered. Historically, U.S. suppliers had exported complete nuclear

power reactors or nuclear steam supply systems for new plants, but the

Temelin project was unique in that the scope of the proposed

Westinghouse contract covered only the reactors’ instrumentation and

control system as well as the initial nuclear fuel for the plant. As a result,

the Bank used its standard internal procedure to review the environmental

and safety effects of the project. (For information on the Bank’s standard

review process, see app. IV.)

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During the review of the Temelin application, the Bank had one engineer

who was a licensed nuclear engineer. He was assigned the responsibility

for the evaluation of the environmental and safety effects of the

application for the Temelin project. Evaluations of proposed

Export-Import Bank financing are based on the following five criteria:

(1) Is the project technically and commercially feasible? (2) Are the known

project participants qualified in their respective fields? (3) Is the capital

cost estimate for the project reasonable? (4) Is the schedule for

completion of the project realistic? (5) Are the environmental effects of

the project acceptable? In addition, for the review of nuclear power

transactions, the engineer evaluates safety issues associated with the

nuclear project, including the competence and structure of the nuclear

regulatory body of the involved country. The engineer requests NRC’s

assistance in the evaluation of the nuclear regulatory body.

In nuclear applications for which the proposed scope of supply by a U.S.

firm includes the complete nuclear steam supply system, the State

Department will typically arrange for the preparation of an environmental

document, which includes a review of the significant environmental

effects of the proposed project. However, in the Temelin case, because the

proposed export did not encompass the complete nuclear steam supply

system, State Department officials determined that the unified procedures

applicable to nuclear exports did not apply. Bank officials realized that the

evaluation of the project’s environmental and safety issues would have to

be undertaken internally and began collecting information sufficient to

conduct the evaluation to provide the Board of Directors with the

information necessary to make a decision on whether or not to provide

financial support for the project. To provide such support, the Board of

Directors had to find reasonable assurance of repayment and had to be

confident that the project was environmentally sound. (For information on

how Czech officials are addressing some environmental concerns, see app.

V.)

From March 1993 to June 1994, the Bank’s nuclear engineer spent the

majority of his working hours reviewing the Temelin project, according to

the Bank’s records. His work represented the largest portion of the Bank’s

efforts to determine that the project was technically feasible and to assess

technical, including safety and environmental, risks. According to other

Bank officials we spoke with, the large amount of research and review

time spent on the Temelin evaluation was unprecedented compared to

other projects financed by the Bank. For example, Bank officials said that

during fiscal year 1994, the Bank received 650 applications that had to be

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addressed by its five engineers. Because of the high ratio of applications to

staff, the amount of time devoted to each application is limited.

In reviewing the Temelin project, the Bank’s nuclear engineer met with

officials from the Department of Energy (DOE) and NRC to determine the

safety of the VVER 1000 reactors and the adequacy of the Czech regulators

as an independent regulatory agency, respectively. He consulted IAEA’s

Assistant Director General for Nuclear Safety to learn more about

Soviet-designed reactors, reviewed the study of the Temelin reactors made

by the Czech utility’s consultant, and discussed the findings with the

consultant’s audit team. The engineer relied heavily on this study as well

as on DOE’s study of VVER reactors for his analysis of the reactors’ safety

and then met with Czech officials to discuss what was being done to

correct the problems identified.

In July 1993, before the final commitment application was received, the

Bank’s nuclear engineer visited the Czech Republic for a week, including

1-1/2 days at the Temelin site. He was not accompanied by any other

nuclear experts or Bank officials. According to the engineer, he walked

though the plant and talked to the workers about what they were doing to

ensure the safety of the plant. He was impressed by the plant’s

“housekeeping” and told us that if a plant is neat and well kept, it looks as

though people know what they are doing and indicates quality

workmanship. He also visited the Czech manufacturing plant to assess the

quality of the Temelin reactor vessel. He also met with Czech regulators to

assess their regulatory abilities and to confirm NRC’s assessment of the

agency.

On March 10, 1994, the Export-Import Bank’s Board of Directors

authorized final commitments for the Bank’s guarantees of private loans to

be made to the Czech utility and provided by a group led by Citibank

International. Repayment of the loans supporting the sale of the

Westinghouse equipment and nuclear fuel was to be guaranteed by the

government of the Czech Republic.

The National Security

Council Conducted an

Interagency Technical

Review of the Temelin

Reactors

To determine whether the Temelin nuclear power project met with the

administration’s policies, particularly U.S. environmental policy, and to

garner governmentwide expertise, the Bank’s Chairman requested that the

National Security Council conduct an interagency review of the reactors’

design and the capabilities of the Czech regulatory authorities. According

to Bank officials, they knew that other agencies in the U.S. government

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possessed more information about the VVER 1000 reactors and in May 1993,

asked the National Security Council to coordinate the agencies’ responses.

The Bank asked for the best information and for the opinion of the

National Security Council on how the Temelin project conforms with the

G-7’s policy. Bank officials did not ask for a complete technical analysis,

but they wanted to determine whether any other agency had problems

with the project.

On September 29, 1993, the National Security Council submitted to the

Bank a memorandum that contained guidance supporting U.S.

involvement in the Temelin upgrade. The memorandum stated that DOE

and IAEA had concluded that the VVER 1000 design can be improved to meet

a level of safety acceptable to Western countries. It also said, according to

NRC, that the Czech Republic’s nuclear regulatory body meets the criteria

for regulatory competence that are currently under consideration at IAEA.

The National Security Council included an interagency technical paper

presenting the administration’s current body of knowledge about the

design of the VVER 1000 reactor being used at the Temelin site and the

technical capabilities of the Czech regulatory authorities.

In discussions with DOE officials, we were told that DOE’s judgment on the

Temelin project was based on years of experience dealing with

Soviet-designed nuclear power plants. According to DOE officials, they are

very familiar with the plants’ generic design strengths and weaknesses and

relied on IAEA’s reports on Temelin in forming their views. DOE’s

then-Director of the International Program Division said that he had

visited a number of Soviet-designed reactors but that neither he nor his

staff visited Temelin during the review process.

To ensure that the Czech nuclear regulatory authority could perform the

required studies to license the Westinghouse hardware, NRC contracted

with the Idaho National Engineering Laboratory to provide 2-1/2 years of

training to the Czech regulators. NRC officials estimate that the training will

cost approximately $1.5 million to $1.6 million. Funding for the training is

being provided by the U.S. Agency for International Development under its

regional energy efficiency project. (For additional information on NRC’s

training for Czech regulators, see app. VI.)

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Absence of Procedures

Spurs Debate Over Review

Process for Future Nuclear

Exports

As a result of the controversy over the Temelin project, Bank officials told

us that they paid a high price for guaranteeing the loan. Specifically, the

Bank’s General Counsel told us that responding to the many requests for

information was quite costly in terms of the staff time needed to gather

and reproduce documents. It was also the first time that an adjoining

country, Austria, had objected to the Bank’s involvement in a project and

also quite unusual for the Bank’s Chairman to request that the National

Security Council get involved in a project. Bank officials told us that they

wanted to ensure to the greatest extent possible that the Temelin loan

guarantee review would stand up to public scrutiny. The National Security

Council’s review provided additional assurance of credibility and

accountability.

During the review process, Bank officials had occasional difficulties in

acquiring the information needed for a review of Temelin. Internal

memorandums among Bank officials involved in the Temelin review

expressed concern about the difficulties in obtaining information pertinent

to the review. One official noted that

[I]t is absolutely unacceptable to have a situation where we don’t get a document or are not

otherwise informed of something because we didn’t ask exactly the “right” question in the

“right” way. We are to be treated as full partners in this operation with direct access to

everything we need to know in order that the Board can reach a final decision based on all

the facts. As far as I’m concerned, this message should be communicated directly to CEZ,

the Czech Embassy, State Dept. and U.S. Embassy Prague, NSC [National Security Council],

NRC, and all of the various law firms and PR [public relations] firms now engaged in this

undertaking. They must be fully apprised of the gravity of this request.

Memorandums also revealed that the Bank’s General Counsel believed

that the unified nuclear procedures directing environmental assessments

of nuclear exports should be amended so that they apply to the export of

major parts of nuclear power plants, such as instrumentation and control

systems. If projects like Temelin were placed under the unified nuclear

procedures, the issue would be addressed by the federal agencies with

expertise in nuclear matters. Officials from DOE, NRC, and the State

Department disagreed with this proposal, which they saw as “poorly

conceived and unnecessary” and which would not “affect the basic

decision on whether the foreign project would go forward.”

Another Bank official continued, noting that

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I am not persuaded by State’s counterarguments. The fact that there will be many more

nuclear power upgrades in the future supports the need for environmental review. To the

extent that the work done on Temelin is applicable to future upgrades, then it can be

turned into a “generic assessment” which will reduce the workload in future upgrade

transactions. It’s not that we want a higher comfort level than we have received on

Temelin. Although we are not dissatisfied with the amount of support we ultimately

received from other agencies to assist us in reviewing Temelin, we think that there should

be an established process for conducting such reviews. In Temelin, there was no procedure

and we had to exert a lot of effort to push the other agencies to deal with the issue.

A May 1994 State Department cable quotes an NRC official as saying that

extensive U.S. government efforts were needed to persuade the

Export-Import Bank Board to hold fast to its earlier commitment to

provide the necessary loan guarantees in the face of concerted efforts by

antinuclear groups, requests for information pertaining to the Temelin

project filed by opposition groups under the Freedom of Information Act,

and the decision of NRC’s Chairman to recuse himself from voting on the

export license because of his well-known pro-Temelin views. Earlier, in a

draft letter to the Vice President of the United States dated November 17,

1993, to be signed by officials from DOE, NRC, and the State Department, it

was noted that “efforts to upgrade Soviet-designed nuclear reactors could

be undermined by . . . the protracted and increasingly sterile review of

Export-Import Bank financing guarantees . . . for the Temelin nuclear

power plant.” In addition, the draft letter refers to “informal indications

that the Export-Import Bank may not be satisfied with the approach taken

by the Executive Branch in Temelin, and may seek a different approach

for future nuclear-related cases.”

Bank Officials Draft New

Environmental and Safety

Procedures for Nuclear

Exports

In March 1995, Bank officials told us that the Bank is in the process of

drafting procedures to address nuclear safety and environmental concerns

for nuclear exports that do not fall under the State Department’s unified

nuclear procedures. The draft procedures are currently undergoing

internal review, and Bank officials expect the new procedures to be

completed by early fall 1995.

Bank officials expect that these procedures will facilitate the review

process by alerting applicants of information requirements and

establishing a list of elements that will be evaluated against proposed

guidelines. The Bank’s procedures will apply to all categories of eligible

nuclear exports. In cases where the unified procedures apply, the Bank’s

procedures will incorporate the environmental review conducted under

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the unified procedures. Thus, the Bank’s procedures will not substitute for

the unified procedures.

The Bank’s General Counsel told us that she no longer views the unified

procedures as the best way of addressing environmental concerns for the

components of nuclear power plants. According to Bank officials, the

Bank’s procedures are more flexible and allow the Bank’s engineers to

focus on those environmental and safety issues most relevant to specific

exports. Although these procedures are internal to the Bank, Bank

officials feel confident that other agencies will be responsive to their

requests for information and believe that the Bank is now seen as an

important player in facilitating nuclear reactor upgrades abroad.

According to Bank officials, pending bids by U.S. suppliers to upgrade

reactors in China, Hungary, and the former Soviet Union may require Bank

financing.

Export-Import Bank

Satisfied That Risk of

Legal Liability for Any

Damage Caused by

Temelin Plant Is

Remote

According to the Bank’s General Counsel, Bank officials have carefully

examined the question of whether the Bank could be held liable for

damages in the event of a nuclear incident at the Temelin facility. (See

app. VII for a photograph of the Temelin power plant.) On the basis of an

analysis of the Vienna Convention on Civil Liability for Nuclear Damage,

proposed Czech law, the domestic law of the United States and other

countries, and international law, the Bank’s Office of the General Counsel

concluded that the chances are very small that the Bank would be held

liable in any court for such damages.

Czech and International

Law Support Operator’s

Liability in Case of Nuclear

Accident

The Vienna Convention is an international treaty that channels exclusive

liability for nuclear damage to the operator of the nuclear facility that

caused the damage. Before the Bank’s Board of Directors considered the

Temelin case for referral to the Congress on January 27, 1994, the Czech

government had adopted a resolution supporting adherence by the Czech

Republic to the Vienna Convention and had submitted the appropriate

legislation to the Czech Parliament. As recommended by the Bank’s staff,

the Board of Directors adopted a special condition that the Bank’s legally

binding guarantee would not be furnished until after the Czech Parliament

consented to the Czech Republic’s adherence to the Vienna Convention.

This condition was subsequently satisfied when the Czech Parliament

voted unanimously on February 15, 1994, to ratify the Vienna Convention.

Page 13 GAO/RCED-95-157 Temelin Nuclear Reactor
B-261096 

On March 24, 1994, the instruments of ratification were duly deposited

with IAEA in Vienna, and after a 3-month period set forth in article

XXIV(3) of the Vienna Convention, the Czech Republic became a party to

the Convention. Accordingly, the Czech Republic has committed itself to

impose liability for any nuclear incident at the Temelin facility exclusively

on the operator of the facility.

As a signatory to the Vienna Convention, the Czech Republic is obligated

to adopt appropriate implementing legislation. In a letter dated March 3,

1994, Prime Minister Vaclav Klaus assured the Bank’s Chairman that the

Czech government will use its best efforts to ensure prompt passage of

such implementing legislation. This legislation is now being prepared. The

principles of the law were considered by the appropriate ministries of the

Czech government in early 1995. Recently, the principles have been

submitted for approval to the Czech Cabinet. Once approved the principles

will serve as a basis for the final language of the law, which should be

passed by the Parliament by the end of 1995. The Czech government

expects that the law will be in force before the scheduled completion of

the Temelin facility. Even in the absence of implementing legislation, any

attempt by the Czech Republic to impose liability on a party other than the

nuclear facility’s operator would be inconsistent with the country’s treaty

obligations.

Subsequent to the Bank’s approval of the Temelin guarantee, CEZ and the

Czech government agreed in principle to indemnify the Bank and the

commercial lenders for an amount governed by the Vienna Convention for

any losses relating to or arising out of design, manufacture, use, or

operation of the Westinghouse products or of the Temelin facility as a

whole. The Czech utility and the Czech government have also agreed that

in the event that the Czech Republic withdraws from the Vienna

Convention or repeals the domestic law implementing the Vienna

Convention, the Export-Import Bank and the commercial banks will have

the right to accelerate the loan and require immediate repayment of all

outstanding amounts.

As a practical matter, Westinghouse has assured the Bank that if the Czech

Republic does not adopt national legislation implementing the principles

of the Vienna Convention, it has no intention of making nuclear fuel

shipments under the supply contracts that would allow the Temelin plant

to be operated. Westinghouse has reserved the contractual right to

withhold such shipments in order to protect its own interests.

Page 14 GAO/RCED-95-157 Temelin Nuclear Reactor
B-261096 

Conclusions Export-Import Bank officials believe that the loan review process must be

facilitated if future nuclear exports like the Temelin project are to be

financed, especially since the Bank may be asked to finance reactor

upgrades in China, Hungary, and countries of the former Soviet Union in

the near future. In reviewing the Temelin project, Bank officials were

responsible for addressing environmental issues because the established

procedures requiring State Department review did not apply to the exports

proposed by Westinghouse. Although Bank officials received guidance

from the National Security Council and other U.S. agencies, they had

occasional difficulty in obtaining some information pertinent to the

Temelin project. At the same time, Bank officials had to respond to the

concerns of environmental groups, the Austrian government, and some

Members of Congress that the Bank’s review was not sufficient to

determine the environmental and safety impacts of the Temelin project.

Our analysis found that the actions taken by Bank officials in reviewing

the Temelin project appear reasonable, and we believe that new

procedures addressing exports of nuclear reactor parts may facilitate

future transactions.

The Export-Import Bank’s Office of the General Counsel has assured its

Board of Directors that the risk of legal liability for any damage caused by

the Temelin plant is remote. On the basis of an analysis of the Vienna

Convention, proposed Czech law, the domestic law of the United States

and other countries, and international law, the Bank concluded that the

chances are very small that it would be held liable in any court for such

damages. On the basis of the Bank’s analysis and supporting

documentation, we believe that the Bank’s decision is reasonable.

Agency Comments We provided a draft of this report to the Export-Import Bank for its review

and comments. On May 31, 1995, we met with Export-Import Bank

officials, including the Bank’s General Counsel, to discuss the Bank’s

comments. In general, Bank officials agreed with the facts and analysis

presented. They gave us additional clarifying information, and we revised

the text as appropriate. Representatives of the State Department, including

the Deputy Office Director, Office of the Senior Coordinator for Nuclear

Safety; NRC, including the Senior Program Manager, Office of International

Programs; and DOE, including the Director of the Office of Nuclear Energy,

also reviewed a copy of the draft report and gave us clarifying information,

and we revised the text as appropriate. In addition, representatives of the

Czech Republic’s Embassy in Washington, D.C., also reviewed a copy of

the draft report and suggested some technical revisions regarding the

Page 15 GAO/RCED-95-157 Temelin Nuclear Reactor
B-261096 

status of their proposed nuclear legislation. We made changes to the text

where appropriate.

Scope and

Methodology

To determine why the U.S. government supported the Bank’s loan

guarantee for the completion of the Temelin reactors, we interviewed

officials and reviewed documents from DOE, NRC, the National Security

Council, and the State Department. To determine what actions the Bank

took to ensure the soundness of the project, we interviewed officials from

the Bank, Westinghouse, and the engineering consulting firm that audited

the Temelin reactors and reviewed the Bank’s documents relating to the

Temelin project. We also reviewed appropriate provisions of the Vienna

Convention on Civil Liability for Nuclear Damage, domestic law of the

United States, international law, and the Bank’s Office of the General

Counsel’s analysis of potential liability to the United States.

In addition, we visited the Temelin nuclear power plant site in the Czech

Republic and interviewed Czech officials, including the Chairman of the

Board of the Czech utility, CEZ; the former Prime Minister of the Czech

Republic; the Minister of Industry and Trade; the Deputy Minister of the

Environment; the Director of Administration of the Czech regulatory body;

and two resident regulatory inspectors at the Temelin plant. In Vienna,

Austria, we interviewed several officials from the Federal Chancellery of

Austria, the Director of the Austrian Energy Utilization Institute, an official

from the Austrian Research Center, a nuclear physicist from the University

of Vienna, and several officials from the International Atomic Energy

Agency’s Division of Nuclear Safety.

We performed our review between June 1994 and May 1995 in accordance

with generally accepted government accounting standards.

We plan no further distribution of this report until 15 days from the date of

this letter unless you publicly announce it contents earlier. At that time,

we will send copies to the Chairman, U.S. Export-Import Bank; the

Secretaries of State and Energy; the Chairman, Nuclear Regulatory

Commission; the Director, Office of Management and Budget; and other

interested congressional committees. We will also make copies available

to others on request.

Page 16 GAO/RCED-95-157 Temelin Nuclear Reactor
B-261096 

Please call me at (202) 512-3841 if you or your staff have any questions.

Major contributors to this report are listed in appendix VIII.

Sincerely yours,

Victor S. Rezendes

Director, Energy and

 Science Issues

Page 17 GAO/RCED-95-157 Temelin Nuclear Reactor
Contents

Letter 1

Appendix I 

Studies of the VVER

1000 Reactor

Recommend

Technical Changes

20

Appendix II 

Design-Related

Recommendations by

Private Nuclear

Consultant Audit

Team and Status of

Improvements

22

Appendix III 

Application of

Westinghouse’s Safety

Technology to

Russian-Designed

VVER 1000 Nuclear

Power Plants

24

Appendix IV 

Export-Import Bank’s

Standard Review

Process at the Time of

the Temelin Review

25

Page 18 GAO/RCED-95-157 Temelin Nuclear Reactor
Contents

Appendix V 

Czech Officials

Address Radiation

and Long-Term Spent

Fuel Storage

Concerns

27

Appendix VI 

NRC Provides

Training for Czech

Nuclear Regulatory

Agency

29

Appendix VII 

View of Temelin

Nuclear Power Plant

30

Appendix VIII 

Major Contributors to

This Report

31

Abbreviations

CEZ Ceske Energeticke Zavody Koncern

DOE Department of Energy

IAEA International Atomic Energy Agency

NRC Nuclear Regulatory Commission

NSC National Security Council

Page 19 GAO/RCED-95-157 Temelin Nuclear Reactor
Appendix I 

Studies of the VVER 1000 Reactor

Recommend Technical Changes

In 1990, the International Atomic Energy Agency (IAEA) reviewed the

Temelin plant design and in 1992 sponsored a meeting of nuclear safety

experts from Western countries as well as Russia and Ukraine to review

the design, operational safety, and licensing aspects of VVER 1000 reactors.

Recommendations made by the IAEA review teams centered on

modernizing VVER 1000 plants by using more advanced Western technology

to improve performance and safety. The most important of the

recommendations, not all of which apply to the Temelin reactors, were the

following:

• Enhancements to the fuel and control rod designs should be made to

improve performance.

• An improved core control strategy should be used to improve the plant’s

operability.

• The instrumentation and control systems are based on “old” technology,

and the feasibility of replacing or upgrading the systems hardware to

improve the reactors’ reliability and the plant’s performance should be

evaluated.

• Specific changes in the reactors’ control and protection system designs

should be implemented to enhance the plant’s safety.

• A systematic and comprehensive safety analysis using state-of-the-art

technology should be done consistent with typical Western licensing

practices.

• The control room design should be modernized to improve the quality and

quantity of information available to the plant’s operators.

In 1991, Ceske Energeticke Zavody Koncern (CEZ) officials requested an

audit by a U.S. consulting firm to assess the potential licensability of the

Temelin reactors in accordance with Western standards and regulations

expected to be in effect in the mid-1990s, the anticipated commissioning

date of the reactors. While the principal focus was on nuclear safety and

licensability, the audit also included other technical, economic, and

management aspects of the Temelin project. On the basis of the scope and

results of its reviews, the audit team concluded that Temelin can be

licensable to Western standards in the mid-1990s but that its licensability

cannot be ensured unless the audit team’s technical and programmatic

recommendations are implemented. Although the Temelin reactors are not

being licensed to Western standards, CEZ officials have made or are making

several changes that address some of these concerns.

The consulting firm’s audit team found that a number of the initial Temelin

design concepts, criteria, or analyses fell short of modern Western

Page 20 GAO/RCED-95-157 Temelin Nuclear Reactor
Appendix I 

Studies of the VVER 1000 Reactor

Recommend Technical Changes

practices but that these shortcomings could be largely eliminated through

design improvements that are expected to make the plant comparable with

contemporary facilities in the West. These include the addition of a

modern instrumentation and control system, an improved fuel and core

design, improvements resulting from VVERs’ and Western nuclear power

plants’ operating experience, and improvements resulting from the audit

team’s recommendations. The audit team also found that the Czech plant

managers needed to more fully develop the “safety culture” in which one

approaches plant safety with a questioning attitude that avoids

complacency. In addition, the audit team found an inadequate amount of

information from the original Soviet reactor supplier about the technical

basis and underlying analyses of the plant’s design.

The audit team concluded that the Temelin plant’s design includes a

number of important features that equal or, in some cases, exceed Western

practices. These areas of strength include, for example, good physical

separation between trains of safety-related components and a large degree

of safety-related system redundancy, including three independent spray

ponds that are each capable of accepting the plant’s maximum heat loads.

In October 1992, the audit team prepared a progress report on its audit

findings and subsequent follow-up tasks, including an action plan listing

tasks and the priority in which they should be accomplished. The audit

team found that implementation progress on these tasks had been and

continued to be slow and concluded that implementation must be

accelerated if the plant’s current schedule is to be maintained.

In a March 1994 position paper, Czech officials noted that they had worked

closely with the audit team to draft a corrective action plan based on the

findings and recommendations of the initial audit. The officials said that

the plant’s general designer and the original Russian designer have

participated in the action plan implementation, that many tasks in the plan

have been accomplished, and that the remaining ones are proceeding on

schedule. They concluded that implementation of the action plan

invalidates negative findings about the Temelin project made by previous

reviews, such as IAEA’s 1990 review and the consulting firm’s audits, and

that all references to these findings are no longer valid.

Page 21 GAO/RCED-95-157 Temelin Nuclear Reactor
Appendix II 

Design-Related Recommendations by

Private Nuclear Consultant Audit Team and

Status of Improvements

First Priority Actions IAEA Meeting Discussiona

Complete the evaluation of the new fuel/core bids and ensure the

continued availability of necessary design information from the

original Soviet designers. This effort should be integrated into the

overall assessment of Temelin.

In response to an IAEA technical and design review mission of the

Temelin nuclear power plant, CEZ officials adopted a modified

core and fuel design for the reactors to improve safety, fuel cycle

cost, and overall economy and to increase operational flexibility. 

The audit team found that substantial technical information from

the original Soviet designers would be needed to design the new

fuel and core. It recommended that negotiations for obtaining

such information from the Soviet designers be accelerated.

According to CEZ and Westinghouse officials, the need for Soviet

assistance has not been extensive, but they have been able to get

what they need.

Complete the evaluation of the replacement instrumentation and

control equipment bids and ensure the continued availability of

necessary design information from the original Soviet designers.

This effort should be integrated into the overall assessment of

Temelin.

Because Russian instrumentation and control equipment has a

record of unreliability and does not incorporate digital technology

such as what is now being used in Western plants, CEZ officials

chose to replace Temelin’s instrumentation and control system to

improve the reactors’ performance and safety.

The system being supplied is similar to those used on other

Westinghouse-designed nuclear power plants. One exception,

however, is that CEZ officials specified that a Diverse Protection

System be added. Its addition is intended to give greater

assurance that core damaging accidents will be avoided.

According to CEZ and Westinghouse officials, the need for Soviet

assistance has not been extensive, but they have been able to get

what they need.

Conduct Level 1 and 2 probabilistic safety assessments (PSAs)

using an entity independent of the design organizations. This

activity should begin as soon as possible to be of maximum use in

the design.

CEZ officials contracted with a U.S. consulting firm to perform

Level 1 and 2 probabilistic safety assessments of the Temelin

reactors. Work began in September 1993. It is expected that the

PSA Level 1 for internal events will be completed by March 1995,

and the PSA Level 2 will be done by September 1995.

Conduct a Western fire hazards analysis. This activity should be

completed as soon as possible to enable results to be factored into

the design.

The presentations made at the consultants meeting in Vienna did

not include fire hazards analysis.

Critically examine the equipment qualification program and take the

actions necessary to ensure its adequacy.

The consulting firm’s audit emphasized the need for a program to

ensure that safety- related equipment would operate in case of an

accident. Some equipment might be required to operate under

severe pressure, temperature, and humidity conditions. A

program to qualify equipment for the expected service conditions

is common for U.S. plants and is needed for Temelin. The

presentations made at the consultants meeting in Vienna did not

include discussions of an equipment qualification program.

Complete the seismic reanalysis of safety-related structures and

systems.

The presentations made at the consultants meeting in Vienna did

not include discussions of seismic analysis.

Conduct a comprehensive design review to determine the

adequacy of safety train separation in the detailed plant and

system designs.

The presentations made at the consultants meeting in Vienna did

not include discussions of safety train separation.

(continued)

Page 22 GAO/RCED-95-157 Temelin Nuclear Reactor
Appendix II 

Design-Related Recommendations by

Private Nuclear Consultant Audit Team and

Status of Improvements

First Priority Actions IAEA Meeting Discussiona

Conduct and document comprehensive containment

subcompartment analyses under post-loss of coolant accident

conditions.

Collect/create Temelin design basis documentation and supporting

design information.

Provide single failure protection for critical piping leading from the

containment sump.

Conduct a detailed review of all aspects of containment sump and

connected systems design.

The presentations made at the consultants meeting in Vienna did

not include discussions of post-loss of coolant accident

containment analyses.

The presentations made at the consultants meeting in Vienna did

not include discussions of design basis information.

The Temelin containment sump design has been redesigned to

prevent clogging due to debris collection and to prevent the

formation of a vortex that could interrupt suction from the sump.

Presentations at the Vienna consultants meeting said that these

changes and modifications solved the sump concerns.

Make provisions to facilitate adding a filtered vent to containment. As reported at the Vienna consultants meeting, the Czech Nuclear

Research Institute has analyzed severe accidents, i.e., accidents

that are more severe than the accident scenarios that form the

basis of the plant’s safety systems design. Czech regulations do

not require that measures be taken to cope with severe accidents.

However, the Nuclear Research Institute has investigated ways to

manage severe accident consequences. One possibility is to

install a filtered vented containment, but design modifications to

add a filtered vented containment had not been completed as of

December 1994.

Reevaluate the need for a boric acid tank heating system. The discussion of design modifications to the Temelin nuclear

power plant’s emergency core cooling system at the consultants

meeting did not make mention of any changes to boric acid tank

heating.

Establish a defensible coping time criteria for loss of all off- and

on-site AC power and demonstrate the design can meet it.

Conduct a comprehensive review of the adequacy of the DC

battery system and make any necessary design changes.

The consulting firm’s audit raised a concern about the adequacy

of the direct current power system needed between loss of

outside power to the Temelin site and the startup of emergency

generating equipment on the Temelin site. Temelin officials said

that a source of direct current power is provided for each safety

system, but the capacity and duration of the power supply, the

basis of the consulting firm’s concern, was not discussed.

Review the safety system designs relative to the potential effects of

non-safety-related component failures on the safety-related

systems.

The consultants meeting discussions did not include the effects

on non-safety-related component failures on the safety-related

systems.

Complete the liquid radwaste evaporator design study and make

any necessary design changes.

Explore the advantage of not regenerating depleted resin beds in

the liquid radwaste design.

The consultants meeting discussions did not include liquid

radwaste evaporator design.

aThe scope of the IAEA meeting was not designed to include discussion on all of the

design-related recommendations made by the consultant’s audit team.

Page 23 GAO/RCED-95-157 Temelin Nuclear Reactor
Appendix III 

Application of Westinghouse’s Safety

Technology to Russian-Designed VVER 1000

Nuclear Power Plants

The Temelin VVER 1000 nuclear power plant is the most advanced

Russian-designed pressurized water reactor. The VVER 1000 plant’s design

is a four-loop pressurized water reactor similar to the Westinghouse

pressurized water reactor for which extensive safety analyses methods

have been developed and accepted by the U.S. Nuclear Regulatory

Commission and other regulatory bodies throughout the world. According

to Westinghouse officials, the physical behavior, characteristic response,

and modeling of the VVER 1000 nuclear power plant’s design may be readily

represented by the Westinghouse safety analysis technology because of

the fundamental similarity in designs. The safety analysis methods used

for Temelin required qualification and verification only for the unique

design features of the VVER 1000 design, and this qualification was

accomplished by comparisons to data from VVER 1000 plants, comparisons

to separate effects tests representing the unique VVER plants’ design

features, and comparisons to integral facility tests that incorporated

unique features of the VVER 1000 design. Temelin-specific geometric and

physical data for the plant’s design obtained in cooperation with the plant

owner, CEZ; the plant’s general designer, Energoprojekt; and the plant’s

general contractor, SKODA, as well as original Russian design

documentation and the Czech Technical University, were used to calculate

conservative safety analyses results using the qualified and verified

methods. The safety analyses results indicated that the safety acceptance

criteria had been met.

According to Westinghouse officials, the safety analysis approach applied

to the Temelin nuclear power plant is the same approach that is utilized

and accepted by regulatory authorities to support nuclear power plant

licensing throughout the world. In this approach, unacceptable

consequences resulting from faults are defined, depending upon the

frequencies of the event. Unacceptable consequences include fuel failures

and off-site radiation releases. Once unacceptable consequences have

been defined, limits are established on the plant’s operations; exceeding

these limits could lead to unacceptable consequences. The required

protection system functions and actions based upon the events and

consequences are established. Safety analyses are performed for a

complete range of plant conditions and accident scenarios to demonstrate

that acceptable results are obtained for the spectrum of initiating events.

Page 24 GAO/RCED-95-157 Temelin Nuclear Reactor
Appendix IV 

Export-Import Bank’s Standard Review

Process at the Time of the Temelin Review

The Export-Import Bank is an independent agency with a five-member

Board of Directors who are appointed by the President and confirmed by

the Senate. Under the Bank’s charter, most recently reauthorized by the

Congress in 1992, the Bank’s decisions on transactions may be based only

on commercial, financial, and environmental grounds, not on foreign

policy considerations.

All long-term projects—those over $10 million or with a repayment period

of more than 7 years—are assigned to a team consisting of a loan officer,

an engineer, an economist (in certain cases), and an attorney. The loan

officer performs a financial analysis of the proposed transaction to

determine whether there is a reasonable assurance of repayment and

makes recommendations on the financial structure of the transaction. The

engineer prepares a technical evaluation and an environmental evaluation.

(Since the Temelin transaction, the Bank has hired an environmental

specialist to oversee environmental evaluations.) The economist analyzes

the foreign country’s economic conditions to assist in determining

whether there is a reasonable assurance of repayment. The attorney is

responsible for legal issues and for preparing the legal documentation for

the transaction. After completing its analysis, the team presents its report

and recommendation to the Board of Directors for consideration. At the

Board meeting, members of the Board usually ask questions about the

proposed transaction before making a determination.

The Bank’s Board of Directors considered the Temelin transaction at two

different stages: preliminary commitment and final commitment. A U.S.

exporter or commercial bank may apply to the Bank for a preliminary

commitment when the exporter needs a financing offer in order to

compete for a contract award. Before recommending a preliminary

commitment, the staff analyzes the financial and technical feasibility of the

transaction, performs an environmental evaluation, and examines any

legal issues that may arise. If the request for a preliminary commitment is

approved by the Board of Directors, the Bank sends the applicant a letter

specifying the interest rate and the terms and conditions of the financing

offer (usually an option for either a direct loan or a loan guarantee). The

exporter then uses the Bank’s financing offer to complement its

commercial and technical proposal to the foreign buyer, which is typically

the borrower.

If the contract is awarded to the U.S. exporter, the foreign borrower—or

the guaranteed lender—may submit an application seeking conversion of

the preliminary commitment to a final commitment. The assigned

Page 25 GAO/RCED-95-157 Temelin Nuclear Reactor
Appendix IV 

Export-Import Bank’s Standard Review

Process at the Time of the Temelin Review

transaction team, usually consisting of the same individuals who worked

on the transaction at the preliminary commitment stage, conducts a

further review of the financial, technical, environmental, and legal issues

presented by the finalized transaction. In some cases, the review at this

stage is substantially more extensive than at the preliminary commitment

stage, because more comprehensive information is available from the

foreign buyer. After completing its review, the staff then submits a

recommendation to the Board of Directors.

If a transaction involves exports of technology, fuel, equipment, materials,

or goods or services to be used in nuclear facilities, the Board of Directors

votes initially to approve a final commitment and submits the transaction

to the Congress for review, as required by statute. A detailed statement

describing and explaining the transaction must be submitted to the

Congress in at least 25 days of a continuous session of the Congress, or 35

calendar days if either the House or the Senate is in adjournment for a

period which continues for at least 10 days after the date of the Bank’s

submission of the statement. After this period has terminated, the

transaction may be finally approved by the Board of Directors. After the

Board’s action, the Bank’s staff negotiates the terms of a credit agreement

and (in the case of a loan guarantee) a guarantee agreement with the

borrower and other parties to the transaction.

Page 26 GAO/RCED-95-157 Temelin Nuclear Reactor
Appendix V 

Czech Officials Address Radiation and

Long-Term Spent Fuel Storage Concerns

The Czech Ministry of

Environment Conducts

Radiation Studies

The Czech Ministry of Environment was established on December 19,

1989. At that time, one-third of the construction on the Temelin nuclear

power plant had already been completed. As a result, the Ministry had no

influence over site selection. During the time of the site selection, a

Section of Environment was located in the Ministry of the Interior.

Officials from this office assessed the site on the basis of the rules and

by-laws for the construction of buildings that were in effect at that time.

An environmental impact statement was not performed for the reactor

site.

According to the Deputy Minister of the Environment, the Ministry has

evaluated the impact of the Temelin plant on water resources only. A

hydrological study was conducted on the migration of radionuclides

released from the Temelin plant into the system of dams on the Vltava

River. The study concluded that planned releases of the radionuclides will

not affect the water resources in any outstanding way. According to

Ministry officials, the study also evaluated probable tritium releases, and

even then the results were acceptable.

Ministry officials told us that in case of an accidental release, it will take

many weeks for the contamination to reach Prague. Three dams lie

between the plant site and the city, and according to Ministry of

Environment officials, most of the radionuclides would sink into the

sediment. After the plant is operating, Vltava River laboratory authorities

will constantly monitor and analyze the radiation levels in the sediment

and ground water. Soil analyses will be performed at an external

dosimetry laboratory. Quarterly reports and yearly summaries will be

published by CEZ and the Temelin laboratories. In case of any problems,

the Vltava River Authority will report directly to the Minister of

Environment.

Before the start-up of the Temelin plant, Czech officials plan to have a

program in place to monitor radiation levels. Acceptable levels of

radioactive releases are being set by the Ministry of Health with the

cooperation of the Ministry of Environment. The Ministry of Health has

expertise in this area through its Water Research Institute, which has

worked on radiation detection in the past and will set up special

laboratories to research radiation levels. Acceptable standards of release

will be developed to meet international standards.

Ministry of Environment officials have no authority to limit or stop the

operation of a nuclear power plant or to inspect within the plant itself.

Page 27 GAO/RCED-95-157 Temelin Nuclear Reactor
Appendix V 

Czech Officials Address Radiation and

Long-Term Spent Fuel Storage Concerns

These responsibilities belong to the Czech nuclear regulatory authority.

Ministry of Environment officials inspect air and water outside of the

plant; in case of a problem that falls under the responsibility of the

regulatory authority, officials would contact either the inspector

responsible for that particular area of operations or nuclear regulatory

headquarters in Prague.

No Final Decision Made on

Long-Term Spent Fuel

Storage

CEZ officials are searching for a site to build a permanent waste storage

facility but have not made a final decision. A facility for permanent storage

will be needed by the year 2030, and 10 potential sites have been

pre-selected. Interim facilities at the Dukovany nuclear power plant allow

spent fuel to be temporarily stored and cooled on site, and spent fuel from

the Temelin reactors could be temporarily stored inside the Temelin

containment itself.

The Czech Minister of Environment has expressed concern about the lack

of a permanent waste storage facility and wants a legal guarantee of

permanent storage and decommissioning defined by standards in the law

that would deny operating licenses until spent fuel disposal plans are

completed. Specifically, he would require that CEZ and the Ministry of

Industry and Trade develop a long-term concept on plans for

decommissioning a plant and permanently storing spent fuel. In the case of

the Temelin plant, the building permit has already been issued, and current

Czech by-laws and regulations do not require input from the Ministry of

Environment in assessing storage sites. However, internal Ministry

directives require the Ministry to prepare a report concerning the

environmental impacts of radioactive waste storage at the selected sites.

When a site is selected, the Ministry of Environment will report on the

environmental impacts of the facility.

Page 28 GAO/RCED-95-157 Temelin Nuclear Reactor
Appendix VI 

NRC Provides Training for Czech Nuclear

Regulatory Agency

Because Westinghouse is providing the instrumentation and control

system and specially designed nuclear fuel for the Temelin reactors, NRC’s

contractor is training the Czech regulators to perform regulatory tasks on

these components as well as in all other interfaces of the reactors. The

contractor is also teaching the Czech regulators NRC’s approach and

methodology for licensing nuclear power plants, but officials stress that

they will not comment on the licensability of the Temelin reactors. An NRC

official will receive periodic reports from the contractor to confirm that

the subject matter being taught conforms to the agreed-upon

methodology. Most of the training is taking place at the Idaho National

Engineering Laboratory at Idaho Falls, Idaho; some activities are taking

place in the Czech Republic.

Training for the Czech regulators includes a Temelin safety analysis of the

Westinghouse components to be performed at the same level of

competence and technical capability as if it were being done in the United

States. The contractor will provide the training and monitor the Czechs’

execution of the safety review. NRC officials told us that they maintain a

close technical exchange with the Czech regulators, and if something

unacceptable occurs during the review, they will contact the regulators

and remind them that certain agreed-upon items have not been followed.

In case of a conflict, NRC officials may point out that this practice would be

unacceptable in the United States; however, the Czech regulators must

make the final decision. NRC officials are concerned only with how

regulatory decisions are being made and, because they have no authority

to enforce their own decisions, will not accept responsibility for the safety

of the Temelin reactors.

According to the contractor, the Czech regulators have a good level of

knowledge about certain NRC requirements—particularly in the

instrumentation and controls area—but need examples of how NRC

evaluated compliance with these requirements. NRC officials told us that

currently the Czech nuclear regulatory structure does not have enough

staff and needs to be strengthened in some areas, but NRC officials expect

these changes to occur this year. NRC officials believe that because the

Czech regulators have greater autonomy and independence than either

Russian or Ukrainian regulators, the Czechs have a stronger regulatory

authority. They also believe that Westinghouse won the Temelin contract

partially because the Czech regulators had confidence in NRC’s licensing

approach.

Page 29 GAO/RCED-95-157 Temelin Nuclear Reactor
Appendix VII 

View of Temelin Nuclear Power Plant

Source: Westinghouse Electric Corporation.

Page 30 GAO/RCED-95-157 Temelin Nuclear Reactor
Appendix VIII 

Major Contributors to This Report

Resources,

Community, and

Economic

Development

Division, Washington,

D.C.

Bernice Steinhardt, Associate Director, Energy and Science Issues

Gene Aloise, Assistant Director

Patricia J. Metz, Senior Evaluator

Glen Levis, Senior Evaluator

Thomas J. Flaherty, Senior Evaluator

Duane G. Fitzgerald, Ph.D., Nuclear Engineer

Office of the General

Counsel

Jackie A. Goff, Senior Attorney

European Office Pamela J. Timmerman, Senior Evaluator

Lauren V. A. Waters, Evaluator

(170259) Page 31 GAO/RCED-95-157 Temelin Nuclear Reactor
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