Nuclear Nonproliferation: DOE's Effort to Close Russia's Plutonium Production Reactors Faces Challenges, and Final Shutdown Is Uncertain
Published: 2004-06-04T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Russia's continued operation of three plutonium production reactors poses a serious proliferation threat. The Department of Energy's (DOE) Elimination of Weapons-Grade Plutonium Production program seeks to facilitate the reactors' closure by building or refurbishing replacement fossil fuel plants. This report (1) describes DOE's efforts to manage and implement the program, (2) assesses the challenges DOE faces in achieving its goal of shutting down the reactors, and (3) identifies DOE's current expenditures and projected program costs.
section_title: What GAO Found
paragraphs: DOE is financing and managing the construction of two fossil fuel plants in Russia that will replace the heat and electricity that will be lost with the shutdown of Russia's three plutonium production reactors. DOE (1) has developed an overall plan to manage its program, (2) has selected two U.S. contractors to oversee the construction of replacement fossil fuel plants, and (3) is working with its U.S. contractors to review specific design and construction plans for the plants. DOE officials expressed concern that the number of organizations, 17, involved in the program makes coordination difficult and has led to delays. Additionally, DOE and U.S. contractor officials said that the primary Russian contractor may not have adequate experience and currently lacks enough staff to implement its part of the program. Final shutdown of the reactors is uncertain because DOE faces a number of challenges in implementing its program, including (1) ensuring Russia's commitment to the nonproliferation and safety goals of the program, (2) clarifying the existing reactor shutdown agreement, and (3) working with Russia to find employment for thousands of Russian nuclear workers who will lose their jobs when the reactors are closed. Russia's rejection of DOE's proposals to reduce the amount of plutonium produced by the reactors and to improve the safety of the reactors before they are shut down raises serious questions about Russia's commitment to key program goals. Furthermore, the existing reactor shutdown agreement contains shutdown dates that do not reflect DOE's planned program schedule. Finally, the challenge of finding employment for Russian nuclear workers could undermine the program by creating the potential for Russia to continue operating the reactors longer than necessary to ensure jobs for the workers. DOE has not developed a plan to address this issue. As of December 31, 2003, DOE had spent $7.8 million--about 4 percent of available funds on planning and developing the program, including travel, overhead, project administration, and document translation costs. Regarding future program costs, DOE officials told us that they expect the projected costs to build the replacement fossil fuel plants to be significantly higher than their original estimate of $466 million, possibly as much as $1 billion.

section_title: Letter
paragraphs: Russia’s continued operation of three plutonium production reactors,  which together produce enough weapons-grade plutonium each year for  about 300 nuclear weapons, poses a serious proliferation threat. This  plutonium—up to 1.2 metric tons produced annually—is being added to  Russia’s already vast stockpile of weapons-usable nuclear material. The  shutdown of these reactors has been a long-standing nonproliferation goal  of the United States, and efforts to secure their closure have continued for  over a decade. By 1992, Russia had shut down all but 3 of its 13 plutonium  production reactors—2 continue to operate in the closed nuclear city of  Seversk and 1 in the closed nuclear city of Zheleznogorsk. While the  primary role of plutonium production reactors in the former Soviet Union  was to produce weapons-grade plutonium, some of the reactors, including  the three that remain in operation, were also designed to generate heat and  electricity for nearby cities. Because temperatures in these cities can drop  to -40 degrees Fahrenheit in winter and the nearly 300,000 Russians living  there depend on the reactors for heat and electricity, alternate heat and  power sources must be made available before the reactors can be shut  down.
In addition to producing weapons-grade plutonium, these reactors are  considered by U.S. and Russian experts to be among the most unsafe in the  world. These reactors do not have a containment structure, generally a  steel-lined concrete, dome-like structure that serves as the ultimate barrier  to the release of radioactive material during an accident. Furthermore, the  reactors, which were built in the 1960s, have exceeded their original  estimated operating life by 20 years.
In 1994, Vice President Gore and Russian Prime Minister Chernomyrdin  signed an agreement whereby Russia pledged to (1) shut down its three  remaining plutonium production reactors by 2000; (2) not restart any other  plutonium production reactors that had been shut down prior to signing of  the agreement; and (3) not use plutonium produced by the three reactors in  nuclear weapons. At the same time, the United States agreed that it would  not restart any of its plutonium production reactors. However, the 1994  agreement never entered into force because the United States and Russia  could not agree upon who would pay for alternative sources of heat and  electricity to replace the reactors. A new agreement, signed by Gore and  Chernomyrdin in 1997, addressed this problem by committing the United  States and Russia to share the cost of modifying the cores of the reactors so  that they could continue to provide heat and electricity while no longer  producing spent (used) fuel that could be easily converted into weapons- grade plutonium. This agreement, which entered into force immediately,  banned the restart of previously shutdown plutonium production reactors,  prohibited Russia’s use of newly produced plutonium in nuclear weapons,  and established a monitoring regime under which U.S. and Russian  personnel regularly inspect previously shutdown plutonium production  reactors. In addition, under the agreement, U.S. representatives verify the  quantities of plutonium that have been produced by the three Russian  reactors since 1997 and determine that this material is kept in storage  rather than being used in nuclear weapons. Also in 1997, the Department of  Defense (DOD) was assigned formal responsibility for managing the U.S.  effort to modify the reactors, with technical assistance from the  Department of Energy (DOE) and its national laboratories. Between fiscal  years 1994 and 2001, the United States spent approximately $42.5 million to  explore the feasibility of modifying the reactors. However, numerous  technical and political obstacles slowed the effort to modify the reactors,  and the program languished.
In 2001, the United States and Russia agreed to pursue another option to  bring about the closure of the reactors: building or refurbishing fossil fuel  plants to replace a significant amount of the heat and electricity now  produced by the reactors. The management of the program was transferred  from DOD to DOE in December 2002, as the result of a review of all U.S.  nonproliferation programs led by the National Security Council. The  National Nuclear Security Administration manages DOE’s effort, which is  known as the Elimination of Weapons-Grade Plutonium Production  program (hereafter referred to as the program). In March 2003, the  Secretary of Energy and the Minister of Atomic Energy of the Russian  Federation (MINATOM) signed an amendment to the 1997 agreement, as  well as a new implementing reactor shutdown agreement between DOE  and MINATOM, whereby the United States agreed to fund the construction  or refurbishment of two fossil fuel plants to replace the three plutonium  production reactors. Russia agreed to shut down all three reactors by 2006.  Specifically, Russia agreed to shut down the reactors as soon as the  replacement fossil fuel plants are able to provide sufficient heat and  electricity to the cities of Seversk and Zheleznogorsk. The agreement also  stated that Russia would (1) assume responsibility for the fuel, operation,  and maintenance of the replacement fossil fuel plants and for their  commissioning and (2) remain responsible for the decommissioning of the  plutonium production reactors following their shutdown.
In this context, you asked us to review DOE’s program to help Russia shut  down these reactors. This report (1) describes DOE’s efforts to manage and  implement the program since it was transferred from DOD, (2) assesses the  challenges that DOE faces in achieving its goal of shutting down the  reactors, and (3) identifies DOE’s current expenditures and projected costs  to implement the program. To address these objectives, we interviewed  U.S. officials from DOE, DOD, and the Department of State (State), the  Nuclear Regulatory Commission, the Pacific Northwest National  Laboratory (PNNL), and the National Energy Technology Laboratory on  matters related to U.S. efforts to secure the shutdown of Russia’s  plutonium production reactors. In September 2003, we interviewed  officials in Moscow from the Ministry of Atomic Energy of the Russian  Federation; Rosatomstroi, the primary Russian contractor; and  Gosatomnadzor, the Russian nuclear regulatory agency. In addition, we  went to the cities of Seversk and Zheleznogorsk, where the plutonium  production reactors are currently in operation and interviewed scientists,  plant managers, city officials, and reactor operators. We also analyzed  current program cost and expenditure data from DOE. More detail on our  scope and methodology can be found in appendix II. We conducted our  work between June 2003 and April 2004 in accordance with generally  accepted government auditing standards.
subsections: section_title: Background
paragraphs: During the Cold War, the United States and the Soviet Union built a total of  27 nuclear reactors to produce weapons-grade plutonium for nuclear  weapons. Although all nuclear reactors produce plutonium as a byproduct  of their operation, plutonium production reactors are specifically designed  to produce a concentrated isotope of plutonium that is more readily used in  nuclear weapons. (See app. III for additional information about the  plutonium production nuclear fuel cycle.) The United States constructed 14  plutonium production reactors of which only one, the N-reactor at Hanford,  Washington, produced electricity in addition to weapons-grade plutonium.  This reactor was shut down in 1987 for safety upgrades following the  Chernobyl accident and never resumed operation. The United States had  shut down all of its plutonium production reactors by 1989.
The Soviet Union built 13 plutonium production reactors, and all but 3 have  been shut down. (For a time line showing the history of these reactors and  efforts to bring about their closure, see app. IV.) The three remaining  reactors began operating between 1964 and 1968, and U.S. and Russian  nuclear experts told us that these reactors are among the most dangerous  in the world due to their age and poor design. In addition, the reactors lack  safety features such as a containment structure, which is generally a steel- lined concrete, dome-like structure that serves as a barrier to the release of  radioactive material during an accident. The lack of containment presents a  greater risk for the two reactors at Seversk because, unlike the reactor at  Zheleznogorsk, which is located inside a mountain, the Seversk reactors  are above ground. Figure 1 shows the location of the Russian reactors.
According to Russian officials in Seversk, the two reactors currently  provide about 70 percent of the heat and electricity for the city’s residents.  However, the reactors have the capacity to produce more heat and  electricity than is needed to meet the demands of Seversk’s residents, and  both heat and electricity have been sold to the nearby city of Tomsk since  1973. Officials in Zheleznogorsk told us that the reactor there provides 60  percent of the city’s heat and 98 percent of its electricity. The amounts of  replacement heat and electricity that the United States and Russia agreed  to in the March 2003 reactor shutdown agreement are less than what is  currently provided by the reactors, but Russian officials from both cities  told us the agreed upon amounts would be sufficient to meet their needs  once the reactors are shut down.
Commissioned in the mid-1960s, the three reactors have continued to  operate although, according to Russian officials, they were originally  designed to have an operating life of 20 years. Officials from Russia’s  nuclear regulatory agency, Gosatomnadzor, told us that since the 1960s,  there have been at least three serious accidents and several minor incidents  at one of the Seversk reactors. For example, in 1966, a coolant pipe  ruptured, resulting in the release of contaminants into the atmosphere near  the reactor site. Subsequently, the same reactor experienced a partial  meltdown that damaged part of the core. Finally, in 1999, the reactor  experienced another serious incident when spent fuel was ejected onto the  top of the reactor.
section_title: DOE Has Overall Program Plan in Place, but the Large Number of Organizations Involved in the Program Could Delay Progress
paragraphs: Since the program was transferred from DOD to DOE in December 2002,  DOE (1) has developed an overall program plan to manage the construction  of the fossil fuel plants, (2) has selected two U.S. contractors to oversee  work on the replacement fossil fuel plants, and (3) is working with its U.S.  contractors to review design and construction plans for the plants. DOE  plans to complete refurbishment of the plant in Seversk by 2008 and  construction of the plant in Zheleznogorsk by 2011. However, U.S. and  Russian officials expressed concern that the large number of U.S. and  Russian organizations, 17, involved in the overall management of the  program makes coordination difficult and has led to delays. Additionally,  DOE and U.S. contractor officials told us that the primary Russian  contractor, Rosatomstroi, has not previously worked with U.S. contractors  on large-scale construction projects and currently lacks enough staff to  effectively implement its part of the program, overseeing the Russian  subcontractors, which could lead to delays.
subsections: section_title: DOE Developed an Overall Plan to Manage the Program, Hired Contractors, and Is Reviewing Specific Design and Construction Plans for the Fossil Fuel Plants
paragraphs: DOE has developed an overall management plan for its program that (1)  emphasizes detailed project planning, (2) seeks to identify project risks,  and (3) develops alternative strategies to reduce risks. The program  management elements in DOE’s plan are detailed in DOE order 413.3,  which the department uses for construction projects and the acquisition of  capital assets in the United States. Under DOE order 413.3, the program  will move through five critical decision points, the major stages of design  and construction, upon the approval of DOE’s Deputy Secretary. These  critical decisions are formal determinations that allow the project to  proceed to the next phase and commit additional resources. Critical  decisions are required during the planning and execution of a project, for  example, before beginning conceptual design, before starting  construction, and when beginning operations. (For more detailed  information about DOE’s management plan, see app. V.)
DOE has also selected two U.S. contractors to oversee work on the two  plants. In mid-2003, DOE awarded contracts to (1) Washington Group  International (WGI) to oversee Russia’s refurbishment of an existing fossil  fuel plant at Seversk and (2) Raytheon Technical Services (Raytheon) to  oversee Russia’s construction of a new fossil fuel plant at Zheleznogorsk.  These contracts cover the preliminary design phase of the projects. DOE  plans to evaluate the performance of both contractors at the conclusion of  the preliminary design phase. According to DOE, an extension or new  contract would be required to cover the final design phase, construction,  and closeout phases. In addition, DOE employs the National Energy  Technology Laboratory, a DOE national laboratory that has historically  focused on the development of advanced technologies related to coal and  natural gas, to accomplish various management support tasks.
Finally, DOE, together with its contractors, is reviewing the detailed design  and construction plans that Russian subcontractors are developing for the  fossil fuel plants at Seversk and Zheleznogorsk. At Seversk, DOE plans to  refurbish an existing fossil fuel plant, which was built in 1953. To meet the  heat and electricity production levels specified in the March 2003  agreement, DOE plans to replace one boiler (boilers burn coal to produce  heat and steam); upgrade the plant’s 12 existing boilers to improve their  efficiency and performance; and replace three turbine-generators, which  use the steam produced by the boilers to generate electricity. (See app. VI  for more information about the operation of coal-fired power plants.) In  addition, DOE plans to improve the infrastructure at the plant by, among  other things, enhancing the coal-handling system and improving the plant’s  water chemistry system. DOE plans to complete the refurbishment of the  fossil fuel plant at Seversk by 2008. At Zheleznogorsk, DOE plans to  construct a new fossil fuel power plant that is powered by coal to meet the  heat and electricity production levels specified in the March 2003  agreement. This new plant is scheduled for completion in 2011. Since the  plants are being built to Russian standards, DOE plans to use Russian  environmental, safety, and health standards in the construction of the fossil  fuel plants rather than U.S. standards. However, in addition to satisfying all  Russian regulations, DOE’s contractors are responsible for identifying  potential environmental concerns resulting from emissions at the plants  and comparing the Russian environmental standards with applicable  international standards.
section_title: Concerns Exist About the Large Number of Program Participants and the Primary Russian Contractor’s Lack of Experience and Staff
paragraphs: We identified 17 U.S. and Russian organizations that are participating in the  program. In total, these organizations have a variety of roles and  responsibilities, including setting policy and direction, providing technical  assistance, and managing and overseeing the program. In addition, there  are numerous Russian subcontractors who will be responsible for  supplying, manufacturing, or installing equipment for the replacement  fossil fuel plants. Specifically, in addition to DOE, the U.S. organizations  participating in the program include the following:  The National Nuclear Security Administration, a separately organized  agency within DOE that oversees the program;  Washington Group International is DOE’s primary integrating contractor  for refurbishing the Seversk replacement fossil fuel plant;  Raytheon Technical Services is DOE’s primary integrating contractor for  building the Zheleznogorsk plant. Raytheon has subcontracted some of  its work to the U.S. construction firm Fluor;  The National Energy Technology Laboratory performs various  management support tasks for DOE and has two primary  subcontractors, Energy and Environmental Solutions and Concurrent  Technologies Corporation, which provide management support to  DOE’s program. Additionally, Concurrent Technologies Corporation  subcontracts some work on the program to Parsons; and  PNNL had been the lead contractor for DOE’s planned Nuclear Safety  Upgrades Project. Though this project was cancelled in February 2004,  PNNL will still have limited participation in developing a reactor  shutdown plan.
In addition to MINATOM, numerous Russian participants in the program  include the following:  Rosatomstroi, the primary Russian contractor working for MINATOM  on building the replacement fossil fuel plants;  Tvel-Finance supports WGI on the Seversk fossil fuel plant project and  is a subcontractor to Rosatomstroi;  The Siberian Chemical Combine in Seversk operates the two reactors  there and owns the fossil fuel plant that DOE plans to refurbish;  Tomsk Teploelectroproekt is a subcontractor to Rosatomstroi and is  responsible for developing the refurbishment design for the  replacement fossil fuel plant at Seversk;  The Mining and Chemical Combine operates the reactor in   The Experimental Design Bureau for Machine Building (OKBM) was  involved in the development of many of DOE’s planned safety upgrades  for the reactors and is involved in developing the reactor shutdown plan.
Figure 2 shows the relationships between key program participants.
DOE officials told us that the numerous organizations involved in managing  this complex program makes coordination difficult and has led to delays.  For example, at Zheleznogorsk, the acquisition of the proposed site to build  the replacement fossil fuel plant was delayed for 9 months because a  dispute over the value of the land among MINATOM; the Mining and  Chemical Combine, which is responsible for operating the reactor; and a  local Siberian power utility. Raytheon officials told us that the project  experienced a “day-to-day” slippage while the land acquisition issue  remained unresolved. To improve program management, DOE plans to hire  a resident officer in charge of construction who will reside in Russia for the  duration of the program. Specifically, the resident officer’s responsibilities  will include (1) ensuring that contractual work is carried out, (2) providing  daily reviews of contractor progress, (3) monitoring the quality of work  being performed, and (4) assisting in early identification and resolution of  construction problems.
DOE and U.S. contractor officials also told us that the primary Russian  contractor, Rosatomstroi, has not previously worked with U.S. contractors  on large-scale construction projects and does not currently have staff to  effectively implement its part of the program, which may lead to additional  program delays. Rosatomstroi was created in 2002 and has a limited budget  and little authority to make decisions on behalf of the Russian government  without the approval of MINATOM. Because MINATOM designated  Rosatomstroi as the primary Russian integrating contractor, DOE must rely  on Rosatomstroi to manage Russia’s part of the program, which includes  overseeing the numerous Russian subcontractors. Rosatomstroi officials  told us in September 2003 that they had 8 employees dedicated to the  program but that they plan to add about 40 additional staff as the Seversk  and Zheleznogorsk fossil fuel plant projects progress from the design phase  to construction. Officials from both U.S. contractors said that one of their  most difficult initial tasks has been to mentor Rosatomstroi personnel on  project management and Western business practices. WGI officials told us  that this task has taken much-needed time away from other planning  aspects of the Seversk project. For their part, Rosatomstroi officials  expressed concern that DOE’s use of two U.S. integrating contractors to  provide day-to-day project oversight is burdensome because it forces them  to adapt to different management systems and reporting requirements.
Despite their efforts to develop a sound management structure, DOE  officials told us that successful program implementation ultimately  depends on Russia’s commitment and cooperation. A recent assessment of  DOE's program by the Office of Management and Budget (OMB) reinforces  the need for Russia’s cooperation to improve the program’s chances for  success. OMB pointed out that DOE must rely on Russia to create  conditions that will not limit the effectiveness and efficiency of the  program to shut down the reactors. Furthermore, OMB stated that Russia’s  creation of these conditions is largely out of DOE's control and is a  potential flaw in the structure of the program. However, a Department of  State official told us that he believes Russia has every incentive to  cooperate in the program because shutting down the reactors and  obtaining replacement heat and electricity sources is in Russia’s interest.
section_title: DOE Faces Challenges in Its Efforts to Shut Down the Reactors, Including Obtaining Russia’s Support to Implement Key Nonproliferation and Safety Initiatives
paragraphs: Final shutdown of Russia’s three plutonium production reactors is  uncertain because DOE faces challenges in implementing its program.  Perhaps the most important of these challenges is ensuring Russia’s  commitment to key aspects of the program. Russia’s recent rejection of  DOE’s initiatives to reduce the amount of plutonium being produced by the  reactors and to improve the safety of the reactors prior to their shutdown  raises serious questions about Russia’s commitment to the fundamental  nonproliferation and safety goals of the program. A second challenge DOE  faces is that the existing reactor shutdown agreement does not specify the  steps needed to complete the shutdown of the reactors and the specific  requirements that must be met to license and commission the replacement  fossil fuel plants. Furthermore, the agreement contains shutdown dates  that are not realistic. Finally, thousands of Russian nuclear workers who  are currently employed at the reactors and related facilities will be  displaced when the reactors are closed. Although DOE officials told us that  a failure to find jobs for these workers could threaten the success of the  program, DOE has not developed a plan to coordinate the shutdown of the  reactors with other DOE and Department of State efforts designed to find  employment for Russian nuclear workers.
subsections: section_title: Russia Rejected DOE’s Proposal to Reduce the Amount of Plutonium Produced by the Reactors in the Interim before They Are Shut Down
paragraphs: The main nonproliferation goal of DOE’s program is to stop Russia’s  production of weapons-grade plutonium. Because closure of the reactors  will not occur until the fossil fuel plants are built and suitable heat and  electricity sources are provided, DOE and MINATOM discussed interim  measures to reduce the amount of plutonium produced by the reactors  before they are shut down, as well as measures to accelerate the reactors’  shutdown. According to DOE officials, Russia’s support for this initiative  would have clearly signaled a commitment to the nonproliferation goal of  the program. In July 2003, DOE and Russian officials identified three  options to reduce the reactors’ output of plutonium while the replacement  fossil fuel plants are being built: (1) extending the period during the  summer when the reactors are shut down for maintenance and refueling,  (2) shutting down one of the two reactors at Seversk once the  refurbishment of the fossil fuel plant reaches an agreed-upon level of  completion, and (3) shutting down the reactor at Zheleznogorsk before the  fossil fuel plant is completed but after it is able to supply an adequate  amount of heat to the city. DOE believed that pursuing all of the reduction  options could reduce the amount of weapons-grade plutonium produced by  the reactors before their planned shutdown dates by up to 25 percent, or  one-third metric ton, annually.
DOE officials told us that the first option, extending summer outage  periods, held the greatest promise for reducing plutonium production at  the earliest possible date, which DOE believed could occur in the summer  of 2004. Russian reactor officials in Zheleznogorsk told us that extending  summer outage periods would be the easiest option to reduce the  production of plutonium. Because the initiative to reduce the production of  plutonium is outside the scope of DOE’s program to build replacement  fossil fuel plants, DOE obtained funding from the Department of State’s  Nonproliferation and Disarmament Fund to support the estimated $380,000  cost of studying the three plutonium production reduction options. DOE  also planned to solicit participation from other countries to help fund these  efforts.
In November 2003, the First Deputy Minister of MINATOM stated in a letter  to DOE that Russia no longer wanted to explore the possibility of reducing  the amount of plutonium produced while the reactors continue to operate  and that pursuing such options could affect the time frame of closing the  reactors. According to the letter, “ not find it worthwhile to  waste efforts on a project for reducing plutonium production prior to the  permanent shutdown of the reactors.” The letter also stated that Russia’s  main objective was to shut down the reactors as soon as possible. In  response to the letter, DOE is no longer pursuing extending summer  outages at the reactors as an option for reducing the amount of plutonium  produced. A Department of State official told us that Russia’s decision to  reject this proposal was likely based on its security concerns about  providing U.S. personnel with access to the reactors for the purpose of  monitoring and verifying the reduced amount of plutonium that would be  produced.
In December 2003, MINATOM requested that DOE fund a study to examine  the possibility of shutting down one of the Seversk reactors prior to the  completion of the replacement fossil fuel plant. To achieve the early  closure of one of the reactors, MINATOM proposed that the refurbishment  of the Seversk plant could be accelerated through the advanced  procurement of certain major components such as the boiler. However,  unlike extending the summer outage periods, this option could not be  implemented in mid-2004.
section_title: DOE Canceled Its $21 Million Program to Improve the Safety of the Reactors after Russia Rejected DOE’s Proposed Assistance
paragraphs: As part of the reactor shutdown agreement, DOE pledged to improve the  safe operation of the reactors; and to accomplish this goal, DOE planned to  fund a $21 million effort, consisting of 28 safety upgrade projects—such as  fire safety system improvements, enhancements to emergency electrical  power systems, and risk assessments. DOE selected PNNL to oversee the  installation of the safety projects. DOE’s original plan called for work on  the upgrade projects, including design work and contracting activities, to  take place during a 24-month period—beginning in mid-2003 and ending by  mid-2005—in order to maximize the benefits of the safety enhancements  before the reactors are shut down. (See app. VII for a summary of DOE’s  planned safety upgrade projects.)
However, the start of the program was delayed for several months because  the United States and Russia were unable to agree on the amount of  background information that Russia required of U.S. workers to submit for  Russia’s national security review purposes before they would be granted  access to the reactors. In February 2004, the failure to resolve this issue led  MINATOM to reject DOE’s planned assistance to improve the safety of the  reactors and instead to say it would undertake necessary safety  improvements on its own. As a result, DOE officials told us they were  canceling the safety upgrade project and are considering several options to  transfer the remaining unspent project funds to other program areas,  including accelerating the completion of the replacement fossil fuel plant at  Zheleznogorsk.
DOE’s Assistant Deputy Administrator, Office of International Nuclear  Safety and Cooperation, told us that he was very pessimistic that Russia  would perform the safety upgrades. Additionally, he noted that even if  Russia decides to install the upgrades, they may not be of sufficient quality  or quantity to reduce the risk posed by the reactors’ continued operation. A  PNNL program official also expressed doubt that Russia would pursue  upgrading the reactors. He noted that without DOE’s planned safety  upgrades, the reactors would continue to deteriorate until they are finally  shut down. None of the reactors would be licensed for operation in the  United States or Western countries because they lack modern safety  controls, and at least one reactor has experienced structural damage  causing obstructions in the channels where control rods are inserted in  case the reactor must be shut down in an emergency. The control rods are  devices used to control the rate of nuclear reactions in a reactor. In the  view of the PNNL official, it is likely that all three reactors have  experienced such damage.
The deteriorating safety conditions present a greater danger at the two  Seversk reactors than at Zheleznogorsk, because unlike the Zheleznogorsk  reactor, the reactors at Seversk are located above ground. Furthermore,  one of the Seversk reactors has experienced multiple accidents, including  one that resulted in the expulsion of fuel elements onto the top of the  reactor in 1999. Based on our analysis, the reactors are showing the wear of  having been run for a very long time at a high output. The danger that these  reactors present is the risk of a catastrophic reactor failure—such as a loss  of coolant accident—which would result in a fire expelling the highly  enriched uranium fuel and its fission byproducts such as plutonium and  strontium-90, all of which are highly toxic and carcinogenic. The danger  from such a fire is that radioactive particles would be dispersed and  breathed into the body, causing either kidney damage from particles of  uranium or cancer from particles of strontium-90 and plutonium. (For our  technical analysis of the safety problems posed by the reactors, see app.  VIII.)
Regardless of the safety condition of the reactors, Russian officials stated  that they plan to run the reactors until replacement energy is provided to  the residents of Seversk and Zheleznogorsk. Because winter temperatures  in the region of the cities can reach -40 degrees Fahrenheit, officials from  Gosatomnadzor told us that they would continue issuing operating licenses  to the reactors each year unless a “calamity” occurred.
section_title: The Reactor Shutdown Agreement Does Not Clearly Specify What Is Required to Shut Down the Reactors and Contains Unrealistic Shutdown Dates
paragraphs: Although the current agreement calls on Russia to shut down the reactors  when the replacement fossil fuel plants produce a certain amount of heat  and electricity, it does not specify what steps are needed to shut down the  reactors; how long it will take to shut down the reactors; or the process  for and time required to license and commission the replacement fossil fuel  plants. DOE indicated that agreeing on these issues and developing a  specific plan of action to complete the program is critical to success. As a  result, DOE initiated discussions with Russia to develop a reactor  shutdown plan that will detail the activities needed to shut down the  reactors and commission the fossil fuel plants. Additionally, the reactor  shutdown plan will analyze expenses associated with shutting down the  reactors.
Further, the current agreement contains shutdown dates that are  unrealistic and do not reflect DOE’s planned completion dates for the  replacement fossil fuel plants. Under the March 2003 agreement, the United  States and Russia agreed that the two reactors in Seversk and the reactor in  Zheleznogorsk would stop producing plutonium by December 31, 2005, and  December 31, 2006, respectively. However, according to DOE, Department  of State, and Russian officials, these dates are no longer realistic because  DOE does not plan to complete the replacement fossil fuel plant in Seversk  until 2008 or the plant in Zheleznogorsk until 2011. Russian officials have  reiterated that they will not shut down the reactors until the agreed-upon  replacement power and heat generating capacity are provided by the  United States. DOE and Department of State officials told us that the  current agreement would be amended to reflect DOE’s planned schedule  for the completion of the fossil fuel plants once project designs are  completed. Failure to secure specific agreement on these changes could  put program success at risk as it has for other U.S. nonproliferation efforts.
Specifically, in the past, some U.S. nonproliferation efforts that were  dependent on Russian cooperation have been canceled or adversely  affected in part because of a lack of specific agreements and coordination  between relevant U.S. and Russian organizations. Notable examples  include two large-scale construction projects in Russia that were managed  by DOD under the Cooperative Threat Reduction (CTR) program—a  facility to dispose of liquid propellant used to fuel Russian ballistic missiles  at Krasnoyarsk and the Fissile Material Storage Facility at Mayak. In both  cases, DOD did not secure specific provisions in the agreements that  addressed all program risks to the projects.
In 1993, DOD agreed to help Russia dispose of liquid propellant used to  fuel Russian ballistic missiles and eventually agreed to finance the  construction of a disposal facility. In February 2002, after $96 million  had been spent on the project, DOD officials learned that Russia had  used the liquid propellant in its space program but had failed to notify  DOD. As a result, DOD canceled construction of the facility and  terminated the project. The DOD Inspector General found that Russia  used the rocket fuel without DOD’s knowledge because the agreements  with Russia did not require it to provide the fuel to DOD for disposal and  did not provide DOD with access rights over the fuel’s storage.
In another case, the United States agreed to build a storage facility in  Mayak, Russia, for fissile materials, including highly enriched uranium  and plutonium. However, the agreement did not provide DOD with  rights to verify the source of the fissile material to be stored in the  facility, nor did it specify the amount or type of fissile material Russia  was required to deposit in the facility. By July 2003, DOD had spent  $372.8 million on fissile material containers and the design and  construction of the facility. However, in July 2003, MINATOM notified  DOD that Russia would store only 25 metric tons of plutonium at the  facility, while converting its highly enriched uranium into low enriched  uranium to sell to the United States for use in civilian nuclear power  plants. As a result, only one-fourth of the facility’s storage capacity will  be used.
The DOD Inspector General concluded that for future CTR projects,  implementing agreements should be negotiated that would “require Russia  to provide the United States with all the necessary resources to assure that  assistance is used for intended purposes.” As a result of congressional  concern and in response to recommendations from the DOD Inspector  General, the CTR program has taken several steps to protect the  investment of U.S. funds and improve program oversight, including  replacing good faith obligations from Russia with specific legal  commitments before proceeding with any current or future CTR projects.
section_title: DOE Has Not Developed a Plan to Coordinate the Shutdown of the Reactors with Other U.S. Efforts to Employ Thousands of Displaced Russian Nuclear Workers
paragraphs: DOE officials told us that worker transition issues at Seversk and  Zheleznogorsk have the potential to undermine efforts to shut down the  reactors and present major challenges for the program. In July 2002,  Russia’s First Deputy Minister of Atomic Energy said that the most “acute”  problem in downsizing Russia’s nuclear weapons complex was at  Zheleznogorsk, where the closure of the reactor would lead to the loss of  5,000 to 7,000 jobs in a city where other employment opportunities are  limited. He also predicted that the closure of the two reactors in Seversk  would lead to the loss of 5,000 to 6,000 additional jobs. Russian officials  from both Seversk and Zheleznogorsk told us that finding jobs for  displaced workers is their highest priority. Although these officials  recognize that Russia is primarily responsible for employing these workers,  they are seeking assistance from the United States to help address this  problem.
Since many Russian nuclear workers have highly specialized experience  manufacturing and processing weapons-grade nuclear material, their  unemployment poses a significant proliferation risk because they might sell  sensitive nuclear information to terrorists or countries of concern.  Specifically, many nuclear workers in Seversk and Zheleznogorsk possess  knowledge and skills in machining nuclear material and manufacturing  nuclear weapons. Since 2001, Congress has appropriated about $40 million  each year to support DOE’s efforts to assist Russia in finding employment  for its displaced nuclear workers through the Russian Transition Initiatives  (RTI) program. The RTI program is comprised of two nonproliferation  programs, the Nuclear Cities Initiative (NCI), which currently has some  projects in Zheleznogorsk, and the Initiatives for Proliferation Prevention  (IPP), which has a few projects in both cities. Both the NCI and IPP  programs seek to prevent the proliferation of nuclear weapons knowledge  from unemployed Russian nuclear weapons scientists—a problem known  as “brain drain.” As directed by the Congress, the NCI program works in 3  of Russia’s 10 closed nuclear cities: Snezhinsk, Sarov, and Zheleznogorsk.  The IPP program can work in all of the closed nuclear cities. From 1999 to  2003, the NCI program spent about $15.7 million on 23 projects in  Zheleznogorsk. During the same period the IPP program sponsored one  project in Zheleznogorsk costing about $1.8 million and one project in  Seversk that cost $1.2 million. However, NCI has not initiated any new  projects since September 2003 because the government-to-government  agreement guiding the program expired. The agreement has not been  renewed because the United States and Russia have not agreed upon legal  protections regarding liability claims that could be brought against the  United States, its contractors, and their employees.
DOE’s office that administers the reactor shutdown program (Office of  International Nuclear Safety and Cooperation) and the DOE office that is  responsible for the RTI program (Office of Nonproliferation and  International Security) have begun to coordinate their efforts, which  include attending regular meetings and planning for joint trips to the cities.  However, as of April 2004, DOE had not developed a plan to formally  coordinate the department’s program to facilitate the shutdown of the  reactors with the ongoing DOE efforts to help Russia find employment for  its displaced nuclear workers. DOE officials from both program offices told  us they are starting to draft a joint action plan to address Russian  workforce transition issues related to the shutdown of the plutonium  production reactors. In addition, DOE is working with Swiss officials to  organize an international conference to discuss potential employment  projects at Seversk and Zheleznogorsk.
Additionally, the United States and several other countries fund the  International Science and Technology Center (ISTC) program. This  program supports science centers in Russia and Ukraine and focuses on  paying nuclear, chemical, and biological weapons scientists to conduct  peaceful research in a variety of areas, such as developing new anticancer  drugs, improving nuclear safety, and enhancing environmental cleanup  techniques. The Department of State is responsible for implementing the  program on behalf of the U.S. government and chairs an interagency group  that conducts a policy review of all project proposals submitted for  funding. As of March 2004, ISTC had three active projects in Seversk and  Zheleznogorsk. According to DOE officials, DOE has not coordinated with  the ISTC program on workforce issues related to the shutdown of the  plutonium production reactors. They noted that DOE views the shutdown  effort as a departmental initiative although DOE plans to seek support from  other countries in its efforts to find employment opportunities for  displaced workers. Department of State officials told us that clearer  agreement on the problem and a coordinated U.S. government approach  was needed before the ISTC could be used to address worker displacement  issues at Seversk and Zheleznogorsk. They also stated that they are  prepared to use the ISTC program in coordination with other U.S. efforts to  address the problem.
section_title: DOE Has Spent Only a Small Portion of Available Program Funds, and Total Program Costs Are Likely to Be Significantly Higher Than DOE’s Original Estimates
paragraphs: As of December 31, 2003, DOE had spent $7.8 million, about 4 percent of  the funds available, to begin work on planning and developing the program.  In addition, DOE officials told us that they expect the final cost of the  program to be significantly higher than their initial estimate. DOE’s slow  rate of spending on program activities has led to about $179.1 million in  unobligated and unspent funds. Furthermore, the cost to build the  replacement fossil fuel plants, which DOE had projected to be $466 million,  is uncertain because the estimate is based on Russian cost projections that  DOE has not yet validated. According to DOE officials, the actual  construction costs for the plants are likely to be significantly higher than  the original estimate, possibly as much as $1 billion. DOE and its  contractors are currently revising the preliminary estimate to reflect  changes in the projects’ schedule and scope.
subsections: section_title: DOE’s Slow Rate of Spending on the Program Has Led to a Large Balance of Unspent and Unobligated Funds
paragraphs: As of December 31, 2003, DOE had unobligated funds totaling $137.9  million and an additional $41.2 million that has been obligated, but not yet  spent. Together, these funds represent DOE’s total carryover balance of  $179.1 million, which represent about 96 percent of the funds available for  the program. As table 1 shows, through December 31, 2003, DOE had  received $186.9 million in funding for the program but had only spent about  $7.8 million of these available funds to begin work on planning and  developing the program. Specifically, DOE indicated that these funds were  mainly spent on planning and developing the program and include travel,  overhead, project administration, and document translation costs.
According to DOE officials, three major factors account for DOE’s current  carryover balances:  After management of the program was transferred from DOD to DOE in  December 2002, DOE received $74 million in unspent program funding  from DOD. These funds were in addition to DOE’s appropriations for the  program.
According to DOE and U.S. industry officials, large-scale construction  projects require “front end” funding because construction projects are  executed over several years. DOE officials expect the program’s  obligations and expenditures to increase significantly when the Seversk  project moves from the design phase to the construction phase near the  end of fiscal year 2004 and the Zheleznogorsk project moves into the  construction phase in the second quarter of fiscal year 2005.
Difficulties and unforeseen delays are frequently associated with doing  work in Russia.
Large carryover balances are not uncommon for DOE nonproliferation  programs in Russia. In March 2003, DOE reported that its nuclear  nonproliferation programs had a total carryover balance of almost $460  million. DOE indicated that the large carryover amounts were due to  difficulties in negotiating and executing contracts with Russia and the  multiyear nature of these programs.
Despite the program’s large carryover balance, DOE has requested an  additional $50.1 million for the program in fiscal year 2005. Specifically, the  request includes $39.5 million for the Seversk fossil fuel plant construction,  about $9.6 million for the Zheleznogorsk plant, and $1 million for technical  support activities. In addition, DOE’s fiscal year 2005 budget projects the  annual budget requests for fiscal years 2006 through 2009 to be between  $56 million and $66.9 million.
section_title: Total Cost to Build the Replacement Fossil Fuel Plants May Be as Much as $1 Billion
paragraphs: In April 2003, DOE estimated that it would cost $466 million to build the  replacement fossil fuel plants. DOE estimated that the plant at Seversk  would cost about $172 million and the Zheleznogorsk plant would cost  approximately $295 million. However, because DOE’s estimates are based  on Russian cost projections developed between 2000 and 2001, which DOE  has not validated, the final cost to build the replacement fossil fuel plants is  uncertain. According to DOE officials, revised cost estimates are currently  being developed by DOE’s contractors and are likely to be significantly  higher than the original estimate, possibly totaling as much as $1 billion.  For example, the original estimate did not include the costs of U.S. and  Russian integrating contractors. Several other factors contributing to the  projected cost increase include the high rate of inflation in Russia, higher  than expected Russian labor and overhead rates, and unanticipated  problems with the design plans for both plants. For example, DOE officials  told us that the initial cost estimates for the Seversk plant were based on an  existing Russian design for the refurbishment, which DOE believed to be at  an advanced stage. However, after DOE and WGI began examining the  design documents, they found that much of the design was incomplete. As  a result, Russian contractors will perform additional design work, which  will contribute to increased project costs. As more of the design work is  completed, refined overall cost and schedule estimates will be developed  for the plants. According to DOE, firm cost estimates will be provided to  the Congress by the end of 2004.
DOE plans to fund the entire cost of the replacement fossil fuel plants,  which will be based on a Russian design and constructed by Russian  contractors. DOE, Department of State, and National Security Council  (NSC) officials told us that the United States did not insist that Russia  commit resources to building the plants when the March 2003 reactor  shutdown agreement was signed. NSC and Department of State officials  noted that the United States was concerned that Russia would not be able  to fund its part of the effort, and it did not want the program to be subject  to the unpredictability of the Russian budgetary process, which could delay  the program. The Department of State official also noted that the U.S.  government decided that the U.S. interest in pursuing the objective of the  earliest possible shutdown of the reactors overrode its interest in a  potentially fairer allocation of costs for building the replacement fossil fuel  plants. DOE officials pointed out that Russia will be responsible for the  maintenance and operation of the plants once they are completed and that  Russia is sacrificing some electricity production capacity because the  replacement fossil fuel plants will not produce as much electricity as the  reactors. DOE considers these Russian efforts as “in-kind” contributions.
Cost increases and schedule delays are not uncommon for U.S.  nonproliferation programs in Russia. For example, the United States has  had difficulties with past major construction projects in Russia, such as the  Chemical Weapons Disposal Facility at Shchuch’ye, and many of these  projects have experienced dramatic cost increases, significant delays, or  other major setbacks. At Shchuch’ye, DOD is assisting Russia by building  a chemical weapons destruction facility. As a result of changes in the  project’s scope and other factors, the estimated cost for the project  increased from about $750 million to about $1.04 billion. Congressional  concern over Russia’s financial commitment to the project led to a  congressional mandate that Russia commit at least $25 million annually  toward its chemical weapons destruction activities.
section_title: Conclusions
paragraphs: DOE’s effort to secure the shutdown of Russia’s three plutonium  production reactors is a critical nonproliferation program because it seeks  to eliminate the production of weapons-grade plutonium. However,  implementing this complex and technically challenging program is  becoming an increasingly risky undertaking for DOE. Some actions that  Russia has taken raise serious questions about its commitment to the  nonproliferation and safety-related goals of DOE’s program. We believe, as  do some DOE officials, that Russia could have demonstrated good faith by  reducing the amount of plutonium produced by the reactors in the period  before they are shut down. This could have been accomplished by  extending the amount of time the reactors are shut down for maintenance  during the summer months—a proposal that Russian officials told us could  be easily accomplished. However, Russia informed DOE that it had no  interest in pursuing this opportunity. While Russia’s unwillingness to  consider this proposal represents a setback, we believe that extending the  summer outage periods for the reactors furthers U.S. nonproliferation  objectives and would meet an important national security goal. In addition,  DOE was willing to spend over $20 million to improve the safety of these  reactors, which have been characterized as being among the most unsafe  reactors operating today. In this case, Russia also rejected DOE’s planned  assistance to improve the reactors’ safety and claims that it will make its  own safety improvements. We believe that the continued operation of these  reactors, given their current age and condition, presents a significant and  growing safety risk. Without implementing DOE’s proposed safety  upgrades, the safety risks posed by the reactors will continue to increase  dramatically.
Although the existing agreement between DOE and Russia’s Ministry of  Atomic Energy governing the shutdown of Russia’s plutonium production  reactors provides a general framework for cooperation, there are no  guarantees that the reactors will be shut down within DOE’s projected time  frames. Furthermore, the agreement does not specify what steps must be  taken to shut down the reactors and what specific requirements must be  met to certify the completion of the replacement fossil fuel plants. Without  defining these steps and specific requirements, DOE will be unable to  develop accurate estimates for the true scope and cost of its program or be  able to determine more precisely when the reactors will be shut down. The  history of U.S.-Russian nonproliferation activities has demonstrated that  some well-intentioned programs have had limited success because the  agreements governing them lacked specificity or oversight was inadequate.  The lessons of the past should be carefully considered as DOE moves  forward with its program. Furthermore, the existing time frames for  shutting down the reactors reflected in the agreement are neither accurate  nor achievable. DOE, Department of State, and Russian officials recognize  that the shutdown dates in the agreement are unrealistic and will need to  be revised to reflect DOE’s schedule for the completion of the fossil fuel  plants. Because of the history of failed efforts to secure the reactors’  closure and the inability to achieve previously agreed upon shutdown dates  for these reactors, we believe it would be in the best interests of the United  States to revise the agreement in order to have increased assurances that  the reactors will be permanently shut down.
A major consequence of DOE’s program to assist Russia’s closure of the  reactors will be the displacement of thousands of Russian nuclear workers  who are currently employed at the reactors and related facilities. Many of  these workers have received specialized training in the manufacture and  reprocessing of weapons-grade nuclear material and could pose a serious  proliferation risk if unemployed because they might sell sensitive nuclear  information to terrorists or countries of concern. This looming problem, if  left unaddressed, has the potential to undermine the program. Although  DOE has started to coordinate the reactor shutdown program with the  department’s other efforts to employ Russian nuclear workers— specifically the Russian Transition Initiatives—it has not developed a plan  to coordinate these two nonproliferation programs. Moreover, there is no  overall U.S. government strategy that would integrate the Department of  State’s International Science and Technology Center program with DOE’s  programs to employ Russian weapons scientists, particularly in the cities  where the reactors will be shut down. A jointly planned effort could  strengthen U.S. nonproliferation efforts by leveraging resources and  expertise between these programs. Such a plan could also identify other  options to support employment opportunities in the two cities, including  seeking financial support from other countries.
Estimated costs to construct the replacement fossil fuel plants are  expected to increase dramatically. With the total cost for the program  expected to be as much as $1 billion, DOE’s program has taken on greater  financial risk and will require a more substantial investment of resources.  Because the United States has agreed to fully fund the costs of the  replacement plants, Russia has little incentive to control construction  costs. Russia would be more likely to show fiscal restraint if it were  responsible for funding a portion of the construction projects. In the final  analysis, this program will provide Russia with significant capital assets  that Russia would have had to finance itself if not for the assistance of the  United States. Additionally, DOE’s approximately $179 million balance of  unobligated and unspent program funding raises concerns, especially in  light of the department’s request for an additional $50.1 million in fiscal  year 2005. Although DOE officials believe that these carryover balances are  justified, it is highly unlikely that DOE will be able to spend its entire  available program funding by the end of fiscal year 2004 because  construction at both plants is not expected to begin until at least fiscal year  2005.
section_title: Recommendations for Executive Action
paragraphs: To help achieve important U.S. nonproliferation objectives, we recommend  that the Secretary of Energy and the Administrator of the National Nuclear  Security Administration continue efforts to reduce the amount of  plutonium produced by the reactors as an interim measure before they are  permanently shut down. Specifically, the Secretary and the Administrator  should continue to pursue the option of extending summer outage periods  at the reactors as a way to realize the immediate nonproliferation benefits  of reduced plutonium production in Russia.
To increase the chances for program success by clarifying the existing  reactor shutdown agreement, we recommend that the Secretary of Energy,  working with the Administrator of the National Nuclear Security  Administration and Secretary of State, do the following:  reach agreement with Russia on the steps that must be taken to  permanently shut down the reactors and the specific requirements that  must be met to complete the replacement fossil fuel plants;  identify any additional costs that may surface as a result of refining the  scope of work associated with shutting down the reactors and  completing the replacement fossil fuel plants and revise cost and  schedule estimates for the program accordingly; and   amend the March 2003 reactor shutdown agreement as soon as  practicable to accurately reflect DOE’s more realistic shutdown dates  for Russia’s three plutonium production reactors.
To maximize the benefits of related U.S. nonproliferation efforts, we  recommend that the Secretary of Energy and the Administrator of the  National Nuclear Security Administration do the following:  Create a specific plan and take steps to formally coordinate DOE’s  program to assist Russia’s closure of the three plutonium production  reactors with the department’s efforts to find jobs for displaced Russian  nuclear workers through the Russian Transition Initiatives. Such a plan  should be coordinated with Russia and should include strategies for  obtaining assistance from other countries in finding employment for  these workers.
Take the lead in developing a comprehensive plan that focuses on  integrating U.S. efforts to employ Russian nuclear workers in the cities  of Seversk and Zheleznogorsk. The plan should be developed in  conjunction with the Secretary of State. Such a plan should consider  ways to better ensure that future projects funded by DOE and the  Department of State in Seversk and Zheleznogorsk are clearly focused  on finding jobs for Russian workers who will be displaced once the  plutonium production reactors and related facilities are closed.
To help defray the escalating costs of DOE’s program to shut down Russia’s  plutonium production reactors, we recommend that the Secretary of  Energy and the Administrator of the National Nuclear Security  Administration consider seeking financial support from Russia to construct  the replacement fossil fuel plants. To the extent possible, these  contributions should not be limited to in-kind contributions such as  building materials, labor, or the value of land.
To address concerns about large carryover balances of program funding,  we recommend that the Secretary of Energy and the Administrator of the  National Nuclear Security Administration  monitor funding requirements to ensure that funds are obligated in a   determine whether future funding requirements need to be reduced in  light of the slow rate of spending to date on the program.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided the Departments of Energy and State with draft copies of this  report for their review and comments. DOE’s and State’s written comments  are presented as appendixes IX and X, respectively.
DOE’s National Nuclear Security Administration said the draft report  provided a balanced evaluation of its program to shut down Russia’s three  plutonium production reactors. DOE agreed to implement our  recommendations. The Department of State agreed with all of our  recommendations except one that DOE should consider seeking financial  support from Russia to construct the replacement fossil fuel plants. DOE  also expressed concern with our conclusion regarding this matter. Both  agencies stated that relying on Russia to fund critical program elements  would delay the program, something they did not want to risk. These  concerns notwithstanding, we continue to believe that DOE should look for  opportunities to have Russia fund a portion of the construction projects as  a way to contain costs, which are expected to increase dramatically. DOE  plans to pursue obtaining financial support from Russia provided that it  does not delay the program. We agree with this approach.
Both agencies also disagreed with our conclusion that Russia’s rejection of  key initiatives to reduce the amount of plutonium produced by the reactors  and to improve their safety before they are shut down signals Russia’s lack  of commitment to the nonproliferation and safety goals of the program.  Both agencies stated that Russia rejected these initiatives primarily due to  its security concerns about granting U.S. officials access to the reactors. In  our report, we recognized that Russia’s security concerns may have played  a role in rejecting the extension of summer outages at the reactors as an  option for reducing plutonium production. However, in a November 2003  letter from MINATOM to DOE, Russia did not cite security concerns as a  reason for rejecting the proposal. In fact, as we noted in the report,  MINATOM stated that “ not find it worthwhile to waste efforts  on a project for reducing plutonium production prior to the permanent  shutdown of the reactors.” Instead, MINATOM claimed that it wanted to  focus on the earliest possible shutdown of the reactors. As we noted in our  report, both U.S. and Russian officials told us that extending summer  outages to reduce the current production of weapons-grade plutonium held  great promise and would be an easy option to implement. Furthermore, in  its comments, DOE stated that it was disappointed in Russia’s rejection of  the proposal to study ways to reduce the amount of plutonium produced by  the reactors as an interim step before they are shut down.
Regardless of Russia’s basis for rejecting the proposal, it should be noted  that the long-standing and ultimate U.S. goal of this program is to reduce  and eliminate the production of weapons-grade plutonium in Russia as  quickly as possible. From the U.S. perspective, shutting down these  reactors is a major nonproliferation objective, and the United States is  committing significant resources to this effort. Thus, it seems reasonable to  us that Russia should reciprocate and show its commitment to the  fundamental nonproliferation tenets of this program. Finally, although DOE  and State objected to our characterization of the implications of Russia’s  decision to reject key DOE initiatives, both agencies agreed with our  recommendation that seeking summer outages as a way to reduce  plutonium production should continue to be pursued.
With regard to the reactors’ safety, we noted in the report that they are  among the most unsafe in the world and that DOE was prepared to provide  a substantial amount of assistance to improve their safety. Russia’s  rejection of the assistance, regardless of the reasons, raises serious  concerns about its commitment to ensuring the reactors’ safe operation  until they can be shut down. As we noted in the report, DOE and national  laboratory officials expressed doubt about whether Russia would perform  sufficient safety upgrades on its own.
State also objected to what it believed to be our conclusion that final  shutdown of the reactors is uncertain because the reactor shutdown and  implementing agreements are insufficiently clear regarding the steps to  permanently and irreversibly shut down the reactors. We believe that State  in its written response to our draft report has mischaracterized our  conclusion. Specifically, our report cites the lack of clarity in the agreement  as one of several challenges that DOE faces that could affect final  shutdown. While State disagreed with our conclusion, it agreed with our  recommendation that DOE should reach agreement with Russia on the  steps that must be taken to shut down the reactors and the specific  requirements needed to certify the completion of the fossil fuel plants.  State also believes that we overstated the implications of the agreement’s  lack of accurate shutdown dates. However, State acknowledged that the  deadlines for reactor shutdown in the agreement are no longer consistent  with current plans and agreed with our recommendation to revise the  dates.
State also disagreed with our conclusion that worker transition issues have  the potential to undermine the program. However, as we noted in our  report, Russian officials we spoke with considered the employment of  displaced workers as their highest priority and DOE officials  acknowledged this as a major concern. Furthermore, DOE and State agreed  with our recommendations to address this problem.
DOE and State also provided technical comments, which we incorporated  in the report where appropriate.
We are sending copies of this report to the Secretary of Energy; the  Administrator, National Nuclear Security Administration; the Secretary of  State; the Director, Office of Management and Budget; and interested  congressional committees. We will also make copies available to others  upon request. In addition, this report will be available at no charge on the  GAO Web site at http://www.gao.gov.
If you or your staff have any questions concerning this report, I can be  reached at 202-512-3841 or aloisee@gao.gov. Major contributors to this  report are included in appendix XI.
section_title: Information About Seversk and Zheleznogorsk
paragraphs: This appendix provides information about the cities of Seversk and  Zheleznogorsk, the two cities in Russia where the plutonium production  reactors are located.
subsections: section_title: Seversk
paragraphs: Formerly known as Tomsk-7, the closed city of Seversk is located  approximately 2,000 miles east of Moscow and about 9 miles northwest of  Tomsk, a major industrial city in western Siberia. As of January 2000, the  city had approximately 119,000 residents. In addition to plutonium  production, a number of other nuclear related activities have been carried  out in Seversk, including the fabrication of uranium and plutonium  weapons components. Recently, Seversk was selected to be the site for a  planned facility that will dispose of 34 metric tons of Russia’s weapons- grade plutonium by converting it into mixed oxide fuel. The planned  conversion facility will be built with Department of Energy funding.  Nonnuclear activities at the city include an oil refinery operation.
Seversk is the location of the Siberian Chemical Combine, which is  responsible for operating the plutonium production reactors. Construction  of the Siberian Chemical Combine facilities began in 1949; and on July 26,  1953, the first output of enriched uranium-235 was produced. Since its  inception, the Siberian Chemical Combine has housed the Siberian Atomic  Power Station; a chemical separation plant; facilities for plutonium  processing, blending, and pit fabrication; an enrichment plant; and nuclear  waste management facilities. The first of the plutonium production  reactors at Seversk came online in 1955, and by the 1970s five such reactors  were operating at the site. Three of the reactors were shut down in the  early 1990s. The city’s two remaining weapons-grade plutonium production  reactors began operation in 1965 and 1968 and continue to provide heat and  electricity to Seversk and the neighboring city of Tomsk. Currently, the  Siberian Chemical Combine employs about 15,000 workers, most of whom  are highly skilled nuclear experts.
section_title: Zheleznogorsk
paragraphs: Zheleznogorsk is located approximately 2,500 miles east of Moscow and  about 35 miles north of the city of Krasnoyarsk. As of early 2000, the city  had a population of 103,000. Formerly known as Krasnoyarsk-26, the city  was built to house the employees of the Mining and Chemical Combine, a  complex engaged in producing and processing weapons-grade plutonium.  Both the city and the Mining and Chemical Combine are located on the east  bank of the Yenisei River in Siberia. In 1996, the residents of Zheleznogorsk  voted to remain a closed city in an attempt to maintain the clean, village- like quality amidst harsher, more environmentally damaged towns. Since  the end of the Cold War, the technical workforce in Zheleznogorsk has  dropped; and the city is now in difficult financial straits. Zheleznogorsk has  tried to diversify its economy through forays into satellite building and  television assembly.
The three plutonium production reactors operated by the Mining and  Chemical Combine were built in a huge cavern approximately 250 meters  beneath a mountain. Over 60,000 prisoners were forced to excavate the  chambers containing the reactors when work began in 1950, but in 1953  over 100,000 military construction workers replaced these prisoners. Two  of the reactors began operating in 1958 and 1961 but were both shut down  in 1992. A third plutonium production reactor, active since 1964, still  functions to provide heat and electricity to the city. The Mining and  Chemical Combine currently employs about 9,500 workers who in addition  to plutonium production are involved in other nuclear-related activities,  including the stockpiling of plutonium.
section_title: Scope and Methodology
paragraphs: We performed our review of DOE’s Elimination of Weapons-Grade  Plutonium Production program at DOE’s offices in Germantown, Maryland;  DOE headquarters in Washington, D.C.; the Defense Threat Reduction  Agency in Ft. Belvoir, Virginia; the Department of State (State) in  Washington, D.C.; the National Security Council in Washington, D.C.; the  Nuclear Regulatory Commission in Rockville, Maryland; and Moscow,  Seversk, and Zheleznogorsk, Russia.
To assess the progress of DOE’s recent efforts to shut down Russia’s three  remaining plutonium production reactors, we reviewed documents and had  discussions with officials from the Department of Defense (DOD); DOE;  State; the National Security Council; the Nuclear Regulatory Commission;  the Pacific Northwest National Laboratory (PNNL); the National Energy  Technology Laboratory; the U.S. Trade and Development Agency; DOE’s  U.S. contractors—Washington Group International (WGI) and Raytheon  Technical Services (Raytheon); and a number of nongovernmental entities,  including nonproliferation and fossil fuel experts. In September 2003, we  visited Russia to interview Russian officials and to see the sites for the  replacement fossil fuel plants DOE plans to fund. While in Moscow, we  spoke with officials from the Ministry of Atomic Energy of the Russian  Federation; Rosatomstroi; the Kurchatov Institute, a leading Russian  nuclear design institute; and Gosatomnadzor, the Russian nuclear  regulatory agency. These officials provided Russia’s views of DOE’s  program to build replacement fossil fuel plants and its efforts to shut down  the reactors. We visited Zheleznogorsk and spoke with officials from the  Mining and Chemical Combine, the city government, the planned fossil fuel  plant, and the operators of the reactor. We toured the site of the planned  fossil fuel plant and observed the current condition of the buildings at the  site. We visited Seversk and interviewed officials from the Siberian  Chemical Combine, the city government, operators of the reactors, and  operators of the existing fossil fuel plant that DOE plans to refurbish. We  toured the site of the existing fossil fuel plant and observed its current  condition.
To assess DOE’s management of the program we examined documents  from DOE and DOE’s U.S. contractors—WGI and Raytheon. We  interviewed officials from DOE’s Office of Engineering and Construction  Management and from the Elimination of Weapons-Grade Plutonium  Production program. In addition, while in Russia, we obtained views on  DOE’s management of the program from a number of Russian officials from  the Ministry of Atomic Energy of the Russian Federation; Rosatomstroi; the  Kurchatov Institute; Gosatomnadzor; the Mining and Chemical Combine;  the Siberian Chemical Combine; and the city governments of  Zheleznogorsk and Seversk.
To identify challenges DOE faces in implementing its program, we  examined documents from DOE, the Nuclear Regulatory Commission,  PNNL, the National Energy Technology Laboratory, DOE’s U.S.  contractors—WGI and Raytheon, and several nongovernmental entities  including nonproliferation and fossil fuel experts. To describe the proposed  upgrades DOE planned to fund to improve the safety of the reactors while  replacement fossil fuel plants were being built, we reviewed documents  from DOE, the Nuclear Regulatory Commission, and PNNL. We also  interviewed nuclear safety officials from DOE, the Nuclear Regulatory  Commission, the Department of State, and PNNL.
To determine the amount of money spent on U.S. efforts to eliminate  weapons-grade plutonium production in Russia prior to the program’s  transfer from DOD to DOE in December 2002, we analyzed documents and  spoke with officials from DOE, DOD, the Department of State’s  Nonproliferation and Disarmament Fund, the U.S. Trade and Development  Agency, PNNL, and the Nuclear Regulatory Commission. Dollar amounts  for the historical spending on these efforts were adjusted to constant fiscal  year 2003 dollars to reflect trends in inflation over time. Because they are  being used for background purposes only, we did not assess the reliability  of these historical data.
To determine how much DOE had spent through December 31, 2003 on its  efforts to eliminate weapons-grade plutonium production in Russia and  DOE’s projected costs to implement the program, we reviewed DOE’s cost  and schedule estimates for the replacement fossil fuel plants, interviewed  appropriate agency officials, and posed a number questions to DOE to  determine the reliability of the financial data provided to us. We  determined that the data were sufficiently reliable for the purposes of this  report based on work we performed to assure the data’s reliability.  Specifically, we (1) met numerous times with program officials to discuss  these data in detail; (2) obtained from key database officials responses to a  series of questions focused on data reliability covering issues such as data  entry access, internal control procedures, and the accuracy and  completeness of the data; and (3) added follow-up questions whenever  necessary.
We conducted our review between June 2003 and April 2004 in accordance  with generally accepted government auditing standards.
section_title: The Plutonium Production Nuclear Fuel Cycle
paragraphs: Plutonium is a byproduct of the nuclear fuel cycle and is produced by all  nuclear reactors. Weapons-grade plutonium, however, contains a high  content of plutonium-239, which is the most suitable isotope for use in  nuclear weapons. Plutonium of this type is formed in the Russian  production reactors as a component of highly radioactive spent reactor  fuel. Although at this point the plutonium is relatively protected against  proliferation because it is diluted and surrounded by the highly radioactive  spent fuel, it cannot be safely stored for long periods in this form at the  “wet storage” areas at the reactors to preclude corrosion and cracking in  the aluminum fuel cladding. The plutonium is taken to another facility  where it is chemically separated from the spent fuel in an operation called  “reprocessing.” There is also an optimal time to reprocess the spent nuclear  fuel: reprocess too soon and the fuel is highly radioactive, reprocess too  late and the fuel can contaminate the spent fuel pool. Although the  reprocessed fuel requires containment and is easily incorporated into  weapons, it is also relatively easier and less expensive to store than spent  fuel. Figure 3 illustrates the plutonium production cycle.
section_title: Additional Information About DOE’s Management Plan for the Program
paragraphs: Figure 5 shows the project acquisition process and critical decision (CD)  points used in the DOE order 413.3 program management structure, which  DOE has adopted for the program.
As figure 5 shows, the five CD points are: (1) CD-0, approve mission need;  (2) CD-1, approve preliminary baseline range; (3) CD-2, approve  performance baseline; (4) CD-3, approve start of construction; and (5) CD- 4, approve start of operation or project closeout. Figure 5 also shows the  prerequisite documentation and project milestones, such as the acquisition  and project execution plans, which must be provided before critical  decision approval can be granted. DOE officials believe that this  management approach will help improve program oversight and  accountability. The fossil fuel plant construction projects at Seversk and  Zheleznogorsk gained approval of mission need (CD-0) from the Deputy  Secretary of Energy in December 2002. DOE officials told us that the  Seversk project would proceed to CD-1 in April/May 2004 and to CD-2 near  the end of fiscal year 2004. The Zheleznogorsk project is expected to move  to CD-1 in August 2004 and to CD-2 in the second quarter of fiscal year  2005.
section_title: Description of a Coal-Fired Power Plant
paragraphs: This appendix describes how electricity and heat are produced by a coal- fired power plant. Although the plant described is not identical to ones that  will be constructed in Russia, the description is generic and can generally  be applied to all coal-fired power plants. Figure 6 shows how electricity is  produced by a coal-fired power plant.
Coal is pulverized into a fine powder as it leaves the coal bin. That powder  is blown into a boiler where it is ignited. The walls of the boiler contain  miles of tubing, through which water is circulated. Heat from the burning  coal turns the water into steam. The steam passes through piping to a  turbine. The steam is directed against blades of the turbine causing it to  spin. The turbine shaft turns, rotating the generator, which creates  electricity. After the steam is directed against the blades, it goes to a  condenser beneath the turbine. Cool water in the condenser turns the  steam back into water. The water is pumped back into the boiler tubes to  be heated into steam again. Large fans blow air into the boiler to support  the combustion of coal. Some of the air is directed to the pulverizer where  it helps dry the coal and carry it to the boiler. Coal ash drops to the bottom  of the boiler for disposal. Hot gases escape from inside the boiler.  Impurities are removed from these gases through scrubbing systems before  they are released through the stack.
section_title: Description of DOE’s Planned Nuclear Safety Upgrades
paragraphs: As part of the March 2003 reactor shutdown agreement signed by DOE and  the Ministry of Atomic Energy of the Russian Federation, DOE pledged to  improve the safe operation of Russia’s three remaining plutonium  production reactors until they can be shut down. Prior to Russia’s decision  to reject DOE assistance to improve the safety of the reactors, DOE had  allocated $21 million to support 28 safety upgrade projects including fire  safety system improvements, enhancements to emergency electrical power  systems, and risk assessments. DOE planned to complete the safety  upgrades within 24 months in order to improve the safety of the reactors  during their remaining lifetime. To oversee the safety upgrade projects,  DOE selected PNNL, which had managed prior efforts under DOD to  modify the reactors’ cores and was thus familiar with the reactors and their  design and safety problems.
DOE selected the safety upgrade projects after determining that none of  them would extend the operating life of the reactors. DOE chose the 28  projects out of a larger list of 40 projects that Russian reactor officials  submitted. According to DOE and PNNL officials, some of the reactor  upgrades that Russia initially proposed were rejected because they were  potentially life extending or would require too much time to implement.  For example, DOE rejected Russian upgrades to improve the primary  coolant pipes of the reactors due to concerns that such improvements  would be life extending.
Table 2 provides information about each of DOE’s planned upgrades to  improve the safety of Russia’s three plutonium production reactors.
section_title: GAO Technical Analysis of the Safety Problems Associated with Russia’s Three Plutonium Production Reactors
paragraphs: Russia’s three remaining weapons-grade plutonium production reactors are  among the most dangerous reactors currently operating in the world. All  three of the reactors were built using old designs derived from the original  reactor run by Enrico Fermi in the 1940s. According to officials from  MINATOM, the Russian nuclear regulatory agency Gosatomnadzor, and the  Kurchatov Institute—the leading civilian nuclear research institute in  Russia—the reactors must be shut down by 2010. However, the reactor  managers at Seversk believed that the continuous repairs to the reactors  over the years are increasing the operating life and that further safety  upgrades could allow the reactors to operate until 2014. In our view, all  three reactors are showing the wear of having been run for a very long time  at very high output, and all have had accidents—some as recently as 5  years ago.
The safety risks posed by these reactors are a function of three factors: (1)  all three reactors have been running at a very high output, producing both  high temperatures and high neutron flux (the number of neutrons passing  through a sphere one square-centimeter in cross-section during a unit of  time) for their entire lives; (2) all three reactors have run approximately  twice as long as they were originally designed to operate; and (3) none of  these reactors meet current reactor safety standards. The danger that these  reactors present is the risk of a catastrophic reactor failure—such as a loss  of coolant accident—which would result in a fire expelling the highly  enriched uranium fuel and its fission byproducts such as plutonium and  strontium-90, all of which are highly toxic and carcinogenic. The danger  from such a fire is that radioactive particles would be dispersed and  breathed into the body, causing either kidney damage from particles of  uranium or cancer from particles of strontium-90 and plutonium.
All three reactors are designed to run at rated power, which is the original  power output level of a reactor in terms of temperature output (t), and  electrical output (e). According to Gosatomnadzor, the rating for the  reactors is 800 megawatts (t) each. A Gosatomnadzor official informed us  that the reactors could run at 20 percent higher than their original rating, or  at 960 megawatts (t), and that the reactors had run at an elevated level  during a 20-year period. In our opinion, Gosatomnadzor’s estimates are  probably conservative because, based on the amount of fuel that can be  used by the reactors and the fuel type that has been used, each reactor has  the ability to run at a power level up to 2,500 megawatts (t) and has been  run at a power level of at least 2,000 megawatts. If these reactors were  originally designed to run at 800 megawatts (t), then they may have run at  three times their original design rating. This will definitely shorten the  operating life of the reactors, which makes their continued operation risky.
Russian officials that we met disagree over both the original life spans of  the reactors and how much longer the reactors can be operated before the  risk of a catastrophic failure becomes too high. According to officials from  MINATOM, Gosatomnadzor, and the Kurchatov Institute, the original life  span for each of the reactors was 25 years. However, according to the  operators of the three Russian reactors, the original reactor life spans are  20 years. All three reactors have operated for approximately 40 years, or  roughly twice as long as originally designed. Gosatomnadzor confirmed  that the design life is a function of: (1) the graphite cladding—which forms  the outer, protective layer of the fuel elements and (2) the steel  containment that surrounds the core. If it is assumed that the reactors have  operated at 2,500 megawatts (t) for 20 years, then the original design life of  20 years could be reduced by up to 10 years, since the super heating of the  graphite and the high neutron flux at the core center will cause much  higher degradation than if the reactors were run at their rated power levels  for their entire lives. These two factors will make the integrity of both the  graphite cladding and the steel containment highly questionable and will  increase the risk of a catastrophic failure of the reactors.
None of the reactors meets current Russian, U.S., or international safety  standards because they lack modern safety controls and are therefore  dependent on direct operator intervention for both monitoring and safety.  MINATOM, Gosatomnadzor, and the Kurchatov Institute told us that the  personnel working at the reactors pose a safety threat because the quality  of the reactor staff is weakening due to attrition and old age. According to  Gosatomnadzor, the average age of reactor workers is 50, and the reactors  are experiencing an increased number of temporary emergency shutdowns  due to operator error, not the technology itself. Conversely, reactor officials  at Seversk were concerned that the attrition of older workers will result in  the loss of the knowledge and the ability of people that have become  familiar with the reactors over many years. Although the Russian  organizations disagree over the cause of the increased rate of accidents,  there is a consensus that workforce attrition will have an impact on the  safe operation of the reactors because it is likely that the reactor workers  are the first and last line of defense against reactor accidents.
section_title: Comments from the Department of Energy
section_title: Comments from the Department of State
section_title: GAO Contact and Staff Acknowledgments
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paragraphs: Jim Shafer, 202-512-3841.
section_title: Acknowledgments
paragraphs: In addition to the individual listed above, R. Stockton Butler, Nancy  Crothers, Glen Levis, Steve Rossman, and Keith Rhodes, GAO’s Chief  Technologist, made key contributions to this report.
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