oversight

Nuclear Nonproliferation: Status of Transparency Measures for U.S. Purchase of Russian Highly Enriched Uranium

Published by the Government Accountability Office on 1999-09-22.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                  United States General Accounting Office

GAO               Report to the Honorable Richard G.
                  Lugar, U.S. Senate



September 1999
                  NUCLEAR
                  NONPROLIFERATION
                  Status of Transparency
                  Measures for U.S.
                  Purchase of Russian
                  Highly Enriched
                  Uranium




GAO/RCED-99-194
      United States
GAO   General Accounting Office
      Washington, D.C. 20548

      Resources, Community, and
      Economic Development Division

      B-283458

      September 22, 1999

      The Honorable Richard G. Lugar
      United States Senate

      Dear Senator Lugar:

      After the breakup of the Soviet Union in the early 1990s, there was great
      concern that weapons-grade material from retired Russian nuclear
      weapons, such as highly enriched uranium and plutonium, could be stolen
      or reused in nuclear weapons if not disposed of or properly protected. In
      the case of highly enriched uranium, one solution was to dilute this
      nuclear material into low enriched uranium so that it could be made into
      fuel for commercial nuclear power reactors. In February 1993, the United
      States agreed to purchase from Russia 500 metric tons of highly enriched
      uranium extracted from dismantled Russian nuclear weapons over a
      20-year period.1 Russia agreed to dilute, or blend-down, the material into
      low enriched uranium before shipping it to the United States. From June
      1995 through December 31, 1998, 1,487 metric tons of low enriched
      uranium, derived from 51 metric tons of highly enriched uranium, was
      delivered to the United States. USEC implements the commercial contract
      under the agreement and pays Russia for the deliveries of low enriched
      uranium.2 Russia is expected to receive about $12 billion from the
      agreement. As of April 1999, USEC had paid Russia almost $940 million.

      In accordance with the 1993 agreement, the United States and Russia
      negotiated a series of access and monitoring measures, known as
      transparency measures, at four nuclear material processing facilities that
      are located in closed Russian nuclear cities.3 These transparency measures
      are designed to provide confidence that the arms control objectives of the
      agreement—reducing the number of Russian nuclear warheads—and the
      nonproliferation objectives—reducing Russia’s inventory of
      weapons-grade highly enriched uranium—are met. More specifically, these
      measures are intended to provide confidence that the highly enriched
      uranium is extracted from dismantled Russian nuclear weapons and that
      the highly enriched uranium is then blended into low enriched uranium at

      1
      Formally known as The Agreement Between the Government of the United States of America and the
      Government of the Russian Federation Concerning the Disposition of Highly Enriched Uranium
      Extracted From Nuclear Weapons (Feb. 18, 1993).
      2
       Formerly a government-owned corporation, the United States Enrichment Corporation was privatized
      in July 1998 and is now known as USEC Inc., or USEC.
      3
       Russia’s 10 closed nuclear cities performed the most sensitive aspects of Russia’s nuclear weapons
      production. Access to the closed cities is restricted, and they are geographically isolated.



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                   three Russian facilities. U.S. officials implement the measures through
                   periodic monitoring visits to Russian facilities, where they observe the
                   processes involved with converting highly enriched uranium into low
                   enriched uranium, review nuclear material inventory records, and use
                   equipment that measures the quality of the uranium to determine if it is
                   weapons grade and could be used in a nuclear weapon.

                   As you requested, this report examines (1) the transparency measures that
                   are in place, (2) whether these measures ensure that the nonproliferation
                   objectives of the agreement are met, and (3) the proposals for additional
                   transparency measures. This report is the unclassified version of a
                   classified report that we issued to you on July 8, 1999. In addition to
                   information on these three objectives, the classified report included
                   information on whether the transparency measures ensure that the arms
                   control objectives of the agreement—that the highly enriched uranium
                   that is purchased by the United States is extracted from dismantled
                   Russian nuclear weapons—are met.


                   While most of the transparency measures have gradually been
Results in Brief   implemented at four Russian nuclear material processing facilities, several
                   key measures have not yet been put into place. Moreover, under the
                   agreement, U.S. officials lack access to Russian nuclear weapons
                   dismantlement facilities and to the weapons dismantlement process. Some
                   of the low enriched uranium delivered to the United States—about
                   one-third—was shipped before the transparency measures had been
                   implemented at each of the Russian facilities. According to the
                   Departments of State and Energy, there was a deliberate decision by the
                   U.S. government that U.S. interests would be served by allowing a portion
                   of the highly enriched uranium to be blended into low enriched uranium
                   and to be rapidly removed from Russia while the details of the
                   transparency measures were being worked out. U.S. officials first visited a
                   Russian facility in February 1996 to implement the initial set of
                   transparency measures. In October 1996, Russian officials agreed to
                   strengthen the measures in return for a $100 million advance payment to
                   be credited against their future deliveries of low enriched uranium. The
                   most significant strengthened measures involve the (1) use of portable
                   U.S.-manufactured equipment at various stages to confirm the presence or
                   absence of weapons-grade highly enriched uranium and (2) installation of
                   U.S. equipment that can continuously monitor whether the highly enriched
                   uranium is blended into low enriched uranium. However,
                   continuous-monitoring equipment has been installed at only one of the



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             three Russian blending facilities after a 2-year delay and has not yet gone
             into routine operation. Russian officials have not agreed to a schedule for
             installing the equipment at the two other blending facilities.

             Transparency measures provide U.S. officials with confidence that
             weapons-grade highly enriched uranium is being blended into low
             enriched uranium at the three Russian blending facilities. Nevertheless,
             U.S. officials will not be highly confident that all of the low enriched
             uranium purchased under the agreement is coming from weapons-grade
             highly enriched uranium until continuous-monitoring equipment is
             operating at the Russian blending facilities. Furthermore, according to the
             Department of Energy, U.S. officials rejected one cylinder of low enriched
             uranium that was shipped to the United States in 1997 for purchase under
             the agreement because it did not meet the agreement’s requirements.

             In March 1998, the Secretary of Energy proposed to the Russian Minister
             of Atomic Energy a number of additional transparency measures that
             included providing U.S. officials with greater access to the Russian
             nuclear-weapons-dismantlement process. However, Department of Energy
             officials told us that although one Russian facility has recently expressed
             an interest in a demonstration project, there has been no progress in
             reaching an agreement with Russia’s Ministry of Atomic Energy on
             adopting these additional measures.


             Little official information is available on the sources, uses, and inventories
Background   of highly enriched uranium (HEU) in Russia, according to a May 1998 report
             by the Energy Information Administration (EIA).4 EIA estimates, however,
             that Russia produced about 1,400 metric tons of weapons-grade HEU from
             1950 through 1988, after which, Russia is believed to have stopped
             producing HEU for defense purposes.5 The inventory of HEU remaining in
             Russia was estimated to be 1,270 metric tons at the end of 1994. EIA
             reported that not all HEU in Russia was used in nuclear weapons. For
             example, some HEU has been used as fuel for plutonium-production,



             4
             Commercial Nuclear Fuel From U.S. and Russian Surplus Defense Inventories: Materials, Policies, and
             Market Effects, EIA (May 1998).
             5
              Uranium, in its natural form, comprises a mixture of several isotopes (forms of the same element with
             different atomic weights). Less than 1 percent of natural uranium is the isotope uranium 235 (U-235),
             the fissionable isotope used in nuclear weapons and reactors. Uranium that is enriched to a
             concentration of over 90 percent U-235 is highly enriched and is weapons-grade material. Uranium that
             is enriched to a concentration of from 3 to 5 percent U-235 is low enriched uranium and is
             commercial-reactor-grade material.



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research, and naval propulsion reactors.6 EIA noted that most of the
uranium used to produce HEU in the former Soviet Union reportedly came
from fuel that was used in plutonium-production reactors.

In January 1994, USEC signed a commercial contract with Techsnabexport
to implement the February 1993 government-to-government agreement.
Techsnabexport is a commercial arm of the Ministry of the Russian
Federation for Atomic Energy (MINATOM) and is the Russian executive
agent for the agreement. In November 1996, USEC and Techsnabexport
signed an amendment to the commercial contract that established an
agreement on the quantities and prices of low enriched uranium (LEU) for 5
years. The agreement provided for USEC to purchase LEU derived from 18
metric tons of HEU in 1997, 24 metric tons in 1998, and 30 metric tons
annually from 1999 through 2001. According to USEC, from June 1995
through December 1998, USEC received 1,487 metric tons of LEU, as shown
in figure 1.7 From August 1998 through March 1999, Techsnabexport
suspended the contracted deliveries of LEU to USEC, in part, because of
Russia’s dissatisfaction with progress in reaching an agreement on the
price it would receive for the natural uranium that makes up a portion of
the LEU. As a result, USEC received only 60 percent of the 1998 LEU
shipments it had contracted for delivery. An agreement on the natural
uranium was reached in March 1999, and a USEC representative stated
that Techsnabexport delivered the last of the 1998 LEU shipments in
June 1999.




6
 Not all HEU is considered to be weapons-grade material. Any uranium enriched to 20 percent of U-235
or greater is considered to be highly enriched. Under the 1994 Transparency Protocol, the United
States has the right to monitor only the concentration of U-235 in the uranium being processed.
7
According to USEC, this quantity of LEU is derived from 51 metric tons of HEU, which the
Department of Energy estimates is equivalent to the amount of HEU found in about 2,040 nuclear
warheads.



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Figure 1: Annual Amounts of LEU
Delivered to the United States From   1600      Metric tons of LEU
1995 Through 1998                                                                  1487

                                      1400


                                      1200


                                      1000


                                          800


                                          600
                                                                 480        450
                                          400           371

                                                186
                                          200


                                            0

                                                1995     1996        1997   1998   4-yr.
                                                Calendar year                      Total



                                      Source: USEC.




                                      Several U.S. and Russian government agencies are involved in the
                                      negotiation and implementation of the transparency measures. A
                                      Department of State official is designated as the Chief HEU Transparency
                                      Negotiator for the United States, and a Department of Energy (DOE) official
                                      is the Deputy Chief Negotiator. DOE’s Office of Nonproliferation and
                                      National Security, contracting with most of DOE’s national laboratories and
                                      several of its operations offices, implements U.S. transparency activities,
                                      such as staffing and organizing U.S. monitoring visits to the Russian
                                      facilities. DOE spent about $44 million on HEU transparency activities from
                                      fiscal year 1994 through fiscal year 1998.8 Lawrence Livermore National
                                      Laboratory spent about $20 million, or about 45 percent of the total funds
                                      that DOE has provided, during this period. For the Russian Federation,
                                      MINATOM is responsible for negotiating and implementing the transparency
                                      measures.

                                      The March 1994 Protocol on HEU Transparency Arrangements established
                                      the Transparency Review Committee as the formal bilateral mechanism

                                      8
                                       DOE plans to spend an additional $45 million for HEU transparency activities for fiscal year 1999
                                      through fiscal year 2001.



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                              for U.S. (DOE and State Department) and Russian (MINATOM) officials to
                              negotiate specific transparency measures at Russian and U.S. facilities and
                              to discuss and resolve issues arising from the implementation of the
                              measures. From 1994 through 1997, U.S. and Russian officials held six
                              meetings of the Transparency Review Committee. An additional meeting
                              of the executive members of the committee was held in February 1998.9


                              From February 1996 through May 1999, transparency measures were
Transparency                  gradually implemented at four Russian nuclear material processing
Measures Have Been            facilities. However, under the agreement, U.S. officials lack access to
Gradually                     Russian nuclear weapons dismantlement facilities and to the process
                              whereby nuclear weapons are dismantled. In October 1996, Russian
Implemented at                officials agreed to strengthen the measures at the Russian facilities in
Russian Facilities            return for a $100 million advance payment to be credited against their
                              future deliveries of LEU. Although Russian officials have allowed DOE to
                              implement many of the transparency measures that were agreed to in
                              1996, there have been some delays and impediments in implementing
                              them.


Russian and U.S. Facilities   Currently, four Russian facilities process the HEU and six U.S. facilities
That Process HEU and          process the LEU purchased under the agreement, as shown in figure 2.
LEU                           Under the agreement, the United States does not have access to the
                              Russian weapons dismantlement facilities or to the weapons
                              dismantlement process.10 The Russian facilities are administered by
                              MINATOM. Of the four Russian facilities, only three blend HEU into LEU. The
                              Seversk facility is currently the only one that performs all of the processes
                              related to the conversion and blending of HEU into LEU. (For a discussion of
                              the fourth facility—Mayak—see pp. 10-11.) USEC operates one of the six
                              U.S. facilities, the Portsmouth uranium enrichment facility, in Piketon,
                              Ohio. USEC sends the LEU from the Portsmouth facility to five U.S. nuclear
                              fuel fabricators that make nuclear reactor fuel for commercial nuclear
                              power reactors. (See app. I for a description of the processes for
                              converting and blending HEU into LEU at the Russian and U.S. facilities.)


                              9
                               In 1996, the United States also established a U.S. interagency committee, chaired by the National
                              Security Council, to oversee the implementation of the U.S. national security and commercial
                              objectives of the HEU purchase agreement. In May 1998, the committee was formalized by an
                              executive order of the President as the Enrichment Oversight Committee and includes representatives
                              from the Departments of State, Defense, and Energy; the intelligence community; and other federal
                              agencies.
                              10
                               According to DOE, there are four Russian nuclear weapons dismantlement facilities: Sverdlovsk-45,
                              Zlatoust-36, Avangard, and Penza-19.



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Figure 2: Russian Federation and U.S. Facilities That Process HEU and LEU, as of June 1999


     Siemens Power Corporation,             Portsmouth
     Richland, WA                           Gaseous
                                            Diffusion Plant, (USEC)
                                            Piketon, OH




        United States                                       Washington
                                                            D.C.


                                                                                       To U.S.

                                                                      St. Petersburg


    ABB/Combustion                                                                                                   Russia
    Engineering, Inc.                                                         Moscow
    Hematite, MO



           Westinghouse Nuclear,
           Columbia, SC

                                                               Ural Electrochemical
                                                               Integrated Enterprise,
        Framatome Cogema Fuels,                                Novouralsk                                                 Krasnoyarsk
        Lynchburg, VA                                                                            Siberian Chemical        Electrochemical
                                                                                                 Enterprise,              Plant,
                                                                                                 Seversk                  Zelenogorsk
                                                                            Mayak Production
                           GE Nuclear Energy,                               Association,
                           Wilimington, NC                                  Ozersk


  Legend
           HEU shipments
           LEU shipments



                                                      Source: DOE.




Transparency Measures at                              Specific transparency measures, applicable to both Russian and U.S.
the Russian Facilities                                facilities, are identified in 16 technical annexes to the March 1994 Protocol
                                                      on HEU Transparency Arrangements that were signed from 1995 through
                                                      1998 as a result of six meetings of the Transparency Review Committee




                                                      Page 7                                             GAO/RCED-99-194 U.S. Purchase of Russian HEU
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    and one meeting of its executive members.11 The date when each technical
    annex was signed generally determined when U.S. monitors could begin
    implementing the transparency measures at the Russian facilities.12 As a
    result, about one-third of the shipments of LEU that were sent to USEC
    under the commercial contract, from 1995 through 1998, were not subject
    to transparency measures. (App. II provides a list of the 16 technical
    annexes that grant specific monitoring and access rights at the Russian
    and U.S. facilities. It also provides more information on the LEU shipments
    that were not subject to the transparency measures.)

    Originally, two Russian facilities processed HEU—the Seversk and Ural
    facilities. In 1996, the Krasnoyarsk plant began to process HEU. According
    to DOE, starting in 1996, U.S. monitors were allowed to perform the
    following activities at these facilities:

•   Observe the chemical processes whereby the HEU is transformed from
    metal chips—fragments of nuclear weapons components—into a gaseous
    form of HEU for blending purposes.13
•   Visit the areas where HEU is blended into LEU.
•   Apply tamper-indicating devices—U.S. tags and seals—to HEU and LEU
    containers to help monitors identify and track the movement of the
    material through the different processes or from one facility to another.
•   Review and obtain copies of Russian nuclear material control and
    accounting documents to track the amount of HEU and LEU that is being
    processed.14
•   At the Ural facility, from February 1996 through October 1998, U.S.
    monitors were able to take random samples of uranium, up to four times a
    year at the point where the uranium is blended (blendpoint), to measure
    the enrichment levels of the uranium that was being processed to
    determine whether HEU was being blended into LEU.

    11
      Russia also has the reciprocal right to implement transparency measures in the United States to
    determine whether the Russian LEU is fabricated into fuel for commercial nuclear power reactors and
    is not refabricated into HEU that could be used in U.S. nuclear weapons. From 1996 through 1998,
    MINATOM officials visited U.S. facilities seven times to implement these measures. In October 1998,
    representatives of the Portsmouth uranium enrichment facility told us that they would not produce
    weapons-grade HEU from the Russian LEU because they are prohibited by federal nuclear-licensing
    requirements from this activity. Moreover, the United States no longer requires new HEU for weapons
    production.
    12
     In the case of the Ural facility, U.S. monitoring visits began after the technical annex for the facility
    had been initialed by the parties but before it was signed.
    13
     During these chemical processes—oxidation and fluorination—the HEU metal chips are heated to
    convert them into an HEU oxide, and the HEU oxide is then converted into HEU hexaflouride, or UF6.
    14
      When reviewing and obtaining documentation at the Russian facilities, U.S. monitors have access to
    some sensitive commercial information but do not have access to classified national security
    information.


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    In October 1996, MINATOM agreed to a list of additional measures designed
    to strengthen transparency at the Russian facilities. In December 1996,
    MINATOM received an advance payment from USEC of $100 million in
    exchange for agreeing to implement these additional measures. Some of
    these measures include the following:

•   Use of U.S.-manufactured portable equipment that measures the
    enrichment of the uranium and confirms the presence or absence of
    weapons-grade HEU at various stages of the conversion and blending
    processes. Since U.S. monitors are not certified to work in Russian
    facilities, Russian technicians, witnessed by U.S. monitors, operate the
    portable uranium detection equipment and record the results.
•   Access to areas where HEU weapons components are received from the
    Russian dismantlement facilities and are stored in sealed containers.
•   Ability to observe the process in which the weapons components are cut
    into metal chips.
•   Access to the areas where the HEU oxide is chemically treated to remove
    certain impurities.15
•   Installation of U.S. equipment that can continuously monitor the
    enrichment levels and material flow rate at the points where HEU is
    blended into LEU.16 This equipment is shown in figure 3.




    15
      This chemical process is called purification.
    16
      Oak Ridge and Los Alamos National Laboratories developed the continuous-monitoring equipment
    for installation at Russian blending facilities. According to equipment specifications, the equipment is
    designed to measure the flow rates of the uranium, tracking the amount of uranium that is being
    blended to within plus or minus 20 percent. The LEU blendstock that is used to blend HEU into LEU is
    uranium that has been enriched up to 1.5 percent U-235 by using depleted uranium containing less than
    0.7 percent U-235.



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Figure 3: U.S. Equipment That Continuously Monitors the Blending of HEU Into LEU



   Uranium Enrichment              Flow Monitor              Flow Monitor
         Monitor                   LEU Detector              HEU Detector




                                      UF6 Flow




                                         Source: DOE.




                                         DOE  started to implement most of the strengthened measures during
                                         monitoring trips to three of the Russian facilities beginning in 1997. In a
                                         February 1998 memo, DOE reported that Russian officials had implemented
                                         95 percent of the strengthened transparency measures that were linked to
                                         USEC’s December 1996 advance payment of $100 million. The fourth
                                         facility, Mayak, started to process HEU under the agreement in 1997, but




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the transparency measures were not implemented there until after the
technical annex had been signed for the facility in February 1998.

U.S. monitoring visits can occur up to six times each year at the Russian
facilities, and each visit can last up to 5 days. U.S. monitors are required to
notify MINATOM 30 working days in advance of their visits to the Russian
facilities. Currently, DOE selects its monitors from a list of 100 persons
from DOE, DOE’s national laboratories and its contractors, and other U.S.
agencies. The first monitoring trip took place in February 1996 at the Ural
facility. According to DOE, from February 1996 through March 1999, U.S.
monitors made 50 visits to the four Russian facilities, as shown in table 1.17
 In order to gain daily access to the HEU-blending process, in August 1996,
DOE established a permanent monitoring office at the Ural facility in
Novouralsk, Russia. Two to four U.S. monitors, who are rotated every 2
months, usually staff the permanent office and can visit the facility daily.18
Because DOE now staffs a permanent monitoring office at the Ural facility,
there has not been a need for periodic monitoring visits there since
August 1996.




17
  From fiscal year 1994 through fiscal year 1998, about 35 percent of the total $44 million that DOE
funded for implementing the transparency activities was spent on U.S. monitoring visits and on the
establishment and maintenance of a permanent presence office in the Russian Federation.
18
 According to DOE, 55 U.S. monitors rotated through the permanent office at the Ural facility from
August 1996 through March 1999.



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Table 1: U.S. Visits to Russian
HEU-Processing Facilities From                             Familiarization            Monitoring             Technical
February 1996 Through March 1999   Facility                         visitsa                visits               visitsb             Total
                                   Ural
                                   Electrochemical
                                   Integrated Plant                         3                     3                     4             10
                                   Siberian
                                   Chemical
                                   Enterprise                               2                    15                     0             17
                                   Krasnoyarsk
                                   Electrochemical
                                   Plant                                    1                    11                     3             15
                                   Mayak
                                   Production
                                   Association                              2                     6                     0              8
                                   Total                                    8                    35                     7             50
                                   a
                                    U.S. monitors visited the Russian facilities before transparency measures were in place to
                                   familiarize themselves with the facilities’ operations.
                                   b
                                    U.S. monitors can visit the Russian blending facilities to assist in the installation of U.S.
                                   continuous-monitoring equipment.

                                   Source: DOE.




Delays and Impediments to          Although Russian officials have allowed DOE to implement most of the
Implementing Some                  strengthened transparency measures that were agreed to in 1996, there
Measures at the Russian            have been delays and impediments to implementing some of them. Despite
                                   these difficulties, State Department and DOE officials believe that the
Facilities                         measures have given them unprecedented access to facilities in Russian
                                   closed cities. Since 1996, DOE has continued to negotiate for access to the
                                   process whereby HEU weapons components are cut into metal chips. Both
                                   Russian and U.S. officials consider information about the design of their
                                   weapons to be classified, including the shapes of their weapons
                                   components. Accordingly, DOE has suggested that weapons components
                                   could be shrouded during the metal-chipping process when U.S. monitors
                                   are present to allow them to witness the process without revealing
                                   classified information. DOE officials told us that the Mayak facility has
                                   recently expressed an interest in conducting a demonstration of shrouding
                                   weapons components during the metal-chipping process but that MINATOM
                                   has not yet approved this proposal.

                                   Moreover, the installation of U.S. continuous-monitoring equipment at the
                                   Russian Ural facility was delayed for 2 years. The delay was due to a
                                   number of factors, including requirements by the Russian government to



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license and certify the equipment before it was installed and concerns by
Russian officials about how data generated by the equipment would be
used by the United States. In January and February 1999, DOE officials and
national laboratory staff installed and tested the monitoring equipment at
the Ural facility. During this test, U.S. officials found that the equipment
could accurately detect the enrichment levels of the uranium but that the
equipment needed some adjustments to properly measure the amount of
LEU that was being processed. Before the equipment can go into routine
operation at the facility, these technical problems must be fixed, and a
revised technical annex and other agreements for the facility must also be
approved and signed by the United States and the Russian Federation.
According to a February 1999 cable from the U.S. Embassy in Moscow,
DOE and MINATOM had not resolved their differences over how the United
States will remove or use the data generated by the monitoring equipment
and what steps both parties will take to resolve any discrepancies that may
occur between the data generated by the equipment and the Russian
facility’s own documentation of its nuclear material.

DOE  and Lawrence Livermore officials told us that they plan to install
continuous-monitoring equipment at the second Russian blending facility
at Krasnoyarsk by the end of September 1999. However, DOE is waiting to
ship the equipment to Krasnoyarsk until the Department receives final
approval from MINATOM to install and operate the equipment. According to
DOE, an agreement has not yet been reached with MINATOM on the details
for installing the equipment at Seversk, the third Russian blending facility.
A DOE official told us that before the equipment can be installed at these
two blending facilities, MINATOM would likely require that the technical
annexes related to the transparency procedures for these facilities be
revised and renegotiated. A MINATOM official told us in September 1998 that
he considered the installation of the equipment at the Ural facility to be a
pilot test and that there were no specific plans for installing the equipment
at the other two facilities. DOE officials disagreed with MINATOM’s statement
because, in October 1996, Russian officials had granted the United States
the right to install this equipment at the Ural, Krasnoyarsk, and any future
Russian blending facilities. At the time of our review, this matter had not
yet been resolved.




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                         Transparency measures provide U.S. officials with confidence that
Confidence Exists        weapons-grade HEU is being blended into LEU at the Russian blending
That Weapons-Grade       facilities. Nevertheless, U.S. officials have stated that until
HEU Is Blended Into      continuous-monitoring equipment is installed at the three Russian
                         blending facilities, they will not be highly confident that all of the LEU that
LEU                      the United States is purchasing is coming from blended HEU. Furthermore,
                         in response to the concerns we raised, DOE improved its procedures for
                         collecting information on the LEU cylinders shipped under the agreement
                         through its arrangements with USEC.


U.S. Officials Have      DOE  and Lawrence Livermore officials told us that they have confidence
Confidence That LEU Is   that weapons-grade HEU is being blended into LEU at the Russian blending
Coming From              facilities.19 DOE and Lawrence Livermore officials told us that until
                         continuous-monitoring equipment is installed at the three Russian
Weapons-Grade HEU        blending facilities, they will not be highly confident that blending is
                         occurring and that all of the LEU that the United States is purchasing is
                         coming from blended HEU. For example, although the
                         continuous-monitoring equipment has been installed at the Ural facility,
                         this facility is scheduled to blend only 12 metric tons of the total 30 metric
                         tons of HEU to be delivered as LEU for 1999.

                         There are several ways in which U.S. monitors can gain confidence that
                         weapons-grade HEU is being converted and blended into LEU at the Russian
                         facilities. U.S. monitors are allowed to use U.S. portable equipment, apply
                         identifying U.S. tags and seals to containers and equipment that indicate
                         tampering, and obtain Russian nuclear material inventory documentation
                         on the HEU and LEU in containers at each step of the conversion and
                         blending processes. According to Lawrence Livermore officials, the
                         equipment allows U.S. monitors to determine, with high confidence, that
                         the HEU that is being processed when the U.S. monitors are present is
                         weapons-grade material. Since 1997, six times a year, U.S. monitors have
                         been able to visit areas at the Mayak and Seversk facilities where sealed
                         containers that were used to ship HEU weapons components are stored.
                         They can also observe the HEU after it has been cut into metal chips. At
                         two blending facilities—Seversk and Krasnoyarsk—U.S. monitors can
                         observe and measure the enrichment of the HEU in containers six times a
                         year as they are fed into the blendpoint.




                         19
                          Our July 8, 1999, classified report discusses U.S. officials’ confidence that the HEU that has been
                         purchased under the agreement is coming from Russian dismantled nuclear weapons.



                         Page 14                                          GAO/RCED-99-194 U.S. Purchase of Russian HEU
                          B-283458




                          At the Ural facility, permanent monitors have daily access to the blending
                          area, where they can apply U.S. tags and seals to HEU in containers and to
                          some equipment, and can obtain Russian documentation that shows the
                          amounts of HEU and LEU that are being blended. From February 1996
                          through October 1998, U.S. monitors were able to randomly request that
                          Russian technicians take samples of the HEU and LEU at the blendpoint. An
                          analysis of the samples, which were limited to being taken four times a
                          year, provided a snapshot of the enrichment levels of the HEU and LEU in
                          the pipes at the time of sampling. As of October 1998, DOE reported that a
                          total of 11 samples had been taken and analyzed by Russian technicians
                          under observation by U.S. monitors. The analysis showed that
                          weapons-grade HEU was being blended.20 When put into routine operation,
                          the continuous-monitoring equipment that was recently installed at the
                          Ural facility will provide U.S. monitors with a continuous record of
                          whether blending is occurring. As a result, random samples will no longer
                          be taken there.

                          DOE and Lawrence Livermore officials have stated that because the access
                          granted to U.S. monitors is limited at each of the Russian facilities, they
                          are unable to track the HEU through the entire process as it is converted
                          and blended into LEU. Additionally, State Department and Lawrence
                          Livermore officials told us that the continuous-monitoring equipment does
                          not provide U.S. monitors with information on whether the HEU that is
                          being blended is of weapons origin.


One Cylinder of LEU Was   In 1997, U.S. monitors discovered that one cylinder of LEU that was
Rejected Under the        shipped to the United States did not meet the requirements of the
Agreement                 agreement. In an October 27, 1997, letter, the Department of State
                          informed MINATOM that it would not accept the cylinder under the HEU
                          purchase agreement. According to an April 1998 unverified press account,
                          U.S. officials were uncertain of whether the cylinder contained LEU that
                          came from HEU from nuclear warheads. However, according to USEC
                          officials, on February 1, 1999, USEC paid Russia’s Techsnabexport for the
                          cylinder under a separate commercial agreement. Figure 4 shows the
                          disputed cylinder.




                          20
                            DOE paid the Russian Ural facility $124,391 to perform all 11 of these analyses.



                          Page 15                                           GAO/RCED-99-194 U.S. Purchase of Russian HEU
                                     B-283458




Figure 4: Disputed Cylinder of LEU
Rejected Under HEU Purchase
Agreement




                                     Source: Portsmouth Uranium Enrichment Facility.




USEC Documentation and               Until recently, U.S. monitors did not always obtain documentation on the
Reporting                            contents of all of the LEU cylinders shipped under the agreement in a
                                     timely manner. A USEC representative told us that USEC had not been
                                     required to regularly share cylinder documentation data with DOE but, as a
                                     matter of practice, had shared this information with DOE upon request.
                                     During our review, we raised concerns with DOE officials about whether
                                     they should formalize their data-sharing arrangement with USEC and
                                     receive USEC documentation more routinely. In response to our concerns,
                                     in March 1999, DOE officials formally requested that USEC send them the
                                     results of USEC’s and the Russian facilities’ documentation on the
                                     contents of the LEU cylinders on a monthly basis. DOE officials stated that
                                     by regularly receiving this information from USEC, they could be more




                                     Page 16                                      GAO/RCED-99-194 U.S. Purchase of Russian HEU
                     B-283458




                     confident that the LEU obtained under the agreement is consistent with the
                     process of blending HEU. USEC provided DOE with the first of these
                     monthly reports on May 7, 1999.


                     In March 1998, the Secretary of Energy proposed a number of additional
U.S. Officials Are   transparency measures to the Russian Minister of Atomic Energy. In
Seeking Additional   September 1998, we asked MINATOM officials if they planned to grant any
Transparency         broader access to U.S. transparency monitors. MINATOM officials responded
                     that broader access for U.S. monitors, such as access to the Russian
Measures             weapons dismantlement process, would have to be negotiated in the
                     context of other arms control agreements.21 DOE officials also
                     acknowledged that it could be difficult to achieve broader access for U.S.
                     monitors in the absence of an arms control agreement whereby both the
                     United States and Russia could verify reductions in nuclear weapons and
                     classified information about nuclear weapons could be exchanged.


                     We met with officials from the Departments of State and Energy to receive
Agency Comments      the Departments’ comments on a draft of this report. Specifically, we
                     obtained comments from the Director, Office of Policy and Regional
                     Affairs for Russia and the New Independent States, Department of State,
                     and the Deputy Director, Office of Arms Control and Nonproliferation,
                     Department of Energy. The Departments of State and Energy stated that
                     the report’s findings were fair and balanced.

                     The Departments of State and Energy also provided technical comments
                     that were incorporated into the report as appropriate.


                     To examine the status of the implementation of the transparency
Scope and            measures, we reviewed the February 1993 government-to-government HEU
Methodology          purchase agreement, the September 1993 Memorandum of Understanding
                     Relating to Transparency and Additional Arrangements, the March 1994
                     Protocol on HEU Transparency Arrangements, and 16 technical annexes to
                     the 1994 Protocol, signed from 1995 through 1998, that grant specific
                     monitoring and access rights at the U.S. and Russian facilities. We also

                     21
                       In our report entitled Weapons of Mass Destruction: Effort to Reduce Russian Arsenals May Cost
                     More, Achieve Less Than Planned (GAO/NSIAD-99-76, Apr. 13, 1999), we discuss the status of a facility
                     that is being constructed with U.S. funds at the Mayak nuclear complex to store plutonium removed
                     from dismantled Russian nuclear weapons. The report found that Russian negotiators had not yet
                     agreed to U.S. proposals aimed at confirming that the plutonium to be stored at Mayak would originate
                     solely from dismantled nuclear weapons and would support Russia’s dismantlement of nuclear
                     weapons.



                     Page 17                                         GAO/RCED-99-194 U.S. Purchase of Russian HEU
B-283458




reviewed the records of five of the six meetings of the bilateral
Transparency Review Committee, which occurred from September 1994
through November 1997. According to DOE officials, no records were
issued for the fifth meeting of the committee in December 1996 and the
meeting of the executive members of the committee in February 1998
because the signed transparency annexes served as the records of these
meetings. We obtained and reviewed unclassified and classified reporting
cables from the U.S. Department of State and the U.S. Embassy in
Moscow, Russia, covering the period from 1992 through 1999. DOE
provided us with trip reports covering the period from 1994 through 1999,
which documented U.S. monitors’ visits to the Russian facilities to
implement the transparency measures. To identify DOE’s funding of
transparency activities from fiscal year 1994 through fiscal year 2001, we
also obtained budgetary and expenditure data from DOE. We reviewed
relevant technical and energy trade publications covering the period from
1991 through June 1999.

In Washington, D.C., we met with officials from the Department of State’s
Office of Policy and Regional Affairs for Russia and the New Independent
States; DOE’s Offices of the Undersecretary, Nuclear Energy, Science and
Technology, Arms Control and Nonproliferation, and International Nuclear
Safety and Cooperation; DOE contractors from Lawrence Livermore
National Laboratory; and EIA. Several U.S. officials whom we met with had
served as U.S. monitors who staffed DOE’s permanent office at the Russian
Ural facility or regularly participated in the monitoring visits to the
Russian facilities. We also met with officials from the Department of
Defense and several agencies that represent the U.S. intelligence
community.

We visited Moscow, Russia, in September 1998 to meet with various U.S.
officials from the U.S. Embassy and with Russian officials from MINATOM
and one of its commercial subsidiaries—Techsnabexport.

To discuss the commercial aspects of the purchase agreement that had an
impact on transparency measures, we also met with and gathered
information from representatives of USEC—the U.S. executor of the
agreement—in Bethesda, Maryland. We met with the President of Edlow
International Company, in Washington, D.C., who was responsible for
managing all of the shipments of the LEU from St. Petersburg, Russia, to
the United States. We visited the two uranium enrichment facilities
operated by USEC—the Portsmouth facility in Piketon, Ohio, and the
Paducah, Kentucky, facility. We also met with representatives of one of the



Page 18                            GAO/RCED-99-194 U.S. Purchase of Russian HEU
B-283458




five U.S. fuel fabricators—GE Nuclear Fuel, in Wilmington, North
Carolina.

We conducted our review from August 1998 through June 1999 in
accordance with generally accepted government auditing standards.


We are sending copies of this report to Senator Jesse A. Helms, Chairman,
and Senator Joseph R. Biden, Ranking Minority Member, Senate
Committee on Foreign Relations; Representative Benjamin A. Gilman,
Chairman, and Representative Sam Gejdenson, Ranking Minority Member,
House Committee on International Relations; and other appropriate
committees.

We are also sending copies of this report to the Honorable Madeleine K.
Albright, the Secretary of State; the Honorable Bill Richardson, the
Secretary of Energy; the Honorable William S. Cohen, the Secretary of
Defense; and other interested parties. If you have any questions or need
additional information, please contact me or Gene Aloise, Assistant
Director, on (202) 512-3841. Other major contributors to this report were
Sarah Veale, Victor Sgobba, and Duane Fitzgerald, Ph.D.

Sincerely yours,




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




Page 19                            GAO/RCED-99-194 U.S. Purchase of Russian HEU
Contents



Letter                                                                                            1


Appendix I                                                                                       22

Processes for
Converting and
Blending Highly
Enriched Uranium
Into Low Enriched
Uranium at Russian
and U.S. Facilities
Appendix II                                                                                      23
                      Technical Annexes Implement Transparency Measures                          23
Technical Annexes     Some Shipments Were Not Subject to Transparency                            24
Establish
Implementation of
Transparency
Measures
Table                 Table 1: U.S. Visits to Russian HEU-Processing Facilities From             12
                       February 1996 Through March 1999

Figures               Figure 1: Annual Amounts of LEU Delivered to the United States              5
                        From 1995 Through 1998
                      Figure 2: Russian Federation and U.S. Facilities That Process               7
                        HEU and LEU, as of June 1999
                      Figure 3: U.S. Equipment That Continuously Monitors the                    10
                        Blending of HEU Into LEU
                      Figure 4: Disputed Cylinder of LEU Rejected Under HEU                      16
                        Purchase Agreement
                      Figure II.1: Titles of Transparency Annexes to 1994 HEU                    24
                        Transparency Protocol, by Major Category
                      Figure II.2: Some LEU Shipments Were Not Subject To                        25
                        Transparency Measures




                      Page 20                           GAO/RCED-99-194 U.S. Purchase of Russian HEU
Contents




Abbreviations

DOE        Department of Energy
EIA        Energy Information Administration
GAO        General Accounting Office
HEU        highly enriched uranium
LEU        low enriched uranium
MINATOM    Ministry of the Russian Federation for Atomic Energy


Page 21                         GAO/RCED-99-194 U.S. Purchase of Russian HEU
Appendix I

Processes for Converting and Blending
Highly Enriched Uranium Into Low
Enriched Uranium at Russian and U.S.
Facilities
                  Four Russian facilities convert and blend highly enriched uranium (HEU)
                  into low enriched uranium (LEU) through the following processes:

              •   Seversk and Mayak receive HEU weapons components from the Russian
                  weapons dismantlement facilities, cut the components into metal chips,
                  and heat the HEU metal chips to convert them into oxide.
              •   Seversk and Mayak chemically treat the HEU oxide to remove certain
                  impurities.22 Seversk and Krasnoyarsk combine the purified HEU oxide
                  with fluorine to produce HEU hexafluoride, also known as UF6.
              •   Seversk, Krasnoyarsk, and Ural blend the HEU into LEU. During the blending
                  process, the HEU is blended with uranium that is enriched up to a level of
                  1.5-percent U-235—called blendstock—to produce LEU.
              •   Seversk, Krasnoyarsk, and Ural load the LEU into cylinders that contain
                  about 1.5 metric tons of LEU each. The cylinders are transported by rail to
                  St. Petersburg, Russia, and from there, they are shipped to the United
                  States.

                  Once the LEU arrives in the United States, six U.S. facilities perform the
                  following processes:

              •   The Portsmouth uranium enrichment facility may further change the
                  enrichment of the LEU to meet USEC customers’ commercial specifications
                  or the cylinders may be sent as received to the five U.S. nuclear fuel
                  fabricators.
              •   The five U.S. nuclear fuel fabricators convert the LEU into reactor fuel and
                  sell it to electric utilities in the United States and other countries.




                  22
                   Some of the initial shipments of LEU under the agreement contained traces of plutonium and other
                  impurities. In order to meet the U.S. uranium industry’s standards for product purity, Russia began to
                  process the HEU to remove any impurities starting in 1996 at the Seversk facility.



                  Page 22                                          GAO/RCED-99-194 U.S. Purchase of Russian HEU
Appendix II

Technical Annexes Establish
Implementation of Transparency Measures

                    Sixteen technical annexes to the 1994 Transparency Protocol implement
                    access and monitoring procedures at the U.S. and Russian facilities subject
                    to the 1993 government-to-government HEU purchase agreement. From
                    1995 through 1998, the United States and the Russian Federation signed
                    these annexes, some of which were revised as new Russian facilities or as
                    new processes were added. As a result, some of the shipments sent to the
                    United States under the commercial agreement from the Russian facilities
                    were not subject to the transparency measures. The technical annexes
                    governing the U.S. monitoring of Russian facilities will continue to be
                    revised if the HEU conversion and blending activities of the Russian
                    facilities change or when new transparency activities are implemented,
                    such as installing equipment that continuously monitors whether HEU is
                    being blended into LEU at the three Russian blending facilities.


                    From 1995 through 1998, U.S. and Russian negotiators signed 16 technical
Technical Annexes   annexes to the 1994 Transparency Protocol that established specific
Implement           access and monitoring rights at U.S. and Russian facilities. When two
Transparency        additional Russian facilities started to process HEU under the agreement
                    and some of the facilities added new processes, technical annexes had to
Measures            be negotiated for each of these facilities, and some annexes had to be
                    revised and renegotiated to accommodate the new processes, as
                    demonstrated by figure II.1.




                    Page 23                            GAO/RCED-99-194 U.S. Purchase of Russian HEU
                                                              Appendix II
                                                              Technical Annexes Establish
                                                              Implementation of Transparency Measures




Figure II.1: Titles of Transparency Annexes to 1994 HEU Transparency Protocol, by Major Category


Administration
  Annex 1                            Annex 2                            Annex 10                           Annex 11                     Annex 14
  Transparency                       Notification of                    Financial                          Reexport of                  Exchange of
  Review                             Visits & Related                   Arrangements,                      Russian LEU,                 HEU Material
  Committee,                         Arrangements,                      4/4/96                             4/3/96                       Reports,
  7/28/95                            7/28/95                                                                                            4/3/96


Processes
  Annex 7                            Annex 8                            Annex 9                            Annex 12                     Annex 13
  Analytical                         Tags and                           Technological                      Equipment,                   Radioactive
  Methods for                        Seals,                             Process                            4/4/96, revised              Standards,
  U-235,                             11/22/95                           Descriptions,                      12/18/96                     4/4/96
  4/3/96                             revised 4/4/96                     4/4/96


Procedures for U.S. Monitoring of Russian Facilities
  Annex 3a                           Annex 5                            Annex 15                           Annex 16
  Ural,                              Seversk,                           Krasnoyarsk,                       Mayak,
  4/2/96,                            4/2/96,                            12/20/96                           2/11/98
  revised 12/20/96                   revised 12/18/96                   amended 2/11/98
                                     & 2/11/98


Procedures for Russian Monitoring of U.S. Facilities
  Annex 4                            Annex 6
  Portsmouth,                        Fuel
  4/2/96,                            Fabricators,
  revised 12/20/96                   4/2/96,
                                     revised 12/20/96


a Annex 3 was initialed by the parties on 11/22/95 which allowed U.S. monitoring visits to begin at the Ural facility.


                                                              Source: Department of Energy.



                                                              Some LEU shipments were sent to the United States under the 1994
Some Shipments Were                                           commercial contract between USEC and Techsnabexport before the
Not Subject to                                                transparency measures had been implemented at each of the Russian
Transparency                                                  blending facilities. According to the Departments of State and Energy,


                                                              Page 24                                                    GAO/RCED-99-194 U.S. Purchase of Russian HEU
                                       Appendix II
                                       Technical Annexes Establish
                                       Implementation of Transparency Measures




                                       there was a deliberate U.S. government decision that U.S. interests would
                                       be served by allowing a portion of the HEU to be blended into LEU and to be
                                       rapidly removed from Russia while the details of the transparency
                                       measures were being worked out. In addition, by allowing the shipments
                                       to begin before the transparency measures were in place, Russia could
                                       begin receiving much needed financial revenue from the HEU agreement.

                                       From 1995, when the first LEU deliveries started, through 1998, about
                                       one-third—496 metric tons of the total 1,487 metric tons—of the LEU sent
                                       to the United States was not subject to transparency measures, as shown
                                       in figure II.2. The amount of LEU that was not subject to transparency
                                       measures was equivalent to about 17 metric tons of HEU. For example,
                                       officials from Lawrence Livermore National Laboratory told us that
                                       because the technical annex was not signed for the Ural facility until 1996,
                                       the United States was not permitted to monitor any of the 1995 LEU
                                       shipments sent to the United States under the agreement. All of the 1995
                                       LEU shipments came from that facility.



Figure II.2: Some LEU Shipments Were
Not Subject to Transparency Measures   500   Metric tons of LEU




                                       400




                                       300




                                       200




                                       100




                                         0

                                        1995                               1996               1997                      1998
                                        Calendar year

                                                 Subject to transparency

                                                 Not subject to transparency



                                       Source: Department of Energy.




(141372)                               Page 25                                    GAO/RCED-99-194 U.S. Purchase of Russian HEU
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