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Analysis of the Legal and Regulatory Environment Governing the Disposition of Nuclear-Powered Submarines: Major Difficulties and Obstacles in Improvement of International Cooperation and Ways to Mitigate or Overcome Them

V. N. Barinov, IBRAE, and A. P. Zotov

Kurchatov Institute

One of the most prominent examples of international cooperation undertaken by Russia on both multilateral and unilateral bases has to do with the disposition of decommissioned nuclear-powered submarines and the management of the spent nuclear fuel and radioactive waste. The degree to which the relevant legal framework is complete and adequate will determine how efficiently the disposition and rehabilitation activities will be organized, planned, and executed from the level of international cooperation all the way down to the level of individual production enterprises.

Despite good results and many years of experience in international cooperation (especially with the United States), this extraordinarily important endeavor has recently run into a number of bottlenecks and obstacles which clearly complicate the further development of international cooperation in the area of nuclear materials management. In fact, some of them have to do with matters of principle. Analysis of these obstacles can help group them into the following several categories:

  • Summit-level political issues,

  • Issues of science and technology,

  • Logistics and program management,

  • The interactions of parties at different levels,

  • Mindset gap as a legacy of the Cold War,

  • Funding, and

  • Legal issues.

G-8 Summit resolutions have been instrumental in furthering the development of international cooperation. In the declaration of the 1996 G-8 Summit in Moscow, the participants expressed their commitment to paying priority attention to the comprehensive safety of nuclear energy use.

One of the priorities spelled out in the Global Partnership Program adopted at the G-8 Summit in Kananaskis, Canada, in 2002, was the disposition of nuclear-powered submarines and fissionable material. Today, Russia is already engaged in negotiations with a few countries, primarily those with which Russia has standing intergovernmental agreements. This negotiation process has made possible substantial progress in getting to the point where practical implementation of specific large-scale projects can be started. To illustrate, the construction of a coastal facility for the long-term storage of the reactor compartments of nuclear-powered submarines and the disposition of nuclear-powered attack submarines has been initiated at Saida Bay. A series of projects intended to improve the state of the environment in the Arctic is being implemented within the framework of the Arctic Military Environmental Cooperation (AMEC) program. The European Union’s Tempus-TASIS technical assistance program continues to gain momentum.

Worth mentioning is the fact that Russia goes beyond these measures and strives to adequately, and in cooperation with other countries, respond to new threats and challenges, including the threat of proliferation of nuclear weapons, terrorist threats, and the illicit circulation of nuclear materials. These issues have been under continuous discussion in both bilateral and multilateral formats.

A hierarchical representation of the existing legal and regulatory environment is provided in Figure 1.

Overall, the regulatory and legal frameworks of the Russian Federation are in compliance with the generally accepted approaches to ensuring nuclear, radiation, and environmental safety, as well as to the management of radioactive waste and spent nuclear fuel. This bodes well for the prospects of international cooperation in the field of multifaceted disposition of nuclear-powered submarines. The existing body of the Russian law does provide for the safe planning and implementation of disposition activities and environmental rehabilitation of coastal facilities, territories, and waters affected by radiation.

Obstacles and problems that affect the effectiveness of international cooperation can be split into those that are “external” and those that are “internal.”

“External” obstacles include the other side’s resolve to “push through” projects which are not necessarily suited to



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Strengthening U.S.-Russian Cooperation on Nuclear Nonproliferation: Recommendations for Action G Analysis of the Legal and Regulatory Environment Governing the Disposition of Nuclear-Powered Submarines: Major Difficulties and Obstacles in Improvement of International Cooperation and Ways to Mitigate or Overcome Them V. N. Barinov, IBRAE, and A. P. Zotov Kurchatov Institute One of the most prominent examples of international cooperation undertaken by Russia on both multilateral and unilateral bases has to do with the disposition of decommissioned nuclear-powered submarines and the management of the spent nuclear fuel and radioactive waste. The degree to which the relevant legal framework is complete and adequate will determine how efficiently the disposition and rehabilitation activities will be organized, planned, and executed from the level of international cooperation all the way down to the level of individual production enterprises. Despite good results and many years of experience in international cooperation (especially with the United States), this extraordinarily important endeavor has recently run into a number of bottlenecks and obstacles which clearly complicate the further development of international cooperation in the area of nuclear materials management. In fact, some of them have to do with matters of principle. Analysis of these obstacles can help group them into the following several categories: Summit-level political issues, Issues of science and technology, Logistics and program management, The interactions of parties at different levels, Mindset gap as a legacy of the Cold War, Funding, and Legal issues. G-8 Summit resolutions have been instrumental in furthering the development of international cooperation. In the declaration of the 1996 G-8 Summit in Moscow, the participants expressed their commitment to paying priority attention to the comprehensive safety of nuclear energy use. One of the priorities spelled out in the Global Partnership Program adopted at the G-8 Summit in Kananaskis, Canada, in 2002, was the disposition of nuclear-powered submarines and fissionable material. Today, Russia is already engaged in negotiations with a few countries, primarily those with which Russia has standing intergovernmental agreements. This negotiation process has made possible substantial progress in getting to the point where practical implementation of specific large-scale projects can be started. To illustrate, the construction of a coastal facility for the long-term storage of the reactor compartments of nuclear-powered submarines and the disposition of nuclear-powered attack submarines has been initiated at Saida Bay. A series of projects intended to improve the state of the environment in the Arctic is being implemented within the framework of the Arctic Military Environmental Cooperation (AMEC) program. The European Union’s Tempus-TASIS technical assistance program continues to gain momentum. Worth mentioning is the fact that Russia goes beyond these measures and strives to adequately, and in cooperation with other countries, respond to new threats and challenges, including the threat of proliferation of nuclear weapons, terrorist threats, and the illicit circulation of nuclear materials. These issues have been under continuous discussion in both bilateral and multilateral formats. A hierarchical representation of the existing legal and regulatory environment is provided in Figure 1. Overall, the regulatory and legal frameworks of the Russian Federation are in compliance with the generally accepted approaches to ensuring nuclear, radiation, and environmental safety, as well as to the management of radioactive waste and spent nuclear fuel. This bodes well for the prospects of international cooperation in the field of multifaceted disposition of nuclear-powered submarines. The existing body of the Russian law does provide for the safe planning and implementation of disposition activities and environmental rehabilitation of coastal facilities, territories, and waters affected by radiation. Obstacles and problems that affect the effectiveness of international cooperation can be split into those that are “external” and those that are “internal.” “External” obstacles include the other side’s resolve to “push through” projects which are not necessarily suited to

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Strengthening U.S.-Russian Cooperation on Nuclear Nonproliferation: Recommendations for Action FIGURE 1 Structure of legal, regulatory, organizational, and managerial documentation applicable to multifaceted disposition and rehabilitation activities. our needs and saddle us with additional obligations significantly exceeding those which are in keeping with our domestic laws and the international norms. The practice of political “linkage” also belongs in this category. The issue of funding for the Russian weapons-grade plutonium disposition program has not yet been resolved. The “internal” obstacles include The need to adopt legislation implementing Russian ratification of the 1963 Vienna Convention on Civil Liability for Nuclear Damage; The need to complete legal formalities associated with Russia’s ascension to the Joint Convention on the Safety of Radioactive Waste Management, the format and objectives of which are related to those of the Convention on Nuclear Safety; The need to finalize the issues of granting access to secure facilities to foreign nationals; Taxation issues; and Civil liability for damage (nuclear and otherwise). The regulatory and legal aspects of multifaceted disposition and environmental rehabilitation may be affected by the following large-scale reforms currently under way in Russia: Changes in the delineation of authority within the federal government of the Russian Federation, constituent regional entities, and local authorities are being made. In May 2004, the Russian government sent a draft of a federal legislation on the subject to the floor of the State Duma. The federal law “On Technical Regulation” entered into force on July 1, 2003. By 2010, a transition from the currently functioning system of federal and industry-specific norms and rules to safety regulation through a combination of technical protocols that set mandatory requirements, on the one hand, with voluntarily adopted standards, on the other, must be completed. Administrative reform of the federal executive branch triggered by Presidential Edict No. 314 of March 9, 2004 (“On System and Structure of the Federal Executive Branch”) may have an impact on the logistical side of the strategic master plan, including relevant coordination and approval. However, current regulatory and legal documents are quite precise in their definitions of the roles and responsibilities of various federal and executive branch entities in the realm of the disposition and environmental rehabilitation of

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Strengthening U.S.-Russian Cooperation on Nuclear Nonproliferation: Recommendations for Action what formerly belonged to the Russian Navy. The mechanics of activities involving spent nuclear fuel and radioactive waste resulting from operations of Russia’s nuclear-powered icebreaker fleet, as well as management of the Murmansk Marine Shipping Company’s nuclear maintenance support vessels, are executed in full compliance with the requirements and stipulations of the federal law “On Use of Atomic Energy.” As far as safety issues related to the management of spent nuclear fuel and radioactive waste—both of civilian and of military origin—are concerned, both enterprises in charge of operational implementation and regulatory authorities go by the universal, Russia-wide bylaws and standards. When activities involving the disposition of nuclear-powered submarines and surface ships and vessels or having to do with environmental rehabilitation of dangerously radioactive sites are conducted with the use of international financial aid or technical assistance, issues may arise related to granting foreign nationals access to certain sites or the degree to which available privileged information may be shared with the foreign donor. These problems are regulated by laws and bylaws exemplified by such federal laws of the Russian Federation as “On State Secrets,” “On Restricted-Access Jurisdictions and Administrative Entities,” a number of Russian government resolutions, and some others. Among other things, these laws and bylaws outline the specific requirements, and a special access process for foreign citizens and Russian nationals alike is in place at various restricted-access facilities. They also spell out a list of “knowledge items” that constitute state secrets, describe the established process for transfer of technical information abroad, etc. The experiences from past years of interactions with international partners on multifaceted nuclear-powered submarine disposition shows that these issues have been and continue to be successfully resolved in complete compliance with Russian law, even though certain constraints do persist. In summary, the following are the main obstacles hindering further development of international cooperation in nuclear material management: Access to Russian restricted-access facilities where cooperative programs are implemented. Issues of granting foreign nationals access to restricted-access facilities are governed by a Russian government resolution which defines the granting of such access in exceptional cases. To visit such facilities, a special authorization pass must be issued following receipt of the approval of the Russian Ministry of Defense and the Russian Federal Security Service. Even though access restrictions are in effect for such Russian facilities, access by foreign collaborators is still provided on the basis of mutual agreements that spell out the scope of the visitors’ background information required, the deadlines by which this information must be provided, the duration of their visit, and some other formalities. However, some problems in this area still remain. They include, for example, the amount of time that it takes to process all the paperwork (up to 45 days), the extent of the visitors’ background information requested, and difficulties in coordinating how frequently and for how long these facilities can be visited. Taxation issues. International partners insist on complete and unconditional tax exemption for the financial aid and technical assistance. For example, such an approach is exercised in the U.S.-Russian agreement of 1992 and in the Agreement on the Multilateral Nuclear Environmental Program in the Russian Federation (MNEPR). This, however, contradicts the stipulations of the Tax Code of the Russian Federation, which requires ratification of these agreements. Similar issues arise with regional and local taxation. Progress in resolving taxation issues started to materialize after the 1999 law on gratuitous aid (assistance) was adopted and entered into force. It also followed the introduction of modifications and additions to some taxation laws and the granting of certain benefits to aid- and assistance-rendering entities in terms of the amount of tax deductions to the state. The problem has not been resolved completely, however. The Russian Tax Code is in need of further improvements along the following lines: Reduce the amount of time that it takes to complete the bureaucratic procedure needed to assign projects and programs the status of gratuitous technical aid. Improve the mechanism of value-added tax (VAT) recovery for “gratuitous aid projects.” Right now, VAT reimbursement is significantly delayed, which constrains the process of project implementation. Address and resolve the issue of exemption from taxes collected by Russia’s regional entities (this issue is now at the discretion of local authorities). Preserve the single social tax rate for individual persons (local Russian taxpayers) who participate in such bilateral programs. Exemption from civil liability for damage inflicted in the course of cooperative project implementation. The United States and some other Western donor nations often insist on unconditional exemptions for domestic legal entities and individual persons from civil liability for damage inflicted in the course of bilateral project work performed in Russia. This is stipulated in the provisions of the 1992 Framework Agreement. This presented an obstacle for the implementation of an intergovernmental agreement on the disposition of plutonium declared to no longer be required for defense purposes, as well as for plutonium management and cooperative efforts in this domain. The same goes for the 1998 agreement on science and technology cooperation in dispositioning of excess plutonium produced by the disarmament and implementation of the Nuclear Cities Initiative. Our U.S. partners insist on the stipulations of the 1992 Agreement, despite the fact that the U.S.-Russian bilateral agreements made since 1993 have offered other stipulations

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Strengthening U.S.-Russian Cooperation on Nuclear Nonproliferation: Recommendations for Action which are more aligned with the times and more acceptable to the Russian side. MAJOR CONCLUSIONS AND PROPOSALS REGARDING ANALYSIS OF THE LEGAL AND REGULATORY ENVIRONMENT IN THE DOMAIN OF NUCLEAR-POWERED FLEET DISPOSITION In general, Russia’s existing legal and regulatory environment ensures the safety of multifaceted disposition operations and is conducive to international cooperation in this area. It is also compliant with the international standards (rules and norms) underpinning nuclear and radiation safety. To overcome these obstacles and disconnects, the following measures are deemed prudent: Exemption from civil liability for damage inflicted in the course of collaborative project work. For projects that will be proposed in the future, one should go by the stipulations of the Agreement on Multilateral Nuclear Environmental Program in the Russian Federation (MNEPR). These stipulations contain an agreed-to formula of exemption from liability: exemption claims will be accepted only if the actions or inactions that led to damage were not intentional. At the same time, the Russian side needs to take specific steps to improve its national regulatory environment and to move along and further develop the system of insurance against civil liability for damage. Access to restricted Russian facilities where collaborative programs are implemented. It would be advisable to further address the issues of how long it takes to review requests for access to restricted facilities and how much background information is to be requested of prospective visitors. A two-pronged approach can be proposed here: our partners would submit lists of prospective visitors to the Russian side ahead of time (e.g., at the beginning of each calendar year), and we would become more efficient at taking care of all organizational formalities. Another option here would be to move some of the production lines subject to conversion outside the overall jurisdiction of the restricted facility of which they are a part. In Russia, such experience already exists. Taxation issues. Pursuant to the law “On Gratuitous Aid (Assistance) to the Russian Federation and Introduction of Modifications and Supplements to Selected Acts on Taxation and on Extra-Budgetary Deductions Benefits in Return to Such Gratuitous Aid (Assistance),” Government Resolution No. 1046 of September 17, 1999, has been passed. It is entitled “On Approval of Registration Process for Technical Assistance Projects and Programs, Issuance of Certificates for Assets, Products, Operations, and Services Constituting this Technical Aid (Assistance), and Monitoring of Its Proper Use.” Implementation of the law and the resolution has been entrusted to the Commission for International Technical Assistance, which operates under the auspices of the Russian government (hereinafter referred to as the Commission), which, when it is reviewing technical aid (assistance) projects and programs, will also take into account a whole host of other laws and regulations. Over three years of its work, the Commission has reviewed international technical assistance projects and programs worth US$2,230.8 million. However, since 2002, the amount of international technical assistance (aid) rendered has decreased somewhat. The main reason for this is the mutually exclusive interpretation of selected tax benefit and customs privilege provisions envisaged in multilateral and bilateral technical collaboration agreements. The main contradiction here is the fact that the Russian Tax Code does not make room for an exemption from the VAT paid by the providers of assorted material resources intended for use in production activities. The contradiction materialized when Article 21 of the Tax Code entered into force. As a result, foreign and international donors find themselves on an uneven playing field in terms of the tax breaks available to them. Currently, work is under way to prepare amendments to the Russian Tax and Budgetary Codes. The amendments call for a return—from the federal budget to the recipients of technical aid—of an amount equal to the VAT that they had to pay in the course of providing gratuitous technical aid (assistance) on Russian territory. Adoption of such amendments will be conducive to an increase in the inflow of technical aid (assistance) into the Russian Federation and will also allow implementation of the stipulations of Article 149 of the Russian Tax Code. The Agreement on Multilateral Nuclear Environmental Program in the Russian Federation provides for full tax exemption of the aid. Here, the Russian side has to engage in coordination with the donors over the exact details of the process—within the framework of the Russian law—by which the technical aid (assistance) in question will be rendered tax exempt. Work along these lines continues to be done by local and regional authorities, which will have to confirm to the donor nations the tax-exempt status of international assistance. However, further improvement of the mechanism for actual enforcement of the already existing norms will clearly be in order. Improvement of the legal and regulatory environment for international cooperation. It is necessary to complete the ongoing administrative reform of the federal executive branch and pass domestic laws and regulations regarding the ratification of international treaties that shape Russia’s cooperative engagement with other countries. In this context, one of the highest priorities is adoption of a law on radioactive waste management. We also need to make an effort to get the 1996 Vienna Convention on Civil Liability for Nuclear Damage ratified as soon as possible. A Russian government resolution will be required to bring into force, on the territory of the Russian Federation, the 1999 Joint Convention on the Safety of Spent Fuel Management and on the Safety of Radioactive Waste Management. Finally, work needs to continue to improve the Tax Code.

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Strengthening U.S.-Russian Cooperation on Nuclear Nonproliferation: Recommendations for Action In addition to above-mentioned action items in pursuit of regulatory and legal environment improvements, the following are deemed prudent: The possibility and the need for amending “Main Sanitary Rules for Ensuring Radiation Safety” (OSPORB-99, SP.2.6.1.799-99) to additionally include the category of “very low-activity radioactive wastes” needs to be considered. The introduction of the notion of “nondangerous wastes” into the practice of radioactive waste management, based on Radiological Safety Norms (NRB-99), along with predefined acceptable methods of the deposition of such wastes in the natural environment, needs to be considered. Besides, a procedure needs to be developed, on the basis of the NRB-99 requirements, for determination of what quantitative criteria should be used for an environmental impact assessment—with respect to local conditions; international practice; and specific formulated objectives of the rehabilitation of compound areas, buildings, and structures—once the rehabilitation is complete. Functional requirements and criteria for accepting radioactive waste for final disposal, in compliance with the existing process, need to be developed and commissioned. This should be made as a clarification to the “Sanitary Rules for Radioactive Waste Management” document (SPORO-2002, SP2.6.6.1168-02). Criteria for the complete rehabilitation of the former coastal servicing bases of the Navy’s Northern Fleet need to be formulated. The procedures for the coordination of design documentation and the interaction among various regulatory bodies (e.g., the sanitary oversight committee and the fire authority) that participate in the processes of coordination and approval of design documentation relevant to the disposition and environmental rehabilitation of hazardously radioactive sites and items need to be updated (i.e., brought into compliance with the Russian government’s decisions regarding the functions of the federal executive branch). This should be done after the ongoing reform of the federal executive branch has been completed.