STATEMENT SUBMITTED BY THE UNITED STATES NUCLEAR REGULATORY COMMISSION
TO THE SUBCOMMITTEE ON CLEAN AIR, WETLANDS, PRIVATE PROPERTY, AND NUCLEAR SAFETY
COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS
UNITED STATES SENATE
CONCERNING UNITED STATES NUCLEAR REGULATORY COMMISSION PROGRAMS AND NUCLEAR SAFETY REGULATORY ISSUES
PRESENTED BY SHIRLEY ANN JACKSON, CHAIRMAN
July 30, 1998

Mr. Chairman and members of the Subcommittee, the Commission is pleased to appear before you to discuss nuclear safety regulatory issues and the programs of the Nuclear Regulatory Commission (NRC). I would like to begin by providing the Committee with a brief summary of topics that are of particular interest.

In the broadest sense, the mission of the NRC in FY 1999 remains the same as when the Congress created the NRC with the Energy Reorganization Act of 1974: that is, to ensure the protection of public health and safety, the common defense and security, and the environment in the civilian use of source, byproduct, and special nuclear materials. Periodically, however, the NRC has engaged in self-examination and reassessment of its regulatory functions--both as a stimulus for continued improvement and in response to changes in the industries we regulate. The three years since the initiation of the NRC Strategic Assessment and Rebaselining effort in 1995 have been a time of self-evaluation, as we have prepared to realign our regulatory policies and programs in order to improve our own effectiveness and efficiency, as well as to position the agency for changes in the regulated environment, such as those resulting from electric utility deregulation and restructuring.

In recent months, the NRC has been the subject of a number of external reviews, some of them sharply critical, from our Congressional appropriations committees, the General Accounting Office (GAO), the NRC Inspector General, the nuclear industry, and other stakeholders. Whether or not one agrees with these criticisms, we believe that they are worthy of careful consideration. They provide a useful opportunity to review the improvements we already have put into place; to examine the initiatives we have started and to evaluate the need for accelerating or adjusting the emphasis of those initiatives; and to address new issues where they have been identified. In addition, given the public manner in which the NRC conducts its affairs, we believe these critiques have provided a useful impetus for engaging in active dialogue with our stakeholders. Earlier this month, in fact, the Commission invited a number of these stakeholders, including some of our harshest critics, to engage in a round-table discussion, open to the NRC staff, the press, and the public. As anticipated, this meeting provided the Commission with beneficial insights, including a range of perspectives on the strengths and the weaknesses of NRC regulatory programs and policies.

We believe this Commission has been willing to tackle difficult technical and policy issues--many of which have become multi-dimensional and complex through a history of providing short-term or incomplete resolution. While this willingness to take on challenges may have uncovered or highlighted areas in need of change, we believe we also have pursued a solutions-oriented focus toward accomplishing those changes in a comprehensive and enduring manner.

Regarding the criticisms leveled recently, it is important to note that they have not been all from one direction. Certain critiques have been perceived to be driven by pressure from the nuclear power industry, with implied or overt accusations that nuclear energy has become economically burdened as the result of NRC over-regulation. On the other hand, the General Accounting Office (GAO), the Union of Concerned Scientists, and other groups have been vocal in criticizing the NRC for a lack of rigor in demanding strict adherence to clear safety standards. These organizations are demanding even stronger NRC regulatory oversight of its power reactor licensees.

We would submit that, as an independent regulatory agency, the NRC must be careful to maintain a focus on meeting its legislatively established health and safety mission. While we must be fair in considering the views of all our stakeholders, and while we must endeavor to accomplish our mission as effectively and efficiently as possible, we cannot afford to be propelled back and forth by every current in the river. Given our health and safety mandate, and given the nature of the industries we regulate, we believe there is virtue in being deliberate--not sluggish, but careful and thoughtful--in analyzing, optimizing, and accomplishing the necessary changes to our processes.

While this testimony is provided as input to an oversight hearing, it also is structured to provide, clearly and directly, the NRC analysis of and response to the critiques I have mentioned. A more complete discussion of the full spectrum of NRC programs is provided as background information in an appendix to this testimony. I will focus on the specific areas that have been criticized.

In May 1997, the GAO issued a report entitled "Nuclear Regulation--Preventing Problem Plants Requires More Effective NRC Action." Criticisms in the GAO report focused on the perceived lack of early NRC intervention and enforcement action to prevent declines in nuclear plant performance. The GAO recommended an increased NRC focus on licensee responsiveness to identified problems, with specific strategies for NRC action when licensees allow problems to go uncorrected, and an increased NRC focus on licensee management competence as a component of NRC inspection and assessment.

We believe that changes we have initiated to our reactor inspection and performance assessment processes will address most of the GAO concerns. These changes include: (1) efforts to develop and rely on more objective performance indicators; (2) the integrated review of our reactor assessment processes (known as IRAP), which I will address in more detail shortly; (3) an increased emphasis on the FSAR as a current reference document; and (4) a review of NRC practices in following up on licensee commitments. In addition, the NRC will increase its focus on performance-based (i.e., outcomes-oriented) inspections as the basis for drawing conclusions related to licensee management processes and controls.

In a separate report, issued in March 1997, the GAO focused on the NRC system for handling the safety concerns, or allegations, raised by licensee employees. The GAO observations and recommendations covered a wide spectrum, generally centered around: (1) the timeliness of the Department of Labor (DOL) process for addressing discrimination complaints filed under Section 211 of the Energy Reorganization Act of 1974; (2) NRC capabilities for monitoring the allegation process; and (3) NRC knowledge of the work environment at nuclear power plants.

The NRC has taken aggressive action to improve its overall allegation program through increased management emphasis on the treatment of allegations and the protection of alleger identity, more effective and efficient allegation-related processes, improved timeliness and quality in communications with allegers, upgraded NRC employee training, a new software system for tracking and trending allegations, and specific process changes to incorporate allegation-related insights into the evaluation of licensee performance in NRC Senior Management Meetings. We have taken specific measures to eliminate a vulnerability related to protecting alleger identity in the release of documents under our Freedom of Information Act (FOIA) processes. In addition, in our interactions with the Department of Labor, we have undertaken a number of measures that will enhance the joint agency treatment of Section 211 complaints.

In June 1998, the NRC received a number of critiques, including reports from both the House and Senate Committees on Appropriations, that covered a broad range of NRC programs perceived to be in need of improvement. For treatment in this testimony, we have grouped these criticisms into the following categories: (1) risk-informed and performance-based regulation; (2) reactor inspection and enforcement; (3) reactor licensee performance assessment; (4) reactor licensing and oversight; (5) uranium recovery; and (6) NRC organization and management effectiveness and efficiency.

A major area of criticism focused on NRC processes that result in expending undue NRC and licensee resources to address NRC requirements that are of relatively low safety significance. NRC critics, in general, believe that the NRC needs to accelerate its move toward making the entire NRC regulatory framework more risk-informed (i.e., such that areas of highest risk receive the greatest focus), and more performance-based (i.e., more results-oriented, and more open to allowing licensee flexibility in how to meet NRC regulatory requirements).

The Commission has been very supportive of this adjustment in regulatory approach, as a means toward enhanced decision-making, improved efficiency, and reduced licensee burden in both the reactor and materials arenas. We agree, however, that the pace of current actions should be accelerated, and we are open to working with our stakeholders toward that end. Long-term NRC initiatives such as the Cost Beneficial Licensing Action program and Improved Standard Technical Specifications were designed to concentrate NRC and licensee resources on more safety significant aspects of nuclear power plant operation, and to remove or modify requirements with little safety benefit and high cost. Under the Probabilistic Risk Assessment (PRA) Implementation Plan, the NRC more recently published generic regulatory guidance to support risk-informed plant changes, as well as application-specific guidance in the areas of technical specifications, in-service testing, in-service inspection of piping, and graded quality assurance. The Commission also has emphasized an approach to rulemaking that is risk-informed and, where appropriate, performance-based, in order to reduce the burden associated with overly conservative or prescriptive requirements and to sharpen the focus on matters of highest risk. As one example, in September 1995 the Commission approved the issuance of a revision to 10 CFR Part 50, Appendix J, "Primary Reactor Containment Leakage Testing for Water-Cooled Power Reactors." The revision added an option entitled "Performance-Based Requirements," to allow licensees to replace voluntarily the prescriptive testing requirements of Appendix J with testing requirements, based both on overall performance and on the performance of individual components. Another example is the NRC Maintenance Rule--made effective in July 1996 and now being revised--which uses a risk-informed and performance-based approach to ensure the availability and reliability of key structures, systems, and components in power reactor facilities. Through training, program reviews, and stakeholder interactions, the NRC also is working to make its inspection, enforcement, and assessment processes more risk-informed and, where appropriate, performance-based, in order to provide a coherent, defensible, and consistent framework for the entire spectrum of NRC regulatory functions.

In the area of reactor inspection, the NRC has been criticized for failing to reduce the inspection-related licensee burden in a manner commensurate with overall industry improvements in safety and efficiency. Similarly, regarding NRC enforcement practices, critics have stated, among other contentions: (1) that the recent increase in non-escalated enforcement reflects a change in NRC culture rather than a decline in licensee performance; (2) that the cost of responding to violations of low severity is excessive; (3) that enforcement is not properly focused on safety and matters of high risk; and (4) that the NRC needs to abandon its reliance on an approach that demands strict compliance with its regulations, without regard to the relative safety significance of individual issues.

While the NRC believes that the basic focus and emphases of its inspection and enforcement programs are sound, we agree that improvements are needed in both areas. The average number of inspection hours has, in fact, decreased, and the gradient has increased between the amount of inspection received by the best performing plants and plants experiencing performance problems. While short-term efforts are focused on increasing the incorporation of risk information into inspection planning and execution, we also plan to initiate, in October 1998, a review of the inspection program structure, focus, and procedures. The decision to perform this review was a result of initiatives which occurred over the past year that were aimed at achieving regulatory excellence. These include the ongoing review of our reactor performance assessment process, our improvements to the Senior Management Meeting process, and our performance of a job task analysis for personnel involved in our reactor inspection program.

Regarding the criticisms of our enforcement practices, we believe that the increase in non-escalated enforcement actions stems from an concerted effort to improve consistency, together with an increased focus on compliance, and a specific emphasis on ensuring that reactor plant design bases have been maintained. The NRC does not believe that this increase in violations reflects a decline in reactor safety performance. In fact, as part of the efforts described above, we may have inadvertently created too low a threshold for Severity Level IV violations, as compared to minor violations. The NRC recognizes the resource demands associated with relatively low-level violations, and we have taken several short-term actions to simplify the disposition of these non-compliances. We have increased the level of centralized oversight to ensure consistency in this area, and we have increased the headquarters oversight and coordination of the appeal process for disputing low-level violations. As directed by the Commission, the NRC staff has changed one of the criteria for distinguishing minor violations from Severity Level IV violations. As an overall effort to improve our enforcement practices, we also intend: (1) to continue to meet with stakeholders to consider the need for further change, including identifying unnecessary or duplicative regulations or requirements and removing the burden of responding to low severity level violations; (2) to improve guidance on factoring risk into enforcement decisions; (3) to use training, internal audits, and stronger management oversight to identify and correct inconsistencies and other problems; and (4) to provide closer coordination between inspection and enforcement activities.

In the area of reactor performance assessment, the strongest overall criticism has centered around the subjectivity and lack of scrutability of our assessment processes. In particular, critics have faulted these processes for the lack of clear, objective assessment criteria--including criteria used to place nuclear power plants on the NRC "Watch List." Taken as a whole, these processes have been characterized as being redundant and too resource-intensive, both for licensees and for the NRC.

The NRC agrees with the thrust of these criticisms. However, we would note that these flaws have been the focus of considerable Commission attention, and that specific agency initiatives are underway to address these very concerns. In 1996, the Commission directed a study of the Senior Management Meeting (SMM) process by Arthur Andersen, which resulted in an increased emphasis on objective, quantitative information, as well a number of SMM process improvements. From that study, the increased scrutiny of the overall assessment function led to initiating the IRAP--a full-scope, integrated review encompassing all NRC reactor-related performance assessment processes--with the goal of developing a single, integrated process that is more objective, more scrutable, and less resource intensive than the current mix of processes. We expect to complete the IRAP by late this year. In the interim, the Commission has initiated several other changes, which include: (1) changing the frequency of the SMM from semiannual to annual; (2) requiring a more systematic processing and comparison of regulatory performance data in the areas of human performance, enforcement, allegations, and risk; (3) providing a structured analysis of performance data in a publicly released plant issues matrix for each plant; and (4) providing for Commission approval of actions taken at the Senior Management Meeting.

In the area of reactor licensing and oversight, the primary criticisms have been: (1) that the NRC has implemented informal processes that bypass formal procedures, thereby imposing requirements inappropriately; (2) that the NRC has reinterpreted improperly what constitutes design basis information, in a manner that is unclear, unduly burdensome, and unproductive; and (3) that NRC adjudicatory processes take too long and cost too much.

Once again, the NRC agrees with the general thrust of these issues, and we are taking action to address the concerns expressed. Regarding regulatory process controls, we have adopted measures that internally challenge the need for each generic communication, to ensure that the licensee actions requested and responses required are commensurate with the safety significance of the issues involved. In addition, we will increase NRC management oversight of the issuance of Confirmatory Action Letters, to ensure that proper controls are exercised in NRC staff confirmation and documentation of licensee commitments, and that licensees are not pressured into actions in excess of regulatory requirements. Regarding our focus on design basis information, the Commission has issued revised guidance to clarify the evaluation process for resolving degraded and nonconforming conditions, and we are committed to providing more flexibility for our licensees to make facility changes without NRC approval (i.e., using 10 CFR 50.59). We will continue to work with the industry to bring clarity and a risk-informed approach to this area. Finally, regarding adjudicatory processes, the Commission has been working to implement several measures, including: (1) streamlining the hearing process, (2) clearly delineating Commission expectations for adjudicatory proceedings, such as schedules and sua sponte reviews; and (3) making provisions for Commission guidance to licensing boards on individual proceedings, timely identification of any open generic policy issues for Commission decision, and effective integration of the technical review and adjudicatory schedules. While these measures are designed to improve the timeliness of all NRC adjudicatory proceedings, we have given particular consideration to ensuring that the process for reactor license renewal will be efficient, fair to all parties involved, and focused on the technical merits of the applications. We also will examine whether changes (including legislation) would be appropriate to expand our use of more informal or legislative-style hearings in licensing proceedings.

Several criticisms have related to the overall topic of NRC organization, management effectiveness, and efficiency. Critics have called for an agency-wide review, contending that the NRC has been unresponsive to previous internal and external reviews, and faulting the agency for an overall lack of self-assessment capability. Significant NRC staffing and resource reductions have been suggested, targeting the areas of management and support, human resources, finance, professional staff (particularly in the area of reactor oversight), research, and international programs.

Perhaps the most compelling NRC response to these concerns is the extensive effort we have made, in recent years, to construct a coherent, defensible, and dynamic framework for strategic planning and resource management. In 1995, the Commission initiated the Strategic Assessment and Rebaselining review, which compared agency programs to Congressionally mandated NRC authorities and responsibilities, and provided the foundation for developing our FY 1997-2002 Strategic Plan, the FY99 Performance Plan, and program-level, outcomes-focused operating plans. We are developing and implementing an integrated, coherent, agency-wide process for planning, budgeting, and performance management, which builds in accountability and self-assessment, and provides a direct means to refocus work or re-deploy resources in response to change.

Moreover, as this Committee is aware, the NRC is already much smaller than it once was. The NRC FY98 budget, when adjusted for inflation, is the lowest in the 23-year history of the NRC. As an example, the current NRC research budget has been reduced by approximately 80% over the past 17 years. Since FY94, the NRC has reduced Senior Executive Service managerial positions by 16 percent, from 220 to 185. We have improved the overall supervisor-to-employee ratio, and we are striving to reach our goal of 1:8 by the end of the next fiscal year.

We believe, further, that the NRC has been vigorous in its self-assessment, using both broad-scope and specifically focused reviews to uncover deficiencies and develop sensible solutions. Some of these reviews, such as the IRAP, have been internal, while others have employed external consultants, such as our recently initiated enlistment of Arthur Andersen and Company to evaluate our planning and self-assessment processes, beginning with the Office of Nuclear Reactor Regulation (NRR). In addition, we have made a concerted effort to be open and receptive to criticism, including the broad array of critiques outlined in this testimony. We actively seek interactions with our stakeholders to engender feedback and input on our performance in various regulatory functions, and to solicit suggestions for continued improvement.

Regarding the specific areas mentioned for staffing reductions, we will continue to seek areas in which greater organizational efficiency can be achieved. We expect that the enhancements resulting from our reactor oversight process reviews will allow a reduction in resources in some areas, while retaining the necessary level of expertise and a defensible level of oversight. We have made considerable progress in reducing our management and support staff, and we will continue to target reductions in these areas. Finally, we believe that our participation in international activities is beneficial to the regulation of U.S. nuclear power plants, and not only augments our operational experience database, but, in fact, also plays an important role in leveraging our limited resources by allowing cooperative research.

We would like to thank the members of this Committee for the support they consistently provide to the Nuclear Regulatory Commission. As I have heard said, "a bend in the road is not the end of the road, unless you fail to make the turn." I believe I can say, with my Commission colleagues, that we intend to make the turn, if, in fact, we are facing a bend--or to modulate our trajectory, if that is the degree of adjustment needed.

To proceed with modifying the agency regulatory approach along the lines I have discussed requires that we have adequate resources. As you know, both the House and Senate have passed Energy and Water appropriations bills for FY99. The Senate would appropriate $470.8 million for the NRC, including the NRC Inspector General, and the House version would appropriate $467.5 million. Either bill would constitute a sizeable reduction from the requested level of $488.6 million. As requested, that level did little more than to enable the agency to maintain its resources in the face of inflation. The present reduction, if carried out, will require the NRC to reduce its planned FY99 programs by at least $17.8 million. As a result, the NRC will cut back on its reactor inspection and reactor oversight programs, curtail selected safety research, eliminate studies of nuclear materials operating experience, and substantially reduce many of its support activities.

With the Senate and House appropriations bills as a catalyst, our FY 2000 budget proposal will reflect an approach that accelerates many of our efforts leading to a revised regulatory framework. We believe that accelerating our efforts toward a risk-informed and, where appropriate, performance-based regulatory approach will both enhance our safety decisions and provide a coherent basis for our regulatory processes. Through the full implementation of our Planning, Budgeting and Performance Management Process, our FY 2000 program resource requirements will reflect additional efficiencies and more streamlined processes. Some of that streamlining already has begun, and is reflected in the current FY99 budget estimate. As I have outlined earlier, we are committed to examining broad aspects of our reactor inspection, enforcement, and performance assessment processes (as well as other programs), and we will make the adjustments needed to optimize our performance in those areas. Where criticisms are found to be valid, our decisions to make additional adjustments--or to accelerate changes already in progress--may require further changes to the FY 2000 program and the associated budgetary resources.

As you know, the Omnibus Budget Reconciliation Act of 1990, as amended, requires the NRC to recover 100 percent of its new budget authority, less the amount appropriated from the Nuclear Waste Fund for high level waste activities, by assessing fees. However, the NRC 100 percent fee recovery requirement reverts to 33 percent at the end of FY98, if the current requirement is not extended. The Committee on Environment and Public Works has approved unanimously S.2090, "NRC Fairness in Funding Act of 1998," which would extend the authority of the NRC to collect fees through 2003. Both the House and Senate appropriations bills for FY99 contain general provisions extending approximately 100 percent fee recovery for FY99 only. The Commission encourages the Congress to act on the fee authority extension in S.2090 so as to provide a sound future funding base for NRC programs.

The Commission, NRC licensees, and the Congress have expressed concerns regarding the fairness and equity of charging licensees for certain agency expenses that cannot be attributed to individual licensees or classes of licensees. The Commission recently has considered issues associated with fees, and has concluded that reducing the fee-based portion of our budget would address these fairness and equity issues. Thus the Commission supports removing a portion of NRC funding from the fee base, and covering it with separate appropriations, as provided for in S.2090.

In conclusion, the Commission is committed to making the changes necessary to maximize NRC regulatory effectiveness, and we are sensitive to the need to contain the costs of doing business in order to minimize the financial impact to our licensees. At the same time, we take very seriously our responsibility to provide reasonable assurance of adequate protection of public health and safety in the use of nuclear materials in the United States. The NRC greatly appreciates the support for its programs and resource needs that this Committee has afforded the agency in the past. We look forward to our continued interactions.

APPENDIX A: ENHANCED DISCUSSION AND ADDITIONAL INFORMATION

The discussions that follow provide the Subcommittee with further details on the activities that we have outlined in this testimony. A table of contents is provided for ready reference to areas of specific interest.

TABLE OF CONTENTS

I. Expectations for a Health and Safety RegulatorA-4

II. NRC Response to the May 1997 GAO Report, "Nuclear Regulation--Preventing Problem Plants Requires More Effective NRC Action"A-6

III. NRC Response to the March 1997 GAO Report, "Nuclear Employee Safety Concerns--Allegation System Offers Better Protection, But Important Issues Remain"A-8

IV. NRC Response to the May 1998 Senate Appropriations Committee Report and Related StudiesA-13

A. Risk-Informed and Performance-Based RegulationA-14

B. Inspection and EnforcementA-19

  • InspectionA-19
  • EnforcementA-22
  • SummaryA-26

    C. Reactor Licensee Performance AssessmentA-27

    D. Reactor Licensing and OversightA-31

  • Regulatory ProcessesA-31
  • Design Basis InformationA-34
  • Power Reactor License Renewal and NRC Adjudicatory ProcessesA-37

    E. Uranium RecoveryA-41

    F. Organization and Management Effectiveness and EfficiencyA-43

  • Organization and PlanningA-44
  • Information Technology and Information ManagementA-45
  • NRC Self-AssessmentA-47
  • Management and Support StaffingA-49
  • NRC Participation in International ActivitiesA-49
  • SummaryA-50

    V. Other Agency Programs and Areas of FocusA-50

    A. Electric Utility Deregulation A-50

  • Cost-Competitiveness and Safe Nuclear OperationsA-51
  • Electrical Grid ReliabilityA-52
  • Decommissioning Funding AssuranceA-53
  • License Transfers and Timeliness of NRC ReviewsA-54

    B. NRC Certification of Advanced Reactor DesignsA-56

    C. Status of the NRC Materials ProgramA-58

  • Materials Program InitiativesA-58
  • Oversight of the U.S. Enrichment Corporation A-61

    D. High-Level WasteA-62

  • NRC Assessment of DOE Progress and Potential for Licensing SuccessA-63
  • Potential IssuesA-64
  • Status of Spent Fuel Storage A-65

    E. Decommissioning and Decontamination; Clean-UpA-66

    F. Work with the U.S. Department of Energy (DOE)A-69

  • External Regulation of DOEA-70
  • Current DOE Privatization ActivitiesA-72
  • Tritium Production A-73
  • Disposition of Surplus Weapons-Grade PlutoniumA-74

    G. Significant Research ActivitiesA-75

    H. International CooperationA-77

  • Bilateral and Multilateral ActivitiesA-77
  • Convention on Nuclear SafetyA-78

    I. Year 2000 Systems CorrectionsA-78

    I. Expectations for a Health and Safety Regulator

    The United States Nuclear Regulatory Commission (NRC) was established in 1975 principally because the evolution and development of the nuclear power industry had created a new set of regulatory challenges, requiring the attention of an exclusively regulatory agency to ensure the health and safety of the American public. Created in a time of change, the NRC throughout its existence has engaged repeatedly in reassessment and recalibration in the light of new data and new understanding. In the same way that it demands objective self-examination and effective corrective action on the part of the regulated industry, the NRC recognizes that it must require the same of itself. The three years since the initiation of the NRC Strategic Planning and Rebaselining effort in 1995 have been a time of searching self-evaluation, as the agency has prepared to realign its regulatory policies and programs for nuclear power plants, to take into account the variety of changes that will result from the shift to electric utility deregulation and associated utility restructuring .

    In recent months, the NRC has been the subject of a number of critiques, some of them sharply critical, from our Congressional appropriations committees, the General Accounting Office (GAO), the NRC Inspector General, the nuclear industry, and other stakeholders. Whether or not one agrees with these criticisms, the NRC believes that they represent valuable input worthy of careful consideration. They also are an appropriate occasion for the agency to continue its own rigorous stock-taking; to assess objectively both the strengths and the weaknesses of NRC regulatory programs and policies; to understand better the impact of those programs and policies on those we regulate; to consider how effectively we have responded to change in the regulatory environment; and to give open-minded and objective consideration to the views and interests of our various constituents.

    Many of the criticisms leveled recently have been perceived as driven by pressure from the nuclear power industry, with implied or overt accusations that nuclear power has become economically burdened as the result of NRC over-regulation. On the other hand, the May 1997 General Accounting Office (GAO) report ("Nuclear Regulation--Preventing Problem Plants Requires More Effective NRC Action"), as well as the Union of Concerned Scientists and other constituent groups, have been vocal in criticizing the NRC for a lack of rigor in demanding strict adherence to clear safety standards, and in demanding, if anything, stronger NRC regulatory oversight of its power reactor licensees.

    We would submit that, as an independent regulatory agency--regardless of the source of our fees--the NRC must be careful to focus on meeting our legislatively established health and safety mission. While we must be fair in considering the views of all our stakeholders, and while we must endeavor to accomplish our mission as effectively and efficiently as possible, we cannot afford to be propelled back and forth by every current in the river. In other words, given our health and safety mandate, and given the nature of the industries we regulate, we believe there is virtue in being deliberate--not sluggish, but careful and thoughtful--in analyzing, optimizing, and accomplishing the necessary changes to our processes.

    In addition, in reviewing the criticisms that have been directed at the NRC regulatory process, it is important both for the NRC and for our stakeholders to keep in mind that the basic processes under criticism are the same processes that have resulted in the licensing and operation of 110 safe nuclear power plants. Today, 104 plants are operating to produce 20% of our nation's electricity, with an enviable record in terms of protecting the health and safety of the American people. That should not be taken to imply, by any means, that NRC processes are or should be above criticism--far from it. It does, however, suggest that caution should be exercised before making sweeping changes to ensure that seemingly desirable improvements, made in the interest of increased efficiency or diminished regulatory burdens, do not turn out to have unforeseen adverse effects on the overall objective of ensuring nuclear safety.

    II. NRC Response to the May 1997 GAO Report, "Nuclear Regulation--Preventing Problem Plants Requires More Effective NRC Action"

    In its May 1997 report, "Nuclear Regulation--Preventing Problem Plants Requires More Effective NRC Action," the General Accounting Office (GAO) emphasized that, in order to achieve the NRC safety mission, it was critical for the Commission to have a high degree of confidence in the ability of its regulatory program to ensure that the nuclear industry performs to high safety standards. The GAO observed that the NRC determination of adequate protection of public health and safety presumptively assumes that licensees will operate their facilities within approved designs and in accordance with NRC regulations. Within this context, the GAO report gave a number of specific criticisms, which included contending:

  • that, for some plants, the NRC had not taken aggressive enforcement action to require licensee correction of safety problems on a timely basis;
  • that the NRC needed to improve on early intervention and aggressive enforcement action, in order to prevent declines in nuclear plant long-term performance, and in order to increase the assurance that licensees are meeting high safety standards; and
  • that the NRC was slow to place plants on the NRC "Watch List."

    The GAO report recommended that the NRC develop strategies to take more aggressive action on safety deficiencies when they are discovered. Specific recommendations included: (1) that NRC inspectors be required to document fully the status of licensee actions to address identified problems, including timetables for the completion of corrective actions and statements as to how the NRC will respond to nonconformances with planned actions; (2) that the NRC make licensee responsiveness to identified problems a major feature of the Senior Management Meetings, to include clarifying the intended NRC response when problems go uncorrected; and (3) that the NRC assess licensee management competency as a mandatory component of the NRC inspection and assessment processes.

    As indicated in its written response to the GAO report, the NRC has been developing--and in many cases already has instituted--a variety of improvements to its reactor performance assessment processes that will address most of the GAO concerns. The NRC staff has worked extensively to develop improved performance indicators for use in the assessment of reactor licensees--including performance indicators that focus on the adequacy of licensee corrective actions. The Integrated Review of the NRC Assessment Process for Operating Commercial Nuclear Reactors (referred to as IRAP), is an extensive review by the NRC staff of all existing reactor-related assessment processes. This review is still ongoing, and the final form of the IRAP has yet to be determined; however, in keeping with the recommendations made by the GAO and others, early stages of the IRAP have considered such changes as: (1) streamlining and integrating into a single process the best elements of our current processes; (2) tying specific regulatory actions directly to the assessments made; (3) improving the systematic use and categorization of data; (4) developing and using threshold criteria; (5) focusing on performance results; (6) providing opportunity for licensee response at appropriate stages; and (7) providing for Commission approval of actions taken at the Senior Management Meeting. [For additional detail on the IRAP and other aspects of licensee performance assessment, see Section IV.C of this testimony.]

    Other NRC initiatives that relate to the GAO report criticisms involve a renewed emphasis on the purpose and use of the final safety analysis report (FSAR) and a review of NRC practices in following up on licensee commitments. The updated FSAR provides a current reference document to be used in routine safety analyses performed by the NRC, the licensee, and other interested parties. NRC inspection and licensing guidance has been clarified to re-emphasize the use of the FSAR in providing updated licensing basis information for the plant, and the need to review applicable portions of the FSAR and other licensing documents during inspections and licensing reviews. The NRC staff also is reviewing existing NRC processes for identifying, tracking, and verifying licensee commitments made to the NRC, to improve NRC staff and industry understanding and performance in this area. The NRC has begun discussions with the Nuclear Energy Institute (NEI) to determine whether changes in the NEI guidance document on licensee commitments might be mutually beneficial for licensees and the NRC.

    In the area of assessing management competency, the Commission agrees that licensee management has a significant effect on plant operation and, by inference, on safety and risk. The NRC role is to provide oversight of generic aspects of utility organization and employee qualifications commensurate with the need to provide reasonable assurance of adequate protection, such as establishing minimum qualification requirements for certain positions. However, as the Commission recently reaffirmed, NRC inspection and assessment does not directly assess licensee management performance or corporate culture. Rather, the NRC inspection program emphasizes conducting performance-based (i.e., outcomes-focused) inspections in broad areas of facility operation and design, and, on the basis of inspection results, draws conclusions about the effectiveness of licensee management processes and controls. In addition, to be clear, NRC regulatory oversight does not extend to NRC involvement in the selection process for licensee managers.

    III. NRC Response to the March 1997 GAO Report, "Nuclear Employee Safety Concerns--Allegation System Offers Better Protection, But Important Issues Remain"

    The NRC regulatory program places a high value on a work environment, within the licensee community, in which the highest standards of quality, integrity, and safety are understood to be in the best interest of the licensee and its employees and contractors. The NRC allegation program provides a way for individuals working in NRC-regulated activities and members of the public to provide safety and regulatory concerns directly to the NRC. For allegations involving potential wrongdoing, the NRC Office of Investigations (OI) works with the program offices on follow-up, in-depth investigation, analysis, and disposition--including enforcement action. For allegations of discrimination under Section 211 of the Energy Reorganization Act of 1974, the Department of Labor (DOL) provides an investigation and adjudicatory process for complainant redress, and the NRC also may conduct its own investigation to determine the need for enforcement action. The Commission has taken aggressive action to improve the NRC treatment of allegations, and to promote within the overall licensee community a safety-conscious work environment--in which personnel at any level are encouraged to report concerns, and such that concerns are promptly reviewed, prioritized, investigated, and if warranted, corrected, with appropriate feedback to the individual.

    In its March 1997 report, "Nuclear Employee Safety Concerns--Allegation System Offers Better Protection, But Important Issues Remain," the GAO made a number of observations and recommendations for improvement relating to the following general areas: (1) the timeliness of the Department of Labor process for providing complainant redress under Section 211; (2) NRC capabilities for monitoring the allegation process; and (3) NRC knowledge of the work environment at nuclear power plants.

    Over the past 18 months, the NRC has made a number of specific changes to its allegation program, some of which were in response to specific GAO recommendations, and some as part of internal NRC initiatives. In general, these changes have focused on emphasizing the importance of the allegation program and improving its implementation, including NRC processes for allegation receipt, documentation, tracking, follow-up, evaluation, and closure. Specific actions include the following:

  • The NRC Executive Director for Operations issued an announcement to agency employees expressing NRC management expectations for NRC staff handling of allegations, including comprehensive and timely allegation resolution and protection of alleger identity.
  • The NRC published a brochure that is provided to allegers. The brochure describes the NRC allegation process, the DOL process, and the extent to which the NRC can protect the identity of allegers.
  • The NRC staff developed and implemented an improved software package that has enhanced NRC capabilities for tracking and trending allegations, including tracking discrimination complaints from receipt through the completion of NRC investigative and enforcement activities as well as through the completion of DOL actions.
  • Standard training material on the allegation program has been developed and implemented, to ensure that NRC employees were current and knowledgeable on the important aspects of the allegation program, including treating allegers professionally and courteously.
  • The NRC developed standard formats for correspondence with allegers, to ensure that all necessary topics are discussed and all essential information is included in such correspondence. The format for acknowledgment letters requires a restatement of the allegations as understood by the NRC. Closure letters also now require a restatement of the concern, as well as a description of the NRC basis for closing the concern.
  • Special cover sheets were developed for allegation correspondence to increase NRC staff recognition of the special handling requirements needed to protect the identity of allegers.
  • The Senior Management Meeting assessment process was revised to include a discussion of insights gained from the allegation program, to assess licensee performance in establishing and maintaining an environment conducive to raising safety and regulatory concerns.

    The NRC also has taken a number of actions specifically designed to improve the follow-up, investigation, and disposition of Section 211 discrimination complaints. The NRC Office of Investigations (OI) has enhanced its overall program in this area by: (1) ensuring an interview with each alleger that has established a prima facie case for Section 211 discrimination (including those under separate pursuit by the DOL); (2) increasing the level of OI involvement in the regional and program office Allegation Review Boards, including the analysis and disposition of discrimination complaints; (3) upgrading the oversight and training of field investigators involved in discrimination investigations; and (4) improving the timeliness and quality of OI reports. Given the complementary DOL jurisdiction in this area, the NRC has been working with the DOL on a range of actions designed to improve the DOL investigative and adjudicatory process. These include: (1) the transfer of Section 211 complaint investigation responsibility from the DOL Wage and Hour office to the DOL Occupational Safety and Health Administration (OSHA); (2) a draft revision to the NRC/DOL Memorandum of Understanding (MOU) related to Section 211 complaints, which I recently signed and forwarded to the Secretary of Labor for her signature; and (3) efforts in progress to develop draft legislation that, among other enhancements, would improve the effectiveness and timeliness for the DOL Section 211 investigative and adjudicatory process.

    Within the range of actions described above, the NRC has completed its implementation of all but three of the GAO report recommendations. Actions still in progress or under consideration are as follows:

  • The NRC and DOL staffs have agreed on draft legislative changes that would make the timeliness requirements in Section 211 of the Energy Reorganization Act more reasonable, and would help to improve the effectiveness and timeliness of the DOL process. The NRC staff currently is preparing a paper that will forward these proposed changes to the Commission for approval and submission to the Congress.
  • The NRC still is evaluating the GAO recommendation on routinely providing feedback forms in allegation closeout correspondence. Several sample studies have been conducted, and the NRC staff will soon provide a recommendation to the Commission on this matter.
  • The GAO recommended that the NRC improve its capabilities for assessing the work environment at licensee facilities. The Commission currently is reviewing an NRC staff paper that provides options for addressing this issue.

    An additional area needing improvement was revealed when, in January 1998, the NRC staff inadvertently revealed the identities of a number of allegers while responding to requests for information under the Freedom of Information Act (FOIA). The NRC established a special team to evaluate the incident and make recommendations to management. The audit team found a flaw in NRC processes that involved, in essence, two competing interests: (1) the need to ensure that FOIA requests receive a prompt and complete response, in keeping with statutory timeliness and release requirements and the Commission stance on openness and public access to information; and (2) the allegation management program mandate on protecting the identity of allegers. The release of alleger identities occurred because essentially no agency guidance or training existed to address the specific process of redacting allegation-related records when responding to an FOIA request, to prevent the release of alleger identities. In addition, the process for reviewing FOIA responses in the responsible organization had undergone an erosion of administrative barriers that at one time had included additional layers of review. In addition to the lack of procedures and training, NRC management found that there was no single point of accountability to ensure that allegation related material was not released inappropriately.

    NRC management considers this to be a serious event that revealed a significant weakness in its processes. Because of the significance of this issue and the broad scope of corrective actions under consideration, the NRC Executive Council has become involved directly in the evaluation and resolution of this issue. The NRC staff is in the process of implementing 30 recommendations with the goal of preventing future releases. While the longer term corrective actions are being evaluated, the levels of review that had eroded have been reinstated and the Agency Allegation Advisor has been identified as the single point of accountability and assigned to review all FOIA responses involving allegation material.

    IV. NRC Response to the May 1998 Senate Appropriations Committee Report and Related Studies

    As indicated earlier, in recent months, the NRC has been the subject of a number of critiques, beyond the GAO, some of them sharply critical, from Congressional committees, the nuclear industry, and other sources. Some of the principal sources include:

  • The June 1998 Senate Committee on Appropriations Report Language
  • The June 1998 House Committee on Appropriations Report Language
  • A study by Tim Martin Associates

    In this section of the testimony, we will attempt to characterize those recent criticisms and to provide, for the record, an objective and thorough response. The criticisms have been grouped into the following categories: (1) risk-informed and performance-based regulation; (2) reactor inspection and enforcement; (3) reactor licensee performance assessment; (4) reactor licensing and oversight; (5) uranium recovery; and (6) NRC organization and management effectiveness and efficiency.

    A. Risk-Informed and Performance-Based Regulation

    In this topical area, the basic criticisms are summarized as follows:

  • Licensees expend considerable resources on NRC requirements that are not related to safety or are of low safety significance.
  • The NRC needs to create a graded safety value scale.
  • The NRC needs to develop and adhere to clear Safety Goals.
  • The NRC needs to accelerate the move to risk-informed and performance-based regulation.

    The NRC has been moving and will continue to move toward making the entire NRC regulatory framework--related to both nuclear reactor safety and nuclear materials safety--more risk-informed (i.e., such that areas of highest risk receive the greatest focus), and, where appropriate, more performance-based (i.e., more results-oriented and more open to allowing licensee flexibility in how to meet NRC regulatory requirements). The overall goal of this adjustment in regulatory approach is to enhance safety decision-making, to improve efficiency, and to reduce resources devoted to issues with low safety significance. As discussed below, a significant number of NRC efforts related to risk-informed regulation have been initiated and are ongoing. Nevertheless, the NRC recognizes that the pace of its actions in this area should be accelerated, and that improvements are warranted.

    The NRC has been using risk information in some generic and plant-specific regulatory activities for several years. In 1986, the Commission issued its policy statement on Safety Goals which characterized the acceptable individual and societal risk from accidents at nuclear power plants. The Commission recently has approved the development of guidelines for applying the Safety Goals and their subsidiary objectives in plant-specific regulatory activities. In 1993, a Regulatory Review Group (RRG) was established to study power reactor regulations and related processes, placing special attention on the potential for using performance-based requirements and guidance in place of prescriptive requirements and guidance. In its final report, the RRG discussed several areas in which NRC process changes could allow significant reductions in industry and NRC resource demands without adversely affecting the level of safety at operating plants.

    As one result, the Cost Beneficial Licensing Action (CBLA) program was created in 1993 to increase NRC management attention and provide a more expeditious review of licensee requests that seek to modify or delete requirements that have a small effect on safety and are costly to the licensee to implement. As of June 29, 1998, of the 305 CBLAs submitted since 1993, 238 have been approved, resulting in cost savings (based on licensee estimates) of over $1.25 billion over the life of the plants.

    An important longer-term effort is the Technical Specification Improvement Plan (TSIP), resulting in the development and use of Improved Standard Technical Specifications (ISTS)--designed to focus NRC and industry resources on the more safety significant aspects of nuclear plant operation. NRC effort and industry input on this initiative began in 1986, and culminated in the initial ISTS publication in 1992, with a revision in 1995. Currently, 56 plants (92 units) have volunteered to convert their plant technical specifications to the ISTS, and 18 plant conversions (involving 28 units) have been approved. Owners groups project annual savings of between $150,000 and $1.13 million per site from the program. Plants that have made this conversion incur savings because of less restrictive surveillance (testing) requirements on specified equipment, as well as from the significant decrease in the post-conversion rate of needed license amendments.

    In part because of the RRG efforts, the NRC formulated its Probabilistic Risk Assessment (PRA) Policy Statement and its PRA Implementation Plan. The Commission PRA Policy Statement, first proposed in 1994 and published in August 1995, identified the following goals: improved decision-making, more efficient use of NRC staff resources, and reduced burden on licensees. The PRA Implementation Plan, first issued in August 1994, consists of more than 100 initiatives to enhance the use of risk information in regulation of both power reactor and nuclear material licensees, as well as efforts to move appropriately toward more performance-based approaches. In addition, the Commission has encouraged the consideration of risk information in all regulatory activities.

    As part of the PRA Implementation Plan, the Commission recently approved for publication generic regulatory guidance, in the form of a regulatory guide and standard review plan, that will support implementation of risk-informed regulation of power reactor licensees, by providing guidance on how to use PRA information to support and evaluate plant-specific changes. In addition to the generic guidance documents, application-specific guidance has been developed and issued for the areas of technical specifications, in-service testing, in-service inspection of piping, and graded quality assurance. Each of these approaches has been proven successful in pilot applications at specific power reactor licensees. In the coming year, the NRC will give increased focus to the review of license amendments and other programmatic changes through the use of these guidance documents.

    The NRC also is working with the Nuclear Energy Institute (NEI) on a pilot applications program in which NEI will identify areas where regulatory requirements and plant operations can be simplified with minimal impact on plant safety. The NRC plans to participate in a study by the Center for Strategic and International Studies (CSIS) on risk-informed and performance-based regulation at the NRC, which also should be useful in formulating further recommendations for change.

    The Commission also has sought to increase regulatory effectiveness through certain rulemakings. These rule changes have been directed toward incorporating risk-informed and performance-based approaches, where appropriate, as well as toward reducing the regulatory burden associated with overly conservative requirements, and eliminating the need to seek exemption from overly prescriptive requirements. As one example, on September 12, 1995, the Commission approved the issuance of a revision to 10 CFR Part 50, Appendix J, "Primary Reactor Containment Leakage Testing for Water-Cooled Power Reactors." The revision added an option entitled "Performance-Based Requirements," to allow licensees to replace voluntarily the prescriptive testing requirements of Appendix J with testing requirements based both on overall performance and on the performance of individual components. In another instance, the NRC worked with the Department of Transportation to provide procedures under new regulations that enable the shipment of decommissioned reactor steam generators to a disposal facility, without undergoing a specific steam generator transportation certification process. A third example is the NRC Maintenance Rule--made effective in July 1996 and currently undergoing certain proposed revisions--which uses a risk-informed and performance-based approach to ensure the availability and reliability of key structures, systems, and components in power reactor facilities. The NRC will continue its review of existing regulations to identify additional opportunities in which NRC requirements can be made more risk-informed and, as appropriate, performance-based.

    The NRC also has revised guidance for reactor inspection activities to incorporate risk insights and to be more performance-based. These revisions provide guidance on using risk insights to help plan inspection activities, to evaluate the significance of inspection observations and findings, to evaluate the adequacy of licensee assessments that have probabilistic risk elements in their bases, and to support enforcement activities. Incorporating risk insights into inspection procedures is expected to result in more efficient NRC inspections, since it will focus attention and resources on the more risk-significant items. Other changes to the inspection program are being pursued, with the overall goal of having a fully risk-informed baseline inspection program.

    Finally, NRC staff training in risk concepts and practices is being carried out as part of the PRA Implementation Plan. The NRC has mandated training on risk-informed guidance and policy for NRC management and technical staff, including site resident inspectors. Senior reactor analyst positions also have been established and filled with specially trained PRA specialists in each regional office and in headquarters, to serve as a primary resource for incorporating risk insights and risk perspectives into reactor inspection, enforcement, and assessment activities.

    With respect to nuclear materials safety, we have used a variety of risk-informed, and, where appropriate, performance-based approaches to analyze areas of NRC responsibility beyond reactors, including nuclear waste, fuel cycle facilities, and industrial and medical uses of nuclear material. We are developing a comprehensive conceptual framework for applying risk-informed and performance-based regulation in nuclear materials applications. We will use this framework to identify areas in which the increased use of risk-informed methods will enhance safety and regulatory efficiency. For some nuclear materials devices and facilities, the nature of the risks, the types of facilities, or other factors may indicate that more traditional approaches should be used. Overall, we anticipate that this framework will better focus our regulatory resources on the most risk-significant aspects of nuclear materials usage.

    In summary, the Commission remains committed to making the entire NRC regulatory framework more risk-informed and, where appropriate, more performance-based. Short-term actions are being implemented to increase the priority, management attention, and pace of implementation. These include steps to ensure more prompt review of risk-informed reactor licensing submittals, the establishment of a lead Project Manager for the coordination of risk-informed and performance-based licensing actions, and a management oversight steering committee to provide policy, technical and priority guidance on risk-informed regulation. We will continue to pursue longer-term activities as identified in the PRA implementation plan.

    B. Inspection and Enforcement

    Inspection

    The power reactor inspection program serves an important role in enabling the NRC to fulfill its mission of ensuring public health and safety. This program is designed, through audits of licensee activities, to identify safety problems independently at an early stage, before significant safety events occur. The NRC has defined the minimum set of inspections necessary to meet this objective as the Core Inspection Program. Core inspections are performed at all sites, independent of licensee safety performance. These inspections are intended to emphasize observation and evaluation of those ongoing facility operations and supporting activities that are most important to reactor safety. The NRC uses additional inspection effort (beyond the core program) on a plant-specific basis to gain additional insights into licensee performance in selected areas in which (1) the core program has identified problems; (2) off-normal events require follow-up; or (3) emerging safety issues require resolution.

    In this area, the basic criticisms are summarized as follows:

  • As nuclear power plant safety and efficiency have improved, regulatory burdens have not decreased in a commensurate manner.
  • The level of inspection effort at reactor power plants does not vary in keeping with variations in actual plant safety performance.
  • The NRC inspection program focuses on some activities with very low impact on safety.

    The NRC recognizes that the safety performance of U.S. nuclear power plants has improved over the past decade as the industry matured. In fact, we believe that NRC oversight has contributed to and helped to maintain that improvement. The average number of NRC inspection hours per plant has been reduced, from 3,100 in 1990 to 2,500 in 1997, and we are evaluating further reductions to the inspection program. However, part of the NRC caution in approaching these reductions is based on past experience--in which, when the NRC reduced its focus on a given area, some licensees also reduced their vigilance in that area, with the result that performance declined. A recently identified example was the decline in attention that had occurred, across the industry, on maintaining the facility design basis. In addition, we note that, while overall safety performance has improved, some plants continue to experience significant problems. These plants require significant agency resources for the identification of safety issues and follow-up of licensee corrective actions. Based on these types of concerns, we believe it is essential to use a risk-informed approach in any further inspection program reductions.

    In response to concerns about the distribution of inspection hours, the NRC improved the inspection planning process during the early part of this decade. These improvements were designed to increase the gradient between the amount of inspection received by the best performing plants and plants that experienced performance problems, as well as to provide a performance-based allocation of inspection resources (beyond the core inspection program). Currently, inspection effort for plants experiencing performance problems significantly exceeds the core inspection program.

    Notwithstanding the changes made to date, we acknowledge the need for additional improvements, and the NRC has both short- and long-term actions underway to address the concern with the inspection program focus, including the focus of the core inspection program. The inspection program has shifted away from programmatic reviews toward a more performance-based approach. The NRC also has initiated several activities to increase the incorporation of risk information into inspection planning and execution. The NRC has issued guidance on risk-informed inspection practices, providing inspectors with expectations and guidelines on (1) the relationships between PRA and defense-in-depth, (2) the integration of non-probabilistic considerations with PRA, (3) the communication of PRA insights to licensees, and (4) the expected level of inspector PRA use. In addition, as mentioned earlier, several training courses have been developed for inspectors and managers, to increase the NRC staff level of understanding on PRA uses in various regulatory applications.

    As a longer-term action, the NRC will review its inspection program, including program structure, focus, and requirements/procedures, beginning in October 1998. This review is intended to determine whether the inspection program achieves its intended goals, to identify and eliminate unnecessary inspection requirements, to improve the risk-informed focus, and to improve program efficiency.

    Enforcement

    NRC enforcement jurisdiction is drawn from the Atomic Energy Act of 1954, as amended, and the Energy Reorganization Act (ERA) of 1974, as amended. The NRC enforcement program supports the NRC safety mission by seeking to prevent, at NRC-licensed facilities, events with impact on public health and safety, through deterrence, through prompt problem identification, and through prompt, comprehensive corrective action.

    The NRC Enforcement Policy seeks to support this overall goal, articulated in the NRC Strategic Plan, by addressing non-compliances in a graded approach. The enforcement process begins by categorizing the significance of each violation, within the context of associated inspection findings. Four levels of severity are used to differentiate violations according to their safety significance. Severity Levels I, II, and III are used to characterize violations of significant concern, and violations at these levels (referred to as "escalated enforcement actions") also may result in civil penalties. Severity Level IV violations, which individually are somewhat less significant (and are referred to as "non-escalated actions), may result in Notices of Violation, but do not result in civil penalties. Violations considered to be of minor concern do not result in formal enforcement action, and generally are not documented. To provide incentives for licensees to promptly identify and correct problems associated with violations, decisions on whether to issue a civil penalty for a significant violation, as well as decisions on whether to issue a Notice of Violation for a less significant violation, are based largely on the associated licensee efforts to identify and correct the circumstances that led to the violation.

    Within this graded approach, it is important to consider that the NRC does not find it appropriate to wait for an event or an actual safety consequence before taking enforcement action. The primary reason for taking action on Severity Level IV violations is to identify and correct problems early (as well as to track emergent trends) in the interest of deterring more significant issues. As a result, when evaluating the significance of a violation, NRC considers not only the direct consequences of the specific as-found condition, but also the potential safety consequences, or risk. In addition, the NRC considers whether the violation involved repetition, willfulness, pervasiveness, licensee management involvement, or other characteristics that may make the violation more safety significant.

    Within this area, the basic criticisms are summarized as follows:

  • The NRC needs to abandon its unsound reliance on an approach that rigidly demands strict compliance with the regulations, regardless of safety significance.
  • Similarly, the NRC focuses unduly on "paper compliance" rather than emphasizing risk-informed considerations.
  • The recent sharp increase in the number of violations reflects a changing NRC culture, and is not consistent with the continuing improvements in industry safety performance.
  • The cost of responding to violations of low severity is excessive.
  • NRC civil penalties are excessive.
  • The NRC enforcement program is overstaffed.
  • The NRC enforces regulations inconsistently.

    As stated above, the NRC uses enforcement to emphasize to its licensees the need to prevent violations, and when violations occur, the need to identify and to address the issues associated with them before they manifest themselves as significant events or challenges to safety systems. However, because most of the violations identified are relatively low-level, the majority of enforcement actions issued are low level. The NRC recognizes the resource demands associated with responding to these non-escalated enforcement actions, and has taken several short-term actions to reduce the licensee burden in this area. The efforts underway (some of which merely involve exercising self-discipline in carrying out existing NRC policy) include: (1) ensuring that the NRC staff gives credit for licensee actions in both identifying and correcting violations in deciding whether to cite a low-level violation; (2) not requiring a written response when low-level violations are issued and corrective actions are addressed sufficiently in writing elsewhere on the docket (e.g., in a Licensee Event Report); (3) providing more consistent treatment when multiple violations are identified with a common root cause; and (4) clarifying NRC staff guidance for the treatment of violations identified as the result of licensee corrective actions. In short, the intent is to simplify the disposition of these types of violations. In addition, as part of ongoing efforts, such as the NRC enforcement policy revision and request for public comment issued in May 1998, the NRC will seek to identify other measures to improve consistency and to ensure a safety focus in documenting and dispositioning violations. The intent is to encourage prompt identification of problems, to ensure corrective action commensurate with risk, and not to have problems linger which could have a cumulative safety impact. The intent of enforcement is to improve performance. The short-term and long-term actions the NRC has underway should address the greatest concerns. We are expediting these changes.

    The NRC recognizes that civil penalties have increased since the 1995 revision to the Enforcement Policy. A significant factor in this increase appears to be due to increased headquarters involvement in the evaluation process, which has improved region-to-region consistency but also has resulted in the increased identification of situations that warrant escalated action. In general, the NRC believes that its practices involving Severity Level I, II, and III violations and civil penalty assessments are appropriate. However, as part of the improvements discussed in this area, the NRC intends to consider the need for additional changes in the escalated enforcement process.

    For licensees and other stakeholders, the area clearly of more concern has been the sharp increase in the number of non-escalated enforcement actions from 1995 to 1997. In fact, the NRC does not believe that this increase reflects a decline in reactor safety performance. Rather, the increase is due, at least in part, to our efforts to improve the quality and consistency of the inspection and enforcement programs and to an increased focus on compliance. Inspection guidance issued in FY96 resulted in a significant improvement in the consistency of documenting inspection findings, which in turn resulted in additional violations. Also, following pivotal inspections at the Millstone Station and other facilities, NRC management placed a greater focus on ensuring that the nuclear plant licensing basis has been maintained, including maintaining an accurate Updated Final Safety Analysis Report. Special initiatives, such as maintenance and design inspections, also have contributed to the increased number of violations. The unanticipated increase in Severity Level IV violations has led to a sharpened focus on long-standing issues related to non-escalated enforcement actions, issues which go back over a number of years.

    The NRC has recognized for some time that the relative consistency of Enforcement Policy implementation associated with Severity Level I, II, and III violations is not demonstrated to a commensurate degree for non-escalated actions. Historically, the level of enforcement staff resources has only allowed oversight of enforcement actions of higher significance. The resulting minimal oversight of low level enforcement activities, typically comprising approximately 90% of all enforcement actions, has allowed inconsistent enforcement practices to develop. In recognition of this problem, additional staffing was added to the enforcement staff within the past several months, to oversee, in part, the consistency and control of low-level violations. As an additional measure, the NRC has increased the headquarters oversight and coordination of the appeal process for disputing low-level violations issued by NRC regional offices, ensuring the opportunity for a headquarters review of licensee disputes regarding whether a violation actually exists, its severity level, or the appropriateness of the sanction. To ensure consistency in the specific areas of the Maintenance Rule and 10 CFR 50.59, special enforcement review panels have been established to review all associated potential enforcement actions.

    Additional efforts planned in this area include: (1) further meetings with stakeholders to obtain additional perspectives on enforcement and to consider the need for further change; (2) improvements to existing guidance on the threshold separating Severity Level IV violations and minor violations; (3) the development of additional guidance on how risk insights should be factored into enforcement decisions, as well as on the use of "regulatory significance" in evaluating enforcement actions; (4) additional training on the results of these changes and initiatives; (5) internal audits of the consistency of issuing low-level violations; and (6) closer coordination between inspection and enforcement activities.

    Summary

    In summary, the NRC is aware of the impact and resource demands that the inspection program place on its licensees, and plans to institute a comprehensive review of this program. The NRC also is mindful of the licensee burden associated with NRC enforcement actions. As described above, we will reinforce existing policy provisions and seek additional measures to ensure that enforcement actions are not unnecessarily burdensome, and we will focus on ensuring that NRC enforcement actions are based appropriately on safety significance. Further review of the enforcement program will be conducted as described above. Program changes and training for both inspection and enforcement will emphasize a risk-informed and performance-based approach.

    C. Reactor Licensee Performance Assessment

    Inspection, enforcement, and assessment all play a role in evaluating reactor licensee performance to provide reasonable assurance of the adequate protection of public health and safety. The specific role of assessment is to integrate individual insights, and to arrive at an overall conclusion (broader in scope and/or longer in term) with respect to licensee safety performance. Currently, the NRC uses several processes to assess the safety performance of nuclear reactors, including: (1) Plant Performance Reviews (PPRs), conducted every six months by regional managers; (2) Systematic Assessments of Licensee Performance (SALPs), conducted every 12 to 24 months by agency middle managers; and (3) Senior Management Meetings (SMMs), conducted every six months by agency senior managers, until recently, when the Commission directed that SMMs be held annually. These processes were developed and implemented at different times over the past 18 years to address specific agency concerns, each intended to strengthen the NRC assessment of plant performance and to identify performance issues, in order to focus agency resources on plants warranting additional inspection, and to ensure that problems are corrected before a serious decline in nuclear safety emerges.

    Within this area, the basic criticisms are summarized as follows:

  • NRC reactor performance assessment processes lack clear, objective assessment criteria.
  • Specifically, the NRC has no clearly defined criteria for placing nuclear power plants on the NRC "Watch List."
  • NRC reactor performance assessment processes are too resource intensive, both for licensees and for the NRC.

    In general, the NRC agrees that these criticisms form the basis of specific agency initiatives that are intended to address these very concerns. These initiatives are discussed below.

    In 1996, the Commission directed that a study of the SMM process be performed. A consultant, Arthur Andersen, conducted a study and recommended a number of improvements. Many of these recommendations have been incorporated, including: (1) increased emphasis on objective, quantitative information; (2) development and use of performance indicator trending methodology; (3) increased participation at the SMM to ensure a broad perspective; (4) improved process facilitation at SMMs; and (5) improvements to the quality and format of the data provided to SMM participants.

    The focus on increasing the objectivity of the SMM process led to additional scrutiny of the entire NRC function of reactor performance assessment. While each of the NRC assessment processes has been subject to periodic, detailed reevaluation, it became clear that the agency had never conducted an integrated review of the entire assessment function. Recognizing the need for such a broad-scope review, in 1997 the Commission initiated an Integrated Review of the NRC Assessment Process for Operating Commercial Nuclear Reactors (referred to as IRAP). The IRAP was conceived as a two-phase effort, with the objective of the first phase being the development of a single, integrated assessment process that is more objective, more scrutable, and less resource intensive than the current mix of processes. Phase two, scheduled to begin in October 1998, will direct a similar level of scrutiny at the NRC reactor inspection program.

    Early in the concept development stage, the NRC met with representatives from the Nuclear Energy Institute (NEI), the Union of Concerned Scientists, and other members of the public to get their views on the objectives, scope, and outputs of NRC assessment. In March 1998, the IRAP team forwarded an initial assessment concept to the Commission for consideration. The Commission directed the NRC staff to solicit public comments on this proposal, and provided general principles for assessment activities. As development of the process continues, the NRC plans to conduct meetings and workshops with the public and the industry, and to discuss possible alternative approaches, including a recent NEI proposal on risk-informed and performance-based reactor licensee oversight.

    The current assessment processes depend on both qualitative and quantitative information. Recognizing the value of clear, quantitative assessment criteria, the Commission already has initiated several improvements to the current assessment processes to improve objectivity, consistency, and scrutability. The improvements include: (1) an increased focus on plant safety performance indicators; (2) more systematic processing and comparison of regulatory performance data in the areas of human performance, enforcement, allegations, and risk; and (3) a structured analysis of performance data in a publicly released plant issues matrix (PIM) for each plant.

    The NRC will continue to work with its stakeholders to identify and develop quantitative indicators. As progress is made, the shift to a more quantitative set of measures will continue. However, existing high-level quantitative performance indicators are slow to respond to actual declines in safety performance (in some cases involving multi-year response times). Most of the current performance indicators are event-based and do not provide a leading indication of trends in licensee safety performance. GAO reports in the past have been critical of the lack of leading indicators in the NRC performance assessment process. Therefore, although NRC will increase the use of quantitative information, we also will continue to make use of qualitative insights. The Commission has directed the NRC staff to work closely with NEI to determine the merits of their proposal for an assessment process based on quantitative performance indicators. This action is currently in progress.

    In addition, as noted above, the SMM has been moved from a semiannual to an annual schedule beginning in FY99. This adjustment coincides with other changes to the various NRC assessment processes, and is commensurate with the overall improvement in industry performance and the slow rate of change in the performance of individual plants. This short-term change will result in some resource savings; however, we hope to achieve more dramatic resource savings from the successful development and implementation of the integrated assessment process discussed above, particularly as redundancies in the current processes are identified and eliminated. As these changes are implemented, the NRC periodically will review their effectiveness and continue to solicit stakeholder input on emerging issues of concern.

    Since the inception of the NRC performance assessment processes (following the Three Mile Island Accident), the agency has periodically reviewed, sought stakeholder feedback, and made changes where appropriate. Recent criticisms and self-evaluations indicate that some additional improvements are warranted to improve objectivity and to enhance efficiency and effectiveness, while maintaining the global objective of the current processes--that is, to evaluate reactor licensee safety performance to ensure the adequate protection of public health and safety.

    D. Reactor Licensing and Oversight

    Regulatory Processes

    The NRC strives to maintain open communications with its stakeholders regarding their concerns related to NRC consistency in implementing its regulations. Past NRC actions to address these concerns include: (1) the development and publication of the Standard Review Plan and associated regulatory guides to provide guidance on implementing the regulations; and (2) the Regulatory Review Group and National Performance Review Group studies of regulations and related processes. Other measures, such as the backfit rule (10 CFR Part 50.109), have been designed to balance the NRC focus on protecting public health and safety with the burden of implementing that focus.

    The NRC does not, and legally cannot, impose requirements except in accordance with applicable statutory requirements such as the Atomic Energy Act and the Administrative Procedure Act. NRC requirements can only be promulgated in the form of regulations, licenses and license conditions, or orders. However, certain NRC regulatory processes, while not actually imposing legally binding requirements, can be perceived as pressuring a licensee to take actions that exceed regulatory requirements in order to resolve the immediate situation. Such situations are perceived, at times, as imposing de facto requirements on the licensee, and have been the focus of criticisms that the NRC is over-regulating or creating undue regulatory burden for its licensees. Recent criticisms in this area are summarized as follows:

  • The NRC has implemented informal processes that bypass formal procedures, thereby, in effect, imposing requirements inappropriately.
  • The NRC should not impose virtual backfits without a formal backfit analysis.
  • The NRC uses Confirmatory Action Letters to impose conditions on licensees even in situations where the NRC is aware that enforcement action could not be supported.

    The NRC agrees that a number of regulatory processes should be reevaluated in an effort to ensure they are not creating an inappropriate burden on its licensees and the NRC staff while maintaining an appropriate level of safety. Examples of regulatory processes in which such burdens can originate include NRC generic communications, Confirmatory Action Letters, diagnostic inspections, and the SALP process (discussed in Section IV.C of this testimony).

    NRC generic letters and NRC bulletins legally can require that information be provided to the NRC, but legally cannot create a new requirement for a specific course of action to resolve an issue. Generic communications have been used, however, to provide new or clarified interpretations of existing requirements. The NRC recognizes, further, that the production of information itself can be burdensome, and that the actions requested, in some instances, can be construed as the imposition of new requirements. As a result, the NRC has adopted measures that internally challenge the need for each generic communication, and provide the industry and the public with the opportunity to comment on the actions requested and on their cost and safety benefit. In addition, proposed generic letters and bulletins now are reviewed and discussed by NRC executive management at the earliest stages of formulation. These controls are intended to ensure that, if a proposed generic communication is approved for further development, the requested actions and the required response are commensurate with the safety significance of the issue involved. Equally important is the publication of proposed generic letters and bulletins for public comment, to ensure that efforts to reduce unnecessary regulatory burden do not result in inappropriate reductions in safety margins. Ultimately, the Commission is informed prior to the issuance of each generic letter. An NRC self-assessment is in progress which, in part, will focus on the development of generic communications.

    If the NRC were to impose on a licensee a new interpretation of an existing requirement without adding a new regulation (for example through a generic letter), the NRC first must meet the requirements of 10 CFR 50.109 relating to plant-specific backfits. In most cases these new interpretations are issued for comment before they are imposed on other licensees. Backfits that require a regulatory analysis must be approved by the NRC Executive Director for Operations before being forwarded to the licensee, and a process exists for the licensee to appeal the imposition of any backfit.

    A Confirmatory Action Letter (CAL) is sent by the NRC to a particular licensee to confirm and document a commitment by that licensee to take certain actions in response to an identified safety or regulatory issue. Properly used and written, a CAL does not impose legally binding and enforceable requirements. Rather, it documents the NRC understanding of a voluntary licensee commitment to actions that will resolve the issue. The NRC and the licensee should discuss and agree on the actions necessary or appropriate to address the underlying issue. In fact, one of the functions of a CAL is to ensure that no misunderstanding arises about the actions to which the licensee is committing. The licensee is not required to make any commitments, but may choose to do so as a means to resolve the issue without the need for more formal NRC action to address the underlying issue. If the licensee chooses not to commit to actions that resolve the issue, the NRC must decide whether its obligation to ensure adequate protection of public health and safety warrants more formal action, such as the issuance of an order, to require the licensee to address the underlying issue. The licensee has administrative and legal recourse if it disagrees with the NRC action.

    Used appropriately, CALs have proven to be an effective regulatory tool to ensure that a licensee promptly addresses identified safety issues. Properly used, CALs should serve the interests of licensees, the NRC, and the public. However, the NRC acknowledges that a licensee may agree to a CAL and the associated actions simply to avoid lengthy discussions with the NRC over plant readiness for restart. In this context, a commitment to an action outside regulatory requirements (or that is perceived to be outside regulatory requirements) may appear to be the most expedient course of action. To ensure that CALs are used in an appropriate manner, the NRC intends to re-emphasize to NRC management and staff the proper use and wording of CALs. There also will be increased NRC management oversight of the issuance and implementation of CALs. The NRC also will examine the need for establishing a threshold for issuing a CAL. Licensees are encouraged strongly to bring any future concerns related to CALs to the attention of NRC senior management and the Commission.

    In keeping with its obligations to the public it serves, the NRC conducts its business in open forums whenever feasible. The NRC will maintain an open dialogue with the public and industry concerning its regulatory processes.

    Design Basis Information

    In this topical area, the basic criticisms are summarized as follows:

  • The NRC has reinterpreted improperly what constitutes design basis information.
  • The NRC review of design baselines is unduly burdensome, and is unproductive in terms of safety benefit.
  • The NRC should define its requirements in this area.

    To place these criticisms in perspective requires at least a brief historical context. In the mid- to late-1980s, the NRC identified concerns that certain design basis information was not being maintained properly, and that plant modifications were being made without the licensee having a complete understanding of the plant design basis. These NRC findings heightened awareness in the nuclear power industry of the need to improve the adequacy of design documentation. Many licensees voluntarily initiated extensive efforts to retrieve and reconstitute the design basis information for their plants. To assist the industry in performing design basis improvement programs, the Nuclear Management and Resources Council (NUMARC), the predecessor to NEI, developed guidelines providing a standard framework for licensee programs to improve design basis information.

    In late 1991, the NRC evaluated whether rulemaking, guidance, or a policy statement was needed to address this need for licensees to retain accurate design bases information. In August 1992, the Commission issued a policy statement concerning the adequacy and availability of design basis information, stressing the importance of maintaining design basis information and recommending that all power reactor licensees assess the accessibility and adequacy of their design basis documentation. In the same time-frame, the 1991 Regulatory Impact Survey highlighted the regulatory burden on licensees occasioned by NRC team inspections, with the result that, over the next several years, the NRC reduced its effort to conduct specific, design-related team inspections. Instead, issues related to maintaining accurate and accessible plant design documentation were addressed principally as elements of inspection and follow-up of operations-related activities.

    During a number of inspections in 1995, inspectors found, in some cases, that design bases were not being maintained or adhered to appropriately. As a consequence of this new information, the NRC recognized that voluntary industry efforts to improve and maintain plant design basis information had not been effective in all cases. In October 1996, the agency issued 50.54(f) letters to power reactor licensees, requesting that they submit information that would provide the NRC added confidence and assurance that facilities were being operated and maintained within their design bases, and that any deviations were being reconciled in a timely manner. Licensee responses were used to prioritize selected team inspections that focused on design issues of risk-significant safety systems. These inspections resulted in significant findings, which included, among other things: (1) plant modifications or evaluations that had resulted in operation outside the design basis; (2) modifications or evaluations resulting in safety systems not being able to perform their intended safety functions; and (3) inadequate testing of safety-related components. Some of the findings resulted in declaring equipment or systems inoperable, requiring plant modifications and resulting in voluntary or technical-specification-required plant shutdown. These findings were detailed to the nuclear power industry in Information Notice 98-22, issued June 17, 1998. Although licensees expended significant resources to document their design bases, significant safety issues were found and corrected that otherwise might have gone undetected.

    The NRC has concluded that past efforts may have provided short-term emphases rather than long-term resolution to the issue of adequacy of design-basis information. In addition, initiatives such as risk-informed and performance-based regulation emphasize the importance of a common understanding between the NRC and its licensees on the maintenance and application of design-basis information within the regulatory framework. The NRC believes, however, that a combination of recent and upcoming NRC actions will contribute to the final resolution of this issue.

    Among the short-term improvements associated with the plant design basis and the related regulatory framework, the NRC has: (1) issued revised guidance to the industry explicitly discussing the evaluation process to be used in resolving degraded and nonconforming conditions at power reactor facilities; (2) held a Commission-level meeting with the Nuclear Energy Institute (NEI) in June 1998 to discuss issues related to design basis information; and (3) held a working-level meeting with NEI to resolve outstanding issues, with the goal of endorsing NEI guidance that would clarify what types of information should be considered design basis information.

    In the longer-term, the NRC intends, as one significant measure, to provide more specificity and flexibility in 10 CFR 50.59, the regulation under which licensees can make changes to their facilities and procedures without NRC approval. The NRC will support the completion of an industry guidance document related to design-basis information. In addition, the NRC intends to develop an Advance Notice of Proposed Rulemaking that would solicit public comment on possible rule changes. These rule changes are intended to clarify which design or analysis deficiencies require reporting, and to specify the timeliness of such reporting.

    Power Reactor License Renewal and NRC Adjudicatory Processes

    Although the NRC only recently received its first two applications for the renewal of power reactor licenses, preparations for license renewal has been a long-term effort. Within this specific context, as well as more generally, NRC adjudicatory processes have been a target of criticism. The basic criticisms in this area are summarized as follows:

  • NRC adjudicatory processes take too long, and cost too much.
  • Specifically, the Atomic Safety and Licensing Board (ASLB) is too costly for the benefit it provides.
  • Legislative-style hearings should replace NRC adjudication processes.
  • The review process for power reactor license renewal applications is an appropriate arena in which to implement new adjudicatory procedures.

    The Commission has been working to pursue the implementation of measures that would streamline the hearing process--both in anticipation of license renewal applications and in general. The Commission has issued a policy statement clearly delineating Commission expectations with regard to the conduct of adjudicatory proceedings, including license renewal proceedings. In addition, the Commission intends to provide guidance to licensing boards in individual proceedings, to ensure that proceedings are conducted in a fair and efficient manner, and that they result in adequate records for decision. Provisions also have been made for the timely identification of any open generic policy issues for Commission decision, and effective integration of the technical review and adjudicatory schedules. As a result of these actions, the NRC expects to complete the review of the initial license renewal applications, including the safety review, environmental review, and public hearing, within approximately 30 to 36 months from the receipt of the application. Based on that experience, the Commission expects that the review process for subsequent applications will be more efficient. Finally, we recognize that the NRC is unique among Federal health and safety regulators in the degree to which we historically have used judicial trial-type procedures to resolve technical issues. We will examine whether changes (including legislation) would be appropriate to expand our use of more informal or legislative-style hearings in licensing proceedings.

    In the specific area of power reactor license renewal, the Commission recognizes that permitting plants to operate for an additional 20 years, where appropriate, may be an important factor in ensuring a diverse energy mix for the nation in the future. Nuclear power plants produce approximately 20 percent of all electric power produced in the United States. Approximately 10 percent of the current operating licenses will expire by the end of 2010, and more than 40 percent will expire by 2015. License renewal also may be important to the economic viability of a utility because of the additional time over which its investment can be amortized.

    To prepare early on for this possibility, the NRC issued the license renewal rule (10 CFR Part 54) in 1991, to establish the technical and procedural requirements for renewal of operating licenses. Based on initial experience in implementing the rule, the Commission recognized that a more stable and predictable regulatory process for license renewal could be established, and amended the rule in 1995, to limit the scope of the license renewal review to particular time-dependent design analyses, and to aging management of long-lived passive structures, systems, and components. Additionally, the NRC environmental regulation (10 CFR Part 51) was amended in 1996 to focus our environmental review process for license renewal. This revision streamlined the environmental review process by having a large number of environmental issues addressed in a Generic Environmental Impact Statement, thereby eliminating the need for such issues to be addressed individually by each license renewal applicant.

    Up to this point, the industry approach to license renewal has been to submit for NRC approval plant-specific and generic technical reports on specific topics, before submitting complete license renewal applications. This approach was intended to establish a foundation of technical information that a licensee can use to evaluate the feasibility of a license renewal application, and to reference that information later in the application itself. On April 10, 1998, Baltimore Gas and Electric delivered the first license renewal application for their two-unit Calvert Cliffs plant to the NRC. Subsequently, on July 7, 1998, Duke Power Company submitted a license renewal application for their three-unit Oconee plant. Additionally, the Southern Nuclear Operating Company recently announced plans to consider license renewal for its two Hatch units. This means that license renewal is no longer a theoretical exercise. Therefore, our focus has changed. The NRC is working to ensure that a disciplined license renewal path exists, fair to all parties involved and focused on the technical merits of the applications.

    To that end, the Executive Council of the NRC (comprised of the Executive Director for Operations, the Chief Financial Officer, and the Chief Information Officer) has been tasked to ensure that the implementation of license renewal is a unified and coherent process. These senior managers will focus on three areas: oversight, coordination, and strategic implementation. I reminded the Executive Council to ensure that policy matters warranting Commission attention are promptly identified and communicated to the Commission. In addition, the NRC Chief Financial Officer and Chief Information Officer have been tasked, under the aegis of the Executive Council, with establishing a process for efficiently shifting or refocusing resources, as needed, to ensure a timely license renewal review.

    The Nuclear Energy Institute continues to sponsor various industry initiatives for license renewal, and has established an industry working group to address license renewal issues. The NRC has developed new practices and procedures for the conduct of the license renewal reviews. These procedures include specific provisions to identify and prioritize generic technical issues in support of, and without jeopardizing, the aggressive review schedules established for the initial renewal application reviews. These practices also are derived from and build upon the broader improvements to the reactor licensing process, previously described.

    In summary, the Commission believes that these measures, including the measures designed to streamline NRC adjudicatory processes, will be effective in ensuring a technically sound but timely process for power reactor license renewal.

    E. Uranium Recovery

    In this area, the basic criticisms can be summarized as follows:

  • The NRC may have expanded inappropriately the scope of its reviews.
  • The NRC has interpreted the law inappropriately to limit the use of mill tailings impoundments for other radioactive wastes.
  • The NRC inappropriately imposes an economic feasibility requirement on some applicants.

    The scope of NRC reviews, particularly its authority for regulating the ground-water aspects of in situ leach (ISL) facility operations, is based on the Atomic Energy Act (AEA) provisions for NRC regulation of the production of uranium. The Uranium Mill Tailings Radiation Control Act (UMTRCA) and the National Environmental Protection Act of 1969 reinforced the NRC regulatory authority provided by the AEA. Currently, the NRC is working with individual States to identify ways in which we can rely on State reviews of ground-water protection at ISL facilities. By doing this, we believe that we can eliminate dual regulation between the NRC and the States.

    Although the NRC agrees that it can be in the national interest to use mill tailings impoundments as disposal sites for AEA waste other than 11e.(2) byproduct material, one consideration should be willingness of the Department of Energy (DOE) to take possession of these sites under current statutes. Under UMTRCA, the long-term custodian (i.e., the State, or the DOE if the State refuses) is only required to take 11e.(2) byproduct material. If other material is placed in the cell, the long-term custodian must agree to take the cell for long-term care. In the past, the DOE has been hesitant to do so, since this could create a situation of perpetual dual regulation. The DOE has agreed to allow the disposal of hazardous material at one mill site. However, such disposal required permitting by the U.S. Environmental Protection Agency, and a perpetual indemnification from the licensee guaranteeing cleanup. In September 1995, the NRC staff issued guidance outlining criteria that would allow for disposal of material other than 11e.(2) byproduct material in mill tailings impoundments. The NRC staff currently is reviewing these criteria, to determine whether they can be made less restrictive without creating a situation in which mill tailings sites would be subject to dual regulation.

    The NRC does not impose an economic-feasibility requirement for the processing of alternate feedstock material at uranium mills; however, existing NRC guidance provides that a licensee must certify that it is processing alternate feedstock for its uranium content. The guidance describes plausible grounds for making this certification, which include financial considerations, high uranium content of the alternate feedstock, or other bases.

    This issue is of particular concern to the State of Utah, which filed a petition to intervene on an application for processing alternate feedstock. The Utah petition raised concerns that, by taking alternate feedstock, the licensee was operating a low-level waste disposal cell, which was under regulatory authority of the State of Utah. Utah argued that, to avoid State regulation, the licensee was processing the material to change its legal definition to 11e.(2) byproduct material. Recently, the NRC has granted a uranium mill authority to process alternate feedstock. As a result of this action, the NRC has received letters of concern from Congressmen James V. Hansen and Merrill Cook; from the Speaker of the State of Utah House and President of the State of Utah Senate; from the County Council in Tooele County, Utah; from the Utah Department of Environmental Quality; and from the Navajo Nation. Because the processing of alternate feedstock material is controversial, and in order to ensure that NRC-licensed uranium mills do not undertake processing of material simply to avoid other regulatory requirements, the NRC requires the certification test discussed above.

    These issues have been recently raised to the Commission in a white paper submitted by the National Mining Association (NMA). The NRC believes that additional progress can be achieved on licensee and stakeholder concerns related to uranium recovery facilities. To that end, in early FY98, the NRC initiated an evaluation of the entire regulatory framework for uranium recovery facilities. This evaluation includes the issues identified in the NMA white paper. As part of the evaluation, the NRC will hold public meetings in Texas, Colorado, New Mexico, and Wyoming to discuss the regulatory framework for uranium recovery. From this dialogue, the NRC intends to enhance the effectiveness and efficiency of the uranium recovery regulatory program. The NRC staff has prepared and the Commission is reviewing an overarching risk goal for the decommissioning of uranium recovery facilities.

    F. Organization and Management Effectiveness and Efficiency

    In this overall topical area, the basic criticisms can be summarized as follows:

  • The NRC needs a significant, agency-wide review.
  • The NRC has done little to respond to previous internal and external reviews.
  • NRC staffing should be sharply reduced, particularly in the areas of management and support, human resources, finance, and professional staff. Reorganization to combine groups according to processes would add efficiency.
  • NRC research efforts should decrease to reflect industry maturity.
  • NRC involvement in international activities is excessive.
  • Even with severe budget cuts, NRC staffing would exceed that of the nuclear regulatory bodies of other countries.

    In responding to these criticisms, we begin by noting that the NRC is responsible for the regulation of a complex technology and, as a result, one might expect that differing views will exist as to what are the best regulatory solutions to various issues. However, the NRC historically has initiated programs and processes designed to assess its own regulatory requirements and framework, to determine whether adjustments can be made to improve safety, to reduce unnecessary licensee burden, and to improve NRC efficiency. Particularly in recent years, the Commission has been active in seeking ways to improve its regulatory effectiveness and efficiency.

    Organization and Planning

    In August 1995, the Commission initiated a Strategic Assessment and Rebaselining review. Designed to be introspective and self-critical, this full-scope analysis explored the relationship of agency programs to Congressionally mandated authorities and responsibilities, with the objective of providing a solid, reliable foundation on which to base a strategic framework for future decision-making. This study was used as the foundation for developing the NRC FY 1997-2002 Strategic Plan, the FY99 Performance Plan, and program-level outcomes-focused operating plans.

    Another NRC organizational tool, a key component in ensuring effectiveness and efficiency, is the agency-wide Planning, Budgeting, and Performance Management Process (PBPM). As a natural outgrowth of the Strategic Assessment and Rebaselining initiative, the PBPM allows the agency to implement the Government Performance and Results Act (GPRA) and other Congressional and Administration initiatives that demand greater accountability for results. The PBPM involves the following four main components:

  • Setting the strategic direction and performance expectations for the organization;
  • Determining the programs, resources and planned accomplishments needed to meet those expectations;
  • Measuring and monitoring performance against the established expectations; and
  • Assessing performance in light of lessons learned and applying the results.

    This builds in accountability for the accomplishment of work, and provides a direct means to refocus work or to re-deploy resources to adjust to emergent or competing demands.

    Information Technology and Information Management

    The NRC has changed its process for information management and the for the deployment of information technology, and thereby has improved effectiveness and reduced cost. This change is driven by the Clinger-Cohen Act, and more fundamentally by the overall desire of NRC management to identify opportunities for reducing the cost of doing business. Aggressive internal cost improvement activities have reduced NRC operating costs, while still funding needed improved management processes and IT investments.

    A number of NRC initiatives have strengthened our management of information technology (IT) and information management. One example is our implementation of a robust Capital Planning and Investment Control process (CPIC), which ensures that NRC IT projects have a strong business case, a demonstrable return on investment, and adequate planning and project management to ensure success. The CPIC process has been used to approve four major IT investments to date: (1) STARFIRE, an integrated resource management system; (2) the NRC Reactor Programs System (RPS); (3) our Agency Documents Access and Management System (ADAMS); and (4) our Personal Computer Refresh system. Three of the four projects are on schedule and on budget. The fourth project, RPS, has identified new requirements due to a business change, and currently is under review for an increased scope and budget.

    A second initiative has been the development of an Information Technology Architecture to ensure that IT investments will work together effectively. The NRC has developed a detailed architecture of standards covering not only hardware and telecommunications but also how application systems must work together and share data. We have used this architecture as a framework for studying whether the thirteen different types of large-scale computers currently in use could be used more effectively. As a result, we have found a way to move systems so that we can retire an aging and expensive-to-maintain minicomputer. We will continue to use this architecture to ensure the stable operation of the NRC technology infrastructure, and to detect overlap and duplication.

    Perhaps the most significant IT initiative is the development of a comprehensive plan for the remediation of all the NRC mission-critical and business-essential systems, to ensure that they will be Year 2000 compliant. [For additional discussion of overall NRC efforts to address the Year 2000 technology problem, see Section V.I.]

    NRC Self-Assessment

    Self-assessment plays a critical role in NRC organizational and management effectiveness. Through the PBPM, the NRC has sought to institutionalize self-assessment in our normal agency processes. As discussed throughout this testimony, we are continuing to evaluate and reform our technical and support functions in order to enhance effectiveness and efficiency. In addition to the reactor inspection, enforcement, performance assessment, and licensing reviews already mentioned, our self-assessments to date have led to the restructuring of our research and rulemaking programs to be more responsive to regulatory priorities, as well as to the closure of the NRC Walnut Creek Field Office in California to achieve process efficiencies. We have been conducting an interoffice assessment of event analysis activities to eliminate overlap and duplication, and we are preparing to issue an Advance Notice of Proposed Rulemaking that would modify event reporting requirements to make them less burdensome and more risk-informed. Our self-assessments of the NRC research program led to its downsizing by approximately 80 percent over the last 17 years, and we will continue to adjust its content and resource levels to reflect changes in the industry and in regulatory need.

    The NRC encourages constructive criticism of its actions, and views this as a means for improving the regulatory process. The NRC Office of Nuclear Reactor Regulation (NRR) holds annual Regulatory Information Conferences, during which current and important regulatory issues are discussed openly and candidly with the nuclear power industry and the public. Workshops and other public meetings are held regularly to discuss regulatory developments in an open forum. Public comments invariably are sought on major regulatory actions, and the agency currently is working with the industries it regulates on a broad range of regulatory and technical issues.

    As a significant example of soliciting stakeholder inputs in a public forum, the Commission earlier this month hosted a round-table discussion, open to the NRC staff, the industry, Congressional staff, the press, and the general public, to understand more clearly the recent criticisms of various NRC programs, and to invite additional comments and insights from a wide range of participants. The meeting was widely attended, and included participation by the Commission, senior NRC management, industry representatives, the Union of Concerned Scientists, and a former NRC Commissioner. The discussion included a vigorous dissection of various NRC reactor oversight functions and regulatory processes, and was helpful in providing additional insight and perspective on the areas of criticism already discussed.

    In addition to these public forums, the Commission has created internal processes to encourage licensees to bring their concerns directly to the attention of NRC management. The NRC staff also solicits more routine feedback from licensees, to gain a broader view of the effect of NRC activities on the safe operation of nuclear power plants. The NRC evaluates this feedback, along with information from other sources (such as the Institute of Nuclear Power Operations (INPO) or NEI), to determine appropriate follow-up actions. The results are tracked and reported annually to the Commission.

    To augment our self-assessment capabilities, we recently obtained the services of Arthur Andersen and Company to look at our PBPM process, focusing on how we conduct self-assessments and program and resources planning in reactor-related programs. This study will be ongoing in FY99, and will be expanded to include our support functions.

    Management and Support Staffing

    In addition to the critical reviews of our program activities, we believe our management and support programs also must be efficient and proportionally sized to our mission functions. Since FY94, the NRC has reduced Senior Executive Service managerial positions by 16 percent, from 220 to 185, and we have improved the overall supervisor-to-employee ratio from 1:4 to 1:6 (633 to 402). Reductions in these areas will continue into FY99.

    NRC Participation in International Activities

    With regard to agency participation in international activities, the international activities in which the NRC participates, and which the NRC funds, do in fact contribute to and are beneficial to the regulation of U.S. nuclear power plants, and are not duplicative of activities performed by other groups. As a simple illustration: when considering the population of nuclear power plants based on or derived from U.S. technology, more are operating outside the U.S. than inside the U.S. To make optimal use of this operational experience database requires access to and interaction with the operators and regulators of these facilities, as well as interactions with organizations such as the World Association of Nuclear Operators (WANO). Such insights provide an important input to NRC regulatory activities, and can directly benefit the U.S. nuclear industry when relevant safety issues are surfaced abroad before they surface in U.S. plants. Moreover, with the decline of our research budget, the NRC must leverage its limited resources to obtain the information necessary to respond to emerging safety issues and to industry initiatives.

    While there certainly are lessons to be learned from foreign nuclear organizations, the NRC does not believe it is appropriate to size its organization based on foreign organizations. Differences between the size of the NRC professional staff and that of other national nuclear regulatory organizations are due to significant institutional, economic, and legal differences. Some foreign governments divide the responsibility for regulation of nuclear-related activities among several different entities, whereas U.S. law provides the NRC with nuclear safety and regulatory responsibilities for a very broad range of nuclear-related activities. [For additional detail on NRC international programs, see Section V.H of this testimony.]

    Summary

    In summary, the Commission has made and will continue to make changes to enhance the efficiency and effectiveness of the NRC. To ensure this progress, the Commission will employ its agency-wide Planning, Budgeting and Performance Management process, internal self-assessments, and, as necessary and appropriate, the use of outside consultants. In addition, the NRC will continue to operate in an atmosphere of openness, candor, and a willingness to stimulate feedback and to listen to constructive criticism from its stakeholders.

    V. Other Agency Programs and Areas of Focus

    A. Electric Utility Deregulation

    The economic deregulation of electric utilities has continued its transition from the wholesale to the retail environment. While the Federal Energy Regulatory Commission (FERC) and the State Public Utility Commissions (PUCs) have the responsibility for rate regulation, several areas of NRC focus also have emerged as the transition to a competitive market has begun to take shape. These are not areas of major resource expenditure for the NRC; however, as utilities restructure internally, as ownership arrangements change, as mergers occur, and as licensees work to control and reduce costs, the NRC must understand and respond appropriately to the effects the that changing business environment could have on nuclear safety. NRC areas of focus related to electric utility restructuring fall under four general headings: (1) any impact of cost-competitiveness on safe nuclear operations; (2) electrical grid reliability; (3) the availability of funds for decommissioning; and (4) license transfers and timeliness of NRC reviews. Several specific actions have been taken in this area. The NRC believes that its regulatory framework is generally sufficient, at this time, to address the restructuring and reorganization that likely will arise as a result of electric utility deregulation.

    Cost-Competitiveness and Safe Nuclear Operations

    The NRC continues to study possible impacts of cost-competitiveness pressures on safe nuclear operations. NRC safety assessments at some reactor facilities have identified deficiencies that may stem from the economic pressure on a licensee to be a low-cost energy producer, which in turn may limit the resources available for corrective actions and plant maintenance. The NRC is developing measures that could help to identify plants where economic stress may be adversely impacting safety. However, the NRC has not found an overall correlation between cost cutting and a decline in safety performance; rather, in general, the best managed and most cost efficient facilities are those with the best economic and safety performance.

    In addition to the potential impact on safe operations, cost-competitiveness could become a factor in nuclear plant license renewal. The impacts here can be complex. In an effort to make nuclear facilities competitive in a deregulated market, in some instances State PUCs have taken steps toward offering limited-time opportunities that would allow utilities to recoup sunk investments in generation. For licensees with a longer-term focus, the financial benefits of license renewal may make the option of continued operation attractive.

    Electrical Grid Reliability

    Another important area of NRC focus has been electrical grid reliability. In recent years, NRC probabilistic risk assessments have made it clear that a "Station Blackout" at a nuclear power station is a major contributor to core damage frequency. The term "Station Blackout" is used, in the nuclear power industry, to refer to an event in which a loss of offsite power is coupled with the inability of the onsite emergency diesel generators to provide vital power to plant safety equipment. While the estimated frequency of these events is very low, because of the potential consequences, the possibility of a Station Blackout continues to be an area of NRC focus. The analysis of power reactor experience in this area shows that nuclear generating stations are robust in design and operational standards, allowing them to help stabilize the electrical grid. However, analysis also makes clear that nuclear generating stations are vulnerable to grid disturbances, and especially to loss-of-offsite-power events. Grid reliability governance must take account of these factors. Standards of performance, operational criteria, and training of personnel are oversight issues that all must be addressed as deregulation goes forward. The NRC has established a grid reliability action plan to address concerns regarding the impact of utility deregulation on the reliability of the grid in supplying offsite power to nuclear power plants.

    To address related issues, the DOE has created a working advisory committee on the reliability of the U.S. electric system. In July 1997, this committee issued a report to the Secretary of Energy recommending that Federal legislation be considered to clarify the authority and responsibility for setting reliability standards, and that the FERC should review the policy, standards, and governance organization of reliability entities. The committee also has issued two draft reports, one relating to technical transmission issues, and the other addressing the roles and responsibilities of independent system operators. The NRC has been coordinating with the DOE, and will continue to monitor closely the impact of electric utility restructuring on grid reliability. In February 1998, the NRC issued an Information Notice entitled, "Offsite Power Reliability Challenges from Industry Deregulation."

    The NRC also has issued a draft report on the evaluation of loss-of-offsite-power events at nuclear power plants for external peer review. This information in this report will be used to evaluate Station Blackout assumptions as they relate to grid reliability. This evaluation is scheduled for completion in FY99.

    Decommissioning Funding Assurance

    Existing NRC decommissioning regulations require power reactor licensees either to set aside funds periodically in external trust fund accounts or to provide third-party guarantees for estimated decommissioning costs. As such, by the time a licensee permanently ceases operations at the end of its licensed term, the total amount of funds estimated as needed to complete decommissioning is expected to be available. In the emerging environment of electric utility restructuring, the NRC has had to reevaluate certain aspects of these provisions for decommissioning funding assurance, including the NRC definition of "electric utility," the potential impact of new ownership arrangements, and the problem of above-market or "stranded" costs. Several specific actions have resulted.

    On August 19, 1997, the Commission issued a final policy statement on electric utility restructuring and deregulation. The policy statement indicates that the NRC will continue to conduct its financial qualifications, decommissioning funding, and antitrust reviews; will identify all direct and indirect owners of nuclear power plants; will establish and maintain working relationships with rate regulators (including the FERC and the State PUCs); and will reevaluate the adequacy of its regulations in this area.

    On September 10, 1997, the NRC issued for public comment a Proposed Rule on decommissioning funding. The NRC staff has developed a final rule that currently is being considered by the Commission. We expect to issue the final rule shortly. As currently written, the rule would modify NRC decommissioning regulations in four areas. First, it would revise NRC regulations to ensure that decommissioning funding assurance requirements are clarified for all responsible licensee entities, not merely for "electric utilities." Second, it would allow credit on the earnings from decommissioning trust funds. Third, to keep the NRC informed of licensee decommissioning fund status, it would require periodic licensee reports on the status of such funds and any changes to licensee external trust agreements. Finally, to ensure adequate licensee accumulation of decommissioning funds, the NRC would take additional action as needed on a case-by-case basis, either independently or in cooperation with the FERC and the State PUCs, including the modification of a licensee schedule for accumulation of decommissioning funds.

    The NRC also has taken other actions in this area. NRC staff guidance has been developed for reviews of licensee financial qualifications and decommissioning plans, as well as in the area of antitrust reviews. Numerous meetings have been held with industry representatives, State and Federal rate regulators, the financial community, and other stakeholders. Staff-level liaisons have been established where appropriate. The overall effect of these measures has been to improve NRC, licensee, and public awareness on issues related to electric utility restructuring.

    License Transfers and Timeliness of NRC reviews

    The NRC regulation covering power reactor license transfers, 10 CFR 50.80, prohibits the transfer or assignment of a power reactor license, in any manner, without written Commission consent. The NRC evaluates such transfers to determine whether the proposed transferee is technically and financially qualified to conduct the activities covered by the license. The NRC examination of the financial qualifications of the proposed transferee includes three factors: (1) financial qualifications for operations; (2) decommissioning funding assurance; and (3) antitrust considerations. The NRC also must determine whether the transfer would lead to foreign ownership, domination, or control of the facility.

    In the past several years, the NRC has seen an increase in transfer applications, primarily as a result of corporate restructuring actions in anticipation of economic deregulation. The restructuring actions that the NRC has evaluated include: (1) mergers, either between electric utilities or between an electric utility and a company outside the power generation industry; (2) formations of holding companies; (3) sales of ownership shares of nuclear plants; and (4) formations of operating subsidiaries to run nuclear plants for an owner or owners. With the recent announcement of the sale of Three Mile Island, Unit 1, by GPU Nuclear, Inc. to Amergen, Inc. (a jointly-owned subsidiary of PECO Energy Company and British Energy, Inc.), the NRC likely will be asked to approve the sale of an entire nuclear plant for the first time. The NRC also expects to receive future requests for other types of direct or indirect transfers (e.g., joint ventures).

    Because of the variety of current and potential transfer requests, the NRC has evaluated each request based on its particular factual situation. However, the NRC has issued guidance on several aspects of its transfer reviews in the final Standard Review Plan on Antitrust Reviews and the draft Standard Review Plan on Power Reactor Licensee Financial Qualifications and Decommissioning Funding Assurance, which we expect to issue as a final report later this year. The NRC also has developed draft criteria for evaluating license transfers to non-owner operators of nuclear power plants. In addition, the NRC staff has met and remains willing to meet with representatives of licensees and/or intended transferees to discuss requirements of the transfer process.

    Notwithstanding our current case-by-case approach, virtually all transfer requests have been completed in a timely fashion. We are not aware of any recent transfer requests in which we have caused any delay of completing the transaction. A "typical" transfer usually can be approved within three to six months of receiving the transfer application. NRC approval consists of an order issued by the Director, Office of Nuclear Reactor Regulation, followed by a ministerial license amendment (to add or change names of licensees) if changes to the license are needed. If a conforming amendment to the license is required to reflect administrative changes to the license, such an amendment does not involve a significant hazard consideration. For some facilities, the staff may conduct a significant changes review, in consultation with the Department of Justice, regarding the antitrust implications of the transfer. No hearing on the antitrust aspects of the transfer would be held except in situations in which the NRC finds significant changes. However, 53 of the nuclear reactor units currently licensed to operate have been "grandfathered" and, consequently, are not subject to any NRC antitrust review. The NRC has not had antitrust or other hearings for any of the 45 to 50 transfer applications we have approved in the last five years. In view of the fact that NRC antitrust responsibilities tend to duplicate antitrust review responsibilities of other Federal agencies (e.g., the FERC and the Department of Justice), the NRC supports legislation introduced by the Administration to eliminate future NRC antitrust reviews.

    B. NRC Certification of Advanced Reactor Designs

    In the past two years, the NRC has reached significant milestones in the certification of advanced reactor designs, and in the implementation of the associated combined licensing process. As far back as the late 1970s and early 1980s, the experience gained in licensing existing U.S. nuclear power plants indicated that the licensing process for new nuclear power plants could be improved in ways that would enhance safety, improve stability, and reduce industry and agency uncertainty by achieving earlier resolution of technical and policy issues. Taking advantage of this insight, however, proved to be an arduous effort that included legislative reform, a Commission Policy Statement on Standardization, extensive litigation, and rulemaking. The overall result has been 10 CFR Part 52, a reformed licensing process that provides for combined licenses, early site permits, and certified standard designs.

    In May 1997, the NRC certificated the General Electric Advanced Boiling Water Reactor (GE ABWR) design and the ABB Combustion Engineering System 80+ design. This certification marked the final step in the design certification process, an effort that encompassed both the development and promulgation of Part 52, and that involved the most rigorous technical and safety reviews ever performed for a nuclear plant design. The goals of this process included design standardization, enhanced safety and reliability features, and a more predictable and stable licensing process. Both the ABWR, a 1,350-megawatt boiling water reactor, and the System 80+, a 1,400-megawatt pressurized water reactor, incorporate features that would mitigate the effects of severe accidents.

    In addition to these two designs, the NRC is continuing the review process for a third advanced reactor design, the Westinghouse AP600--a 600-megawatt pressurized water reactor that uses passive safety features, employing gravity, natural circulation, convection, evaporation, and condensation for plant protection. The NRC independent AP600 research program played a key role in identifying significant design issues which, if not corrected in time by Westinghouse, would have resulted in significant schedule delays. The NRC research program also helped to resolve issues that were not covered by the vendor test program, and contributed significantly to the overall understanding of the AP600 design.

    The NRC staff has continued to devote a significant level of attention and resources toward completing the AP600 review by bringing to closure the remaining technical issues. The NRC staff issued an advanced copy of the AP600 Final Safety Evaluation Report (SER) in May 1998. The Advisory Committee on Reactor Safeguards (ACRS) also made a concerted effort to expedite its review process, which resulted in issuing the ACRS design approval letter earlier this month. The NRC staff expects to be able to release the final AP600 SER next month, with the Final Design Approval to follow in September.

    Even given the advantages of these advanced designs, the Commission recognizes that the timing and likelihood of renewed demand for nuclear construction in the U.S. remains unclear. The design certification process, however, has been effective in providing enhancements to safety in design, drawing from experience in a manner that will increase the predictability of the licensing process, and that will ensure NRC readiness for future licensing actions.

    C. Status of the Materials Program

    Materials Program Initiatives

    The NRC continues to oversee the safe use of radioactive materials by approximately 5,900 specific medical, academic, industrial, and commercial licensees, and an additional 45,000 general licensees. Key areas of improvement include: (1) the implementation of an action plan for improving licensee accountability of licensed materials; (2) the consolidation of NRC guidance for materials licensees; (3) the revision of Part 35, "Medical Use of Byproduct Material"; and (4) the revision of Part 70, "Domestic Licensing of Special Nuclear Material." The NRC also is continuing to improve its effectiveness in relationships with other regulatory entities, such as Agreement States.

    The Commission recently approved an action plan to address licensee accountability for certain kinds of licensed materials encompassing approximately 24,000 devices. The action plan was developed in response to recommendations provided by an Agreement State-NRC working group that evaluated current licensee accountability of devices. A registration program would require certain general licensees to register their devices with the NRC annually. This program will ensure that licensees still can maintain accountability of their devices, and will allow the NRC to maintain a database of devices possessed by the licensees.

    The NRC is continuing to streamline the process for handling materials license and amendment requests. The NRC staff is midway through the process of updating and consolidating hundreds of guidance documents into approximately 20-30 comprehensive topical reports for use by materials users. These reports will contain licensing checklists and audit guidelines to assist licensees in developing their programs. As a result of these efforts, we expect increased clarity on and understanding of NRC requirements, more completeness in license applications and license amendments, and more timely processing and review of licensee submittals.

    The Commission has completed a multi-phase review of its medical use program, which included an independent study conducted by the National Research Council for the National Academy of Sciences' Institute of Medicine. As a result of this detailed review, the Commission directed the NRC staff to develop recommendations for revising the 1979 Commission Medical Policy Statement and 10 CFR Part 35, "Medical Uses of Byproduct Material." The revision of Part 35 would achieve several specific improvements, which would include focusing the regulations on medical procedures that pose the highest radiation safety risk, with a subsequent decrease in the oversight and regulatory burden for low-risk activities. The Commission recently approved a proposed rule for publication and solicitation of public comment. This rulemaking has a targeted completion date of June 1999. The Commission used a process that encouraged and facilitated early State and stakeholder involvement in the development of proposed revisions to Part 35.

    The Commission also is pursuing a risk-informed and performance-based approach for regulating fuel cycle facilities. In this context, the NRC currently is revising 10 CFR Part 70, "Domestic Licensing of Special Nuclear Material," to increase NRC confidence in the margin of safety at major fuel cycle facilities. Based on current intentions, this revision: (1) would identify appropriate consequence criteria and the level of protection needed to prevent or mitigate accidents that exceed these criteria; (2) would require affected licensees to perform an integrated safety analysis (ISA) to identify potential accidents at the facility and the items relied on for safety; and (3) would require the implementation of measures to ensure that the items relied on for safety are continuously available and reliable.

    In the area of Agreement States, the NRC recognizes its shared responsibility to ensure that the regulatory programs of the NRC and Agreement States collectively establish a coherent nationwide effort in the safe use of nuclear materials. The 30 existing Agreement States regulate approximately 16,000 specific and 90,000 general licensees. The 1997 signing of an agreement between NRC and the Commonwealth of Massachusetts transferred about 425 materials licensees to Massachusetts regulatory oversight. In addition, Ohio (with about 600 materials licenses) is scheduled to become an Agreement State in FY99, and Pennsylvania (with about 800 materials licenses) and Oklahoma (with about 225 materials licenses) currently are scheduled to become Agreement States in FY 2000.

    Oversight of the U.S. Enrichment Corporation (USEC)

    The NRC issued initial certificates of compliance for both USEC gaseous diffusion plants in November 1996, and assumed regulatory jurisdiction in March 1997. In January 1998, the NRC issued its first annual report to Congress on the gaseous diffusion plants, including an assessment of facility compliance with regulatory requirements. The NRC will conduct the first recertification in FY99, in accordance with the USEC Privatization Act, which requires that the NRC recertify the plants at least once every 5 years.

    In addition, the NRC has developed a standard review plan, in coordination with other agencies, for NRC activities specifically related to USEC privatization. The NRC staff has used this standard review plan to address NRC review activities required to support USEC privatization. In accordance with the USEC Privatization Act, USEC has begun the privatization process, and expects to become a private entity early in the second half of this year through an initial offering of stock to the public. The NRC will continue to report annually to the Congress on the status of the USEC plants and their compliance with NRC standards, and will continue to undertake an active, comprehensive inspection program to verify operational safety and review of plant incidents and events. This inspection program will continue to include NRC resident inspectors at each plant.

    The NRC also is preparing to review an application from USEC for commercial deployment of the Atomic Vapor Laser Isotope Separation (AVLIS) technology, and is engaging in pre-licensing discussions and reviews in support of the USEC application. The USEC has advised the NRC that it plans to submit an AVLIS application in February 1999.

    D. High-Level Waste

    In the critical area of managing high-level waste, NRC continues to believe that a permanent geologic repository is the appropriate mechanism for the nation to manage, safely and ultimately, spent fuel and other high-level nuclear waste. The Congress has assigned to the NRC significant responsibilities as a part of the national repository program. In accordance with statutory direction in the Nuclear Waste Policy Act of 1982, as amended, and the Energy Policy Act of 1992, the NRC must consult extensively with the DOE before licensing a repository. The 1987 revisions to the Nuclear Waste Policy Act focused DOE high-level waste repository efforts exclusively on the site at Yucca Mountain, Nevada. The NRC has several objectives in this pre-licensing consultation phase: (1) to develop a regulatory framework (regulations and guidance); (2) to ensure that the DOE is aware of the elements comprising a quality license application; (3) to evaluate the adequacy of the site characterization and waste form in the DOE site suitability recommendation to the President; and, (4) ultimately, to determine whether the NRC, through its licensing and oversight processes, can authorize repository construction, receipt of waste, repository operations, and final repository closure and decommissioning.

    In order to enhance the effectiveness of the NRC program and in response to budget constraints, the NRC in FY96 refocused its high-level waste program on resolution of the ten key technical issues most important to repository safety and, consequently, most important to licensing. These issues cover areas such as groundwater flow, thermal effects, potential disruptive events, container releases, and total system performance. The NRC has continued to make progress toward resolution of these issues, including the documentation of corresponding acceptance criteria and early feedback to the DOE for preparation of its Viability Assessment throughout FY 1996-1998. In restructuring its pre-licensing regulatory program, the Commission has applied a risk-informed and performance-based approach to the performance of a geologic repository system--a system with unique physical characteristics, failure mechanisms, and lifetime. Application of this philosophy has resulted in the development of an integrated regulatory approach under which the key issues important to repository performance and safety will guide the revision of NRC regulations, the development of a Yucca Mountain review plan and independent analytical techniques, and the resolution of issues.

    One key technical issue for NRC is the development of a site-specific, performance-based regulation applicable to the proposed repository at Yucca Mountain. Proposed and final regulations are planned for FY99 to provide a regulatory framework for the DOE submittal of a license application in 2002. These criteria are being developed to implement health-based standards for Yucca Mountain that are consistent with the recommendations of the National Academy of Science (NAS) in their 1995 technical report on Yucca Mountain, in accordance with the Energy Policy Act of 1992.

    NRC Assessment of DOE Progress and Potential for Licensing Success

    During FY99, the NRC will review the DOE Viability Assessment to identify potential licensing vulnerabilities and any major concerns with DOE test plans, design concepts, and Total System Performance Assessment that, if unresolved, could result in an incomplete or unacceptable license application. While the NRC review of the DOE Viability Assessment is not required explicitly under statute, the NRC expects to be asked to provide its independent licensing view as important input to the decisions that the President and the Congress will make concerning the future of the repository program at the Yucca Mountain site. Moreover, the NRC believes that its views, supported by independent NRC analyses, will contribute to public confidence in the credibility of the decision-making process.

    The NRC is encouraged that the DOE now is conducting a performance-based program to focus on those issues most important to repository safety. In addition, the DOE recently issued its Repository Safety Strategy (previously called the Waste Isolation and Containment Strategy). This strategy provides the DOE explanation of the role that natural and engineered barriers are expected to play in the containment of radionuclides within the waste package, and in ensuring that the annual dose to persons living near the site is acceptable. The NRC believes that the DOE has made significant progress in its site characterization program for the candidate repository at Yucca Mountain, including the completion of the Exploratory Studies Facility, the recent initiation of the East-West Drift for the enhanced characterization of the repository block, and the surface-based and subsurface testing.

    On the basis of what is known today, the NRC is confident that it will be able to determine, with reasonable assurance, whether spent fuel and other high-level waste can be disposed of safely in a geologic repository at Yucca Mountain, provided that: (1) the NRC receives a high-quality license application from the DOE; (2) NRC requirements are met; (3) the NRC is permitted to maintain its technical capability for licensing a geologic repository in the face of budget constraints, and (4) timely, reasonable, and implementable standards are developed for the repository. Ensuring that the NRC is prepared to review a DOE license application for a geologic repository in a timely manner is a Commission priority. To this end, a credible, technically competent, and adequately funded pre-licensing regulatory program is essential.

    Potential Issues

    The Commission is continuing to work with the DOE, the Office of Management and Budget (OMB), the Office of Science and Technology Policy (OSTP), and the Environmental Protection Agency (EPA), to ensure that the EPA high-level radioactive waste standard, when issued, is both appropriate and implementable. However, many issues related to the EPA high-level waste standard are similar to those related to the NRC cleanup rule for sites undergoing decommissioning. As a result, the NRC recently wrote to the Senate Committee on Environment and Public Works, suggesting that a legislative solution may be necessary.

    The Commission also is aware that the Congress is contemplating new legislation that would alter the national high-level waste program. The Commission agrees with the basic approach taken in both the House and Senate bills, including the use of an all-pathways radiation standard, and believes that both contain the fundamental elements of an integrated waste management system needed for the protection of public health and safety. That being said, however, the Commission recommends that the Congress take particular care that the overall schedule for DOE acceptance of waste for storage at a licensed interim storage facility and its obligation to submit a license application for a permanent repository do not set these two important programs on a collision course with respect to their needs for limited resources. Centralized interim storage and permanent geologic disposal are key elements of the integrated waste management systems laid out in both bills. The development and licensing of each should be afforded sufficient time and adequate funding.

    Status of Spent Fuel Storage

    Currently, it is primarily the responsibility of licensed utilities to manage the spent fuel from commercial nuclear power reactors. The NRC reviews the designs for and operation of facilities for the storage of spent fuel in fuel pools and independent spent fuel storage installations, primarily located at reactor sites. The NRC has certified 13 cask designs for spent fuel storage under the use of either a general license or as part of a site-specific license--and has certified two cask designs to be fabricated for the transport of spent fuel. In FY99, the NRC anticipates reviewing approximately 50 applications for commercial spent fuel transport designs, Department of Transportation and DOE spent fuel transport designs, commercial spent fuel storage designs, and interim storage of spent fuel, including ten independent spent fuel storage installations (ISFSIs), one of which would be a privately owned, away-from-reactor interim spent fuel storage facility. Associated review and inspection activities will ensure that safety and regulatory compliance are achieved and maintained for these designs and installations. Additionally, the NRC will continue its review of a spent fuel dry transfer system, which would allow cask-to-cask transfers and would, among other features, obviate the need for using a spent fuel pool in conducting a transfer, which would facilitate timely and safe decommissioning of shutdown commercial power reactors.

    E. Decommissioning and Decontamination; Clean-Up

    Decommissioning involves removing radioactive contamination in buildings, equipment, groundwater, and soils to such levels that a facility can be released for either unrestricted or restricted use. In addition to the cleanup of hundreds of facilities each year, the NRC is continuing to encourage timely cleanup of approximately 40 more complex material and fuel cycle facility sites through the implementation of its Site Decommissioning Management Plan. Five sites were successfully decommissioned and removed from the Site Decommissioning Management Plan list in FY97. The NRC expects three more sites to be removed each year in FY98 and FY99. In addition, decommissioning was completed and the operating license terminated for the Fort St. Vrain Nuclear Generating Station, Unit 1, owned by the Public Service Company of Colorado. Except for the independent spent fuel storage installation, the site was released for unrestricted use.

    After an extensive rulemaking process that involved several years of enhanced stakeholder interaction through workshops and public meetings, the Commission in July 1997 issued a final rule to establish radiological criteria for decommissioning and license termination. The NRC rule contains an all-pathways radiation standard that is consistent with recommendations of national and international scientific organizations. The NRC use of an all-pathways standard is also consistent with the all-pathways approach reflected in the high-level waste bills currently under Congressional consideration. During earlier discussions, the staff of the U.S. Environmental Protection Agency (EPA) had expressed concern with certain provisions of the rule, including the lack of a separate groundwater standard. As a result, the NRC and the EPA held a public meeting in April 1997, after which the NRC revised its proposed final rule on two issues in response to EPA concerns. However, it should be noted that the NRC fundamentally disagrees with the need for a separate groundwater standard. Before finalization of the rule, I met with the EPA Deputy Administrator, on behalf of the Commission, to review the rule and to discuss how the views and concerns that the EPA had expressed might be accommodated in individual license termination requests from licensees. In addition, we discussed the possibility of developing some type of binding agreement on the finality of NRC license termination decisions.

    In August of 1997, I sent to Administrator Browner a draft Memorandum of Understanding (MOU) entitled "Consultation and Finality on Decommissioning and Decontamination of Contaminated Sites." This draft MOU identifies the responsibilities of each agency for the decommissioning and decontamination of contaminated sites, and specifies the ways in which these responsibilities would be carried out to achieve finality in license termination decisions. Later in August, we received a copy of EPA guidance entitled "Establishment of Cleanup Levels for CERCLA Sites with Radioactive Contamination." This document provides clarifying EPA guidance for establishing protective cleanup levels for radioactive contamination at sites that come under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA). We were disappointed to see in this guidance the EPA assertion that the dose limits in the NRC final rule generally will not provide a protective basis for establishing preliminary remediation goals for cleanup at CERCLA sites, and that the NRC sites would require further remediation. A principal NRC concern with this guidance and the EPA position is the question of finality for sites that have complied with the NRC or equivalent Agreement State cleanup standards and have had their licenses terminated. To address this concern, the Commission proposed legislation that would amend CERCLA to recognize NRC cleanup standards as sufficiently protective, and that would provide finality to sites that have complied with the NRC or equivalent Agreement State cleanup standards.

    In December 1997, I sent a letter to Administrator Browner detailing NRC concerns and comments on the EPA CERCLA guidance. The EPA responded to the NRC-proposed MOU on February 19, 1998, and to NRC comments on the CERCLA guidance on February 20. In reviewing these responses, the Commission found that the EPA was continuing to oppose finality for sites that comply with NRC cleanup standards. Therefore, in April 1998, I again wrote to Administrator Browner, stating that there appear to be fundamental differences between the NRC and the EPA on the basis for protecting public health and safety and the environment, and that the Commission continues to believe, consistent with standards of the international community, that the regulatory approach used by the NRC will be sufficient to ensure adequate protection of public health and safety and the environment in this area. I also stated that the Commission recognizes that the resolution of the differences between our agencies is a matter of policy that can best be solved by Congressional action. Subsequently, Administrator Browner categorically rejected the NRC legislative approach, and informed me that if an agreement satisfactory to both agencies cannot be developed, the EPA may decide to apply its standards unilaterally and require remediation under CERCLA for NRC sites after they have been decommissioned.

    In summary, the NRC supports legislation that would establish finality for sites that comply with NRC cleanup standards. Dual regulation is wasteful of both government resources and the resources of American citizens to whom the regulations apply. Therefore, the Commission supports language comparable to that found in section 810 of H.R. 3000. This provision would effectively prevent later imposition of additional remediation standards or requirements at decommissioned sites that have met the NRC cleanup standards.

    F. Work with the U.S. Department of Energy (DOE)

    Several areas of change for the NRC involve work with the Department of Energy (DOE). We are positioning the NRC to become, potentially, the external regulator of DOE nuclear activities, and to license DOE privatized facilities. On the basis of a DOE/NRC memorandum of understanding (MOU), a pilot program for the regulation of DOE nuclear facilities has begun. In addition, as part of plans to stabilize the Hanford tank waste through a remediation project, the DOE is proposing to privatize the operation, and to have the NRC license the private enterprise. The NRC has been providing technical assistance and support for this project, including reviews of contractor proposals and the development of a regulatory program, to ensure a smooth transition later in the project for NRC regulatory oversight. We also have approved a license amendment authorizing the irradiation of tritium-producing lead test assemblies at Watts Bar Unit 1, and we will continue to work with the DOE on the use of a commercial light-water reactor for tritium production, if the Congress and the Administration support this approach. Finally, we have begun discussions with the DOE regarding NRC involvement in either of two DOE strategies for disposal of excess weapons-grade plutonium: (1) immobilizing surplus plutonium with high-level waste in ceramic material for geologic disposal, and (2) burning surplus plutonium as a component of mixed-oxide fuel in existing commercial reactors.

    External Regulation of DOE

    In December 1996, following a report by a DOE Advisory Committee on External Regulation and further study by a DOE working group, the Secretary of Energy announced that the Administration would take certain measures toward giving the NRC the responsibility for the regulation of nuclear safety at nearly all DOE nuclear facilities, phased in over a ten-year period. The Advisory Committee and the working group had concluded that external regulation of DOE nuclear safety would increase the assurance of safety, give the public and workers more confidence in the safety of DOE operations, make safety regulation of DOE nuclear facilities more stable, require operations managers to be more accountable for nuclear safety, and minimize redundancy in the safety regulation of DOE nuclear facilities. The NRC evaluation of this concept was part of the NRC Strategic Assessment and Rebaselining initiative. In the course of that evaluation, public comments overwhelmingly favored NRC regulation of DOE nuclear facilities. These two factors--the DOE decision and the public commentary--weighed heavily in the Commission decision to endorse NRC oversight of DOE facilities. In June 1997, the DOE and the NRC agreed to pursue NRC regulation of DOE nuclear facilities on a pilot program basis.

    The pilot program is to determine the feasibility of NRC regulatory oversight of DOE nuclear facilities, and to support a decision on whether to seek legislation to authorize NRC regulation of DOE nuclear facilities. On November 21, 1997, DOE Secretary Pea and I (on behalf of the Commission) signed a Memorandum of Understanding (MOU) between the NRC and the DOE that details the specific conditions and activities associated with the pilot program. The MOU objectives include: (1) determining the value added by NRC regulatory oversight; (2) testing various regulatory approaches (for example, licensing and certification); (3) determining the status of DOE pilot facilities with respect to meeting existing NRC requirements, or acceptable alternatives, and identifying any significant safety issues; (4) determining the costs (to both agencies) of NRC regulation; (5) evaluating alternative regulatory relationships, and determining DOE contract changes that might be necessary to provide for NRC oversight; (6) identifying transition issues and solutions; (7) identifying legislative and regulatory changes needed; and (8) evaluating appropriate processes for stakeholder involvement should the NRC assume broad external regulatory authority over DOE nuclear facilities.

    The pilot program began in the Fall of 1997 at Lawrence Berkeley National Laboratory (LBNL). On-site work for the Lawrence Berkeley National Laboratory pilot was completed on January 15, 1998. No significant safety issues were identified at LBNL. After completing the Berkeley site report, the Commission has requested that the NRC staff prepare a revised MOU, in consultation with the DOE, that would incorporate lessons learned during the process and, if agreed, allow the agencies to recommend jointly that the Administration seek legislation promptly for NRC regulatory authority for a specific pilot facility or class of facilities, on the basis of information gained during a specific pilot.

    The field work on the second pilot site, the Radiochemical Engineering Development Center (REDC) at Oak Ridge National Laboratory, was completed in June 1998. The tentative conclusions of the work to date are that REDC as well as LBNL are licensable without significant changes to the facilities or their radiation safety programs. However, several major policy issues have resurfaced recently that could delay completing both reports. These issues are: (1) Who should be the licensee (i.e., the DOE or the contractor)? (2) What, if anything, should be done about legacy materials and buildings? and (3) Should the NRC seek jurisdiction over DOE accelerators and over DOE naturally-occurring and accelerator-produced radioactive materials? The NRC and the DOE are working together to resolve their differences on these policy issues.

    The third pilot for FY98 is underway at the Savannah River Site Receiving Basin for Offsite Fuels, and is scheduled for completion in late 1998. During FY99, the NRC intends to continue the pilot program, starting with the Pacific Northwest National Laboratory and adding facilities of greater complexity that would provide expanded information on the major objectives previously outlined. In addition, the NRC staff has begun work on draft legislation that would support NRC oversight of specific facilities.

    Current DOE Privatization Activities

    The NRC also is participating in the DOE Hanford tank waste remediation system project, a major privatization initiative, located on the Hanford Reservation in Richland, Washington. An NRC/DOE MOU was executed on January 29, 1997, specifically for the demonstration phase (Phase I) of this project. This MOU calls for the NRC to provide technical assistance and support to the DOE in the development of a comprehensive regulatory program, consistent with the NRC regulatory approach, for processing all Hanford tank wastes into forms suitable for final disposal, while protecting the general public, workers, and the environment. The Congress continued to appropriate funding for NRC participation in this project for FY98. To support this phase, the NRC has established a permanent on-site representative on the Hanford site, and continues to assist in the review of initial DOE privatization contractor submittals, as well as in the DOE development of guidance documents for the privatization contractors. Throughout Phase I of this program, the DOE is responsible for regulating the activities of the privatization contractors. However, the ultimate goal of NRC participation is to provide a smooth transition into the DOE-proposed NRC licensing of the privatized contractor. Legislation may be necessary to clarify NRC authority to regulate these activities.

    Tritium Production

    The evaluation of options for tritium production is another DOE activity that the NRC is supporting. The United States stopped producing tritium in 1988, when the last nuclear weapons production reactor at the DOE Savannah River site was shut down. The most recent projection calls for resumption of tritium production by the end of 2005. To meet this need, the DOE has chosen a dual-path strategy involving the evaluation of the two most promising tritium supply alternatives: (1) to produce tritium in commercial light-water reactors, either through acquisition of reactors under government ownership, or by contracting for target irradiation services under private ownership; and (2) to design, build, and test critical components of an accelerator system for tritium production. It is our understanding that the DOE plans to select one of these approaches by the end of 1998 to serve as the primary source of tritium. The other alternative, if feasible, will continue to be developed as a backup tritium source.

    The commercial reactor option has been split into two phases. The first phase, a demonstration phase currently under way at the Tennessee Valley Authority's Watts Bar Unit 1 nuclear plant, involves the irradiation of 32 tritium-producing burnable absorber rods (referred to as a "lead test assembly"). These rods were placed in the Watts Bar reactor core during the first refueling outage (in the Fall of 1997), following issuance of a license amendment by the NRC. The rods are scheduled to be removed from the core during the Spring 1999 outage and shipped to a DOE facility for post-irradiation examination. We understand that this tritium will not be used for defense purposes. Consistent with Administration and Congressional decisions and guidance, the second phase of the commercial reactor option is the irradiation of up to about 3300 rods in a tritium production core. The DOE expects to submit its tritium production core topical report for NRC review later this summer. Assuming any necessary legislative and programmatic approvals are in place, and the DOE proceeds with its program, a plant-specific application for an amendment to the facility operating license is expected in 1999 or 2000. Under such a scenario, licensees undertaking tritium production core irradiation would need NRC authorization in 2002 or 2003 in order to meet the DOE requirement for extraction of tritium gas by the end of 2005.

    Disposition of Surplus Weapons-Grade Plutonium

    Under a reimbursable agreement signed by the NRC and the DOE in September 1995, the NRC agreed to provide assistance to the DOE Office of Fissile Materials Disposition in the review of potential disposition alternatives for plutonium declared excess to the needs of the U.S. nuclear weapons program. In January 1997, the DOE issued its Record of Decision that reflected a dual strategy for plutonium disposition: (1) immobilization of some of the surplus plutonium in ceramic material, after mixing with high-level waste, for disposal in a geologic repository; and (2) burning of some plutonium as a component of mixed-oxide (MOX) fuel in existing commercial reactors. With respect to the MOX fuel strategy, the DOE indicated that it anticipates that the MOX fuel fabrication facility would be licensed by the NRC at a DOE-owned facility, and that the MOX fuel would be irradiated in a commercial power reactor. The DOE has announced that its Savannah River site would be the location of the MOX fuel fabrication facility. The referenced reimbursable agreement was modified to cover the NRC costs of NRC assistance in preparing for eventual licensing activities.

    We also are reviewing a number of issues that may require legislation, related to the roles of the NRC and the DOE in the MOX fuel program. Some of these issues include: (1) whether such a facility should be regulated by a licensing or a certificate-of-compliance approach; (2) whether the DOE or a contractor (or both) would be the regulated entity; (3) the role of other Federal agencies; (4) the role of the Defense Nuclear Facilities Safety Board; (5) who should be responsible for certain activities related to the MOX fuel facility, such as physical protection, MOX fuel transportation safety, low-level radioactive waste disposal, liability coverage, and facility decommissioning; and (6) whether the MOX fuel program and facility would or would not be considered a "defense activity or facility" under 42 U.S.C. 7272.

    G. Significant Research Activities

    To make timely and technically credible regulatory judgements and to anticipate problems of potential safety significance, the NRC must have independent technical expertise and information. Key to providing this capability is the NRC research program. This program is both confirmatory and anticipatory, and resolves uncertainties associated with the most safety significant regulatory issues. The NRC conducts reactor and plant performance research to provide in-depth examination and understanding in support of other regulatory functions. For example, the recent rebaselining of the reactor source term, under the NRC research program, will facilitate the approval of utility requests for changes to some operational limits. Current areas of significant research emphasis include high burnup fuel behavior, reactor pressure vessel integrity, steam generator research, environmentally assisted cracking, radionuclide transport, thermal-hydraulic research, severe accident research, probabilistic risk assessment, and environmental qualification of electrical cables.

    The NRC routinely seeks opportunities in its relationships with outside organizations, both domestic and foreign, to enter into cooperative research agreements through which it can leverage available research resources. These organizations include other Federal agencies, the Electric Power Research Institute (which conducts research for the U.S. industry), and members of the international regulatory community engaged in nuclear safety research. These agreements result in both the sharing of information and the sharing of research costs, the effect of which is to maximize the use of our research resources, and at the same time to enhance our own research capabilities.

    By maintaining a viable research program, the NRC has access to research through approximately 35 active cooperative agreements, as well as through another 45 agreements that are being extended or considered with organizations in more than 25 countries, including countries from the former Soviet Union. Through these agreements, the NRC contributes about $8 million annually, but receives the benefits of research valued at approximately $85 million annually. In addition, the NRC receives about $1.3 million each year in support of its various research programs.

    A good example of NRC cooperative efforts and leveraging of research resources is the joint U.S.-Russian research program on radiation health effects, which is being performed under the auspices of the U.S.-Russian Joint Coordinating Committee on Radiation Effects Research (JCCRER). While the studies can involve both U.S. and Russian populations, the initial focus is on the unique opportunities in the southern Urals in Russia, particularly in the vicinity of the Mayak nuclear complex. There, as a result of past poor operating practices and accidents, workers and the surrounding populations were exposed to significant amounts of radiation. The characteristics of these exposures are different in many respects from those for populations previously studied for radiation health effects, such as the survivors of Hiroshima and Nagasaki.

    Present radiation protection standards have been developed by making assumptions on how to extrapolate the risks of deleterious health effects from those observed in populations exposed to short bursts of radiation (such as the atomic bomb survivors) to the chronic exposures that are characteristic in facilities subject to NRC regulation. The studies in the southern Urals will contribute to a better understanding of what models are most appropriate to describe the relationship between low dose rate (chronic) radiation exposures and radiation-induced health effects.

    The DOE is the U.S. executive agency for the JCCRER, and the NRC is sponsoring a portion of the research. Other Federal agencies participating in the JCCRER are the EPA, NASA, and DOD.

    H. International Cooperation

    Bilateral and Multilateral Activities

    The NRC has long maintained a wide-ranging program of international cooperative exchanges to ensure the peaceful, safe, and environmentally acceptable uses of nuclear energy in the U.S. and abroad. This cooperation is conducted through a variety of bilateral and multilateral relationships. As the regulator of the world's largest civilian nuclear program, the NRC has broad capabilities to contribute to international programs on nuclear power safety, radiation protection, nuclear material protection control and accounting, waste management, and decommissioning of nuclear facilities. At the same time, the Commission can benefit from the experience and expertise gained by foreign nuclear operations.

    In supporting U.S. non-proliferation objectives, the NRC is working with the Executive Branch to facilitate the effective implementation of the Strengthened Safeguards System of the International Atomic Energy Agency (IAEA). The NRC will participate with other involved agencies in the preparations for implementation of the Additional Protocol to the US/IAEA Safeguards Agreement. Subsequently, the Protocol provisions will be implemented at applicable NRC licensed facilities.

    Currently, the NRC is involved in 33 bilateral safety arrangements with other countries on five continents. These relationships provide the framework for providing technical advice and assistance to other countries, as well as for exchanging significant safety and research information.

    Convention on Nuclear Safety

    The NRC has worked extensively in the development of the International Convention on Nuclear Safety--the first instrument to address directly the safety of nuclear power plants worldwide. This convention obliges contracting parties to establish and maintain proper legislative and regulatory frameworks to govern safety. The Convention on Nuclear Safety has been transmitted to the U.S. Senate for review and action during the current session.

    I. Year 2000 Systems Corrections

    As a preliminary comment in this area, I would note that on June 12, 1998, I testified on the subject of Year 2000 Readiness of the Utility Industry before the Senate Special Committee on the Year 2000 Technology Problem. In addition, on May 14, 1998, NRC management testified on Year 2000 issues before the Subcommittee on Technology, House Science Committee.

    The NRC continues to leverage information technology to provide the capacity needed to manage effectively the regulatory, scientific, administrative, financial, and records data that are vital to fulfillment of the NRC mission. The NRC is fully aware of the challenges we face in ensuring that our computer applications and hardware systems continue to function properly in the year 2000 and beyond, and we have established an aggressive program to address those challenges directly. We estimate that the total cost to the NRC will be $10.9 million.

    The NRC has completed its assessment of the scope of the Year 2000 computer problem as it relates to computer systems that we use directly. We also are communicating with agencies with which we exchange electronic information, to ensure that our data exchange formats will properly represent dates beyond 1999. The NRC has developed an action plan and schedules to ensure that the systems most vital to NRC operations are repaired well before the year 2000, with appropriate repair schedules for systems less critical to mission-related activities. The NRC is pursuing aggressively the certification of Year 2000 compliancy for products and services that we acquire or use from commercial sources. The NRC Year 2000 program is in compliance with the most current Year 2000 program guidance issued by the Office of Management and Budget.

    The NRC also is fully aware of the need to address the Year 2000 computer problem in relation to the use of computers in the nuclear industry. To ensure proper focus on this issue by the nuclear power industry, the NRC staff met with the Nuclear Energy Institute (NEI) to obtain industry support in addressing the concern. NEI has agreed to initiate an effort on the Year 2000 computer problem and, working jointly with the Nuclear Utilities Software Management Group, has promulgated a guidance document to assist nuclear power plant licensees in developing programs to address this issue effectively. This document, entitled "Nuclear Utility Year 2000 Readiness," has been issued to all nuclear power plant licensees, and a related workshop was conducted in November 1997. NEI also met with utility senior executives in November to remind them of the importance of addressing the Year 2000 computer problem at their facilities, and to establish a mechanism for exchange of information among licensees as they implement their programs.

    In December 1997, the NRC developed a draft generic letter, entitled "Year 2000 Readiness of Computer Systems at Nuclear Power Plants," to ensure that licensees provide assurance of this readiness. As part of the Federal Register notice soliciting public comment, the NRC requested proposed alternatives to the generic letter, such as a voluntary industry initiative that would satisfy the same intent. The NRC staff has met with the staff of the General Accounting Office (GAO), and factored GAO comments into the final generic letter. The final generic letter was issued to nuclear power plant licensees on May 11, 1998. The generic letter requires licensees to confirm, within 90 days of the date of the letter, that they are pursuing a program to address the Year 2000 problem, and, by July 1, 1999, to confirm that they will be Year 2000 ready or to provide the schedule for remaining actions to achieve readiness. In addition to requiring licensees to report on the existence of Year 2000 programs and to confirm their readiness, the NRC has recommended that licensees establish contingency plans. The NRC will conduct inspections of approximately 12 nuclear power plant licensee Year 2000 programs, on a sample basis, during 1998 and 1999. In addition, the NRC will continue to monitor licensee efforts to address the Year 2000 computer problem through attendance at related workshops and meetings over the next two years. We believe that our timetables have been established prudently, allowing consideration of the need to issue shutdown orders (in the unlikely event that a reasonable assurance of safety cannot be concluded) well before the end of 1999, thus allowing for contingency planning on the part of affected utilities.

    Over the past year, the NRC has taken a number of actions to ensure that the Year 2000 computer problem will be either eliminated or minimized for its materials licensees as well. We have sent our materials licensees two Information Notices on this problem, as well as conducting on-site and telephone sampling interviews with management from various types of NRC materials licensees. Interviews were conducted with gauge manufacturers, teletherapy device manufactures, fuel cycle organizations, uranium extraction companies, broad-scope medical institutions, and the US Enrichment Corporation gaseous diffusion plants, to identify any additional problems or issues that warranted further action. NRC materials licensee inspectors have been instructed to confirm licensee receipt of NRC Information Notices, to determine whether licensees have identified any potential problems, and to note any corrective actions taken.