United States Nuclear Regulatory Commission Programs and Nuclear Safety Regulatory Issues
July 30, 1998
Fiscal Year 1999 Oversight Testimony
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.