United States Nuclear Regulatory Commission - Protecting People and the Environment

OIG/95E-11 - Special Evaluation of NRC's Organizational Structure

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Overview

Office of The Inspector General
United States Nuclear Regulatory Commission
Washington, DC 20555
May 2, 1995

Memorandum To: James M. Taylor
Executive Director for Operations
Original Signed by Thomas J. Barchi
From: Thomas J. Barchi
Assistant Inspector General for Audits
Subject: Special Evaluation of NRC's Organizational Structure

Attached is the Office of the Inspector General's Special Evaluation Report entitled "Now Is The Opportune Time To Re-Examine NRC's Organizational Structure." We are also providing copies to the Director of NRC's National Performance Review Phase II Steering Committee.

We developed this report in response to (1) the Chairman's continuing interest in ensuring the efficiency of NRC's operations, and (2) the Steering Committee's request for our views on this topic. We drew from previous and current audits in compiling this information. For example, we have included views and observations of licensee representatives and NRC staff obtained during our ongoing review of NRC's operating reactor inspection program.

Attachment:
As stated

cc: H. Thompson, EDO
J. Milhoan, EDO
K. Cyr, OGC
J. Hoyle, SECY
D. Rathbun, OCA
J. Blaha, EDO
R. Scroggins, OC
P. Norry, ADM
G. Cranford, IRM
R. Bangart, OSP
W. Russell, NRR
E. Jordan, AEOD
D. Morrison, RES
C. Paperiello, NMSS
J. Funches, ICC
W. Beecher, OPA
T. Martin, Region I
S. Ebneter, Region II
J. Martin, Region III
L. Callan, Region IV
OPA-Region I
OPA-Region II
OPA-Region III
OPA-Region IV
OPA-RIV: Walnut Creek

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Report Synopsis

In light of today's austere budget environment, and NRC's current National Performance Review initiatives, we believe now is an opportune time for the agency to re-examine its headquarters/regional office structure. Such an effort has the potential for identifying significant savings through eliminating duplicate functions and management layers; it could also help alleviate a source of criticism regarding field operations -- that of inconsistent interpretation and application of regulations by NRC staff at nuclear power plants.

In developing this Special Evaluation Report, we drew from previous and ongoing audit work and suggested several organizational alternatives that the Executive Director for Operations may wish to explore.


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Introduction

In 1993, the Vice President's National Performance Review challenged Federal agencies to examine their functions to identify opportunities for improving operating efficiency and reducing budget expenditures. Many observers believe this introspection provides a unique opportunity for Federal agencies to "get back to basics." The Nuclear Regulatory Commission (NRC) identified several areas where organizational changes could meet this challenge. However, some within the nuclear industry continue to believe that NRC's growth has outpaced the industry it is charged with regulating; this, in turn, raises the question whether NRC is organized optimally.

In January 1995, at the request of the Chairman, NRC, the Office of the Inspector General (OIG) initiated an overview of NRC's management of the operating reactor inspection program. The effort began as a broad survey of issues such as (1) the organizational structure of the program, (2) the adequacy of training for inspectors and managers, (3) inspection planning, and (4) program consistency. Many of these topics were also discussed in the Nuclear Energy Institute's "Nuclear Regulatory Review Study" (Towers-Perrin). At the completion of the survey OIG staff decided to initiate a more focused review into how NRC ensures inspection program consistency, and the role that inspector training plays in this process.

Also early in 1995, under the National Performance Review Phase II (NPR-II), the Vice President again asked Federal agencies to examine the basic missions of government and identify ways to cut costs and improve performance. In support of the Vice President's request, and to reflect his continuing interest in ensuring the efficiency of NRC's operations, the Chairman, NRC, established an NPR-II Steering Committee to recommend additional opportunities for organizational improvement. As an adjunct to this effort, the Steering Committee asked the Office of the Inspector General (OIG) to provide insights on how the agency might achieve greater efficiencies.

We saw the Steering Committee's request as an opportunity to draw from a large body of work in previous and ongoing audits to develop this Special Evaluation Report, and identify where NRC might further improve its operating efficiency. For example, we have included views and observations obtained from licensee representatives and NRC staff during our survey of NRC's operating reactor inspection program. Also, we are continuing our audit work regarding consistency in NRC's operating reactor inspection program, and anticipate issuing additional reports on other aspects of the program.


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Background

In launching the commercial nuclear enterprise, Congress envisioned the need for a comprehensive regulatory body to oversee possibly hundreds of nuclear power plants that would provide a major portion of the nation's electrical energy demands. The first step in this process was the establishment of the Atomic Energy Commission (AEC) in 1954. In 1974 Congress decided to abolish AEC and transfer its regulatory functions to NRC. The new agency continued the headquarters/regional structure established under the AEC. In April 1994, NRC consolidated two adjacent regional offices, and established a smaller field office to support inspection activities.

Today's nuclear industry does not reflect that which was envisioned when Congress decided to support the commercialization of nuclear power. When NRC was created, the nuclear industry anticipated constructing more than twice the number of plants that now exist. However, no new plants have been ordered since 1979. Consequently, there are 107 units currently operating that supply about 20 percent of the nation's electrical demand. In addition to regulating commercial nuclear power plants, NRC is responsible for overseeing a wide range of functions, such as medical and industrial uses of nuclear material. The agency employs about 3,200 technicians, program managers, and support staff to accomplish this mission; about two-thirds of the staff are located at NRC headquarters and the rest are disbursed among the agency's regional offices.

In light of the nuclear power industry's static growth, we believe now is the opportune time for the Steering Committee to re-examine NRC's headquarters/regional office structure. Such an effort has the potential for identifying significant savings through eliminating duplicate functions and management layers; it could also alleviate a source of criticism regarding field operations -- that of inconsistent interpretation and application of regulations by NRC staff at nuclear power plants.


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Eliminating Duplicate Headquarters/Regional Office Functions and Management Layers Can Reduce Operating Costs

NRC has established operating units in headquarters and each regional office that may be duplicative and increase NRC's operating costs. We suggest that the Steering Committee determine whether potential efficiencies and savings could be realized by consolidating many regional office functions at headquarters.


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Eliminating Duplication

Headquarters has an extensive support organization that includes the Office of General Counsel, Public Affairs, State Liaison, Office of Enforcement, and the Office of Investigations. Regional offices have units, with a combined total of about 60 positions, that mirror these functions. For example, a typical regional office includes a Regional Counsel, Public Affairs staff, a State Liaison Officer, a State Agreements Officer, an Office of Investigations Field Office, and either an Enforcement and Investigations Coordination Staff or an Enforcement Officer. We believe the potential exists for NRC to significantly reduce operating costs by consolidating many, if not all, of these functions at headquarters.

NRC also has an extensive administrative support system. Headquarters devotes about 180 positions for the Office of Administration. Collectively, there are about 120 staff positions in regional offices that perform similar functions; the number of administrative staff positions at each regional office varies from 27 to 38. We believe current advances in telecommunication technology may make it more efficient for headquarters to perform many of the essentially identical administrative functions currently performed in regional offices. For example, the Office of Administration could coordinate Freedom of Information requests, or the Office of the Controller could be solely responsible for agency-wide budget matters.

NRC headquarters have reactor project directorates which include a project director and support staff for each operating nuclear power plant. Regional offices also have Division of Reactor Projects to supervise resident inspectors and monitor other inspection activities. While the headquarters and regional projects organizations have somewhat different responsibilities, certain efficiencies may be realized by consolidating these functions in headquarters.


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Reducing Management Layers

Our work suggests the headquarters/field management structure is one of the more visible targets of opportunity to improve NRC operations. Under NRC's current management structure, Regional Administrators and headquarters program office Directors, such as the Office of Nuclear Reactor Regulation (NRR) and the Office of Nuclear Material Safety & Safeguards (NMSS), report directly to the Office of the Executive Director for Operations (EDO). While NRR and NMSS are responsible for developing policies and procedures that regional offices are to follow when conducting inspections, regional offices have discretion in directing certain aspects of the inspection program.

NRC's regional office structure totals about 1,000 staff, including about 500 inspectors who report through three regional office management layers. The top two layers consist of about 30 Senior Executive Service positions that somewhat mirror headquarter program office divisions; the third layer includes about 70 positions at the GG-15 Branch Chief level.

Recent inspection program proposals indicate the agency may be moving toward centralizing certain components of the reactor inspection program. For example, NRR is considering shifting responsibility for physical security inspections to a newly created headquarters branch; responsibility for other types of inspections may be moved to NRR in the near future. One senior NRR official told us he believes that within 10 years, all regional inspection functions could be shifted to headquarters, thereby significantly reducing or eliminating the need for NRC to retain the regional office structure. Since the agency appears to be moving toward centralized inspections in some areas, we encourage the EDO to evaluate the merits of further inspection program consolidation to headquarters.


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Consolidated Management Could Also Reduce Program Inconsistency

NRC's existing management structure can foster inconsistencies in the staff's interpretation and application of regulatory requirements at nuclear power plants. We believe reductions in management layers, and the possible relocation of some regional inspection programs to headquarters, could help alleviate many of the problems that currently stem from inconsistent regional office implementation of various inspection and enforcement activities.

Our work also suggests the discretion afforded regional offices may be a major cause for inconsistencies noted in the reactor inspection program. For example, the Nuclear Energy Institute has cited inconsistent interpretation and application of regulatory requirements across regions as a fundamental complaint about NRC's regulation of the industry. Our interviews with licensee and NRC staff generally support this contention. We learned that each NRC region has its own "personality" that can influence how certain aspects of the inspection program are implemented and regulatory issues are addressed.

We also noted differences between NRR guidance and regional office implementation of the reactor inspection program. For example, in 1987 NRR emphasized that inspections should be "performance-based" rather than "compliance-based". Our preliminary observations indicate, however, that inspectors may not be adequately trained in this area, and need better guidance in how to conduct a performance-based inspection. Therefore, inspectors frequently assess and cite violations based on whether utilities are complying with operating procedures, regardless of whether the non-compliance issue cited has a nexus to plant safety.


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Organizational Alternatives

NRC should seize upon this unique opportunity to enhance operational efficiency. We believe the agency may be able to reduce operating costs and improve its effectiveness by consolidating certain functions in headquarters. Although not all-encompassing, we suggest the Executive Director for Operations explore the merits of adopting the following alternatives. We recognize some, such as eliminating regional offices, may seem severe; however, they may be appropriate in today's austere budget environment.

  • Due to improved telecommunication capabilities, consolidate non-inspection or administrative regional office functions to headquarters.

  • Consolidate responsibility and staff for regional office functions, such as public affairs, regional counsels, investigations, and enforcement, in headquarters.

  • Realign inspection program management responsibility so that inspectors and regional office branch chiefs report directly to NRR and NMSS headquarters program offices. By shifting program responsibility to headquarters, this option would retain a field inspection presence, and eliminate up to two regional office management layers.

  • Expand on current initiatives by creating headquarters program office units that would be responsible for conducting inspections previously performed by region-based inspectors. This could (1) provide greater flexibility in allocating inspection resources, (2) help maintain a "critical mass" of inspection disciplines, (3) enable headquarters to better direct certain types of inspections needed at targeted licensees and (4) allow inspectors to bring a "fresh eyes" approach to plants and locations they had not previously inspected. NRR has promoted the "fresh eyes" approach in its Integrated Performance Assessment Program.

  • Reduce regional office size to field offices. The primary purpose of field offices would be to oversee resident and materials inspectors and provide limited administrative support; they would not have region-based inspectors. This option would eliminate regional management positions and place inspection programs directly under program office control. It would also have the same advantages listed in the previous option regarding region-based inspectors.

  • Consider eliminating some or all regional offices based on geographic proximity or services provided to licensees.


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Major Contributors to this Report

William D. McDowell, Audit Manager
Lee Higgins, Senior Management Analyst
Elmo Allen, Senior Auditor

Page Last Reviewed/Updated Thursday, March 29, 2012