OIG/97E-19 - Valuable Lessons Can Be Learned from the Regulatory Transition of the Gaseous Diffusion Plants
OIG/97E-19 - Valuable Lessons Can Be Learned from the Regulatory Transition of the Gaseous Diffusion Plants
- Report Synopsis
- Objectives, Scope, and Methodology
- Major Contributors to this Report
- Glossary: Office of the Inspector General Products
Office of the Inspector General
U.S. Nuclear Regulatory Commission
Washington, D.C. 20555-0001
October 20, 1997
|Memorandum To:||L. Joseph Callan|
Executive Director for Operations
|From:||Thomas J. Barchi|
Assistant Inspector General for Audits
|Subject:||Valuable Lessons Can Be Learned From The Regulatory Transition of The Gaseous Diffusion Plants|
Attached is the Office of the Inspector General's special evaluation of NRC's program for regulation of the two gaseous diffusion plants operated by the United States Enrichment Corporation. This special evaluation contains our observations on the agency's program.
We briefed senior officials in the Office of Nuclear Material Safety and Safeguards following our review and they agreed with our observations. Because this special evaluation does not contain recommendations, we did not solicit agency comments.
This special evaluation provides the results of the Office of the Inspector General's (OIG) review of the U.S. Nuclear Regulatory Commission's (NRC) program for regulating the two gaseous diffusion plants (GDP) owned by the Department of Energy (DOE) and operated by the United States Enrichment Corporation (USEC). The objectives of our review were to gain an understanding of (1) NRC's processes and management controls for regulating the plants, and (2) NRC's working relationships with other involved federal agencies. The scope of the review included the current status of NRC's program in addition to transition issues identified that would be applicable to future, external regulation of DOE facilities.
Unlike fossil fuels, which can be burned in virtually the same form in which they exist in nature, uranium must undergo enrichment to become an efficient fuel for nuclear power reactors. There are various enrichment techniques but gaseous diffusion is the only process that has been used in the United States. The Energy Policy Act of 1992 (the Act) established USEC for the purpose of operating the two GDPs. In September 1994, also as directed by the Act, NRC promulgated standards for the two GDPs, establishing the framework for NRC to assume regulatory authority over the GDPs. On March 3, 1997, NRC assumed regulatory authority over the plants.
In October 1997, NRC and DOE plan to complete an agreement that details a pilot plan to test the external regulation of other DOE facilities. Depending on the results of the pilot program, NRC may eventually be directed by Congress to regulate hundreds of DOE facilities. Our observations may benefit that effort.
We found that senior plant officials believe NRC's consistency of regulation and its expectation of adherence to operating commitments are creating safer and improved operations at the GDPs. We also found that NRC's inspection approach and its inspection staff are highly regarded and are key to NRC's regulatory consistency. In addition, based on our limited review, we identified several areas where the transition of oversight for the GDPs can provide valuable lessons that may also be applicable to NRC's possible future external regulation of DOE facilities.
When we discussed the results of our review with NRC officials, they informed us that staff had recently been instructed to conduct a lessons learned review of the transition of regulatory authority over the GDPs. NRC's review is projected to be completed about the end of December 1997.
This special evaluation provides the results of the Office of the Inspector General's (OIG) review of the U.S. Nuclear Regulatory Commission's (NRC) program for regulating the two gaseous diffusion plants (GDP) owned by the Department of Energy (DOE) and operated by the United States Enrichment Corporation (USEC). NRC is currently working toward implementation of a pilot program that will have NRC providing regulatory oversight for additional, selected DOE facilities. Our observations may benefit that effort. This work was included in OIG's fiscal year (FY) 1997 Annual Plan.
Unlike fossil fuels, which can be burned in virtually the same form in which they exist in nature, uranium must undergo a series of changes to become an efficient fuel for nuclear power reactors. Enrichment is the process used to increase the percentage of uranium-235 (U-235) in nuclear fuel. Natural uranium contains only about 0.7 percent U-235 but most commercial nuclear power plants operating today are designed to use uranium enriched to approximately 3 percent by weight as nuclear fuel. There are various enrichment techniques but gaseous diffusion is the only process that has been used in the United States. There are two gaseous diffusion plants operating today, located near Portsmouth, Ohio, and Paducah, Kentucky. These plants have been operating safely under DOE for about 40 years.
The Energy Policy Act of 1992 (the Act) amended the Atomic Energy Act of 1954 to establish USEC for the purpose of operating the two uranium enrichment plants owned and previously operated by DOE. Under the Act, USEC became a wholly-owned government corporation and the exclusive marketing agent of enriched uranium for the government. USEC assumed operation of the plants on July 1, 1993. The Act mandated USEC to privatize, if possible, and also provided that NRC was to promulgate standards(1) for the two operating GDPs within two years of its enactment. In September 1994, NRC issued 10 CFR Part 76, Certification of Gaseous Diffusion Plants, which established the certification(2) process and the standards for the two plants. DOE continues to conduct some operations at the sites that do not fall under NRC regulatory authority.
In April 1995, USEC submitted applications for certification which were rejected by NRC because they lacked adequate information to determine compliance with safety regulations. After USEC submitted revised applications, NRC issued Certificates of Compliance, which include compliance plan(3) approval, for each plant. The initial certificates, issued in November 1996, are for a period of about two years with expiration dates of December 31, 1998. On March 3, 1997, following a transition period that allowed USEC to complete procedural revisions and training, NRC assumed regulatory authority over the plants. DOE retains ownership of the facilities and will be responsible for the eventual decommissioning of the sites. In April 1996, the USEC Privatization Act was signed into law with provisions intended to make USEC more attractive to a potential private-sector buyer. USEC is currently pursuing privatization through an initial public offering or a merger/acquisition.
In October 1997, NRC and DOE plan to complete an agreement that details a pilot plan to test the external regulation of other DOE facilities. The pilot program will use "simulated regulation" to test "a facility and its standards, requirements, procedures, practices, and activities against the standards that NRC believes would be appropriate to ensure safety at that pilot facility." Depending on the results of the pilot program, NRC may eventually be directed by Congress to regulate hundreds of DOE facilities.
We focused our work on two functional activities involved in the transition of regulatory authority and in NRC's program to provide oversight of the GDPs: licensing activities, including regulations, application review, and processing of amendments; and inspection and inspection-related training and enforcement activity. We found that senior plant officials believe NRC's consistency of regulation and its expectation of adherence to operating commitments are creating safer and improved operations at the GDPs. We also found that NRC's inspection approach and its inspection staff are highly regarded and are key to NRC's regulatory consistency.
In addition, based on our limited review, we identified several areas where the transition of oversight for the GDPs can provide valuable lessons that may also be applicable to NRC's possible future external regulation of DOE facilities: (1) certification and/or licensing activities, (2) regulatory transition, (3) inspection program, and (4) evaluation and report writing. The balance of this special evaluation discusses those observations.
I. Certification and/or Licensing Activities
NRC can use the GDP transition process to identify those areas where regulatory guidance is critical to effective and efficient licensing and oversight of other potential DOE facilities that the agency may ultimately regulate. For example,
A Standard Review Plan (SRP)(4) was not ready for the initial certification application. As a result, and in spite of meetings among the parties, USEC was not clear about what it should submit to NRC. NRC and USEC officials agreed that this caused difficulties and delays in the application review and was contributory to the rejection of the initial application. USEC plans to complete its recertification application by March 1998. Although the SRP would also be helpful to USEC for preparing that application, the SRP is not expected to be completed until December 1997. As such, a USEC licensing official stated the SRP will essentially be useful only for NRC staff review of the application.
The agency should also review its need and ability to provide timely SRPs and guidance in other, related areas such as AVLIS(5), backfit, and 10 CFR Part 95 -Security Facility Approval and Safeguarding of National Security Information and Restricted Data. For instance, Office of Nuclear Material Safety and Safeguards (NMSS) officials believe USEC will begin submitting AVLIS licensing material to NRC in FY 1998 but are uncertain whether that SRP can be completed when needed.
10 CFR Part 76 could be improved by providing some clarification. For example, a USEC licensing official felt that Part 76 could: (1) more clearly describe the types of programs, associated reviews, and threshold criteria for making changes to the certificate, and (2) provide clarification similar to that for reactors in 10 CFR Part 100 - Reactor Site Criteria - describing important terms such as "exclusion area" and "low population zone." A review of Part 76 activity should provide insights that would be useful for the revision, now underway, of 10 CFR Part 70 - Domestic Licensing of Special Nuclear Material - which will also apply to any future regulation of DOE facilities.
It is important to consider and understand who will be the licensee at other DOE facilities. For example, will NRC license DOE and/or a DOE contractor that is operating a DOE facility? In addition, other questions may arise. For instance, if DOE is a licensee at a facility, will NRC want a senior-level DOE presence on-site to ensure licensee involvement in the management of the facility? NRC can use the USEC certification to provide insight into similar decisions in the future.
II. Regulatory Transition
Identifying those parts of the transition carried out by USEC will allow NRC to identify areas that need to be addressed by another party in any future transitions. For example,
NRC should evaluate its ability to develop or arrange technical training needed for regulating future DOE facilities. For the GDPs, NRC staff obtained much of this training from USEC. NRC must ensure that it will be able to obtain necessary technical training where an entity such as USEC does not exist.
The Regulatory Oversight Agreement (ROA)(6) between DOE and USEC did not appear to work well. USEC's operating contractor, in particular, felt that DOE was not effective in simulating an "NRC-type" regulatory role. For instance, DOE retained consultants to assist in its effort. However, even those individuals did not agree on how "NRC-type" regulation should be performed. If any interim regulatory arrangement similar to the ROA will be used in possible future DOE facility transitions, NRC and DOE should determine how to improve that activity.
USEC acted as an intermediary agency to coordinate the transition of regulatory authority, especially during the phase-in of "NRC-type" regulation (the ROA). USEC also voluntarily prepared analytical matrices of the relationship between NRC's Technical Safety Requirements and DOE's Operational Safety Requirements in order to aid in the evaluation of the technical operating basis of the plants. Such USEC activities should be considered in future transitions.
The interaction between NRC and DOE during the GDP transition also provides an excellent basis for examining how any future transitions can be improved. For example,
DOE and NRC executed several memorandums of understanding (MOU) prior to NRC assuming jurisdiction over the GDPs. One MOU covered cooperation between the two agencies prior to NRC assuming oversight, and one covered security responsibilities after NRC assumed oversight. However, the MOU describing various responsibilities with respect to continued cooperation between NRC and DOE, and setting forth the framework for coordination of issues after NRC assumed oversight had not been completed as of September 1997, long after the certification was completed and after NRC had assumed jurisdiction over the plants. Whether the delay had any substantive effect is not clear. However, identifying the difficulties in producing such agreements for the GDPs can provide direction for improving the process in any future endeavors.
Issues related to the determination of NRC and DOE regulatory boundaries will need to be addressed. For example, there were operating complications caused by the presence of both High Enriched Uranium, regulated by DOE, and Low Enriched Uranium, regulated by NRC, at the Portsmouth GDP. There may also be other regulatory questions concerning the impact of non-NRC-regulated lease holders operating on DOE sites.
NRC's transition meetings and communications with the employees and the unions at the GDPs was a positive factor in successful transition to NRC regulatory oversight. Review of these communication efforts would provide a basis for successfully accomplishing this task in any future transitions.
The agency may be able to make improvements by reviewing financial information. For example,
Evaluation of NRC's costs for completing transition activities for the GDPs would provide baseline information for future efforts and might indicate areas where performance could be improved. For instance, one of the objectives of the DOE pilot program is to determine the cost of NRC regulation in order to extrapolate that cost to regulation of any additional DOE facilities.
At the time of certification, the funding arrangement for special nuclear materials accounting with the Nuclear Materials Management and Safeguards System (NMMSS) had not been finalized. Fuel cycle facilities' obligations to this fund are normally included in their annual fees and are a part of NRC's annual appropriation. However, USEC has been paying this money directly to NMMSS or through DOE to NMMSS and the funds were not included in NRC's FY 1997 or FY 1998 budget requests. NRC should ensure that questions such as this are addressed prior to licensing any future facilities.
III. Inspection Program
We believe NRC's inspection program, inspection personnel, and enforcement actions are NRC's front-line effort for ensuring effective regulation. While NRC's inspection program is highly regarded by plant officials, a few improvements might be made that would also apply to future NRC regulation of DOE facilities. For example,
The core inspection plan for the GDPs will not be established until about March 1998 although NRC inspection personnel have been on site at the GDPs since 1994. The agency could use this experience to identify methods it can use to focus a risk-based inspection program earlier in the transition process.
NRC's Division of Facilities and Security (DFS) performed an inspection at the Paducah facility. This inspection was the division's first of a licensee and DFS personnel lacked some needed inspection and enforcement training. As a result, Region III personnel had to provide additional assistance to that effort. The agency should ensure that the inspection program is consistent, and that staff who perform inspections meet certain minimum qualifications.
IV. Evaluation and Report Writing
Performing a lessons learned review of the GDP transition effort will provide valuable guidance for use during the DOE pilot program. For example, such a report could aid in establishing format and content standards for future lessons learned reports.
As we noted earlier, senior plant officials believe NRC's consistency of regulation and its expectation of adherence to operating commitments are creating safer and improved operations at the GDPs. We also found that NRC's inspection approach and its inspection staff are highly regarded and are key to NRC's regulatory consistency. In addition, based on our limited review, we identified several areas where the transition of oversight for the GDPs can provide valuable lessons that may also be applicable to NRC's possible future external regulation of DOE facilities.
When we discussed the results of our review with NRC officials, they informed us that NMSS staff had recently been instructed to conduct a lessons learned review of the transition of regulatory authority over the GDPs. NRC's review is projected to be completed about the end of December 1997.
Objectives, Scope, and Methodology
The objectives of our review were to gain an understanding of (1) the U.S. Nuclear Regulatory Commission's (NRC) processes and management controls for regulating the two gaseous diffusion plants (GDP), and (2) NRC's working relationships with other involved federal agencies.
The scope of the review included the current status of NRC's program in addition to transition issues identified that would be applicable to future, external regulation of Department of Energy (DOE) facilities. Our review also encompassed the working relationships between NRC and (1) DOE, (2) the United States Enrichment Corporation (USEC), (3) the Occupational Safety and Health Administration, and (4) the U.S. Environmental Protection Agency.
To accomplish our objectives, we interviewed NRC officials in the Division of Fuel Cycle Safety and Safeguards, Office of Nuclear Material Safety and Safeguards, and in Region III. We visited the GDP located near Portsmouth, Ohio, to gain an understanding of the plant's operations and of NRC's on-site activities. At the plant, we interviewed NRC's senior resident inspector, officials from USEC and USEC's operating contractor, Lockheed Martin Utility Services, and a senior DOE official. We also reviewed program office mission and goal statements, policies and procedures, budgets, and other related documentation.
We conducted our review from July through September 1997.
Major Contributors to this Report
William D. McDowell
Robert W. Moody
Glossary: Office of the Inspector General Products
1. Investigative Report - White Cover
An Investigative Report documents pertinent facts of a case and describes available evidence relevant to allegations against individuals, including aspects of an allegation not substantiated. Investigative reports do not recommend disciplinary action against individual employees. Investigative reports are sensitive documents and contain information subject to the Privacy Act restrictions. Reports are given to officials and managers who have a need to know in order to properly determine whether administrative action is warranted. The agency is expected to advise the OIG within 90 days of receiving the investigative report as to what disciplinary or other action has been taken in response to investigative report findings.
2. Event Inquiry - Green Cover
The Event Inquiry is an investigative product that documents the examination of events or agency actions that do not focus specifically on individual misconduct. These reports identify institutional weaknesses that led to or allowed a problem to occur. The agency is requested to advise the OIG of managerial initiatives taken in response to issues identified in these reports but tracking its recommendations is not required.
3. Management Implications Report (MIR) - Memorandum
MIRs provide a "ROOT CAUSE" analysis sufficient for managers to facilitate correction of problems and to avoid similar issues in the future. Agency tracking of recommendations is not required.
4. Audit Report - Blue Cover
An Audit Report is the documentation of the review, recommendations, and findings resulting from an objective assessment of a program, function, or activity. Audits follow a defined procedure that allows for agency review and comment on draft audit reports. The audit results are also reported in the OIG's "Semiannual Report" to the Congress. Tracking of audit report recommendations and agency response is required.
5. Special Evaluation Report - Burgundy Cover
A Special Evaluation Report documents the results of short-term, limited assessments. It provides an initial, quick response to a question or issue, and data to determine whether an in-depth independent audit should be planned. Agency tracking of recommendations is not required.
6. Regulatory Commentary - Brown Cover
Regulatory Commentary is the review of existing and proposed legislation, regulations, and policies so as to assist the agency in preventing and detecting fraud, waste, and abuse in programs and operations. Commentaries cite the IG Act as authority for the review, state the specific law, regulation or policy examined, pertinent background information considered and identifies OIG concerns, observations, and objections. Significant observations regarding action or inaction by the agency are reported in the OIG Semiannual Report to Congress. Each report indicates whether a response is required.
1. These standards include procedural requirements, generally applicable NRC health and safety standards, technical safety requirements, and safeguards and security requirements specific to the areas of the GDPs leased to USEC.
2. The Act directed NRC to establish and implement a certification process under which the two GDPs would be certified by NRC for compliance with the standards. For areas where plant operations were not yet in compliance, the Act provided for a compliance plan prepared by DOE. A certification process was used in order to allow for compliance plans and continued operations that might not be allowed under a licensing action.
3. The compliance plans, prepared by DOE and submitted by USEC, describe how and when the plants will be brought into compliance with NRC's requirements in instances where compliance was lacking at the time of certification. The compliance plans also set forth the safety and safeguards basis, including compensatory actions, that justifies continued operation until compliance is achieved. USEC reviewed the plans which were then submitted to and approved by NRC.
4. SRPs are prepared to provide guidance to staff reviewers in performing reviews of, among other things, applications for operating various types of facilities. The principle purpose of an SRP is to ensure the quality and uniformity of such reviews. It is also the intent of SRPs to make information about regulatory matters widely available and to improve communication between NRC and industry, thereby increasing understanding of the review process. In actuality, both an SRP and a standard format and content guide (which defines the topics and level of detail an applicant should cover in an application) should be available. The Office of Nuclear Material Safety and Safeguards intends to combine these two documents so we have simply referred to SRPs here.
5. USEC is currently developing AVLIS, atomic vapor laser isotope separation technology, as a successor to the gaseous diffusion process.
6. The ROA was an agreement between DOE and USEC that provided, whenever possible, that DOE would attempt to facilitate the transition to compliance with requirements likely to be imposed by NRC at the end of an interim transition period, when NRC would assume regulatory jurisdiction.