Fiscal Year 1999 Authorization for the United States Nuclear Regulatory Commission

May 14, 1998

U.S. Nuclear Regulatory Commission
Fiscal Year 1999 Authorization Testimony


Mr. Chairman and members of the Committee, the Commission is pleased to appear before you to discuss the authorization testimony for the Nuclear Regulatory Commission (NRC) for Fiscal Year (FY) 1999, as well as the legislative proposals from our agency. I would like to begin by providing the Committee with a brief summary of topics that are of particular interest.

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In the broadest sense, the mission of the NRC in FY 1999 remains the same as when 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. Over the past several years, the focus of the Commission has been a careful re-evaluation of the NRC approach in accomplishing this mission, making changes where necessary to reaffirm nuclear safety as our highest priority, to maximize NRC regulatory effectiveness and efficiency, and to position the agency for the future.

In our commitment to provide effective and efficient regulation, a key element has been our restructuring of the NRC organization. We have established separate organizations for the NRC Chief Financial Officer (CFO) and Chief Information Officer (CIO). Together with the Executive Director for Operations (EDO), the CFO and the CIO make up the Executive Council, thus providing an integrated framework for agency decision-making that incorporates a sound regulatory approach, rooted in science and technology, astute financial judgment, and intelligent information management. In addition, the organization under the EDO has been realigned in order to conform the organization strategically to the spectrum of Commission priorities and goals--which, in turn, improves our ability to plan effectively, to implement efficiently, and as a bottom line, to better serve the needs of our stakeholders.

A second critical factor in this effort to improve overall agency performance has been the application of business-like principles to implement sound management principles--sensible, reliable processes for defining our goals, developing cost-effective strategies to achieve those goals, determining the resources needed to implement these strategies, and measuring and assessing our own performance. One significant achievement in this regard is our recent implementation of an integrated planning, budgeting, and performance measurement system, a system designed around these principles, in which "dollars follow programs, and programs follow policy." The foundation for developing such a system was the completion of the NRC Strategic Assessment and Rebaselining initiative, an agency-wide effort that we initiated in August 1995, shortly after I became the NRC Chairman. Thus far, the Commission has used this integrated system to produce the NRC FY 1997-2002 Strategic Plan and the FY 1999 Performance Plan. In addition to meeting the requirements of the Government Performance and Results Act, these plans constitute a sensible, reliable framework that will guide future decision-making and ensure effectiveness as the NRC seeks to accomplish its mission. We are firmly committed to managing for results, and I have encouraged every NRC employee to become familiar with these plans.

The Commission expects to further improve its business culture through the NRC Regulatory Excellence initiative. This effort outlines 12 active strategies that will benefit our various stakeholders by maintaining our focus on safety while developing better requirements and more efficient regulatory processes. Consistent with these regulatory excellence strategies, we are taking specific steps to make our regulatory approach--both for nuclear reactor safety and nuclear materials safety--more risk-informed and, where appropriate, more performance-based.

In order to further improve our effectiveness, efficient tools must be in place to process, store, and retrieve critical information. In FY 1999, we will be implementing a new Agency-Wide Document Access and Management System (ADAMS) that will improve significantly our ability to manage the NRC document repository. This system will allow NRC licensees to submit documents electronically, provide electronic storage of all new documents in one location, allow electronic routing, concurrence, and document distribution, and permit full-text document retrieval from each NRC employee work-station. We also have begun developing a resource information management system to support our integrated planning, budgeting, and performance management process, thereby eliminating the inefficient and unnecessary operation and maintenance of many stand-alone, duplicative systems. In addition, we have taken careful measures to ensure sound solutions to the Year 2000 computer challenges faced by both the NRC and our licensees.

In the area of nuclear power reactor oversight, the number of operating reactors has declined from 109 to 104, and 18 reactors are either awaiting decommissioning in a so-called SAFSTOR state or actively being decommissioned. In the past year, we have made significant strides in improving our approach to the oversight of operating reactors, including inspection efforts to ensure that the design issues that surfaced at Millstone are not present at other nuclear plants. Regarding the Millstone facilities specifically, the Commission and the NRC staff have directed a vigorous degree of oversight toward ensuring that the facilities conform to applicable NRC regulations and license conditions, and toward ensuring that the fundamental issues--namely, the widespread design control weaknesses, the inappropriate treatment of employee concerns and employee discrimination matters, and overall inadequate corrective action processes--have been resolved.

In addition, the Commission has been directing considerable focus toward the need for improvement at Commonwealth Edison facilities, based on the inability of the licensee to establish lasting and effective programs that result in sustained performance improvement.

The NRC also is conducting a broad-scope, integrated review of reactor-related assessment processes to improve the objectivity, effectiveness, and efficiency with which we assess the safety performance of operating reactors. In the area of license renewal, we have focused on ensuring that our processes for technical and adjudicatory review are both streamlined and effective, and we have increased our efforts to conduct technical and environmental reviews in anticipation of two and possibly a third license renewal application in the near future.

In the area of allegation follow-up, the NRC has taken aggressive action to improve its overall 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 alleger communications, 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 are putting into place specific measures to correct 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 been pursuing a number of measures that would enhance the joint agency treatment of Section 211 complaints.

In the critical area of high-level radioactive waste management, the NRC is working to resolve ten technical issues considered most important to repository safety performance. We also are preparing to review the DOE Viability Assessment (scheduled to be submitted in FY99), providing feedback to the DOE on its strategy for preparing a license application (scheduled to be submitted in 2002), and developing an NRC Standard Review Plan for reviewing such an application for the proposed repository at Yucca Mountain. We are confident that the NRC 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, provided (1) that the DOE submits a high-quality application, (2) that NRC requirements are met, (3) that, in the face of budget constraints, the NRC is permitted to maintain its technical capability for licensing a geologic repository, and (4) that timely, reasonable, and implementable radiological standards are developed for the repository.

Several areas of NRC change 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 hoping to privatize the operation, and to have the NRC license the private enterprise. The NRC has been providing technical assistance and support in the initial phase of this project, including reviews of contractor proposals and the development of a regulatory program, to ensure a smooth transition into a later phase of the project, in which tank waste processing would become a commercial venture. We also have approved a license amendment for the use of a tritium-producing lead test assembly at the Watts Bar Unit 1, and we will continue to work with the DOE in their decision on whether to use a commercial light-water reactor for tritium production. 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 mixed-oxide fuel in existing commercial reactors.

In the international arena, in order to leverage our resources while learning from the experience of others, the NRC continues its cooperative research efforts with organizations in more than 25 countries, including the republics of the former Soviet Union. The NRC also continues to cooperate and/or participate actively with other national regulatory authorities, as well as in bilateral and multilateral efforts, to improve global nuclear safety. These efforts include working with the U.S. Agency for International Development (under the Freedom Support Act and the Foreign Assistance Act of 1961), supporting the ratification of the Convention on Nuclear Safety, serving on the Gore-Chernomyrdin Commission and the U.S.-South Africa Binational Commission, and supporting the formation of the International Nuclear Regulators Association (INRA)--as well as serving as the first INRA chair.

The Commission has submitted a number of legislative proposals for the consideration of the 105th Congress. Specifically, these proposals concern: (1) the continuation of Commissioner service; (2) carrying of firearms by certain NRC licensee employees; (3) the unauthorized introduction of dangerous weapons at NRC licensee facilities; (4) the sabotage of production, utilization, or waste storage facilities; (5) general NRC gift acceptance authority; and (6) the NRC office location for service of process and papers.

As a final introductory point, I would note that critics of the NRC have stated that the agency operates from a continually rising set of expectations for industry performance. It is true that, in the past several years, we have been ambitious in refining the NRC regulatory approach--in keeping with the focus on our primary health and safety mission, the desire to improve our effectiveness as regulators, and the need to position the agency for the future. It is also true that, as part of those efforts, we have discovered certain areas requiring additional emphasis. For example, lessons learned at Millstone and other facilities revealed an industry-wide under-emphasis on maintaining the reactor design basis, and we have sought to correct that balance. However, the overarching theme of many of our changes has been to improve the efficiency and effectiveness of NRC regulatory functions: to develop more objective performance criteria, to improve the scrutability and predictability of our processes for assessing licensee performance, to become more risk-informed in all aspects of our regulatory oversight, and to become more cost-effective in our planning and budgeting processes. In the view of the Commission, while these efforts certainly are intended to enhance public health and safety, they have not resulted in arbitrary increases in our expectations for licensee performance. In fact, we believe strongly that the changes we have made and are making will prove, in the long run, to improve the nuclear regulatory environment for all our stakeholders.

I would like to thank all the members of this Committee for the support they consistently provide to the Nuclear Regulatory Commission. In particular, Mr. Chairman, I would like to thank you for the substantial contribution you have made toward furthering the accomplishment of the NRC mission in protecting public health and safety, and on behalf of the entire Commission, I offer you my heartfelt congratulations on a long and distinguished career of public service, and I wish you continued success in all of your future endeavors.

The discussions that follow provide the Committee with further details on the activities that I have outlined in this summary.

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Strategic Organizational, Planning, And Regulatory Excellence Activities

Management and Organizational Changes

Since the last NRC hearing before this Committee, in September 1996, we have made a great deal of progress toward our commitment to provide effective and efficient regulation. One area of achievement has been in restructuring the NRC organization. The new management and organizational structure, which has been in effect now for over a year, has strengthened the NRC's ability to perform its health and safety mission effectively. A key feature of this realignment was the establishment of separate organizations for the NRC Chief Financial Officer (CFO) and Chief Information Officer (CIO). Previously, the CIO- and CFO-related functions reported to (or were included within the office of) the Executive Director for Operations (EDO). The Commission believes that this new organization has allowed the EDO to concentrate his efforts on the regulatory operations of the agency. The CFO focuses on agency-wide planning and on resource-related policies, operations, and systems. The CIO is responsible for the agency-wide approach to information management and the strategic use of information technology as a management tool across a spectrum of agency activities.

This structure has allowed the NRC to elevate the level of management attention in specific areas of need. In addition, we created an Executive Council, comprised of the EDO, CIO, and CFO (and chaired by the EDO), to ensure that management decisions are properly coordinated to respond to regulatory program needs. Working as a unit, the three members of the Executive Council provide an integrated framework for agency decision-making that incorporates a sound approach to regulation, rooted in science and technology, astute financial judgment, and intelligent information management.

The new structure also realigned the NRC staff offices that report to the EDO, under three deputy EDOs: a deputy EDO for Regulatory Programs, who forms a single point of oversight for the agency line organization offices and regional offices; a deputy EDO for Regulatory Effectiveness, who provides a high-level focal point for program evaluation independent of the line organizations; and the deputy EDO for Management Services, who provides a high-level focus on optimizing cost-effectiveness in our resource, personnel, and support needs. Together with the restructured CIO and CFO functions, this realignment matches the organization strategically to the spectrum of Commission priorities and goals--which, in turn, improves our ability to plan effectively, to implement efficiently, and as a bottom line, to better serve the needs of our stakeholders.

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Planning, Budgeting and Performance Management Process

In applying business-like principles to its regulatory processes, the Commission goal is to ensure that the NRC is both effective and efficient in implementing its mission. Key to reaching this goal has been the completion of the NRC Strategic Assessment and Rebaselining initiative discussed in the NRC statement in 1996. This internal effort was initiated to provide a solid, reliable foundation on which to base a strategic framework for future decision-making, in addition to supporting the NRC implementation of the Government Performance and Results Act and other Congressional and Administration initiatives. We have used this foundation as the basis for developing the NRC FY 1997-2002 Strategic Plan, the FY 1999 Performance Plan, the NRC Regulatory Excellence initiative, and program-level operating plans.

Few areas are more crucial to shaping the future of the NRC than the development and implementation of a fully integrated, comprehensive program and budget planning process. We have developed and are implementing such a process, and we are confident that, applied in a disciplined manner, it will enable the NRC to meet the demands of a results-driven Federal environment. Within each cycle, the first phase of the process is to establish the goals and objectives for the agency and to decide how it will meet those goals and objectives. These products make up the NRC Strategic Plan and Performance Plan. The second phase in the process is to determine the planned accomplishments and resources necessary to achieve those objectives. This will include the development of program-level operating plans. The final product of this phase is an agency budget that aligns resource allocations with NRC performance goals. With concrete goals and performance measures established, the NRC will track the degree to which the agency is achieving its objectives, as reflected in the NRC performance goals (found in the agency performance plan) and the planned accomplishments (found in the budget). Finally, the program-level operating plans used by each office will provide the specific means by which the office will contribute to the achievement of objectives, will be the primary work planning and execution tool, and will be the detailed means of tracking agency performance.

The final and perhaps the most critical component of this process is the assessment phase, which is important for two primary reasons. First, assessment is the primary vehicle by which the agency can capture key information from lessons learned about how the agency is performing so as to inform the next cycle. Second, a comprehensive assessment is necessary to compare the results of NRC performance, both positive and negative, to the established objectives. Thus, a central objective for the NRC is to incorporate rigorous self-assessment into every area of the organization. This objective will be achieved in four primary ways: regulatory excellence evaluations, annual program reviews, self-assessments, and internal and external audits.

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Enhancing our Effectiveness as Regulators

The NRC has embarked on a wide range of efforts to increase the effectiveness with which we perform our mission. Key to these improvements are three specific initiatives: first, our Regulatory Excellence initiative; second, the overall movement toward a regulatory approach that is risk-informed and, where appropriate, performance-based; and third, the cost-beneficial licensing program.

Regulatory Excellence Initiative

The NRC is in the process of finalizing an Excellence Plan aimed at achieving regulatory excellence in all NRC functions. This Excellence Plan has three goals: (1) to improve a manageable but broad range of NRC regulatory programs, rules, standards, and regulatory guidance; (2) to improve NRC processes, as well as NRC managerial and support functions, so as to enhance the efficiency and performance of the NRC staff; and (3) to create an environment that will promote enhanced effectiveness and efficiency in NRC activities, with the support of--and input from--our internal and external stakeholders.

The three excellence goals will be implemented through a set of 12 active strategies, which range from broad-scope evaluations of core functions--such as the reactor inspection program--to ensuring the efficacy of NRC processes and support functions, such as the extensive improvements to NRC information management systems that I will discuss later. Eleven of these strategies represent the most significant improvement initiatives currently being undertaken at the NRC. The remaining strategy is focused on developing and implementing a process for identifying future improvement initiatives. Specific plans are being finalized for each of these strategies describing the purpose, approach, criteria for measuring success, benefits, resources involved, and the involvement of our stakeholders. The implementation of these strategies will strengthen the NRC, make it more efficient and effective, and maintain our primary focus on safety while benefiting those we regulate through the development of better requirements, improved guidance, and a more efficient regulatory process.

Risk-Informed, Performance-Based Regulation

Consistent with regulatory excellence, we are implementing strategies to make 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). Areas in which a risk-informed approach has been used to enhance safety decision-making include improvements to NRC Senior Management Meeting assessments, consideration of risk evaluations during the NRC enforcement process, and the resolution of emergent technical issues (e.g., certain spent fuel pool issues) without the creation of new generic requirements. We also are continuing an aggressive program to provide related training in this area to technical staff and managers throughout the agency.

With respect to nuclear reactor safety, the NRC expects to complete important milestones in risk-informed regulation in FY99. The NRC staff has developed generic regulatory guidance, in the form of a regulatory guide and standard review plan, on the use of probabilistic risk assessment (PRA) findings and insights in support of licensee requests for changes to their licensing requirements. Pilot applications have approved graded quality assurance requirements and increased allowed outage times for equipment in Technical Specifications. Out of these pilots, application-specific regulatory guides and standard review plans are being developed and are under review by the Advisory Committee on Reactor Safeguards (ACRS). The NRC staff currently is developing a draft safety evaluation report for a risk-informed pilot in-service testing program. The NRC also has issued for public comment a draft regulatory guide and draft standard review plan on risk-informed in-service inspection.

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, performance-based approach to ensure the availability and reliability of key structures, systems, and components in power reactor facilities. We are continuing our review of existing regulations to identify additional opportunities in which our requirements can be made more risk-informed and, as appropriate, performance-based.

With respect to nuclear materials safety, we have used a variety of risk-informed, and, where appropriate, performance-based approaches to analyze our areas of responsibility, 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, 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.

As one application related to our oversight of nuclear materials licensees, NRC staff procedures were revised in early 1997 so that, for routine inspections, NRC inspectors now implement a more performance-based approach in reviewing licensee activities related to medical quality management programs. Inspectors verify that procedures have been developed to implement the quality management program, and that the licensee staff has been trained in using these procedures. However, the inspectors no longer routinely review and cite against internal licensee procedures and protocols for administering byproduct material for medical use. Reactive and misadministration-related inspections continue to receive the same level of regulatory attention.

Cost-Beneficial Licensing Actions and Other Regulatory Relief Initiatives

The NRC cost beneficial licensing action program was established in 1994 to increase agency responsiveness to licensee requests for reduction or elimination of license requirements with small effects on safety but high economic burden. Although activity and involvement in this voluntary program has varied among licensees, the NRC staff has approved over 300 cost beneficial licensing actions. The licensees estimate that the savings resulting from these cost beneficial licensing actions exceed $799 million over the life of the facilities.

The NRC changed its inspection guidance by issuing revised Inspection Manual Part 9900 concerning licensee resolution of degraded and nonconforming conditions. This guidance, which clarified agency practice for such conditions, provided regulatory relief from the need for resolution of minor deficiencies, such as those involving documentation, in a time-frame consistent with safety significance and in a manner that would not impact continued operations. This guidance was distributed to the public in Revision 1 to Generic Letter 91-18 in October 1997.

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Information Technology Tools to Improve and Facilitate Management of the Agency

NRC regulatory functions, as well as the new management initiatives earlier described, require the preparation, review, receipt, and distribution of massive amounts of documented information. Today, the NRC operates in a predominately paper-based environment, expending significant resources to reproduce, catalog, and microfilm documents. These present document management processes significantly limit the ability of agency employees to retrieve, integrate, share, and disseminate information quickly and efficiently.

The NRC currently has a major information technology infrastructure initiative underway entitled the Agency-wide Document Access and Management System (referred to as ADAMS). This system will give the NRC the tools to manage its documents more effectively and efficiently. ADAMS will support the electronic submission of documents by NRC licensees, store all new documents electronically in one location, permit full-text document retrieval capability from each NRC employee work-station, and allow for the electronic routing, concurrence, and distribution of documents. ADAMS also will improve the public availability of NRC documents by providing access to the NRC document repository via the Internet, using standard Web browser software. ADAMS will be fully deployed, agency-wide, by the end of FY99.

In addition, the Commission has directed the development and implementation of an agency-wide resource management system that will support the planning, budgeting, and performance measurement process discussed earlier. This system, named STARFIRE, will be far-reaching within the NRC and will be the vehicle for capturing hours worked by NRC staff in various labor categories for cost accounting, payroll, and fee billing purposes. The system also will automate many semi-automated processes, such as budget formulation, travel, and procurement. We project that STARFIRE will recover its investment and begin showing savings within four years.

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Year 2000 Systems Corrections

The NRC continues to leverage information technology to provide the power 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 that it faces in ensuring that its 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, and that systems less critical to mission-related activities are addressed last. The NRC is pursuing aggressively Year 2000 compliancy certification of 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. In order to ensure proper focus on this issue by the entire 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 staff 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 will factor GAO comments into the final generic letter. We also are planning to conduct inspections of nuclear power plant licensee Year 2000 programs, on a sample basis, during 1998 and 1999. In addition, the NRC staff 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.

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, determine whether licensees have identified any potential problems, and note any corrective actions taken.

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Operating Reactor Issues

Overview of Power Reactor Safety Performance

In FY97, the industry average number of scrams (automatic reactor shutdowns) and safety system actuations continued to decline slightly. Our focus, however, has been on equipment problems and equipment failure rates, for two reasons: first, because equipment failure continues to be the leading cause of all scrams; and second, because of the lack of sustained improvement in safety system failures and the forced outage rate. The improvement in average unit availability through 1995 was due--not to fewer forced outage hours--but to greatly reduced scheduled outage hours, achieved through increased maintenance activity while at power (known as "online maintenance"). This is a consequence of longer fuel cycles (which result in greater intervals between refueling outages), combined with shorter, more efficient refueling outages. (Average availability declined slightly in 1996 and sharply in 1997, due largely to the significant number of units that were shut down during that period.)

This overall picture has caused the NRC to consider how our programs, including NRC regulations, reactor oversight, and enforcement, might best be focused to address equipment failure--and in particular maintenance-related equipment failure--as part of reactor licensee overall performance. A key component in the NRC effort to address this area has been the NRC Maintenance Rule--which became effective in July 1996--as well as the associated guidance on its implementation. Inherent in the Maintenance Rule is a risk-informed, performance-based emphasis on ensuring the availability and reliability of key structures, systems, and components in the facility. To date, approximately three-fourths of power reactor licensees have received NRC inspections under this rule. Based on insights from these inspections, the Commission has directed the NRC staff to propose a modification of the rule, to clarify that the rule applies to shutdown operations and to ensure that the licensee assesses the safety impact of all out-of service equipment when performing maintenance--and in particular, online maintenance. Given the inspection results and the overall improvements in emphasis in licensee programs, we believe that the continued implementation of this rule--together with industry efforts to collect and use associated equipment reliability and availability data--should produce a significant benefit in precluding risk-significant or unsafe plant equipment configurations, and in reducing the number of safety system failures and forced shutdowns.

Another area of particular Commission focus has been the performance of reactor licensees in maintaining their design and licensing bases. In response to events at Millstone Station and at Maine Yankee, the NRC conducted a wide range of special inspections and lessons-learned reviews that have formed the basis for a number of corrective actions. In February 1997, the NRC staff forwarded to the Commission two papers that summarized an examination of NRC regulatory processes in three related areas: (1) the maintenance of the design and licensing bases; (2) the use and content of plant Safety Analysis Reports; and (3) issues related to 10 CFR 50.59, "Changes, tests, and experiments."

By way of background for the Committee, the 10 CFR 50.59 rule allows power reactor licensees to make changes and conduct tests and experiments provided that these changes, tests, and experiments do not create what is termed an "unreviewed safety question." If the threshold is exceeded, a licensee must seek specific NRC review and approval of the proposed change, test, or experiment. Disagreement has existed between the industry and the NRC staff for many years on the interpretation and implementation of the rule. The Commission directed that a renewed effort be made to clarify and resolve these differences.

In May 1997, the NRC requested public comment on 22 topical areas related to the implementation of 10 CFR 50.59. Following their analysis of public comments, the NRC staff sent to the Commission, in September 1997, a paper recommending that immediate guidance be issued to clarify the role of 10 CFR 50.59 in the resolution of degraded and nonconforming conditions. The paper also provided a series of options describing possible improvements in four areas: (1) the implementation of 10 CFR 50.59; (2) the use and required content of plant Safety Analysis Reports; (3) design basis issues; and (4) NRC oversight of licensee commitments and related internal process improvements. In response to these papers, the Commission likely will request that the staff initiate an expedited rulemaking to modify the language of 10 CFR 50.59, in order to clarify the current rule. In addition, the Commission also may request that regulatory guidance be developed to clarify the scope and methods needed to update Safety Analysis Reports. The Commission and NRC staff will be involved actively in these topics over the coming year, as we strive to provide clarity and consistency in the implementation of these issues and to resolve long-standing issues.

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Reactor Performance Assessment Process

Currently, the NRC uses several processes to assess the safety performance of nuclear reactors. They include Plant Performance Reviews, conducted every six months by regional managers; Systematic Assessments of Licensee Performance, conducted every 12 to 24 months by agency middle managers; and Senior Management Meetings, conducted every six months by agency senior managers. These processes were developed and implemented at different times over the past 18 years to address specific agency concerns.

All three of these processes have been subject to periodic, detailed reevaluation. However, the agency has never conducted an integrated review of the entire assessment process. In October 1997, the NRC initiated the Integrated Review of the NRC Assessment Process for Operating Commercial Nuclear Reactors (referred to as IRAP) to address weaknesses with the current set of assessment processes. The primary goals of the IRAP are: (1) to clarify objectives; (2) to eliminate redundancies; (3) to define roles, responsibilities, and authorities; (4) to improve consistency; (5) to match processes to NRC staff resources; and (6) to reduce administrative burden. The IRAP is currently in progress. Changes that likely will be proposed include: (1) streamlining the performance assessment process; (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; and (6) providing opportunity for licensee response at appropriate stages. If implemented, these changes likely will result in a single, integrated process for objectively and efficiently assessing the safety performance of operating commercial nuclear reactors.

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Watch List Plants

Under the current system for assessing reactor licensee performance, NRC senior managers meet semi-annually to review the performance of power reactor licensees and nuclear materials licensees. The Senior Management Meeting is conducted to focus agency-wide resources on those plants or facilities of most concern to the agency, to communicate the concerns of senior NRC managers to licensees with poor performance or adverse performance trends, and to ensure that coordinated courses of action are developed and implemented before problems reveal themselves as significant events. One product of the semi-annual NRC Senior Management Meeting is the NRC Watch List--a listing of power reactor facilities that warrant a heightened level of NRC oversight based on their performance.

The most recent designation of Watch List facilities occurred at the 24th semi-annual Senior Management Meeting, which took place on January 6-7, 1998. The following plants were identified as Category 2 plants, which means that they are authorized to operate but have weaknesses that warrant increased NRC attention: Clinton (Illinois); Crystal River Unit 3 (Florida); Dresden Units 2 and 3 (Illinois); LaSalle Units 1 and 2 (Illinois); Salem Units 1 and 2 (New Jersey); and Zion Units 1 and 2 (Illinois). As a relevant note, Commonwealth Edison has since decided to shut down permanently the Zion plants. No plants were designated Category 1, which means that no plants were removed from the previous watch list. Category 1 plants are those facilities that had been previously designated as Category 2 and have taken effective action to correct the identified weaknesses.

Millstone Units 1, 2, and 3 (Connecticut) remained Category 3 plants, which means that they have significant weaknesses that warrant maintaining the plants in a shutdown condition until the licensee can demonstrate to the NRC that adequate programs have been established and implemented to ensure substantial improvement. Plants in this category require Commission authorization to resume operations.

Status of Millstone Units 1, 2, and 3

In June 1996, the NRC designated the three units at Millstone as Category 3 plants on the NRC Watch List, requiring a Commission vote for the restart of each unit. Prior to that time, the licensee had shut down each of the units, for a variety of reasons: Unit 1 on November 4, 1995, for a planned refueling outage; Unit 2 on February 20, 1996, because of a design issue that rendered inoperable both trains of the high pressure safety injection system; and Unit 3 on March 30, 1996, when the failure to meet certain NRC requirements rendered inoperable the containment isolation valves for the auxiliary feedwater turbine-driven pump. While specific issues varied somewhat from unit to unit, the overall decision to change the classification to Category 3 (from the January 1996 designation of all three units as Category 2) was a Commission determination that a combination of unique challenges were confronting this licensee, including inadequacies in corrective action programs, numerous allegations, design basis discrepancies, and other issues.

On February 22, 1996, the licensee issued a report which described in detail the underlying causes, as determined by the licensee, for numerous inaccuracies contained in the Millstone Unit 1 Updated Final Safety Analysis Report (UFSAR). Those causes included: (1) errors and omissions in the original 1986-1987 UFSAR; (2) failures of the administrative control programs to fully address NRC requirements; (3) failure of the licensee to implement fully those administrative programs; (4) a pattern of licensee management failure to correct identified weaknesses and risks associated with the UFSAR and design bases; and (5) failure of the licensee oversight group to bring to management attention the existence of this pattern, the significance of the pattern, or the ineffectiveness of corrective actions to prevent its recurrence. The report acknowledged that, due to the nature of these identified causes, the potential existed for the presence of similar configuration management problems at Millstone Units 2 and 3.

The NRC conducted a special inspection at Millstone Unit 3, in March and May 1996, that identified design and other deficiencies similar to those reported in the licensee report, and similar to those identified by the NRC at the other Millstone units. As the licensee and NRC findings both indicated, significant design control deficiencies and degraded and non-conforming conditions were identified at Millstone Units 1, 2, and 3. Three major types of design control problems were identified at all three units: (1) errors in licensing and design bases documentation; (2) failure to translate design bases to procedures and hardware; and (3) inadequate engineering and modifications.

The most significant issue identified by the NRC special team inspection of Millstone Units 2 and 3 was the ineffective corrective action process. The special inspection team found instances in which (1) degraded and nonconforming conditions had been identified but were not promptly corrected; (2) line management did not respond to findings from their own quality assurance organizations; and (3) the root causes and programmatic implications of identified issues were not addressed in a timely fashion. The team concluded that the licensee had not established an effective corrective action program for the Millstone Station. An example of the safety implications of these inadequacies was the licensee's failure to implement timely and appropriate corrective action to identified deficiencies in the auxiliary feedwater system--which provides a heat removal capability to mitigate the consequences of certain accidents. In other instances involving identified deficiencies in the service water system and the post-accident hydrogen monitoring system, the licensee failure to evaluate comprehensively the consequences of system changes (or the operational impact of longstanding temporary measures) resulted in the fundamental design issues remaining uncorrected, the inability of the systems to meet their design functions, and excessive reliance on operator actions to compensate for the design deficiencies

On August 14, 1996, the NRC issued a confirmatory order, a legally binding requirement that is imposed on a licensee after it has agreed to the stated requirement and has waived its right to hearing. The confirmatory order directed Northeast Utilities to contract with a third party to implement an independent corrective action verification program that would verify the adequacy of licensee efforts to establish adequate design bases and design controls. This program is intended to provide additional assurance, before unit restart, that the licensee has identified and corrected existing problems in the design and configuration control processes.

The NRC staff determined further, in its September 1996 report, "Millstone Independent Review Group Regarding Millstone Station and NRC Handling of Employee Concerns and Allegations," that, in general, an unhealthy work environment--which did not tolerate dissenting views and did not welcome or promote a questioning attitude--had existed at the Millstone plants for the previous several years. This poor environment had resulted in a number of instances of discrimination and ineffective handling of employee concerns.

On October 24, 1996, the NRC issued a second confirmatory order directing that, before the restart of any Millstone unit, the licensee develop and submit to the NRC a comprehensive plan for the review and disposition of safety issues raised by its employees and for ensuring that employees who raise safety concerns can do so without fear of retaliation. The order also directed the licensee to retain an independent third party to oversee implementation of its comprehensive plan.

The significance and number of issues identified at Millstone have resulted in the continued shutdown of all three units, pending licensee completion of its corrective actions, NRC verification of those actions, and Commission formal authorization to restart. Staff planning for the conduct of NRC regulatory oversight programs at Millstone is based on the recognition that the licensee bears primary responsibility to demonstrate that corrective actions have been implemented effectively. Before the NRC can reach a decision to approve restart, the licensee must determine that the plants conform with applicable NRC regulations, license conditions, and the UFSARs, and that applicable licensing commitments have been met. Licensee compliance with NRC regulations, license conditions, and licensing commitments is fundamental to the establishment of NRC confidence in the safety of licensed activities.

On November 3, 1996, the NRC created a new organization, the Special Projects Office, within the Office of Nuclear Reactor Regulation, to provide a specific management focus on NRC activities associated with the Millstone units. The responsibility of the Special Project Office for activities at Millstone includes all licensing and inspection activities required to support an NRC decision on restart of the Millstone units.

The overall NRC staff assessment is that the licensee continues to make progress in all areas identified in the Restart Assessment Plans for Units 2 and 3. The licensee has ceased all restart activities at Unit 1, and reduced some effort at Unit 2 to support the Unit 3 restart. At present, the NRC staff is continuing to assess the effectiveness of important licensee corrective actions. Many of the NRC activities, including major team inspections, have been delayed as a direct result of changes in the licensee schedule. Important work that must be completed by the licensee and reviewed by the NRC staff includes: (1) closure of fire protection issues; (2) operator training issues; (3) vendor technical manual issues; (4) disposition of independent corrective action verification program findings; (5) safety conscious work environment program enhancements; and (6) corrective action process and backlog improvements. The NRC staff has planned a number of significant inspection activities to assess licensee readiness for restart. These inspections and the remaining NRC staff evaluations of the issues identified in the Millstone Restart Assessment Plan ultimately will form the bases for an NRC staff restart recommendation to the Commission. Schedules for restart decisions on Units 3 and 2 will continue to be dependent on the completion of scheduled activities by Northeast Utilities, as well as on the assessments by the independent contractors and NRC staff.

Status of Commonwealth Edison Plants

Commonwealth Edison Company (ComEd) holds licenses for 13 reactors at 6 sites. Ten reactors are authorized to operate, and three units (Dresden 1 and Zion 1 and 2) are in the decommissioning process. Five of the reactors currently are operating: Braidwood Units 1 and 2, Byron Units 1 and 2, and Dresden Unit 3. Five are currently shut down: Dresden Unit 2, LaSalle Units 1 and 2, and Quad Cities Units 1 and 2.

NRC concerns regarding the performance of ComEd nuclear facilities have been focused primarily on questions regarding the licensee's ability to establish lasting and effective programs that result in sustained performance improvement. In a June 1992 paper entitled, "Performance of Commonwealth Edison Company Plants," the NRC staff informed the Commission of major ComEd weaknesses. Similar problems were described in NRC reports and correspondence with the licensee over the next several years. In a January 27, 1997 letter issued to the licensee under 10 CFR 50.54(f), the NRC outlined several problem areas that the we believe have contributed to cyclical safety performance (i.e., performance characterized by recurring upward and downward trends, indicating an inability to sustain improvements) at the ComEd facilities: (1) the lack of effective management attention and application of resources; (2) weak corporate oversight of nuclear operations; (3) poor problem recognition and the failure to achieve lasting corrective actions; (4) the lack of engineering support; and (5) an inability or reluctance to learn from experiences at other ComEd sites and other utilities.

In a series of responses provided to the NRC, ComEd acknowledged the problems identified in the 10 CFR 50.54(f) letter and outlined a range of necessary corrective actions. An NRC panel was established to monitor closely and periodically licensee progress in responding to NRC concerns and correcting the issues. In addition, ComEd management has provided periodic briefings to the Commission on their strategies for improvement and the status of progress.

Parallel and confirming observations and analyses have been documented by the Institute of Nuclear Power Operations (INPO) over a similar time-frame. In November 1997, ComEd released to the NRC two INPO documents which concluded: (1) that the ComEd chain of command is not rigorously or effectively used; (2) that ComEd problem-solving often involves the creation of new programs or plans, yet implementation falls short because of a lack of follow-up, changing priorities, or inadequate resources; (3) that corporate response to weak nuclear performance or pressure from outside organizations has been to change managers, and that this rapid turnover, in turn, has contributed to unclear direction in many parts of the organization; and (4) that managers and senior corporate personnel have a tendency to highlight any positive aspect of a given issue while minimizing (and thus failing to address) the negative aspects. INPO stated that the root causes described in the January 1997 NRC letter closely parallel the INPO root cause analyses of ComEd discussed in previous years. After the release of this INPO report, the NRC issued a follow-up letter to ComEd, asking the licensee to re-evaluate the issues described in the 10 CFR 50.54(f) letter in view of the additional INPO findings.

In letters to the NRC dated January 5, 1998, and February 17, 1998, the licensee has outlined 13 system-wide strategic initiatives that would address the overall scope of NRC concerns and would be directed toward fundamental resolution of ComEd cyclical performance issues, including: (1) operational and technical performance; (2) facility material condition; (3) organizational alignment and workforce engagement; and (4) effective leadership and management. The NRC currently is evaluating the appropriate regulatory response to this ComEd letter. As one option under consideration, the NRC staff is preparing a confirmatory order that would make legally binding specific elements of the licensee's stated corrective actions.

While these issues apply to Commonwealth Edison as a whole, the circumstances at each facility are somewhat different. Quad Cities Units 1 and 2 have been shut down since December 1997 and September 1997, respectively, to address fire-protection-related safe-shutdown issues. The NRC issued a Confirmatory Action Letter (CAL) on January 16, 1998--a document which emphasizes and confirms, after discussions with the licensee, the NRC understanding of specific actions which the licensee has committed to take in response to an emergent problem. In this case, the CAL was issued to confirm actions that Quad Cities has stated it will take before either unit can restart.

LaSalle Units 1 and 2 have been shut down since September 1996 to address a number of human performance, corrective action process, and engineering support and design issues. The NRC issued a Confirmatory Action Letter on April 14, 1997, confirming actions that the licensee is taking to address these issues before restarting either unit.

Zion Units 1 and 2 have been shut down since February 1997 and September 1996, respectively, to address a number of human performance problems in operations, material condition issues, and deficiencies in the support given by the engineering group to the operations group. A Confirmatory Action Letter was issued on February 25, 1997, with supplements on April 14, 1997 and June 6, 1997. These letters confirmed actions the licensee was taking to address these issues before restarting either unit; however, on January 15, 1998, Commonwealth Edison announced that it is shutting down permanently the Zion station. On March 9, 1998, Commonwealth Edison provided written certification to the NRC that all fuel has been removed from the reactor vessels at Zion Units 1 and 2, and committed that those units will remain permanently defueled.

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GAO Assessment and NRC Response

The General Accounting Office (GAO), in its May 1997 report "Nuclear Regulation - Preventing Problem Plants Requires More Effective NRC Action," recommended that the NRC develop strategies to take more aggressive action on safety deficiencies when they are discovered. To achieve this goal, the GAO recommended that the NRC: (1) provide increased documentation of licensee corrective actions and NRC responses to nonconformances with planned actions; (2) make licensee responsiveness to identified problems a major feature of the Senior Management Meetings; and (3) assess licensee management competency as a mandatory component of the NRC inspection process.

As indicated in its response to the GAO report, the NRC is developing--and in many cases already has instituted--a variety of improvements to its reactor performance assessment process 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 ongoing Integrated Review of the NRC Assessment Process for Operating Commercial Nuclear Reactors (referred to as IRAP), as discussed earlier, is an extensive review by the NRC staff of all reactor-related assessment processes. The IRAP likely will propose significant changes to the Senior Management Meeting process and other assessment processes which will include (1) tying regulatory actions more directly to the results of assessments; (2) depending more on the results of NRC enforcement (which will include a focus on licensee corrective actions); and (3) increasing the focus on performance results as a measure of licensee management effectiveness. In addition, the NRC will develop additional inspection guidance on closing out issues identified in NRC inspection reports.

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Allegations, Discrimination Issues, and Safety-Conscious Work Environment

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 may also 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 concerns are promptly reviewed, prioritized, investigated, and if warranted, corrected, with appropriate feedback to the individual.

The NRC implementation of its allegation program has improved substantially in recent years. NRC staff processes for receipt, documentation, tracking, follow-up, evaluation, and closure of allegations have been scrutinized and upgraded. A vigorous program for Headquarters audits of the regional and program office implementation indicates substantial improvements in efficiency and effectiveness in these areas, as well as in the timeliness and quality of communications with allegers. Additional efforts include: (1) consistent management emphasis--including an announcement issued by the Executive Director for Operations--on expectations for NRC staff treatment of allegations and protection of alleger identity; (2) emphasis on special document handling requirements needed to protect alleger identity, including the use of warning cover sheets for allegation correspondence; (3) the development and agency-wide use of standard training material for NRC employees on the allegation program and treatment of allegation issues; (4) the development and implementation of an improved software package that has enhanced allegation tracking and trending capabilities; (5) the solicitation and evaluation of public comment on various measures to improve NRC and licensee emphasis on maintaining a safety-conscious work environment; and (6) a revision to the NRC Senior Management Meeting process, to include a discussion of insights gained from the allegation program regarding the performance of individual licensees in maintaining a work environment conducive to raising safety and regulatory concerns.

An additional area needing improvement was discovered in February 1998, when the NRC staff determined that information released in response to two Freedom of Information Act (FOIA) requests, regarding Region II allegation-related documents, had included inappropriately certain names and other information that would identify a number of allegers. The NRC established a special team to evaluate the incident and make recommendations to management. The audit team found a serious flaw in Region II processes that involved, in essence, two competing interests: (1) the need to ensure that FOIA requests receive a prompt and robust 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 team found that 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 information. In addition, the team found that the Region II process in question had undergone an erosion of administrative barriers that at one time 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 for protecting this information.

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 also has taken a number of actions 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 meets the 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 overlapping involvement with the DOL in this area, the NRC staff has been involved in a range of interactions designed to improve the DOL investigative and adjudicatory process, including: (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) efforts in progress to revise the NRC memorandum of understanding with the DOL related to Section 211 complaints; and (3) efforts in progress to develop draft legislation that, among other enhancements, would improve the timetable for the DOL Section 211 investigative and adjudicatory process, and would help to provide earlier remedies to individuals who have been subject to discrimination for engaging in protected activity.

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Electric Utility Deregulation

The economic deregulation of electric utilities has continued its rapid 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 have also emerged as the transition to a competitive market has begun to take shape. For the NRC, this is not an area of major resource expenditure; 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 of the changing business environment on nuclear safety. NRC areas of focus related to electric utility restructuring fall under three general headings: (1) any impact of cost-competitiveness on safe nuclear operations; (2) electrical grid reliability; and (3) the availability of funds for decommissioning. Several specific actions have been taken in this area, as discussed below. 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 focus on any possible impact 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. In addition, the NRC is conducting an integrated review of reactor-related assessment processes, to enhance our existing program for plant performance assessment.

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

A second 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 Station Blackouts have been extremely rare to date, 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 structures must take account of these factors. Standards of performance, operational criteria, and training of personnel are oversight issues that all must be factored in and properly 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. The 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

In general, existing NRC decommissioning regulations require power reactor licensees 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 re-evaluate 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 re-evaluate 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 public comment period has now expired, the comments are under NRC staff evaluation, and we expect to issue a final rule by June 1998. As currently written, the proposed rule would modify NRC decommissioning regulations in four areas. First, it would revise the NRC definition of "electric utility," to ensure that decommissioning funding assurance requirements are clarified for all responsible licensee entities. 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.

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Reactor License Renewal

The timely renewal of nuclear power plant operating licenses for up to an additional 20 years, where appropriate to renew them, may be important 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 for license renewal, the NRC issued the license renewal rule (Part 54 of Title 10 of the Code of Federal Regulations) in 1991, to establish the technical and procedural requirements for renewal of operating licenses. Based on initial industry and NRC staff interpretations of 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 time-limited aging analyses, and to aging management of long-lived passive structures, systems, and components. Additionally, the NRC environmental protection regulation (Part 51 of Title 10 of the Code of Federal Regulations) was amended in 1996 to enhance the NRC environmental review process for license renewal. This revision streamlined the environmental review process by addressing a large number of environmental issues in a Generic Environmental Issue Statement, thereby eliminating the need for such issues to be addressed individually by each license renewal applicant.

The NRC has developed draft regulatory guides and standard review plans for both Parts 51 and 54, which we believe provide an acceptable framework for an effective, efficient, and technically sound review of the initial license renewal application. Additional improvements also are being considered for Part 51, on an expedited basis, to address the generic and cumulative environmental impacts of transportation of High-Level Waste (HLW) in the vicinity of an HLW repository. Further enhancements will be made to regulatory guides and standard review plans, where appropriate, based on the experience gained during the first several license renewal applications.

The Commission also will consider the implementation of measures identified by our Office of General Counsel (OGC) to streamline the hearing process for license renewal. These measures include establishing an efficient and reliable adjudicatory schedule--while ensuring a fair resolution of contested issues; timely surfacing of any open policy issues for Commission decision; and effective integration of the review of technical issues into the adjudicatory process. In addition, the NRC Chief Financial Officer and Chief Information Officer have been tasked, under the aegis of the NRC Executive Council, with establishing a process for efficiently shifting or refocusing resources, as needed, to ensure a timely license renewal review.

The current industry approach to license renewal is to submit for NRC approval plant-specific and Owners' Group technical reports on specific topics, before submitting complete license renewal applications. This approach is intended to establish a foundation of technical information that a licensee can use to evaluate the feasibility of a license renewal application, and that may be referenced later in the application itself. The NRC has been reviewing technical reports prepared by Baltimore Gas and Electric Company (BGE) that address the Calvert Cliffs units. On March 4, 1998, BGE announced that the company intends to pursue license renewal for the Calvert Cliff facilities.

In addition to this action on the BGE submittals, the NRC has reviewed reports prepared by Duke Power Company that address the Oconee units. Duke Power is expected to submit additional reports and to make a decision in mid-1998 about submitting a license renewal application. Recently, Southern Nuclear Operating Company also announced plans to consider license renewal for its Hatch units as early as 1999.

In developing the FY98 budget, to control costs, the Commission deferred work associated with the review of generic license renewal activities not specifically related to the pending license renewal applications. The work deferred included generic technical reports prepared by the Babcock & Wilcox Owners' Group, the Boiling Water Reactor Owners' Group, and the Westinghouse Owners' Group. These reports address the renewal requirements for certain major structures and components, for reference in future license renewal applications. If licensees such as the Southern Nuclear Operating Company do commit to license renewal, the Commission will reassess the deferral of work on reports relevant to specific cases. Additional licensees are active in the generic license renewal activities, but have not informed the NRC formally of their intentions to submit license renewal applications. 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.

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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 FY 1998-1999. In addition, the decommissioning of the Public Service Company of Colorado's Fort St. Vrain Nuclear Generating Station, Unit 1, was completed, the operating license was terminated, and the site was released for unrestricted use.

After an extensive rulemaking process that involved stakeholder interaction, the Commission issued a final rule to establish radiological criteria for decommissioning and license termination in July 1997. The NRC rule contains an all-pathways radiation standard that is consistent with recommendations of national and international scientific organizations, and with 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 EPA proposal of 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, 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 way in which those 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." The stated purpose of the document is to provide clarifying guidance for what the EPA asserts would establish protective cleanup levels for radioactive contamination at sites that come under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA). In this guidance, the EPA asserts 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 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.

In December 1997, I sent a letter detailing NRC concerns and comments on the CERCLA guidance to Administrator Browner. The EPA responded to the NRC-proposed MOU on February 19, 1998, and to NRC comments on the CERCLA guidance on February 20. We currently are reviewing these responses. I am in the process of preparing a response to the EPA, in which I plan to suggest that resolution of the fundamental differences between our approaches to human health and environmental safety is a matter for discussion at the highest policy level. In that regard, we also support legislation that would establish finality for sites that comply with NRC cleanup standards. For example, the NRC recently suggested revisions which have been incorporated in H.R. 3000, "Superfund Reform Act," to ensure such finality at CERCLA sites. We appreciate the bipartisan support of you, Mr. Chairman, and of Mr. Hall, for the inclusion of this provision in H.R. 3000.

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High-Level Waste

In the critical area of managing high-level waste, the NRC continues to believe that a permanent geologic repository is the appropriate mechanism for the nation to manage, ultimately, spent fuel and other high-level nuclear waste. The Congress has assigned 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: to develop a regulatory framework (regulations and guidance); to ensure that the DOE is aware of the elements comprising a quality site application; to evaluate the adequacy of the site characterization and waste form in the DOE site suitability recommendation to the President; and, ultimately, to determine whether the NRC, through its licensing and oversight processes, can authorize repository construction, receipt of waste, and final repository closure and decommissioning.

The NRC program was refocused in FY96 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. 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, has been the focus of the NRC program throughout FY 1996-1998. In structuring its pre-licensing regulatory program, the Commission has applied a risk-informed, 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 whereby the key issues important to repository performance and safety will guide the revision of NRC regulations, the development of the standard review plan and independent analytical techniques, and the resolution of issues.

One key technical issue for the NRC is the development of a site-specific, performance-based regulation applicable to the proposed repository at Yucca Mountain. A proposed regulation is planned for FY98, and a final regulation in FY99, which is on a schedule requested by the DOE to keep pace with its 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, as well as in accordance with the Energy Policy Act of 1992.

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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 explicitly required 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 its own independent analyses, will contribute to public confidence in the credibility of the decision-making process.

The NRC is encouraged that the DOE is now conducting a performance-based program to focus on those issues most important to repository safety. In addition, the DOE has just 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 acceptably low. The NRC believes that the DOE has made significant progress in its site characterization program for the proposed 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.

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Potential Issues

The Commission is aware that the Congress is contemplating new legislation that would alter the National 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 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, and the development and licensing of each should be afforded sufficient time and adequate funding. In addition, the Commission believes that it is possible for the Congress to address certain aspects of the bills in final legislation in such a way as to reduce the NRC resources needed to implement the legislation.

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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 the storage of spent fuel in 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 a general license--in addition to a number of cask designs approved as part of site-specific licenses--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.

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Status of the Materials Program

The NRC continues to focus on 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 development 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.

In 1997, the NRC staff developed an action plan to address licensee accountability for certain kinds of licensed materials. The action plan was developed in response to recommendations provided by an Agreement State-NRC working group that evaluated current licensee accountability of devices. The NRC staff recommended the development of a registration program to increase NRC oversight of certain general licensees. The registration program would require certain general licensees to register their devices with the NRC annually. This program will ensure that licensees can still maintain accountability of their devices and allow the NRC to maintain a database of devices possessed by the licensees. The Commission is evaluating the action plan and shortly will provide guidance to the NRC staff on how to proceed.

The NRC is continuing to streamline the materials licensing and inspection processes by establishing a more efficient and automation-assisted process for handling materials license and amendment requests. Currently, the NRC staff is updating and consolidating more than 1,000 guidance documents into 24 comprehensive NUREG-series reports for use by materials users. These reports will contain licensing checklists and audit guidelines to assist the licensees in developing comprehensive programs. As a result of these efforts, we expect increased clarity with respect to requirements, more completeness in applications for licenses 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 has directed the NRC staff to develop recommendations for revising the 1979 Commission Medical Policy Statement and Part 35 of Title 10 of the Code of Federal Regulations, "Medical Uses of Byproduct Material." The revision of Part 35 would achieve several specific improvements in the regulations governing the medical use program. These improvements include focusing the regulations on medical procedures that pose the highest risk, from a radiation safety aspect, with a subsequent decrease in the oversight and regulatory burden for low-risk activities. This rulemaking has a targeted completion date of June 1999.

The recommendations on the Medical Policy Statement and the proposed revisions to Part 35 are being developed using a group approach, which includes participation of the Organization of Agreement States and the Conference of Radiation Control Program Directors. In addition, early public input has been solicited through Federal Register notices, meetings with medical professional societies and boards; open meetings of the groups developing the revised policy statement and rule language; public workshops; and posting on the Internet relevant background documents, options for the more significant regulatory issues associated with the rulemaking, and the draft text of a proposed rule and policy statement.

The proposed revision of Part 70 of Title 10 of the Code of Federal Regulations is intended to increase NRC confidence in the margin of safety at fuel cycle facilities. This would be accomplished through the performance of an integrated safety analysis to identify potential accidents at each facility and the items relied on for safety to prevent or mitigate those accidents. The proposed rule also will establish limits to identify the adverse consequences that must be protected against and the level of protection required. By requiring the use of such limits, in conjunction with the performance of the integrated safety analysis, the Part 70 rule, in effect, will take a risk-informed, performance-oriented approach for regulating fuel cycle facilities.

In the area of Agreement States, the NRC acknowledges 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 55,000 general licensees. The 1997 signing of an agreement between the 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 early 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.

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Oversight of the US Enrichment Corporation

The NRC issued initial certificates of compliance for both United States Enrichment Corporation (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 the 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. The NRC intends to consult with Executive Branch agencies regarding the NRC role in plant recertification. In addition, the NRC staff last summer developed a draft standard review plan for NRC activities specifically related to USEC privatization, and the standard review plan will be revised once comments from other Federal agencies have been received and evaluated.

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, either through a merger-acquisition process or through an initial offering of stock to the public. The NRC will continue to report annually to the Congress on the status of the plants and their compliance with NRC standards, and will continue to undertake an active, comprehensive inspection program to verify operational safety and investigation of recurring 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 technology and is engaging in pre-licensing discussions and reviews in support of the USEC application. The USEC has advised the NRC staff that it plans to submit an Atomic Vapor Laser Isotope Separation application about a year after privatization is completed. Based on current schedules, that submission would occur during the summer of 1999.

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External Regulation of DOE

Pilot Program

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 the 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 Peña and I (on behalf of the Commission) signed a Memorandum of Understanding between the NRC and the DOE that details the specific conditions and activities associated with the pilot program. The Memorandum of Understanding 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 the DOE and the NRC) 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 the appropriate process of 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. On-site work for the Lawrence Berkeley National Laboratory pilot was completed on January 15, 1998, and the site report is expected by April 18, 1998. No significant safety issues were observed at Lawrence Berkeley National Laboratory. After completion of the Berkeley site report, the Commission has requested that the NRC staff prepare a revised Memorandum of Understanding, in consultation with the DOE, that would incorporate lessons learned during the process and, if agreed, allow the DOE and the NRC to recommend 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 the pilot program.

The second pilot site, the Radiochemical Engineering Development Center at Oakridge National Laboratory, is scheduled for completion in mid-July 1998. The third pilot for FY98 is the Savannah River Site Receiving Basin for Offsite Fuels, which is scheduled tentatively for completion in late September 1998. During FY99, the NRC staff intends to continue the pilot program, adding facilities that would provide expanded information on the major objectives previously outlined.

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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. A Memorandum of Understanding was executed on January 29, 1997, specifically for the demonstration phase (Phase I) of this project. This Memorandum of Understanding calls for the NRC to provide technical assistance and support to the DOE in the development of a comprehensive regulatory program, consistent with the regulatory approach of the NRC, 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 resident on the Hanford site, and continues to assist in the review of initial DOE privatization contractor submittals, as well as in 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 Phase II, when the tank waste processing becomes a commercial venture, with the intent that the contractors become NRC licensees.

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 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 in June 1998. 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 authorization from the NRC in 2002 or 2003 in order to meet the DOE requirement for extraction of tritium gas by the end of 2005.

Under a reimbursable agreement signed by the NRC and the DOE in September 1995, the NRC also provided 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, with high-level waste, of some of the surplus plutonium in ceramic material for disposal in a geologic repository, and (2) burning of some plutonium as mixed-oxide (MOX) fuel in existing commercial reactors. With respect to the MOX fuel strategy, the DOE indicated that it anticipated 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 referenced reimbursable agreement was modified to cover the NRC costs of NRC assistance in preparing for eventual licensing activities.

We also are reviewing issues that may require legislation, related to the roles of both the NRC and the DOE in MOX fuel program. 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 Facility Safety Board; (5) who should be responsible for certain activities related to the MOX fuel facility, such as safeguards, 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.

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Significant Research Activities

To make timely and technically credible regulatory judgements and to anticipate problems of potential safety significance, the NRC must have independent expertise and information. Key to providing this capability is the NRC research program. This program is both confirmatory and anticipatory and resolves uncertainties with broad regulatory issues. The NRC conducts reactor and plant performance research to provide in-depth examination and understanding in support of other regulatory functions. Current areas of significant research emphasis include high burnup fuel behavior, steam generator research, environmentally assisted cracking, radionuclide transport, thermal-hydraulic research, and environmental qualification of electric cables.

The NRC routinely seeks opportunities in its dealings 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 represents the U.S. industry), and members of the international 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 enhance our own research capabilities.

By maintaining a viable research program, the NRC has access to research through approximately 40 active cooperative agreements, as well as through another 20 agreements that are being extended or considered with organizations in more than 25 countries, including members of the former Soviet Union. Through these agreements, the NRC contributes about $9 million annually, but receives the benefits of research valued at approximately $85 million annually. In addition, the NRC receives about $2 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 overseen by the Joint Committee on Radiation Effects Research (JCCRER). While the research will study both U.S. and Russian populations, it will focus on the unique opportunities in the southern Urals in Russia, particularly in the vicinity of the Mayak nuclear complex. There, as a result of initially 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 health effects from those observed in populations exposed to high levels of radiation, such as the atomic bomb survivors, to the low levels that are subject to regulation. The studies at Mayak could shed light on what models are most appropriate to describe the relationship between 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.

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International Cooperation

The NRC must respond to the ever-present challenge of enhancing international nuclear safety. The agency actively participates in mutually beneficial bilateral and other international efforts to strengthen regulatory regimes and to create a global nuclear safety culture. The United States is the world's largest exporter of nuclear commodities and technology. Of the approximately 430 nuclear power reactors operating worldwide, approximately 320 are operating outside of the United States. Of this 320, around 60 percent to 65 percent are based on or are derived from U.S. technology. The United States is also a major supplier of nuclear fuel, equipment, maintenance, technical expertise, and other services needed to support operation of these facilities.

We have a responsibility to ensure that this equipment and these services are exported responsibly, are used in the safest possible manner, and are adequately safeguarded, both here and abroad. The fact that there are more nuclear power reactors that are based on or derived from U.S. technology operating outside of the United States than in the United States provides a considerably larger operational experience base than exists in the United States alone, leading to benefits for the U.S. nuclear power industry. Finally, the NRC participation in global safety enhancement efforts aids considerably in the prevention of nuclear accidents in countries with weak or embryonic nuclear safety cultures.

I would like to provide some examples of how the NRC coordinates its activities, both bilaterally and multilaterally, as well as inside the United States, to enhance the global nuclear safety culture and to strengthen national regulatory regimes.

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The Formation of the International Nuclear Regulators Association

Early in my tenure as the NRC Chairman, in my early interactions with senior regulators from other countries, I became convinced of the need for a free-standing, independent international organization that would focus specifically on the needs of national nuclear regulatory bodies and their fundamental role as part of a nuclear infrastructure.

In May of 1997, the senior nuclear regulators from eight countries--including Canada, France, Germany, Japan, Spain, Sweden, the United Kingdom, and the United States--met in Paris to establish and to adopt the initial terms of reference for the International Nuclear Regulators Association (INRA). The INRA was formed to provide a forum in which senior regulators could identify nuclear regulatory challenges, exchange views on broad regulatory policy issues, and make recommendations to strengthen nuclear regulation worldwide. The INRA seeks to accomplish the following basic objectives: (1) to build a global nuclear safety culture; (2) to seek international consensus on approaches to nuclear regulatory issues; (3) to facilitate international cooperation in implementing sound solutions, working cooperatively with other international and national organizations involved in nuclear safety; and (4) to encourage the most efficient use of resources in areas of common interest.

The membership of this newly created body is based on a series of criteria related to the size and scope of the national nuclear program, the existence of a well-established, independent nuclear regulatory authority, and a commitment to the provisions of the Convention on Nuclear Safety. As such, the initial membership was limited to eight countries, with a consciously controlled approach to expansion during the initial period of establishing foundational guidelines and objectives.

As part of the constituting meeting in May 1997, I was elected the first INRA chairman for a period of two years. In January 1998, in Walnut Creek, California, I hosted the first regular meeting of the INRA, where our focus was on the commonalities and differences in national regulatory approaches. The goal of this particular effort is to define a set of fundamental safety elements that make up an effective nuclear regulatory infrastructure--which assumes a basic statutory framework, and which includes financial, civil, technological, and human resources, as well as an independent regulatory component. Such an infrastructure provides the foundation for the development of nuclear power as a safe and reliable energy source. The INRA also outlined and promulgated important elements of a nuclear regulatory infrastructure for consideration at the Moscow Energy Ministerial Meeting to be held in May 1998.

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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 in nuclear power safety, radiation protection, safeguarding and physical protection of nuclear materials, 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). Within the limits of available resources, the NRC will participate with other involved agencies in the negotiation of the Additional Protocol to the US/IAEA Safeguards Agreement. Subsequently, the Protocol provisions will be implemented at affected 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.

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U.S. Agency for International Development

During recent years, particular emphasis has been given to countries operating Soviet-designed reactors. The NRC role has focused primarily on strengthening regulatory bodies in the new states of the former Soviet Union and Central and Eastern Europe, as well as other nations, particularly in Asia, which are beginning ambitious nuclear power programs. The NRC conducts major programs, funded through the U.S. Agency for International Development, to train regulators from the former Soviet Union and Central and Eastern Europe on the creation or strengthening of their regulatory capabilities. We have begun to see positive results from our assistance efforts with the Russian, Ukrainian, Kasakh, Armenian, Czech, Slovak, Lithuanian, Bulgarian, and Hungarian regulators. Much of this success can be attributed to their own willingness and desire to enhance their nuclear safety and regulatory infrastructure and their growing expertise in the application of Western safety review tools.

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Gore-Chernomyrdin Commission and the Binational Commission

Two examples of high-level opportunities to focus on nuclear safety with top United States and foreign government officials are through the U.S.-Russian Joint Commission on Economic and Technological Cooperation, chaired by Vice President Gore and Russian Minister Chernomyrdin (known as the Gore-Chernomyrdin Commission or GCC), and the U.S.-South African Binational Commission, chaired by Vice President Gore and South African Deputy President Thebo Mbeki.

As a vice-chair of the Energy Policy Committee of the Gore-Chernomyrdin Commission, I emphasized maintaining a balance between U.S. nuclear non-proliferation and nuclear safety policies and implementation activities. For example, the NRC is participating in a project to convert the three Russian plutonium production reactors at Tomsk and Krasnoyarsk into sources for district heat and electricity. This project was conceived as a means for removing the last Russian plutonium production reactors from operation for non-proliferation reasons. However, in its execution, important nuclear safety and regulatory components have required consideration. At the ninth GCC meeting in Moscow in September 1997, three agreements were signed related to termination of plutonium production in the Russian Federation by December 31, 2000. In support of these agreements, I signed--with my counterpart Russian Federation regulatory agency chairman--a "Joint Statement Concerning Enhancement of Regulatory Oversight of Core Conversion Activities." As of the tenth GCC (March 10-11, 1998), the NRC and the Federal Nuclear and Radiation Safety Authority (referred to as GAN) are negotiating an arrangement to implement our commitments.

Another area in which the NRC is active in the GCC process is in strengthening the Russian systems for materials protection, control, and accounting, an issue which also combines nuclear nonproliferation and nuclear safety issues. The objective of the NRC assistance program to GAN is to develop systems of material control and accounting, and physical protection, that will include a body of regulations, guides, technical review criteria, implementation standards and procedures, and an inspection program. The NRC is pleased with the progress made thus far, and we look forward to continued cooperation in this area.

For many years, the South African nuclear program was isolated from the world community during the period when its government practiced apartheid and refused to sign the Nuclear Non-Proliferation Treaty. This situation has changed on both fronts. This has resulted--in the post-apartheid period--in the need to improve the institutions and approaches to ensure the safety of its nuclear energy program. To assist in addressing this need, the NRC concluded a cooperation and exchange arrangement with the Council for Nuclear Safety in 1994, and has participated actively in the activities of the Binational Commission since 1996. The focus of our efforts is threefold: (1) assisting with the major revisions of the South African basic nuclear energy laws; (2) strengthening the government bodies responsible for nuclear safety; and (3) fostering South African participation in international nuclear safety research. The need remains to continue both high-level dialogue through the Binational Commission and through staff-level training and technical interactions. The NRC expects to conclude, under the Binational Commission, a memorandum of understanding with the South African Department of Minerals and Energy to facilitate our interactions on a broad nuclear safety front.

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Convention on Nuclear Safety

In a notable effort, the NRC has worked extensively in the development of the 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.

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Legislative Proposals to the 105th Congress

The Commission has submitted a number of legislative proposals for the consideration of the 105th Congress. Each of the proposals submitted is discussed below, in order of priority. In addition, this section discusses one proposal under consideration, which would involve a technical correction related to the duration of combined construction and operating licenses.

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Continuation of Commissioner Service

This amendment would allow a Commissioner whose term has expired to continue in office (subject to the removal power of the President) until whichever of the following occurs first: (a) his or her successor is sworn in, or (b) the expiration of the next session in Congress after the expiration of the Commissioner's fixed term of office. Enactment of this amendment would, in most circumstances, allow the Commission to maintain a quorum of at least three individuals, even when the terms of several successive Commissioners have expired without their reappointment. It would also be helpful for cases in which a Commissioner is renominated, but with insufficient time for the Senate to act before the expiration of the prior term.

Such a holdover provision would enable the Commission to operate in accordance with the intent expressed by the Congress in the Energy Reorganization Act of 1974, that the NRC should have a 5-member Commission, and would avoid the potential disruption of agency business due to the loss of a quorum. Holdover provisions are found in the organizational statutes of the majority of independent regulatory agencies.

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Carrying of Firearms by Licensee Employees

This amendment would authorize guards to carry firearms at NRC-licensed facilities when there are special nuclear materials (SNM) present, and would shield guards from State criminal prosecution for the use of their firearms to prevent the theft of weapons-grade materials. Currently, in some States, guards at NRC-licensed facilities may use weapons only to protect their own lives or the lives of others.

The purpose of the amendment is to provide greater protection both at facilities where SNM is present and during the transportation of such material. This authority is needed to attain full comparability with safeguards at DOE-owned facilities and DOE transport systems. In informal discussions between the NRC staff and DOE personnel regarding external regulation of DOE nuclear facilities, DOE has expressed concern regarding the NRC lack of Section 161k coverage, and the implications this would have for regulation of security at such facilities if they came under NRC regulatory authority.

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Unauthorized Introduction of Dangerous Weapons

This amendment would allow the Commission to issue regulations that would, in effect, make it a Federal crime for an individual to introduce, without prior authorization, any dangerous weapon, explosive, or other dangerous instrument likely to produce substantial injury or damage into facilities subject to NRC licensing authority. The Commission currently has limited authority in this area. The NRC may impose sanctions against the licensee, but no Federal law permits imposing criminal sanctions against the individual responsible for bringing the weapon or other dangerous instrument on site. Enactment of this amendment would assist NRC licensees in their efforts to safeguard licensed nuclear facilities and materials against nuclear theft or radiological sabotage.

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Sabotage of Production, Utilization, Uranium Enrichment, Fuel Fabrication, or Waste Facilities

Section 236 of the Atomic Energy Act of 1954, as amended, currently addresses sabotage or attempted sabotage of production, utilization, and waste storage facilities. However, it can be argued that this provision is not applicable during the construction phase of such facilities. Past events have indicated that sabotage can occur during the construction phase that is not discovered until the operational phase, and thereby has the potential to impact public health and safety. This amendment would make it a Federal crime to sabotage such facilities during the construction phase, if the sabotaging action could jeopardize public health and safety. In addition, this amendment would extend these sabotage provisions--for all phases--to other types of facilities, including (1) waste treatment facilities, (2) waste disposal facilities, and (3) uranium enrichment or nuclear fuel fabrication facilities licensed or certified by the NRC. Enacting criminal sanctions to help deter sabotage and increasing the range of facilities covered will protect more adequately the public health and safety.

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Gift Acceptance Authority

This amendment would provide the NRC with general gift acceptance authority. To implement this new authority, the Commission would be required to establish criteria to ensure that the acceptance of a gift would not compromise the integrity of the work of the agency. The issue of NRC gift acceptance authority has arisen a number of times in recent years, primarily with respect to acceptance of library and training materials from outside sources. Many other government agencies currently have such authority.

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Office Location

This amendment would change the requirement that the NRC maintain an office for the services of process and papers within the District of Columbia (DC). The Atomic Energy Act requirement that the NRC maintain such an office was enacted before the Commission consolidated the agency in Rockville, Maryland, and there is no longer a sound reason for maintaining the DC office. The elimination of the requirement could result in a monetary savings for the agency, because it would eliminate the need to maintain a DC address for hand or mail delivery of documents. Commission efficiency would be enhanced if this statutory requirement were eliminated.

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Duration of Combined Construction and Operating Licenses

The Commission also is considering a staff proposal that the agency seek a technical correction having to do with the duration of a combined construction and operating license. Section 103 of the Atomic Energy Act authorizes the NRC to specify a duration of up to 40 years for any license it issues, including an initial operating license for a nuclear power plant. The Energy Policy Act of 1992 amended the Atomic Energy Act of 1954 to make explicit that the NRC can issue a combined license for construction and operation of a nuclear power plant. However, the Energy Policy Act did not make explicit that the duration of a combined license should allow for up to 40 years of operation. In the absence of such an explicit provision, Section 103 might be read to limit the period of operation under a combined license to 40 years, minus the time it took to construct the plant. There is no safety reason for such a limit, and the Congress that enacted the Energy Policy Act of 1992 did not explicitly consider the issue.

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I want to make one final point, regarding the extension of the requirement to recover approximately 100 percent of the NRC budget by assessing fees. As you may recall, 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 FY 1998, if the current requirement is not extended. The FY99 budget proposed by the President is based on extension of the 100 percent fee recovery through FY 2003. The Commission has submitted proposed authorization legislation that would extend the 100 percent fee recovery requirement in support of the budget proposed by the President. The Commission encourages the Congress to act on this extension so as to provide a sound future funding base for NRC programs. I will note that, to be fair to all NRC licensees, funding for regulatory reviews and other assistance provided to the DOE should be exempt from the fee requirement. To this end, our proposed FY99 appropriation legislation would exempt $3.2 million from fees for these activities.

In conclusion, the NRC is sensitive to the need to contain its costs of doing business to minimize the financial impact to its licensees. At the same time, we take very seriously our responsibility to ensure 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 that this Committee has afforded the agency in the past. The NRC hopes to continue to benefit from this support. In the Commission view, these programs are necessary to ensure effective regulation of an industry that touches virtually every facet of American life.

Mr. Chairman, this concludes my prepared statement. My Commission colleagues and I will be pleased to answer any questions that you and the Committee may have.

Page Last Reviewed/Updated Wednesday, April 15, 2020