[Senate Hearing 106-39]
[From the U.S. Government Publishing Office]


                                                         S. Hrg. 106-39
 
     NUCLEAR REGULATORY COMMISSION: REVIEW OF PROGRAMS AND REFORMS

=======================================================================

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
        CLEAN AIR, WETLANDS, PRIVATE PROPERTY AND NUCLEAR SAFETY

                                 OF THE

                              COMMITTEE ON
                      ENVIRONMENT AND PUBLIC WORKS
                          UNITED STATES SENATE

                       ONE HUNDRED SIXTH CONGRESS

                             FIRST SESSION

                               __________

                            FEBRUARY 4, 1999

                               __________

  Printed for the use of the Committee on Environment and Public Works

                               ----------

                     U.S. GOVERNMENT PRINTING OFFICE
55-912 cc                    WASHINGTON : 1999
_______________________________________________________________________
            For sale by the U.S. Government Printing Office
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                                 20402


               COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS

                       one hundred sixth congress
                 JOHN H. CHAFEE, Rhode Island, Chairman
JOHN W. WARNER, Virginia             MAX BAUCUS, Montana
ROBERT SMITH, New Hampshire          DANIEL PATRICK MOYNIHAN, New York
JAMES M. INHOFE, Oklahoma            FRANK R. LAUTENBERG, New Jersey
CRAIG THOMAS, Wyoming                HARRY REID, Nevada
CHRISTOPHER S. BOND, Missouri        BOB GRAHAM, Florida
GEORGE V. VOINOVICH, Ohio            JOSEPH I. LIEBERMAN, Connecticut
MICHAEL D. CRAPO, Idaho              BARBARA BOXER, California
ROBERT F. BENNETT, Utah              RON WYDEN, Oregon
KAY BAILEY HUTCHISON, Texas
                     Jimmie Powell, Staff Director
               J. Thomas Sliter, Minority Staff Director
                                 ------                                

  Subcommittee on Clean Air, Wetlands, Private Property, and Nuclear 
                                 Safety

               JAMES M. INHOFE, North Carolina, Chairman

GEORGE V. VOINOVICH, Ohio            BOB GRAHAM, Florida
ROBERT E. BENNETT, Utah              JOSEPH I. LIEBERMAN, Connecticut
KAY BAILEY HUTCHISON, Texas          BARBARA BOXER, California

                                  (ii)




                            C O N T E N T S

                              ----------                              
                                                                   Page

                            FEBRUARY 4, 1999
                           OPENING STATEMENTS

Bond, Hon. Christopher S., U.S. Senator from the State of 
  Missouri.......................................................     2
Graham, Hon. Bob, U.S. Senator from the State of Florida.........    10
Inhofe, Hon. James M., U.S. Senator from the State of Oklahoma...     1
Lieberman, Hon. Joseph I., U.S. Senator from the State of 
  Connecticut....................................................    12

                               WITNESSES

Colvin, Joe F., president and CEO, Nuclear Energy Institute......    24
    Prepared statement...........................................    72
Diaz, Hon. Nils, Commissioner, Nuclear Regulatory Commission.....     7
Dicus, Hon. Greta Joy, Commissioner, Nuclear Regulatory 
  Commission.....................................................     6
Jackson, Hon. Shirley Ann, Chairman, Nuclear Regulatory 
  Commission.....................................................     4
    Prepared statement...........................................    40
    Responses to additional questions from:
        Senator Bennett..........................................    69
        Senator Bond.............................................    70
        Senator Crapo............................................    63
        Senator Graham...........................................23, 67
        Senator Inhofe...........................................    54
Jones, Gary L., Associate Director for Energy, Resources, and 
  Science Issues, Resources, Community, and Economic Development 
  Division, General Accounting Office............................    26
    Prepared statement...........................................    79
Lochbaum, David, Nuclear Safety Engineer, Union of Concerned 
  Scientists.....................................................    29
    Prepared statement...........................................    85
    Response to an additional question from Senator Graham.......    89
McGaffigan, Hon. Edward, Jr., Commissioner, Nuclear Regulatory 
  Commission.....................................................     8
Merrifield, Hon. Jeffrey S., Commissioner, Nuclear Regulatory 
  Commission.....................................................     9
Rhodes, James T., chairman and CEO, Institute of Nuclear Power 
  Operations.....................................................    27
    Prepared statement...........................................    89
Sessions, Hon. Jeff, U.S. Senator from the State of Alabama......    31

                         ADDITIONAL STATEMENTS

Domenici, Hon. Pete V., U.S. Senator from the State of New Mexico    39
Fetter, Steven M., Fitch IBCA, Inc...............................    92

                                 (iii)

  


     NUCLEAR REGULATORY COMMISSION: REVIEW OF PROGRAMS AND REFORMS

                              ----------                              


                       THURSDAY, FEBRUARY 4, 1999

                             U.S. Senate,  
       Committee on Environment and Public Works,  
                     Subcommittee on Clean Air, Wetlands,  
                      Private Property, and Nuclear Safety,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 9:12 a.m. in 
room 406, Senate Dirksen Building, Hon. James N. Inhofe 
(chairman of the subcommittee) presiding.
    Present: Senators Inhofe, Bond, and Graham.
    Also present: Senator Sessions.

          OPENING STATEMENT OF HON. JAMES M. INHOFE, 
            U.S. SENATOR FROM THE STATE OF OKLAHOMA

    Senator Inhofe. The meeting will come to order.
    I guess I should open with an apology here. We originally 
were going to have this set for last week, if you will 
remember. Six months and a week ago we said we would have a 
meeting in 6 months, but that was when they were starting to 
take depositions in the impeachment matter, and I learned a 
long time ago that when you're in recess, you don't have 
hearings because there's no one around. Well, I don't have too 
many here right now.
    [Laughter.]
    Senator Inhofe. But they are going to be here. I understand 
that Senator Graham is on his way, and Senator Sessions and 
some others.
    We have a little bit of a timing problem, ladies and 
gentlemen, in that I just came from the National Prayer 
Breakfast; it didn't occur to me when we set this up that it 
was at the same time. And because of going back into trial, we 
are going to be having both the Democratic and Republican 
Caucuses, so we're going to go ahead and expedite this and 
maybe try to get it through in approximately 2 hours, maybe.
    So I will go ahead and start with an opening statement.
    I would like to recognize the new members of our 
subcommittee, who are not here yet but will be here: Senator 
Voinovich, Senator Bennett, and Senator Hutchison. Senator 
Hutchison, as we speak, is speaking at the National Prayer 
Breakfast, so she's going to be a little bit late.
    We are going to have a very busy Congress in both oversight 
and on legislation, including both FEMA and wetlands 
authorization bills, and I think we have 12 oversight hearings 
that we are scheduling at the present time.
    One of our last hearings last year was on oversight of the 
Nuclear Regulatory Commission. We held that hearing exactly 6 
months and 1 week ago, and at that time Chairman Jackson said 
we could ``expect these results in 6 months.'' Well, you've had 
6 months and 1 week, so we're going to have a lot more results 
than we thought we would have.
    [Laughter.]
    Senator Inhofe. At the July hearing we invited the 
commissioners back, and the witnesses from the second panel, to 
explain the impact of the changes that the NRC has implemented, 
and comment on the changes that the NRC has proposed. So I look 
forward to their testimony.
    Since the July hearing, the NRC's effort to change has been 
positive. I want to be sure that it works.
    On the issue of reform, I would be judging success by three 
measures. First of all, will the NRC meet its relicensing goal 
of processing the applications within 30 months? You will 
remember that 6 months ago we heard concerns that this could 
last for an interminable time.
    No. 2, will the general regulatory reform goals be 
implemented throughout every level of the NRC?
    And No. 3, will safety not be compromised?
    The first and the third goals are self-explanatory. 
Regarding the second goal, I am concerned that the reforms at 
the NRC will be embraced by the commissioners and the senior 
managers, but that they will not filter down through the NRC 
workforce. What we need is a cultural change at the NRC. I 
think we're all aware that Chairman Jackson will be leaving the 
Commission at the end of her term--on June 30, I believe it is, 
of this year--and yet, you can have changes at the top and they 
don't filter all the way down through the ranks. We want to 
make sure that that does happen.
    So we look forward to this hearing. I would also comment 
that we will have continued hearings. I think it is natural, 
and it is built into any bureaucracy, whether it's the NRC or 
anything else, if you don't have oversight, things tend to get 
very lax and, of course, you're going to probably have more 
oversight than you've had before, and this will be consistent; 
not just one spurt of it now, but it will continue throughout 
the years, at least as long as I chair this subcommittee.
    At this time I would recognize Senator Bond, one of our 
fine members from Missouri.

        OPENING STATEMENT OF HON. CHRISTOPHER S. BOND, 
            U.S. SENATOR FROM THE STATE OF MISSOURI

    Senator Bond. Thank you very much, Mr. Chairman. I 
certainly hope that our good friend, Senator Hutchison, is 
putting in a few good words for us. We need them in these 
days----
    [Laughter.]
    Senator Bond [continuing]. And I am glad she is covering us 
on that base.
    These are very busy times, as the chairman has mentioned. I 
apologize that I have a whole bunch of other things going on, 
but this is so important that I wanted to come by and extend my 
best wishes to Chairman Jackson and members of the Commission, 
particularly Commissioner Merrifield, whom we knew in a prior 
life, and we certainly enjoyed working with him there.
    I know the Nuclear Regulatory Commission has a very 
important mission, and that is to ensure that civilian uses of 
nuclear materials are done in a manner consistent with the 
public's health and safety, our country's national security, 
and in protection of environment.
    I want to take a moment to let the subcommittee, as well as 
the chairman and the members, know that I have some 
constituents in Missouri that are extremely concerned about the 
NRC's proposed revision of the medical uses of byproduct 
material regulation. It is going to be self-evident to anybody 
with whom I discuss this issue that I'm no expert on nuclear 
issues. I got out of physics just about the time they really 
started getting into that area, and I know very little about 
nuclear medicine. But I do have some experts at home, and I 
have experts located in St. Louis, MO, at Mallinckrodt. They 
are good corporate citizens and leaders in the field of nuclear 
medicine.
    They have concerns that they have expressed to me, and I 
share them with you, that the NRC is continuing to propose 
regulations in areas where there is no statistically 
significant radiation risk to workers, members of the public, 
or patients. One of these areas is diagnostic nuclear medicine, 
which uses trace amounts of radioactive isotopes, given to 
patients to diagnose diseases such as cancer, heart disease, 
Alzheimer's, and AIDS.
    I understand that after having spent approximately $2 
million of user fee money, the Commission rejected--with no 
explanation--the recommendations of the National Academy of 
Science Institute of Medicine report, and that report found 
that for nuclear medicine, the risk and probability of harm 
occurring to a patient or a member of the public is 
extraordinarily low, and recommended that the NRC reduce its 
focus in low-risk areas.
    I will not be able to stay for the question and answer 
portion. I will have my staff here. I would hope that you would 
be able to address that.
    Mr. Chairman, if I could, I would like to be able to submit 
several follow-up questions for the record.
    Senator Inhofe. Without objection.
    Senator Bond. I would ask, Madam Chair, if you would keep 
my office posted on this extremely important issue--not just to 
the people at Mallinckrodt, but to the hundreds of thousands of 
people whose health may be benefited by their work.
    I assure you, we will be following the NRC's action on this 
issue very closely. It is my hope that the NRC will work with 
all parties and use the best scientific, medical, and 
technological information available so that those who are 
interested in the medical uses of byproduct material can be 
sure that we reach a satisfactory outcome.
    Mr. Chairman, I thank you very much for the opportunity to 
present these concerns, which are of great importance to me.
    Senator Inhofe. Thank you, Senator Bond. We will be having 
a lot of written questions coming in, so we would certainly 
welcome yours. I know that some of the other members--Senator 
Sessions is going to be here in 40 minutes, and others will be 
coming in and out--so you will probably receive more questions 
in writing, which will expedite this hearing. Because of 
today's schedule, that's probably a good idea.
    The way we've divided the panels today is to start with the 
five commissioners from the NRC. The second panel will consist 
of industry groups and public interest groups and outside 
interests.
    I would like to give you an overview of how we will proceed 
during the public hearing. We have nine witnesses who will be 
testifying today. I will also mention that while some members 
of the subcommittee couldn't be here today, their staff is here 
and they will be submitting questions, as I said before.
    Each witness will be allowed 5 minutes for an opening 
statement, and as my little granddaughter says, ``red, yellow, 
green, we all know what that means.'' So if you would try to 
stay within that.
    Jeff, since this is your first hearing as a new 
commissioner, I am sure that you will adhere to your lights.
    [Laughter.]
    Mr. Merrifield. Indeed.
    Senator Inhofe. After the comments we will be asking 
questions; and then, of course, we will start with our next 
panel.
    I think that since some of the questions are going to be 
for both, although it may be a little bit disruptive, we're 
going to try to get everybody at the table at the same time, 
and I think maybe we can do that with the cooperation of the 
people sitting on the first row.
    So with that, Chairman Jackson, I will recognize you to 
begin with.

   STATEMENT OF HON. SHIRLEY ANN JACKSON, CHAIRMAN, NUCLEAR 
                     REGULATORY COMMISSION

    Ms. Jackson. Thank you very much, Mr. Chairman and members 
of the subcommittee. Thank you for this opportunity to present 
the substantial regulatory improvements that the Nuclear 
Regulatory Commission has made in the 6 months plus 1 week 
since our last hearing.
    Our reforms, which are rooted in initiatives begun over the 
last 4 years, have four goals: maintaining safety; reducing 
unnecessary regulatory burden; streamlining NRC regulatory 
processes, and enhancing our public credibility. I will 
highlight for you some of the significant accomplishments.
    First, we have streamlined the major NRC program offices, 
reducing the number of managers, improving organizational 
efficiency, and decreasing our overall resource requirements. 
By the end of this fiscal year we will have 330 NRC managers 
and supervisors, less than half the 700 we had in September 
1993. Our fiscal year 1999 budget will achieve our stated goal 
of an 8 to 1 staff-to-manager ratio.
    Second, we have accelerated a fundamental shift in the NRC 
regulatory paradigm. This shift is rooted in the Commission's 
commitment to risk-informed and performance-based regulation. 
In the past 6 months we have increased stakeholder involvement, 
refined NRC internal license review practices, completed pilot 
programs for risk-informed graded quality assurance, in-service 
testing, and in-service inspection, and are considering risk-
informing the complete body of power reactor regulations.
    In reactor oversight, perhaps the most substantial reform 
is our development of a comprehensive revision to our reactor 
assessment and inspection programs, built upon cornerstones of 
safe licensee performance that must be monitored to ensure no 
unacceptable risks in reactor operations.
    Performance indicators, integrated with the results of 
risk-informed baseline inspections, will allow the NRC to draw 
objective conclusions and to take regulatory actions that are 
linked clearly to licensee performance.
    In the past 6 months we also have reduced substantially the 
unnecessary NRC and licensee burden associated with low-level 
enforcement issues, while retaining those features essential to 
the oversight of licensee safety performance.
    Third, we have established fair, effective, and timely 
processes for license renewals, license transfers, and 
associated adjudicatory reviews. As an example, the NRC staff 
will complete the initial safety evaluation report and draft 
environmental impact statement for the Calvert Cliffs 
application on schedule, next month. In the absence of a 
hearing, we anticipate a completed NRC review and Commission 
decision on the Calvert Cliffs renewal application by May 2000, 
which is 25 months after its submittal.
    Despite these achievements, we clearly face continuing 
challenges, such as ensuring the integrity of our public 
petition process and examining our treatment of harassment and 
intimidation allegations. Other open issues include fire 
protection, the development of a risk-informed performance-
based revision to our medical use regulations, and ensuring the 
readiness of our licensees for the year 2000.
    In closing, I would like to emphasize to this subcommittee 
the Commission's commitment to completing and 
institutionalizing these regulatory reforms, as well as many 
others discussed in our written testimony and others not in the 
testimony, doing it in an enduring manner that will ensure 
long-range NRC effectiveness. In part, we are building this 
continuity through key rulemakings and Commission policy 
decisions that will guide future actions. In the larger sense, 
we are transforming the NRC regulatory culture and ensuring 
long-term stability by incorporating these changes into our 
agency-wide planning, budgeting, and performance management 
process, which is driven by our multiyear strategic plan and 
built upon the foundation of strategic assessment and 
rebaselining begun in 1995.
    Let me just assure you that this institutional framework 
will assure not just short-time and short-term adjustments, but 
building a legacy for the 21st century. We are communicating 
with our stakeholders, both internal and external, especially 
our staff, both continually and with focus, and we don't 
underestimate the challenge of effecting and managing change, 
especially internal to the NRC. But the NRC has an excellent 
and dedicated staff, and the Commission and the NRC senior 
management team are committed to leading change by 
communicating and inculcating these reforms throughout the NRC 
organization.
    With your continued attention and support, we will succeed.
    Thank you. I will be happy to answer any questions after my 
colleagues.
    Senator Inhofe. Well, thank you, Chairman Jackson, and 
thank you for your service and dedication. We will miss you 
when you are gone.
    I would like to ask each one of you if you have any opening 
statement. We will start with Commissioner Dicus.
    I would also want to ask you to include in your opening 
statements whether or not you agree with everything the 
chairman has said.
    [Laughter.]

   STATEMENT OF HON. GRETA JOY DICUS, COMMISSIONER, NUCLEAR 
                     REGULATORY COMMISSION

    Ms. Dicus. That's going to be the beginning of my 
statement, I think.
    Good morning. I am very pleased to have the opportunity to 
be here today and to be able to provide my views to the 
subcommittee on the important topics receiving attention at the 
NRC.
    The written testimony presented by the Commission and 
summarized in the chairman's opening statement was agreed to 
and is supported by all of the commissioners. There is, 
however, concern expressed about the commitment of the 
Commission to continue down the paths in our testimony.
    I can assure you that the Commission is committed to these 
activities. It is both internally and externally recognized 
that implementation of essential changes in the NRC's method of 
regulation requires time before we shift the NRC's internal 
regulatory culture, and for licensees to understand how to meet 
and to best utilize new methods of regulation. After all, we 
are asking professionals--those inside the NRC, together with 
those outside the NRC--that have been used to one method of 
regulation for a quarter of a century or more, to shift to a 
fundamentally new regulatory methodology.
    The fact that the process of integration of these changes 
will take time should come as a surprise to no one. That 
recognition, however, reinforces the need for the Commission to 
be committed to pursuing these improvements so that a new 
regulatory culture can develop in an effective manner.
    Therefore, let me assure you that the Commission will 
improve its regulatory structure for both nuclear power plants, 
as well as our materials licensees. The Commission will reach a 
determination on what constitutes an acceptable risk assessment 
for power plants. The Commission will determine appropriate 
regulatory use of those assessments. The Commission will find 
ways for the NRC to operate more effectively and efficiently, 
and the Commission will improve our ability to have early 
identification of plants that may be headed for problems in 
operations.
    Given current commissioner terms, and if there are no 
reappointments of sitting commissioners, I will be the last of 
the commissioners at this table whose term will expire. My 
current term does not end until June 30 of the year 2003. I 
want to give you my personal assurance that as long as I am on 
this commission, I will continue to pursue more effective and 
efficient methods for achieving NRC's regulatory mission. My 
goal is to see the initiatives that the Commission has begun 
advance throughout the coming years to a point where the long-
term regulatory improvements currently planned are either 
completed or nearing completion before I leave the Commission.
    Whatever changes in the Commission's makeup may occur in 
the coming years, I will continue to fully support, both 
internally and externally, the systematic improvements on which 
we have embarked.
    Thank you.
    Senator Inhofe. I want to thank you for that assurance, 
Commissioner Dicus. We appreciate it very much.
    Commissioner Diaz.

 STATEMENT OF HON. NILS DIAZ, COMMISSIONER, NUCLEAR REGULATORY 
                           COMMISSION

    Mr. Diaz. Mr. Chairman, members of the subcommittee, I do 
appreciate the opportunity to make a short statement.
    I do strongly support the many efforts at regulatory reform 
now underway at the NRC, and I do support the statements that 
my fellow commissioners have made. I assure you that I will 
work with my fellow commissioners to ensure that the 
initiatives are continued.
    I would like to call your attention to one aspect of the 
activities that I have supported since my appointment as 
commissioner. This can be loosely characterized as ``assuring 
due process.'' By ``due process,'' I mean not just compliance 
with the minimal requirements of the law, but implementation of 
fairness and equity in all regulatory activities, as befits a 
democratic society.
    You will forgive me if I am a little passionate on the 
subject of democracy, democratic institutions, and due process. 
That comes from having known what it is like to live in a 
society in which government is all-powerful and due process is 
unknown. It is that experience which makes me feel strongly 
that at every level of Government the rules must be clear, they 
must be evenly, fairly, and equitably applied, and the rules 
and the results communicated to the public without under-or 
over-estimation of the safety implications.
    I have emphasized that due process at the NRC must apply to 
many things--to the senior management meetings and its watch 
lists; to our policies on license amendment exemptions and 
license renewal; to inspection assessment and enforcement; to 
the hearing process; and to the protection of whistle-blowers, 
with appropriate safety concerns, and to public communications.
    A quick illustrative example. When I arrived at the 
Commission, the basis for placement of a plant on the NRC watch 
list was not transparent to either the Commission, the 
licensees, or the public. As you may recall, the Commission 
must now provide negative consent for the watch list. 
Explanation for such action has been made clearer, and we are 
revamping our entire inspection, assessment, and enforcement 
process.
    The Commission has made considerable progress in this and 
in all other areas that I have mentioned, but we must ensure 
that this progress not only continues but is propagated 
throughout all our other activities.
    In this respect, I believe the use of risk-informed 
regulations will bring technical due process to how we ensure 
safety by controlling risk and eliminating unnecessary burden.
    A final point. I am very encouraged by the collegial 
decisionmaking being exercised by the Commission. I am thankful 
for the opportunity you have given me to make these remarks, 
and I look forward to the very beneficial effects that your 
oversight brings to the NRC.
    Senator Inhofe. Thank you, Commissioner Diaz.
    Commissioner McGaffigan.

STATEMENT OF HON. EDWARD McGAFFIGAN, JR., COMMISSIONER, NUCLEAR 
                     REGULATORY COMMISSION

    Mr. McGaffigan. Thank you, Mr. Chairman.
    I join my colleagues in thanking you for the opportunity to 
testify today. As I said to you at the first hearing last July, 
I firmly believe that such congressional oversight hearings are 
essential, both for the Congress and for the Commission.
    Mr. Chairman, I am very proud of the Commission's 
accomplishments over the past 6 months. By any measure, this 
has been one of the most productive periods in the 24-year 
history of the Commission. Chairman Jackson has listed some of 
the highlights. I want to call particular attention to the 
policy changes made on low, safety-significant, so-called 
``Level IV'' violations.
    None of us could defend our policy as it existed last July, 
nor did we try. Indeed, as we testified, we were in the process 
of changing that policy.
    The chart to the left, which was part of the chairman's 
testimony, shows the reduction in Level IV violations requiring 
licensee response in the last 5 months. We are no longer 
diverting licensee resources to low safety-significant 
violations found by the NRC. Licensees are putting such 
findings into their corrective action programs and handling 
them as they would problems that they uncover themselves.
    This change came after extensive conversations with our 
stakeholders, and was supported by both industry 
representatives and by Mr. Lochbaum of the Union of Concerned 
Scientists.
    In the coming 6 months, Mr. Chairman, we will tackle 
additional issues in our enforcement policy, such as the issue 
of regulatory significance, as part of our overall effort to 
have an integrated inspection, assessment, and enforcement 
policy, and we will continue to involve our stakeholders in an 
unprecedented fashion.
    We could not have achieved all these policy changes without 
the extraordinary effort of our staff. They are the ones who 
achieved the results on the chairman's list, and many others as 
well. They and we are managing and experiencing an 
extraordinary series of simultaneous changes in programs, 
processes, and people. It has been exceedingly difficult, but 
also exceedingly rewarding, to manage these changes. We are 
grateful to the Congress for giving us the buy-out authority 
that was essential to achieving the 8 to 1 employee-to-manager 
ratio in a fair fashion. We lost many good people in the last 6 
months to retirement, but other equally capable people have 
stepped forward to carry on the change process.
    Our goal is to continue the pace of change in the coming 6 
months without slipping into the dysfunction that can often 
characterize institutions undergoing rapid change. I personally 
would welcome another hearing by this subcommittee in 6 months 
to check on our progress and to continue the productive dialog 
that you began with us last July.
    Thank you, Mr. Chairman.
    Senator Inhofe. Thank you, commissioner.
    The newest commissioner, Commissioner Merrifield.

STATEMENT OF HON. JEFFREY S. MERRIFIELD, COMMISSIONER, NUCLEAR 
                     REGULATORY COMMISSION

    Mr. Merrifield. Senator Inhofe, Mr. Chairman, thank you 
very much for you kind initial comments. I don't have any 
prepared remarks, but first I would like to associate myself 
with the comments of my fellow commissioners. I do sincerely 
believe that we are all in agreement on those matters.
    I do want to share with you more informally some 
observations that I have had since I have been a commissioner 
at the NRC, now totaling about 13 weeks at this point.
    When I first went to the Commission, I didn't have an 
appreciation for the consistently high quality of the staff 
that we have at the NRC. I knew that we had some high quality 
staffers, but I didn't realize the consistency of that. What 
brought that to my attention initially as a new commissioner 
was that I had to staff my own office. I had to hire a number 
of people to be part of my office, and I interviewed probably 
50 or 60 people in all who are employees of the NRC right now. 
One of the questions that I asked them went very much to the 
issue--of the three that you mentioned, No. 2--do they believe 
that the regulatory reform goals that we are initiating are 
appropriate? And were they, as staff, committed to the cultural 
change needed to make that happen?
    The answer that I uniformly received was yes. I think the 
staff does believe that the changes that we have been making 
and that have been encouraged by your subcommittee are 
important. They take the NRC into the 21st century and put us 
in the regulatory environment in which we need to be. I think 
that is instructive and helpful.
    Similarly, in visits that I have made to plants around the 
country, I have met with our regional inspectors, the folks at 
the very plants who are doing the Level IV violation work, and 
they too agree that we need to make that cultural change and 
are committed to it.
    Finally, I met with a number of CEOs over the course of the 
last couple of months, many of whom have wanted to come in and 
meet me as a new commissioner. They too, when asked, uniformly 
agreed that the NRC is making the kind of changes needed to get 
us in the right place. So I think that's a very appropriate 
message.
    A couple other things that I want to mention before I 
close. We are going to receive some questions, I presume, about 
where we stand on the Y2K issues, and I would be happy to 
address those in the question period, as well as follow up on 
some of the issues raised by Senator Bond on Part 35 that I 
feel we do have an appropriate answer for.
    One final thing that I have found as a new commissioner. I 
think this is a unified Commission. I think that having five 
commissioners is important; I think we work better that way. 
One of the problems that has occurred at the Commission is that 
we had a lapse; we had a period where we only had a few 
commissioners.
    As you are looking forward to making changes in our 
authority, as the authorizing committee, one that I would 
recommend is the notion of having an overlap so that the 
commissioners can stay on to the end of the calendar year, when 
their terms end. I think having a unity of the Commission is 
important, and I encourage this committee, as soon as there is 
a nomination, to move forward quickly with a replacement for 
Chairman Jackson, who will indeed be missed.
    Thank you for permitting me to testify.
    Senator Inhofe. Thank you, Commissioner Merrifield.
    So that you will be aware of it, you mentioned Y2K. I also 
chair the Senate Armed Services Readiness Committee, and we're 
going to be having a joint hearing between this committee and 
the Readiness Committee on February 24, specifically on Y2K. So 
we probably won't be getting into that at this time.
    We have had a lot of interest shown--Senator Lieberman, who 
is on this committee, has already submitted some questions, as 
has Senator Pete Domenici, who is not on this committee. So 
there is interest outside.
    We have been joined by our ranking member on this 
committee, and I would ask Senator Graham for any opening 
statements or comments at this time.

  OPENING STATEMENT OF HON. BOB GRAHAM, U.S. SENATOR FROM THE 
                        STATE OF FLORIDA

    Senator Graham. Thank you very much, Mr. Chairman. I 
appreciate your holding this series of oversight hearings. I 
think the Nation is well served by having men and women of such 
distinction on the NRC. And as has been said by most, we have a 
particular responsibility to see that the Commission continues 
to not only be a functioning body, but more importantly, have 
the confidence of the American people in the very important 
regulatory activities that they conduct.
    I welcome all the members of the Commission. I will have to 
say that I have a particular welcome for my friend, 
Commissioner Diaz, a fellow Floridian, who had contributed so 
much to our State before coming to this national 
responsibility. Before joining the NRC, Professor Diaz was 
director of the Innovative Nuclear Space Power and Propulsion 
Institute at the University of Florida. Our State is proud to 
have one of its most distinguished citizens in such a critical 
position.
    Today we will be conducting an oversight hearing on 
regulatory reforms and changes within the Nuclear Regulatory 
Commission. I have a particular concern that is going to be the 
focus of my questions, so I would like to lay it out in my 
opening statement.
    This hearing comes at a critical stage in America's use of 
nuclear power for commercial purposes. According to the Energy 
Information Administration, the percentage of electricity 
generated by nuclear power reached a peak of 22.5 percent in 
1995. In the last 10 months of 1998, nuclear power generated 
20.5 percent of our electric supply. The EIA projects that this 
percentage will continue to decline. By 2010, only 18 percent 
of our electric supply will be generated by nuclear power.
    To summarize, over a 15-year period, from 1995 to 2010, 
nuclear as a percentage of America's electrical generation will 
decline from 22.5 percent to 18 percent.
    I might say, I checked these numbers as they relate to my 
State of Florida, which has five nuclear plants at three sites, 
and found that the decline was similar. In 1995, 20 percent of 
my State's electricity was generated by nuclear; by 1998, that 
had declined to 16 percent, and the projection is on a similar 
declining glide slope through the year 2010.
    We are particularly proud of Florida's nuclear plants, 
especially Turkey Point Nuclear Power Plant, one of the older 
plants in the country, which for the last three rating periods 
has received the highest scores available through the NRC.
    During this decline in the percentage of our electric 
supply generated by nuclear power, we are facing some extreme 
challenges. A major set of those challenges relates to our 
national and international commitments to reduce greenhouse gas 
emissions and avoid impacting the global environment through 
climate change. Looking at carbon dioxide emissions alone, the 
use of nuclear power plants instead of fossil fuel plants that 
would have generated the same amount of electricity--nuclear 
plants have avoided two billion tons, two billion tons of 
carbon emissions, since 1973.
    Today the size of our nuclear industry in the United States 
has reached and passed its peak. There are no new plants 
currently scheduled to come on line. Older plants are reaching 
the end of their service lives. At the same time, the demand 
for electricity in the United States is predicted to continue 
to increase.
    So this raises a series of questions. One of those is how 
we are to meet these increasing demands for power while taking 
responsible action to reduce greenhouse gas emissions.
    Now, I will submit one suggestion for response to that 
question which came in the form of a letter from one of my 
constituents, who is in the 4th grade at Callahan, Florida 
Elementary School. His letter stated as follows:

          The way we can stop from using so much oil is to make laws 
        about using so much power. What people need to do is live in 
        log cabins with nothing but lanterns and candles. That wouldn't 
        use so much power.

    [Laughter.]
    Senator Graham. While it is unlikely that we will adopt his 
suggestion, this student identified a basic law of energy 
economics--to reduce energy demand, we must change behavior. By 
implementing energy conservation programs and seeking 
alternative energy sources, we are moving toward this goal.
    But projected increases in electricity demand indicate that 
there is much more to be done. We need a plan. I recognize that 
nuclear power's role in this plan is, to say the least, 
controversial. I recognize the concerns associated with the use 
of nuclear power and the waste it generates. I believe our 
subcommittee is committed to addressing these issues.
    As we proceed through today's hearing, I would like to ask 
the committee members, the panelists, and the audience to keep 
the following questions in mind:
    Is the current state of decline of our nuclear industry 
desireable?
    Is the decline from 22.5 percent to 18 percent of America's 
electrical generation in a period of 15 years a desireable 
national policy and consequence?
    What are the tradeoffs, including global warming 
obligations, that we will need to make if we are to meet our 
anticipated increased electric demands without a viable nuclear 
industry?
    What will be the changes in behavior required of other 
sectors of our society and economy if we are to accept a 
continued decline in the proportion of our electrical 
generation met through nuclear power?
    Is the current decline of our nuclear industry 
irreversible? Are we in a situation in which we are dealing 
with factors beyond our control, and thus rather than focus on 
change, we must focus on consequences?
    If it were desireable to do so, how could the NRC impact 
the economic viability of the nuclear industry and reverse this 
trend?
    The answers to these questions will be an integral part of 
our Nation's strategy to meet our future energy needs, and will 
be a determining factor in the domestic impact of actions to 
reduce greenhouse gas emissions.
    I look forward to your comments and the comments of our 
colleagues and the other panelists who will be with us today. I 
also have a statement for the record from Senator Lieberman.
    Thank you, Mr. Chairman.
    [The prepared statement of Senator Lieberman follows:]
 Prepared Statement of Hon. Joseph I. Lieberman, U.S. Senator from the 
                          State of Connecticut
    Thank you Mr. Chairman and I appreciate your holding this oversight 
hearing on the Nuclear Regulatory Commission. As you know, I have 
strongly advocated these hearings. I regret that I will be unable to 
stay for this hearing, but I must attend a markup in the Armed Services 
Committee.
    This may be the last hearing before Chairman Jackson departs at the 
end of her term in June to become president of Rensellear Polytechnic 
Institute. I think there is widespread agreement that Chairman Jackson 
has made a tremendous positive contribution to the functioning of the 
NRC. I thank her for that contribution on behalf of the people of 
Connecticut. Regaining the trust of the citizens of southeast 
Connecticut in nuclear power has been a slow process, but the 
chairman's openness and responsiveness to the community and her total 
commitment to safety as a first priority have made an enormous 
difference. We wish her well in her new challenges.
    In response to the last oversight hearing of this subcommittee, the 
NRC has set forth several performance goals: maintain safety, reduce 
unnecessary regulatory burden, increase public confidence and increase 
efficiency and effectiveness of key NRC processes.
    These are worthy performance goals and they are well-stated. They 
probably could gain widespread approval. However, I am concerned about 
some of the details of these goals, and my concern comes from the work 
that the GAO has been doing for me over several years. The GAO's most 
recent project for me focuses on how the NRC defines safety, and 
whether some new NRC initiatives will improve the safety of reactors.
    One of these new NRC initiatives is known as risk-informed 
regulation. On the surface, this sounds good: everyone wants 
regulations to take into account information about risk, in other 
words, make sure that the NRC and licensees focus resources in areas 
commensurate with their importance to health and safety.
    But the GAO today raises questions about whether this new approach 
to regulation will actually make any difference in terms of improving 
the safety of reactors. The GAO indicates that the NRC hasn't done the 
analysis necessary to determine whether this new approach will improve 
safety. The GAO also questions whether the NRC has the proper 
foundation to move forward with risk-based regulation. This approach to 
regulation assumes that the NRC and the licensees fully understand the 
design basis of a reactor, and that the reactor is in compliance with 
that design basis. Without this type of information, it is extremely 
difficult to make well-informed decisions about which problem presents 
the most risk and needs to be addressed first.
    Unfortunately, however, our experience over the last several years 
has shown that the NRC and licensees often lack basic information about 
the design basis of a plant.
    It's my view that before the NRC fully adopts this risk-based 
approach to regulation, it needs to convince the public that the 
approach will improve safety. I'm all in favor of reducing unnecessary 
regulatory burdens on licensees, but we need to keep in mind our first 
goal of insuring safety.
    I'd like to take a few minutes to address one other issue, Mr. 
Chairman.
    One of my major concerns over the last several years--in fact it 
was a big focus of my attention when I was the chairman of this 
subcommittee--has been the NRC's handling of whistleblowers. As we've 
learned from our experience at Millstone, whistleblowers can provide 
invaluable information about what's going wrong at a plant.
    In recent years, Chairman Jackson has made significant strides in 
improving the way the Agency handles complaints from whistleblowers. 
But I was very disturbed recently at the NRC's approach to 
investigating allegations of harassment and intimidation associated 
with the layoff of 106 employees at Millstone. I asked for the 
Inspector General to investigate these layoffs, and he recently issued 
a report critical of the NRC's actions.
    To her credit, Chairman Jackson immediately appointed an 
administrative law judge to do an independent review of the layoffs, 
although there is some concern that the investigators assisting the 
judge may not be independent of the Agency.
    While I'm pleased with the chairman's swift response to the 
Inspector General's report, I'm concerned that her personal commitment 
to treating potential whistleblowers with seriousness and respect may 
not be as widespread throughout the Agency as it needs to be. In other 
words, it is important that policy directives from the top be 
implemented at all levels and that the Commission itself follows 
through on these policies.
    Thank you again, Mr. Chairman, and I regret I cannot stay.

    Senator Inhofe. Thank you, Senator Graham.
    To demonstrate the flexibility of this committee, my idea 
has been rejected and we are going to go back to the original 
format, where you would stay here for questions. But if you 
could remain here while the other panel makes its 
presentation--will all five of you be able to do that?--so that 
in the event there is some contradiction, some of you can come 
forward?
    Thank you.
    Chairman Jackson, since this is probably your last 
appearance before this subcommittee, I again want to thank you 
for all the help you have been and for your dedication. As I 
said in my opening statement, I want to make sure that the 
reforms are fully implemented. I know you've worked hard, but 
you won't be here, and some of the other commissioners may not 
be here later on when we want to make sure that this is 
ongoing.
    I just would ask you, Chairman Jackson, are you still on 
track for finishing each license renewal application within 30 
to 36 months?
    Ms. Jackson. Yes, Mr. Chairman. Each milestone laid out in 
our license renewal schedule for the Calvert Cliffs 
application, and the Oconee application, each milestone has 
been met up through December 31, 1998, and it's still on track. 
There has been a high degree of management oversight. There is 
a License Renewal Steering Committee that has been set up, 
comprised of senior managers, who meet on a regular basis. 
Their job is to ensure that issues can be resolved before they 
become sticking points, and the executive council has been 
directed by me to provide additional oversight to ensure that 
resources get moved around and that any policy issues are 
surfaced on a rapid basis.
    But we have met all of our milestones; and, as you know, 
there were petitions for intervention which our licensing 
panels denied; and the Commission, in the case of the Calvert 
Cliffs application, upheld that position. If there is no 
contest, we expect to complete the Calvert Cliffs license 
renewal in 25 months, and that's ahead of the originally 
projected 30 to 36 months. But it is a very aggressive 
schedule, and it assumes no hiccups, but so far we are 
definitely on track.
    Senator Inhofe. Well, that's good news, Madam Chairman.
    I would like to ask each commissioner if they would like to 
comment, at least whether you agree or disagree, and elaborate 
if you wish.
    Commissioner Dicus.
    Ms. Dicus. Well, clearly I agree with what the chairman has 
said. The information she has provided to you is accurate. We 
are definitely, with Calvert Cliffs, a little bit ahead of 
schedule; and certainly with Oconee, we are definitely on 
schedule. Barring any unforeseen activities that would occur, 
something that we can't anticipate, we should certainly finish 
these as she said, Calvert Cliffs in 25 months and Oconee, if 
not ahead of time, certainly on schedule.
    Senator Inhofe. Commissioner Diaz.
    Mr. Diaz. I totally agree. I do believe that a significant 
thing that has been done is to upgrade the way we conduct the 
hearing process. I think the changes that we are making there 
have been very beneficial.
    Senator Inhofe. Commissioner McGaffigan.
    Mr. McGaffigan. Sir, I also agree. I think the staff-
licensee dialog has been extraordinary. We are talking almost 
weekly in public with both Duke and BG&E, Baltimore Gas & 
Electric, and that's a real change. But we have much better 
communication in this process than I think we've had 
previously.
    Mr. Merrifield. I would agree. And perhaps anticipating 
your next question, I think there's a uniformity among the 
commissioners and the staff to ensure that as we go along this 
process, we continue to find ways of saving time. And I think 
that internally we should be shooting for a shorter time period 
as we go through this renewal process.
    Senator Inhofe. I would also like to ask any of you--maybe 
you, Chairman Jackson--can you foresee any reason why this 
would be delayed, anything that is out there that we may not be 
aware of right now that could cause an obstacle or a problem in 
meeting this schedule?
    Ms. Jackson. Well, I would say that there are always two 
potential vulnerabilities. One is that the public, with 
appropriate standing, does have the right to intervene, and the 
National Whistleblower Center did petition for a hearing. As I 
say, that was denied; the Commission upheld that. But they have 
the right to appeal that, and they have done that, and so 
really, that is a vulnerability, depending upon how the Appeals 
Court rules.
    The other type of vulnerability is whether one gets stuck 
on any particular technical review issues that create a 
problem, and that's why we have the degree of oversight built 
into the process. And of course there's a third, having to do 
with the environmental impact statement process. But at this 
point we don't see any roadblocks in that regard.
    Senator Inhofe. Any other comments?
    Mr. McGaffigan. Sir, there is one additional one. The 
Advisory Committee on Reactor Safeguards has a statutory 
responsibility to look at each of these. We have built that 
into the process. We met with them yesterday, and they are 
trying to work in parallel. They look at the safety evaluation, 
not the environmental evaluation, and we have built in from 
November to February, approximately, for them to do their job, 
and they're starting it now. They're not going to wait until 
November; they're going to start getting briefed now. But that 
process at times can be a little bit of a wild card.
    Ms. Jackson. But I do believe that they are committed to 
trying to work with us.
    Senator Inhofe. But you have, in anticipating that--that's 
not totally unforeseen----
    Mr. McGaffigan. Yes. That's totally anticipated.
    Senator Inhofe. Good.
    Any other comments?
    [No response.]
    Senator Inhofe. One of the concerns you always have, or 
that I would have, is that other distracting issues might get 
in the way. Our concern is to make sure that this equipment is 
working safely and properly for the next 30 or 40 years or 
whatever the licensing is, but other issues could come up in 
there, like reliving the plant siting issues and all that, 
things that I would want to guard against.
    Do you have any process to ensure that site issues aren't 
thrown into the renewal process?
    Ms. Jackson. The way the staff reviews are structured, they 
are predicated on review plans; we call them standard review 
plans, and they are built squarely on two regulations, one 
having to do with the actual technical reviews, 10 CFR Part 54, 
and one for environmental reviews.
    In fact, a couple of years ago the Commission revised both 
the Part 54, but also Part 51, to allow more generic resolution 
of environmental issues. So those are what we've done to try to 
keep things on track.
    But in the end, if you're having technical reviews, the 
staff has to do those reviews in a complete and a fair way. 
They are much more focused than they might have been otherwise. 
And the environmental reviews are being done in a fair and 
complete way, and the whole environmental impact statement 
process is also a public process.
    So those are the kinds of things that are not totally 
within our control, but what we can control is the tightness of 
the review and adherence to our own schedule.
    Senator Inhofe. Any other comments about that?
    Mr. Merrifield. I would add one other thing. One of the 
ways in which we can get off track is if the Commission doesn't 
provide the right instructions to the staff, and we give them 
side issues and send them off into areas that they shouldn't be 
in. I think, speaking only for myself, license renewal is a top 
priority, and whenever I have an opportunity to meet with 
staff, I make it clear that that's an issue where they ought to 
be putting their attention.
    Ms. Dicus. Just to add, the issues that we're dealing with 
with license renewal are what I call the ``going forward'' 
issues, the issues that have to do with aging, to ensure that 
the plant can be operated safely. It's not the past issues. For 
example, siting--that's been determined; that is not an issue 
that we will go back to during license renewal.
    Senator Inhofe. Thank you very much.
    Senator Graham--I do have another question, but I would 
like to defer to Senator Graham for questions at this time.
    Senator Graham. I know that a number of other plants which 
are reaching the end of their current permitted life are 
deferring an application for extension until they see the 
results of these first two plants. Do you think that is a 
desireable policy, for other plants to defer until these two 
are resolved before making a decision? Or would you recommend 
that those who feel that they want to extend the life should 
submit their applications while the two current ones are still 
in process?
    Ms. Jackson. Well, Senator, if I may start, in fact I think 
we've been ``invitational'' relative to having licensees come 
forward with license renewal applications. I think we've 
invited those.
    The point we have made--and we are in dialog with a number 
of licensees who we expect within the next 2 years to submit 
license renewal applications, and that dialog is important so 
that we can stage those reviews and plan and make sure that we 
have the resources in place to do those reviews in as timely a 
manner as we can.
    Second, we in fact have a group that meets with an NEI 
group on license renewal to continue to talk about issues, both 
generic and specific, to refine the process so as to give 
potential license renewal applicants more comfort that the 
process is getting better all the time.
    And so my statement to you is, ``invitational'' and focused 
on planning is where we are.
    Senator Graham. Did anyone else want to comment on that 
question?
    Mr. Diaz. I just wanted to say that a little bit of delay 
sometimes is not bad, because the jury is still out. I think 
they are looking to see how the process works.
    Also, it's a very complex economic decision that has to be 
phased into what are the other expenses that the plant will 
have to go through.
    So a little bit of delay actually works OK for some people; 
however, the Commission would like to get the applications as 
early as possible so that we can put them into our license 
renewal process.
    Ms. Dicus. The issue that the chairman brought up, about 
being almost invitational, we continue to hear of more and more 
applicants--utilities--that are considering license renewal, to 
the point where we are having those conversations with the 
industry to try to ``gate'' some of these renewal applications 
so that we do not get a large number in 1 year where we're not 
prepared to deal with it. So we are discussing that with the 
industry.
    Mr. McGaffigan. Sir, I would add that we do have budgeted, 
I believe, four for fiscal year 2000. We know that Arkansas 
Nuclear 1 announced that it is coming in in December; Turkey 
Point may be soon thereafter; and others, and we welcome that.
    The best endorsement we're getting at the moment is from 
the applicants who are in the process. Mr. Mike Tuckman of Duke 
at a recent NEI meeting that I attended with Chief Nuclear 
Officers said, and I'm pretty close to a quote, ``The water is 
good, come on in,'' to his fellow Chief Nuclear Officers at the 
plants around the country.
    So I think that the process is working. We will improve it, 
as Commissioner Merrifield said, as we go forward, but we have 
a pretty sound process right now.
    Senator Graham. If I could, Mr. Chairman, I'd like to ask 
this panel the first of a series of questions that I outlined 
in my opening statement, and that is--I recognize that you're a 
regulatory body, not a macropolicymaking body, but you also are 
in a unique position to evaluate some of the most significant 
aspects of the macro issues surrounding this industry, such as 
the fundamental safety and compatibility of these plants with 
adjacent neighborhoods, the environmental consequences of the 
operation of nuclear, and so forth.
    I indicated the statistics relative to what is happening 
now, a rather precipitous decline in the proportion of our 
electrical energy being generated by nuclear. Do you consider 
that this current state of decline in our nuclear industry is a 
desireable national trend?
    Ms. Jackson. Well, I am a proponent of nuclear power. I 
regulate it, but I believe in it. So no, I don't think it is 
desireable to have a decline. I think having a diversity of 
energy supply from an economic security point of view is an 
important goal.
    In addition, I think as you implied in laying out the 
series of questions that you would like us to address, you 
spoke to the issues of global warming and mitigation of 
greenhouse gases, and I think we all recognize that nuclear 
represents an emissions-free source. But there is no free 
lunch. One has to maintain a compact with the public that 
allows nuclear power to flourish, and that does require the 
safe operation of the plants, and they are safe, but it also 
requires a belief by the public in the safe operation of the 
plants.
    And then the final thing I would mention is that the issue 
of disposition of spent fuel and high-level waste does have to 
be resolved, because in the end that does affect both public 
credibility, and it has environmental impact if it is not 
addressed. It may not have impact relative to air quality, but 
it can have environmental impact in terms of grounds and 
contamination and the like. But we feel our regulatory regime 
at the moment allows for the safe storage of spent fuel and 
high-level waste onsite for as long as 90 years, but in the end 
there has to be a resolution.
    Ms. Dicus. I agree with everything the chairman has said 
wholeheartedly.
    I might also add--I can't quote the exact figures, but it's 
my understanding that if we continue to have a decline in use 
of nuclear-generated power, we will have to more than double 
our efforts to meet our greenhouse gas reduction goals, and at 
tremendous additional cost to the Nation.
    Senator Graham. I remember a statement made by the 
Assistant Secretary of the Department of Energy with 
responsibility for energy statistical analysis, that if the 
United States in the year 2015 had the same proportion of its 
electrical generating capacity in nuclear that France does 
today--and I recognize that that is a theoretical but 
unrealizeable goal, but to use it as a standard--that if in 
2015 we had the French standard, we would meet between 80 and 
120 percent of our year 2015 greenhouse obligations. So it's an 
enormous strategic component of the Nation's obligation under 
the Kyoto agreement, and for our own national concern.
    I think we need to think about the use of nuclear in terms 
of what are the consequences if we don't have nuclear, how much 
other behavioral change will be required elsewhere in our 
society and in our economy in order to make up for the lost 
opportunity to meet a substantial amount of our obligation 
through the use of nuclear-generated electricity.
    So if I could, Mr. Chairman, just ask--the last question in 
my series was, if it is desireable to reverse this trend, how 
could the NRC impact the economic viability of the nuclear 
industry and contribute to such a reversal?
    Ms. Jackson. If I may begin, I believe there are four ways 
that the NRC has impact.
    The first is how we conduct our business, and that is what 
has been the focus of this committee's attention. We are 
shifting the regulatory paradigm to become risk-informed and 
performance-based. We are shifting the regulatory paradigm to 
implement a new assessment, inspection, and enforcement program 
that is focused on the right things, that has clear thresholds 
built into it, and that provides a baseline level of oversight 
and burden, but no unnecessary burden beyond that. We are 
improving our internal operations through our planning, 
budgeting, and performance management process that is outcomes-
focused and meant to make us more efficient and accountable. 
And we are being responsive to our various publics, to all of 
our stakeholders.
    The second has to do with our facilitating continued 
operations of existing plants, and that is what license renewal 
is all about. We think that we have a good process, but one 
that has to be--and is--protective of public health and safety.
    Third, we have to be responsive to new ownership 
arrangements as the electric utility industry restructures, and 
we think we have the basis for that in how we've been aligning 
ourselves in terms of license transfers. The Commission made a 
decision to add a part to 10 CFR Part 2 to allow more informal 
hearings for license transfers. But in addition, we have 
aligned ourselves internally in terms of the various reviews we 
have to do.
    And finally, the fourth is that we have to be prepared to 
license new plants. We have laid the groundwork for that. There 
is a regulation that existed before any of us arrived on the 
scene; that's 10 CFR Part 52, but we've laid out a review plan 
relative to that. We have done design certification rulemakings 
for two advanced reactors, the Advanced Boiling Water Reactor 
and the Combustion Engineering System 80+, and last year we 
completed the final design approval for the Westinghouse AP-600 
design.
    So those four ways--how we conduct our business, allowing 
continued operations of existing plants, being responsive to 
new ownership and business arrangements in the electric utility 
industry, and preparing and laying the groundwork for license 
renewal--are four ways that we as regulators can do our jobs, 
but all in a way that is protective of public health and 
safety.
    Mr. Merrifield. Senator Graham, I would like to associate 
myself with the remarks of the chairman, both in her response 
now and in her previous response. I completely agree with them.
    The only other thing I would add is this. For those of us 
who are supportive of the uses of nuclear power, there is an 
issue that we all have to grapple with now, and that is the 
practicalities of the cost of alternative forms of energy, such 
as coal and oil, which do have an impact on the decision of a 
utility to move forward with a new plant. And that's certainly 
something that we have no control over.
    Finally, there is ultimately an issue of a utility deciding 
to move forward and build a plant. I think we've put ourselves 
in a position of being ready to act on that selection, with a 
design certification moving forward. We also have a process 
available if a utility would like to pre-designate a new site 
where they would like to build a plant; we can certify that 
selection as well and allow them to put that site on the shelf 
for future use.
    So I think we have done what is necessary to move forward, 
and we are ready, willing and able if a utility moves forward 
with a plant design, and we will move forward and work on 
licensing that facility.
    Mr. Diaz. Senator, if I may add something?
    In this process of reversing this trend, which I believe 
should be reversed, there are a series of political issues that 
need to be resolved. There are a series of economic issues that 
need to be resolved. There is the issue of the effectiveness of 
the Nuclear Regulatory Commission, which is a very important 
issue; that's one that we can deal with in a very tight and 
controlled manner.
    And then there is the issue of public communications. This 
is a vital issue because unless this is addressed, there will 
always be the question out there whether this is really a 
viable and safe technology.
    The composite of those political, social, economic, and 
regulatory issues is what could make it viable, to reverse the 
trend.
    Mr. McGaffigan. Sir, one last comment, if I could.
    The heart of the rule that Chairman Jackson mentioned was 
to take a two-step process and make it a single-step process in 
getting a combined operation and construction license. That was 
endorsed by Congress in 1992; former Senator Johnston was the 
prime mover in getting that endorsement of the Commission rule.
    Our hearing process will obviously be challenged by any 
such application, and I think there is probably some concern 
about our hearing process. We have done what we can in the last 
few months, but the issue is very much before us, whether there 
are further reforms that we need to make in our hearing process 
to make it more streamlined for new applicants.
    I just wanted to call that to your attention.
    Senator Inhofe. Thank you, Senator Graham. I think those 
last two questions will be appropriate questions for the next 
panel, also.
    Let me just wind this up. Last July I asked a question 
stemming from the two quotes, the one of the former 
commissioner, Dr. Remick, and another from the former head of 
the INPO, Dr. Pate. Let me read these quotes again and ask each 
of you to respond in terms of the cultural change and what you 
are anticipating in the future.
    Dr. Remick said,

          The Commission does not know in detail how the Agency's 
        programs are being performed in the field. The overemphasis on 
        blind adherence to strict compliance in every confusing 
        regulation, to strict compliance with documents never intended 
        for that purpose, is in some cases diverting attention from 
        more safety-related activities.

    And Dr. Pate said,

          Headquarters and regional personnel routinely--every day, and 
        indeed, every hour--impose requirements on the plants that the 
        Commission or other senior managers would not support if, in 
        each instance, you knew what was happening.

    Since we read those quotes 6 months ago--why don't we start 
with you, Chairman Jackson, as to how you see this changing; 
not just what has happened over the last 6 months, but for the 
future.
    Ms. Jackson. OK. Senator, if I may, a member of my staff 
had a picture of a contorted road that he gave me not long 
after the hearing last July, and at the bottom was a phrase 
that said, ``A bend in the road is not the end of the road 
unless you fail to make the turn.''
    [Laughter.]
    Ms. Jackson. So what I would like to posit is that, in 
fact, the Commission and all of the NRC is making the turn at 
the bend in the road, and we're doing that by virtue of the 
overall new assessment, inspection, and enforcement process 
that we are designing. It is not in place yet, one has to be 
honest, but we have worked with stakeholders, with NEI, with 
the Union of Concerned Scientists, in developing this. But I 
think we've taken some very specific short-term steps having to 
do with low-level violations, and you saw the trend graph; that 
is real. We have changed the enforcement process that way. But 
also, over the next couple of months we are going to align the 
overall enforcement program with the assessment and inspection 
program.
    We are renormalizing the inspection program. We are 
creating what we are calling a risk-informed baseline 
inspection; it's what is the minimum that we need to do to 
assure public health and safety, but only go beyond that for 
cause. And that's going to cause a major change.
    But we have an educational job to do--training, 
communication, education, coaching--with the staff, but you 
have arrayed behind us an excellent management team, and these 
folks have been making hard decisions, working themselves to 
death and working those who work for them to death, and they 
are working to drive all of the change through the 
organization.
    I think that, coupled with the commitment you have heard 
from this Commission, is the greatest opportunity we have to 
ensure that we complete that bend.
    Senator Inhofe. I think that is very well said.
    Does anyone have any disagreement with that statement?
    [Chorus of noes.]
    Senator Inhofe. How about you in the audience? Any 
disagreement out there?
    [Laughter.]
    Senator Inhofe. Well, I appreciate that very much.
    Do you have any further questions for this panel, Senator 
Graham?
    Senator Graham. No, Mr. Chairman.
    Mr. Merrifield. Senator, I agree with what the chairman 
said. I think it's a long road. We have made part of the travel 
on that road, but we are not there yet. The chairman mentioned 
Level IV violations; I think that's a measure of our progress. 
Another one which wasn't mentioned is the issue of confirmatory 
action letters, where we send out a letter to a licensee and 
want to confirm that they're taking an action. We have used a 
significant number of those in the past and have had a dramatic 
decrease in the number of those issued in the course of the 
last 6 months because of more stringent changes made.
    We do need to keep on top of making sure that the decisions 
that we make as commissioners, that are implemented by our 
staff in Rockville, are followed through with our regions, and 
that is something that we need to continue to make more 
progress on. I think the efforts toward investigations and 
enforcement are a further effort to try to achieve that goal, 
and I certainly believe that it's something that we need to 
keep on top of in order to make sure that the actions that 
we've taken that have made progress in Level IV are consistent 
throughout the Agency and our regions.
    Mr. Diaz. Senator, if I may add something?
    I have labeled this Commission an ``engaging'' Commission, 
and sometimes--I don't know whether it's at the right level or 
not--but one thing that we have been asking continuously is, 
what is happening at the interfaces among the different levels 
of the staff, between headquarters and the regions, between 
their staff, licensees, and stakeholders? And maintaining 
communication with the Commission will bring accountability to 
those interfaces. It is a very important way to effect the 
cultural changes that need to be made, so that the entire 
Commission and entire staff are actually focused on those 
changes.
    Senator Inhofe. Yes, Commissioner Dicus?
    Ms. Dicus. If I could, just for a few minutes, I agree with 
everything that has been said so far, because clearly we have a 
ways to go. We're not where we need to be yet, but we do have a 
map of the road and we know where we're going.
    I think when we do get our enforcement policy redone, it 
will be a major step to completion, but also ensuring that we 
do provide the constant oversight and training necessary for 
those interfaces on the one-on-ones, the people who actually 
work closely with the licensees.
    When I am in plants, I also talk to our resident 
inspectors. I get their feedback and I make them aware that 
this is something that is definitely on the Commission's plate.
    Senator Inhofe. Good.
    Yes, Commissioner McGaffigan.
    Mr. McGaffigan. Just to make a point, the communications 
that we are having today, both with our stakeholders and 
internally, are a revolution. One of the NEI staff, Tony 
Petrangelo, has called it ``NRC Glasnost.''
    We are trying very, very hard to be open with our staff, 
and I think we do know what's happening in the field today, and 
we partly know it directly and we partly know it through much-
improved communication with our stakeholders.
    So if there is something that has changed--and I think you 
challenged us on this at the last hearing--if there is a really 
major, fundamental change that is going to help, it is a 
revolution in communications. Dr. Rhodes is going to mention it 
later. We are fully aware that when we make extraordinary 
changes, the communication channels have to be open.
    Senator Inhofe. Thank you very much.
    Ms. Jackson. Mr. Chairman, if you would just be indulgent 
with me for 30 seconds?
    Senator Inhofe. Yes.
    Ms. Jackson. I do want to say it, so that you can have a 
concrete example. I actually have gone to all of our regions, 
as well as in headquarters, to have what are called ``Chairman-
staff dialogs,'' where I actually meet with groups of 
employees--not their management, just the actual employees, in 
groups of 15 or 20--to talk about what's going on, to talk 
about the change, the need for change, how it's going to impact 
them, to find out their concerns and discomfort, to walk it 
through.
    In addition, the executive director for Operations, Dr. 
Travers, has begun doing a similar kind of activity, because it 
takes that kind of investment.
    Senator Inhofe. Well, it does, Madam Chairman, and I 
appreciate that very much.
    Senator Graham.
    Senator Graham. The responses to those last questions 
prompted an idea to which I am not going to ask for an answer 
now, but I would like to plant a question, and maybe you could 
respond in writing.
    I do not believe that Congress should become involved in 
micromanaging an agency. I do believe we have the 
responsibility for oversight of the macro issues in the sense 
of whether the Agency is accomplishing its intended direction, 
the reason that it was established.
    I would like to ask, how do you think this subcommittee 
could best carry out its function? For instance, what are the 
kinds of questions that we should be asking on a recurrent 
basis that relate to the fundamental policy issues affecting 
your agency and your relationship to the public interest in 
commercial applications of nuclear energy? What are the data 
bases that you would use to respond to those questions that we 
ought to be directed toward to monitor?
    We can't exercise oversight by having a hearing once every 
8 months. As any CEO of a large conglomerate would have, we 
have to have a continuous information flow that allows the CEO 
to have a sufficient command of what's happening to have a 
comfort level that the individual components of the 
conglomerate are making their contributions toward the 
corporate objectives.
    What are the questions? What are the data files that we 
ought to be monitoring as they relate to the NRC's 
responsibility to the Nation's commercial nuclear industry?
    I would like the answers to that in writing.
    [Response to the question follows:]

    We agree with you that the subcommittee's responsibility is 
for the oversight of macro issues and, as you state, not micro-
managing an agency. In this regard, we respectfully believe 
that the subcommittee's oversight function can take place in 
several arenas. First, the subcommittee can provide oversight 
of the Agency to ensure NRC is protecting the public's health 
and safety by conducting its regulatory mission consistent with 
the national priorities of streamlining regulatory burdens 
while increasing our openness to the American public. For 
example, the subcommittee could provide oversight of NRC's 
efforts to avoid dual regulation in the decommissioning area. 
As you know, the interactions with other Federal agencies, 
particularly the EPA, have gone on for several years, and 
subcommittee guidance regarding the interpretation of our 
respective roles would be most welcome.
    Second, notwithstanding our being an independent 
Commission, the subcommittee can enhance NRC's efficiency by 
involving us early in legislative initiatives of national 
import that could affect NRC's mission. For example, as the 
committee reviews CERCLA and/or RCRA legislation, the NRC can 
be a contributor to those discussions, since some of the 
affected sites are NRC licensees or are located in Agreement 
States.
    Third, the Government Performance and Results Act provides 
a viable process that could assist the subcommittee in carrying 
out its oversight responsibilities. It includes interaction 
between the agencies and Congress to formulate agreed upon 
strategic goals and performance objectives, and to monitor the 
Agency's progress in achieving those goals and performance 
objectives. We are currently revising our strategic plan and 
performance metrics to clarify the direction of the Agency and 
the regulatory improvements we have underway to respond to 
congressional and stakeholder concerns. We plan to revise the 
plan in stages and to get feedback from our stakeholders 
through the process. We welcome and encourage the participation 
of the committee in revising our strategic plan.
    Fourth, regarding potential metrics that NRC could be 
measured by, we suggest that the committee work closely with us 
on the following key documents: NRC's annual Performance Plan 
and our Monthly Status Report of Licensing Activities and 
Regulatory Duties. The Performance Plan will assist in 
measuring our success in implementing our new initiatives and 
the Monthly Status Report of Licensing Activities and 
Regulatory Duties has and can continue to be a vehicle to 
provide Congress information about how NRC is meeting its 
mission statement and objectives. Some refinements to the 
documents may be required to ensure that they provide both the 
subcommittee and NRC with the types of information and metrics 
that are necessary.
    Lastly, we would also recommend more frequent informal 
interaction between subcommittee members and the NRC to discuss 
issues of importance and the status of the NRC's regulatory 
improvements. This can come in the form of periodic meetings 
between commissioners and subcommittee members as well as 
subcommittee staff attendance at NRC meetings on significant 
regulatory, strategic, and budgetary matters, visits to 
licensed nuclear facilities, and enhanced use of communication 
tools such as accessing information via the Internet from the 
NRC web site. All of the above would serve as an excellent 
forum to view NRC/stakeholder interaction and participate in 
discussions pertaining to issues and concerns facing the NRC 
and our licensees.
    We believe that active subcommittee oversight can add value 
to NRC processes already on the way. It is our intent to 
continue to work with Congress and our stakeholders to ensure 
that our plans, recommendations, and initiatives for regulatory 
reform are appropriate, implemented, monitored, and reported, 
and that there is a continued focus and understanding of the 
initiatives and the success to be achieved.

    Senator Inhofe. I appreciate that question. We look forward 
to getting the answer.
    Senator Inhofe. I now ask that our second panel come to the 
witness table. As I said before, if the five of you wouldn't 
mind remaining, maybe on the first row, if others could help 
accommodate that request--that way you can be close-by.
    Panel 2 includes Mr. Joe Colvin, president and CEO of the 
Nuclear Energy Institute; Ms. Gary Jones, associate director, 
Energy, Resources, and Science Issues, Resources, Community, 
and Economic Development Division, U.S. General Accounting 
Office; Mr. David Lochbaum, Nuclear Safety Engineer, Union of 
Concerned Scientists; and Dr. James T. Rhodes, Institute of 
Nuclear Power Operations.
    You heard the instructions to the previous panel. I won't 
repeat those, but the same rules will apply.
    We'll start with Joe Colvin, if you would start off with 
your presentation.

 STATEMENT OF JOE F. COLVIN, PRESIDENT AND CEO, NUCLEAR ENERGY 
                   INSTITUTE, WASHINGTON, DC

    Mr. Colvin. Thank you, Mr. Chairman, good morning. Senator 
Graham, good morning. I am Joe Colvin----
    Senator Inhofe. Let me comment to all four of you that we 
are going to try to hold onto our time on this because of the 
change, what's coming up on the trial and all that.
    Go ahead. You are recognized.
    Mr. Colvin. Thank you, Mr. Chairman.
    As you are aware, I am the president and chief executive 
officer of the Nuclear Energy Institute. My association 
represents the nuclear energy industry and sets industry 
positions and policies on major strategies and issues affecting 
the industry, including Federal regulations that ensure the 
safety of the 103 operating nuclear plants, operating in 31 
States.
    I want to thank you, Chairman Inhofe, for your leadership 
and thank the subcommittee for its continuing oversight of the 
regulatory process for our industry.
    Issues concerning the regulation of our nuclear power 
industry are particularly important in the context of Senator 
Graham's discussions and at a time when Congress and other 
policymakers are recognizing the growing nexus between energy 
supply, energy needs, environmental policy, and the important 
role that nuclear energy must play in our Nation's energy mix 
now and into the future. I would be happy to comment on that 
more during the question and answer period.
    In the 6 months since this subcommittee held its first 
hearing, the NRC commissioners and staff have made tremendous 
progress in taking the initial steps toward meaningful reform. 
Many longstanding issues are being brought to resolution, and I 
compliment the commissioners and the NRC staff for their 
efforts.
    In this time period they have demonstrated that difficult 
issues can be resolved and important decisions can be made in 
an efficient and timely manner.
    Nevertheless, the single most important challenge facing 
the nuclear energy industry, certainly in the near term, is the 
regulatory process that consumes licensee and NRC resources on 
issues that have little or no safety significance and that 
produce inconsistency in assessing plant performance and 
enforcement. In that light, it is very important that Congress 
continue to provide ongoing oversight of and support to the 
Nuclear Regulatory Commission in this transition to a risk-
informed, performance-based regulatory process.
    We are at the beginning of a very long journey, and the 
task at hand is to make the appropriate changes in a timely 
manner and sustain the efforts begun last year. In that regard, 
I would like to summarize five recommendations for the 
congressional involvement needed to sustain these efforts that 
will, in our view, result in meaningful NRC reform.
    First is that Congress should direct the Agency to prepare 
a multiyear strategic plan to achieve a safety-focused, 
results-oriented regulatory process. The NRC's long-range plan 
should include measurable goals and objectives to demonstrate 
progress toward reform of the regulatory systems and, more 
importantly, describe how these incremental changes, 
collectively, will achieve the desired goals.
    Second, Congress should schedule another hearing by June of 
this year and direct the commissioners to provide this 
multiyear strategy for reforming the regulatory process at that 
time.
    I believe the subcommittee should also continue to hold 
hearings approximately every 6 months until you are satisfied 
that the progress in reforming the process is proceeding in the 
right direction, at the proper pace, and that it will be 
sustained.
    Third, the subcommittee should request the NRC to identify 
legislative changes needed to proceed with timely regulatory 
reform, issues such as amending the Atomic Energy Act in the 
area of antitrust reviews, foreign ownership, adjudicatory 
hearing processes, and so on.
    Fourth, Congress should ensure that the Agency complies 
fully with the requirements of the Omnibus Budget and 
Reconciliation Act of 1990. The Agency should submit 
legislation, if necessary, to modify the Agency's fee structure 
so that nuclear power plant licensees will be assessed fees 
only for those programs from which they directly benefit. 
Additionally, the Agency's ability to collect user fees should 
be authorized annually by Congress until the Commission 
completes its regulatory reform initiatives.
    Finally, Mr. Chairman, I think this subcommittee should 
resolve the impasse between the Nuclear Regulatory Commission 
and the Environmental Protection Agency over the establishment 
of dual regulations for radiation protection standards. This 
subcommittee has jurisdiction over both Federal agencies and 
should clarify that the proper scientific and regulatory 
authority to establish these standards should rest solely with 
the Nuclear Regulatory Commission.
    I think, Mr. Chairman, that continued oversight of the NRC 
by this subcommittee is important for the reasons described to 
ensure that necessary steps toward broad reform of the Agency 
are being taken and will be taken in a comprehensive and timely 
manner. We've seen the Agency make significant progress in 
recent months, but we see the need to establish a longer-term 
vision and working plan with the appropriate metrics to ensure 
that the regulatory changes indeed are implemented, and that we 
sustain these improvements.
    Thank you, and I would be happy to respond to your 
questions during the question and answer period.
    Senator Inhofe. Thank you, Mr. Colvin.
    Ms. Jones.

STATEMENT OF GARY JONES, ASSOCIATE DIRECTOR, ENERGY, RESOURCES, 
    AND SCIENCE ISSUES, RESOURCES, COMMUNITY, AND ECONOMIC 
DEVELOPMENT DIVISION, GENERAL ACCOUNTING OFFICE, WASHINGTON, DC

    Ms. Jones. Thank you, Mr. Chairman, good morning.
    Good morning, Senator Graham.
    Since this committee's hearing last July, we would agree 
with NEI that NRC has accelerated many activities needed to 
implement a risk-informed regulatory approach and has 
established milestones for many others. We hope that momentum 
continues, because NRC still has an enormously complex task 
ahead. One of the messages of our testimony today is that NRC 
needs a road map to guide the implementation of the very 
activities it has under way.
    Let me spend just a few moments highlighting some of the 
major activities still to be accomplished.
    First, there are several basic issues that are not resolved 
after many years of addressing them. For example, for some 
plants, NRC does not have current or accurate design 
information, or confidence that final safety analysis reports 
have been updated. The 50.59 process that allows plants to make 
a change without prior NRC approval needs to be improved. These 
safety documents and the change process are the foundations on 
which safety regulation--deterministic or risk-informed--is 
based. For example, what is the potential impact if a utility 
does not have complete and accurate design information, or an 
outdated final safety analysis report? One result might be that 
evaluations relying on these documents can lead to wrong 
conclusions and jeopardize safety.
    NRC and the industry view risk assessment as one of the 
main tools to be used to identify and focus on those 
structures, systems, and components of plant operations having 
the greatest risk, yet neither NRC nor the industry has 
standards or guidance that define the quality, scope, or 
adequacy of risk assessments.
    Until recently, NRC did not consider whether and to what 
extent the Agency should revise all its regulations pertaining 
to nuclear plants to make them risk-informed. NRC staff have 
recommended to the Commission that changes to the regulation 
occur in a phased approach, beginning by defining ``important 
to safety'' and ``risk-significant,'' and then requiring a 
higher level of safety assurance for those structures, systems, 
and components that are critical to safety under those 
definitions.
    NRC has also not determined if compliance with risk-
informed regulations will be voluntary or mandatory for the 
utility industry. NRC staff recommended to the Commission that 
implementation be voluntary, noting that it would be very 
difficult to show that requiring mandatory compliance would 
increase public health and safety. Voluntary compliance could 
send a signal that current plants are less safe and could 
create two classes of plants operating under two different sets 
of regulations.
    Changing to a risk-informed approach will be an economic 
decision for each individual plant. The cost to comply may 
outweigh the benefits for doing so, particularly for plants 
nearing the end of their operating licenses. Currently there is 
little cost-benefit data available.
    Mr. Chairman, NRC continues to work on all these issues and 
many other issues impacting a risk-informed approach. However, 
NRC has been considering applying risk to the regulatory 
process for more than 10 years, and NRC officials predict it 
will be another 4 to 8 years before changes it has proposed 
have been implemented.
    We found that NRC has about 150 separate activities under 
way that affect risk-informed regulation. It has developed or 
is planning to develop implementation plans for many of these 
activities. However, given the complexity and interdependence 
of NRC's requirements and the results of ongoing activities, 
such as industry pilot projects, it is critical that NRC 
clearly articulate how the various initiatives will help 
achieve the goals set out in the 1995 policy statement on risk-
informed regulation. Although NRC's tasking memo and the 
implementation plan establish tasks and expected completion 
dates, they do not ensure that the short-term efforts are 
building toward NRC's longer-term goals and do not link the 
various ongoing initiatives. They also do not help the Agency 
determine appropriate staffing levels, training, skills, and 
technology needed in the timing of those activities to 
implement a risk-informed approach. It provides no link between 
the day-to-day activities of program managers and staff and 
NRC's overall goals for risk-informed regulation.
    Given that NRC is essentially changing every aspect of how 
it regulates safety, a strategic plan would help ensure that 
NRC meets the challenges it has set for itself.
    Although the Office of the Inspector General's 1998 report 
stated that the NRC staff had a strong commitment to protecting 
public health and safety, it admitted that they are confused 
about the new directions in the regulatory practices and 
challenges facing the Agency. While NRC is developing and 
implementing many mechanisms for better communication, a 
strategic plan that provides a clear path forward and connects 
all the ongoing activities would help staff understand when and 
if activities will affect them, what type of training they will 
receive, and how various activities interrelate.
    Thank you, Mr. Chairman.
    Senator Inhofe. Thank you, Ms. Jones.
    Dr. Rhodes.

 STATEMENT OF JAMES T. RHODES, CHAIRMAN AND CEO, INSTITUTE OF 
             NUCLEAR POWER OPERATIONS, ATLANTA, GA

    Mr. Rhodes. Mr. Chairman, thank you and the other members 
of the subcommittee for the opportunity to represent the 
Institute of Nuclear Power Operations at this hearing.
    At the July hearing I discussed the improvement our 
industry has made in the past decade, as measured by a number 
of performance indicators. Today I am pleased to inform you 
that the industry has continued this solid progress into 1999. 
Although the year 1998 began with a number of plants struggling 
with extended shutdowns, the industry made a strong comeback 
during the year. In fact, overall performance improved more in 
1998 than at any time in recent years. Let me share with you a 
few key indicators of that improvement.
    By the end of 1998, most of the plants that had begun the 
year in long-term shutdown were back on line, some 9 of 14 
units in that situation. In addition, nuclear electric 
generation continued to increase during the year. For example, 
Commonwealth Edison recently reported that its nuclear program 
ended the year with a capacity factor of over 65 percent, more 
than 10 percentage points higher than their goal for the year, 
and more than 15 points higher than their 1997 results.
    Also last July I reported to this committee that the trend 
of significant events per unit per year had decreased from 2.38 
in 1985 to about .1 in 1997, and that is shown on this graph 
here. Today I am pleased to report even further improvement. 
NRC event data, confirmed by our own experience, shows an 
industry achievement of just over .04 events per unit this past 
year, as shown on this bar chart here, a tremendous improvement 
over this period, and even continuing through 1998.
    The final noteworthy improvement is the number of plants in 
INPO's ``excellent'' category. Following each plant evaluation, 
which we perform about every 20 months for a 2-week period, 
INPO provides an assessment on a 1 to 5 scale, with category 1 
being the excellent performers. The standards are very high. 
The levels of performance needed to earn an excellent rating 
have risen over the years. At INPO's annual Chief Executive 
Officers Conference in November we recognized 31 excellent 
plants. This is a record achievement and a dramatic increase 
from the six excellence awards first presented in 1986, and 
this shows a trend of excellent plants over that period of 
time.
    Now I'd like to move to my second area of focus, the 
regulatory changes that are important for continued improvement 
in the nuclear power industry.
    Many have said--and we certainly agree--that such changes 
will play a central role in the health of our industry. We 
continue to be encouraged by the openness that the NRC has 
demonstrated in communicating with its stakeholders. The open 
exchange of information and ideas is a key contributor to the 
safe and reliable operation of our Nation's nuclear power 
plants. This improved communication is evident through the 
NRC's periodic stakeholder meetings, enhancements in the 
license renewal process, and the ongoing development of the new 
reactor oversight process.
    The new oversight process is especially important. It 
improves the Commission's ability to ensure public health and 
safety by better allocating resources and eliminating 
redundancies. Specifically, it will focus the inspection, 
assessment, and enforcement processes on safety-significant 
items. This will allow utilities appropriate control over 
activities and issues that are not safety-significant, but are 
vital to plant reliability and economic viability.
    The proposed oversight process identifies several bands of 
plant performance. To achieve and remain in the uppermost band, 
nuclear plants will need highly effective self-assessment and 
corrective action programs. Let me point out that plant 
performance in these areas is routinely reviewed during INPO 
plant evaluations and plant assistance visits. Therefore, 
INPO's mission of promoting excellence in plant operations is 
fully complimentary with the new oversight process.
    The NRC is undergoing significant changes in philosophy, 
processes, and personnel, including changes at the senior 
leadership level. We have seen change programs succeed and fail 
in the industry. To be successful, the NRC must have clarity of 
purpose, constant communication, training, and--most of all--
persistence. This is hard work, but critical for success.
    In conclusion, we at INPO believe the NRC is on the right 
track with its efforts to improve, although much work needs to 
be done. The changes focus directly on the Agency's mission, 
the protection of public health and safety. We will continue to 
work in cooperation with the NRC to help ensure the safe 
operation of our Nation's nuclear power plants.
    Again, I appreciate this committee's interest in the 
regulation of a changing nuclear power industry. Your continued 
support and guidance will play an important role in helping the 
NRC provide truly effective regulation in pursuit of its 
mission.
    Thank you very much.
    Senator Inhofe. Thank you.
    Mr. Lochbaum.

STATEMENT OF DAVID LOCHBAUM, NUCLEAR SAFETY ENGINEER, UNION OF 
              CONCERNED SCIENTISTS, WASHINGTON, DC

    Mr. Lochbaum. Good morning.
    After the subcommittee's hearing last July, the NRC 
developed a plan to improve its reactor oversight program. The 
NRC intends to phase these improvements in at a few nuclear 
plants this year, and adopt them for all plants next year.
    As I recently told the NRC commissioners, UCS believes that 
the NRC has a good plan. However, the plan's quality is not the 
most important factor in determining whether the NRC succeeds 
in this mission. What matters most is how well the Agency 
implements this program. Too often the NRC fails to follow its 
plans and does not regulate in a consistent, timely manner.
    The NRC Inspector General recently reported to Senator 
Lieberman that the Agency failed to properly discharge its 
responsibilities to the people of Connecticut and to the 
workers at the Millstone Nuclear Power Station. These failures 
are particularly troubling because they involve the highest 
profile nuclear facility in the country. The NRC created a 
special projects office with responsibility for only that one 
site. The Inspector General documented numerous regulatory 
failures involving that office, despite its singular focus. The 
Inspector General also reported that many of the failures were 
caused by the NRC not following its own procedures and 
policies.
    The Inspector General's report is the latest example in a 
long history of the NRC failing to follow through on its plans. 
Let me cite fire protection as an old--yet still ongoing--
example.
    The NRC created Appendix R, its fire protection rule, to 10 
CFR Part 50 in January 1980 to address safety concerns 
following the serious fire at the Browns Ferry Nuclear Plant in 
Alabama in March 1975. Nineteen years later, the majority of 
nuclear power plants in this country do not now, and never 
have, satisfied the Appendix R requirements.
    When Representative Markey asked the NRC about this 
situation in May 1997, the Agency replied in December 1997 that 
it was considering a revision to Appendix R. Nearly 2 years 
later, we understand the Agency is still thinking about doing 
this.
    Last December, Representative Markey asked the General 
Accounting Office to investigate fire safety issues at nuclear 
power plants. In the meantime, the majority of nuclear power 
plants are operating in violation of these regulations. At the 
Salem Generating Station in New Jersey, for example, both 
reactors were shut down in 1995 through 1997 while its owner 
made extensive repairs to safety equipment.
    Numerous fire protection deficiencies remained uncorrected 
during this lengthy shutdown. The NRC allowed both reactors to 
restart, despite knowing that fire protection requirements were 
not met. Not only that, but the NRC is content with the owner's 
plans to leave these problems uncorrected for several more 
years.
    The NRC tolerates these violations because plant owners 
have taken so-called ``interim compensatory measures.'' The 
most common of these measures involves workers, called fire 
watches, walking through the plants looking for smoke or 
flames. Such ``interim'' measures have been used for more than 
6 years at some nuclear power plants.
    But interim measures are not a substitute for permanent 
solutions. When I get a flat tire, I replace it with that spare 
mini-tire. That's an interim measure I can use until I get the 
flat fixed or buy a new tire. It would be irresponsible for me 
to undertake a cross-country trip on that interim spare tire. 
My poor judgment would place me and other travelers at undue 
risk. Likewise, it is irresponsible for the NRC to rely on fire 
watches indefinitely. This poor decision places millions of 
Americans living around nuclear plants at undue risk.
    The risk from fire is real. The NRC reported that fire 
represents 7 to 50 percent of the overall core damage risk at 
nuclear plants. According to this data, there is a plant where 
the fire risk equals the risk from all other sources combined. 
So, the fire risk is real, and the regulations created to 
protect Americans from that risk are essentially being ignored 
by the NRC.
    We respectfully request that this subcommittee compel the 
NRC to resolve the fire protection problems. The NRC must 
either enforce or revise its fire safety regulations. Continued 
neglect, predicated on ``interim'' compensatory measures and 
``considerations'' of rulemaking, must end. The regulations 
were promulgated in direct response to the serious Browns Ferry 
fire. If another serious nuclear plant fire were to occur, the 
American public would be very distressed to learn that these 
fire protection regulations had simply not been enforced.
    Your subcommittee's oversight hearings have accelerated the 
NRC's change process. We sincerely appreciate the 
subcommittee's efforts in this regard. We trust that this 
subcommittee will not judge the NRC solely on its plans; we 
hope that you will evaluate the results from these new and 
improved processes, even though this data will not be available 
until later this year. We respectfully request that this 
subcommittee continue these efforts to ensure that the NRC 
reaps the maximum benefits from these plans.
    Thank you.
    Senator Inhofe. Thank you, Mr. Lochbaum.
    We have been joined by Senator Sessions, and I would ask if 
Senator Sessions has any opening statement or comments at this 
time.

STATEMENT OF HON. JEFF SESSIONS, U.S. SENATOR FROM THE STATE OF 
                            ALABAMA

    Senator Sessions. Thank you very much, Mr. Chairman. I 
enjoyed serving with you the last 2 years on this committee, 
and I've had a good deal of interest in this particular 
subject. I think it is important to raise it.
    Mr. Lochbaum, I think you would agree that whether the NRC 
is doing a good job or not, they have more regulators per 
nuclear power plant than any other country in the world, so we 
have a right, I think, to expect good regulation.
    But at the same time, we are at a point, having been 
involved with this committee on clean air issues, for example, 
where we have to recognize the challenge that is facing us. 
Ambassador John B. Rich to the International Nuclear--something 
or other, appointed by President Clinton--spoke recently at the 
Scottish Conference of the North Atlantic Assembly, and he made 
some dramatic statements. I think everyone here ought to read 
that address. It was a thoroughgoing analysis of all the issues 
involving nuclear power. It was a ringing call for meeting the 
challenge. Among other things, he stated that our electricity 
demands will double by 2050 for the world, they will double by 
2050, and he said that the one technology capable of meeting 
large baseloads without greenhouse emissions is nuclear power. 
That's so obvious as to be beyond debate, it seems to me. He 
added,

          In the century ahead, mankind must place great reliance on 
        harnessing the nuclear genie and using it to maximum effect if 
        our needs are to be met and our security preserved.

    Mr. Chairman, it seems to me that we are at a point where 
we have not brought on any more nuclear plants. Twenty percent 
of our power today is from nuclear energy. If that were to be 
eliminated, think how many tons of greenhouse gases and noxious 
sulfur dioxides and other pollutants would be released into the 
atmosphere. If other nations of the world move to coal plants 
to meet their burgeoning demands for electricity, we will have 
a serious worldwide problem of pollution. The best way to meet 
that is to somehow meet this challenge.
    Nuclear engineering schools are closing in this country. 
Ms. Jackson and I shared some comments about that over dinner. 
They are closing because there is so little demand, and this 
country ought to be the world leader in major innovations 
involving nuclear energy, and I hope that whatever comes out of 
this, that we will make sure that we preserve the safety of the 
nuclear energy industry, but at the same time we develop some 
sort of window or light at the end of the tunnel that would 
allow us to move forward with this energy source.
    I believe that if it is done right, if the NRC helps 
develop model plans for plants, they could be brought on at 
much lest cost than the process that we've gone through before, 
and that can be done. I consider it a serious national issue, a 
matter of worldwide importance. We have to break down what I 
consider to be an irrational fear of nuclear energy, and 
``harness that genie,'' as Ambassador Rich has said.
    Thank you for your leadership.
    [The prepared statement of Senator Sessions follows:]
Statement of Hon. Jeff Sessions, U.S. Senator from the State of Alabama
    I would like to first thank Senator Inhofe for his leadership and 
commitment to exercise continued congressional oversight on the 
activities of the NRC. Last July, Senator Inhofe held a hearing in this 
subcommittee, which I participated in, to review the Nuclear Regulatory 
Commissions' oversight of nuclear safety in the United States. I am 
grateful Senator Inhofe has provided the opportunity for me to join the 
Clean Air and Nuclear Safety Subcommittee again today to assess the 
status of reform efforts by the NRC since the last hearing.
    Nuclear Energy needs to remain a part of our domestic energy mix. 
Over the last 2 years, I've had an opportunity to serve on the Senate 
Environment and Public Works committee's subcommittee on Clean Air and 
Nuclear Safety. During that time, the subcommittee held numerous 
hearings illustrating the problems our nation faces in dealing with air 
pollution. The Clean Air Act has helped our nation to battle the air 
pollution problem by reducing the amounts of harmful air pollutants 
emitted into the environment. Those hearings have shown we are making 
significant progress, but as our energy needs rise, the technical 
ability to reduce overall air pollutants from traditional fossil fuel 
electricity plants becomes more and more limited.
    Nuclear power provides over 20 percent of the electric power in 
this country and offsets thousands of tons of sulfur, nitrous oxide, 
carbon, mercury particulate matter and other pollutants each year. 
Without nuclear energy as part of our energy mix, it is unlikely we 
could have made the significant progress in reducing air pollutants 
recorded over the last 20 years.
    The Energy Information Administration predicts the U.S. will need 
about a 30 percent increase in electricity generation by 2015. To meet 
this need and win our battle against air pollution, Nuclear Energy must 
continue to be harnessed safely and responsibly.
    In November, I attended the 44th Annual Session of the North 
Atlantic Assembly in Scotland. The Ambassador to the United Nations 
International Energy Agency John B. Ritch III, appointed by President 
Clinton, stated in his presentation that electricity demands will 
double by 2050, and the one technology capable of meeting a large base-
load with negligible greenhouse emissions is nuclear power. He added, 
``In the century ahead, mankind must place great reliance on harnessing 
the nuclear Genie, and using it to maximum effect, if our needs are to 
be met and our security preserved'' (A Nuclear Perspective for the 21st 
Century, 44th Annual Session of the North Atlantic Assembly).
    In order to foster an environment which encourages the development 
and implementation of safe nuclear power in the United States, 
regulatory obstacles which do not relate to safety must be minimized or 
removed. The nuclear industry has a stellar safety record in this 
country. There has never been a serious accident in this country which 
put the safety of our citizens in danger. The main reason the United 
States nuclear industry has been so safe is because of the careful 
oversight by the Atomic Energy Commission and later, the Nuclear 
Regulatory Commission. All United States plants must adhere to strict 
safety standards, with frequent inspections, redundant controls and 
containment systems.
    There is a balance to be met when monitoring the operation and 
maintenance of nuclear power plants. While safety-orientated 
regulations and procedures foster the safe generation of nuclear power, 
subjective regulations which fail to focus on safety waste resources 
and place unfair costs on the ratepayers. This over regulation has 
detrimental effects on the operation of our current plants, discourages 
the construction of new plants and can result in the Nuclear Regulatory 
Commission overlooking real safety issues while focusing instead on 
non-safety-related management practices. Micro-management of nuclear 
plant operation, as illustrated by many of the NRC's Category 4 
violations, discourages efficiency and may have the unintended 
consequence of actually compromising safety. The NRC needs to look at 
the safety of our nuclear plants and take decisive action when true 
safety problems are identified. The agency need not however, be 
involved in the oversight of non-safety-related management procedures 
at our nuclear power plants.
    Testimony from the Nuclear Subcommittee's hearing last July 
illustrates that the Nuclear Regulatory Commission would be able to 
operate in a more efficient manner if the Agency refocused its efforts 
on safety and implemented a risk-informed regulatory approach. 
Regulations and enforcement procedures developed by the Atomic Energy 
Commission in the 50's and carried out by its successor, the Nuclear 
Regulatory Commission today, need to be updated to reflect the 90's 
state-of-the-art nuclear technology. Unnecessary regulations must be 
eliminated so that the NRC is better able to use its resources to keep 
our nuclear power plants safe. The NRC needs to focus its efforts on 
developing and enforcing proper safety regulations while at the same 
time encouraging the regulated community to develop efficient ways to 
meet those safety standards on their own.
    The Nuclear Regulatory Commission needs to continue its 
streamlining efforts and learn to do more with less. Despite the 
decline in the number of Nuclear plants operating in the United States 
and the failure to bring new plants on line, the NRC continues to seek 
increases in appropriations and the fees it levies on ratepayers. The 
NRC has over 1600 employees to monitor 110 plants--a ratio of 
approximately 14.5 NRC employees to each plant, while the UK has fewer 
than 200 employees to monitor 35 reactors--a ratio of 5.7 to 1--with 
Japan and France sharing statistics similar to the UK. The United 
States has by far the highest number of regulators per plant.
    Inefficient practices by the NRC delay licensing action and 
discourage the construction of new state-of-the-art nuclear power 
plants in this country. To keep nuclear power a part of our nation's 
energy mix, the NRC must develop a system which allows streamlined re-
licensing of safe nuclear power plants nearing the end of their 
operating license while at the same time clearing the way for the 
construction of new plants in the future.
    I am hopeful continued reform taking place at the Nuclear 
Regulatory Commission will help remove the regulatory hurdles faced by 
the generators of electric power in this country. At the same time, 
Congress and the Administration need to act responsibly to solve the 
problem of nuclear waste to pave the way for the implementation of 
safe, new technologies in the generation of nuclear power.

    Senator Inhofe. Thank you, Senator Sessions. I associate 
myself with your remarks. I would also observe that Senator 
Graham expressed some similar interests in his opening remarks 
and in his questions.
    Let's quickly go into questions.
    First, Mr. Colvin, I would like to ask you, do you think 
that we can address these reforms that we've been talking 
about, going all the way through the NRC without an overall 
long-range strategic plan?
    Mr. Colvin. No, sir. As I said in my comments, I think that 
we have seen the Agency over many years undertake activities in 
what I would call a ``disaggregated'' or ``incremental'' basis. 
As we move forward to make the changes, as Ms. Jones from GAO 
indicated to us today, we need to have an approach that 
integrates the details of this plan and sets up the longer-
range goals, such that as we move forward we can identify our 
progress against those.
    With respect to that, we also need to identify the 
appropriate metrics and measurement tools that allow us to 
measure that progress. So I think we need to have a long-range 
goal; we need to set that out; we need to have that ventilated 
with the stakeholders and with this committee, and then this 
committee through its oversight responsibility should measure 
the progress of the Agency as it moves forward in its reform 
activities.
    Senator Inhofe. Let me make a request, then, Mr. Colvin, 
since you have answered the question the way you did. Let us 
ask you to help us--I know that the private sector is sometimes 
better equipped to do this--if you could help us, in 
consultation with other members of this panel, to develop a 
plan, a summary, we would like that very much--along, of 
course, with the Commission.
    Mr. Colvin. Yes, sir, we would be happy to participate in 
that dialog.
    Senator Inhofe. I think the chairman is trying to say 
something.
    [Laughter.]
    Senator Inhofe. Come forward quickly, here.
    Ms. Jackson. In point of fact, even though we have not 
focused on it in these hearings, the NRC does have just such a 
plan, focused on goals, activities to support those goals, 
metrics that both act as filters for prioritizing and the 
measurement after the fact in terms of achieving those goals. 
It is a multiyear plan.
    Senator Inhofe. Let me modify my request and ask that if 
you take your plan--and I would like to have a critique of this 
plan by the four members of this panel.
    Ms. Jackson. That is fine, because the process has been 
open. We have been working with Arthur Andersen in developing 
these plans, and it would be nice if people would acknowledge 
that.
    Senator Inhofe. Why don't you remain up there, if you 
would, Madam Chairman. Save you from running back and forth.
    [Laughter.]
    Senator Inhofe. Mr. Colvin, last July you and a number of 
the witnesses raised serious issues on problems with the NRC, 
and now 6 months have gone by. I would like to have you tell us 
what you think, briefly, about the progress that has been made 
in the past 6 months.
    Mr. Colvin. Well, Mr. Chairman, I think, as I indicated in 
my brief oral comments, we have seen tremendous progress by the 
Agency within this time period. But again, these are steps that 
I consider to be some of the initial steps undertaken by the 
Agency, and this is a long journey.
    I think from the industry standpoint we are not, and we 
cannot and should not be satisfied with the progress made 
within the regulatory forum until we see the sustained 
improvement out of the Agency that is necessary in this area.
    I indicated in my comments that the singlemost important 
issue facing our industry as we move forward to ensure the 
continuity of energy supply, energy security and diversity, and 
meeting our environmental goals is really the regulatory issues 
that are affecting our ability to operate these plants 
efficiently and in a cost-effective manner.
    We have other major issues, such as stranded investment and 
those related to the disposal of used nuclear fuel. But from 
the investment community's perspective and from the nuclear 
energy industry's perspective, the regulatory system is the 
system that needs the most reform and needs it with the 
greatest urgency, especially as we deregulate in various States 
and localities and move forward to remain competitive in this 
future deregulated market.
    Senator Inhofe. Thank you.
    Ms. Jones, I am calling on your experience in reviewing the 
NRC. Do you think the senior managers are communicating the 
reform plans down through the Agency effectively at this time?
    Ms. Jones. Well, I heard what the commissioners said this 
morning, and I applaud the kind of communication networks that 
they are setting up within the Agency. It sounds like they have 
been working very closely with senior management and the senior 
managers are talking with the staff.
    However, we have had a lot of visuals this morning in terms 
of where the Agency is going. We've talked about a road map. I 
think the chairman talked about a ``turn in the road.'' We're 
really just starting that turn; and I think it's really 
critical that the staff at NRC understand what's going on and 
are well-trained, and I think that's one of the points in terms 
of our strategy, that all of that would be very clear to staff 
in terms of the path forward.
    Senator Inhofe. Well, let me make a request. If you would 
take the time, if you can do this, and you can let us know 
whether or not you can, to go through this and take a real 
close look at the cultural changes and come up with some kind 
of a preliminary report to us.
    I'm going to call for the next hearing on this subject, on 
the NRC, to be September 23, so the request that we have made 
in terms of the critique of the chairman's plan, as well as the 
request of the GAO--if you could have something at that time 
that we could discuss so we could have a better monitoring 
effect as to what is going on, where we're going from here.
    Could you do that?
    Ms. Jones. We would be happy to work with you on that, Mr. 
Chairman.
    Senator Inhofe. All right.
    Let me defer now to Senator Graham for questions, and I 
have maybe one or two more.
    Senator Graham. Mr. Chairman, thank you very much. I have 
to express my apologies, that when I finish these questions I 
am going to have to leave for another commitment.
    I would like to ask this panel--not for response today, but 
for subsequent follow-up--the same question that I asked the 
commissioners of the NRC. What are the kinds of questions, what 
are the data files, that this committee should be monitoring on 
an ongoing basis in order to exercise more effective oversight 
of the macro policy issues affecting the industry, the public 
safety, other public interests, and the NRC? I would be 
interested in your response to that question.
    I asked a series of questions in my opening statement, the 
third of which was, is the current decline of our nuclear 
industry reversible? And I was concerned about an article that 
appeared in the January 27, 1999 Christian Science Monitor 
about the state of the nuclear industry in Europe, which has 
been much more committed to nuclear generally than we have. The 
article primarily focused on Germany, where ``the German 
government's decision to phaseout nuclear power generation, to 
halt reprocessing of spent fuel, is causing a domestic and 
international storm for the new Chancellor.'' It goes on to 
point out that in Sweden there has been a referendum which 
states that the country should be nuclear-free by 2010, and 
that the government has announced that it will begin the close-
down of the first of its 12 reactors. Switzerland has announced 
that it will draw up plans to phaseout its four plants. England 
has taken steps to reduce its nuclear plans for the future. And 
even France, which is the most advanced country, has indicated 
that it was pledging more investments in alternative energy 
development.
    Are we running against a tide of resistance to nuclear that 
is irreversible, and therefore we ought to be making our plans 
in the context of the termination of an industry rather than 
extension or expansion of an industry?
    Mr. Colvin. Senator, I think the clear answer to that is 
no. In the United States over this last 2-year period we have 
seen what I would characterize as a ``rediscovery'' of the 
benefits of nuclear energy. We have seen, as we transition to a 
competitive marketplace and we look at protecting the 
environment both from the carbon dioxide or CO2 
area, the Kyoto Protocol issues, but more importantly from the 
clean air issues in maintaining clean air compliance in sulphur 
dioxides, nitrous oxides, ozone, particulate matter, and other 
emittants to the environment, that nuclear power has tremendous 
capability that has yet been untapped and unrealized.
    Our policies in the United States, from the environmental 
perspective, do not credit non-emitting technologies, be they 
nuclear, hydro, or other types of renewables, from an economic 
standpoint. As a Nation we need to level this playing field to 
ensure that we can move forward with the appropriate 
technologies and credit them accordingly.
    It is interesting from the international perspective that 
while they have had the primary growth and movement forward, 
they are just now beginning to face some of the issues that we 
have already addressed, especially in this transition to 
competition.
    The last point I would make is that it is very easy, 
politically, to say that you're going to shut down 40 percent 
of your electricity system and do so in a very short time. 
Nuclear power can be the lowest-cost production. As we've seen 
in Sweden and other countries, it is very difficult to create 
an alternative energy that is competitive, cost-effective, and 
still meets other issues, such as the environmental and clean 
air concerns.
    Mr. Lochbaum. I guess from our standpoint, there has been 
some talk today and in the past about the intangible values of 
nuclear power in terms of global warming and other aspects. We 
would look at the value that the industry itself places on 
nuclear power. Two plants traded hands last year, and the sale 
prices were less than 10 percent of the book value of these 
plants: the Pilgrim Plant and Three Mile Island Unit 1. That's 
on an open market. That's what the nuclear industry values 
these plants at. I think that's a very good indicator; money 
talks. I think that sends a very good message as to the value 
of nuclear power.
    Senator Graham. Any other comments?
    To me, this article--and other developments--raise the 
question of sustained public acceptability of this industry. I 
have indicated in my earlier comments, as the chairman stated, 
that I think nuclear has a very important role to play for a 
variety of our national interests. But I am frankly concerned 
as to whether the general public shares that feeling and will 
provide a sufficient amount of sustained support that will 
create an environment in which those who have to make some very 
significant financial investment decisions for their firms will 
be willing to do so, and therefore reverse this trend of 
declining nuclear as a percentage of our electric generation.
    Mr. Colvin. Senator Graham, I think it is important to 
realize that the public in general, over many years of public 
opinion polls, supports nuclear energy and the continued use of 
it in the United States. The polls typically indicate about 
two-thirds of the general public is in support.
    We recently ran some polls of college-educated voting 
adults, those that participate in the public policy process. 
And again, 65 percent of those support the use of nuclear 
energy. In fact, when asked what would be the likely source of 
fuel for energy and electricity in the year 2015, the answer 
was overwhelmingly nuclear energy over solar or other types of 
energy, from that body.
    More importantly, however, we see that there is a 
perception gap between what those individuals believe 
personally and what they believe their peers, neighbors, and 
others believe. And as a result we have undertaken, as an 
industry, a major activity to try to provide the information to 
these people to make the reasonable decisions, and I believe 
that the public, when called upon to make a decision over 
siting of a new power plant, be it of any type, will in fact 
consider these issues and look at the various aspects of these 
issues thoughtfully and come to the correct decision.
    Senator Graham. Mr. Chairman, I'm afraid I'm going to have 
to leave. Thank you very much.
    Senator Inhofe. Thank you, Senator Graham.
    I just have one, or maybe two, final questions, because 
we're going to try to adhere to our schedule.
    Mr. Lochbaum, at the November meeting of the NRC 
stakeholders you compared the NRC's reaction to our Senate 
hearings as ``a bad plant,'' one who reacts to an announced 
inspection as running around, developing action plans to 
address all the problems that they have been ignoring before, 
and set up ``a good plant'' which brags about the results they 
have seen from effective programs. Your analogy has not gone 
unnoticed here by this subcommittee, but I would like to ask 
you--you have been critical in the past, stating that the NRC 
has ignored some of what you consider to be the real safety 
concerns, while they pursue enforcement actions for minor 
violations.
    Do you think that the changes that have been taking place 
at NRC have addressed these concerns that you have expressed in 
the past?
    Mr. Lochbaum. The new oversight program has more indicators 
which should allow earlier detection of problems. But our 
concern is, again, there were indications in the past that 
there were problems at the Millstone, Salem, and other plants, 
and these indicators were not responded to by the NRC. So we 
are not concerned that there was a lack of indicators; we are 
concerned that there was a lack of response. We are not sure 
that the new plan addresses the lack of response issues.
    Senator Inhofe. All right.
    Any other comments that anyone would like to make, 
particularly referencing where we're going from here and what 
you've observed in the past and your level of comfort and 
satisfaction?
    [No response.]
    Senator Inhofe. All right. We will wind up with Chairman 
Jackson.
    Let me say before you give your final remarks, we hope you 
don't retreat to the log cabin that was referred to by Senator 
Graham----
    [Laughter.]
    Senator Inhofe [continuing]. That you stay and remain 
available, and perhaps return here after this service of duty 
as a witness, so that we can continue to use your expertise.
    Ms. Jackson. I would be pleased to do so. Since where I'm 
going will require lots of energy, I have a vested interest in 
ensuring that it exists.
    Let me just say the following. What I have observed in the 
time that I have been at the NRC is this. Obviously, if there 
are longstanding neuralgias, whether they come from the side of 
Mr. Lochbaum who feels that NRC has not implemented the program 
that it has had the way it should--meaning, enforcing its 
safety regulations--or it comes from the side of some of the 
other witnesses, such as Mr. Colvin, who has indicated the 
feeling that NRC has been overly draconian in how it has done 
things, or as Ms. Jones says, that it just hasn't been clear 
about what its standards are, the point of the matter is that 
the NRC has begun to change. I think the kind of oversight that 
this committee has provided has been very helpful in that. But 
in point of fact, the kinds of changes that we're talking about 
are not going to happen overnight, so the kinds of metrics that 
you and Senator Graham have asked this group to provide that 
would be good to look at the NRC in the large, I think, is a 
good thing.
    But just as it will take time to fully implement what has 
been set in motion, these things didn't just start 6 months 
ago. We would not have been able to achieve just what we've 
achieved up to this point if the seeds had not been sown some 
years ago.
    But what I think this committee has done is, it has caused 
the NRC to accelerate and to refocus where it needs to go, and 
we thank you for that.
    I think the real point now is for all of us to move forward 
in good faith and try to stay on the path upon which we have 
embarked, and I would be happy to come back at any time.
    Thank you very much.
    Senator Inhofe. Well, normally I would like to come down 
and thank you individually after such a hearing, but we're on a 
very tight schedule right now so I'll just thank you from here, 
and hope that you will recall what we're asking you for on 
September 23, and we look forward to seeing you. We will be 
notifying you of that meeting shortly.
    Thank you.
    [Whereupon, at 11:05 a.m., the subcommittee was adjourned, 
to reconvene at the call of the chair.]
    [Additional statements submitted for the record follow:]
       Statement of Hon. Pete V. Domenici, U.S. Senator from the 
                          State of New Mexico
    I thank the chairman for his leadership in this committee and fully 
support him in his efforts to facilitate change at the Nuclear 
Regulatory Commission. I also thank him for allowing me to offer a 
statement for the record at this time.
    I congratulate Chairman Jackson on her new position. She has 
accomplished much during her tenure as Chairman of the NRC, and she 
deserves credit for her diligence and hard work as Chairman of the 
Commission.
    Several factors converge that spur me to put considerable effort 
into creating an efficient and effective regulatory environment for 
nuclear energy production. The threat of global warming and the 
simultaneous push for deregulation require a concentrated effort on the 
part of policy makers, scientists, and regulators to formulate good 
solutions. One thing is certain, our energy mix will change in the very 
near future. It is up to us to decide whether that change contributes 
to the general welfare, health, and safety of the public as a whole.
    This is, however, more than a matter of health and safety. U.S. 
energy policy is a matter of national security. And I am talking about 
both narrow and broad definitions of the term ``national security.'' 
With each step made toward deregulation, the anticipated rush to the 
lowest cost, least capital-intensive energy source becomes more 
tangible.
    While I am a great believer in the regulatory wisdom of the 
invisible hand, the future energy resources available to citizens of 
this country should not necessarily be left solely to calculations 
based on the principles of supply and demand today. I think everyone 
would agree that we need to be careful to ensure sufficient energy 
resources remain available for future generations. Moreover, the 
choices we make today will have long-standing effects on the 
environment our children inherit.
    While there is much talk in the Administration and among 
environmental groups about ``global warming'' and ``greenhouse gases,'' 
so far there has been little discussion about the merits of nuclear 
energy in preserving clean air. I intend to force this into the debate. 
At some point, persons serious about achieving the dual, and seemingly 
contradictory, objectives of meeting increasing energy needs and not 
emitting potentially harmful gases into the atmosphere will reach the 
following conclusion: nuclear energy provides the only option of a 
major base-load production capability that does not degrade air 
quality.
    Chairman Inhofe and members of this committee understand that the 
Nuclear Regulatory Commission's actions directly effect the nuclear 
industry's future prospects. In a deregulated environment, all sources 
of energy will require increased attention to cost. At present, the 
cost factor for nuclear energy is severely and adversely impacted by 
the regulatory environment. Ensuring that nuclear energy remains 
competitive as an energy source in a deregulated environment requires 
focused attention on removing excessive, costly regulatory burdens.
    I and other Senators have been pushing hard for the Nuclear 
Regulatory Commission to move toward a risk-informed, performance-based 
approach. Although it may seem counterintuitive for those who fear 
nuclear-anything, streamlining regulatory processes and easing the 
burdens faced by the nuclear industry will contribute to greater 
safety. Under current circumstances nuclear power plant licensees are 
forced to allocate resources in attending to aspects of plant operation 
that present little or no safety risk. This heightens the concern that 
important and risk-significant issues are not given appropriate 
attention.
    For example, the NRC must devise efficient and cost-effective 
procedures for license renewal. Currently, 40 percent of our nuclear 
plant licenses expire before 2015. Nuclear plants owners that will 
require relicensing in the very near future are waiting to see how 
quickly existing applications are handled before submitting their 
applications. I understand that the Calvert Cliffs license renewal 
process should be done by May, a quick turnaround compared to others. I 
also know that there is still significant fat in even a 25-month 
license renewal process. The NRC must continue to be aggressive in 
trimming excess processes that have no bearing on risk to public health 
or safe operation of nuclear power plants.
    Ensuring that sufficient decommissioning funds are available upon 
closure of nuclear power plants represents another critical issue. The 
current regulatory framework and tax structure for decommissioning is a 
concern confronting the nuclear industry, regardless of the regulatory 
environment. In the past, the rate-making process had little or no 
relationship to fee collection. Moreover, states' desire to keep energy 
prices low kept these decommissioning fees artificially low. As a 
result, the nuclear industry faces excessive uncovered financial 
liabilities. Providing an assurance for meeting decommissioning 
obligations is not only significant to the nuclear industry. After a 
plant is shut down, the sole purpose of the decommissioning fund is to 
provide the means for adequate cleanup.
    A related issue is the existing inequity in tax treatment of the 
decommissioning funds. These funds are not an asset and should not be 
taxed as such. As is the case of surface mining operations or solid-
waste disposal, these funds represent a ``cost of service'' to ensure 
future cleanup and safeguard public health and safety.
    These are just two examples of many issues that require our 
attention. I have several other concerns related to the nuclear 
regulatory environment, and I will continue to pursue rigorous 
oversight of the Nuclear Regulatory Commission's drive to achieve risk-
based regulation. I am also currently working on a series of 
legislative measures to address my concerns--some of which concern the 
NRC directly and others focused on the role of nuclear energy in 
promoting low-impact energy sources.
    Once again, I fully support the work of this committee and commend 
the chairman for continuing to pursue regulatory change at the NRC. I 
look forward to working with the members of this committee and others 
to ensure our future energy security.
                                 ______
                                 
 Statement of Shirley Jackson, Chairman, Nuclear Regulatory Commission
    Mr. Chairman and members of the subcommittee, the Commission is 
pleased to present to you the ongoing efforts of the Nuclear Regulatory 
Commission (NRC) to increase our effectiveness in nuclear safety 
regulation.
                 continuous improvement through change
Overview
    During our last hearing before this subcommittee, on July 30, 1998, 
I described a broad range of proposed improvements in our regulatory 
programs, with particular emphasis on the NRC oversight of power 
reactor licensees. Our appearance before this subcommittee played an 
important role in accelerating changes already underway at the NRC. On 
August 7, on behalf of the Commission, I issued a Tasking Memorandum to 
the NRC staff that established an aggressive agenda, including both 
short-term progress and longer term strategies. The overall goal of 
these reforms has been to maintain safety while reducing unnecessary 
regulatory burden, streamlining our regulatory processes, and enhancing 
our public credibility.
Significant Accomplishments
    The Commission believes we have made substantial progress in this 
6-month period, characterized by:
     Developing a comprehensive revision to the NRC reactor 
assessment and inspection programs;
     Establishing and adhering to an aggressive schedule for 
processing the Calvert Cliffs and Oconee license renewal applications;
     Issuing the Final Design Approval for the Westinghouse 
AP600 reactor design;
     Issuing guidance for streamlining NRC adjudicatory 
proceedings;
     Initiating and completing a rulemaking to establish 
informal legislative-style hearing procedures in license transfer 
cases;
     Achieving established milestones on the Three Mile Island 
license transfer application;
     Enhancing the timeliness of our reviews for improved 
Standard Technical Specifications reactor license amendments;
     Issuing Safety Evaluation Reports allowing risk-informed 
graded quality assurance, in-service testing, and in-service inspection 
at certain licensee facilities;
     Facilitating safe and small, but cost-beneficial, power 
up-rates at reactor facilities resulting in a net power up-rate, since 
the beginning of the up-rate program, of 2300 megawatts electric across 
the spectrum of all our licensees--the equivalent of two new large 
reactors coming online;
     Reducing unnecessary NRC and licensee burden associated 
with low-level enforcement issues, while retaining those features 
essential to the oversight of licensee performance;
     Approving the issuance of proposed regulations for medical 
use and high-level waste disposal that adopt a risk-informed, 
performance-based approach;
     Determining, in a timely fashion, that the proposed 
privatization of the U.S. Enrichment Corporation met regulatory 
requirements;
     Achieving established milestones for reviews of several 
dual-purpose spent fuel cask designs, including issuing a final 
Certificate of Compliance for one design, and a draft Safety Evaluation 
Report and draft Certificate of Compliance for another;
     Realigning the three major NRC program offices and 
eliminating the Office for Analysis and Evaluation of Operational Data 
(AEOD), reducing the number of NRC managers, improving organizational 
efficiency, and reducing our overall staffing and resource 
requirements; and
     Achieving Year 2000 readiness in NRC information systems.
    The Commission is committed to completing and institutionalizing 
these and other changes in a manner that will ensure long-range NRC 
effectiveness. In part, we are ensuring this continuity through key 
rulemakings and Commission policy decisions that will guide future 
actions. In the larger sense, we are altering the culture of the NRC 
and ensuring long-term stability by incorporating these changes into 
our planning framework, which is built around our 5-year Strategic 
Plan, our annual budgets and Performance Plans, and our dynamic 
Planning, Budgeting, and Performance Management (PBPM) process (which 
requires outcomes-focused operating plans for each program area).
                organizational and planning initiatives
Realignments to Increase Effectiveness and Efficiency
    As part of our efforts to be more effective and efficient and to 
reduce supervisory overhead, the Commission is realigning the three 
major NRC program offices.
     The Office of Nuclear Reactor Regulation (NRR) is reducing 
from seven divisions to five, resulting in a net reduction of 15 
managerial and supervisory positions. This realignment establishes 
reporting lines that are consistent with major NRR program functions: 
inspection, performance assessment, license renewal, and licensing.
     The Office of Nuclear Regulatory Research (RES) is going 
from twelve branches to seven, eliminating 14 supervisory positions.
     The Office of Nuclear Material Safety and Safeguards 
(NMSS), despite growing program requirements, is eliminating 10 
supervisory positions.
     The Commission also has eliminated the NRC Office for 
Analysis and Evaluation of Operational Data (AEOD), transferring its 
functions to other agency offices. These functions (event assessment, 
incident response, incident investigation, technical training, the 
review of generic requirements, and backfit program oversight) are 
being integrated with similar work in other NRC offices. The AEOD 
realignment reduces overhead by approximately 10 FTE, and we expect 
these synergies to improve effectiveness.
    Other headquarters and regional offices will transition to new 
organizational structures by the end of the fiscal year. In total, 
these realignments will eliminate 88 managerial and supervisory 
positions.
    The Commission has made notable progress in improving the NRC 
staff-to-manager ratio. When this effort was initiated in September 
1993, the NRC had slightly over 700 managers and supervisors. That 
number has declined steadily, and the realignments described above will 
reduce it to 330 by the end of fiscal year 1999. Based on the NRC 
staffing levels in the President's fiscal year 1999 budget, we will 
achieve the stated Commission goal of an 8:1 staff-to-manager ratio.
    We also have decreased the overall number of NRC employees, 
expressed in terms of full-time equivalent (FTE) staff years, from 2985 
in fiscal year 1998 to 2896 in fiscal year 1999. Through the NRC use of 
buyouts, early retirements, and attrition, we project that actual 
staffing levels will continue to decrease to about 2835 by the end of 
this fiscal year. This pace of controlled staff reductions will allow 
us to achieve fiscal year 1999 and 2000 staffing level targets without 
compromising critical mission requirements. The NRC fiscal year 2000 
budget request of $471.4 million and 2810 FTE, recently submitted to 
Congress, will provide the necessary resources to continue the timely 
implementation of the important regulatory changes discussed in this 
testimony, while continuing to ensure the fulfillment of our public 
health and safety mission. Based on the operational and regulatory 
program efficiencies achieved and anticipated, our fiscal year 2000 
budget reduces the NRC staff by 175 FTE compared with fiscal year 1998.
    We expect that, as we make our regulatory program more risk-
informed and performance-based, we also will have opportunities to 
continue improving our overall operational efficiency and effectiveness 
through Planning, Budgeting, and Performance Management. There are, 
however, ``up front'' investments required to realign our regulatory 
approach and to put into place the supporting infrastructure that will 
yield future savings. The appropriateness of further reductions will be 
evaluated in terms of both meeting our public health and safety mission 
and responding to the needs of the regulated community.
International Program Comparisons
    At the July 1998 hearing, a Tim D. Martin & Associates (TDMA) 
report was introduced that compared ``regulatory personnel loading per 
unit of nuclear generation'' in the U.S. and other countries. The 
report implied that NRC had proportionally far more regulatory 
personnel than the other countries analyzed.
    In response, we conducted a detailed review with our counterpart 
regulatory agencies in France, Japan, and the U.K. The results, which 
will be provided to the Congress as part of the final report, 
demonstrate that the nature and scope of specific regulatory programs 
in various countries differ substantially. Many U.S. programs, such as 
license renewal and operational experience evaluation, are not 
conducted in a substantive or formal way by other countries. Other 
programs, such as inspection, research, and high-level waste 
management, differ substantially in approach or infrastructure. 
Functions which, in the U.S., are performed under the umbrella of 
nuclear reactor regulation, in other countries reside in research or 
technical support organizations whose work may be given direction by 
the regulatory body. To be valid, any country-to-country comparison 
would have to take these factors into account.
    Moreover, infrastructure differences--such as the degree of 
standardization of reactor design, the placement of licensees in the 
public or private sector, or the number of licensees--generally are 
outside of NRC control, but account for substantial variations in 
resource levels. Differences in the NRC regulatory approach, while more 
within our control, are shaped largely by expectations from the 
Congress and the public. This includes such considerations as the 
degree of independent verification required for licensee activities and 
the degree of public participation in regulatory activities.
    Finally, each of the four countries has implemented or is 
considering major reorganizations and program reassessments. While each 
country can gain insights about the regulatory approaches used by 
others, the differences in industry and regulatory infrastructure, 
funding mechanisms, and stakeholder interests must be considered before 
drawing conclusions from broad comparisons. When these differences are 
considered, the apparent disparities in resource levels per unit of 
nuclear generation are diminished significantly.
Planning, Budgeting and Performance Management
    As part of our efforts to ensure the effectiveness and efficiency 
of agency operations, the NRC has implemented the Planning, Budgeting 
and Performance Management (PBPM) process. In my testimony presented in 
March 1997 to the House Committee on Commerce, Subcommittee on Energy 
and Power, I reported that we had just initiated this system, and that 
it was designed (1) to establish a sensible, reliable process for 
defining agency goals; (2) to develop cost-effective strategies for 
achieving those goals; (3) to determine the resources needed to 
implement this strategic direction; and (4) to measure and to assess 
our own progress and overall performance. Since that time, we have 
expanded our use of this process as the dynamic core of our planning 
framework, a framework that will ensure the longevity and endurance of 
current regulatory reforms.
    The fiscal year 1997-2002 Strategic Plan and fiscal year 1999 
Performance Plan were the initial PBPM efforts, and both documents 
received high marks from the Congress, the Office of Management and 
Budget, and the General Accounting Office. The fiscal year 2000 PBPM 
process integrates the NRC Strategic Plan and Performance Plan more 
fully with our budget request. A recent Arthur Andersen evaluation, 
currently under NRC staff review, found that the NRC PBPM process is 
sound, and that it has improved our integrated planning efforts, 
consistent with the Government Performance and Results Act. In 
addition, the PBPM framework provides a means of ensuring the 
accountability of agency managers. We are applying the PBPM process in 
our three major program offices in planning our work and developing the 
budget for fiscal year 2001. The continuing work of Arthur Andersen is 
helping us to develop outcomes-based measures as ``filters'' to 
evaluate, prioritize, and sunset activities. In the feedback process, 
which PBPM requires, these measures also comprise the actual metrics 
for gauging performance.
Institutionalizing Change
    We are moving the NRC aggressively toward being a more risk-
informed and more performance-based organization. These efforts will 
strengthen the linkage between our performance goals, strategies, and 
resource requirements in the fiscal year 2001 budget. We are refining 
our existing Strategic Plan and Performance Plan to reflect the 
regulatory reforms underway. This approach will ensure that current 
changes will be institutionalized in a manner that ensures long-term 
organizational effectiveness.
                    shifting the regulatory paradigm
Risk-Informed and Performance-Based Regulation
    The Commission is overhauling the NRC regulatory approach to become 
more risk-informed and performance-based; to enhance safety focus; to 
improve effectiveness, efficiency, predictability, and scrutability; 
and to eliminate unnecessary regulatory burden in both the reactor and 
materials arenas. The accomplishments of the past 6 months demonstrate 
both an acceleration of existing efforts and the launching of new 
initiatives. We have increased stakeholder involvement, refined NRC 
internal practices, completed NRC pilot programs, and laid the 
foundation for risk-informing NRC reactor regulations over the longer 
term.
    Increased Stakeholder Involvement: The Commission has increased 
substantially the involvement of the nuclear power industry, public 
interest groups, States, and other stakeholders through public 
meetings, extended workshops, and the solicitation of public comments 
through the Federal Register and the Internet. Stakeholder input 
customarily has played an important part in the formulation of NRC 
policies--for example, the Probabilistic Risk Assessment (PRA) policy 
statement and the formulation and initial use of NRC guidance on risk-
informed regulation. More recently, stakeholder interactions have 
become even more integral to the development of options for Commission 
consideration on risk-informed revisions to reactor regulations and 
proposed improvements to NRC reactor oversight processes. The 
Commission believes that this increased interaction will be of 
substantial benefit, by ensuring a mutual understanding of technical 
and safety issues, stimulating a healthy dialog among all participants, 
promoting wider acceptance of our programs, and highlighting areas for 
additional research.
    Changes to NRC Licensing Action Review Practices: As part of our 
commitment to risk-informed regulation, we have changed internal NRC 
operating practices. This has included providing additional guidance, 
training, and management attention to ensure that risk-informed 
licensing actions are given the appropriate priority. The completion of 
numerous plant-specific risk-informed licensing reviews has helped to 
sharpen the focus on safety while reducing reduce unnecessary 
regulatory burden. Two examples are:
     Extending allowed outage times for some systems without 
adverse effects on plant risk when certain precautions are taken, and
     Reducing in-plant inspection requirements for reactor 
vessel welds by as much as fifty percent.
    In practical terms, these changes substantially reduce occupational 
radiation exposure, plant operational costs, and unnecessary shutdowns 
without adversely affecting public safety.
    Progress on Pilot Programs: Risk-informed pilot programs have been 
completed through the NRC review of prototypical license amendment 
applications. We have approved pilot applications in three areas: (1) 
graded quality assurance, (2) in-service testing of pumps and valves, 
and (3) in-service inspection of important reactor plant piping. In 
each of these applications, our consideration of risk information 
provided a strong basis for a graded treatment of the regulated 
activities at certain licensee facilities, which allows both NRC and 
licensees to focus resources on equipment and activities with the 
greatest risk significance.
    In another pilot application, the NRC reviewed certain requirements 
for post-accident hydrogen monitoring. By allowing more flexibility for 
the initiation of hydrogen concentration monitoring during an accident, 
reactor operator attention can be focused on more risk-significant 
matters.
    These pilots have demonstrated that the implementation of the risk-
informed programs can be accomplished without a significant change in 
risk, and that an acceptable level of quality and safety will be 
maintained. Lessons learned from the pilots will be used to improve 
future applications and NRC reviews.
    Longer-Term Initiatives: The Commission is considering a proposal 
to redefine, in a broad-based manner, plant equipment needing special 
treatment in such areas as quality assurance, environmental 
qualification, operational controls, and engineering code requirements. 
The Commission also is considering a recommendation to ``risk-inform'' 
the complete body of power reactor regulations. In addition, we are 
facilitating the adoption of a risk-informed regulatory approach by 
making infrastructure changes through staffing and training, additional 
revisions to guidance documents, and the development of improved PRA 
methods.
License Renewal
    Establishing a stable, predictable, and timely license renewal 
process is a top NRC priority. The Commission has issued a policy 
statement laying out its expectations for a focused review of license 
renewal applications, built upon our license renewal regulations. To 
date, all milestones for the license renewal reviews have been met. I 
have charged the NRC Executive Council with overseeing the license 
renewal reviews to ensure adequate resources are applied and to raise 
promptly any issues that require Commission review. Using case-specific 
orders, the Commission has established an aggressive adjudicatory 
schedule for reviewing the Calvert Cliffs and Oconee applications, 
aimed at completing the license renewal process in 30-36 months. We 
also have prepared procedures to control the reviews and to resolve 
generic renewal issues. NRC management meets monthly with the 
applicants to monitor progress and the resources expended, and to 
resolve renewal issues.
    The initial safety evaluation report and draft environmental impact 
statement for the Calvert Cliffs application should be completed on 
schedule next month. Last December, the Commission denied an appeal 
from the petitioner on the Calvert Cliffs application and affirmed the 
Licensing Board denial of a request for hearing. The petitioner has 
sought judicial review. In the absence of a hearing, the NRC 
anticipates completing its review and a Commission decision on the 
Calvert Cliffs renewal application by May 2000, 25 months after it was 
submitted.
    Regarding the Oconee application, the licensee responses to NRC 
requests for additional information are scheduled to be completed next 
month. Last December, the Licensing Board denied a request for hearing 
from the petitioner on the Oconee renewal application. The petitioner 
has appealed this ruling to the Commission. The NRC anticipates 
completing its review and a Commission decision on the Oconee renewal 
application no later than December 2000.
    We also understand that we will receive our next license renewal 
application in December 1999 from Entergy for their Arkansas Nuclear 
One plants. Other applications may follow quickly, and we have asked 
for sufficient resources in our fiscal year 2000 budget to handle the 
anticipated new applications. Lessons learned from the initial reviews 
will help to streamline later reviews even further.
License Transfers and Adjudicatory Processes
    The Commission has issued a final rule to establish an informal 
streamlined hearing process for license transfers. Under this newly 
adopted rule (Subpart M to 10 CFR Part 2), the Commission expects to 
complete informal hearings and issue final decisions on most license 
transfer applications within about 6-8 months of when the application 
is filed.
    The NRC has completed final Standard Review Plans (SRPs) for 
antitrust and financial qualifications reviews, and a draft SRP for 
foreign ownership issues. SRPs document the process and criteria to be 
used by the NRC staff in performing its reviews, which improves the 
focus, effectiveness, predictability, timeliness, and efficiency of the 
process. During the coming months, the NRC expects to complete timely 
reviews of license transfer requests from Three Mile Island Unit 1 and 
the Pilgrim station.
    The Commission currently is considering options for a more 
comprehensive streamlining of its adjudicatory processes. Concurrently, 
the Commission has been monitoring closely its adjudicatory tribunals 
to ensure appropriate adherence to the substantive and schedular 
provisions of the Commission Rules of Practice.
Other Licensing-Related Issues
    Enhancements to License Amendment Review Processes: In July 1998, 
the NRC participated in an American Nuclear Society licensing workshop 
to identify opportunities for improving licensing processes both for 
the NRC and for licensees. The NRC and the Nuclear Energy Institute 
(NEI) established a joint task force to pursue process improvements 
based on recommendations developed at the workshop. In response to the 
workshop and self-assessments, the NRC is working to improve the 
timeliness of licensing reviews. Significant progress was made in these 
areas during the first quarter of fiscal year 1999, as measured by 
reductions both in the inventory of licensing actions and in the 
average age of actions in the inventory.
    Improvements to the 10 CFR 50.59 Change Process: In October 1998, 
the Commission published for public comment proposed revisions to 10 
CFR 50.59. Under this regulation, licensees are allowed to make certain 
changes to their facilities without prior NRC approval. The revisions 
to the rule are intended to clarify NRC requirements and to allow 
changes that will have minimal impact on the facility licensing basis. 
These revisions will both improve the effectiveness of this regulatory 
process and reduce unnecessary NRC and licensee burden. The NRC staff 
currently is analyzing the public comments and expects to complete a 
final rule package for Commission review and approval within a few 
months.
    FSAR Guidance: Another NRC initiative is the development of 
guidance on updating final safety analysis reports (FSARs). The updated 
FSAR is used in routine safety analyses performed by the NRC, the 
licensee, and other interested parties. NEI, with significant input 
from the NRC, has developed a guidance document, outlining a voluntary 
process for removing excess detail from the FSAR, thereby simplifying 
both the FSAR and the updating process. We currently are considering a 
proposed regulatory guide that endorses this NEI document. That 
proposal should go out for public comment in the near future.
    Improved Standard Technical Specifications: The NRC has improved 
the timeliness of reviews for converting power reactor licenses to 
improved standard technical specifications. This conversion improves 
consistency in interpreting and applying these requirements. In total, 
licensees for approximately 89 reactors have decided to convert to the 
new technical specifications, which licensees have projected will save 
from $150,000 to over $1M annually per site. To date, applications to 
convert have been received from 57 units, of which 43 units have been 
given approval, 17 since July 1998. We expect to issue approvals for an 
additional 10 units during the remainder of fiscal year 1999, which 
will eliminate the large backlog of applications under review over the 
last 2 years.
    Refining the Use of Generic Communications: In August 1998, the NRC 
staff met with stakeholders to ensure an understanding of concerns 
related to NRC generic communications. Based on the results of that 
meeting, we are clarifying the definition and purpose of certain types 
of generic communications, documenting the generic communication 
process, and resolving related compliance backfit issues. As part of 
this effort, we are reviewing proposed generic letters earlier, and at 
a higher management level, and engaging stakeholders earlier in the 
process.
    Improving the RAI Process: We have improved discipline in the 
process for requesting additional information (or RAIs) from licensees 
for license amendments and other NRC reviews. We have revised internal 
NRC guidance, trained appropriate NRC staff, held NRC staff and 
management accountable for the timeliness and quality of reviews, and 
developed an outline for general distribution that details the 
qualities looked for in licensee submittals. These efforts should help 
to reduce the need for, and the burden associated with, RAIs.
 Reactor Inspection, Performance Assessment, and Enforcement
    As previously stated, the Commission is taking a more risk-informed 
and performance-based approach in overseeing nuclear reactors. Since 
the July 1998 hearing, we have made considerable progress in 
identifying necessary changes to the inspection, assessment, and 
enforcement processes to improve their objectivity; to make them more 
understandable, predictable, and risk-informed; and to focus on aspects 
of performance that have the greatest impact on safe plant operation. 
These efforts have been guided, in part, by four performance goals used 
as ``filters'' to evaluate, prioritize, and sunset activities. Each 
activity is examined to see how it: (1) supports the NRC safety 
mission; (2) eliminates unnecessary NRC and licensee burden; (3) 
increases public confidence; and (4) increases NRC internal 
effectiveness and efficiency.
    Assessment and Inspection Program Changes: The NRC staff has 
proposed to the Commission a new assessment framework, which builds 
upon the cornerstones of licensee performance that must be monitored to 
ensure that nuclear power reactor operations do not pose unacceptable 
risks to the public. The cornerstones support the NRC mission by 
ensuring that: (1) accident-initiating events are reduced; (2) accident 
mitigation systems are available, reliable, and capable of performing 
their intended functions; (3) barriers are sufficient to limit the 
release of radioactivity; (4) adequate emergency preparedness functions 
are maintained; (5) licensees have implemented adequate programs to 
protect the public and workers from radiation; and (6) security 
measures are in place to protect against sabotage. As part of the 
assessment framework, the NRC staff has identified performance 
indicators, performance indicator thresholds, and risk-informed 
inspections that would supplement and verify the validity of the 
performance indicator data.
    This assessment framework provides a natural basis for a risk-
informed baseline inspection program--a program that identifies the 
minimum level of inspection required, regardless of licensee 
performance, to ensure adequate NRC oversight and assessment of 
licensee performance. Developed using a risk-informed approach, the 
proposed baseline inspection program includes a comprehensive list of 
inspectable areas within each cornerstone of the assessment framework.
    As currently proposed, the assessment process will integrate the 
performance indicators with the results of the risk-informed baseline 
inspections. This integration will allow the NRC to make objective 
conclusions regarding licensee safety performance, to communicate these 
results effectively to the licensees and to the public. Even more 
significantly, the process includes specific thresholds--tied to the 
cornerstones of safety--that will trigger commensurate licensee and/or 
NRC action if they are exceeded. The process will provide both 
continual and periodic assessment of licensee performance.
    We have developed these new processes through a series of 
stakeholder meetings with extensive and constructive dialog. The 
overall proposal was forwarded to the Commission on January 11, 1999, 
and released for public comment the next day. On January 20, the 
Commission met with the NRC staff and stakeholders to discuss these 
proposals, which we are reviewing currently.
    Although the exact form of the final process is still under 
development, these broad-scale changes to reactor oversight clearly 
will result in several direct benefits:
     Increased objectivity by relying on performance 
indicators, where possible, and the risk-informed baseline inspection 
program, to provide the basis for determining performance, and from 
using risk-informed thresholds to determine expected regulatory and 
licensee response;
     Enhanced scrutability by relating inspection information 
and performance indicators more clearly to their impact on overall 
safety performance;
     Elimination of many current redundancies and 
inefficiencies by using a single, integrated assessment process;
     More direct consideration of risk insights in the new 
risk-informed baseline inspection program, as well as in the 
performance indicator thresholds;
     Greater assurance of safety performance so that 
appropriate licensee and NRC actions can be taken before performance 
degrades unacceptably;
     Reduction in unnecessary inspection and enforcement 
burden; and
     Enhanced public understanding of NRC assessments of 
licensee performance, further strengthened through annual local public 
meetings.
    We have made considerable progress in reshaping these NRC 
regulatory programs. As we transition our programs, we will make major 
process changes incrementally, to allow testing and adjustment during 
piloting and implementation. Much work remains in bench-marking, 
conducting pilots, developing procedures, and training the NRC staff on 
the new processes. In addition, several key policy issues still must be 
resolved, such as whether changes are needed in NRC responses to events 
at licensee facilities.
    Successful implementation will require continuing stakeholder 
involvement, as well as a significant investment of NRC staff and 
management resources. As currently proposed, the transition plan will 
include a 6-month pilot at two sites in each NRC region, beginning this 
June. We will measure pilot program results against the success 
criteria and conduct a joint NRC-stakeholder workshop prior to full 
implementation. Existing processes, such as plant performance reviews 
and senior management meetings, will be replaced by the new risk-
informed oversight process. The Commission already has suspended the 
Systematic Assessment of Licensee Performance (SALP) process, pending 
implementation of the new process. To verify that our objectives are 
being met, we plan to evaluate the revised oversight process after 
about 1 year of full implementation.
    Enforcement Program Changes: In parallel with these improvements to 
our assessment and inspection programs, the NRC has made several 
changes to its enforcement program to reduce unnecessary NRC and 
licensee burden. On July 27, 1998, we issued enforcement guidance to 
clarify our existing Enforcement Policy. The changes ensure that: (1) 
licensees are given appropriate credit for identifying and correcting 
violations; (2) NRC and licensee resources are not expended on 
violations that do not warrant formal citations; (3) written responses 
to Notices of Violation are not required when necessary information is 
already docketed elsewhere; and (4) cases involving multiple examples 
of the same violation are treated consistently. The agency-wide 
implementation of this guidance has resulted in a significant reduction 
in the number of low-level (Severity Level IV) violations, particularly 
in the number of violations requiring a written licensee response.
    On January 22, 1999, the Commission approved a change to the 
Enforcement Policy that will expand the use of non-cited violations. 
Except in limited circumstances, individual Severity Level IV 
violations now will not be cited, so long as they have been entered 
into the licensee corrective action program. Accordingly, the NRC 
inspection program will place more emphasis on assessing the 
effectiveness of licensee corrective action programs. This is 
consistent with the thrust of the risk-informed inspection process 
described earlier.
    In addition to these short-term enforcement program changes, the 
Commission expects that the Enforcement Policy will be changed and 
integrated with the risk-informed inspection and assessment processes. 
These changes should include an expanded policy supplement with 
violation examples that reflect more accurately the risk significance 
of potential violations in each topical area.
Continuing Challenges
    Although we have made substantial progress in redesigning our 
regulatory programs, much work remains in making these programs more 
effective and efficient. Our efforts are far from complete. In 
addition, we recognize that new challenges surely will arise as we 
revamp our programs and take nuclear regulation into the 21st Century. 
These continuing and future challenges include:
     We are working aggressively with the nuclear power 
industry and other licensed nuclear facilities to ensure that their 
safety and security will not be adversely affected by the Y2K problem;
     We are examining the effectiveness and integrity of our 
petition processes, through which members of the public seek NRC action 
to ensure compliance with requirements and adequate protection of the 
public health and safety;
     We are reviewing carefully the NRC treatment of 
allegations involving harassment and intimidation at the Millstone 
nuclear power plants (including a specific review of certain Millstone 
harassment and intimidation cases), which we expect to lead to broader-
based enhancements to NRC enforcement and investigations functions; and
     We are revising our regulatory programs for radioactive 
material to make them more risk-informed and performance-based, and to 
ensure that the regulatory burden is commensurate with the health and 
safety benefits of such regulations, including our medical use 
regulations in 10 CFR Part 35 and our fuel cycle facility regulations 
in 10 CFR Part 70.
Conclusion
    Over the past few years, we have made substantial progress in 
improving our regulatory programs, and we have accelerated that 
progress in the past 6 months. As stated earlier, our interactions with 
this subcommittee have contributed to this success, and we welcome your 
continued constructive oversight. With sufficient resources, strong 
leadership, and broad support, we plan to continue our efforts to 
enhance the effectiveness and efficiency of the NRC by pursuing the 
paths that already have been charted. The Commission fully expects that 
new areas will continue to arise, requiring attention and additional 
effort. As with current areas of reform, we will continue to ensure 
stakeholder involvement in the change process. We believe that we have 
laid the groundwork not only for significant short-term adjustments, 
but for enduring improvements to the NRC regulatory paradigm, 
institutionalized and stabilized through incorporation into our 
performance-based planning process.
    Thank you for your attention and consideration. We will be happy to 
answer any questions from the subcommittee.














   Responses of the Nuclear Regulatory Commission to Questions from 
                            Chairman Inhofe
    Question 1. During the Hearing, Chairman Jackson discussed a long-
range plan for reforming the Agency. How does this plan relate to the 
Tasking Memo? If they are different, please supply a copy of the long-
range plan. In addition, please explain the difference between the two 
plans or the two goals.
    Response. The NRC's long-range plan for reforming the Agency is 
embodied in an integrated Planning, Budgeting, and Performance 
Management (PBPM) process. This process, implemented with the FY 2000 
budget cycle, sets the operational framework for the Agency to manage 
its programs and operations. Key components are: the Strategic Plan, 
the Performance Plan, the Budget and Operating Plans. We are updating 
the Agency's planning documents to reflect the new directions, goals 
and strategy for the Agency. The PBPM approach will ensure that current 
changes will be institutionalized in a manner that ensures long-term 
organizational effectiveness. Our latest draft Strategic Plan will be 
shared with stakeholders, including Congress, for comment.
    The August 7, 1998, Tasking Memorandum to the NRC staff established 
an aggressive agenda for accelerating changes already underway at the 
NRC, and making immediate additional, significant changes and 
improvements in a number of key areas. The specific actions and 
schedules in the tasking memorandum are incorporated into program 
Operating Plans. The updated Strategic Plan and Performance Plan will 
capture the higher level performance measures, goals and strategies 
associated with these and other initiatives.

    Question 2. Can you provide a list of those regulatory activities 
that the NRC directly bills its licensees? How much of your fee income 
is derived from each activity? What percent of your fee income is 
derived from direct service fees?
    Response. The NRC assesses two types of fees to its licensees: 10 
CFR Part 170 fees for activities performed for a specific licensee or 
applicant (based on Independent Offices Appropriation Act) and 10 CFR 
Part 171 annual fees for the remainder of NRC's budget (based on the 
Omnibus Budget Reconciliation Act of 1990). Part 170 fees are assessed 
for inspections and licensing activities, including pre-application 
efforts and reviews of new license applications, renewal applications, 
amendment requests, topical reports, standard plant designs, and 
decommissioning plans. The annual fee recovers NRC's other regulatory 
costs that are not recovered from Part 170 fees (e.g., research, 
rulemaking, and incident response). The Part 170 fees collected in FY 
1998 by the two main classes of licensees are:

----------------------------------------------------------------------------------------------------------------
                           Classes                               Licensing        Inspection          Total
----------------------------------------------------------------------------------------------------------------
Reactors....................................................       $28.2M           $59.6M           $87.8M
Materials...................................................        $7.5M            $4.3M           $11.8M
  Total.....................................................       $35.7M           $63.9M           $99.6M
----------------------------------------------------------------------------------------------------------------


    For FY 1998, of the total $459M collected in fees, $99.6M, or 22 
percent was collected from Part 170 fees.

    Question 2(a). The NEI witness, Mr. Colvin, stated that nearly 80% 
of your fees are not directly tied to a particular service provided by 
the NRC. Do you agree with that figure?
    Response. No. The NRC mission to ensure the adequate protection of 
the public health and safety recognizes that the NRC serves a broader 
need than just providing a specific service to a licensee or applicant. 
As stated in the response to the previous Question 2, approximately 20 
percent of our budgeted costs are recovered through fees for licensing 
and inspection activities performed by the NRC for specific licensees 
and applicants (10 CFR Part 170 fees). However, this does not mean that 
the remaining 80 percent does not benefit our licensees or the public 
or is not necessary for the NRC to provide regulatory oversight. For 
the NRC to carry out its mission, it must perform certain functions 
that are not requested by specific licensees or applicants, but which 
are, in fact, a service provided to categories or groups of licensees. 
For example, we must perform rulemaking, safety research and generic 
studies and maintain an incident response center. Such actions, either 
directly or indirectly, are of benefit to certain groups of licensees. 
The NRC does make an effort in assessing such fees to attribute these 
costs to the groups of licensees receiving the generic benefits of 
these regulatory activities. Also some costs, such as for licensing and 
inspection services provided to Federal agencies and nonprofit 
educational institutions, are recovered through annual fees because we 
are precluded by law or policy from charging fees to those 
organizations.

    Question 2(b). Has the amount of general fees increased as a 
percent of total fees charged to licensees over the past five years? If 
so, would the NRC provide an analysis explaining the change?
    Response. The percentage of fees collected through Part 171 annual 
fees (general fees) to total fees has remained relatively constant over 
the past 5 years. Over the past two years, the Commission has made 
decisions which will result in an increase in Part 170 fee collections, 
shifting costs away from annual fees. These decisions recognize that, 
with few exceptions, agency work directly identifiable to a licensee 
should be billed to that licensee. As a result of this change, the NRC 
estimated Part 170 fee collection for FY 1999 will be approximately $10 
million more than FY 1998. The Commission will be proposing rule 
changes which would result in further increased collection of Part 170 
fees.

    Question 2(c). Do you agree with the industry's position that your 
fees need to be more directly tied to services performed? Does your 
current fee structure comply with the 1990 Omnibus Budget 
Reconciliation Act's requirement that fees be related to services 
performed?
    Response. We agree, in general, that an identifiable licensee or 
applicant who receives agency services should be billed accordingly. 
This objective is not always attainable for legal and policy reasons. 
For example, current law precludes us from charging Federal agencies 
Part 170 fees, and public comments have supported continuing to recover 
costs for certain activities through Part 171 annual fees. As stated in 
the response to the previous question 2(b), over the past two years, 
the Commission has changed its policies so that more costs will be 
recovered directly from specific licensees and applicants. However, 
when NRC activities have a generic relationship to a group of 
licensees, NRC sees nothing inequitable about apportioning the costs of 
those activities to the appropriate group of licensees through Part 171 
annual fees.
    Our current fee structure complies with the provisions of the 
Independent Offices Appropriation Act and the Omnibus Budget 
Reconciliation Act of 1990. The Inspector General has recently issued 
an audit report that concluded that one area, Part 170 hourly rates, 
needs to be reviewed to assure compliance with the full costs 
provisions of OMB Circular A-25, ``User Charges.'' The CFO is 
initiating a study by a multi-office team to review this matter.

    Question 2(d). Doesn't it make sense, from both a safety and policy 
point of view, that those licensees that are necessitating the most 
regulatory action be assessed more fees?
    Response. Yes. In general, licensees that require more licensing 
and inspection attention will be assessed more fees under 10 CFR Part 
170. In developing the annual fees by category, we also take into 
consideration where the generic resources are being used and charge 
those categories of licensees accordingly. Therefore, in both Part 170 
and Part 171 fee assessments, the charges represent either a directly 
identifiable benefit or a reasonable relationship to the NRC's cost of 
providing the regulatory service to the licensee. However, to meet the 
100 percent fee recovery requirement, the NRC's annual fees include 
costs for activities that do not directly benefit licensees. These 
activities are discussed in response to Chairman Inhofe's Question 3.

    Question 2(e). Do you believe that your budget submissions as well 
as your annual rule regarding fee schedules provide adequate 
information for the industry and others to analyze, understand, and 
critique those submissions?
    Response. The budget submissions and our annual fee rules provide 
sufficient information for our licensees and other interested parties 
to analyze, understand and critique our submissions. Each year public 
comments are solicited on an annual proposed fee rule which describes 
the development of the proposed fees and outlines the Part 170 and Part 
171 fee amounts. The final fee rule provides a response to those 
comments. Each year when a proposed rule is issued, a copy with a 
summary of the proposed changes is mailed to each licensee so that they 
may quickly assess the impact of the rule. A copy of all working papers 
providing backup data and other detailed information on the development 
of the fees is made available for public review in the NRC public 
document room. Additionally, the Agency responds to many inquires on 
its fee policies and practices and periodically meets with individual 
licensees to discuss particular issues.
    Because the Commission has decided to rebaseline its fees in FY 
1999, the Commission has directed the staff to ensure that the proposed 
fee rule provides sufficient information for all its licensees to 
analyze and understand. Rebaselining fees could result in significant 
changes to the annual fees for many NRC licensees.

    Question 3. You have agreed in previous hearings that certain 
portions of your budget, such as the international programs, should not 
be included in the user fees. Please submit to the subcommittee a list 
of those programs, and their budgets, that do not directly benefit 
licensees, for FY 1999 and FY 2000.
    Response. The following chart lists programs and their budgets that 
do not directly benefit licensees. These programs typically provide 
either a significant indirect benefit to our licensees or are essential 
for the NRC to effectively carry out its mission to protect public 
health and safety and common defense and security. These estimates 
include direct costs as well as the overhead and agency general and 
administrative costs of providing these services. Estimates for direct 
costs reflect resource allocations developed for the FY 1999 enacted 
budget and for the FY 2000 President's Budget. Estimates for overhead 
and administrative costs are based on hourly rates established by the 
1998 fee rule and do not reflect changes that may result from the final 
1999 fee rule.

                  Activities Proposed for Fee Exclusion
                          [Dollars in Millions]
------------------------------------------------------------------------
                                         FY 1999 Budget   FY 2000 Budget
               Activity                     Estimate         Estimate
------------------------------------------------------------------------
Regulation of Federal Agencies........         3.0              3.0
Regulation of Nonprofit Educational            3.8              3.8
 Institutions.........................
Regulation of Small Entities..........         5.2              5.2
Regulatory Support to Agreement States        12.4             11.0
Site Decommissioning Management                5.7              7.4
 Program..............................
Generic Decommissioning and                   10.7             10.7
 Reclamation Activities...............
International Activities..............         4.2              5.0
Agreement State Oversight.............         5.5              5.3
  Total...............................        50.5             51.4
------------------------------------------------------------------------


    Question 4. At the hearing, Chairman Jackson indicated that the 
license renewal application for the Calvert Cliffs Plant would be, 
barring any glitches, completed in 25 months, well ahead of the 
proposed 30-36 month schedule. Is the lack of intervention on the 
Calvert Cliffs application primarily responsible for the reduction in 
schedule? Are there improvements that can be made in the NRC review 
process to further reduce the schedule?
    Response. The Commission denied the only petition for intervention 
in the Calvert Cliffs license renewal proceeding. Therefore, there will 
not be an adjudicatory hearing in this proceeding. This is the 
principal factor in the reduction in schedule to 25 months. There may 
be additional opportunities to improve the NRC renewal schedule for 
Calvert Cliffs and Oconee. After the NRC issues the renewal safety 
evaluation report, the staff will meet with the licensees for Calvert 
Cliffs and Oconee, Baltimore Gas and Electric (BGE) and Duke Energy, 
respectively, to discuss the scope of safety issues that need to be 
resolved and review and revise, as appropriate, the scope of the 
license renewal reviews and schedule milestones. It should be noted 
that the intervention petitioner has sought judicial review of the 
Commission's decision to deny intervention. That issue is currently 
before the D.C. Circuit Court of Appeals.
    The NRC is developing experience from the review of the first two 
renewal applications, as well as the resolution of generic renewal 
issues and technical reports, which will achieve further efficiencies 
in the future.

    Question 5. Aging of nuclear power plants is an ongoing process. 
Many existing licensee programs as well as elements of NRC's regulatory 
oversight focus on ensuring that aging is not detrimental to the safe 
operation of the plants. In fact, the foundation for the license 
renewal regulation is that continuation of current licensing basis 
activities and regulatory oversight ensure the public health and safety 
as plants move beyond 40 years of operation.
    Given this principle, is the focus of the NRC review of a renewal 
application on the aging that is not being managed under the current 
license? Is the Calvert Cliffs review being conducted in this manner? 
If it is not, can the process be made even more efficient without 
impacting safety?
    Response. The focus of the NRC's review of the renewal applications 
is the adequacy of the aging management programs for specific passive 
structures and components needed to ensure safe plant operation for the 
period of extended operation. The renewal rule reflects a focused 
review because those parts of the existing licensing basis related to 
active components, system design, operating margins, emergency plans, 
security and other matters that do not involve aging are excluded from 
the scope of review under 10 CFR 54. Moreover, where a renewal 
applicant proposes to rely on existing maintenance and surveillance 
programs to manage aging effects for the structures and components 
within the renewal review scope, the NRC's review effort is limited to 
a determination of whether there is an aspect of aging that is not 
being adequately managed. The staff is currently examining this aspect 
of its reviews to determine whether changes to its review process are 
appropriate.
    The NRC is developing experience from the review of the first two 
renewal applications, as well as the resolution of generic renewal 
issues and technical reports, which will achieve further efficiencies 
in the future. In particular, the NRC staff is developing a matrix of 
the common aging management elements for each of the major existing 
maintenance and surveillance programs. This effort is intended to 
improve the review guidance for the NRC staff so that their efforts 
will be focused even more than that provided by the 1995 amendment to 
the license renewal rule such that further efficiencies can be 
achieved.

    Question 6. When will the Commission reach a decision regarding the 
options that were presented to you by staff for risk-informing your 
regulations and when do you believe you will complete the process of 
risk-informing all of your regulations?
    Response. The options were presented to the Commission in SECY-98-
300 for nuclear reactor regulations. The Office of the Secretary of the 
Commission anticipates that a decision on these options will be 
finalized within the next several weeks. These estimates range from 
approximately 4 to 8 years depending on the option, or combination of 
options, the Commission chooses.

    Question 7. What do you believe the impact of risk-informing your 
regulations will be on your budget submissions in the upcoming years? 
Should Congress expect those submissions to reflect increases or 
decreases once the process of risk-informing your regulations is 
complete?
    Response. The process of reviewing risk-informed reactor licensee 
submittals (as allowed by current regulations) and the update of risk-
informed guidance documents is ongoing, and these activities are 
already reflected in the current NRC budget.
    With respect to the effort to modify reactor regulations, the 
budget impact will vary as the project progresses. The NRC expects that 
resource expenditures to risk-inform our regulations will be higher in 
the first few years, with lower expenditures in subsequent years due to 
the benefits of a more efficient process in the areas of licensing 
reviews, inspection, and enforcement. These lower expenditures in later 
years are expected to more than compensate for the initial, higher 
expenditures.
    The NRC staff has presented preliminary estimates of resource 
expenditures in SECY-98-300 for risk-informing the NRC reactor 
regulations. The impact on the budget over the upcoming years will be 
dependent on the option, or combinations of options, that the 
Commission decides on over the next several weeks. These decisions will 
be integrated into the Planning, Budgeting, and Performance Management 
Process which will identify the specific activities needed and the 
resource allocations to deliver the improvements.
    For materials regulations, it is anticipated that, as with risk-
informing reactor regulations, the resource expenditures for some 
materials areas will initially be higher in the first few years, and 
expenditures in the subsequent years may vary depending on the type of 
licensed activity and the outcome of the risk assessments.

    Question 8. In promulgating rules, what is the Commission's policy 
on the timing and availability of implementation, inspection and 
enforcement guidance? Is draft guidance available when a proposed rule 
is noticed for comment, or is guidance developed after a rule has been 
finalized?
    Response. The Commission policy is that, when possible, the draft 
guidance on implementation, inspection, and enforcement should be 
available when the proposed rule is published. Some rules are 
sufficiently simple or clear so that additional guidance on compliance 
is not needed. When industry standards are cited in a rule, NRC-
specific guidance may not be necessary. In some instances guidance may 
be developed after publication of the final rule. Industry may take the 
initiative in developing guidance for implementing a rule and that 
guidance may be endorsed by the NRC. In some instances, the effective 
implementation date of the rule may be linked to the publication date 
of the guidance document.

    Question 9. The NRC paper (SECY-99-007) recommending changes to the 
oversight process (assessment, inspection, and enforcement) is about 
500 pages long. Is that much detail necessary to improve the clarity, 
consistency, and objectivity of the process? Is the Commission 
satisfied with the direction and progress on reforming the NRC's 
oversight process?
    Response. The level of detail provided in SECY-99-007 is necessary. 
SECY-99-007 proposes a substantially revised process for overseeing the 
performance of commercial operating reactors. In addition to describing 
high level concepts related to the overall oversight framework and 
approach, it describes specific proposed changes to the Agency's 
inspection, assessment, and enforcement processes. SECY-99-007 serves 
as the primary vehicle for making recommendations available to 
stakeholders for review and comment. The level of detail included in 
the Commission paper is necessary to provide an understanding of the 
recommendations along with supporting rationale to enable respondents 
to provide meaningful comments. The NRC also has prepared a condensed 
summary of the proposed process. Having said this, the Commission did 
direct the staff to ensure future papers associated with the new 
oversight process are prepared in accordance with Vice President Gore's 
``Plain English'' initiative.
    Although the Commission is generally satisfied with the direction 
taken by the staff in developing revisions to the reactor oversight 
process, the Commission is continuing its review of the proposed 
revisions and considering additional information provided by the NRC 
staff in March 1999. While many significant challenges remain for the 
NRC and the industry associated with completing process development and 
successfully transitioning to full implementation, progress made to 
date has been good and will support timely completion of this important 
initiative.

    Question 10(a). How are you ensuring that the principles embodied 
in the revised oversight process result in a consistent approach to 
assessment, inspection, and enforcement?
    Response. The NRC will ensure that the oversight process 
improvement initiative results in a consistent approach to assessment, 
inspection, and enforcement by: (1) developing an overarching 
hierarchical framework for the reactor oversight process along with 
high level principles regarding process design, (2) developing the 
inspection, assessment, and enforcement processes in accordance with 
the framework and principles, (3) incorporating outcome-oriented 
criteria for assessing performance, (4) ensuring the transparency and 
scrutability of the process, and (5) routinely monitoring and 
evaluating the NRC performance against performance measures. This 
approach has been and will continue to be used by the NRC, working with 
various stakeholders, as the Agency completes development and 
integration of the various processes. This need for consistency will be 
a principal focus of NRC headquarters systematic and ongoing review of 
regional operations.

    Question 10(b). What specific changes are you planning to make to 
the enforcement process to improve its safety focus?
    Response. Effective March 11, 1999, the NRC changed the way it 
addresses relatively non-risk significant violations (i.e., Severity 
Level IV violations) for operating reactors. The Commission recently 
approved revising the enforcement policy to change the treatment of 
Severity Level IV violations providing that except under limited, 
defined circumstances, individual Severity Level IV violations will 
normally result in Non-Cited violations. Additionally, closure of most 
Severity Level IV violations will be based on their having been entered 
into a licensee's corrective action program.
    Importantly, this change does not change the expectation of 
compliance with NRC requirements but it does recognize the relatively 
low risk significance of these violations and the fact that most 
licensees generally resolve these issues in their corrective action 
programs commensurate with their safety significance. The net effect we 
expect is that licensee and NRC resources will be better utilized and 
available to focus on issues with greater risk significance.
    Additional changes in our Enforcement Policy for both escalated and 
non-escalated issues are being considered as part of our ongoing 
efforts to redefine inspection and performance assessment processes. 
These proposed changes are intended to integrate effectively the 
reactor oversight processes of inspection, assessment, enforcement and 
reporting and contribute to a more risk-informed performance-based 
regulatory process. We will be prepared to discuss these changes during 
the September 1999 hearing.

    Question 10(c). What have you decided regarding the term 
``regulatory significance''? If you are retaining the term, have you 
defined it? How is ``regulatory significance'' different from ``safety 
significance''?
    Response. The concept of regulatory significance encompasses (1) 
aggregation of violations, (2) willful violations including violations 
associated with discrimination issues, and (3) violations that impede 
the regulatory process such as reporting violations. Regulatory 
significance is a subset of safety significance. As used in aggregating 
violations, it addresses recurring or related violations for which, 
because of their programmatic nature and potential impact on safety, 
the root causes associated with the violations are more significant 
than their actual consequences.
    The staff is developing a proposal for the Commission concerning 
the use of ``regulatory significance.'' The staff does not intend to 
continue the use of the term. The aggregation of violations will not 
need to be used for reactor violations considered under the assessment 
process. It may continue to be used for other violations but with a 
closer nexus to safety consistent with the current staff practice as 
described in Enforcement Guidance Memorandum 98-009 issued on November 
25, 1998. Violations involving willfulness and those that impede the 
regulatory process will be considered without the label of regulatory 
significance.

    Question 11(a). When does the NRC plan to systematically assess the 
risk basis for cask licensing to ensure current and new requirements 
are focused on those areas that can be demonstrated to have an impact 
on safety?
    Response. The NRC's Spent Fuel Project Office (SFPO) staff 
continually uses available risk information and insights in assessing 
current and new regulations impacting storage and transportation cask 
safety.
    The staff has continually used risk information to upgrade its 
regulatory framework to clarify and improve the current storage 
regulations and to ensure that the NRC regulatory program focuses on 
safety. For example, in preparing a conforming change to 10 CFR 72.48 
(concerning a change process similar to 10 CFR 50.59), the staff 
proposed to expand the scope of the regulation to include the 
certificate of compliance holders in addition to the current licensees. 
After assessing comments from the industry, the staff decided to change 
this regulation further to ensure consistency and enhance usefulness, 
not only in the storage regulations, but in the transportation 
regulations as well.
    Also, the staff made early efforts during the 1970's to apply risk 
assessment for the analysis of transportation risk, most notably, in 
the ``Final Environmental Statement on the Transportation of 
Radioactive Material by Air and Other Modes'' (NUREG-0170), and 
``Shipping Container Response to Severe Highway and Railway Accident 
Conditions'' (NUREG/CR-4829, also known as the ``Modal Study''). More 
recently, the staff has applied probabilistic risk assessment in 
deciding to approve the one-time shipment of the Trojan reactor 
pressure vessel, with internals, for disposal at the U.S. Ecology site 
in the State of Washington. Also, the staff has nearly completed its 
re-validation of NUREG-0170 in light of proposed shipments of spent 
fuel to a repository (vs. reprocessing). The re-validation effort 
should be completed by the last quarter of FY99 and includes a computer 
evaluation of cask response to severe accidents and probabilities, the 
use of current health effects models, and studies of population 
distributions along likely shipment routes. The staff intends to use 
the results of NUREG-0170 re-validation in its efforts to update the 
Modal Study for the new generation of dual-purpose cask designs. The 
Modal Study update will focus on confirming severe accident 
probabilities and effects and will likely include partial or full-scale 
package tests. Moreover, the staff is encouraging more risk-informed 
decision-making with the U.S. Department of Transportation and the 
International Atomic Energy Agency. In addition, the staff intends to 
continue to use risk information in implementing its regulatory 
decisions.

    Question 11(b). How and when does the Commission plan to address 
generic issues in cask licensing, e.g., higher burn-up fuels, better 
estimates of leakage rates and approval of innovative design 
approaches, that are impacting private fuel storage licensing, plans 
for licensing an interim storage facility, and decommissioning plants?
    Response. The NRC's Spent Fuel Project Office (SFPO) staff is 
currently addressing a number of generic issues related to dry cask 
storage certification and licensing, as well as transportation package 
approvals. Last year, the staff began to augment its standard review 
plans with interim staff guidance documents (ISGs) to come to quick 
decisions about technical and regulatory issues without waiting for the 
standard review plan to be updated. This allowed the staff to continue 
its review with a sound technical or regulatory decision on a real-time 
basis. Currently, seven ISGs are in place and cover a range of topics. 
This information is available to all members of the public on the NRC 
Internet site.
    Other ISGs are currently being developed, in cooperation with 
industry representatives, related to various generic topics; e.g., high 
burn-up fuels, burn-up credit, contents, rod buckling, and codes and 
standards. These ISGs are expected to be completed within the next 3 to 
6 months, long before the lack of such guidance would impact licensing 
of Private Fuel Storage, L.L.C., (PFS), the Central Interim Storage 
Facility, or plant decommissioning. These ISGs and future ones will 
enhance the technical and regulatory review for licensing independent 
spent fuel storage installations and certification of dry cask storage 
systems and transportation packages. Prior to issuing an ISG, the staff 
typically discusses the ISG with industry representatives and other 
stakeholders at a widely attended publicly noticed gathering. For 
example, the ISGs in progress were discussed at a public industry 
workshop on March 2, 1999, attended by approximately 150 persons. 
Moreover, at this meeting, SFPO staff repeated that it does not desire 
to stifle innovative design approaches that meet the current regulatory 
framework. The staff does stress, however, that any innovative designs 
must be openly discussed with the staff and must meet the regulatory 
requirements that ensure public health and safety. Finally, the 
industry itself must develop issue-specific criteria and provide 
supporting data to the NRC so that the staff can develop an enhanced 
regulatory approach.
    The staff will always consider an exemption to the regulations 
provided assurance of the public health and safety is maintained. 
Notably, the Department of Energy-Idaho Operations Office requested and 
was granted an exemption to the 10 CFR Part 72 seismic requirements 
which was based, in part, on probabilistic information provided by the 
Department. Additionally, to preclude the need for further similar 
exemptions, the staff is working to modify its seismic and geologic 
requirements for siting an independent spent fuel storage installation.
    In a related matter, PFS was required to complete a thorough 
seismic study for its site characterization work which had not been 
completed at the time of the application. This is not a generic issue, 
but is related specifically to the information required to be in the 
PFS application concerning the site chosen by PFS.

    Question 11(c). How does the Commission plan to address these 
generic concerns without impacting the NRC's ambitious schedule for 
licensing new cask designs?
    Response. The NRC's Spent Fuel Project Office (SFPO) staff is 
working on a number of issues in parallel with its technical and 
regulatory activities. While SFPO staff considers safety-oriented 
casework to be its prime focus and highest priority, staff has been 
directed to develop resolution to those issues that may impact or 
impede reaching a technical or regulatory decision.
    Where required, the SFPO staff has sought assistance from others. 
For example, NRC's Office of Nuclear Regulatory Research is assisting 
in researching burn-up credit for final regulatory action. As stated in 
the response to Question 11(B), the staff is developing interim staff 
guidance so that an interim, but safe, regulatory decision can be 
reached prior to the Office of Nuclear Regulatory Research completing 
its review.
    Additionally, during FY 1998, the Department of Energy provided the 
NRC with $4 million for the purpose of licensing a multi-purpose 
canister (MPC) design. The DOE is now using a market-driven approach in 
which private entities will apply to NRC for approval of spent fuel 
storage and transportation designs, and therefore DOE has no further 
interest in obtaining NRC approval for the MPC design. The NRC is now 
working with the Appropriations Committees to allow use of these funds 
for review of applications from private industry for approval of dual 
purpose canisters and other generic activities pertaining to canisters 
for the transportation, storage or disposal of high-level radioactive 
waste and spent nuclear fuel.

    Question 12(a). The backfit rule is a critical tool to assess the 
risk posed by permanently shut down plants. When will the NRC apply its 
backfit rule to all rules and guidance impacting decommissioning 
plants?
    Response. The Commission has approved the development of a backfit 
rule (or modification to 10 CFR 50.109, as appropriate) specific to 
plants undergoing decommissioning consistent with other competing 
priorities. In the interim, the Commission has directed the staff to 
continue to apply the current backfit rule to the extent practicable to 
plants undergoing decommissioning.

    Question 12(b). When will the Commission provide guidance 
addressing the reduced risk posed by shutdown plants to ensure the 
critical approvals needed to proceed with decommissioning can be in 
place 1-2 months after a plant shuts down?
    Response. In March 1999, the NRC initiated a reevaluation of all 
ongoing decommissioning rulemaking activities to ensure that the 
reduced risk associated with permanently shutdown reactors was properly 
reflected in all decommissioning requirements. A public meeting with 
Nuclear Energy Institute representatives has been scheduled to solicit 
industry assistance in determining the level of risk posed by these 
plants and the associated time periods after which many regulatory 
requirements may be reduced. A new risk-informed framework and 
schedules for these rules are expected by mid-1999.

    Question 13(a). Is the NRC currently contemplating any changes to 
the physical safety requirements placed on nuclear plants?
    Response. The staff has proposed, and the Commission is 
considering, changes in the safeguards performance assessment process 
to better utilize industry and NRC resources while at the same time 
assuring that plants maintain an appropriate level of readiness. 
Depending upon the approach chosen by the Commission, changes to 
regulations in this area may result. The Commission is also considering 
a rulemaking plan which would ultimately result in allowing licensees 
to revise security provisions during decommissioning commensurate with 
the risk presented by these facilities.

    Question 13(b). What are the perceived threats to security that the 
current, and proposed, regulations intend to address?
    Response. The NRC design basis threat (DBT) statements were first 
promulgated in the late 1970's. Absent an historical basis of attacks 
on nuclear facilities or of thefts of strategic special nuclear 
material, the Commission concluded that the use of design basis threats 
were appropriate. The threat statements, one for radiological sabotage 
and one for theft and diversion, are hypothetical threats against which 
physical security systems are designed, and they provide a standard 
with which to measure changes in the real threat environment; are used 
to develop regulatory requirements; and provide a standard for 
evaluation of the performance of implemented safeguards programs. The 
threat characteristics enumerated in the DBT are based on extensive 
analyses of actual terrorist characteristics that were commonly 
demonstrated and could reasonably be expected in an adversary, on 
experienced analytical judgement, and on intelligence community 
assessments.
    To ensure the continued adequacy of the DBTs, NRC staff continually 
review threat-related intelligence, including information on vehicle 
bombings and other attacks worldwide. Staff also maintains an active 
liaison program with other Federal agencies concerned with terrorist 
threats and counterterrorism efforts, and performs DBT comparability 
reviews with the Department of Energy. The results of these efforts and 
staff conclusions are formally documented and provided to the 
Commission every 6 months, or as needed. Based on current staff 
analyses, no modification of the DBT is warranted at this time.

    Question 13(c). Has the list of threats changed over the past 
several years?
    Response. Each of the design basis threat (DBT) statements used to 
design physical protection systems has been changed once. The DBT for 
theft of strategic special nuclear material (SSNM) was modified in 1987 
to include the use of a vehicle for transporting personnel and 
equipment during an attempted theft. This change was made in order to 
maintain comparability with DOE's threat guidance regarding protection 
of SSNM. The design basis threat statement for radiological sabotage 
was modified in 1994 to include: (1) use of a vehicle by an adversary 
to transport personnel and equipment to power reactor vital areas, and 
(2) the use of a vehicle bomb to attack the power reactor facility. 
These changes were made in response to two events that occurred in 
February 1993. In that month a vehicle intrusion occurred at the Three 
Mile Island nuclear facility and the World Trade Center was bombed. 
Subsequent to the Oklahoma City vehicle bomb attack on April 19, 1995, 
and the twin vehicle bombing attacks on the U.S. Embassies in Kenya and 
Tanzania on August 7, 1998, the NRC confirmed that the design basis 
vehicle bomb remained valid.

    Question 13(d). Over the past 10 years, how have the physical 
safety requirements of nuclear plants been changed?
    Response. With respect to rulemaking, the following table 
summarizes rulemaking activities in the physical protection area from 
1988 to the present. The ``Title'' column indicates both title and the 
type of facility to which the rule applies. The ``Purpose'' column 
gives a brief summary of the rule and indicates whether the amendments 
increase or decrease security requirements.

            Physical Protection Rulemakings--1988 to Present
------------------------------------------------------------------------
                   Title                               Purpose
------------------------------------------------------------------------
``General Criteria for Security             Amends medical examination
 Personnel'' (53 FR 403), 1/7/88 (power      scheduling. Neither
 reactors and fuel facilities).              increases nor decreases
                                             security requirements.
``Licensing Requirements for the            Establishes licensing
 Independent Storage of Spent Nuclear Fuel   requirements for
 and High-Level Radioactive Waste'' (53 FR   independent spent fuel
 31651), 8/19/88 Independent Spent Fuel      storage installations and
 Storage Installations (ISFSIs).             high-level radioactive
                                             waste, including physical
                                             protection requirements.
                                             Increases security
                                             requirements.
``Safeguards Requirements for Fuel          Upgrades physical protection
 Facilities Possessing Formula Quantities    measures to include
 of Strategic Special Nuclear Material''     tactical response force,
 (53 FR 45447), 11/10/88 (fuel facilities).  vehicle barriers, double
                                             perimeter fence, etc., for
                                             NRC/U.S. Department of
                                             Energy (DOE) comparability.
                                             Increases security
                                             requirements.
``Access to Safeguards Information (54 FR   Implements Federal
 17703), 4/25/89 (power reactors).           legislation. Increases
                                             security requirements.
``Fitness for Duty Program (FFD)'' (54 FR   Requires FFD programs at
 24468) 6/7/89 (power reactors).             power reactors to assure
                                             workforce is not under the
                                             influence or impaired for
                                             any cause. Drug-free
                                             workplace. Increases
                                             security requirements.
``Fingerprint Cards: Increase in Fee'' (55  Administrative change to
 FR 3039, 1/30/90 (power reactors).          fee. Neither increases nor
                                             decreases security
                                             requirements.
``Fingerprint Cards: Increase in Fee'' (55  Fee increase. Neither
 FR 35563) 8/31/90 (power reactors).         increases nor decreases
                                             security requirements.
``Access Authorization Program for Nuclear  Establishes an access
 Power Plants'' (56 FR 18997), 4/25/91       authorization program.
 (power reactors).                           Increases security
                                             requirements.
``Fitness for Duty Program'' (56 FR         Permits, under certain
 41922), 8/26/91 (power reactors).           conditions, employment
                                             actions based on
                                             preliminary test results.
                                             Decreases security
                                             requirements.
------------------------------------------------------------------------
``Fingerprint Cards: Resubmittal Procedure  Procedural amendment.
 Change'' (57 FR 7645) 3/4/92 (power         Neither increases nor
 reactors).                                  decreases security
                                             requirements.
``Minor Amendments to the Physical          Minor clarifying changes.
 Protection Requirements'' (57 FR 33426),    Neither increases nor
 7/29/92 (power reactors and fuel            decreases security
 facilities).                                requirements.
``FFD Programs: NRC Partial Withdrawal of   Responds to the U.S. Office
 NRC Information Collection Requirements''   of Management and Budget's
 (57 FR 5543), 11/25/92 (power reactors).    finding that NRC failed to
                                             demonstrate a compelling
                                             need for certain
                                             information. Neither
                                             increases nor decreases
                                             security requirements.
``Clarification of Physical Protection      Clarifies Commission's
 Requirements at Fixed Sites'' (58 FR        regulatory intent. Neither
 13699), 3/15/93 (fuel facilities).          increases nor decreases
                                             security requirements.
``Licensees' Announcements of Safeguards    Increases the effectiveness
 Inspections'' (58 FR 29521), 5/21/93        of unannounced safeguards
 (fuel facilities).                          inspections. Increases
                                             security requirements.
``FFD Requirements for Licensees            Implements an FFD program at
 Authorized to Possess, Use, or Transport    Category I sites. Increases
 Formula Quantities of Strategic Special     security requirements.
 Nuclear Material (SSNM)'' (58 FR 31467),
 6/3/93 (fuel facilities).
------------------------------------------------------------------------
``Day Firing Qualification Courses for      Revises day-firing
 Tactical Response Team Members, Armed       qualifications to enhance
 Response Personnel, and Guards at           skills. Increases security
 Category I Facilities'' (58 FR 45781), 8/   requirements.
 31/93 (fuel facilities).
``Modifications of FFD Program              Reduces random testing rate.
 Requirements'' (59 FR 502), 1/5/94 (power   Decreases security
 reactors and fuel facilities).              requirements.
``Fingerprint Cards: Change in User Fee''   Administrative change.
 (59 FR 661), 1/6/94 (power reactors).       Neither increases nor
                                             decreases security
                                             requirements.
``Annual Physical Fitness Performance       Provides increased assurance
 Testing for Tactical Response Team          that the licencee response
 Members, Armed Response Personnel and       force is able to perform
 Guards at Category I Licensees'' (59 FR     duties under strenuous
 38347), 4/13/94 (fuel facilities).          tactical engagements.
                                             Increases security
                                             requirements.
``Temporary Access to Safeguards            Minor procedural changes.
 Information'' (59 FR 38553), 7/29/94        Neither increases nor
 (power reactors).                           decreases security
                                             requirements.
``Protection Against Malevolent Use of      Requires vehicle bomb
 Vehicles at Nuclear Power Plants'' (59 FR   protection at operating
 38889) 8/1/94 (power reactors).             power reactors. Increases
                                             security requirements.
``Certification of Gaseous Diffusion        Applies physical protection
 Plants'' (59 FR 48944), 9/23/94 (fuel       requirements to gaseous
 facilities).                                diffusion plants. Increases
                                             security requirements.
``Reduction of Reporting Requirements       Reduces licensee burden.
 Imposed on NRC Licensees'' (60 FR 13615),   Decreases security
 3/14/95 (power reactors).                   requirements.
``Changes to Nuclear Power Plant Security   Deletes a requirement, to
 Requirements Associated with Containment    decrease licensee burden,
 Access Control'' (60 FR 46497) 9/7/95       without degradation of
 (power reactors).                           physical protection.
                                             Decreases security
                                             requirements.
``Changes to Nuclear Power Plant Security   Deletes certain requirements
 Requirements'' (62 FR 63640), 12/2/97       associated with protection
 (power reactors).                           against an insider threat,
                                             to decrease licensee burden
                                             without compromising
                                             physical protection.
                                             Decreases security
                                             requirements.
``Physical Protection for Spent Nuclear     Clarifies physical
 Fuel and High-Level Radioactive Waste''     protection requirements for
 (63 FR 26955), 5/15/98 (ISFSI).             spent nuclear fuel and high-
                                             level radioactive waste
                                             stored at independent spent
                                             fuel storage installations.
------------------------------------------------------------------------

                                 ______
                                 
     Responses of Chairman Jackson to Questions from Senator Crapo
    Question 1. Approximately one year ago, the NRC undertook several 
pilot projects to investigate the appropriateness of NRC oversight of 
Department of Energy nuclear reactor programs. The NRC adopted limited 
programs at the Savannah River, Lawrence Berkeley, and Oak Ridge 
facilities. How would you gauge the results so far?
    Response. Although the pilot facilities selected by DOE represented 
only a small portion of the DOE Complex, the results so far indicate 
that DOE's non-weapons related programs can be effectively regulated by 
NRC and continue to operate safely. Few changes in facilities, 
procedures, safety programs, and safety documentation (including Safety 
Analysis Reports) would be necessary. DOE initiatives such as WorkSmart 
Standards and Integrated Safety Management Systems could easily be 
incorporated into an NRC risk-informed, performance-based regulatory 
framework. Most technical, policy, and regulatory issues, including 
safety and safeguards and enforcement, encountered during the Pilot 
Program could be handled adequately within the existing NRC regulatory 
framework. However, to date the pilot program has concentrated on 
individual facilities located on a much larger DOE site. The next 
logical step in the pilot program would be to evaluate a pilot DOE site 
with all of its individual facilities.
    NRC could develop a regulatory framework that would be risk-
informed, taking into account the age, material condition, and 
operating status of the DOE facilities. NRC brings a national 
perspective to the regulation of DOE because NRC regulates a wide 
spectrum of activities including the public and private sector and 
facilities with a wide range of risks.
    Based on the fact that the Pilot Program identified only a few 
needed changes in DOE facilities or procedures, NRC anticipates the 
cost to DOE of making the transition to external regulation would be 
relatively small. However, the costs will vary depending on the degree 
to which DOE facilities are already in compliance with DOE's own 
requirements. For example, the costs for bringing the USEC gaseous 
diffusion plants into compliance with DOE and NRC requirements has 
proven to be significantly higher than what was indicated in the Pilot 
Program because of the large costs required to bring the plants into 
compliance with long standing DOE safety and security requirements. DOE 
believes the costs to be much higher than the NRC believes. A program 
to place a few facilities like the Lawrence Berkeley National 
Laboratory under NRC regulation might clarify this issue.

    Question 2. Given the limited nature of the programs, would the 
information uncovered from the studies give a good understanding of how 
NRC oversight of an entire facility would function?
    Response. Yes. Within its scope, the Pilot Program has provided NRC 
with a very good understanding of how oversight of an entire site would 
function. Although the Pilot Program included only one entire site, 
Lawrence Berkeley National Laboratory (LBNL), and two facilities within 
large complex sites, the Receiving Basin for Offsite Fuel at Savannah 
River Site and the Radiochemical Engineering Development Center at Oak 
Ridge National Laboratory (ORNL), the Pilot Projects and associated 
activities provided information on how NRC could oversee entire DOE 
sites.
    At LBNL, the NRC found the radiation safety program adequate to 
protect public health and safety. NRC concluded that LBNL could be 
licensed by the NRC using a broad-scope materials license, similar to 
those issued at large universities.
    During the Pilot Projects at the Savannah River Site and the ORNL, 
it became clear that it would be more efficient to regulate an entire 
site than a single facility within a complex site, because such 
facilities depend on the shared-site infrastructure for many of the key 
elements of safe operation (e.g. radiation protection, waste 
management, emergency preparedness, safeguards and security). NRC did 
conduct a brief overview of the non-defense facilities at ORNL in order 
to better understand the shared-site issues.
    Licensing reviews of DOE facilities would be facilitated by taking 
credit for the reviews already performed by DOE. It is evident from the 
Pilot Projects that DOE requirements, in general, provide a safety and 
security envelope that is comparable to that provided by NRC 
regulation.

    Question 3. What is your impression of external (NRC) regulation of 
DOE activities? Under what conditions would this be optimized?
    Response. The NRC continues to believe that NRC regulation of DOE 
nuclear facilities would result in the key advantages identified by the 
DOE Working Group; i.e., that external regulation (1) would allow DOE 
to focus on its primary missions, (2) eliminate the inherent conflict 
of interest arising from self-regulation, (3) enhance safety and 
stability, (4) lead to a safety culture comparable to the commercial 
industry, (5) be consistent with domestic and international safety 
management practices, (6) enhance DOE credibility by an open process, 
and (7) enhance public confidence in DOE. In particular, external 
oversight of DOE through an open process which allows involvement of 
State governments and other stakeholders will increase public 
confidence that DOE is taking the right action.
    NRC is already regulating several DOE activities under existing law 
and could potentially regulate others. These activities are identified 
in the enclosed matrices, ``Existing Regulatory Relationships between 
NRC and DOE and Privatized DOE Facilities/Activities Performed by 
Private Companies only for DOE'' and ``Potential Regulatory 
Relationships between NRC and DOE and Privatized DOE Facilities/
Activities Performed by Private Companies only for DOE.'' It has been 
NRC's experience that the primary cost of external regulation has been 
the cost for DOE to modify its facilities to meet its own requirements 
prior to external regulation. Legislation that clearly indicates 
responsibilities for NRC, DOE, and other Federal agencies may be the 
best approach to resolving many of the issues that have arisen in the 
Pilot Program. The NRC staff currently is preparing a white paper for 
Commission consideration on the results of the Pilot Program and the 
technical, regulatory, and legal issues that have been explored by the 
Pilots.

   Existing Regulatory Relationships between NRC and DOE and Privatized DOE Facilities/Activities Performed by
                                         Private Companies only for DOE
----------------------------------------------------------------------------------------------------------------
          Facility/Activity              Nature of Oversight          Legal Basis                 Issues
----------------------------------------------------------------------------------------------------------------
Uranium Mill Tailings:...............
  Title I site (Remedial action        Review, concur on        UMTRCA.................  Law required completion
   sites).                              remedial action plan                              of surface reclamation
                                        and license DOE for                               by  9/30/98. All but 2
                                        long term care.                                   sites met date.

  Title II site (Active sites).......  After termination of     UMTRCA.................  none
                                        commercial license,
                                        DOE becomes the
                                        general licensee.
----------------------------------------------------------------------------------------------------------------
High Level Waste Repository..........  Prelicensing             Energy Reorg. Act 1974,  Resolution of key tech.
                                        consultation; license.   Section 202, NWPA.       issues at Yucca Mnt.
                                                                                          HLW standards for
                                                                                          Yucca
                                                                                         Commission views on
                                                                                          viability assessment
----------------------------------------------------------------------------------------------------------------
Independent Spent Fuel Storage
 Facilities:.
  Fort St. Vrain.....................  License................  Energy Reorg. Act 1974,  none
                                                                 Section 202.

  TMI-2 Spent Fuel Debris............  License................  Energy Reorg. Act 1974,  none
                                                                 Section 202.
----------------------------------------------------------------------------------------------------------------
Naval Reactors:......................
  Cores..............................  Review.................  Economy Act............  none

  Transport/Packages Fuel Fabrication  Certify................  Economy Act............  none

  Nuclear Fuels Service..............  License................  AEA (AEC Regulatory      Awaiting NFS submittals
                                                                 Decision).               for NRC review and
                                                                                          approval

  BWX Technologies, Inc..............  License................  AEA (AEC Regulatory
                                                                 Decision).
----------------------------------------------------------------------------------------------------------------
Gaseous Diffusion Plants (leased by    Certification..........  AEA, Energy Policy Act   Backfit to meet seismic
 USEC).                                                          of 1992, USEC            design criteria; SAR
                                                                 Privatization Act of     upgrade
                                                                 1996.
----------------------------------------------------------------------------------------------------------------
Non-site-specific central interim      Review.................  Energy Reorganization    Report is non-site
 storage facility topical report                                 Act of 1974, Section     specific
 (SNF).                                                          202.
----------------------------------------------------------------------------------------------------------------
DOE dry transfer system topical        Review.................  Energy Reorganization    Part of the central
 report.                                                         Act of 1974, Section     interim storage
                                                                 202.                     facility
----------------------------------------------------------------------------------------------------------------
DOE burnup credit topical report.....  Review.................  Energy Reorganization    none
                                                                 Act of 1974, Section
                                                                 202.
----------------------------------------------------------------------------------------------------------------
DOE Transportation Packages (38).....  Review, certify........  AEA, HMTSA.............  none
----------------------------------------------------------------------------------------------------------------
West Valley Demonstration Project....  Develop D&D criteria,    WVDP Act, 1980.........  Criteria for D&D
                                        review, consult.                                  Reinstatement of
                                                                                          license for State
                                                                                          after completion
----------------------------------------------------------------------------------------------------------------
WIPP Transportation..................  Review and certify       WIPP Land Withdrawal     none
                                        packages.                Act of 1992.
----------------------------------------------------------------------------------------------------------------
Test of Tritium Production in          Review; Issue            AEA....................  Possible package
 Commercial Reactors.                   conforming license                                review; Legislative
                                        amendments.                                       framework
----------------------------------------------------------------------------------------------------------------
Greater than Class C Waste Disposal..  License................  Low-Level Rad Waste      Storage until disposal;
                                                                 Policy Amendments Act    Timely availability of
                                                                 of 1985.                 disposal capacity;
                                                                                          Cost of disposal;
                                                                                          Impact on reactor
                                                                                          decommissioning
----------------------------------------------------------------------------------------------------------------
Foreign Research Reactor Spent Fuel    Review.................  AEA....................  Public concern about
 Shipments/Package.                                                                       transportation
----------------------------------------------------------------------------------------------------------------
MOX Fuel Fabrication and use.........  Prelicensing             Energy Reorg Act of      Need to update Part 51,
                                        Consultation; License.   1974 as amended, AEA.    S-3
----------------------------------------------------------------------------------------------------------------


  Potential Regulatory Relationships between NRC and DOE and Privatized DOE Facilities/Activities Performed by
                                         Private Companies only for DOE
----------------------------------------------------------------------------------------------------------------
          Facility/Activity              Nature of Oversight          Legal Basis                 Issues
----------------------------------------------------------------------------------------------------------------
Hanford TWRS.........................  Technical Assistance;    1997 Approp. Act.......  Legislation needed to
                                        Potential License.                                authorize NRC
                                                                                          regulation
----------------------------------------------------------------------------------------------------------------
Savannah River Tanks (residues)......  Review; potential        Economy Act NWPA;        Application of
                                        license for HLW          Energy Reorg Act of      incidental waste
                                        residues.                1974.                    criteria to tank waste
----------------------------------------------------------------------------------------------------------------
Aluminum Based Spent Fuels dry         Review.................  Economy Act NWPA;        Criteria for storage;
 storage.                                                        Energy Reorg Act of      Suitability for
                                                                 1974.                    disposal
----------------------------------------------------------------------------------------------------------------
Brookhaven High Flux Beam Reactor....  Review; technical        Economy Act............  Review start date
                                        assistance.
----------------------------------------------------------------------------------------------------------------
External Regulation Pilot Projects...  Simulated regulation...  1999 Approp. Act.......  Legislation needed
----------------------------------------------------------------------------------------------------------------
Privatization Spent Nuclear Fuel
 Projects:.
  Peach Bottom Unit 1 Cores I and II.  Potential license......  Energy Reorganization    DOE must declare as
                                                                 Act of 1974.             excess to R&D

  Shippingport LWBR..................    .....................    .....................

  TRIGA..............................    .....................    .....................
----------------------------------------------------------------------------------------------------------------


    Question 4. What resources would the NRC need in order to regulate 
DOE? How much more staff? How much more funding? How do these compare 
with DOE internal regulation?
    Response. The Pilot Program included only three facilities, which 
do not represent the entire DOE complex. While the Pilot Program did 
not gather enough information to support an estimate of the resources, 
staff, or funding needed for NRC to regulate the entire DOE complex, 
NRC did develop cost estimates for regulating the three facilities 
included in Pilot Programs. Precise resource estimates for NRC to 
regulate all or some of the DOE nuclear complex are difficult to 
develop without the completion of additional, more complex, pilot 
projects. These costs would be comparable to the costs for regulating 
commercial nuclear facilities and would be comparable for similar 
facilities with similar risks.
    The following table provides the cost estimates for NRC to regulate 
Lawrence Berkeley National Laboratory (LBNL), Oak Ridge National 
Laboratory, Radiochemical Engineering Development Center (REDC), and 
Savannah River Site, Receiving Basin for Offsite Fuel (RBOF):

------------------------------------------------------------------------
                                    NRC transition
              Pilot                      costs         NRC annual costs
------------------------------------------------------------------------
LBNL............................  1 FTE.............  0.2 FTE
REDC............................  2.8 FTE plus $200K  0.1 FTE with an
                                   for technical       additional 0.5
                                   assistance.         FTE for first few
                                                       years
RBOF............................  2.5 FTE plus $100K  0.3 FTE
                                   for technical
                                   assistance.
------------------------------------------------------------------------


    The NRC does not have sufficient information to compare its 
regulatory costs to those of DOE internal regulation. However, the cost 
to DOE could be minimized, potentially resulting in a net savings, by 
reducing the level of DOE oversight of the regulated activities to a 
level consistent with a corporate oversight model. If DOE does not 
decrease its oversight activities, costly, burdensome, dual regulation 
may well result.
                                 ______
                                 
     Responses of Chairman Jackson to Questions from Senator Graham
    Question 1. In your testimony you state that the Commission has 
aimed at completing the license renewal process for the Calvert Cliffs 
and Oconee Plants in 30 to 36 months.
    You also state that lessons learned from the initial reviews will 
help to streamline later reviews even further.
    Therefore, in the interest of establishing a stable, predictable 
and timely license renewal process, will you be able to reduce the 30-
36 month time period for the later reviews for license renewal, and if 
so, what is your estimate for the length of time?
    Response. As stated in the chairman's testimony and discussed in 
the response to Senator Inhofe's Question 4, the NRC expects to improve 
the 30-month review schedule for Calvert Cliffs by at least five 
months, which includes the time saved based on dismissal of the hearing 
requests in that case. Aside from time savings related to case specific 
hearing issues, the NRC expects that the 30- to 36-month review 
schedule can be improved for future reviews, but those improvements are 
anticipated primarily from the later review stages that have not yet 
been performed for the Calvert Cliffs and Oconee reviews. When the 
first two renewal applications are completed, the NRC intends to 
reflect on the achievements and make additional improvements in the 
schedule for future renewal applications.

    Question 2(a). In your testimony you state that the initial safety 
evaluation report and draft environmental impact statement for the 
Calvert Cliffs application should be completed on schedule next month.
    Do you have any preliminary results from these reports?
    Response. The preliminary results of the safety review have been 
discussed during public meetings with Baltimore Gas and Electric and 
Duke Energy over the last few months, and are documented in associated 
meeting summaries. The NRC staff used those meetings to expand the 
public record relative to the NRC review of the scope and effectiveness 
of aging management programs for Calvert Cliffs and Oconee, beyond that 
described in the applications. That information is expected to provide 
the necessary technical basis to complete the safety evaluation and 
minimize the number of potential open items that would need to be 
resolved before a renewed license could be granted.
    The supplement to the environmental impact statement for Calvert 
Cliffs was issued by letter dated February 24, 1999. Comments on those 
findings are being sought during a public meeting on April 6, 1999, and 
throughout the 75-day public comment period. The NRC staff issued the 
initial Safety Evaluation Report on renewal of the Calvert Cliffs 
license on
    March 19, 1999.

    Question 2(b). Were there any ``show stoppers?''
    Response. No. The staff has not identified any safety issues thus 
far that cannot be resolved with appropriate license conditions or 
inspection requirements. The environmental review did not identify any 
significant environmental impacts associated with license renewal.

    Question 3(a). Is there a way that the NRC can more closely link 
the fees levied against each licensee to the NRC resources expended on 
each licensee?
    Response. As discussed in Chairman Inhofe's Question 2(b), during 
the past two years NRC has taken steps to improve the linkage of fees 
levied against specific licensees to the resources expended on each 
licensee. These decisions recognize that with few exceptions, agency 
work directly identifiable to a licensee should be billed to that 
licensee.
    We will continue to link the generic regulatory costs, such as 
rulemaking and research efforts to the classes of licensees that cause 
us to incur the cost in accordance with the Omnibus Budget 
Reconciliation Act of 1990. These generic costs are assessed to 
licensees as Part 171 annual fees. It should be noted that the NRC has 
identified approximately 10% of its budget that would be more 
appropriately funded from the General Fund. If legislation was enacted 
to reduce the percentage amount the NRC must recover through fees, this 
would more closely align agency efforts for licensees with the fees 
assessed to those licensees. A listing of these programs and costs are 
found in the response to Chairman Inhofe's Question 3.

    Question 3(b). It seems that assessing licensees annual fees more 
consistently with the regulatory oversight required may provide 
financial incentives for plants to improve their performance. Do you 
agree with this statement?
    Response. In general, licensees that require more licensing and 
inspection attention will be assessed more fees under 10 CFR Part 170. 
In developing the annual fees by category, we also take into 
consideration where the generic resources are being used and charge 
those categories of licensees accordingly. Therefore, in both Part 170 
and Part 171 fee assessments, the charges represent either a directly 
identifiable benefit or a reasonable relationship to the NRC's cost of 
providing the regulatory service to the licensee. That having been 
said, we would point out that the NRC makes no deliberate attempt to 
use fees as an incentive or disincentive for plants to improve 
performance. The Commission believes that fees should not be a primary 
factor in determining the work to be performed in response to NRC's 
health and safety mission. NRC's safety-related decisions cannot be 
driven by fees. The NRC must carry out its statutory mission which 
recognizes that the NRC serves a broader need than just providing a 
specific service to a licensee or applicant.
    As the Congress is aware, the NRC is in the process of making a 
comprehensive revision to its reactor assessment, inspection, and 
enforcement programs. This will be built upon cornerstones of safe 
licensee performance that must be monitored to ensure no unacceptable 
public risks in reactor operations. As an outgrowth of that process, 
licensees requiring more oversight and for which we expend the greatest 
resources will continue to bear a proportionately higher share of the 
Agency costs through Part 170 fees.

    Question 4. A recent NRC Office of Inspector General report raised 
some questions about how the NRC handled concerns that two or more 
workers at the Millstone nuclear power plants in Connecticut may have 
been let go because they raised safety concerns.
    The Inspector General report concluded that the NRC staff at first 
found that such discrimination probably had occurred, but then reversed 
itself without providing the written documentation to support the 
changed conclusion.
    What steps is the NRC taking to make sure the lack of accountable 
documentation of decisions does not recur?
    Response. In response to the findings of the Inspector General, the 
Commission directed the NRC staff to review the findings, assess 
lessons learned, and recommend and take necessary corrective actions. 
The NRC staff completed this review in January 1999. The Office of 
Enforcement issued detailed enforcement guidance on January 14, 1999, 
and February 26, 1999, that requires the staff to prepare and maintain 
an internal status summary for each significant enforcement action the 
Agency considers. Although this administrative form is not an official 
record of the Agency decision, the staff has been directed to use it to 
record important information related to the enforcement decision-making 
process. The guidance also emphasizes the importance of updating the 
form based on subsequent changes to the agreed-upon enforcement 
strategy, including the rationale for the change.
    The Commission has also directed an independent panel headed up by 
the Acting Chief Judge of the Atomic Safety and Licensing Panel to 
review the cases reviewed the by Inspector General and the enforcement 
and investigation process and make recommendations for process 
improvements. This review was completed on March 12, 1999, and is 
currently under Commission consideration. In addition, the NRC staff 
has initiated a broader review of the Agency's investigation and 
enforcement functions and will take appropriate actions.

    Question 5. In your testimony you state that you are revising the 
regulatory programs from radioactive material to make them more risk-
informed and to ensure that the regulatory burden is commensurate with 
the health and safety benefits of such regulations, including medical 
use regulations in 10 CFR Part 35.
    When the proposed rule revising Part 35 was issued in early fall, 
many stakeholders stated that the proposed rule was not risk-informed, 
that there was insufficient time to offer meaningful comments, and that 
both the comment period and date to finalize the rule should be 
significantly extended. The Commission responded to these requests by 
extending the comment period by 30 days. A number of groups including 
the American College of Nuclear Physicians, Society of Nuclear 
Medicine, American College of Radiology, and others requested that the 
Commission extend the final rule date, which is now set for May 1999. 
This request was also supported by the Organization of Agreement 
States, which represents state radiation officials.
    In light of the strong support by the regulated medical community 
for an extension of this May 1999 date, would the Commission consider 
extending the May 1999 date for finalizing the rule?
    Response. In March 1997, in follow-up to several internal and 
external reviews, the Commission directed that 10 CFR Part 35 be 
restructured into a risk-informed, more performance-based regulation by 
June 1999. The Commission's intent is to focus the rule on those 
medical procedures that pose the highest risk, from a radiation safety 
aspect, while decreasing the oversight of low-risk activities. The 
Commission previously extended the public comment period by 30 days and 
reviewed a significant number of insightful public comments. The 
Commission is currently considering extending the schedule for the 
final rulemaking to more adequately incorporate the significant number 
of public comments reviewed.

    Question 6. This next question is specifically addressed to 
Commissioner Diaz. Commissioner Diaz, I am aware that you met with some 
of the representatives of the nuclear medicine communities as well as 
some of my constituents. Could you please summarize the outcome of that 
meeting?
    Response. As you may know, on January 28, 1999, I met with Dr. 
Robert Carretta, President of The Society of Nuclear Medicine; David 
Nichols, Society of Nuclear Medicine; and Mr. Roy Brown, Mallinckrodt 
Medical. We discussed their concerns about the proposed regulation of 
diagnostic nuclear medicine procedures in the new NRC Part 35. In 
particular, they believe that these low-risk procedures would be over 
regulated by the new rulemaking. In this regard, I expressed my belief 
that a risk-informed Part 35 would differentiate between diagnostic and 
therapeutic procedures; with the former (diagnostic procedures) having 
many fewer requirements than the latter (therapeutic). In fact, I 
believe that in the diagnostic area the NRC could regulate by requiring 
that records be kept and made available to our inspectors. However, I 
emphasized that in this and other issues regarding Part 35, I retain an 
open mind, look forward to reading the public comments and would make 
my decision based on the Part 35 rulemaking record.
                                 ______
                                 
   Responses of the Nuclear Regulatory Commission to Questions from 
                            Senator Bennett
    Question 1(a). In response to inquiries by the Army Corps of 
Engineers, the NRC has recently indicated that it will not assert 
regulatory authority over certain uranium and thorium processed wastes 
referred to as ``11e(2) radioactive byproduct material.'' In an 
apparent change of position, NRC now contends that it does not have 
jurisdiction over byproduct material located at sites that were not 
licensed prior to 1978 when the Uranium Mill Tailings Radiation Control 
Act (UMTRCA) was enacted. The NRC interpretation is referenced in two 
pending RFP's in which the Army Corps indicates it will accept 
proposals for disposal of 11e(2) radioactive waste at ordinary 
landfills not regulated by the NRC.
    What is the NRC's response to the pending RFP's by the Army Corps?
    Response. As a general matter, the NRC has no regulatory 
responsibility regarding the Army Corps' management of radioactive 
material under the FUSRAP program.
    In addition, the NRC does not consider its actions regarding FUSRAP 
as a change in position. Earlier, the NRC said that it would not assert 
regulatory authority over this material. Later, the NRC said that it 
would not assert regulatory authority over this material because NRC 
does not have legislative authority to regulate this material. This 
later statement is not a change in position.

    Question 1(b). What is the NRC's response to a 1998 resolution by 
the Conference of Radiation Control Program Directors which calls on 
the Commission as a matter of public health and safety to regulate the 
disposal of uranium and thorium mill tailings referred to as ``11e(2)'' 
radioactive byproduct material, even if it was generated prior to 1978?
    Response. The resolution of the Conference of Radiation Control 
Program Directors cannot, of course, confer jurisdiction on the NRC 
where jurisdiction does not exist under Federal law. As discussed below 
in the answer to Question 1.E, the critical question regarding NRC 
jurisdiction is whether a site where this activity took place was 
licensed by the NRC on or after the date the Uranium Mill Tailings 
Radiation Control Act (UMTRCA) became effective, not when the material 
at the site was generated (Section 202; 42 USC 2111).

    Question 1(c). If pre-1978 11e(2) byproduct material is not 
regulated by NRC, can this radioactive waste be disposed in ordinary 
solid waste landfills?
    Response. NRC does not have jurisdiction over 11e(2) byproduct 
material generated before 1978 unless it exists at a site that was 
licensed by the NRC on or after November 8, 1978, the effective date of 
new section 83 of the Atomic Energy Act. Pre-1978 11e(2) byproduct 
material not regulated by the NRC is under the jurisdiction of other 
Federal and State agencies, including the Department of Transportation 
and the Environmental Protection Agency.

    Question 1(d). If 11e(2) radioactive byproduct waste were disposed 
of in regular solid waste landfills, wouldn't this again raise the 
controversial specter of the Below Regulatory Concern (BRC) issue that 
NRC confronted in 1990?
    Response. The Commission developed criteria and procedures to 
implement the concept of ``Below Regulatory Concern'' (BRC) in 1986 and 
1990 consistent with Congressional directive in the Low-Level 
Radioactive Waste Policy Amendments Act of 1985 (LLRWPAA). These 
actions and procedures were eventually withdrawn by the Commission in 
1993 as directed by Congress in the 1992 Energy Policy Act. The LLRWPAA 
applies only to materials defined by that Act as low-level waste (LLW) 
and expressly excludes 11e(2) byproduct material from the definition of 
LLW (section 2(9)).
    If NRC or an Agreement State authorized disposal of 11e(2) 
byproduct material waste in regular solid waste landfills, it could 
raise similar concerns to those expressed by the public in response to 
the NRC's ``Below Regulatory Concern'' policy.

    Question 1(e). How would the NRC's interpretation of 11e(2) 
jurisdiction affect the licensing of companies such as the Atlas 
Corporation in Moab, Utah, where radioactive byproduct materials were 
created both before and after 1978?
    Response. The language of section 83 of the Atomic Energy Act (42 
U.S.C. 2113(a)) (AEA), was added to the AEA by UMTRCA. Section 83 a. 
provides that any NRC license for covered activities in effect on or 
after the effective date of section 83 (November 8, 1978) must include 
the terms and conditions that the NRC determines are necessary to 
assure that the licensee can comply with the decontamination, 
decommissioning, and reclamation standards prescribed by the 
Commission. The Moab NRC license was in effect on and after the 
effective date of section 83 of the AEA. Therefore, all materials in 
the tailings impoundment at the site are subject to NRC jurisdiction, 
whether these were produced before or after 1978. The critical factor 
in determining jurisdiction over the waste or tailings produced by the 
processing of ore for its source material content is whether a site 
where this activity took place was licensed by the NRC on or after the 
date UMTRCA became effective, not when the material at the site was 
generated.
                                 ______
                                 
   Responses by the Nuclear Regulatory Commission to Questions from 
                              Senator Bond
    Question 1. The NRC has collected data on medical 
misadministrations since 1980. This data includes misadministrations 
involving diagnostic Nuclear Medicine. On March 20, 1997, the 
Commission directed that the revision of Part 35 be risk-informed and 
performance-based. Please explain based on the data the NRC has 
collected since 1980 what risks were identified specifically for 
diagnostic Nuclear Medicine.
    Response. Prior to initiating the revision of the regulations for 
diagnostic nuclear medicine, the Commission thoroughly reviewed several 
extensive assessments, including the external review conducted by the 
National Academy of Sciences-Institute of Medicine (NAS-IOM), a 1993 
NRC internal senior management review, and the Commission's Strategic 
Assessment and Rebaselining Project. Although the Commission decided 
not to adopt the NAS-IOM study recommendations, the Commission 
considered the risk assessment information, including information on 
comparative risks of ionizing radiation in medicine, in the NAS-IOM 
report. Both the NAS-IOM Committee and the NRC Advisory Committee on 
the Medical Uses of Isotopes recognized that quantifying levels of risk 
in radiation medicine is problematic.
    During the development of the overall revision of Part 35, NRC 
staff considered risk information provided by members of the public and 
professional societies, professional medical standards of practice, and 
event databases maintained by NRC, to determine where oversight of low-
risk activities could be decreased and where there needed to be 
continuation, or even broadening, of the regulations governing high-
risk activities.
    Additional information on risk that was considered by the staff 
included the National Council on Radiation Protection and Measurements 
Report No. 93, ``Ionizing Radiation Exposure of the Population of the 
United States,'' NCRP Report No. 100, ``Exposure of the U.S. Population 
from Diagnostic Medical Radiation,'' and NCRP Report No. 105, 
``Radiation Protection for Medical and Allied Health Personnel.'' These 
reports provide data on the exposure to a large number of medical 
patients and workers, and, consequently, the large collective doses, 
associated with this use of radioactive material.
    The Commission proposed revisions to 10 CFR Part 35 and solicited 
comments during a 120-day period, which ended on December 16, 1998. All 
the risk information received in writing during the public comment 
period, as well as the information received at the three public 
meetings held during the public comment period, is being carefully 
considered to determine if additional improvements should be made to 
achieve the goal of restructuring Part 35 into a risk-informed 
regulation.

    Question 2. The regulated medical community has suggested that the 
NRC, based on data by leading experts, (National Academy of Sciences-
Institute of Medicine, National Council on Radiation Protection and 
Measurements, and a 1993 NRC internal management report), move to only 
enforce the radiation protection thresholds of 10 CFR Part 20 and the 
training and experience requirements of 10 CFR Part 35 for the 
regulation of low-risk diagnostic Nuclear Medicine. James Smith, the 
Technical Assistant to Chairman Jackson, first raised this proposal at 
a November 5, 1998, meeting between representatives of the Nuclear 
Medicine community and the Commission staff as one possible way to 
address the concerns of the diagnostic Nuclear Medicine community while 
also meeting the directives of the Commission to strive for a 
``performance-based'' regulation. Why has there been no further 
consideration of this proposal by the Commission or NRC staff working 
on the revision to 10 CFR Part 35? Are 10 CFR Part 20 and the training 
and experience requirements of 10 CFR Part 35 not sufficient in meeting 
the NRC's requirements that the public, workers and patients be 
protected and the physicians and technologists be properly trained? 
Would this not be an example of true ``performance-based'' regulation?
    Response. The Commission has been considering this proposal. During 
the development of the proposed rule the staff eliminated requirements 
in the current Part 35 that are contained elsewhere in the Commission's 
regulations, such as the radiation protection requirements in Part 20. 
In some cases, where justified by risk, more specific requirements were 
maintained in Part 35. The majority of the requirements that were 
maintained apply to the high-risk therapeutic uses of radioactive 
material.
    The proposed revisions to Part 35 include specific requirements, 
not included in Part 20, that are necessary to protect occupationally 
exposed individuals and the public, similar to requirements in Parts 
31-39 for other materials licensees such as industrial radiography. For 
example, the Part 35 requirement to provide instructions to operators 
of therapeutic medical devices is not addressed in Part 20, but is 
necessary for the protection of the operators.
    Another reason why there needs to be specific requirements for the 
medical use of byproduct material in Part 35 is that Part 20 does not 
apply to doses received as a result of exposure of patients to 
radiation for the purpose of medical diagnosis or therapy. The NRC does 
not regulate the physicians' determination as to the correct doses to 
be prescribed to patients. However, minimal requirements are needed, 
for example, to ensure that the doses to patients are in accordance 
with the physician's directions. In other words, the primary focus of 
NRC regulation is providing that the correct patient receives the 
correct dose of byproduct material at the correct site and via the 
correct mode of administration.
    The Commission agrees that Part 35 could be more performance based 
and is considering the recommendations made by the diagnostic nuclear 
medicine community and the commenters. NRC staff is in the process of 
analyzing many comments received on the proposed rule. Staff will 
consider the impact of maintaining the training and experience 
requirements in Part 35 and eliminating all other diagnostic nuclear 
medicine requirements. Some specific areas for consideration will be 
deletion of requirements for: determining the activity of diagnostic 
dosages prior to administration; labeling syringes and shields 
containing byproduct material; and routinely calibrating survey meters 
and instruments used to determine the activity of a radioactive drug 
prior to administration.

    Question 3. After having spent approximately 2 million dollars of 
user fee money the Commission rejected, with no explanation, the 
recommendations of the National Academy of Science-Institute of 
Medicine report (NAS-IOM). This report found that for nuclear medicine, 
the risk and probability of harm occurring to a patient or a member of 
the public is extraordinarily low and recommended that the NRC reduce 
its focus in such low risk areas. What scientific or other information 
did the Commission base its rejection of the NAS-IOM report?
    Response. The NAS-IOM study was conducted because NRC sought an 
evaluation of whether the rules, policies, and procedures of the 
current regulatory framework for medical uses of byproduct material 
fulfilled the NRC's statutory responsibilities for protection of public 
health and safety. Based on its review of the report and consultations 
with relevant agencies, the Commission was not persuaded by the NAS-IOM 
report's overall recommendation to Congress that NRC should not be the 
Federal agency involved in the regulation of Atomic Energy Act 
materials in medicine. The Commission continues to believe that the 
conclusions in the report were not substantiated and that the 
recommendations should not be pursued.
    The report was not rejected on the basis of its analysis of risks 
of ionizing radiation in medicine. In fact, the risk assessment 
information in the report, including the information on comparative 
risks of ionizing radiation in medicine, was considered during the 
rulemaking process in developing proposed revisions to 10 CFR Part 35. 
The NAS-IOM report concluded that ``no comprehensive raw data are 
available to make exact comparisons'' between risks of medical 
modalities (pg. 124). In addition, both the NAS-IOM report and the 
NRC's Advisory Committee on the Medical Uses of Isotopes (May 8, 1997, 
Commission briefing) recognized that quantifying levels of risk in 
radiation medicine is problematic.
    The Commission was not persuaded by the recommendations of the NAS-
IOM report with regard to regulation of byproduct material for medical 
use. The Commission reached this decision, in part, based on comments 
received from some State and Federal agencies on the report. Some State 
and Federal agencies, such as the Department of Health and Human 
Services, Food and Drug Administration, to which additional 
responsibility would have fallen if the NRC adopted the 
recommendations, indicated that they did not support the 
recommendations in the report.
                                 ______
                                 
   Statement of Joe F. Colvin, President and Chief Executive Officer 
                        Nuclear Energy Institute
    Mr. Chairman, Ranking Member Graham and distinguished members of 
the subcommittee, my name is Joe Colvin. I am the president and chief 
executive officer at the Nuclear Energy Institute, the Washington, DC, 
policy organization for the nuclear industry. I am pleased to testify 
this morning about the need for comprehensive reform of the Nuclear 
Regulatory Commission's regulatory process that provides oversight of 
the commercial nuclear energy industry.
    The Nuclear Energy Institute sets industry policy positions on 
various issues affecting the industry, including Federal regulations 
that help ensure the safety of 103 operating nuclear power plants in 31 
states. NEI represents 275 companies, including every U.S. utility 
licensed to operate a commercial nuclear reactor, their suppliers, fuel 
fabrication facilities, architectural and engineering firms, labor 
unions and law firms, radiopharmaceutical companies, research 
laboratories, universities and international nuclear organizations.
                         summary of key points
    Nuclear power plants, which produce nearly 20 percent of America's 
electricity, are our largest source of emission-free energy--an 
important consideration as Congress and other policymakers recognize 
the growing nexus of energy and environmental policy. Among the 
Congress, and indeed across the United States, there is a growing 
awareness that this is a proven industry with more than 2,000 reactor 
years of operating experience and with a product that will become even 
more valuable as we meet the demands of the 21st century.
    Without nuclear energy, the United States will find it impossible 
to meet increasingly stringent U.S. clean air regulations as well as 
international carbon dioxide reduction goals. The nation's nuclear 
power plants provide clean air benefits while producing electricity at 
a competitive price--with production costs that are a fraction of a 
cent higher than coal-fired electricity and more cost-effective than 
natural gas, solar or wind power. Members of Congress increasingly are 
recognizing the important benefits of nuclear energy to our economy, 
our environment and energy future. This subcommittee's hearing last 
year, the first Nuclear Regulatory Commission oversight hearing in more 
than 4 years, is but one piece of tangible evidence of this increased 
policymaker recognition.
    The single most important challenge facing the nuclear energy 
industry is a regulatory process that consumes licensee and NRC 
resources on issues that have little or no safety significance and that 
produces inconsistency in assessment and enforcement. Mr. Chairman, I 
cannot overstate the importance of this subcommittee's oversight, which 
has been instrumental in encouraging the NRC commissioners and staff to 
complete work on many long-standing issues, including outlining a plan 
to adopt risk-informed approaches to regulations for nuclear power 
plants, and revising the assessment process to use objective plant 
performance measures. The NRC has a number of promising regulatory 
reform initiatives underway. However, much work remains to be done and 
Congress should continue to provide the oversight that had already 
initiated meaningful reform of the NRC's regulatory process. The task 
at hand is sustaining the effort started last year.
    Specifically, the NRC should be encouraged by this subcommittee to 
develop and implement a long-term strategic plan as well as focusing on 
activities that can be completed in the near term. The NRC's long-range 
strategy should include these principles:
     a safety-focused regulatory framework that incorporates 
risk insights;
     a more efficient and accountable regulator;
     an integrated NRC strategy for achieving the objectives of 
regulatory reform;
     a specific timetable and milestones to ensure the NRC's 
long-range plan is implemented on schedule; and
     staff resources and a fully accountable budget that 
supports fundamental NRC reform.
    Congress plays a vital role in assuring that Federal nuclear 
regulations recognize the transition to a competitive electricity 
market while protecting public health and safety and preserving the 
nation's energy security. In that regard, Congress should direct the 
NRC to prepare a multi-year plan to achieve a safety-focused, results-
oriented regulatory process--with clear accountabilities within the 
Agency--that protects public health and safety.
    This multi-year plan should include an annual planning process that 
establishes a meaningful set of NRC objectives with measurable results. 
The long-range strategic plan should integrate the principles of 
regulatory reform I described earlier, with measurable goals and 
objectives to demonstrate progress to achieve reform of the regulatory 
system. It also should recognize improved plant safety and performance 
and account for new demands on the regulatory process as a result of 
the transition to a competitive electricity market.
    Mr. Chairman, the industry recommends that this subcommittee 
schedule another hearing by June and direct the NRC commissioners to 
present both the annual and multi-year strategies for reforming the 
regulatory process at that time. The subcommittee should then continue 
to hold hearings every 6 months until you are satisfied that progress 
in reforming the regulatory process is proceeding in the proper 
direction, at the proper pace and that it will be sustained. The 
committee then should schedule hearings, perhaps annually, to oversee 
NRC reform.
    The NRC should also identify legislative changes needed to proceed 
with timely regulatory reform, such as amending the Atomic Energy Act 
with respect to foreign ownership, antitrust reviews and the 
adjudicatory hearing process. The commission should also support tax 
code amendments to ensure that nuclear plant decommissioning trust 
funds receive the same tax treatment when plants are purchased or plant 
licenses are transferred. Decommissioning must be adequately funded in 
a competitive market and the trust funds should be protected from 
bankruptcy.
    Current law requires the NRC to collect approximately 100 percent 
of its budget from user fees on licensees. Most of those fees are 
collected as a generic assessment equally levied against all licensees, 
creating, in effect, a ``miscellaneous'' category to describe nearly 80 
percent of its budget. This practice is contrary to sound and 
accountable budgeting. Congress should ensure that the NRC adheres 
fully to the requirements of the Omnibus Budget and Reconciliation Act 
of 1990 and submit legislation, if necessary, to modify NRC fee 
structure so that licensees are assessed fees only for those NRC 
programs related directly to licensee regulation. Unrelated agency 
expenditures, such as international activities and regulatory support 
to agreement states or other Federal agencies, should not be included 
in nuclear plant licensee user fees, but should be included in a 
specific line item on the NRC's budget, subject to the authorization 
and appropriations process. Additionally, the Agency's ability to 
collect user fees should be authorized annually by Congress until the 
commission completes its regulatory reform initiatives.
    Finally, this subcommittee should resolve the impasse between the 
NRC and the Environmental Protection Agency in setting radiation 
protection standards. This subcommittee has jurisdiction over both 
Federal agencies and should clarify that the proper scientific 
authority for this issue rests with the NRC, which has the expertise in 
setting standards for nuclear facilities. The commission's regulations 
have proven effective in protecting public health and safety as well as 
worker safety.
                               background
    In July 1998, I testified before this committee during a hearing of 
tremendous significance--one that has prompted the NRC to re-examine 
its fundamental regulatory practices and to begin the transition to a 
more focused, objective regulatory system for the nuclear power 
industry. Today, there is a greater recognition of the need for change 
at the NRC. The industry and other stakeholders have, during the past 7 
months, participated with the commissioners and NRC staff in productive 
dialog to better understand all perspectives as the Agency moves toward 
meaningful reform. The increased support and oversight from Congress 
has played a key role in this broad examination of the current 
regulatory system, and continued support from Congress will be 
essential to achieving sustained regulatory reform at the NRC.
    As Commissioner Nils Diaz testified last July, the need to change 
the NRC's regulatory approach ``is not an indictment of the past, but a 
requirement of the future.'' Like the industry it regulates, the NRC 
must adapt to a changing environment where the traditional cost-of-
service market is yielding to a competitive market that places a 
premium on the ability of companies to provide excellent service safely 
and efficiently. Nuclear power plants are competitive today, with 
average production costs second only to coal-fired power plants. But in 
a competitive market, inefficient regulation can detract from safety 
and clearly impact nuclear plant economics.
    Unlike any other electric generation source, nuclear power is 
unique because the costs of the entire electricity production 
lifecycle--including the uranium fuel manufacturing process, NRC 
regulation, waste management and plant decommissioning--are included in 
the cost of electricity to consumers. To remain competitive with other 
generation sources that do not internalize many of these expenses, all 
costs in the nuclear fuel cycle must be appropriate and reasonable. 
Plants will close if they cannot compete, raising potential electricity 
system reliability problems. Moreover, the nuclear electric generation 
will be replaced by power plants that emit greenhouse gases and other 
air pollutants. If that scenario unfolds, the United States will find 
it impossible to meet increasingly stringent U.S. clean air regulations 
and international carbon dioxide reduction goals.
    I don't believe that that is the intent of Congress. In fact, the 
hearing by this subcommittee last July demonstrated that, for the first 
time since the mid-1980's, Congress has a strong interest in ensuring 
that the industry is regulated in a manner that protects public health 
and safety, but in a way in which the industry is not unduly burdened.
    The United States has the largest commercial nuclear power industry 
in the world, and we are the global leaders in the development of 
advanced nuclear power plant technology. The foundation for this 
leadership role is the extensive use of nuclear power in this country 
and the industry's improved safety performance. The NRC's regulatory 
approach must also recognize these substantial improvements in nuclear 
plant performance. The industry's commitment to excellence in plant 
operations has resulted in dramatic gains in both safety and 
efficiency. Since 1985, for example, NRC data shows that the average 
number of significant events at U.S. plants has declined from nearly 
2.5 per unit in 1985 to an average of .04 per unit in 1998. Moreover, 
improvements in nuclear plant operating efficiency since 1990 are 
equivalent to adding 11 large generating units to the national electric 
grid--further evidence of the industry's contribution to serving new 
electricity demand while meeting our nation's clean air goals.
    The NRC has taken many steps to improve agency procedures since the 
July 30, 1998, hearing. These initial steps represent the beginning of 
the sustained agency commitment required to provide a transition to a 
regulatory system that mirrors the industry's improvement. The NRC's 
regulatory innovation must result in a safety-based regulatory process 
that is focused on adequate protection of public health and safety. To 
continue the process toward risk-informed, performance-based 
regulation, the Agency should establish objective, clear regulatory 
thresholds that clearly convey the NRC's regulatory expectations and 
the associated actions of an accountable and responsible regulator.
    With many states preparing to move toward a competitive electricity 
market, it is imperative that the NRC begin now to implement the 
following fundamental changes:
                          near-term priorities
     Implement a new regulatory oversight process with plant 
assessment rooted in a clear safety basis and inspection levels based 
on objective plant performance. NRC enforcement activities should be 
risk-informed and consistently applied so that licensee and NRC 
attention is clearly focused on items that are directly related to 
protecting public health and safety.
     Undertake timely, efficient proceedings for nuclear power 
plant license transfer and license renewal. For example, the NRC must 
meet or better the 30- to 36-month target for responding to the license 
renewal applications by Baltimore Gas & Electric Company and Duke Power 
Company. Experience gained from these first two reviews should be used 
to refine the process and allow the NRC to respond even faster to 
subsequent license applications.
     Adopt an initial set of risk-informed, performance-based 
regulations, including those related to maintenance, and undertake 
pilot projects to evaluate applying risk insights more broadly to the 
entire nuclear power plant.
     Apply risk-informed, performance-based regulations to the 
licensing and oversight of major materials licensees, such as fuel 
fabrication facilities, and to NRC regulation of medical applications.
                        intermediate priorities
     In the 2000-2002 timeframe, the NRC must transition to 
more objective, risk-informed nuclear plant regulation in which 
regulatory requirements are commensurate with risk.
     As the NRC moves toward reform of its regulatory process, 
the commission must examine what appropriate levels of staffing and 
budget are required. The industry believes the Agency should ultimately 
optimize its resources, including an examination of its organizational 
structure, to conform with the new vision of regulatory oversight. The 
commission must allocate resources in a manner that ensures adequate 
staff support to set the foundation for broad regulatory reform.
     Reforming plant security requirements to ensure the 
adequate safety of the plants from any threat, including terrorists, 
while providing the balance to ensure that those security measures 
don't impact plant safety during the operation of these facilities.
                          long-term priorities
     Moving toward reforming the construction and operating 
license process for new advanced reactor designs. The Department of 
Energy's recent analysis of measures required to reduce greenhouse gas 
emissions to 3 percent below 1990 levels includes the construction of 
42,000 megawatts of nuclear-powered electric generation. The energy and 
environmental reality will require the industry and the NRC to begin 
examining how to license new nuclear power plants in an efficient 
manner.
     Apply risk-informed insights to the remainder of the 
Agency's regulations, including the design bases for both existing and 
new nuclear power plants.
    The regulatory environment is improving, but continued 
congressional oversight of the NRC is an important factor for continued 
improvement. For its part, the industry must continue to improve 
nuclear plant performance and be vigilant in assuring adequate 
protection of public health and safety. Similar to the industry's 
process and cultural changes in the 1980's and 90's to establish world-
class safety performance, the NRC must undergo sweeping change, 
including a cultural change within the Agency. This change requires 
long-term vision and commitment, and must ultimately include clearly 
articulated goals for the staffing and budgetary requirements of a more 
efficient and safety-focused regulator. The industry recognizes the 
need for the NRC to fully develop its strategic direction and 
accurately identify the staff and organizational needs to make a 
successful transition. However, the commission must ultimately optimize 
its resources and examine its organizational structure once the 
transition to a new regulatory process is complete.
     nuclear power plants poised for success in competitive markets
    In providing one-fifth of U.S. electricity supply, nuclear energy 
is our nation's largest source of emission-free electricity. Nuclear 
energy also provides clean air benefits at a competitive price--with 
production costs that are a fraction of a cent higher than coal-fired 
electricity and more cost-effective than natural gas, solar or wind 
power. Most U.S. nuclear power plants compete as low-cost electricity 
providers today and are well-positioned as states open their 
electricity markets to competition. Measured solely by economic 
factors--operating and maintenance costs plus fuel costs, ongoing 
capital requirements and general and administrative expenses--most 
nuclear units will be very competitive in a deregulated electricity 
market. In fact, many nuclear plants should be able to improve their 
economic performance even further.
    Production costs at nuclear power plants in the last 3 years 
continue to fall well below those the nuclear energy industry incurred 
at the start of the decade. Meanwhile, plant performance--measured by 
the capacity factor of plant operation--has in the last 2 years reached 
record high levels.
    In a restructured environment that eliminates the rate base, 
earnings will be based solely on the difference between an electric 
generating plant's going-forward costs and the market price of power, 
and fully depreciated nuclear plants will demonstrate enormous 
potential. Nuclear power's marketplace appeal is evident in the 
purchase of Three Mile Island 1 by AmerGen, the joint operating company 
formed by PECO Energy Company and British Energy, and the purchase of 
Boston Edison Company's Pilgrim nuclear power plant by New Orleans-
based Entergy Operations Incorporated. Also, Baltimore Gas & Electric 
Company and Duke Power Company have filed applications with the NRC to 
extend operations at five nuclear units for an additional 20-year 
period. Entergy Operations Incorporated in late January announced it 
plans to extend the license of one of its nuclear units, with a formal 
application expected in December. These events will become more 
frequent as electric utilities reposition themselves in the wake of 
state restructuring initiatives.
     nrc must transition to safety-focused, results-oriented agency
    The industry has built a solid record of safe, efficient 
performance at nuclear power plants as it enters a new business 
environment. But the industry's continued commitment to safe nuclear 
plant operation must be accompanied by the NRC's ability to fulfill its 
mission as a strong and credible regulator. Both are essential to build 
and maintain public trust and confidence in nuclear energy.
    As this subcommittee discussed last July, industry concerns over 
NRC regulation go back many years. Over time, regulatory requirements 
have become progressively more detailed and prescriptive. New 
requirements often are layered on top of old ones, without weeding out 
duplication and inconsistency. The result is that the regulatory 
process has no objective, measurable safety threshold. Many of the 
industry's regulatory concerns are long-standing, and previous NRC 
reform initiatives have not been sustained.
    Congressional interest in the NRC has helped spark greater progress 
in many agency projects that are essential for a new regulatory 
process. Chief among those projects is developing a risk-informed, 
performance-based process for assessing plant performance. In a 
performance-based approach, the NRC would establish basic requirements 
and set overall performance goals, and plant management would decide 
how best to meet those goals. This approach is more sharply focused on 
safety because resources are applied to plant systems and equipment 
commensurate with their importance to safety.
    Last October, the NRC redirected resources to concentrate on the 
development of a risk-informed, performance-based assessment process in 
three overaching strategic areas: reactor safety, radiation safety and 
plant security. This new process will provide a sharper focus on public 
health and safety--and because it incorporates the use of objective 
criteria--it will be much easier for the utilities and the public to 
understand regulatory expectations for nuclear plant operations.
    Consistent with the risk-informed assessment process, similar 
changes are needed in the Agency's enforcement process. Last October, 
the industry proposed changes to the NRC enforcement policy based upon 
guiding principles that are consistent with broader reforms being 
undertaken to improve NRC regulations and policies. These principles 
include:
     Enforcement should be risk-informed so that licensees and 
NRC attention is clearly focused on items having actual consequences or 
high-risk significance for public health and safety. Enforcement should 
not result in the expenditure of NRC and licensee resources on non-
safety significant violations.
     Enforcement should be consistent with the safety focus of 
the performance assessment process, but should not drive the assessment 
process or be used as a surrogate for assessment activities.
     Enforcement should be based upon readily understandable, 
objective criteria that are consistently and predictably applied. 
Enforcement should not be based on new interpretations or expanding 
views of compliance, or be driven by subjective terms.
    The industry has strongly encouraged the NRC to apply these 
principles as it reviews the enforcement policy. Such reform is 
necessary to ensure that the policy is risk-informed, objective and 
properly focused on safety.
                    signs of regulatory improvement
     The NRC has made tangible progress in some areas toward 
reforming the regulatory process since this subcommittee held its first 
oversight hearing last July. The commission has initiated programs to 
implement risk-informed regulation, inspection and enforcement 
programs, and has made notable progress in several projects it already 
had underway in 1998. The commission and staff should be commended for 
their initial steps toward regulatory reform. Some specific areas in 
which the NRC has made progress in recent months include:
     The NRC staff has submitted to the commissioners a plan to 
adopt a risk-informed approach to 10 CFR 50, the basic regulatory 
oversight rules for nuclear power plants.
     The release of final safety evaluations for in-service 
inspection pilot programs. The NRC has adopted a risk-informed approach 
to inspecting welds of reactor coolant systems. These inspections are 
based on methodologies that rely on data from 20,000 previous weld 
exams. This risk-informed approach to inspections is being piloted at 
three nuclear plants. Industrywide, it is expected to reduce 
occupational radiation exposure by 15 percent as well as reduce the 
cost of inspection by $15 million to $25 million annually.
     Revising the nuclear plant assessment process to use 
objective plant performance indicators and risk-informed inspection 
findings. These changes promote a more understandable and predictable 
assessment process. Consistent with the new approach, the NRC has 
suspended the Systematic Assessment of Licensee Performance (SALP) 
program. The agency is considering eliminating the subjective SALP 
program and the release of the ``watch list''--the list of those plants 
requiring increased regulatory attention--by 2000.
     A 30- to 36-month target for renewing licenses for 
Baltimore Gas and Electric Company's Calvert Cliffs plant and Duke 
Power Company's Oconee plant. By maintaining this timeframe, the NRC 
can refine its process of reviewing license renewal applications and 
target resources on the most relevant issues. Subsequent license 
renewal applications should be reviewed more quickly.
     The commission issued a rule in December 1998 to establish 
a more efficient procedure for processing nuclear plant license 
transfers. The number of license transfer applications has increased 
from two to three per year to 20 in 1997 and 15 in 1998. The commission 
must remain committed to efficient reviews of transfer applications. 
Otherwise, the economic viability of licensees who must respond rapidly 
to changing market forces will be placed at risk.
     The NRC has established a process for reviewing 
certification of containers for storing and transporting used nuclear 
fuel within 1 year of a vendor's submission, which is a dramatic 
improvement over past practices.
    Despite these initial steps toward reform, Congress must sustain 
this momentum by encouraging the NRC to continue improving its internal 
processes, such as increasing the efficiency of reviews, safety 
evaluations and the consideration of license renewal applications.
    An efficient nuclear licensing process is especially crucial so 
that nuclear operating companies can make timely business decisions 
required in a competitive market. The economic viability of a license 
transfer proposal can change entirely due to the length of a commission 
review. The public interest can best be served when a relicensing 
process is managed expediently and not delayed by an unnecessarily 
lengthy, undisciplined hearing process. The NRC has recognized the 
importance of swift action in these cases and should be commended for 
its attention in 1998 to improving the licensing process. The 
commission should continue to ensure timely reviews and disciplined 
licensing board proceedings related to license transfers or amendments, 
and ensure that issues raised by intervenors in NRC proceedings are 
based on legitimate safety issues.
   reducing user fees and eliminating duplicative radiation standards
    Other industry issues also require agency reform and legislative 
attention. Last year, Congress approved a single-year extension of the 
NRC's authority to collect 100 percent user fees from licensees. The 
Omnibus Budget and Reconciliation Act of 1990, as amended, requires 
that the Agency recover approximately 100 percent of its budget 
authority by assessing licensees annual fees consistent with the 
regulatory benefits derived. Most of those fees are collected as a 
generic assessment equally levied against licensees, creating, in 
effect, a ``miscellaneous'' category to describe nearly 80 percent of 
its budget. This practice is contrary to sound and accountable 
budgeting. Legislation is needed to modify the fee structure so that 
licensees are assessed only for those NRC programs necessary to 
regulate them. Unrelated agency expenditures, such as international 
activities and regulatory support to agreement states or other Federal 
agencies, should not be included in nuclear plant licensee user fees, 
but should be included in a specific line item on the NRC's budget, 
subject to the authorization and appropriations process. Additionally, 
the Agency's ability to collect user fees should be authorized annually 
by Congress until the commission completes its regulatory reform 
initiatives.
    On another front, this subcommittee is uniquely positioned to 
resolve the impasse between the NRC and the Environmental Protection 
Agency in setting radiation standards. This duplicative regulation 
exists in many areas, but is most apparent in establishing radiation 
standards for a national repository for used nuclear fuel. This 
subcommittee has jurisdiction over both Federal agencies and should 
clarify that the proper scientific authority for this issue rests with 
the NRC, which has the expertise in setting standards for nuclear 
facilities. The commission's regulations have proven effective in 
protecting public health and safety as well as worker safety. 
Conversely, EPA has little direct experience in regulating the use of 
radioactive materials and relies on a regulatory philosophy that lacks 
a scientific underpinning. The industry encourages this subcommittee to 
take actions necessary to eliminate dual regulation of nuclear 
facilities.
                  a road map for comprehensive reform
    Mr. Chairman, Congress should continue its close oversight of the 
NRC and support effort to replace its outdated regulatory scheme with a 
risk-informed, performance-based process that is focused on those areas 
most important to safety. I cannot overstate the importance of this 
subcommittee's oversight, which has been instrumental in the NRC 
commissioners and staff completing work on many long-standing issues, 
including outlining a plan to adopt a risk-informed approach to NRC 
regulations and revising the assessment process to use objective plant 
performance indicators.
    Congress plays a vital role in assuring that Federal nuclear 
regulations recognize the transition to a competitive electricity 
market while protecting public health and safety and preserving the 
nation's energy security. In that capacity, allow me to summarize the 
industry's recommendations for congressional action:
     Require the NRC to prepare and maintain a multi-year 
strategic direction to achieve a safety-focused, results-oriented 
regulatory process--with clear accountabilities within the Agency--that 
protects public health and safety. This long-term strategy should 
incorporate the principles discussed in this testimony and include the 
use of annual plans, which include meaningful regulatory reform 
objectives with measurable results. The commission should apprise 
Congress of its progress through periodic status reports.
     Schedule a hearing in June and direct the NRC 
commissioners to present the Agency's multi-year strategy for reforming 
the regulatory process at that time. The NRC should ultimately optimize 
its resources, including an examination of its organizational 
structure, to conform with the new vision of regulatory oversight.
     Ensure the NRC adheres fully to the requirements of the 
Omnibus Budget and Reconciliation Act and submit legislation, if 
necessary, to modify the fee structure so that licensees are assessed 
fees only for those NRC programs related directly to licensee 
regulation. Most of those fees are collected as a generic assessment 
equally levied against licensees, creating, in effect, a 
``miscellaneous'' category to describe nearly 80 percent of its budget. 
This practice is contrary to sound and accountable budgeting. The 
agency's ability to collect user fees should be authorized annually by 
Congress until the commission completes its regulatory reform 
initiatives.
     Resolve the impasse between the NRC and the Environmental 
Protection Agency in setting radiation protection standards. This 
subcommittee has jurisdiction over both Federal agencies and should 
clarify that the proper scientific authority for this issue rests with 
the NRC, which has the expertise in setting standards for nuclear 
facilities. The commission's regulations have proven effective in 
protecting public health and safety as well as worker safety.
    Mr. Chairman, the industry requests that this subcommittee continue 
its close oversight of the NRC to ensure the necessary steps toward 
broad reform of the Agency are being taken in a comprehensive and 
timely manner. The NRC has made tremendous progress in recent months, 
but it must establish the long-term vision and work plan for making the 
regulatory framework for the commercial nuclear energy industry risk-
informed and performance-based, and focused on those areas most 
important to protect the health and safety of the public.
                                 ______
                                 
Statement of Ms. Gary L. Jones, Associate Director, Energy, Resources, 
  and Science Issues, Resources, Community, and Economic Development 
                  Division, General Accounting Office
   nuclear regulatory commission: strategy needed to develop a risk-
                        informed safety approach
    Mr. Chairman and members of the subcommittee: We are here to 
testify about the actions that the Nuclear Regulatory Commission (NRC) 
has taken to move from its traditional regulatory approach to an 
approach that considers risk in conjunction with engineering analyses 
and operating experience-termed risk-informed regulation. NRC believes 
that a risk-informed approach would reduce unnecessary regulatory 
burden and costs, without reducing safety.
    Our testimony today is based on ongoing work we are conducting for 
Senators Lieberman and Biden. Specifically, our testimony discusses the 
(1) issues that NRC needs to resolve to implement a risk-informed 
regulatory approach and (2) status of NRC's efforts to make two of its 
oversight programs--overall plant safety assessments and enforcement--
risk-informed. In addition, in January 1999, we provided the Congress 
with our views on the major management challenges that NRC faces.\1\ 
Our testimony discusses these challenges and their relationship to 
NRC's efforts to consider risk in its regulatory activities.
---------------------------------------------------------------------------
    \1\ Performance and Accountability Series: Major Management 
Challenges and Program Risks: Nuclear Regulatory Commission (GAO/OCG-
99-19, Jan. 1999).
---------------------------------------------------------------------------
    In summary, we are finding that:
     Since July 1998, NRC has accelerated some activities 
needed to implement a risk-informed regulatory approach and has 
established and set milestones for others. However, NRC has not 
resolved the most basic of issues; that is, that some utilities do not 
have current and accurate design information for their nuclear power 
plants, which is needed for a risk-informed approach. Also, neither NRC 
nor the nuclear utility industry have standards or guidance that define 
the quality or adequacy of the risk assessments that utilities use to 
identify and measure the risks to public health and the environment.\2\ 
Furthermore, NRC has not determined if compliance with risk-informed 
regulations will be voluntary or mandatory for the nuclear utility 
industry. More fundamentally, NRC has not developed a comprehensive 
strategy that would move its regulation of the safety of nuclear power 
plants from its traditional approach to an approach that considers 
risk.
---------------------------------------------------------------------------
    \2\Risk assessments systematically examine complex technical 
systems to attempt to quantify the probabilities that a potential 
accident will occur and the resulting consequences. By their nature, 
risk assessments are statements of uncertainty that identify and assign 
probabilities to events that rarely occur.
---------------------------------------------------------------------------
     In January 1999, NRC released for comment a proposed 
process to assess the overall safety of nuclear power plants. The 
process would establish generic and plant-specific safety thresholds 
and indicators to help NRC assess overall plant safety. NRC expects to 
phase in the new process over the next 2 years and evaluate it by June 
2001, at which time NRC would propose any adjustments or modifications 
needed. In addition, NRC has been examining the changes needed to its 
enforcement program to make it consistent with, among other things, the 
proposed plant safety assessment process. For many years, the nuclear 
industry and public interest groups have criticized the enforcement 
program as subjective. In the spring of 1999, NRC staff expect to 
provide the Commission recommendations for revising the enforcement 
program.
     In January 1999, we identified major management challenges 
that limit NRC's effectiveness. The challenges include the lack of a 
definition of safety and lack of aggressiveness in requiring utilities 
to comply with safety regulations. NRC's revised plant safety 
assessment and enforcement initiatives may ultimately help the Agency 
address these management challenges and carry out its safety mission 
more effectively and efficiently.
                               background
    NRC is responsible for ensuring that the nation's 103 operating 
commercial nuclear power plants pose no undue risk to public health and 
safety. Now, however, the electric utility industry is faced with an 
unprecedented, overarching development: the economic restructuring of 
the nation's electric power system, from a regulated industry to one 
driven by competition. According to one study, as many as 26 of the 
nation's nuclear power plant sites are vulnerable to shutdown because 
production costs are higher than the projected market prices of 
electricity.\3\ As the electric utility industry is deregulated, 
operating and maintenance costs will affect the competitiveness of 
nuclear power plants. NRC acknowledges that competition will challenge 
it to reduce unnecessary regulatory burden while ensuring that safety 
margins are not compromised by utilities' cost-cutting measures.
---------------------------------------------------------------------------
    \3\World Energy Service: U.S. Outlook (Standard & Poor's, Apr. 
1998).
---------------------------------------------------------------------------
    Since the early 1980's, NRC has been considering the role of risk 
in the regulatory process, and in August 1995, NRC issued a policy 
statement that advocated certain changes in the development and 
implementation of its regulations through an approach more focused on 
risk assessment. Under such an approach, NRC and the utilities would 
give more emphasis to those structures, systems, and components deemed 
more significant to safety. The following example illustrates the 
difference between NRC's existing and a risk-informed approach. One 
particular nuclear plant has about 635 valves and 33 pumps that the 
utility must operate, maintain, and periodically replace according to 
NRC's existing regulations. Under a risk-informed approach, the utility 
found that about 515 valves and 12 pumps presented a low safety risk. 
The utility identified 25 components that were a high risk but would 
have been treated the same as other components under the existing 
regulations. If the utility concentrated on the 120 valves, 21 pumps, 
and 25 components that have been identified as having a high safety 
risk, it could reduce its regulatory compliance burden and costs.
 nrc has not resolved many issues needed to implement a risk-informed 
                          regulatory approach
    NRC staff estimate that it could take 4 to 8 years to implement a 
risk-informed regulatory approach and are working to resolve many 
issues to ensure that the new approach does not endanger public health 
and safety. Although NRC has issued guidance for utilities to use risk 
assessments to meet regulatory requirements for specific activities and 
has undertaken many activities to implement a risk-informed approach, 
more is needed to:
     ensure that utilities have current and accurate 
documentation on the design of the plant and structures, systems, and 
components within it and final safety analysis reports that reflect 
changes to the design and other analyses conducted after NRC issued the 
operating license.
     ensure that utilities make changes to their plants based 
on complete and accurate design and final safety analysis information.
     determine whether, how, and what aspects of NRC's 
regulations to change.
     develop standards on the scope and detail of the risk 
assessments needed for utilities to determine that changes to their 
plants' design will not negatively effect safety.
     determine whether compliance with risk-informed 
regulations should be mandatory or voluntary.
    Furthermore, NRC has not developed a comprehensive strategy that 
would move its regulation of nuclear plant safety from its traditional 
approach to an approach that considers risk.
Utilities Do Not Have Accurate and Reliable Design Information for Some 
        Plants
    Design information provides one of the basis for NRC's safety 
regulation. Yet, for more than 10 years, NRC has questioned whether 
utilities had accurate design information for their plants. Inspections 
of 26 plants that NRC completed early in fiscal year 1999 confirmed 
that for some plants (1) utilities had not maintained accurate design 
documentation, (2) NRC did not have assurance that safety systems would 
perform as intended at all times, and (3) NRC needed to clarify what 
constitutes design information subject to NRC's regulations. As of 
November 1998, NRC had taken escalated enforcement actions for 
violations found at five plants--Three Mile Island, Perry, H.B. 
Robinson, Vermont Yankee, and D.C. Cook. NRC took these actions because 
it did not have assurance that the plants' safety systems would perform 
as intended. One utility, American Electric Power, shut down its D.C. 
Cook plant as a result of the inspection findings.
    NRC does not plan additional design team inspections because it 
concluded that the industry did not have serious safety problems. NRC's 
Chairman disagreed with this broad conclusion, noting that (1) the 
inspection results for the five plants indicate the importance of 
maintaining current and accurate design and facility configuration 
information, (2) the inspections did not apply to the industry as a 
whole but to only certain utilities and plants within the industry, and 
(3) other NRC inspections identified design problems at other such 
nuclear power plants as Crystal River 3, Millstone, Haddam Neck, and 
Maine Yankee. The commissioners and staff agreed that NRC would oversee 
design information issues using such tools as safety system engineering 
inspections.
    The 26 inspections also identified a need for NRC to better define 
the elements of a plant's design that are subject to NRC's regulations. 
NRC staff acknowledge that the existing regulation is a very broad, 
general statement that has been interpreted differently among NRC staff 
and among utility and industry officials. According to NRC staff, it is 
very difficult to develop guidance describing what constitutes adequate 
design information. Therefore, NRC has agreed that the Nuclear Energy 
Institute (NEI) would provide explicit examples of what falls within 
design parameters.\4\ NEI plans to draft guidance that will include 
examples of design information and provide it to NRC in January 1999. 
Concurrently, NRC is developing regulatory guidance on design 
information. NRC staff expect to recommend to the Commission in 
February 1999 that it endorse either NRC's or NEI's guidance and seek 
approval to obtain public comments in March or April 1999. NRC 
officials could not estimate when the Agency would complete this 
effort.
---------------------------------------------------------------------------
    \4\NEI has members from all utilities licensed to operate 
commercial nuclear plants in the United States as well as nuclear plant 
designers, major architect/engineering firms, fuel fabrication 
facilities, materials licensees, and other organizations and 
individuals involved in the nuclear energy industry. NEI establishes 
unified nuclear industry policy on such matters as generic operational 
and technical issues.
---------------------------------------------------------------------------
NRC Does Not Have Confidence That Safety Analysis Reports Reflect 
        Current Plant Designs
    At the time NRC licenses a plant, the utility prepares a safety 
analysis report; NRC regulations require the utility to update the 
report to reflect changes to the plant design and the results of 
analyses that support modifying the plants without prior NRC approval. 
As such, the report provides one of the foundations to support a risk-
informed approach. Yet, NRC does not have confidence that utilities 
make the required updates, which results in poor documentation of the 
safety basis for the plants.
    NRC published guidance for the organization and contents of safety 
analysis reports in June 1966 and updated the guidance in December 
1980. NRC acknowledges that the guidance is limited resulting in poorly 
articulated staff comments on the quality of the safety analysis 
reports and a lack of understanding among utilities about the specific 
aspects of the safety analysis reports that should be updated. On June 
30, 1998, NRC directed its staff to continue working with NEI to 
finalize the industry's guidelines on safety analysis report updates, 
which NRC could then endorse. Once the Agency endorses the guidelines, 
it will obtain public comments and revise them, if appropriate. NRC 
expects to issue final guidelines in September 1999.
Erroneous Evaluations Can Erode Design and Safety Margins
    According to NRC documents, if a utility does not have complete and 
accurate design information, the evaluations conducted to determine 
whether it can modify a plant without prior NRC approval can lead to 
erroneous conclusions and jeopardize safety. For more than 30 years, 
NRC's regulations have provided a set of criteria that utilities must 
use to determine whether they may change their facilities (as described 
in the final safety analysis report) or procedures or conduct tests and 
experiments without NRC's prior review and approval.
    However, in 1993, NRC became aware that Northeast Nuclear Energy 
Company had refueled Millstone Unit 1 in a manner contrary to that 
allowed in the updated final safety analysis and its operating license. 
This led NRC to question the regulatory framework that allows licensees 
to change their facilities without prior NRC approval. As a result, NRC 
staff initiated a review to identify the short-and long-term actions 
needed to improve the process. For example, in October 1998, NRC 
published a proposed regulation regarding plant changes in the Federal 
Register for comment; the comment period ended on December 21, 1998. 
NRC requested comments on criteria for identifying changes that require 
a license amendment and on a range of options, several of which would 
allow utilities to make changes without prior NRC approval despite a 
potential increase in the probability or consequences of an accident. 
NRC expects to issue a final regulation in June 1999.
    In addition, in February 1999, NRC staff expect to provide their 
views to the Commission on changing the scope of the regulation to 
consider risk. NRC's memorandum that tracks the various tasks related 
to a risk-informed approach and other initiatives did not show when NRC 
would resolve this issue.
Making Its Regulations Risk-Informed Will Be a Challenge to NRC and the 
        Industry
    Until recently, NRC did not consider whether and to what extent the 
Agency should revise all its regulations pertaining to commercial 
nuclear plants to make them risk-informed. Revising the regulations 
will be a formidable task because, according to NRC staff, 
inconsistencies exist among the regulations and because a risk-informed 
approach focuses on the potential risk of structures, systems, or 
components, regardless of whether they are located in the plant's 
primary (radiological) or secondary (electricity-producing) systems. 
With one exception, NRC has not attempted to extend its regulatory 
authority to the secondary systems.
    NRC staff and NEI officials agree that the first priority in 
revising the regulations will be to define their scope as well as the 
meaning of such concepts as ``important to safety'' and ``risk 
significant'' and integrating the traditional and risk-informed 
approaches into a cohesive regulatory context. In October 1998, NEI 
proposed a phased approach to revise the regulations. Under the 
proposal, by the end of 1999, NRC would define ``important to safety'' 
and ``risk significant.'' By the end of 2000, NRC would use the 
definitions in proposed rulemakings for such regulations as definition 
of design information and environmental qualification for electrical 
equipment. By the end of 2003, NEI proposes that NRC address other 
regulatory issues, such as the change process, the content of technical 
specifications, and license amendments. After 2003, NEI proposes that 
NRC would address other regulations on a case-by-case basis.
    NRC staff agreed that the Agency must take a phased approach when 
revising its regulations. The Director, Office of Nuclear Regulatory 
Research, said that, if NRC attempted to revise all provisions of the 
regulations simultaneously, it is conceivable that the Agency would 
accomplish very little. The Director said that NRC needs to address one 
issue at a time while concurrently working on longer-term actions. He 
cautioned, however, that once NRC starts, it should be committed to 
completing the process. At a January 1999 meeting, NRC's Chairman 
suggested a more aggressive approach that would entail risk informing 
all regulations across the board. NRC's memorandum that tracks the 
various tasks related to a risk-informed approach and other initiatives 
did not show when the Agency would resolve this issue.
NRC Does Not Have A Standard for the Content of Risk Assessments
    NRC and the industry view risk assessments as one of the main tools 
to be used to identify and focus on those structures, systems, or 
components of nuclear plant operations having the greatest risk. Yet, 
neither NRC nor the industry has a standard or guidance that defines 
the quality, scope, or adequacy of risk assessments. NRC staff are 
working with the American Society of Mechanical Engineers to develop 
such a standard.
    However, this issue is far from being resolved. The Society is 
developing the standard for risk assessments in two phases (internal 
events and emergency preparedness). NRC staff estimate that the Agency 
would have a final standard on the first phase by June 2000 but could 
not estimate when the second phase would be complete. To ensure 
consistency with other initiatives, in December 1998, NRC staff 
requested the Commission's direction on the quality of risk assessments 
needed to implement a risk-informed approach. Since it may be several 
years until NRC has a standard, the Commission should also consider the 
effect that the lack of a standard could have on its efforts to 
implement a risk-informed regulatory approach.
NRC Has Not Determined Whether Compliance With Risk-Informed 
        Regulations Would Be Mandatory or Voluntary
    NRC has not determined whether compliance with revised risk-
informed regulations would be mandatory or voluntary for utilities. In 
December 1998, NRC's staff provided its recommendations to the 
Commission. The staff recommended that implementation be voluntary, 
noting that it would be very difficult to show that requiring mandatory 
compliance will increase public health and safety and could create the 
impression that current plants are less safe. In its analysis, the 
staff did not provide the Commission with information on the number of 
plants that would be interested in such an approach. In January 1999, 
the commissioners expressed concern about a voluntary approach, 
believing that it would create two classes of plants operating under 
two different sets of regulations.
    Utilities may be reluctant to shift to a risk-informed regulatory 
approach for various reasons. First, the number of years remaining on a 
plant's operating license is likely to influence the utility's views. 
NRC acknowledged that if a plant's license is due to expire in 10 years 
or less, then the utility may not have anything to gain by changing 
from the traditional approach. Second, the costs to comply may outweigh 
the benefits of doing so. Considering the investment that will be 
needed to develop risk-informed procedures and operations and identify 
safety-significant structures, systems, or components, utilities 
question whether a switch will be worth the reduction in regulatory 
burden and cost savings that may result. Third, design differences and 
age disparities among plants make it difficult for NRC and the industry 
to determine how, or to what extent, a standardized risk-informed 
approach can be implemented across the industry. Although utilities 
built one of two types of reactors--boiling water or pressurized water 
reactors--each has design and operational differences. Thus, each plant 
is unique, and a risk-informed approach would require plant-specific 
tailoring.
NRC Has Not Developed a Strategic Plan to Implement a Risk-Informed 
        Approach
    Since the early 1980's, NRC has considered applying risk to the 
regulatory process. NRC staff estimate that it will be at least 4 to 8 
years before the Agency implements a risk-informed approach. However, 
NRC has not developed a strategic plan that includes objectives, time 
lines, and performance measures for such an approach.
    Rather, NRC has developed an implementation plan, in conjunction 
with its policy statement on considering risk, that is a catalog of 
about 150 separate tasks and milestones for their completion. It has 
also developed guidance for some activities, such as pilot projects in 
the four areas where the industry wanted to test the application of a 
risk-informed approach. In one case, NRC approved a pilot project for 
Houston Lighting and Power Company at its South Texas plant, and the 
utility found that it could not implement it because the pilot project 
would conflict with other NRC regulations.
    Given the complexity and interdependence of NRC's requirements, 
such as regulations, plant design, and safety documents and the results 
of ongoing activities, it is critical that NRC clearly articulate how 
the various initiatives will help achieve the goals set out in the 1995 
policy statement. Although NRC's implementation plan sets out tasks and 
expected completion dates, it does not ensure that short-term efforts 
are building toward NRC's longer-term goals; does not link the various 
ongoing initiatives; does not help the Agency determine appropriate 
staff levels, training, skills, and technology needed and the timing of 
those activities to implement a risk-informed approach; does not 
provide a link between the day-to-day activities of program managers 
and staff and the objectives set out in the policy statement; and does 
not address the manner in which it would establish baseline information 
about the plants to assess the safety impact of a risk-informed 
approach.
    In a December 1998 memorandum, NRC staff said that once the 
Commission provides direction on whether and how to risk-inform the 
regulations and guidance on the quality of risk assessments to support 
their decisions for specific regulations, they would develop a plan to 
implement the direction provided. The staff did not provide an 
estimated timeframe for completing the plan.
    the status of nrc's assessment and enforcement processes: many 
                        unanswered issues remain
    For many years, the nuclear industry and public interest groups 
have criticized NRC's plant assessment and enforcement processes 
because they lacked objectivity, consistency, predictability. In 
January 1999, NRC proposed a new process to assess overall plant 
performance based on generic and plant-specific safety thresholds and 
performance indicators. NRC is also reviewing its enforcement process 
to ensure consistency with the staff's recommended direction for the 
assessment process and other programs.
NRC Is Trying to Make Its Plant Assessment Process More Objective and 
        Transparent
    In 1997 and 1998, we noted that NRC's process to focus attention on 
plants with declining safety performance needed substantial revisions 
to achieve its purpose as an early warning tool and that NRC did not 
consistently apply the process across the industry.\5\ We also noted 
that this inconsistency has been attributed, in part, to the lack of 
specific criteria, the subjective nature of the process, and the 
confusion of some NRC managers about their role in the process. NRC 
acknowledged that it should do a better job of identifying plants 
deserving increased regulatory attention and said that it was 
developing a new process that would be predictable, nonredundant, 
efficient, and risk-informed.
---------------------------------------------------------------------------
    \5\Nuclear Regulation: Preventing Problem Plants Requires More 
Effective NRC Action (GAO/RCED-97-145, May 30, 1997) and Nuclear 
Regulatory Commission: Preventing Problem Plants Requires More 
Effective Action by NRC (GAO/T-RCED-98-252, July 30, 1998).
---------------------------------------------------------------------------
    In January 1999, NRC proposed a new plant assessment process that 
includes seven ``cornerstones.''\6\ For each cornerstone, NRC will 
identify the desired result, important attributes that contribute to 
achieving the desired result, areas to be measured, and the various 
ways that exist to measure the identified areas. Three issues cut 
across the seven cornerstones: human performance, safety conscious work 
environment, and problem identification and resolution. As proposed, 
NRC's plant assessment process would use performance indicators, 
inspection results, other such information as utility self-assessments, 
and clearly defined, objective decision thresholds. The process is 
anchored in a number of principles, including that: (1) a level of 
safety performance exists that could warrant decreased NRC oversight, 
(2) performance thresholds should be set high enough to permit NRC to 
arrest declining performance, (3) NRC must assess both performance 
indicators and inspection findings, and (4) NRC will establish a 
minimum level of inspections for all plants (regardless of 
performance). Although some performance indicators would be generic to 
the industry, others would be plant-specific based, in part, on the 
results that utilities derive from their risk assessments. However, the 
quality of risk assessments and number of staff devoted to maintain 
them vary considerably among utilities.
---------------------------------------------------------------------------
    \6\The seven cornerstones are: initiating events, mitigation 
systems, barrier integrity, emergency preparedness, and public, 
occupational, and physical protection.
---------------------------------------------------------------------------
    NRC expects to use a phased approach to implement the revised plant 
assessment process. Beginning in June 1999, NRC expects to pilot test 
the use of risk-informed performance indicators at eight plants, by 
January 2000 to fully implement the process, and by June 2001 to 
complete an evaluation and propose any adjustments or modifications 
needed. Between January 1999 and January 2001, NRC expects to work with 
the industry and other stakeholders to develop a comprehensive set of 
performance indicators to more directly assess plant performance 
relative to the cornerstones. For those cornerstones or aspects of 
cornerstones where it is impractical or impossible to develop 
performance indicators, NRC would use its inspections and utilities' 
self assessments to reach a conclusion about plant performance. NRC's 
proposed process illustrates an effort by the current chairman and 
other commissioners to improve NRC's ability to help ensure safe 
operations of the nation's nuclear plants as well as address industry 
concerns regarding excessive regulation. NRC's ensuring consistent 
implementation of the process ultimately established would further 
illustrate the commissioners' commitment.
NRC's Enforcement Process Continues to be In a State of Flux
    NRC has revised its enforcement policy more than 30 times since its 
implementation in 1980. Although NRC has attempted to make the policy 
more equitable, the industry has had longstanding problems with it. 
Specifically, NET believes that the policy is not safety-related, 
timely, or objective. Among the more contentious issues are NRC's 
practice of aggregating lesser violations into an enforcement action 
that results in civil penalties and its use of the term ``regulatory 
significance.''
    To facilitate a discussion about the enforcement program, including 
the use of regulatory significance and the practice of aggregating 
lesser violations, at NRC's request, NEI and the Union of Concerned 
Scientists reviewed 56 enforcement actions taken by the Agency during 
fiscal year 1998. For example, NEI reviewed the escalated enforcement 
actions based on specific criteria, such as whether the violation that 
resulted in an enforcement action could cause an offsite release of 
radiation, onsite or offsite radiation exposures, or core damage. From 
an overall perspective, the Union concluded that NRC's actions are 
neither consistent nor repeatable and that the enforcement actions did 
not always reflect the severity of the offense. According to NRC staff, 
they plan to meet with various stakeholders in January and February 
1999 to discuss issues related to the enforcement program.
    Another issue is the use of the term ``regulatory significance'' by 
NRC inspectors. NRC, according to NEI and the Union of Concerned 
Scientists, uses ``regulatory significance'' when inspectors cannot 
define the safety significance of violations. However, when the use of 
regulatory significance results in financial penalties, neither NRC nor 
the utility can explain to the public the reasons for the violation. As 
a result, the public cannot determine whether the violation presented a 
safety concern.
    NEI has proposed a revised enforcement process. NRC is reviewing 
the proposal as well as other changes to the enforcement process to 
ensure consistency with the draft plant safety assessment process and 
other changes being proposed as NRC moves to risk-informed regulation. 
NRC's memorandum of tasks shows that the staff expect to provide 
recommendations to the Commission in March 1999 that address the use of 
the term regulatory significance and in May 1999 on considering risk in 
the enforcement process.
             major management challenges and program risks
    In January 1999, we provided the Congress with our views on the 
major management challenges that NRC faces. We believe that the 
management challenges we identified have limited NRC's effectiveness. 
In summary, we reported that:
     NRC lacks assurance that its current regulatory approach 
ensures safety. NRC assumes that plants are safe if they operate as 
designed and follow NRC's regulations. However, NRC's regulations and 
other guidance do not define, for either a licensee or the public, the 
conditions necessary for a plant's safety; therefore, determining a 
plant's safety is subjective.
     NRC's oversight has been inadequate and slow. Although 
NRC's indicators show that conditions throughout the nuclear energy 
industry have generally improved, they also show that some nuclear 
plants are chronically poor performers. At three nuclear plants with 
long-standing safety problems that we reviewed, NRC did not take 
aggressive action to ensure that the utilities corrected the problems. 
As a result of NRC's inaction, the conditions at the plants worsened, 
reducing safety margins.
     NRC's culture and organizational structure have made the 
process of addressing concerns with the Agency's regulatory approach 
slow and ineffective. Since 1979, various reviews have concluded that 
NRC's organizational structure, inadequate management control, and 
inability to oversee itself have impeded its effectiveness.
    Some of the initiatives that NRC has underway have the potential to 
address the first two management challenges. However, the need to 
ensure that NRC's regulatory programs work as effectively as possible 
is extremely important, particularly in light of major changes taking 
place in the electric utility industry and in NRC. Yet changing NRC's 
culture will not be easy. In a June 1998 report, the Office of the 
Inspector General noted that NRC's staff had a strong commitment to 
protecting public health and safety.
    However, the staff expressed high levels of uncertainty and 
confusion about the new directions in regulatory practices and 
challenges facing the Agency. The employees said that, in their view, 
they spend too much time on paperwork that may not contribute to NRC's 
safety mission. The Inspector General concluded that without 
significant and meaningful improvement in management's leadership, 
employees' involvement, and communication, NRC's current climate could 
eventually erode the employees' outlook and commitment to doing their 
job. This climate could also erode NRC's progress in moving forward 
with a risk-informed regulatory approach. According to staff, NRC 
recognizes the need to effectively communicate with its staff and other 
stakeholders and is developing plans to do so.
    Mr. Chairman and members of the subcommittee, this concludes our 
statement. We would be pleased to respond to any questions you may 
have.
                                 ______
                                 
       Statement of David Lochbaum, Union of Concerned Scientists
    After the subcommittee's hearing last July, the Nuclear Regulatory 
Commission developed a plan to improve its reactor oversight program. 
The NRC intends to phase in these improvements at a few nuclear plants 
this year, and then adopt them for all plants next year.
    As I recently told the NRC commissioners,\1\ UCS believes that the 
NRC has a good plan. However, the plan's quality is not the most 
important factor in determining whether the NRC succeeds in its 
oversight mission. What matters most is how well the Agency implements 
its program. Too often, the NRC fails to follow its plans and does not 
regulate in a consistent, timely manner.
---------------------------------------------------------------------------
    \1\ Union of Concerned Scientists, Presentation to NRC 
commissioners, ``Looking for Goldilocks: The NRC's Inspection, 
Assessment, and Enforcement Programs,'' January 20, 1999. (Attached)
---------------------------------------------------------------------------
    The NRC's Inspector General recently reported\2\ to Senator 
Lieberman that the Agency failed to properly discharge its 
responsibilities to the people of Connecticut and to workers at the 
Millstone Nuclear Power Station. These failures are particularly 
troubling because they involved the highest profile nuclear facility in 
the country. The NRC created a Special Projects Office with 
responsibility for only one site--Millstone. The Inspector General 
documented numerous regulatory failures involving that office despite 
its singular focus. The Inspector General also reported that many 
failures were caused by the NRC not following its own procedures and 
policies.
---------------------------------------------------------------------------
    \2\ Nuclear Regulatory Commission Inspector General,. ``NRC Staff's 
Handling of Harassment and Intimidation Complaints at Millstone (Case 
No. 99-015),'' December 31, 1998.
---------------------------------------------------------------------------
    The Inspector General's report is the latest example in a long 
history of the NRC's failing to follow through on its plans. Let me 
cite fire protection as an old, yet still ongoing, example. The NRC 
created Appendix R, the fire protection rule, to 10 CFR Part 50 in 
January 1980 to address safety concerns following the serious fire at 
the Browns Ferry Nuclear Plant in Alabama in March 1975.
    Nineteen years later, the majority of nuclear plants do not now, 
and never have, satisfied the Appendix R regulations. When Rep. Markey 
asked the NRC about this situation in May 1997, the Agency replied that 
it was considering a revision to Appendix R. Nearly 2 years later, we 
understand that the Agency is still thinking about revising the 
regulation. Last December, Rep. Markey asked the General Accounting 
Office to investigate fire safety issues at nuclear plants.
    In the meantime, the majority of nuclear plants are operating in 
violation of fire safety regulations. At the Salem Generating Station 
in New Jersey, for example, both reactors were shut down from 1995 to 
1997 while its owner made extensive repairs to safety equipment. 
Numerous fire protection deficiencies went uncorrected during this 
lengthy shut down. The NRC allowed both reactors to restart despite 
knowing that fire protection requirements were not met. Not only that, 
but the NRC is content with the owner's plans to leave the problems 
uncorrected for several more years.
    The NRC tolerates violation of its fire protection regulations 
because plant owners have taken so-called interim compensatory 
measures. The most common of these measures involves workers, called 
fire watches, walking through the plants looking for smoke or flames. 
Such ``interim'' measures have been used for more than 6 years at many 
plants.
    But interim measures are not a substitute for permanent solutions. 
When I get a flat tire, I replace it with a spare mini-tire. That's an 
interim measure I can use until I get the flat fixed or a new tire. It 
would be irresponsible for me to undertake a cross-country trip on that 
interim mini-tire. My poor judgment would place myself and other 
travelers at an undue risk. Likewise, it is irresponsible for the NRC 
to rely on fire watches indefinitely. This poor decision places 
millions of Americans living around nuclear plants at undue risk.
    The risk from fire is real. The NRC reported\3\ that fire 
represents 7 to 50 percent of the overall reactor core damage risk at 
nuclear plants. According to this data, there is a plant where the fire 
risk equals the risk from all other accident scenarios combined. So, 
the fire risk is real. And the regulations created to properly manage 
that risk are essentially being ignored by the NRC.
---------------------------------------------------------------------------
    \3\ Nuclear Regulatory Commission, NUREG-1150, ``Severe Accident 
Risks: An Assessment for Five U.S. Nuclear Power Plants,'' June 1989.
---------------------------------------------------------------------------
    We respectfully request that this subcommittee compel the NRC to 
resolve the fire protection problems. The NRC must either enforce or 
revise its fire safety regulations. Continued neglect, predicated on 
``interim'' compensatory measures and ``considerations'' of rulemaking, 
must end. The regulations were promulgated in direct response to the 
serious Browns Ferry fire. If another serious nuclear plant fire were 
to occur, the American public would be very distressed to learn that 
these fire protection regulations had not been enforced.
    Your subcommittee's oversight hearings have accelerated the NRC's 
change process. We sincerely appreciate the subcommittee's efforts in 
this regard. We trust that this subcommittee will not judge the NRC 
solely on its plans. We hope that you will evaluate the results from 
these new and improved processes, even though this data will not be 
available until late this year. We respectfully request that this 
subcommittee continue these efforts to ensure that the NRC reaps the 
maximum benefits from its plans.
                                 ______
                                 
     looking for goldilocks: the nrc's inspection, assessment, and 
                          enforcement programs
    The NRC staff is to be commended for the comprehensive and thorough 
reactor oversight process improvement recommendations detailed in SECY-
99-007. They faced a daunting challenge while seeking a ``Goldilocks'' 
oversight process--one that is not too stringent or too lax, but just 
right. A large number of our concerns have been addressed. On paper, 
this process appears fundamentally sound and capable of successfully 
meeting the stated expectations. However, it must be noted that, on 
paper, so was the old process. It's not the process that will make or 
break this effort, it's the implementation.
    The process was developed with an objective of increasing public 
confidence in the NRC's regulatory function. Key elements of the new 
process are these seven cornerstones of plant safety:
    (1) limit the frequency of initiating events;
    (2) ensure the availability, reliability, and capability of 
mitigating systems;
    (3) ensure the integrity of the fuel cladding, reactor coolant 
system, and containment boundaries;
    (4) ensure the adequacy of the emergency preparedness functions;
    (5) protect the public from exposure to radioactive material 
releases;
    (6) protect nuclear plant workers from exposure to radiation; and
    (7) provide assurance that the physical protection system can 
protect against the design-basis threat of radiological sabotage.
    Even though these cornerstones are easier to understand than the 
concepts evaluated in the SALP process, the proposed reactor oversight 
process is substantially different than the old process. The public 
needs a chance to understand the proposed process. The transition plan 
has a column labeled ``Communication.'' Other than a few press releases 
and a 30-day comment period for the overall process, there's not much 
in the way of educating the public. The draft documents and SECY paper 
may be useful working documents for the NRC and industry, but they 
cannot be used to educate the public. They contain too much nukespeak 
(i.e., technical jargon and acronyms). A brief, plain-English 
description of the proposed process should be developed before the 
comment period begins and provided in the Federal Notice.
Inspection Process
    The NRC's limited inspections provide it with a very small slice of 
the overall safety picture at nuclear plants. It is important that the 
NRC properly characterize its findings. Based on my experience prior to 
joining UCS, it appeared that inspection findings were graded on a 
curve because the threshold for a non-conforming condition seemed lower 
at a plant which the staff believed to have performance problems than 
it was at a plant that the staff believed was doing OK. The staff's 
feelings toward licensees must not influence inspection findings to 
prevent a self-fulfilling prophecy situation.
    Since the proposed baseline inspections will concentrate on areas 
not covered by performance indicators, there will be little chance to 
confirm or refute inspection findings. Findings that are too positive 
or too negative will likely pass through to the assessment process 
unchallenged. Findings that are ``just right'' are very important.
    The NRC's Inspection Manual tells inspectors what to examine and 
how often, but does not provide much assistance in the form of 
objective acceptance criteria. As a result, inspectors are being asked 
to evaluate the condition of a plant component or a plant owner's 
process without benefit of an ``answer key.'' As the Inspection Manual 
chapters is revised, the NRC should provide objective acceptance 
criteria whenever possible. Otherwise, inspections findings may 
continue to be influenced by the staff's perceptions of licensee 
performance.
    The NRC should post all the inspection reports issued for each 
operating nuclear plant within the past year on its internet website.
Assessment Process
    In Table 4.1, the staff listed the following success criterion for 
the assessment process:
    Number of executive over-rides (cases where the outcome is 
something different than the input) at end-of-cycle review is less than 
5 percent.
    Since there are about 25 plants in each region, this would consider 
one plant in each region or five plants in one region being handled 
subjectively as a success. That is wrong. That would be carrying over a 
major flaw of the SALP process into the new process. The appropriate 
goal should be no executive over-rides. None. The staff, on occasion, 
may be justified in over-riding the assessment results with its 
judgment, but that situation should not be considered to be a 
successful outcome of the assessment process. Executive over-rides 
should be used very sparingly and not routinely accepted.
    The proposed assessment process relies heavily on performance 
indicators. We have the following concerns regarding the use of these 
indicators:
     The Reactor Coolant System specific activity PI has a 
green-to-white threshold of >50 percent of the Technical Specification 
limit. This PI is intended to monitor the integrity of the fuel 
cladding barrier. In April 1998, UCS provided a technical report to the 
NRC on our research which concluded that it is illegal and potentially 
unsafe for nuclear plants to operate with any fuel leakers. We have 
since submitted 2.206 petitions on the River Bend and Perry plants 
because these plants are operating with known fuel leakers. In our 
report and our petitions, we have challenged the bases for the RCS 
specific activity Technical Specification. We respectfully request that 
the NRC staff answer our nuclear safety concerns raised nearly a year 
ago before adopting this PI.
     The Containment Leakage PI has a green-to-white threshold 
of >100 percent LA. Containment leakage is a virtually 
meaningless indicator. The containment integrated leak rate tests are 
performed every 18 to 24 months with the plants shut down. If leakage 
exceeds 100 percent LA the plant will not restart. Thus, it 
is highly unlikely that this PI will be anything but green. A PI that 
doesn't ever change color is worse than useless because it provides a 
false sense of security.
    Speaking of false senses of security, the containment leakage PI 
would have been in the green at DC Cook even though that facility's 
containment spray and ice condenser systems were severely degraded. The 
appropriate containment PI would be the reliability of the containment 
heat removal systems.
     The Safety System Performance Indicators suffer from the 
same problem that afflicts the probabilistic risk assessments--they do 
not properly account for system degradation caused by passive design 
problems, or ``blunders'' to use Dr. Thadani's term. For example, the 
Emergency Power PI has a green-to-white threshold of >0.025. In NRC 
Inspection Report 50-213/96-201, dated July 31, 1996, the staff 
concluded:
    The most significant issue noted by the team was the failure of the 
[Haddam Neck] licensee to appropriately consider design-basis scenario 
loads on the Class 1E station batteries sizing calculations. 
Specifically, the licensee's calculation did not account for all of the 
loads associated with a LOCA coincident with loss-of-offsite-power, and 
did not demonstrate that the battery voltage would remain above the 
minimum level required for operation of equipment.
    In other words, the safety-related batteries at Haddam Neck, which 
passed the Technical Specification surveillance tests for years with 
flying colors, would have failed in event of an accident due to a 
design problem. Yet, design problems like these do not count against 
the system reliability numbers. The PI's must reflect that reality or 
they will provide misleading signals.
    Curiously, while the Haddam Neck inspection report documented 
numerous problems with systems intended to protect public health and 
safety, the systems needed to generate electricity worked well.
     For the Physical Protection cornerstone, both the 
personnel screening process performance and the personnel reliability 
program performance indicators have a green-to-white threshold of 3-5 
reportable events. The time period is not specified. We assume it is 1 
year, but it should be clearly defined.
    Attachment 1, Table 5 provides the action matrix proposed for 
assessment program results. The second column states actions the NRC 
just might take for one or two inputs in the white. Is it one or is it 
two? The appropriate threshold should be clearly defined.
    The fourth column on Attachment 1, Table 5 states actions the NRC 
may take for repetitive degraded cornerstones et al. While the proposed 
response are prudent, the trigger for this response is too subjective. 
Since this response level is that level which failed at Millstone, 
Salem, DC Cook, etc., it is vital that it be as clearly defined as 
possible to prevent repeating those oversight errors.
Enforcement Process
    The current Enforcement Policy is rumored to be non-punitive. In 
the current Enforcement Policy, the staff identifies an apparent 
violation of Federal safety regulations and provides the licensee an 
opportunity to explain its case at a pre-decisional enforcement 
conference. The staff can then impose a civil penalty on the licensee. 
The licensee can pay the fine or appeal it.
    ``Punitive'' is defined as ``inflicting, involving, or aiming at 
punishment.'' ``Punishment'' is defined as ``a penalty inflicted on an 
offender through judicial procedure.'' Thus, it seems reasonable to 
conclude that a process which collects multi-million dollar civil 
penalties from offending licensees through an administrative process 
which affords the opportunity to both contest the violation and appeal 
the penalty is, in fact, punitive. If it waddles like a duck, swims 
like a duck, and quacks like a duck, it's a duck. Let there be no 
mistake--the Enforcement Policy is punitive. The good news is that it's 
supposed to be punitive.
    The bad news is that enforcement actions are so randomly applied 
that the policy is totally ineffective. While there are plenty of 
examples to illustrate arbitrary and capricious enforcement actions, 
the classic cases are those associated with the duration of the non-
conforming condition. The statute permits the NRC to assess a penalty 
of up to $110,000 per violation per day that the violation existed. The 
staff rarely invokes this provision. In 1996, the NRC fined the LaSalle 
licensee for about 20 days of a problem. In 1998, the NRC did not fine 
the DC Cook licensee a problem lasting about the same duration. The 
staff must develop the means to consistently and meaningfully apply the 
per day provision of the statute.
General Observations
    The staff went to considerable effort to identify how the outcome 
from the inspection, assessment, and enforcement processes will be 
communicated to stakeholders. It is also necessary to complement these 
communications with much better documentation of staff decisions that 
produced the outcome. The nuclear industry is required by NRC 
regulations to provide a paper trail for decisions affecting nuclear 
safety. The staff's decisions have the same importance as those made by 
licensees, yet the documentation standards are significantly less 
rigorous. The staff must, as a minimum, meet the industry's standards.
                                 ______
                                 
    Response of David A. Lochbaum to a Question from Senator Graham
    Question. In your testimony you emphasize the risk of fire at 
nuclear power plants. You support this emphasis by referring to an NRC 
report from 1989 that states that fire represents 7 to 50 percent of 
the overall reactor core damage risk at nuclear power plants. It is my 
understanding that this report has been superseded by more recent 
reports on risk at each individual nuclear power plant site.
    Do the newer risk reports reach the same conclusions about the risk 
of fire at nuclear plants?
    Response. In October 1996, the Nuclear Regulatory Commission 
published NUREG-1560, ``Individual Plant Examination Program: 
Perspectives on Reactor Safety and Plant Performance,'' which reported 
on the Agency's review of the plant-specific risk assessments submitted 
for each operating nuclear power plant site. While the fire risk is not 
explicitly addressed in this document as it was in the 1989 document 
(NUREG-1150) that I had referenced, Section 7.3 stated:

          The average CDFs [core damage frequencies] from the NUREG-
        1150 PWR analyses fall within the ranges of the CDFs estimated 
        for the PWRs in the IPEs [individual plant examinations]. 
        Similarly, the average CDFs for the NUREG-1150 BWR analyses 
        fall within the ranges of the BWR IPE values. The mix of 
        relative contributions of accident sequences in the IPE results 
        is consistent with the NUREG-1150 results.

    In July 1998, the Nuclear Regulatory Commission published NUREG-
1521, ``Technical Review of Risk-Informed, Performance-Based Methods 
for Nuclear Power Plant Fire Protection Analyses.'' In Table 4.1 of 
this document, the NRC provided the fire risk for twelve (12) nuclear 
power plants. The fire risk for Indian Point 2 was listed as 68% of the 
overall core damage risk while the fire risk for the Limerick 1 plant 
was listed as 53% of the overall core damage risk.
    In my presentation, I stated that the fire contributed up to 50% of 
the overall core damage risk. It appears from this recent NRC data that 
I underestimated the fire risk.
                                 ______
                                 
 Statement of James T. Rhodes, Chairman, President and Chief Executive 
             Officer, Institute of Nuclear Power Operations
    Thank you, Mr. Chairman. I am James T. Rhodes, chairman, president 
and chief executive officer of the Institute of Nuclear Power 
Operations, based in Atlanta, Georgia. Let me thank you for the 
opportunity to represent INPO and provide testimony at this hearing.
    Today, I will focus my remarks on three areas. First, I will 
discuss the progress made by the industry since my testimony to this 
committee last July. Second, I will highlight regulatory initiatives 
that have been and will continue to be a key factor in progress for the 
nuclear power industry. And third, I will focus on the importance of 
effectively managing the change process, particularly as it relates to 
the regulatory initiatives. This last point is especially important 
given the number of organizational changes taking place at the NRC, 
including the announced departure of Chairman Jackson.
                      continuing industry progress
    In July, I discussed the improvement our industry has made in the 
past decade, as measured by a number of performance indicators. Today I 
am pleased to inform you that the industry has continued this solid 
progress into 1999.
    Although the industry began 1998 with a number of plants struggling 
with extended shutdowns, the industry made a strong comeback last year. 
In fact, overall performance improved more in 1998 than at any time in 
recent years. Let me share with you a few key indicators of that 
improvement.
    By the end of 1998, most of the plants that began the year in long-
term shutdown were back on line, producing electricity for their 
customers. This includes plants such as Northeast Utilities' Millstone 
Unit 3 and Commonwealth Edison's Quad Cities Station Units 1 and 2 and 
LaSalle County Station Unit 1. In addition, current data indicate that 
nuclear electric generation continued to increase in 1998. For example, 
Commonwealth Edison recently reported that its nuclear program ended 
the year with a capacity factor of 65.5 percent--more than 10 
percentage points higher than their goal for the year, and more than 15 
points higher than their 1997 results.
    Also, last July I reported to this committee that the trend of 
significant events per unit per year had decreased from 2.38 in 1985 to 
about 0.1 in 1997--a reduction factor of more than 20. Today I'm 
pleased to report even further improvement. NRC event data, confirmed 
by our own experience, shows an industry achievement of only .04 events 
per unit this past year. This data is represented on the graph below.


    The final improvement of note is the number of plants in INPO's 
``Excellent'' category. Following each plant evaluation, INPO provides 
an assessment number--on a scale of 1 to 5--with category one being the 
``Excellent'' performers. At INPO's annual Chief Executive Officers 
conference in November, we recognized 31 such plants, the most ever. 
The standards are very high, and the level of performance needed to 
earn an excellent rating has risen over the years. This graph shows an 
impressive, positive trend for the industry.


                         regulatory initiatives
    Now I would like to move into my second area of focus--the 
regulatory changes that are important to continued improvement in the 
nuclear power industry. We applaud the regulatory initiatives that the 
Commission has underway. The progress made so far demonstrates the 
potential for ongoing improvements in the regulatory process. Many have 
said, and I will reiterate, that improvements such as these will play a 
central role in the health of the industry.
    We continue to be encouraged by the openness being displayed by the 
NRC in communicating with its stakeholders. This open exchange of 
information and ideas is a key contributor to the safe and reliable 
operation of our nation's nuclear power plants.
    This improved communication is evident through the NRC's periodic 
stakeholder meetings, the enhanced review and approval process for 
license renewal, and the ongoing development of the new reactor 
oversight process. This new oversight process is especially important. 
It enhances the NRC's ability to ensure public health and safety by 
more effectively allocating its resources and eliminating redundant 
oversight. Specifically, it will focus the inspection, assessment and 
enforcement processes on safety-significant items, allowing utilities 
appropriate control over activities and issues that are not safety-
significant, but are vital to plant reliability and economic viability.
    We recognize that for plants to achieve and remain in the upper 
band of performance defined in the proposed new oversight process, they 
will need highly effective self-assessments and corrective action 
programs. Let me point out that among the many areas we look at, plant 
performance in the areas of self-assessments and corrective actions is 
routinely reviewed during INPO plant evaluations and during our plant 
assistance visits. Therefore, INPO's mission of promoting excellence in 
plant operations is fully complementary to the new oversight process.
    Another example of beneficial change is the significant reduction 
in items identified as Level IV violations. As you may be aware, these 
violations relate to issues that are not--on their own--of serious 
concern. As part of its progress toward risk-informed regulation, the 
NRC has clearly recognized the benefits of restricting violations to 
safety significant items, while using the inspection reports as the 
appropriate tool for highlighting potential areas for improvement. This 
in turn encourages the utilities to be even more rigorous in analyzing 
their own operations. They can be confident that proactive self-
identification of minor, non-safety-related issues will not 
automatically result in civil penalties.
                      effectively managing change
    Having discussed the continuing improvements in the nuclear 
industry, and the regulatory initiatives that have supported these 
improvements, I would like to now turn my attention to the importance 
of effectively managing the change process within the NRC. We have had 
the opportunity to discuss this subject at recent stakeholder meetings 
and feel it is important to cover it here.
    INPO has had extensive experience with change management. 
Currently, we have a series of initiatives underway to improve how we 
carry out our mission to promote the highest levels of safety and 
reliability in the operation of nuclear electric power plants. 
Therefore, we appreciate what the NRC faces as it strives to change and 
more effectively meet its regulatory responsibilities. NRC is currently 
undergoing significant philosophy, process, and staff changes, 
including changes at the senior leadership levels.
    We've seen many utilities challenged with managing change. Some 
have had success, others have struggled. Based on our observations and 
experience, it is clear that change requires clarity of purpose, 
constant communication, training, and, most of all, persistence and 
hard work.
    I'll begin with clarity of purpose. A clearly defined, long-term 
plan and simple goals are necessary. With clarity and simplicity, 
change leaders throughout the organization can help ensure strong 
support at all levels.
    Second, constant communication is critical for success. 
Communication must be two-way, involving both sending information and 
receiving feedback. The stakeholder meetings are good examples that 
need to be applauded and need to continue. Being flexible enough to use 
relevant feedback from the stakeholders throughout the change process 
will contribute to the Agency's ultimate success.
    Internal communications are equally important. We understand the 
NRC commissioners and senior staff are communicating their expectations 
throughout the organization. We all know that there can probably be no 
such thing as too much communication. But then--just as importantly--
management must listen to employees to ensure that the messages are 
being received and understood. Of course, follow-up action must be 
taken where appropriate.
    Third, preparing and training NRC employees for change, and helping 
them succeed, is another fundamental ingredient. Our experience shows 
that organizations often underestimate the effort required to engage 
and train the work force on significant changes. The NRC must look hard 
at the ability of its work force to digest and internalize the many 
process changes being made. NRC staff will be asked to do different 
things and in some cases to think differently about their jobs. Front-
line employees such as the site resident inspectors are important 
interfaces with the plants and therefore critical points. They must not 
only understand the changes but also be able to implement the changes 
from day-to-day.
    Also, additional skills training may be needed as the organization 
changes, particularly in light of new assignments, work force 
reductions, retirements and transfers of experienced employees. 
Further, it is important that the NRC's award and recognition system 
support employees who successfully implement change.
    Finally, success comes down to persistence and hard work. What the 
NRC is undertaking includes a change in culture. Cultural change takes 
time, tremendous energy, and most of all, significantly more 
persistence and hard work than is often expected. In time, change can 
be anchored into the culture of the organization--but only through an 
ongoing, systematic effort.
    Overall, we're encouraged by what we see happening at the Agency 
thus far. But as Chairman Jackson has said, ``Performance is what 
performance does.'' We've seen many organizations with great intentions 
have their change programs fall short because of poor implementation. 
Given the far-reaching effects of the changes the NRC is initiating, 
persistent and consistent execution of the change process is absolutely 
crucial to success. This--as I said, and as you well know--will take an 
immense amount of hard work.
    In the meantime, we encourage the NRC to continue improving its 
responsiveness to industry needs, such as timely license amendments, 
transfers and renewals, and reducing administrative burdens. 
Additionally, while maintaining appropriate data propriety, increased 
information sharing may also help reduce duplication and administrative 
burdens.
    In conclusion, we at INPO believe the industry--and indeed the 
public--wants and needs a more predictable, objective and responsive 
nuclear regulator. We're encouraged by what the Agency is attempting to 
do--that is, to become a more risk-informed, performance-based 
regulator. We believe the NRC is on the right track with its efforts to 
improve the inspection, enforcement and assessment processes, focusing 
on items directly related to the Agency's mission--the protection of 
public health and safety. We are encouraged by the fact that the 
commissioners, the Executive Director for Operations, and the regional 
administrators recognize the importance of change management. We at 
INPO will continue to work in cooperation with the NRC to help ensure 
the safe operation of our nation's nuclear power plants.
    Again, I appreciate this committee's interest in the regulation of 
a changing nuclear power industry. Your continued support and guidance 
will play an important role in helping the NRC provide effective 
regulation to help assure the safety of our industry.
    Thank you very much.
                                 ______
                                 
            Statement of Steven M. Fetter, Fitch IBCA, Inc.
    I appreciate the opportunity to testify on behalf of Fitch IBCA in 
the U.S. Senate Subcommittee on Clean Air, Wetlands, Private Property 
and Nuclear Safety's ongoing oversight of the Nuclear Regulatory 
Commission (NRC). Fitch IBCA is an international rating agency, based 
in New York and London, with over 700 employees in 21 offices around 
the world.
    The manner in which the NRC carries out its responsibilities during 
the electric utility industry's transition to competition will have a 
profound impact as to the role nuclear power will play within the 
restructured environment.
    As I testified 6 months ago, the NRC is at the center of investors' 
perceptions of the financial risks facing the U.S. nuclear industry. In 
evaluating utilities that operate nuclear plants, debt and equity 
investors study closely the processes and actions of the NRC. To the 
extent that these regulatory responsibilities are carried out in a 
consistent and predictable manner, investors find comfort with the 
outlook for both individual nuclear utilities and the nuclear industry 
as a whole.
    I am encouraged that the constructive intentions offered by NRC 
Chairman Shirley Ann Jackson and the other NRC commissioners at the 
July 1998 subcommittee hearing appear to be bearing fruit. The NRC has 
convened public sessions to seek out stakeholder views on a wide range 
of technical and safety issues. It is input like this, from the front 
lines so to speak, that will make it more likely that the NRC's and the 
nuclear industry's goal of a more risk-informed and performance-based 
regulatory approach will be achieved.
    In July, I highlighted my hope that the processes to review nuclear 
plant license renewal and transfer could be structured to proceed as 
expeditiously as possible without compromising appropriate 
consideration of safety issues. Early indications are that the NRC has 
set the same goal.
    The agency is aiming to complete the Calvert Cliffs and Oconee 
license renewal cases within two to 3 years from the filing of the 
applications, a target which, if met, will bode well for the timely 
handling of additional renewal applications that will be filed in the 
future.
    Similarly, the NRC has issued a final rule providing for a 
streamlined process for reviewing nuclear plant license transfers. 
Under the rule, the NRC will seek to complete consideration of most 
license transfer applications within a 6 to 8 month period after the 
application is filed. The reviews of the transfer requests relating to 
Three Mile Island Unit One and the Pilgrim Nuclear Station appear to be 
on schedule.
    While these recent activities at the NRC are encouraging, continued 
oversight by this subcommittee is called for. It is important that the 
ongoing transition within the membership of the NRC does not set back 
these gains. As a former chairman of a state regulatory commission who 
chose to move on to new life challenges, I know that some of my policy 
initiatives survived into the new regime and some were cast aside. This 
subcommittee can play an important role in assuring that the progress 
made during the past year under Chairman Jackson is maintained under 
new leadership.
    For example, the movement to a risk-informed and performance-based 
regulatory regime will take time, so periodic assessments by the NRC, 
the Congress, and other stakeholders will undoubtedly help the process. 
Likewise, the history of regulatory proceedings, both at the Federal 
and State level, becoming unduly delayed because of contentious issues 
is well-known.
    It is important that the NRC maintain focus on the movement of 
license renewal and transfer applications through the process. The 
timetables the NRC is proposing for each of type of proceeding seem 
appropriate both from a safety viewpoint as well as from the 
perspective of the financial community. If the NRC is able to deliver 
on the promise held out by recent events, I believe investors will be 
supportive of nuclear power playing a key role in the competitive 
utility world going forward.
  

                                
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