[Senate Hearing 108-507]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 108-507

             OVERSIGHT OF THE NUCLEAR REGULATORY COMMISSION

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

                                HEARING

                               before the

     SUBCOMMITTEE ON CLEAN AIR, CLIMATE CHANGE, AND NUCLEAR SAFETY

                                 of the

               COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS
                          UNITED STATES SENATE

                      ONE HUNDRED EIGHTH CONGRESS

                             SECOND SESSION

                               ----------                              

                              MAY 20, 2004

                               ----------                              

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





             OVERSIGHT OF THE NUCLEAR REGULATORY COMMISSION




                                                        S. Hrg. 108-507

             OVERSIGHT OF THE NUCLEAR REGULATORY COMMISSION

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

                                HEARING

                               before the

     SUBCOMMITTEE ON CLEAN AIR, CLIMATE CHANGE, AND NUCLEAR SAFETY

                                 of the

               COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS
                          UNITED STATES SENATE

                      ONE HUNDRED EIGHTH CONGRESS

                             SECOND SESSION

                               __________

                              MAY 20, 2004

                               __________

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



                     U.S. GOVERNMENT PRINTING OFFICE
                             WASHINGTON: 2006        

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               COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS

                      ONE HUNDRED EIGHTH CONGRESS

                             SECOND SESSION

                  JAMES M. INHOFE, Oklahoma, Chairman
JOHN W. WARNER, Virginia             JAMES M. JEFFORDS, Vermont
CHRISTOPHER S. BOND, Missouri        MAX BAUCUS, Montana
GEORGE V. VOINOVICH, Ohio            HARRY REID, Nevada
MICHAEL D. CRAPO, Idaho              BOB GRAHAM, Florida
LINCOLN CHAFEE, Rhode Island         JOSEPH I. LIEBERMAN, Connecticut
JOHN CORNYN, Texas                   BARBARA BOXER, California
LISA MURKOWSKI, Alaska               RON WYDEN, Oregon
CRAIG THOMAS, Wyoming                THOMAS R. CARPER, Delaware
WAYNE ALLARD, Colorado               HILLARY RODHAM CLINTON, New York

                Andrew Wheeler, Majority Staff Director
                 Ken Connolly, Minority Staff Director

                                 ------                                

     Subcommittee on Clean Air, Climate Change, and Nuclear Safety

                  GEORGE V. VOINOVICH, Ohio, Chairman
MICHAEL D. CRAPO, Idaho              THOMAS R. CARPER, Delaware
CHRISTOPHER S. BOND, Missouri        JOSEPH I. LIEBERMAN, Connecticut
JOHN CORNYN, Texas                   HARRY REID, Nevada
CRAIG THOMAS, Wyoming                HILLARY RODHAM CLINTON, New York



                            C O N T E N T S

                              ----------                              
                                                                   Page

                              MAY 20, 2004
                           OPENING STATEMENTS

Carper, Hon. Thomas R., U.S. Senator from the State of Delaware..     9
Clinton, Hon. Hillary Rodham, U.S. Senator from the State of New 
  York...........................................................    29
Inhofe, Hon. James M., U.S. Senator from the State of Oklahoma...     4
Jeffords, Hon. James M., U.S. Senator from the State of Vermont..    20
Reid, Hon. Harry, U.S. Senator from the State of Nevada..........    22
Voinovich, Hon. George V., U.S. Senator from the State of Ohio...     1

                               WITNESSES

Diaz, Nils J., Chairman, U.S. Nuclear Regulatory Commission......     6
    Prepared statement...........................................    49
    Responses to additional questions from:
        Senator Inhofe...........................................    57
        Senator Jeffords.........................................    58
        Senator Lieberman........................................    71
        Senator Voinovich........................................    63
Fertel, Marvin, senior vice president of Nuclear Generation, 
  Nuclear Energy Institute.......................................    36
    Prepared statement...........................................   209
    Responses to additional questions from:
        Senator Inhofe...........................................   218
        Senator Jeffords.........................................   219
        Senator Voinovich........................................   220
Jones, Barclay, professor, Department of Nuclear, Plasma, and 
  Radiological Engineering, University of Illinois at Urbana-
  Champaign......................................................    42
    Prepared statement...........................................   313
Kray, Marilyn, vice president for project development, Exelon 
  Generation.....................................................    40
    Prepared statement...........................................   307
    Responses to additional questions from Senator Jeffords......   312
Lochbaum, David, nuclear safety engineer, Union of Concerned 
  Scientist......................................................    39
    Prepared statement...........................................   299
    Responses to additional questions from Senator Jeffords......   306
McGaffigan, Edward., Jr. Commissioner, U.S. Nuclear Regulatory 
  Commission.....................................................     9
Merrifield, Jeffrey S., Commissioner, U.S. Nuclear Regulatory 
  Commission.....................................................     9

                          ADDITIONAL MATERIAL

Letter, Nils J. Diaz, NRC, dated June 2, 2004....................    17
Reports:
    GAO, Nuclear Regulation, NRC Needs to More Aggressively and 
      Comprehensively Resolve Issues Related to the Davis-Besse 
      Nuclear Power Plant's Shutdown, May 2004...................73-208
    Institute of Nuclear Power Operations, Principles for a 
      Strong Nuclear Safety Culture.............................224-238
    National Academy for Nuclear Training Educational Assistance 
      Program, April 2003.......................................320-335
    Nuclear Energy Institute, NEI Work Force Survey, May 2004...239-298
    Nuclear Energy Research Advisory Committee, Nuclear Power 
      Engineering Curriculum Task Force.........................314-319
Text, Amendment to the Energy bill, S. 14........................    15

 
             OVERSIGHT OF THE NUCLEAR REGULATORY COMMISSION

                              ----------                              


                         THURSDAY, MAY 20, 2004

                               U.S. Senate,
         Committee on Environment and Public Works,
    Subcommittee on Clean Air, Climate Change, and Nuclear 
                                                    Safety,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 10:33 a.m. in 
room 406, Senate Dirksen Building, the Hon. George V. 
Voinovich, (chairman of the subcommittee) presiding.
    Present: Senators Voinovich, Carper, Reid, Clinton, 
Jeffords [ex officio] and Inhofe [ex officio].

  OPENING STATEMENT OF HON. GEORGE V. VOINOVICH, U.S. SENATOR 
                     FROM THE STATE OF OHIO

    Senator Voinovich. The subcommittee will come to order. I 
would like to thank the witnesses for being here today.
    I apologize for the delay in starting the hearing today. We 
had the pleasure of spending 45 minutes with the President of 
the United States where he did an outstanding job of laying out 
where we have been and where we are going with our domestic 
policy, and also in foreign relations.
    Today's hearing continues our ongoing oversight of the 
Nuclear Regulatory Commission. This is the sixth in a series of 
oversight hearings that began in 1998 when Senator Inhofe was 
Chairman of this subcommittee. I thank Chairman Inhofe for his 
leadership on this issue as strong oversight of the NRC is 
critical to the welfare of the American people.
    Nuclear power is necessary and a sound part of our energy 
future. It makes sense for our environment and for our economy. 
It is a reliable and stable source of energy, providing 20 
percent of the country's electricity with zero harmful air 
emissions. In my State it provides about 12 percent of the 
energy that is produced.
    In order to harmonize our economic, energy, and 
environmental needs, nuclear power must continue to grow. The 
NRC plays a vital role in its future. The three basic 
components of NRC's mission are to regulate the Nation's 
civilian use of nuclear materials in order to promote the 
common defense and security, protect the environment, and 
ensure fail safe protection of public health and safety.
    While we so often talk about the goals of our Agencies, we 
need to also talk about whether they have the work force and 
the budget to get the job done. We have goals that we set. Too 
often, my observation has been, that we do not spend enough 
time on the human resources and the budget we need to get the 
job done.
    As I have done in the two previous oversight hearings that 
I have chaired, I want to make myself perfectly clear.
    The No. 1 issue for the NRC is safety. Period. There is no 
greater issue. It is critical that the NRC be a credible Agency 
that can guarantee the safety of the Nation's 103 operating 
nuclear plants.
    Unfortunately, the NRC's credibility is in serious 
questions these days due to the March 2, 2002, shutdown of the 
Davis-Besse Nuclear Power Station, which is located in my home 
State in Oak Harbor. The discovery of a pineapple-sized cavity 
in the plant's vessel head forced the shutdown of the plant for 
2 years. This incident has been referred to as: ``The most 
serious safety issue confronting the Nation's commercial 
nuclear power industry since the accident at Three Mile Island 
in 1979.''
    While I am pleased that the plant has been restarted, is 
running at 100 percent, and has had no additional problems, 
many questions remain about the NRC's actions before and after 
this incident. I asked the General Accounting Office: ``The NRC 
needs to more aggressively and comprehensively resolve issues 
related at the Davis-Besse Nuclear Power Plant shutdown.'' The 
report was released this week to be put into the record.
    Without objection, so ordered.
    [The referenced document follows on page 73.]
    Senator Voinovich. This report looked at three questions: 
No. 1, why did not the NRC identify and prevent the vessel head 
corrosion at Davis-Besse? No. 2, was NRC's process for deciding 
to allow the plant to delay shut down credible? No. 3, is 
sufficient action being taken to prevent similar future 
problems?
    I have serious concerns about the answers GAO found to 
these three questions. I want to hear from the Commissioners 
today on the following issues: Communication failures, 
questionable risk analysis, and the NRC's refusal to assess 
licensee safety culture, or to develop specific guidelines for 
when to shut down a plant.
    Let me be clear. I do not want these issues addressed in 
the context of what happened, but what is going to be done to 
make sure that nothing like this happens again. Since this is 
my main concern, the following from the GAO report is even more 
appalling:

    ``The underlying causes of the Davis-Besse incident underscore the 
potential for another incident to occur. This potential is reinforced 
by the fact that both prior NRC Lessons Learned Task Forces and we, 
GAO, have found similar weakness in many of the same NRC programs that 
led to the Davis-Besse incident. NRC has not followed up on prior Task 
Force recommendations to assess whether the lessons learned were 
institutionalized.''

    They are talking about not only the lessons learned from 
this investigation that was made, but other investigations that 
have been made in the past. They have said that the lessons 
learned from those other incidents have not been followed 
through by the Nuclear Regulatory Commission.
    Basically, the GAO found that many of the same problems 
identified in this investigation were also identified in 
incidents before Davis-Besse but never have been fully 
addressed. This is unacceptable. I am not going to let the 
Davis-Besse Lessons Learned Task Force recommendations fall by 
the wayside.
    Unfortunately, the GAO claims that this may happen because 
of resource constraints at the NRC which gets back to their 
budget and the number and quality of individuals that are 
working for the Commission.
    At this point, I want to state for the record that this is 
not a Davis-Besse hearing. This incident basically serves as 
the model to what can happen when we lose focus on the main 
issue--safety. The NRC and the industry must hold themselves to 
a higher standard. In fairness to the Commission, I was 
impressed by their fastidiousness in deciding when Davis-Besse 
was ready to be restarted. This is the kind of scrutiny that I 
want to see for all the facilities of our country.
    As Chairman of the Subcommittee on Oversight of Government 
Management in the Federal Work Force, and the Governmental 
Affairs Committee, I know that this level of oversight is 
dependent upon the human capital needs of the NRC, which I have 
long been concerned about. I am convinced that if both the NRC 
and FirstEnergy had the right people with the right knowledge 
and skills and the right place at the right time, the Davis-
Besse incident would never have happened.
    Moreover, if the NRC is going to be able to move forward 
and credibly guarantee the safety of our nuclear facilities, 
they need to make sure they have enough people with the 
necessary level of knowledge and experience. I was shocked when 
I first reviewed the NRC and found that they had six times as 
many employees over the age of 60 than under 30. I know, Mr. 
Diaz, you have been working on that. But I want to hear more 
about it today. I know the Commission has been working hard, as 
I said, on this issue. I am interested to know what progress is 
being made in that regard.
    In addition to the implementation of the Lessons Learned 
Task Force recommendations, several important licensing issues 
are all occurring at the same time--relicensing for existing 
plants, which is an enormous responsibility, potential 
applications to build new facilities, and Yucca Mountain.
    Everybody should understand this.
    I am interested in hearing from all the witnesses today 
about the human capital situation throughout the industry. I am 
glad we have representatives here from academia on what is 
being done out there to address this issue.
    I welcome all the witnesses here today and look forward to 
a good and thorough discussion about how the NRC and the 
industry will move forward with credibility with the right 
people and with safety at the forefront of all actions to 
ensure that nuclear power continues to be an important part of 
meeting our economic energy and environment needs.
    That being said, the most important thing we need to do is 
to give complete assurance to the people of this country that 
our nuclear facilities are fail safe. This is very important 
because many people have come to me over the last 2 years and 
expressed concerns about being safe.
    I will never forget the telephone calls I got from friends 
of mine after the Davis-Besse incident that are in the area and 
said, ``George, what is going on? I thought things were fine. 
People of this country have to know when they go to bed at 
night that these are fail safe. They have nothing to worry 
about. Our stress level is enough as it is to be worrying about 
nuclear power in this country.'' Simply put, people ought not 
to go to bed, as I said, worrying about the safety of our 
nuclear power plants.
    I notice that our distinguished Chairman is here, who was 
the Chairman of this subcommittee. Before you came in, I 
acknowledged to our witnesses and to those here that you 
started this in 1998 to review the Nuclear Regulatory 
Commission.

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

    Senator Inhofe. That is right; we did. Mr. Chairman, I 
appreciate your carrying this on. That is right; in 1998 we had 
an oversight hearing when I became Chairman of this 
subcommittee. It was the first oversight hearing in over 10 
years. That is not right. We corrected it. Many good things 
have happened since that time. We have made progress. Each one 
of you has been a part of that. You are aware of this progress.
    The relicensing program, which no one thought would work in 
1998, has become almost routine. Major reforms have taken place 
on the enforcement side. We have seen real progress with the 
NRC moving toward risk-based approaches.
    Recent events have tested the NRC and thus far I am 
generally pleased with how the Commission has responded. We 
need to learn from these challenges, implementing solutions, 
and moving forward. Backsliding into the inefficient and 
ineffective days of the past is not an option. We are just not 
going to do it.
    Acting Chairman Diaz, Commissioners Merrifield and 
McGaffigan--the three of you and the staff of the NRC should be 
commended for the work that you have done. Of course, no job is 
ever finished. I believe that you have as many challenges 
facing you today as we did in 1998, if not more.
    Unfortunately, unless the White House can find a 
replacement for Admiral Grossenbacher, whose nomination 
languished over 7 months before he withdrew in pursuit of other 
opportunities--in frustration, I might add--I fear that you 
will be the three-person Commission for a while.
    During today's hearing and over the coming months, I would 
like to hear your thoughts and views from the second panel on 
this issues. There have been a few safety issues in the last 
few years, such as: No. 1, some recent events at Vermont 
Yankee. No. 2, how well is the risk-based approach working? As 
an Agency are you able to identify the real risks and address 
them in a safe manner?
    No. 3, the NRC and the nuclear industry has a large number 
of employees, close to retirement age, as was stated by the 
Chairman, do you and will you have a staff to replace them in 
order to address the major problems that are coming up, such as 
the continuing relicensing process, the permit application for 
Yucca Mountain, and the potential permits from the different 
consortiums who are interested in building new nuclear 
facilities? All three of these events will be occurring at 
roughly the same time. Do you have the resources that you need 
to address these?
    In addition to the employees that the NRC headquarters and 
the Resident Inspectors, we also have four NRC regions which 
have been in place since the 1970's. Would the NRC function 
more effectively if we consolidated all of the staff to the 
headquarters keeping the Resident Inspectors in place?
    This could eliminate some redundancy and overhead and help 
provide the headquarters with the experienced staff they need.
    How is the interaction between the EPA and the NRC on the 
setting of radiation standards? I have long thought the EPA 
does not do an adequate job assessing the real risks involved 
in radiation. Now that the politics of the standards set by the 
EPA for Yucca Mountain are over, perhaps it is time to address 
EPA's performance also.
    I would just like to say both Senator Voinovich and I are 
very concerned with the crisis we have in this country. It is 
an energy crisis. I cannot think of any group, any Commission, 
that is going to have to be more proactive in helping to 
resolve this. We often say that we had a good Energy bill that 
passed the House. It just did not pass the Senate. But it 
addressed nuclear energy as well as all the other forms. I 
think Senator Voinovich and I are together in saying that we 
need all of them. We need fossil fuel. We need coal. We need 
nuclear. We need renewables. You folks will be playing a very 
active part in that as we pursue new opportunities in nuclear 
energy.
    I look forward to hearing my three good friends who are 
witnesses.
    [The prepared statement of Senator Inhofe follows.]
       Statement of Hon. James M. Inhofe, U.S. Senator from the 
                           State of Oklahoma
    First, I would like to thank Chairman Voinovich for holding today's 
annual oversight hearing which continues the process I started in 1998 
when I was the Chairman of this subcommittee. Since 1998 the NRC has 
made tremendous progress.
    The relicensing program, which no one thought would work in 1998, 
has become almost routine. Major reforms have taken place on the 
enforcement side, and we have seen real progress with the NRC moving 
toward risk-based approaches.
    Recent events have tested the NRC--and thus far I am generally 
pleased with how the Commission has responded. We need to learn from 
these challenges, implement solutions and move forward. Backsliding 
into the inefficient and ineffective days of the past is not an option.
    Acting Chairman Diaz, and Commissioner's Merrifield and McGaffigan; 
the three of you and the staff at the NRC should be commended for the 
work you have done. Of course no job is ever finished and I believe you 
have as many challenges facing you today as we did in 1998, if not 
more. Unfortunately, unless the White House can find a replacement for 
Admiral Grossenbacher, whose nomination languished for over 7 months 
before he withdrew to pursue other opportunities, I fear you will be a 
three-person Commission for awhile.
    During today's hearing and over the coming months, I would like to 
hear your thoughts, and the views from the second panel, on several 
issues.
    (1) There have been a few safety issues in the last few years, such 
as some recent events at Vermont Yankee. How well is the risk-based 
approach working. As an Agency, are you able to identify the real risks 
and address them in a safe manner?
    (2) The NRC, and the nuclear industry, has a large number of 
employees close to the retirement age. Do you and will you have the 
staff in place to address the major upcoming issues such as:

          the continuing relicensing process,
          the permit application for Yucca Mountain, and
           the potential permits from the different consortiums, who 
        are interested in building new nuclear facilities.

    All three of these events will be occurring at roughly the same 
time, do you have the resources that you need?
    (3) In addition to the employees at the NRC headquarters and the 
resident inspectors, we also have four NRC Regions, which have been in 
place since the 70's. Would the NRC function more efficiently if we 
consolidated all of the staff to the headquarters, keeping the resident 
inspectors in place? This could eliminate some redundancy in overhead 
and help provide the Headquarters with the experienced staff they need.
    (4) How is the interaction between the EPA and the NRC on the 
setting of radiation standards? I have long thought that the EPA does 
not do an adequate job assessing the real risks involved in radiation. 
Now that the politics of the standards set by EPA for Yucca Mountain 
are over, perhaps it is time to address EPA's performance.
    With these issues in mind, I am interested in today's testimony and 
the views of the witnesses from both panels. Thank you.

    Senator Voinovich. Thank you very much, Senator Inhofe.
    Due to the late start of the hearing, I am going to ask my 
colleagues and the witnesses to limit their remarks to 5 
minutes.
    Mr. Diaz, I think we made it clear that we expect you to 
lead off. We are expecting 2-minute summaries from Mr. 
McGaffigan and Mr. Merrifield. We welcome you. You have a heavy 
responsibility. We know that. We are anxious to hear from you.
    Mr. Diaz.

 STATEMENT OF NILS J. DIAZ, CHAIRMAN, U.S. NUCLEAR REGULATORY 
                           COMMISSION

    Mr. Diaz. Thank you, Mr. Chairman, Senator Inhofe, and 
members of the subcommittee. I appreciate the opportunity to 
appear before you today with Commissioner McGaffigan and 
Commissioner Merrifield. We are, of course, here to discuss the 
Nuclear Regulatory Commission's activities, to protect the 
public health and safety, to protect the common defense and 
security, and to protect the environment. We also appreciate 
the past support that we have received from the subcommittee 
and the committee as a whole, and we look forward to continuing 
working with you.
    In recent years we have seen significant changes in the 
oversight exercised by the NRC in the areas of safety, 
security, and emergency preparedness. Perhaps, like Senator 
Inhofe said, we have seen significant changes since 1998. We 
are pleased to be working with the subcommittee since that 
time, and the committee as a whole.
    Overall, the industry has performed well in these three 
areas of safety, security, and preparedness. The NRC has become 
increasingly focused on those matters that are most important 
to safety and continues to increase the use of risked-informed 
decisionmaking.
    From a regulator's viewpoint, there are grounds for 
cautious optimism about the state of nuclear safety today.
    The level of reactor safety has increased steadily. From 
the standpoint of American public protection, the record is 
indeed admirable with not a single member of the public ever 
exposed to a harmful level of radiation from a U.S. nuclear 
power plant. We intend to keep it that way.
    The revised Reactor Oversight Process, which we established 
over 3 years ago, continues to provide to the Agency a 
disciplined approach to the determinations of licensees' 
performance. At the end of the 2003 calendar year, there were 
two plants designated for the highest level of scrutiny under 
the Reactor Oversight Process--the Cooper Plant in Nebraska, 
and the Point Beach Plant in Wisconsin.
    The Cooper and Point Beach Plants have received significant 
attention from our regional and headquarters office. We are 
confident that these plants are on the path to resolving long--
standing problems.
    Over the past 2 years, the NRC staff has also devoted 
significant resources for enhanced regulatory oversight of the 
Davis-Besse Plant following the discovery of extensive 
degradation of the reactor vessel head, including the in-depth 
assessment of the startup oversight process.
    The existence, undetected for so long, of a hole in the 
head of the reactor was an unacceptable failure on the part of 
the licensee and of the NRC. Specifically, it was a failure to 
conduct the activities necessary to minimize the potential for 
degradation of the primary coolant pressure boundary. In other 
words, process execution, including communications, broke down.
    On March 8, 2004, after an extensive plant recovery program 
and comprehensive corrective actions by the licensee,
    FirstEnergy, and after considerable NRC inspection and 
assessment, the staff gave approval for the restart of Davis-
Besse. Our full statement discusses the critical review and 
actions the NRC has taken to address the Davis-Besse Lessons 
Learned Task Force and the Inspector General's recommendations.
    We have already provided our comments on the GAO's draft 
report on Davis-Besse. We are reviewing the GAO's recently 
finalized report.
    Let me turn for a minute to other significant achievements, 
specifically in our reactor licensing programs.
    A significant type of reactor licensing action, called a 
power uprate, is a request to raise the maximum power level at 
which a plant may be operated. Power uprates range from 
requests for small increases of less than 2 percent based on 
the recapture of power measurement uncertainty, to large 
increases in the range of 15 percent to 20 percent of full 
power that require substantial hardware modification to the 
plants.
    To date, the NRC has approved 101 power uprates which have 
added safely approximately 4,175 megawatts electric to the 
nation's electric general capacity, and this is the equivalent 
of about four large nuclear power plants.
    Currently, the NRC has four power uprate applications under 
review and expects to receive an additional 25 applications 
through calendar year 2005. This would add approximately 1,760 
megawatts electric to the Nation's electric generating 
capacity. The focus of our review of this application has been, 
and will continue to be on safety.
    License renewals are another significant type of licensing 
action. In 2003, 13 units had their licensees renewed for an 
additional 20 years. We expect that almost all of the 104 
reactors licensed to operate will apply for renewal of their 
licenses. The NRC also is ready to accept applications for new 
power plants. In September and October of last year, we 
received three early site permit applications for sites in 
Virginia, Illinois, and Mississippi where operating reactors 
already exist.
    We have already certified three new reactor designs. In 
addition, the NRC is currently reviewing the Westinghouse AP--
1000 design certification application. The staff has met all 
scheduled milestones for the AP-1000 design review and is on 
track to issue a recommendation to the Commission this fall on 
final design approval. The NRC staff is also actively reviewing 
pre-application issues on two additional designs and has four 
other designs in various stages of pre-application review.
    The Commission has continued to enhance security of 
licensed nuclear facilities and materials through close 
communication and coordination with other Agencies in the 
intelligence and law enforcement communities, and with the 
Department of Homeland Security. We have established an 
enhanced set of security requirements for power reactors that 
are appropriate in the post-9/11 threat environment.
    In treating emergency preparedness as another level of 
defense in-depth, we are recognizing it as an integral part of 
our approach to protecting the public. Reactor fuel, reactor 
coolant system, containment, emergency preparedness--these are 
four barriers, each one complementing the others and each one 
designed, tested, and inspected to provide reasonable assurance 
of protecting the public and the environment from radiological 
releases.
    In the area of material security, we have coordinated 
closely with other Federal Agencies, State, and affected 
licensee groups to develop additional security requirements for 
two classes of materials licensees who possess high-risk 
radioactive materials. Our full statement discusses our 
activities and comprehensive programs for ensuring the safety 
of importing, exporting, and transportation of nuclear 
materials.
    The Commission's activities also extend to the front end of 
the fuel cycle and they continue to increase. The first 
proposed new enrichment facility will be located in New Mexico 
and the second in Ohio. Louisiana Energy Services submitted an 
application for its facility in Eunice, New Mexico, to the NRC 
in December 2003. U.S. Enrichment Corporation is expected to 
submit its application to the NRC for its site in Piketon, OH, 
in August 2004.
    The Commission has directed its staff to conduct reviews of 
the applications for the two proposed enrichment facilities in 
a timely manner. The staff continues to review a request to 
authorize construction of a mixed oxide fuel fabrication 
facility at the Savannah River site in South Carolina as part 
of the Department of Energy's program to dispose of excess 
weapons grade plutonium.
    The NRC has also made progress on a wide array of programs 
relating to the safe disposal of nuclear waste. A central focus 
on these programs is to ensure that the Agency is prepared to 
review an application by the Department of Energy to construct 
a high-level radioactive waste repository at Yucca Mountain, 
NV. The application is expected to be submitted to NRC in 
December 2004, and we are prepared to fulfill our role.
    We continue to develop the programs and dedicate resources 
to ensure that the human capital of the Agency is adequate to 
meet the needs of the Agency and, in this respect, we also are 
adding significant resources to develop the critical thinking 
skills of our work force.
    Mr. Chairman, I can assure you that the Commission will 
continue to be very active in directing and managing the staff 
efforts in ensuring adequate protection of public health and 
safety, promoting the common defense and security, and 
protecting the environment in the application of nuclear 
technology for civilian use.
    We appreciate the opportunity to appear before you today.
    We welcome your questions. I would ask that my written 
statement be placed in the record in its entirety.
    Senator Voinovich. Thank you very much, Mr. Diaz.
    I appreciate your testimony this morning. I notice you went 
over the 5 minutes, but I wanted to give you more of an 
opportunity to get your statement out in front of us.
    Mr. Diaz. I appreciate that, Mr. Chairman.
    Senator Voinovich. Mr. Merrifield.

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

    Mr. Merrifield. Mr. Chairman, in light of the time, I would 
just want to say thank you for the opportunity and the 
challenges you have presented for us, the opportunity to show 
off what we do, a challenge to do better in terms of our effort 
to make sure that safety remains our No. 1 issue, as you 
outlined it.
    I think also today we want to thank you for the strong 
interest that the committee as a whole has shown in issues of 
human capital and your particular interest. Again, I think that 
is something that we would be prepared to discuss in our 
testimony and questions.
    Thank you, Mr. Chairman.
    Senator Voinovich. Thank you, Mr. Merrifield.
    Mr. McGaffigan.

STATEMENT OF EDWARD McGAFFIGAN, JR., COMMISSIONER, U.S. NUCLEAR 
                     REGULATORY COMMISSION

    Mr. McGaffigan. Mr. Chairman, I concur in Chairman Diaz's 
statement. I look forward to your questions. I want to maximize 
the amount of time to answer your questions.
    Senator Voinovich. Thank you, very much, Mr. McGaffigan.
    The Ranking Member of the subcommittee is here. Senator 
Carper, would you like to share with us an opening statement?
    Senator Carper. I have a statement for the record that I 
would like to insert into the record.
    Senator Voinovich. Without objection, so ordered.

 OPENING STATEMENT OF HON. THOMAS R. CARPER, U.S. SENATOR FROM 
                     THE STATE OF DELAWARE

    Senator Carper. Thank you. I would just like to jump right 
into questions. I thank our witnesses. We are delighted that 
you are here. Thank you.
    Senator Voinovich. We have had six NRC oversight hearings, 
as I mentioned, since 1998. Before this time, it is my 
understanding that not many of these hearings were held, and 
that the Commission basically had a free reign.
    Over the past 2 years, I have watched the NRC disagree with 
just about anyone who has analyzed the Commission's actions 
surrounding the Davis-Besse incident, including the Inspector 
General, and now the GAO. I am concerned about that. I feel 
strongly, and I know my fellow colleagues agree with me that 
this committee must provide strong oversight.
    Based on some of your recent actions, what kind of 
assurances can you give us and the American public that you 
take our oversight seriously? We have talked at past hearings 
about the human capital needs in the NRC and the industry as a 
large number of employees are close to retirement age. There 
are several important licensing. You have gone into them.
    The list of things that you have to do is just 
overwhelming. It must be unique in the history of the NRC to 
have so much work that is on your plate that you need to deal 
with. The GAO claims that you have been slow in implementing 
lessons learned because of resource constraints. They 
specifically cite too few staff and experience levels among 
existing staff.
    What I want to know is: Is that true? What are some of the 
constraints? How can we fix this? I want you to be candid with 
me. If you do not have the budget, or if there is something 
wrong that you need that you do not have that you cannot get 
the job done, we want to know about it today.
    Mr. Diaz, we will start with you. If the other 
Commissioners want to chime in, we would welcome that.
    Mr. Diaz. Mr. Chairman, I want to say that we welcome the 
oversight. I believe that it has actually helped the Agency to 
become more focused on the issues that are of concern to the 
Congress and to the Nation. In no way do we see this as 
anything but actually helping us do our job better.
    We do disagree with some of the criticism from outside, and 
probably it is because we are always looking forward at what we 
are going to do, and not only going back. Some of the 
criticisms are probably past their time. Some of them have a 
significant basis and we have taken the necessary actions to 
correct them.
    Senator Voinovich. Mr. Diaz, one of the things I like to do 
is this. Let us zero in on your budget and the human resources 
that you have. Are they adequate to get the job done? That is 
what I want to hear. Where are you on this?
    Mr. Diaz. Our budget is adequate. Our human resources are 
getting systematically upgraded. We have established a program 
to improve the capabilities of our inspectors and our staff to 
deal with issues. We are working in a very disciplined manner 
to address the issues of communications.
    We want everybody in the Agency that needs information to 
have that information. We want that information to go up the 
ladder.
    Senator Voinovich. Let me ask you this. How much retirement 
have you had in the last years? How many new people have you 
brought in? What is the level of the number of employees that 
you have versus what you had before?
    Mr. Diaz. We are increasing our staffing to over 3,100 
FTEs. We were around 2,850 in fiscal year 2002. So we actually 
have an increase of about 250. I do not know the exact number. 
We continue to bring in not only people that are young that we 
can train, but we bring in mature people with the right skills. 
We have been able to develop a data base that allows us to 
match skills with the needs. We continue to work these issues 
in a very systematic manner.
    Mr. Merrifield. Mr. Chairman, one of the things you 
mentioned and pointed out before is the concern about the age 
of our work force. That is one that we have worked very hard on 
in the last few years. You mentioned the statistic that at one 
time we had six times as many people over the age of 60 as we 
did under the age of 30. I do not know the exact ratio at this 
point. I think it is somewhere in the nature of about 1\1/2\-
to-1 or 2-to-1. We have dramatically reduced that number by a 
significant effort to reach out to a wide diversity of 
universities and colleges. We have brought in a lot of very 
exciting, new, well educated, members of our work force that 
are really going to allow us to grow in the future and maintain 
that high level of expertise we have had in the past.
    Senator Voinovich. My past recollection is that some of the 
universities where they have some of these reactors at the 
universities, that they were closing those down. I recall for 
example, the University of Michigan. What is the status out 
there in terms of the availability of people?
    Mr. Diaz. The level of the decline has stabilized. In fact, 
many of the large programs have actually experienced some 
increases. We continue to be concerned with the capability of 
the infrastructure to give us the right person.
    I think it is a problem across the industry.
    But I do believe that right now we are getting the talent 
that we need. It might be more difficult in the years to come 
as more people retire and we lack the experienced personnel to 
fill their places. That is why one of the things that we have 
asked, Mr. Chairman, is the ability to retain some of our 
senior people that are retiring without a penalty. In other 
words, when they retire from the Federal work force, if they 
come to work for us, they lose some of their benefits.
    Senator Voinovich. I understand that. One of the things 
that I am trying to do with the legislation that we introduced 
would deal with that problem. But right now you are being 
restricted because if you bring them back, they lose their 
retirement. Would you like to be able to bring them back to 
work part-time to help you with the transition?
    Mr. Diaz. We have had exceptions made, but we certainly 
will welcome your support in that area.
    Mr. Merrifield. Mr. Chairman, I would also say that you 
have championed in the Energy bill legislation that would 
enhance the training programs for our Agency and provide an 
additional $1 million in training. That is Section 622 of the 
Energy bill on the House side and a similar provision on the 
Senate side. We would certainly appreciate your support of that 
legislation. It would certainly help us as well.
    Mr. McGaffigan. Mr. Chairman, if I could, I would respond 
to your question on resources. Chairman Diaz is absolutely 
correct. We have the resources if we got our budget to do what 
we need to do in the year ahead. All of you know better than we 
do what the prospects of our getting our budget this year are.
    If we are in a continuing resolution situation with a flat 
budget, we basically are flat in all areas except for preparing 
for the Yucca Mountain application and in advanced reactors. 
There could be significant instability in those two areas. But 
in areas such as following up on the Davis-Besse lessons 
learned, we are absolutely committed to dedicating the 
resources necessary there.
    I have been at all six of these hearings. Chairman Diaz has 
as well. Agencies over their lifetimes go through ups and 
downs. When Chairman Diaz and I came on the Commission in 1996, 
we were in a sustained down period. There had been significant 
erosion in staff. There had been no promotions, essentially. We 
had not had an SES development class for many years. Our first 
SES development class was chosen in 1999.
    We have had a second, and we are about to have a third. But 
for many years, with declining budgets and the need to manage 
an Agency in decline, things were postponed.
    We, over the last 5 years, have been actively trying to 
recover from that period. Will the recovery be complete?
    We are going to face challenges in the years ahead because 
there was that period where we had to manage a very significant 
decline in resources, anticipating an industry in decline, 
which turned out not to be true.
    Senator Voinovich. Thank you very much.
    Senator Carper.
    Senator Carper. Thank you, Mr. Chairman.
    I know we have a couple of panels here. Is the expectation 
that we would have one round of questions for each panel?
    Senator Voinovich. Well, I anticipated two rounds for the 
Commission of 5 minutes each.
    Senator Carper. Thank you. I think I want to start with a 
more general question and then maybe come to something more 
specific to a part of the country in which I live and 
represent. A couple of months ago I took a bunch of Boy Scouts 
from Wilmington, DE down to the Norfolk Naval Station, as I do 
every few years. Both our boys are active in scouting. I took 
Troop 67 back to the Norfolk Naval Station.
    We visited submarines and nuclear powered submarines and 
ships, and an aircraft carrier in port.
    The aircraft carrier itself is about 1,000 feet long. It is 
at least 20 stories high. There are roughly 5,000 sailors 
aboard the ship. When the airplane is on board, I think it 
brings a lot more people and maybe 75 or so aircraft. The 
interesting thing for me about the nuclear-powered carrier is 
that it stops to refuel about once every 25 years, unlike the 
other ships that were on either side of it which need to refuel 
about every week. For me, that is always a good reminder that 
nuclear energy is not just an important part of our military 
and our naval forces, but it is also an important part of our 
energy.
    Looking over the briefing materials, I was reminded again 
of the amount of CO2, carbon dioxide, that the 
nuclear power plants do not put into the air. I was reminded of 
the amount of dollars that reliance on nuclear energy does not 
add to our trade deficit. I was reminded of the reduction in 
imported oil that a reliance on nuclear power for the 
generation of electricity affords us.
    I sit here today as one who believes that it is important 
that we continue to maintain and strengthen going forward our 
reliance on nuclear energy as part of, not all of, but part of 
our energy needs in this country.
    I was going to get into some of the questioning that our 
Chairman got into with respect to qualified personnel. I think 
he has covered that about as much as I would want to. I would 
to focus instead on the future of nuclear energy in our country 
and a little bit about the transportation of nuclear waste. 
Then I have a couple of specific questions that deal with the 
nuclear power plant on the other side of the Delaware River 
from us in Salem, NJ.
    I would just start off with a couple of questions about 
nuclear energy. I am going to ask you to be fairly brief in 
responding to these questions. I will direct them, Chairman 
Diaz, to you and ask you to defer to your colleagues and your 
fellow Commissioners to jump in whenever you feel the need.
    I think today about 22 percent of our electricity supply 
comes from nuclear energy. I guess my first question is: Twenty 
years from now, do you think we will still be getting 22 
percent of our electricity from nuclear power? Do you think it 
will be more? Do you think it will be less?
    Mr. Diaz. I believe that that question probably should be 
answered by the next panel. We are ready to do our job of 
regulating the industry. The industry is considering additions 
to the fleet. We believe that we have done what we needed to do 
which was to ensure that anyone that wanted a license to be 
renewed for an extra period of time of 20 years would have a 
fair, equitable, and disciplined approach to renewing that 
license. I think the process that is in place is working well.
    So in many respects, one of the things that has happened is 
that we have been able to have the existing fleet working. We 
have also been able to certify new designs that if the industry 
wants to, they will be able to use those certified designs to 
add new plants to the fleet. But it is the industry which needs 
to make that decision.
    I believe that the best that they can do under the present 
circumstances is to maintain over the next 15 years the 20 
percent to 21 percent that they are presently generating. That 
would include a few new nuclear power plants because the 
overall capacity is increasing.
    Senator Carper. Thank you. You alluded to this. Maybe 
somebody is going to be proposing to build a new nuclear plant 
or two. Just sketch for me very briefly the approval process 
that they go through with respect to your Agency.
    Mr. Diaz. Very quickly, we have two processes--an old 
process and a new process, that we believe is better, which the 
Congress actually established. These new processes combine an 
operating license, which allows the industry to apply 
simultaneously for the construction license and the operating 
permit. We already have three applications for early site 
permits to clear the environmental concerns of a site. We also 
have certified the designs, which means that the industry or 
the utility can actually apply to put that certified design on 
a pre-approved site, making the period of the license for their 
construction and operation shorter, something the industry is 
very much in favor of. The Congress approved that process in 
1992.
    Senator Carper. Thank you. Could we talk a little bit about 
the transportation of nuclear waste to Yucca Mountain? I seem 
to recall that there is some full-scale testing of these casks 
that were to carry the nuclear waste that was either scheduled 
to take place or has taken place. Can you just bring us up to 
speed on that? What is involved in these tests? What kind of 
schedule do you have for them? Is there some kind of system for 
double-checking the results from those tests?
    Mr. Diaz. We have conducted what is called one-quarter 
scale testing. The science and technology for such a test is 
sufficient to scale this one-quarter scale to full size. We 
have had one railroad cask built under these conditions. But I 
think 2 years ago precisely in the Senate, the Commission 
concurred that we were going to do full-scale testing, meaning 
that we were going to take a cask and actually in its full size 
we are going to conduct all the necessary testing to ensure 
that it will be protective of public health and safety, as it 
is used to transport spent fuel.
    We have not done the tests. They are scheduled. The 
Commission just approved the purchase of a full-scale rail 
cask. We have now published and we have received comments on 
the testing procedures. We expect that this will be done 
probably in the next 3 to 4 years.
    Senator Carper. Thank you.
    Thank you, Mr. Chairman.
    Senator Voinovich. Without objection, I would like to enter 
into the record the amendment to the Energy bill, S. 14, which 
was an amendment that was part of the bill that passed in 2003 
and to bring to the committee's attention that these very 
important amendments are in the Energy bill, which we have not 
passed. I think that the public should understand that this 
Energy bill, in addition to dealing with natural gas, oil, and 
so many other areas, including another issue that was before 
this committee, and that in terms of the reliability of 
standards that we need in order to avoid a black out as we had 
last year, are all in this Energy bill.
    If this Congress goes home without passing an Energy bill, 
we are doing a great disservice to the people of this country. 
So I just want to enter these into the record so that it 
appears why it is so important that we get that legislation 
passed.
    Without objection, so ordered.
    [The referenced document follows:]
    
[GRAPHIC] [TIFF OMITTED] 
    
    Senator Voinovich. One other thing, before I forget it.
    We had a big hearing here on the issue of the security of 
our nuclear facilities. I believe Senator Jeffords was the one 
who instigated that. As a result of that hearing, there were 
some questions asked, and you were kind enough to come and meet 
with us in closed session. I want to compliment Senator 
Jeffords because he, at that time, said that he thought it was 
a good idea.
    I want you to know that in the near future, after talking 
with the members of this committee, we may again ask you to 
come into a closed session to update us on where you are in 
terms of the security of those facilities from terrorist 
actions.
    Mr. McGaffigan. Mr. Chairman, if I could, I would make one 
comment on the legislation. In 1998, when Senator Inhofe had 
the first hearing, we also had not had a lot of legislation 
passed in many years. The Energy Policy Act of 1992 was the 
last significant piece of legislation that affected the NRC. 
Chairman Diaz just referred to one of its provisions.
    In the intervening 6 years, aside from Senator Inhofe's 
provision with regard to the fee base, we are still anxiously 
waiting for the legislation. There are a whole series of 
provisions in the Energy bill that we believe are 
noncontroversial. We appreciate both Houses' support in the 
safety, security, and budgeting area. We would dearly 
appreciate this being passed.
    Some provisions involve safety, some security, others 
budgeting matters, such as our ability to have fees for other 
Agencies. There are a whole host of provisions that you, 
Senator Inhofe, Senator Jeffords, and others have supported, 
which we would very much like to see enacted, if at all 
possible.
    Senator Voinovich. There is one other thing that I would 
like would be a memo from the Commission about the harm that is 
done to you with a continuing budget resolution. We have, in 
the last couple of years, had this continuing resolution. I do 
not think my colleagues in the Senate and the House of 
Representatives understand how negative and how bad that has 
been for our Agencies. We just kind of take it for granted. 
``Well, we were not able to get the job done, so we are going 
to have a continuing resolution.''
    But they do not understand what a terrible impact that has 
on your ability to plan and get things done in your respective 
Agencies. It is not only yours, it is right across the board. 
We do not talk about it enough. So I would like you to prepare 
something that maybe I can share with our colleagues and let 
them know why we need to get our appropriations passed on time 
around this place.
    Mr. Diaz. We will be pleased to do so.
    Senator Voinovich. Without objection, so ordered.
    [The referenced document follows.]
    
[GRAPHIC] [TIFF OMITTED] 
    
[GRAPHIC] [TIFF OMITTED] 
    
    Senator Voinovich. Senator Inhofe.
    Senator Inhofe. I think you ought to get it to him today.
    [Laughter.]
    Senator Inhofe. We talked about this back in 1998. We want 
action now. I have to say, Commissioner Diaz, I was 
disappointed in your answer to Senator Carper's question on 
what you see in the future. I cannot imagine with the serious, 
serious energy crisis that we have today that we would not be 
looking out there saying, ``Yes, we are going to have more.''
    I am looking at a chart right now--France, 77 percent; 
Ukraine, 44 percent; South Korea, 37 percent. I just cannot 
imagine that we would be looking in the future and not saying, 
``This is probably singularly the most available one that we 
can go to, to resolve this crisis.''
    It is a crisis right now. Finally, the prices have gone up 
to the point where people realize it is. We have held two 
hearings in our full committee on natural gas prices, on 
gasoline, and all this. We know we have to get out there and go 
after all forms of energy which means exploring in places we 
have not explored. Yesterday on the Senate floor I reminded the 
Senators that in my State of Oklahoma, which is a big State in 
terms of marginal production, that is 15 barrels a day or less.
    If we had all the marginal wells flowing today that have 
been closed in the last 10 years, it would produce more oil 
than we are currently importing from Saudi Arabia. Then you get 
into nuclear. I was surprised. I did not know about all these 
new tests coming up, Senator Carper. I just wonder why you need 
new tests. I can remember the old tests when they dropped a 
container a quarter of a mile on concrete and it is sustained 
it. It went through fire. They put in on the railroad tracks 
and a train coming along at a hundred miles an hour.
    We have progressed to the point where I hope we do not just 
keep replowing those fields over and over again. Then you look 
at some of the ways that some of the extreme environmentalist's 
community look at nuclear. It is kind of interesting that same 
Green Party that has shut down nuclear in Germany is 
encouraging it in France, and France is the beneficiary because 
they are selling the electricity or the power to Germany.
    I just hope that you become aggressive and recognize that 
we have a great need in this country to resolve our energy 
crisis, and nuclear has to be a major part of it. Are there any 
comments from any of the Commissioners?
    Mr. Diaz. Senator, we are aggressive in doing our role. My 
response is based on what the industry estimates their plan is, 
which is called ``2020.'' My response is based on what the 
Department of Energy, which is actually actively trying to 
develop nuclear power, indicates. The electrical capacity of 
the Nation is growing. Therefore, the 20 percent that nuclear 
power generates now, 15 years from now, will be less, and maybe 
will be 15 percent or 16 percent. The industry has proposed a 
plan to build additional capacity. The Commission is ready to 
do its role of licensing.
    Senator Inhofe. OK. That is the other thing I want to get 
before my time expires here. In 1999, Chairman Jackson said 
that the relicensing they are anticipating would take from 30 
months to 36 months.
    Mr. Diaz. We are down, sir, to about 25 months.
    Senator Inhofe. That is good. I like to hear that. But the 
concern is with the process slowed down on relicensing when you 
start preparing for Yucca Mountain. Can you keep the progress 
going?
    Mr. Diaz. We can keep the progress going. We have to manage 
our resources because the resources are limited. But we do not 
believe that there will be a significant impact on the 
relicensing process. We are going to manage it this year to 
about 12. We have said that we can manage eight per year. We 
are working with the industry to make sure they have a 
disciplined approach in providing us with the applications. So 
I do not think there is going to be any significant impact.
    Mr. Merrifield. In fact, Mr. Chairman, our staff had come 
to the Commission last year and said, ``We want to budget and 
be prepared to deal with ten license renewals a year.'' The 
Commission said that was not good enough. We wanted them to do 
12 a year. We recognize, as you do, we want to deal with this 
in a disciplined process, but deal with it in a timely way. I 
agree with the Chairman. We are going to make sure we do both.
    Senator Inhofe. Thank you. My time has expired.
    You talked about when the Chairman in his opening remarks 
referred to 60 percent of the employees are over 60. I thought 
you were describing the U.S. Senate at that time. I thought 
that we might be having some serious problems in the NRC if 
that is the case.
    [Laughter.]
    Senator Inhofe. Thank you, Mr. Chairman.
    Senator Voinovich. Senator Jeffords, I know that you wanted 
to have a statement made. Do you want to do that now or do you 
want to continue the questioning of these witnesses and perhaps 
give your statement before the second panel of witnesses are 
called up? I will let you decide that.
    Senator Jeffords. I think I would like to do that now if I 
can. I have another engagement I have to get to.
    Senator Voinovich. All right.

OPENING STATEMENT OF HON. JAMES M. JEFFORDS, U.S. SENATOR FROM 
                      THE STATE OF VERMONT

    Senator Jeffords. Thank you, Mr. Chairman. Today's hearing 
continues our ongoing oversight of the Nuclear Regulatory 
Commission. I believe this is the sixth oversight hearing the 
subcommittee has had in the last 7 years.
    Chairman Voinovich, you and Ranking Member Carper deserve 
credit for continuing to commitment to hold these hearings 
regularly.
    Today I want to discuss both the NRC's handling of extended 
power uprates and a recent incident involving missing pieces of 
fuel rods at the Vermont Yankee Nuclear Power Plant in my 
State. I appreciate that Chairman Diaz and Commissioner 
Merrifield have been willing to discuss my concerns about the 
recent events in Vermont Yankee with me directly.
    I also want to say to the Chairman and all the 
Commissioners that I am pleased that you are all here today.
    The mission of the Nuclear Regulatory Commission is one of 
the most vital missions carried on by the Federal Government.
    Regulating the Nation's civilian use of nuclear materials, 
ensuring adequate protection of public health and safety when 
these materials are used or disposed of, and protecting the 
environment are all critical.
    I want to make myself perfectly clear, and I know the 
Chairman and the Ranking Member of the subcommittee share my 
views, that the top priority for the NRC is safety. There is no 
greater issue than safety. I want the people of Vermont and 
across the country to be safe. It is NRC's job to guarantee 
that.
    As you are well aware, there has been serious problems at 
Vermont Yankee since this panel's last oversight hearing. 
Vermont Yankee operated by Entergy, discovered that two pieces 
of radioactive fuel rods were missing from the plant's storage 
facilities last month. Officials with Energy Nuclear have said 
that they could not find the two rods--one 7 inches and one 17 
inches long. Either is capable of quickly giving a lethal dose 
of radiation to an unshielded handler.
    The NRC has been involved in Vermont Yankee inspections 
using a remote control camera to see if they have misplaced the 
rods among the 2,787 spent fuel rods in the plant's spent fuel 
pool. The NRC is also working with the utility to review 
records to see if the two missing fuel rods from the plant are 
in the waste facilities at South Carolina or Washington.
    Company officials speculate that the rods may have been 
confused with low-level waste and shipped out to out-of-State 
storage sites. So far, efforts to locate the rods at the 
Vermont Yankee facility have failed. This is an outrageous and 
frightening situation for Vermont families. The Commission must 
commit its resources to ensure that the material is accounted 
for immediately.
    I stand ready to assist the NRC in any way possible to make 
sure that these materials are found and secured. But I note 
that this is the second incident of missing nuclear fuels at 
Northeast nuclear plants in 5 years. When the Millstone 
incident occurred, NRC said that fuel rods had never before 
gone missing in the history of the commercial nuclear plants in 
the United States.
    I know that the materials at the Vermont Yankee were found 
to be missing due, in part, to the new inspection procedures 
the NRC instituted after Millstone. The sad fact is that the 
fuel is again missing. I do not want missing fuel to become the 
norm. It is not enough to tell the public that we think it is 
likely that highly radioactive material went into storage.
    We must improve our nuclear materials accounting system and 
we must do so now. I want to know what the NRC is going to do 
to prevent this from ever happening again in Vermont Yankee or 
anywhere.
    Keeping with my view that the safety is job one at the NRC, 
I would also like to know what the NRC is doing to ensure that 
any boost in Vermont Yankee's power will be reviewed in a 
thorough manner. Entergy has asked the NRC to approve its 
proposal to boost the power from Vermont Yankee by 20 percent. 
As you know, the NRC must determine whether or not such an 
extended power uprate will jeopardize the plant's ability to 
operate safely.
    I expect the NRC to explain, design, and conduct a review 
that will allow Vermonters to have confidence when the uprate 
is approved for Vermont Yankee. In the long term, I am pleased 
that the NRC agreed with Senator Leahy and my request to hold a 
public meeting in Vermont in March to explain the uprate review 
process.
    Many constituents have told me that this was a helpful 
meeting, but more needs to be done to inform and assure 
Vermonters. The review of the Vermont Yankee uprate will be the 
first time that the NRC will conduct such a review using the 
new extended power rate guidelines issued in December 2003.
    I am also pleased that the NRC has agreed to conduct a 
pilot inspection and collection of additional information as 
requested by the Vermont Public Service Board. The purpose of 
this additional inspection will be to collect data about the 
plant's operations under the proposed boosted power conduction.
    This is the information Vermonters want. I am pleased that 
my State will be doing a service to the country as they work 
with the NRC through the use of the new guidelines and 
implementation of the new pilot inspection program.
    The NRC has an opportunity to assure this subcommittee that 
they will make their new site guidelines and inspections work, 
that they will implement them in a thoroughly transparent way, 
and that they will strive to address the concerns of the 
public.
    If we are going to be serious about protecting our 
environment while providing safe, reliable, and affordable 
electricity for all Americans, we need to increase our use of 
renewables, improve how to burn fossil fuels, promote energy 
efficiency, and make sure that nuclear plants operate well and 
safely.
    Thank you, Chairman Diaz and the rest of the Commissioners. 
I look forward to your response.
    Thank you, Mr. Chairman.
    Senator Reid. Mr. Chairman?
    Senator Voinovich. Senator Reid?
    Senator Reid. I apologize to you and the Ranking Member for 
being late. I have a relatively short statement I would like to 
give.
    Senator Voinovich. Without objection, certainly.

  OPENING STATEMENT OF HON. HARRY REID, U.S. SENATOR FROM THE 
                        STATE OF NEVADA

    Senator Reid. Thank you very much.
    First of all, let me say to Chairman Diaz, Commissioner 
McGaffigan, and Commissioner Merrifield, I think you have one 
of the most responsible jobs we have in our entire Government. 
There is no way that I can adequately portray the importance, I 
think, of the work that you have to do. You have such a long 
list of critical duties. All of these duties have been made 
more important as a result of what happened on 9/11. Of course, 
we know you license, inspect, and oversee nuclear facilities. 
This is done to assure their safety and make sure that the 
operations go well at overseas decommissioning of facilities 
and enforce the laws that we write in conjunction with the 
President.
    The NRC cannot perform these critical functions properly, 
though, when it is not operating with its full compliment of 
five Commissioners. But that is the situation we have today. 
The NRC is operating with only three Commissioners.
    For example, the distinguished Chair of the full committee, 
Senator Inhofe, my friend, indicated earlier today that he 
thinks that there has been enough testing done on casks. I 
think if the Commission goes forward on the information, 
scientific in nature that we now have on these casks, it would 
be a terrible disservice, not only to our country, but to the 
world.
    In February, the President sent to the Senate a member of 
my staff to fill one of the two vacancies that now exist with 
this very short-bodied Nuclear Regulatory Commission. The 
President's willingness to do this says more about Dr. Jaczko's 
qualifications than any testimonials that I could offer on his 
behalf. He has met with every member of this committee that has 
wanted to discuss his experience, his background, and his 
views. The committee's view of that role of the NRC has also 
been something that he has discussed with Senators I thank my 
colleagues for taking this time to meet with Dr. Jaczko.
    But despite these meetings and the fact that several other 
nominees have had hearings and have been marked up by this 
committee, his nomination has languished. While I would like to 
fill the remaining fifth slot at the NRC, there is simply is a 
nominee with clear paperwork and other items in order to do 
that. In that way, we could have a Democrat and a Republican.
    But I do not think that waiting is an option. The President 
of the United States felt the same way. I have pledged to work 
against the committee completing other business here on the 
floor until this nominee gets a markup. I have served on this 
committee for 18 years now, and have done so because I really 
like the work on this committee. I have had opportunities to go 
elsewhere, but I like what we do. I like our jurisdiction.
    I do not take the action of blocking the committee's other 
business lightly. But I do so here because the Commission is 
charged with ensuring the safety of the Nation's nuclear power 
plants. That is very important, as I have already indicated. I 
do not think you can do your job when you do not have the 
adequate staff.
    I believe not having a hearing is abdication of this 
committee's duty. At least one of the three Commissioners who 
has already testified before this committee to date, 
Commissioner McGaffigan, agrees with me. I think the other two 
would also acknowledge that it would be better if you had a 
full complement of Commissioners. In 2003, Commissioner 
McGaffigan commented, ``I personally do not like vacancies. I 
think we would best when there are five.''
    I acknowledge that. I would hope that my colleagues here on 
the subcommittee would do whatever they could to get this 
committee to move forward and put Dr. Greg Jaczko on the Senate 
floor. Then we will take whatever chances we have there. But to 
hold this up in committee is not going to be good for the work 
of this committee.
    Again, Chairman Voinovich and Ranking Member Carper, I 
appreciate very much your allowing me to speak, me coming in 
late and leaving early. I appreciate it very much. The work 
that is being done here, the oversight of this subcommittee, is 
extremely important.
    Senator Voinovich. Thank you, Senator Reid. I, too, am 
concerned about the lack of two individuals on the committee.
    Perhaps we can spend some time working on it. But I would 
like to remind you from what my staff tells me that your side 
of the aisle blocked a hearing on Admiral Grossenbacher for 7 
months.
    Senator Reid. That is really not quite true. They gave you 
some bad information, Senator Voinovich. What happened is that 
there was an agreement that we would do both of these together. 
By the time the togetherness came, he had found another job, 
which was really too bad, because I thought he had some 
extremely good qualifications to serve on this Commission. I 
think these gentlemen here would have been better for having 
had the Admiral on this Nuclear Regulatory Commission.
    I would also say this, Senator Voinovich. Up here there is 
a lot of blame to go around. ``He did it; I did it; you did 
it.'' But the fact of the matter is that we now have a 
Commission and we have a man who has a Ph.D., in physics who 
has had experienced administratively. He has had it in the 
Legislative Branch of Government. He would do an outstanding 
job working with these three gentlemen.
    I have said a long time ago, but the Admiral withdrew not 
because of anything I did, I wish the Administration would come 
forward with someone else. For reasons I do not understand they 
have not. I am willing to work any way that I can to make sure 
that there are five and not four.
    Thank you very much.
    Senator Voinovich. Senator Carper.
    Senator Carper. I have a story that relates to the Admiral 
before you got here, Senator Reid, I shared with my colleagues 
that every couple of years I take a bunch of Boy Scouts down to 
the Norfolk Naval Station to spend a weekend and sleep in the 
barracks, eat in the galleys, and climb all over the 
submarines, ships, and aircraft carriers.
    You and I are runners. We like to exercise. One morning, 2 
years ago when I was down there, I got up real early and went 
out and ran on a Sunday morning. As I was running around the 
base, it was just about daybreak, I ran by this one house.
    There are some beautiful homes on the Norfolk Naval Station 
where some of the senior officers live. I went by this one home 
and I looked. There was a flag in front of the home. It looked 
just like the Delaware flag. Just like it. It was about half 
dark. I stopped my run. I went over there and I held the flag 
in my hands. By golly, it was the Delaware flag.
    It turned out that the house was the Delaware House. They 
have like 20 or 25 houses on bases that are named after various 
States. The person who lives in the Delaware House is the head 
of U.S. Submarine Forces around the world. That person was the 
Admiral. He lived there at the time.
    We went back after breakfast that Sunday morning and 
knocked on his door and got him up to let him know that there 
were some people there from Delaware. Later on he came back for 
a hearing to be nominated. He seemed like a good guy. I am 
sorry it did not work out.
    Senator Reid. Yes, he is the best. I would just say that 
anytime we talk about submarines, my being from Searchlight, 
NV, I hope you understand that we are responsible for the 
submarines communicating with each around the world. We have a 
huge Lorenz Station there in Searchlight. Those very 
interesting lights are flashing at night all the time. They 
have all kinds of ghost stories and everything. But the Lorenz 
Station makes our submarine fleet as successful as it, and that 
is in Searchlight. Well, a little out of Searchlight.
    Senator Carper. Would that be the suburbs of Searchlight?
    Senator Reid. Yes.
    [Laughter.]
    Senator Voinovich. We will be continuing with the 
questioning.
    NRC's concern about safety culture was one of the last 
issues resolved before Davis-Besse was allowed to restart. As a 
condition of the restart, you required FirstEnergy to conduct 
an independent assessment of the safety culture at Davis-Besse 
annually for the next 5 years. I remember that part of the 
reason why you did not do it was that you came in and you said, 
``The safety culture has not changed. Get it right.'' You came 
back. It may have been three times that you did that before you 
let it open up.
    Additionally, NRC's Advisory Committee on Reactor 
Safeguards recommended that the NRC pursue the development of a 
methodology for assessing safety culture. This assessment is 
performed widely in other countries.
    With all that being said, why do you disagree with everyone 
that you should put in place a regulation to monitor safety 
culture? Why do we not have a regulation in terms of safety 
culture? It seems to me that if the internal people that are 
running these operations, if there is not a high safety 
culture, that is something that we should be very concerned 
about it. You were concerned about it.
    The issue is: Why are you not doing something about it?
    Why have you looked at the GAO report and said, ``We are 
not going to do that.''?
    Mr. Diaz. Sir, obviously the Commission is very concerned 
with the safety culture at each and every one of our 
facilities. However, we believe that the safety culture as a 
whole becomes sometimes ambiguous. We are not in the business 
of managing these utilities or these reactors.
    Senator Voinovich. The question I have is this. Why do the 
Europeans do it? They have a lot of nuclear facilities in 
Europe. It is my understanding that they do go in and they do 
monitor the safety culture. You are going to be going into 
Davis-Besse for the next 5 years. You certainly are going to 
have to have some standard that you used to assess the safety 
culture during that period.
    You had a standard to use because you said you were not 
going to let them open because they did not have the safety 
culture. Why do not we make that applicable to all the 
facilities?
    Mr. Diaz. Because it will get into an area that the 
Commission believes that we should not be, which in managing 
the facility.
    Senator Voinovich. But you are doing it at Davis-Besse. You 
are going to go in there for the next 5 years.
    Mr. Diaz. But what we are going to do is that we are going 
to assess what the safety culture is and then we are going to 
assess how the management of the facility deals with the safety 
issues. That is our responsibility. We will deal with how they 
manage safety. We have indicators. We have many ways of 
actually addressing that issue. The safety culture issue 
becomes imbedded inside of the relationships between the 
employees and the management. We do not believe that is the 
role of the Commission.
    Senator Voinovich. We have another 102 of these facilities 
around the country. The Commission does not have, as part of 
their regulatory responsibilities, some appraisal to come back? 
Somebody says, ``Hey, we talked to some of the employees. It 
appears that they are not really that cognizant of safety. They 
are not concerned about it.''
    Mr. Merrifield. We are concerned with safety.
    Mr. McGaffigan. Mr. Chairman, we do deal with safety 
culture issues as they arise, but they tend to manifest 
themselves somewhere else in our system. We can get our hands 
around it that way. We have an allegations process. We take 
allegations that we get from individuals at nuclear power 
plants very, very seriously.
    Senator Voinovich. Do you have a survey of employees about 
certain questions you ask about safety?
    Mr. McGaffigan. We do not ourselves survey, but if we 
detect that there is a problem at a facility--and we have done 
this on more than one occasion--we require the licensee to do 
surveys. I believe we did this at South Texas.
    Senator Voinovich. I have to tell you there is a 
disagreement here. I think you should do it. I want to talk to 
you about it. I do not think you are giving a good enough 
reason. If they do it in Europe, you are doing it at Davis-
Besse, you ought to have the same kind of thing. An independent 
survey. You might have disgruntled employees. But there are 
certain questions that you can ask. There are certain 
observations that you can make in terms of whether or not you 
have that kind of safety consciousness there. That is very 
important because it deals with the internal people that are 
there every day. If they do not have safety utmost in their 
mind, they are not going to get the job done.
    Mr. Merrifield. Senator, there is something that we do that 
some of the Europeans do not. We have onsite inspectors every 
day who talk to plant personnel in the control room, in the 
engineering spaces, to line staffs, the mechanics who are doing 
the piping work--we have an opportunity first hand----
    Senator Voinovich. You did not find it out at Davis-Besse. 
You had somebody there. That is the next question I am asking 
is about the communication. GAO and the Inspector General 
identified communications as one of the major factors that led 
to the NRC not to prevent the Davis-Besse incident. Perhaps 
most concerning is the statement in the GAO report, ``The 
Resident Inspector at the Davis-Besse Plant never saw generic 
bulletins and letters issued by NRC on boric acid and 
corrosion, although only a few are generated each year.''
    That is communication. So you had somebody on board and 
they did not know that the safety culture there was not there 
because of some reason that it was not part of their job. 
Second of all, you get into the issue of communications.
    Mr. Diaz. We do agree that communications were faulty. We 
have taken every necessary step to address the issue of 
communications. I believe that it was more than communications. 
It was lack of the technical know-how that this issue could 
really result in a significant corrosion of the head.
    We have addressed both the communication issues and the 
technical issues and how to deal with them.
    Senator Voinovich. Do you have people on board on all 103 
other facilities?
    Mr. Diaz. Yes, sir.
    Mr. Merrifield. Yes, sir.
    Mr. McGaffigan. Yes, sir.
    Senator Voinovich. And probably the company pays for it, I 
would suspect.
    Mr. Merrifield. Yes, they do.
    Mr. Diaz. Through fees.
    Senator Voinovich. I have to tell you something. If I were 
running a show, those would be the most important people that I 
would have in my organization. They are onsite. I would have 
them really trained. I would have them being watchdogs, to know 
the technical aspects of it, to be able to look at the 
management, to look at the attitudes of the employees, and to 
be able to get back to you. How much training do you give these 
people?
    Mr. Diaz. We totally agree. We give significant training, 
but if you look at the directives and what the staff has been 
asked to do during the last year and a half, we are going to 
increase the training, both the technical capabilities and the 
communication capabilities.
    I believe we have been responsive to the issues. I assure 
you that we have taken this very seriously. Corrections are 
being put in place.
    Senator Voinovich. I am going to tell you. I am going to 
visit a couple of facilities and I am going to check up for 
myself. I want to know what you are doing on those individuals. 
I would like some further discourse with you about this issue 
of safety. I think the attitude of people, in terms of safety, 
is paramount. They are the ones that are doing the work.
    Mr. Diaz. Absolutely. I will work on the opportunity 
Senator.
    Mr. Merrifield. Senator, I was going to say that obviously 
you have gotten into some areas we can give additional detail 
through your staff, through briefings. Obviously this is 
something you have a great interest in. We will make sure that 
we get you the information.
    Senator Voinovich. Without objection, so ordered.
    Mr. McGaffigan. Mr. Chairman, I would just mention that we 
have been following Resident Inspector demographics. You are 
interested in our demographics as a whole Agency. But we 
require an annual report from our staff on Resident Inspector 
demographics. We discuss Resident Inspector demographics at an 
annual meeting that we have with the staff. We have had 
problems. Clearly Davis-Besse was our worst hour. We have 
challenged our regional administrators to bring in additional 
people. In some instances, they are double encumbering these 
positions now so that you will have a trainee there while the 
person who is rotating out is still there.
    We are dedicated to having at least two individuals at 
every site. At some sites like Indian Point we have a lot more, 
but at least two individuals. We have three, I believe, at the 
moment, at Davis-Besse. We have turnover. About the time that 
Chairman Diaz and I came on the Commission, we mandated instead 
of a 5-year rotation for Residents, that it be a 7-year 
rotation. Well, we are coming up on the 7th year. At the 
moment, there is a tremendous amount of movement from one site 
to another.
    We do that because we do not want people to homestead and 
get too comfortable. We want new eyes coming into the site and 
a new perspective, a different engineering background, perhaps, 
so they will see different things. But we have a lot of 
turnover at the moment in our Resident Inspector corps. They 
move from one site to another. But we have been monitoring it 
and we have been challenging our regional administrators to do 
a good job in managing it. We pay attention to it. We have all 
the data we can share with your staff.
    Senator Voinovich. Thank you.
    Senator Jeffords.
    Senator Jeffords. Thank you, Mr. Chairman.
    I have several questions about our little problem in 
Vermont. I would like to try a couple here and then will submit 
others in writing.
    At the briefing in preparation for this hearing, your staff 
indicated that the remote camera search of the spent fuel pool 
in Vermont Yankee is complete and the missing fuel rod pieces 
have not been found. This information was repeated in a May 19, 
2004 story, in the Rutland Herald.
    Is it the case that the search pool is complete? What are 
the next steps that will be taken to locate the missing fuel?
    Mr. Diaz. The licensee, with oversight from the NRC, has 
completed the search of the spent fuel pool. They have not 
found the missing fragments of the spent fuel. That does not 
mean that the issue is closed. We will continue to work with 
the licensee to ascertain whether these pieces of fuel were 
shipped outside of the facility with other waste. We are going 
to try to make sure that we find out where it ended. We are not 
sure that we can really find these pieces. I am going to be 
perfectly honest with you.
    In the case of Millstone, we conducted with the licensee a 
major year-and-a-half process. The possibility is that this was 
packaged with other radioactive waste and it did not alarm. 
Therefore, it did not show up as a significantly radioactive 
piece. It ended up probably in one of the low--level waste 
disposal sites.
    Mr. Merrifield. But just to clarify, too, we are still 
doing our investigation. But as we found with Millstone, it is 
plausible that those activities may be a legacy issue for us 
and the licensee and may have been activities that dated back 
to the early 1980's.
    Mr. Diaz. It was a 1980 piece of fuel; yes.
    Senator Jeffords. On May 4, 2004, NRC responded to the 
Vermont Public Service Board's request for additional 
independent reviews of Vermont Yankee. Your letter stated that 
``A pilot engineering assessment would be conducted. The 
assessment team will be comprised of NRC staff, State 
officials, and at least two independent contractors.''
    What will the NRC do to ensure that the independence of the 
independent contractors? What will be the process for selecting 
them? What qualifications will they need to have?
    Mr. Diaz. Our staff has very defined procedures for 
selecting contractors. This is a new type of risk-informed 
inspection that we believe that would become a mainstay of the 
way we do things with facilities. As an engineering assessment, 
we are going to ensure that there is absolutely no connection 
between the contractors or even the staff that is going to be 
dedicated to this activity. They will have a certain amount of 
separation from the Vermont facility.
    We, of course, are an independent Agency. We are going to 
ensure that this work is done independently. You can have our 
complete assurances of that.
    Senator Jeffords. I have additional questions, Mr. Chairman 
which I will submit to you in writing for answers in writing.
    Thank you, Mr. Chairman.
    Senator Voinovich. Without objection, so ordered. Thank 
you, Senator Jeffords.
    Senator Clinton.

OPENING STATEMENT OF HON. HILLARY RODHAM CLINTON, U.S. SENATOR 
                   FROM THE STATE OF NEW YORK

    Senator Clinton. Thank you, Mr. Chairman. Mr. Chairman I 
thank you for holding this hearing. I appreciate your statement 
with respect to Davis-Besse. I would like to associate myself 
with the concerns in this GAO report. It is clearly a finding 
that we need additional resources and support for the safety 
mission that the NRC is responsible for implementing.
    I am concerned, as the Commissioners know, about the 
overall safety of these aging plants and, in particular, the 
situation at Indian Point. In March of this year the NRC 
upgraded the Indian Point safety rating to green. It is my 
understanding that this change in rating reflected work that 
had been done to conduct training, modify electrical systems, 
fix a firewall, and take other steps to improve safety. These 
are all welcome steps.
    But I am concerned that one consequence of this green 
rating is less frequent inspections by the NRC. I am concerned 
for three reasons: First, NRC's year-end inspection report for 
Indian Point lists a range of tasks that have yet to be done, 
including a repair backlog and improving staff performance.
    Second, Indian Point is unique among nuclear facilities in 
that about 20 million people live within a 50-mile radius of 
the plant. Third, the documented oversight failures by the NRC 
at Davis-Besse call into question the effectiveness of the 
NRC's business-as-usual oversight.
    My question is this: How does the NRC justify less frequent 
inspections at Indian Point? Would you not agree that the 
unique setting, and certainly the public concern about Indian 
Point argue for continued NRC oversight at the highest possible 
levels?
    Mr. Diaz. Senator, we are continuing to increase oversight 
at Indian Point. You are correct that we found that the 
licensee has made progress in addressing a series of issues. 
That does not mean that we are satisfied or that we are going 
to actually do much less than what is required.
    We intend to maintain oversight at a level that is 
commensurate to the findings that we have. We believe that we 
have sufficient oversight to maintain the facility in the safe 
condition that it should be. We have an extra inspector. 
Yesterday I was at the plant. I was assured by the Regional 
Administrator that we are maintaining the level of oversight 
that is commensurate with the needs of Indian Point.
    Mr. McGaffigan. I might add that our Regional 
Administrator, Mr. Miller, has asked for a deviation from our 
normal oversight process for heightened oversight at Indian 
Point. Similarly, our Regional Administrator in Region IV has 
asked for continued maintenance of heightened oversight at the 
Cooper Station in Nebraska.
    Both of those plants got themselves into Column 4 of our 
so-called ``action matrix'' which is the multiple degraded 
cornerstone column. In both cases, our Regional Administrators 
are saying, ``We are going to be extra careful and do extra 
inspections until such time as we are really satisfied that 
everything is OK.''
    They are in Column 2 of our action matrix at the moment, 
but they are being treated as if they are in a higher column. 
Mr. Miller has maintained the inspection resources, I believe, 
at Indian Point, that are unprecedented at any other plant.
    Mr. Diaz. Absolutely. So it is recognizing that the 
licensee has made progress and it should be so indicated. But 
we are continuing to increase the oversight at Indian Point.
    Senator Clinton. Thank you. As you know, the Federal 
Emergency Management Agency is scheduled to conduct a drill at 
Indian Point during the week of June 7th to gauge the 
effectiveness of the emergency plans for the surrounding 
counties. This whole issue of evacuation in the event of an 
emergency has been one of my highest priorities.
    Now I know that FEMA has the primary responsibility to 
evaluate emergency planning at nuclear power plants, but 
ultimately an effective emergency plan is a condition of an 
operating license from the Nuclear Regulatory Commission. It 
just impractical and not believable that a 10-mile radius, as 
currently envisioned in the emergency plan, in an area as 
densely populated as metro New York City, represents a fair and 
realistic emergency evaluation plan.
    Let me ask you this. To what extent is the NRC involved in 
the planning of the June 7th drill? Would it not make sense to 
be realistic and broaden the geographic scope of the exercise 
to get a clearer idea of what our real challenges are?
    Mr. Diaz. Senator, the NRC is directly, intensely, and 
aggressively participating in the issue of the exercise. The 
fact is that was the reason for my visit yesterday. It was 
exclusively dedicated to the exercise. I did this at the plant, 
but it was all emergency planning.
    I believe that from yesterday we had very fruitful 
meetings, including meeting with the county executives. Out of 
the meeting, even a more realistic plan that we have devised is 
now taking place.
    Senator Clinton. Good.
    Mr. Diaz. We actually addressed some of the issues of 
concern directly with those who have the responsibility of 
carrying out those responsibilities. We did not resolve all the 
issues, as you can imagine. We still have some questions to 
answer. But I believe we went a long way toward planning and 
eventually executing an exercise that is realistic. I believe 
the exercise calls for a series of measures that will be 
testing the capability of the counties to evacuate people. I 
believe that many of those things are now being put in a better 
perspective. I really appreciate the opportunity to have been 
there and to listen directly to what their concerns were. They 
are being addressed.
    Senator Clinton. Thank you.
    Thank you, Mr. Chairman.
    Senator Voinovich. Senator Carper, you have one last round, 
and then we are going to go to the next panel.
    Senator Carper. Thank you, Mr. Chairman.
    I think it was last year it was revealed that a small 
amount of a substance called tritium was discovered in the 
ground water either next to or beneath the ground on part of 
the Salem One Nuclear Reactor. Over the last year or so, 
efforts have been underway to try to understand and to respond 
to the contamination that had been ongoing.
    I have a couple of questions. Let me just sort of run 
through them and then we can go back and pick them up, if you 
will. What is the role of the NRC in a case like this? Could we 
start when the reactor's owner, which is PSEG, notified your 
Agency of the elevated readings in the ground water. What steps 
does the NRC take in order to protect workers and to protect 
public safety? How do you go about identifying the scope of the 
problem? How do you ensure that the response plan is adequate? 
If we could start there, that would be helpful.
    Mr. Diaz. Sure. The NRC is directly involved, not only in 
the oversight of the protection of the workers and of the 
people, but in any release of radioactivity from the side 
boundary. That is one of our major areas of responsibilities.
    In the case of tritium, tritium is not a very hazardous 
radioactive material. If we put them on a scale, it probably 
comes, I would call, at the very bottom. However, that does not 
mean that we are not concerned with it. We, of course, do 
things in a risk-informed manner. Tritium is a very insidious 
material. You think you have got it, and it will escape. It 
mixes with water. It mixes with steam. It really has many ways 
of flowing where it should not be.
    In the case of the Salem Hope Creek, tritium was found 
outside leaking from the spent fuel pool in a very small 
concentration. We have been working with the licensee. We have 
ascertained that there has been no further contamination of the 
water which is our main concern. The dilutions are still 
relatively low, but we are trying to make sure that the 
licensee addresses why this escaped. They think they know where 
the issue is. It is a liner error of the spent fuel pool.
    We have taken this issue very seriously and continue to 
work with them to make sure the issue is addressed and 
satisfied.
    Mr. Merrifield. Senator, just to put a little of a boundary 
around this, this leak was identified as a result of a well 
that is very close in proximity to the plant. The water that 
had come from the pool containing the tritium has not gone 
across the boundaries of the plant property. It does not 
present any danger to the wildlife or people who live around 
the plant.
    So we are very much on top of it in terms of monitoring 
that release. We are working very closely with the State of New 
Jersey to make sure that we monitor that and have the licensee 
deal with it in the appropriate way.
    Senator Carper. What is the responsibility, if you will, of 
the owner of the plant, PSEG in this particular case? Do you 
believe that they have met their responsibilities to the NRC 
and to the community?
    Mr. Diaz. Yes, presently they are meeting those 
responsibilities in this particular operation.
    Senator Carper. The second question also relates to the 
Salem Hope Creek Plant. It deals with the culture of safety 
that exists at the plant. I understand that over the past year 
or so that the NRC has been engaged in a special review of the 
safety culture of the Salem Hope Creek reactors in New Jersey.
    This is a couple of plants that are about 15 miles away 
from my house on the other side of the Delaware River. You can 
see it on a pretty clear day. Apparently this review that was 
launched in response to questions about the ability of the 
plant management and the operators to maintain an environment 
where questions, including those about the operation and the 
safety of the place could be freely raised by the employees and 
would be fully addressed by the management.
    I just want to know what is the status of this review by 
the NRC. Are you satisfied that the plant operator, PSEG, has 
addressed any areas that need improvement? Are there any 
additional steps that need to be required of the plant and the 
plant operator?
    Finally, is the safety culture a concern at other reactors 
and at other plants?
    Mr. Diaz. Safety culture is an issue that we gauge from my 
viewpoint from how the managers of the plant manage safety.
    In the case of the Salem Hope Creek, our Regional 
Administrator saw signs that there could be a degradation of 
the safety culture. He aggressively addressed it even before 
there were really any major issues that were identified. He 
used the processes that we have to call it to the attention of 
the licensees. The licensees have been responding.
    We are not satisfied yet that everything that needs to be 
done has been done, but a process has begun. We believe they 
are doing the right thing. We are going to be watching 
carefully to make sure that they actually take the entire 
matter not only very seriously, but take it into a completion 
that we can say, ``Yes, you have satisfied what we wanted you 
to do.'' It is ongoing.
    Mr. Merrifield. One thing, also, both Senator Carper and 
Mr. Chairman, that we did not mention when we were answering 
the Chairman's questions on safety culture. We, in fact, are 
sponsoring as an Agency a workshop in which we bring licensees 
in to meet with our staff to try to identify best practices in 
safety culture. So we do have a direct engagement on this issue 
in terms of trying to enhance and identify better ways for 
licensees to enhance the culture of their own plants.
    The Institute for Nuclear Power Operations, which is a 
separate industry-funded organization in Atlanta has 300 or 400 
people who work for it. They have a separate initiative 
underway in which they are intensively looking at this very 
same issue, again to try to enhance the overall level of the 
safety culture at the plants. We are collaborating with them to 
the extent that they are keeping us informed of their 
activities. We are very interested in the work that they are 
doing. We want to assess where they are in relation to where we 
are.
    I did want to fill that in to give you a little bit better 
understanding that we do take the issue of safety culture quite 
seriously. We recognize what other of our international 
partners are doing. We want to make sure that we are doing it 
in the right way for the licensees that we oversee.
    Mr. Diaz. If I may add, on the issue of Davis-Besse, on 
safety culture, the licensee did not meet its own standards of 
safety culture. We do hold them accountable for those 
standards. We want every licensee to have very high standards.
    Senator Voinovich. You should set the standards for them.
    Mr. Diaz. Well, that is an issue that is a very difficult 
issue. Again, we might be getting into the prerogative of the 
management of this facility. The Commission has been discussing 
this for many years. We actually do much more than our European 
colleagues in the area of oversight, much more intrusive, much 
more in there, much more looking over what happened.
    I do not think there is a match in the world for the way 
that the NRC conducts oversight of nuclear facilities anywhere. 
I will stand by that statement.
    Mr. McGaffigan. Mr. Chairman, I might just add that you are 
citing the European example. The main European example that I 
am aware of is that our UK counterparts have a license 
condition that they have imposed on their reactors that 
basically gets the regulator, the Nuclear Installations 
Directorate involved in any staff change at the plant. So if 
you want to decrease the number of people in Department ``X'' 
by ``y,'' you have to come in to the regulator and talk to him 
about it.
    I remember Chairman Inhofe got wind of that a few hearings 
ago and asked us about whether we thought that that was our 
role. We said very firmly that that was not our role. I am not 
sure that gets at safety culture.
    Senator Voinovich. The thing is that is not the role I am 
asking you to make.
    Mr. McGaffigan. No, no; I understand. But that is a 
European precedent. The European precedent that is often--times 
cited is the UK license condition that gets them involved in 
essentially labor management issues and having a regulator 
trying to determine what number of people are needed in each 
department.
    We have respectfully said no to that. There are other 
approaches to safety culture. I think our approach, which is 
when we find a problem, whether it is at Hope Creek Salem, or 
South Texas, or Davis-Besse, we then ask the licensee to do a 
lot of the surveying that you do. But do you do that for all 
103 plants where, for the most part, we do not have any other 
symptom coming up? That could be quite burdensome. Then in 
judging the results, it gets to be very, very subjective. So 
that has been the problem that we have faced.
    Mr. Merrifield. Mr. Chairman, if I may, I would add two 
quick things. When I worked as a counsel on this committee, it 
was quite popular to look at what are the Europeans doing 
versus what we are doing. I think those translations are not 
always made correctly. There is an issue of what does the 
regulation or law look like on paper versus where are you in 
terms of the enforcement of those regulations. There are quite 
stark differences between the Europeans and between this 
country.
    Senator Voinovich. In the GAO report, ``The International 
Atomic Energy and its member nations have developed guidance 
and procedures for addressing safety culture at nuclear power 
plants. Today, several countries, such as Brazil, Canada, 
Finland, Sweden, and the United Kingdom assess plant safety 
culture or licensee's own assessments of their safety 
culture.''
    I am just saying that we are going to have to spend a 
little more time on this issue of safety. I want to know just 
exactly what you are doing. Why did not the person who was on 
board at Davis-Besse understand that they did not have a 
culture of safety in the place? Where were the standards? Do 
you negotiate the standards?
    There are a lot of questions here in terms of management. I 
am not asking you to micro-manage these outfits. We should set 
some standards that are agreed upon, and then make sure that 
they are being upheld.
    Mr. Merrifield. Mr. Chairman, one of the very important 
things that we do as an Agency is benchmark. We meet 
collaboratively with our international partners and try to 
identify best practices. Members of the Commission do as well. 
I have been to most of the major European partners, as have 
others. These are most of our counterparts internationally.
    I could tell you in private my observations about some of 
them. I think we do a pretty damn good job in this country. I 
am not going to back away from that statement. Now, the heart 
of your matter is that we missed an issue of safety culture at 
Davis-Besse. It led to an identifiable problem. I think there 
is complete agreement with you that we need to get to the heart 
of the issue.
    Senator Voinovich. Well, there is the other facility that 
Senator Carper mentioned where they missed a safety culture.
    Mr. McGaffigan. Mr. Chairman, one of the issues 
Commissioner Merrifield mentioned is INPO's involvement. INPO 
has a lot more credibility, frankly, than Federal bureaucrats 
do going in and talking frankly with their industry peers, ``We 
do not like your incentive system for your executives here.''
    But to legislate a rule that says that you will have a 
safety gate for executive incentive payments is another issue. 
The South Texas project last year did absolutely wonderfully in 
dealing with a problem that showed up in March of last year. We 
have commended them for it. The industry has commended them for 
it. They took an absolutely first-rate approach to dealing with 
the issue.
    But their incentive structure, they once told me, is that 
they have a safety gate in their executive incentives. Should 
that be a rule that you first have to meet all your safety 
goals before you get paid other incentive payments?
    Senator Voinovich. You let them decide how they achieve it. 
If they want to put a safety rule in, and that is the way they 
get high performance evaluation of their people to meet the 
standard, if they want to do it that way, fine. They can do it 
anyway they want to. The main thing is to make sure that we 
have the highest standards of safety and the people working in 
the plant get it.
    Mr. McGaffigan. We agree. That is the benchmarking that 
Commissioner Merrifield talks about. We think we are going to 
get to a point where people adopt very good practices in areas 
that are very hard to regulate through the processes that the 
industry itself regulates.
    I think this industry, through the Institute of Nuclear 
Power Operations established after Three Mile Island, is 
absolutely committed to what the late Bill Lee, the Duke 
executive said, ``They are only as good as the weakest 
member.'' They are trying to learn the lessons of Davis-Besse 
every bit as much as we are trying to learn the lessons of 
Davis-Besse. Davis-Besse was on their good guy list, too, just 
like they were on ours. They are committed to not letting that 
happen again. They are looking at these issues that executives 
peer reviewing each other----
    Senator Voinovich. I want to know if you are dedicated to 
making sure that it does not happen again.
    Mr. Diaz. Of course, we are.
    Mr. Merrifield. Yes, sir; yes, sir.
    Senator Voinovich. You are a regulatory Agency.
    Mr. McGaffigan. Yes, sir. And we are going to do everything 
that we can do within the bounds of what a Federal regulator 
should do to make sure that Davis-Besse do not happen. We are 
absolutely dedicated to that. We wake up every day. Our staff 
wakes up every day dedicated to that purpose.
    Mr. Merrifield. Mr. Chairman, you have shown great 
leadership in holding our feet to the fire on the safety issues 
arising from Davis-Besse. We fully appreciate and recognize the 
concern that you have and the concerns raised by GAO. The 
issues of the safety culture are tough issues. They are not 
easily discussed or resolved.
    I think that you are pointing out that we need to have 
further dialog with you and others on this matter. I think that 
is a reasonable request and one that we can certainly say that 
we will continue in the future.
    Mr. Diaz. But I would like to reassure you that we are 
totally dedicated to making sure that every aspect of the 
safety of these plants, including how the managers manage 
safety culture, is not only important, but we are committed to 
making sure that happens.
    Senator Voinovich. We are going to talk about setting 
standards. If you will not do it, I will get legislation passed 
to get it done. But we are going to talk about it. I would 
rather do by regulation and by working with the industry. But 
this is a big issue. I have run some operations. It is the 
mentality of the people who work there that make the 
difference. If they slough it off and they do not care about 
it, and it is not high on the list--performance evaluations are 
very important. That is one of the ways that you get people's 
attention.
    They ought not to be mandated, but if I were a business and 
safety was very important, I would give that some consideration 
in terms of performance evaluations so everybody knew this was 
important and if you did not do your job in that area, then you 
are not doing your job.
    Mr. McGaffigan. Sir, I could not agree with you more that 
that is exactly what we would like all of our licensees to do--
to make sure that the incentive system puts safety first. I do 
not think that necessarily was the case at Davis-Besse. I think 
the industry is learning that lesson, but it is very, very 
hard. We have gotten reports from GAO, as they have said 
before, that we should regulate in this area. No one has given 
us an existence proof of a regulation that can be implemented. 
That is what we are looking for.
    Senator Voinovich. We can talk about that.
    We should get onto to the next panel. Thank you very much. 
We look forward to spending some time with you about this issue 
and a couple of others.
    Mr. Diaz. Thank you.
    Mr. McGaffigan. Thank you.
    Mr. Merrifield. Thank you.
    Senator Voinovich. The record is going to be held open for 
questions from Members of the committee.
    Without objection, so ordered.
    Senator Inhofe asked that this be submitted in the record 
in response to Senator Reid.

    ``I understand in my absence that Senator Reid said there was an 
agreement to hold Admiral Grossenbacher until a Democrat had been 
nominated, thereby linking the two nominees. I want to state for the 
record that we never had such an agreement. We tried to hold a hearing 
on Admiral Grossenbacher several times. Each time we were blocked by 
the minority.''

    Without objection, we will put this in the record.
    Senator Voinovich. I apologize to the second panel for the 
delay. I hope it has not inconvenienced you too much. We are 
going to ask that you limit your statements to 5 minutes. We 
want to assure you that your full statements will be in the 
record before this committee.
    We are pleased to have Marvin Fertel, senior vice president 
of Nuclear Generation; David Lochbaum, nuclear safety engineer, 
Union of Concerned Scientists; Marilyn Kray, vice president for 
project development, Exelon Generation; and Barkley Jones, 
professor, Department of Nuclear, Plasma, and Radiological 
Engineering, University of Illinois at Urbana--Champaign.
    Thank you all for being here today with us. We will start 
with Mr. Fertel.

 STATEMENT OF MARVIN FERTEL, SENIOR VICE PRESIDENT OF NUCLEAR 
              GENERATION, NUCLEAR ENERGY INSTITUTE

    Mr. Fertel. Thank you, Chairman Voinovich, and Ranking 
Member Carper.
    I appreciate the opportunity to represent NEI's member 
companies before this subcommittee today. While my written 
testimony is much broader, my comments today will briefly 
discuss three key points.
    No. 1, our country's 103 nuclear power plants are critical 
to our economy, energy security, and environmental goals, and 
currently produce electricity for one in every five homes and 
businesses.
    No. 2, an effective, credible, stable, and efficient NRC is 
vital to both assuring protection of public health and safety, 
and to providing an environment that allows for positive 
business decisions concerning our existing plants and those of 
tomorrow.
    No. 3, I will comment on industry actions to address the 
issue of the degradation of materials used in nuclear plant 
components and systems.
    Over the past decade, our 103 nuclear plants have achieved 
record levels of production and efficiency while maintaining 
the highest levels of safety. As our second largest source of 
electricity, U.S. nuclear power plants produced 767 billion 
kilowatt hours in 2003, which represents a 25 percent increase 
compared to 10 years ago.
    Nuclear power plants are also the most affordable baseload 
source of electricity today, with costs lower than those for 
coal and natural gas and oil. In an economy that is seeing 
great volatility in the course of oil, gas, and coal, 
electricity from nuclear plants provides consumers and 
businesses with a high degree of price stability.
    As this subcommittee is responsible for Federal clean air 
policy, I am sure that you are aware that nuclear power 
generates three-fourths of all emission-free electricity in the 
United States. This Monday, Exxon-Mobile ran a full-page ad in 
the Washington Post, talking about its efforts to reduce 
greenhouse gas emissions. The company was rightfully proud to 
advertise that its 80 co-generation facilities reduced 
emissions by an amount equivalent to taking a million cars off 
the road, a rather impressive feat.
    But to put nuclear's clean air value to our Nation in 
perspective, annually the nuclear energy industry impact on 
greenhouse gas emissions is over 100 times greater, the 
equivalent of eliminating the greenhouse gas emissions from 138 
million cars, or about 9 out of every 10 U.S. passenger cars.
    Nuclear is indeed our largest source of emission-free 
electricity. To enjoy this benefit, our existing plants must 
continue to operate and new plants must be built in the coming 
years. This depends on the NRC's effectiveness as a safety 
regulator as well as its efficiency.
    As others on this panel will emphasize, regulatory 
uncertainty is the largest perceived risk with new nuclear 
plant construction. Providing certainty, predictability, and 
stability will be essential to attract investment in our new 
advanced design reactors.
    We now have 4 years of experience with the NRC's revised 
oversight process. This new oversight process is a major 
success for safety and for improved regulatory stability. The 
new process focuses on those areas of the plant that are most 
important to safety. It has improved transparency to all 
stakeholders, as well as enhanced objectivity and regulatory 
stability.
    The industry fully supports the NRC's efforts to make the 
regulatory process more safety focused. We believe it work is 
far from complete. The Agency must move forward systematically 
and aggressively to incorporate its safety focused approach 
into the rules themselves.
    We also acknowledge the Agency for its progress in 
reviewing applications for license renewal of existing plants. 
Four years ago the process was anything but certain. Today the 
Agency's businesslike approach to the reviews has resulted in a 
renewal of the licenses for about one-quarter of the Nation's 
plants. We expect almost all plants will go for license 
renewal.
    The lessons learned from the license renewal process and 
the discipline inherent in it must be applied as the Agency 
faces new challenges in the licensing process for the Yucca 
Mountain project, and the licensing of new facilities such as 
the new uranium enrichment facilities.
    We urge this committee to systematically monitor NRC's 
progress on changing the regulations to be more risk--informed, 
on their continued activities to review license renewable 
applications, and on all of their new facility licensing 
reviews.
    As you are aware, the nuclear industry fully pays for all 
the costs associated with NRC regulation. In fact, nuclear 
power plant owners pay for all costs associated with their 
operation, including all externalities. We are the only 
industrial facilities to do so.
    Four years ago this committee supported, and Congress 
passed, a law that reduced the fees paid by the industry as a 
share of the NRC budget by up to 10 percent. The industry urges 
this committee to renew carefully the NRC's fee structure and 
its budget which has grown significantly over the past few 
years. Industry fees should not be used for services that do 
not directly support regulation of the industry.
    As discussed in my written testimony, industry also 
believes that the NRC could operate more efficiently at reduced 
costs to licensees. To achieve this would require a systematic 
review of NRC resources, their priorities, and a holistic view 
of the NRC work force and attrition issues.
    Finally, I would like to mention the industry's response to 
the issue of material degradation at the Davis-Besse plant. 
While significant materials management programs were in place 
for decades, the industry aggressively responded and has acted 
on the Davis-Besse experience. We have expanded our programs in 
this area, and more importantly, through NEI have developed an 
integrated, coordinated, and much more proactive material 
management program. The industry will invest at least $65 
million annually in this effort.
    I can assure you that along with the NRC we are fully 
committed to detecting and resolving material issues well 
before they pose any challenge of safe operations of our 
plants.
    Mr. Chairman, no one values the safe operation of our 
plants more than the people that work at the plants and the 
owners of those plants. Sound business practice is not just 
regulations that require the owners to maintain and operate the 
plants with safety as the top priority. Your concern about 
safety culture is fully appreciated and shared by us. I would 
welcome the opportunity to discuss with you and your colleagues 
the bases for achieving the type of safety culture we all would 
strive for.
    The continued oversight of the NRC by this committee to 
ensure a credible, effective, efficient, and stable regulatory 
process is both appreciated and needed. Furthermore, a 
disciplined focus on NRC resources and budget issues has never 
been more appropriate than now.
    We thank this committee for its past actions. We welcome 
your continued focus on achieving greater efficiencies in the 
future. Thank you. I would ask that my written statement be 
placed in the record in its entirety.
    Senator Voinovich. Thank you very much, Mr. Fertel.
    Mr. Lochbaum.

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

    Mr. Lochbaum. Thank you, Mr. Chairman, and Senator Carper.
    Twenty-five years ago, a Three Mile Island reactor outside 
Harrisburg, PA experienced the worst nuclear power plant 
accident in U.S. history. That accident was not caused by 
uniquely bad conditions. It resulted from broad-based problems 
at many reactors that eventually produced a meltdown at one of 
them. The post-accident inquiries resulted in extensive changes 
at both the nuclear industry and the NRC.
    This history is relevant to today's hearing because 
compelling evidence suggests that extensive degraded conditions 
at many reactor sites are again being tolerated. The NRC's 
response to these warning signs have amounted to little more 
than rearranging the deck chairs on the Titanic.
    Fortunately, there is still time for the NRC to plot a 
different course so as to avoid the icebergs looming on the 
horizon. Earlier this week, GAO released a report on the NRC's 
mishandling of safety issues at the Davis-Besse Nuclear Plant. 
GAO identified several problems NRC should correct. The GAO and 
the media made much of the fact that the NRC rejected many of 
the findings.
    The larger concern is that the NRC has seldom fixed 
findings made by its internal and external auditors, even those 
findings to which it agreed. I reviewed reports issued by the 
NRC's Lessons Learned Task Forces, the NRC Inspector General 
and the GAO over the past 8 years and saw the same regulatory 
problems contributing to unacceptable safety levels at plant 
after plant.
    Earlier this week the GAO reported that the NRC is not 
addressing three systemic problems underscored by the Davis-
Besse incident. The first problem is that the NRC's process for 
assessing safety at nuclear power plants is not adequate for 
detecting early indications of deteriorating safety. GAO 
reported this very same finding in January 1999, July 1998, May 
1997, and January 1996.
    The second problem identified by GAO was NRC's decision--
making guidance does not specifically address shutdown 
discussions or explain how different safety considerations, 
such as quantitative estimates of risk should be weighed. The 
NRC Inspector General reported virtually identical findings in 
May 2003, December 2002, and August 2002. The GAO reported this 
very same problem in February 1999.
    The third problem identified by GAO was that the NRC does 
not have adequate management controls for systematically 
tracking actions that it has taken in response to incidents at 
plants to determine if the actions were sufficient. GAO 
reported a virtually identical problem in September 2003, 
involving security. The NRC Lessons Learned Task Force reported 
this problem in September 2002. The NRC's Inspector General 
reported this problem in August 2000. GAO reported this problem 
more broadly in May 1997.
    Thus, the NRC is much like Bill Murray in the movie, 
Groundhog Day. They keep relieving the same problems over and 
over instead of fixing them. Bill Murray's movie lasted about 
90 minutes. The NRC's rut dates back two decades and continues 
today.
    Davis-Besse is the 28th reactor in the past 20 years to be 
shut down for a year or longer to fix safety problems. The NRC 
must fix its chronic problems to end its ``Groundhog Day.''
    The 28 reactors that endured these lengthy outages brought 
in new management to direct the recovery efforts. New managers 
can assess policies and practices unencumbered by tradition. 
New managers can strike out new paths without implicitly 
conceding that it led workers down the wrong roads in the past. 
New management is a tried-and-true method for bringing about 
timely reforms, yet it is an untried method at NRC.
    A few of NRC's managers are new to the Agency. Most worked 
their way up through the ranks. Consequently, they all come 
from the same mold and have the same habits. Retirements and 
reorganizations merely put different faces on the same 
management styles. Reform efforts fail because repackaging and 
reapplying that management style cannot yield meaningful 
changes.
    UCS is not advocating a massive infusion of new managers at 
the NRC. That would be unfair. That would be the fastest and 
surest fix, but it would be unfair to oust many fine public 
servants.
    Instead, we urge changes to the NRC's hiring and promotion 
practices. Retirements and voluntary departures should become 
opportunities for finding the most qualified replacement, not 
just the most qualified replacement within NRC.
    One of the NRC's strengths is talented, capable, and 
dedicated employees. Properly led, they can make sure that 
nuclear power's costs are not too high and nuclear power safety 
levels are not too low.
    On behalf of UCS, I wish to thank this subcommittee for 
conducting this hearing and inviting our views on this subject. 
Thank you. I would ask that my written statement be placed in 
the record in its entirety.
    Senator Voinovich. Thank you very much, Mr. Lochbaum.
    Ms. Kray.

     STATEMENT OF MARILYN KRAY, VICE PRESIDENT FOR PROJECT 
                 DEVELOPMENT, EXELON GENERATION

    Ms. Kray. Good afternoon, Mr. Chairman and Senator Carper. 
I am with Exelon Nuclear. I am also here in the capacity as a 
lead representative for NuStart Energy Development.
    I preface my remarks today with an observation of the 
opportune timing of this hearing. There are a number of factors 
converging to establish a platform requiring not only our 
attention but also our action. These factors are: the 
heightened concern with the stability of our electricity 
supply, the recognized need for fuel diversity, and less 
dependence on foreign energy sources, the increased concern 
with the environment, and increasing demand for electricity, 
both domestically and globally.
    These factors suggest the need to revisit each component of 
our generation mix. I will be here to discuss only the nuclear 
power component which provides, as stated, approximately 20 
percent of our electricity needs. In response to an earlier 
question, it is my opinion that our current fleet of operating 
reactors cannot uphold the current 20 percent contribution.
    As with any form of energy, nuclear power has both its 
risks as well as its benefits. We must be forever vigilant of 
the need to continuously assess the operational safety of our 
plants, internalizing the lessons learned from TMI, and more 
recently, Davis-Besse. We must also identify a long-term 
solution to our nuclear waste problem.
    It is fair also to acknowledge the benefits of nuclear 
power--being clean, reliable, and currently economic. I assert 
that the benefits outweigh the risks, implying that this 
generation alternative, along with the others, needs to be 
preserved.
    Preserving the nuclear power option, may sound like a 
passive strategy, but the reality is that it requires 
coordinated actions by both the Government and the nuclear 
industry. I was pleased when the DoE announced the Nuclear 
Power 2010 Initiative. It was established to confront some of 
the challenges which are unique to nuclear investments. As part 
of this program, the DoE issued a solicitation inviting power 
companies to submit proposals to address two of the significant 
investment challenges, these being regulatory predictability 
and completion of designs.
    The NuStart Energy Development, LLC, was formed solely for 
the purpose of responding to this solicitation. It was one of 
three industry consortia to submit a proposal. Since submitting 
my written testimony only a few days ago, I am pleased to 
announce that Florida Power and Light has also joined the 
consortium, making it now eight power companies and two reactor 
vendors.
    Our proposal to the DoE spans a 7-year-period from 2004 to 
2010. The total cost is $800 million, with the industry 
committed to providing one-half, or $400 million. The end 
result of this project will be a full demonstration of the NRC 
licensing process, and the completion of the design engineering 
work for the two selected U.S. reactors. Together these will 
significantly reduce the time to market for new plants and also 
alleviate some major areas of uncertainty.
    Beyond the Nuclear Power 2010 program, however, is a need 
to financially incent first mover investors. Possible incentive 
mechanisms include those modeled after other energy and public 
works projects.
    In summary, preserving the nuclear power option requires 
action. In the near term, we must fund the Nuclear Power 2010 
Initiative, specifically $80 million for fiscal year 2005, to 
cover all three consortia proposals. In the long term, we must 
adopt energy policy that establishes methods to promote large 
capital investments into our energy sector while presenting 
reasonable risks to shareholders.
    Thank you for the privilege to share these thoughts with 
you. I would ask that my written statement be placed in the 
record in its entirety.
    Senator Voinovich. Thank you very much, Ms. Kray.
    Mr. Jones.

 STATEMENT OF BARCLAY JONES, PROFESSOR, DEPARTMENT OF NUCLEAR, 
PLASMA, AND RADIOLOGICAL ENGINEERING, UNIVERSITY OF ILLINOIS AT 
                        URBANA-CHAMPAIGN

    Mr. Jones. Chairman Voinovich and Senator Carper, I am 
pleased to be here as representative of the nuclear engineering 
educational community. My background is listed in the front end 
of the material that I have submitted for the record.
    What I would like to do is highlight a few issues that I 
brought up in the testimony, but would like to expand briefly 
upon. I listed four of the timely jobs that the NRC has before 
it. Those have been brought forward this morning.
    There is discussion about whether there is sufficient 
manpower available to meet job demand. From the production of 
manpower point of view and where the universities fit in, it is 
unclear that the present shortfall in the production of nuclear 
engineers will satisfy the demand. The difference currently is 
in the order of hundreds per year.
    We are increasing our number of undergraduates in the 
programs, but you must realize that as you add freshmen to 
programs, it is 4 years, at least, before they graduate and 
arrive on the work force scene. It is several year beyond that 
before you would say they are experienced to the point where 
they would be trusted to handle significant positions within 
the power companies, NRC and other positions into which they 
go.
    So my urging to you is to keep track of the demographics 
and look where resources can be spent in order to ensure that 
the production of nuclear engineers will be there when needed.
    The current work force demographic is very skewed to upper 
age levels. We have heard this morning of the shortfall of 
experienced people as retirements are occurring. We think that 
the universities can and will play a pivotal role, but their 
resource base is one that is limited by what the universities 
can afford to put into small programs which nuclear engineering 
programs typically are.
    Nuclear engineering programs tend to be much smaller than 
those in mechanical, electrical, computer sciences, et cetera. 
Therefore, a demand for new faculty and for increased 
expenditures is hard fought by other departments within the 
university organization.
    I indicated in my statement that it takes an enlightened 
administration to respond favorably to the nuclear engineering 
national needs. My institution has just gone through a 1-year 
review of whether our nuclear engineering program should be 
retained or dismantled. This is in a State with 11 operating 
reactors and over 50 percent of the electrical power supplied 
from nuclear power. We are the only university in the State 
with a nuclear engineering program. I am happy to report that 
the outcome was positive and we are now in a position of being 
able to recruit for new faculty.
    It is worth noting that Illinois has a similar demographic 
in its work force with other nuclear engineering educational 
programs. Three of us are at or past retirement age. That is 
out of nine faculty, currently. To replace us and to have 
overlap requires immediate hiring. The internal competitive 
pressures are such that is difficult to gain in numbers. The 
future at Illinois and at sister institutions requires that 
Government aid, which has been coming from the Office of 
Nuclear Energy part of DoE, and other government and industry 
sources is very helpful. It supports fellowships, research and 
more recently infrastructure for the programs.
    It has basically saved the day in a lot of cases for 
nuclear engineering departments.
    But the number of departments has continued to shrink. So 
our ability to be able to produce the output required is still 
limited. Fortunately, the young people coming into universities 
are signing up in nuclear engineering departments in larger 
numbers. We think that, overall we will be able to supply an 
increased number of graduates and to sustain the discipline.
    I would be happy to respond to other points that I have 
raised, if you have questions. I appreciate the opportunity to 
speak with you. I would ask that my written statement be placed 
in the record in its entirety.
    Senator Voinovich. Thank you very much, Mr. Jones.
    I really am interested, Dr. Jones, in this issue of where 
we are going to get the people to get the job done. Is it the 
Department of Energy that is providing you some help right now?
    Mr. Jones. Yes, they have instituted various research 
programs which basically support the graduate side of the 
house, but these supply the grist, if you will, to sustain 
undergraduate programs as well. They have the Nuclear 
Engineering Education Research (NEER) program, which recently 
has had increased funding level. They also have had a Nuclear 
Energy Research Initiative (NERI) program in conjunction with 
National Laboratories and Industry. Unfortunately, that one has 
shrunk dramatically in funding. They also have introduced an 
International Nuclear Energy Research Initiative I-NERI which 
provides resources for the Federal role in International 
Cooperation on Energy Innovation. The Innovations in Nuclear 
Infrastructure and Education (INIE) program, which was 
established in FY 2002, strengthens the Nation's university 
nuclear engineering education programs through innovative use 
of the university research and training reactors and 
encouraging strategic partnerships between the universities, 
the DOE national laboratories, and U.S. industry. These are 
restricted to being run through universities. These programs 
are very helpful.
    The fellowships and scholarships that DoE provides and that 
INPO provides, and that NRC, to a limited extent provides, are 
also very helpful. If you look back at the beginning of nuclear 
engineering in the late 1950's and throughout the 1960's and 
into the 1970's, the traineeships and fellowships that were 
provided at that time basically attracted the interest and 
talent that made the robust programs that initiated the 
discipline. I think we need to go back into that mode, where we 
have larger numbers of them to attract the quality people that 
are needed to sustain the industry, to sustain the security and 
oversight levels that we need for the plants, and to provide 
the needed continuing manpower.
    Senator Voinovich. Do you have a national organization that 
you belong to?
    Mr. Jones. Yes, it is an ad hoc one. It is called NEDHO, 
the Nuclear Engineering Department Heads Organization. I 
chaired it 10 or 12 years ago. It interacts and works closely 
with the Department of Energy, the Nuclear Energy Institute, 
the National Academy for Nuclear Training (Educational 
Assistance Program) of the Institute for Nuclear Power 
Operations (INPO) and with the American Nuclear Society, as 
well as other nuclear related entities.
    Senator Voinovich. I would be very interested if you could 
get your organization to provide me with a memorandum or 
whatever that would lay out what you really think needs to be 
done in terms of the Federal Government's role in providing the 
people that we are going to need for this industry in this 
country.
    I understand that some of the schools have closed down 
their nuclear engineering departments; is that correct?
    Mr. Jones. That is correct. We are down to less than 30 
now.
    Senator Voinovich. How many were there before?
    Mr. Jones. It started out in the 1970's and 1980's with 
about 60.
    Senator Voinovich. Well, I would welcome that from you.
    Mr. Jones. Absolutely.
    Senator Voinovich. Without objection, so ordered.
    [The referenced document follows on page 224.]
    Senator Voinovich. Mr. Fertel, what is the industry doing 
about this also? You have to be as much concerned as the people 
in the NRC. You need them in the industry.
    Mr. Fertel. Actually, from NEI's perspective, we are 
actually very much involved with the program. We work very 
closely with NEDO, and actually with the American Nuclear 
Society and then with NRC and DoE looking at the manpower and 
womanpower the work force needs going out over the next 20 
years and have identified where the real needs are.
    For instance, Dr. Jones mentioned the fact that DoE 
supports the program. They are now going to support program for 
health physics schools because we are seeing that we are really 
shorted in health physicists going out over the next 10 years. 
That has been very useful.
    We will provide you, Mr. Chairman, the results of the work 
that we have been doing which is an effort to be much more 
integrated across the entire community, not just the industry 
side, but really what Government thinks they will need, what 
the industry thinks it will need, and where we see the 
resources coming.
    I was at a DoE Advisory Committee meeting in the last two 
days and they talked about the program that was just mentioned. 
Their program is doing pretty well there. It is run by Bill 
Magwashot. They are spending about $21 million supporting 
everything from fellowships and scholarships to research 
reactors at the universities.
    While we have lost a number of schools and, in fact, lost 
three research reactors in recent years, the trends are all 
much better now. School programs are growing. One of the things 
that DoE has been able to facilitate the universities working 
together rather than competing with each other to try to use 
resources. That has actually turned out to be a positive for 
everybody.
    We will share with you, Mr. Chairman, the work that NEI has 
done with the others. It is not just us.
    Senator Voinovich. I would like to see it just to see where 
you are and where you think you need to go and what role you 
should be playing because you are interested in it and the 
university should be in it, as well as DoE.
    Without objection, so ordered.
    [The referenced document follows on page 239.]
    Mr. Fertel. We just completed a survey that will be very 
insightful as to where the resource needs really are.
    Senator Voinovich. Are you familiar with the Partnership 
for Public Service?
    Mr. Fertel. Just vaguely.
    Senator Voinovich. Well, there is a guy named Sam Heyman 
that contributed $25 million to set up this Partnership for 
Public Service. The whole aim of the organization is to make 
universities knowledgeable of the needs that we have in the 
Federal Government for the best and brightest people. Many of 
the industries in this country are participating in that 
program.
    Dr. Jones, are you familiar with the Partnership for Public 
Service?
    Mr. Jones. No, I am not.
    Senator Voinovich. I will get you information on it.
    They are out talking to universities about the 
opportunities that are available and how they can help them 
advertise those opportunities.
    What do you attribute the fact that you are getting more 
students than you did before, more interest?
    Mr. Jones. I think partly with the support that has come in 
from the several programs mentioned earlier. The job market is 
good, the salaries are high. There is an enhanced recruiting 
program that goes into the high schools to make the discipline 
more visible to the incoming student. I think there are a 
variety of these activities that are occurring and making the 
difference. In addition, we are working much harder at 
attracting students than we have previously.
    Senator Voinovich. Good. Dr. Jones, do not retire. We need 
you.
    In this Energy bill, we do have some really good provisions 
that will help to deal with that. I am trying to get some 
flexibility through. This specifically deals with this 
retirement and bringing people back on a part-time basis to 
take care of the transition and move along. There is other 
legislation that we have that bring in people from outside on a 
contract basis to come in and help them out. There is just a 
lot more flexibility for them.
    There are little simple things like if they go out and hire 
somebody that is maybe in the middle of their career, that when 
they come to work for the Federal Government they do not have 
to wait 15 years before they get a month's vacation. There are 
a lot of little simple things that we could be done to make it 
a lot easier.
    But I am very interested in that. I have another hat and 
that is the Oversight of Government Management in the Federal 
Work Force. So that is why I am so interested in this whole 
issue of human capital.
    The other question I would like all of you to comment on, 
if you feel that you have something constructive to say about 
it is this whole little debate I had with the members of the 
Commission in regard to safety and the safety culture.
    Mr. Fertel, I think if I heard you right, you said we are 
not there yet. I am not asking for micro-managing, but it seems 
to me that there are certain kinds of standards that the NRC 
can recommend through regulation or what have you, and then 
have people that are onsite that are aware of the standards. 
They said 7 years, but I am not sure it should be 7 years. That 
may be too long for people to be at a place. I think maybe 
after three or 4 years it is time to go because you do, after a 
while, get kind of used to the ``Old Boy'' network and stuff.
    It seems to me that if you had some really competent people 
that were paid competitively, they could be looking after a lot 
of stuff. It is a no-brainer, I think, to find out that people 
are pretty sloppily about safety.
    Mr. Fertel. First of all, on Davis-Besse, there is no 
excuse for the licensee, for the NRC, or actually even for the 
industry overall because SAMPO had gone into Davis-Besse on 
evaluations and not identified the problem. So it was a total 
breakdown of every aspect of what you should look for to make 
sure that those things do not happen.
    David mentioned Three Mile Island 25 years ago. He is 
concerned that we are maybe on the crest of another situation 
like that. After Three Mile Island, as he said, INPO was 
formed, the Institute of Nuclear Power Operations, an awful lot 
of other things happened, too, as an industry and as regulators 
at NRC.
    As an industry, we changed the whole way we look at 
training. We got into a systematic approach to training. We put 
simulators at every site. There is a whole different regime for 
training.
    We looked at procedures, the way our operators react to 
events. They went from basically thinking we could figure out 
every event and you could just take Event ``A'' and I will 
react to it, to a process that is more symptom based, almost 
like doctors treat patients when they come in. What are the 
symptoms? How do I stabilize the patient? How do I stabilize 
the reactor? It was a massive culture change.
    I think when I look at the Davis-Besse event, and when I 
look at it, I am saying, as a sort of collective group of 
people in the industry, what we felt was that it was a 
breakdown in safety. Now, NRC has a role to play in helping 
learn from that. The industry has a role to play in the 
aggregate, which is INPO, NEI, and others. Then the licensees 
have a role to play. I think that the struggle you are hearing 
when you spoke to the Commissioners, and the struggle that we 
would have is figuring out the right roles for each of those.
    You are exactly right. The NRC should set standards. They 
should set regulatory standards on safety that if you are 
meeting, it is clear that you are focused on the right things. 
Beyond that, the industry, and what was alluded to by the 
Chairman was the industry is responsible for management. What 
we do not want to ever do is take that accountability away. You 
want to maintain the accountability of safety as job one from 
the top CEO on down through the people on the floor doing the 
work.
    INPO has now gone out and basically did a self--assessment 
on why they did not find a safety culture people. They are out 
talking to people at the plants as part of their evaluations 
regularly. The type of safety culture that allowed Davis-Besse 
to occur should have been identified. So they have now 
reassessed how they do their evaluations because there was a 
failure there.
    They have also developed a safety culture program that we 
are now going to out to share with the rest of the industry.
    How would you know good safety culture when you saw it? How 
would you know it when it was not there? Some of the easy 
things that people say is: If you walk around the plant, 
basically cleanliness is an indication. Well, if you look at 
what was going on at Davis-Besse, changing filters every week 
rather than monthly, is an indication of a problem.
    It should have been picked up. Some of this is not rocket 
science. It is a breakdown. I think that figuring out where you 
regulate and where you make sure things are visible, and I 
think using a resident much more effectively is important. You 
commented that those are your really important people. Get them 
trained the right way. I think the Commission has heard that. I 
think it is hard for a resident to look at everything.
    Coming over here in a car, I was talking with Dr. Jones and 
he said, ``Well, what does the resident look for?'' I said, 
``Well, maybe that is one of the things that NRC has to 
reassess. Rather than checking every little thing, they should 
be looking for bigger and broader indications of problems.''
    I would encourage right now at this point this. We are very 
seriously looking, from an industry standpoint, what do you do 
about the Davis-Besse experience? Complacency is the worst 
thing that can happen in our industry. Everybody knows it. 
Everybody says it. It has been said repeatedly by NRC 
Commissioners.
    Senator Voinovich. I want to tell you something. The reason 
I am interested in this is because I support nuclear power.
    Mr. Fertel. I understand that, sir. You want it to succeed.
    Senator Voinovich. But the fact of the matter is that you 
are not going to have more nuclear power until you resolve some 
issues. One of the big issues over the years has been, and it 
has prevented us from moving power, is? What do we do with 
nuclear waste? We think that problem has been solved with Yucca 
Mountain and so forth. We still have a long way to go with 
that.
    But the fact of the matter is that if the public feels that 
these are fail-safe, that we have a responsible way of dealing 
with nuclear waste, you will be able to get the support that we 
need to move in that direction. So we agree. We should have 
coal. We should have nuclear. We should have all of it and be 
working toward renewables; the whole thing.
    But if you do not have the regulation, if you do not have 
the environment, then in terms of support for that, it is 
difficult. The same thing is even with investors. You are going 
to go out and try to find investors to put it in. If you have a 
problem of: ``Where do you put this stuff? I have these 
problems with safety things. The public is not for it.'' Then I 
do not want to invest in one of these deals.
    That is what we are trying to do here. It seems to me that 
the industry itself should be way out in front on everything 
you do.
    Mr. Fertel. Well, it certainly is. David's comment about 
what he have seen on the industry side when we change people 
around when there is a problem, I think is true. I think maybe 
that is a lesson that NRC could look at. It may not be 
standards that have to be changed, even though there probably 
are some. It may be the way people look at things when they are 
there. Your comment that if you are there for a long time, it 
all blends together.
    It may not even be an ``Old Boy'' network as much as I have 
always seen it look like this. I am not seeing a difference. It 
is not the kind of eyes you want looking at stuff.
    What I would like to do is probably share with you what we 
are doing in the industry, and share with you what INPO is 
doing and maybe offer some suggestions on what we think NRC 
could do. I am not sure that there is a silver bullet stand 
that they could issue. I think it is more of a menu of things 
that we all need to do to assure that safety culture is correct 
and that safety is always on everybody's mind.
    Senator Voinovich. Thank you.
    Mr. Lochbaum, do you want to comment on that?
    Then we are going to have to wrap it up. First it was the 
President, and now it is the Secretary of Defense who is going 
to meeting with the members of the Senate. I want to make sure 
I get over there and hear what he has to say.
    Mr. Lochbaum. Just very briefly. I just wanted to say that 
the NRC has a safety culture problem of its own. Surveys 
conducted by the Inspector General and the GAO have shown that, 
for example, that the NRC workers who have raised safety 
issues, one-third of them feel that they have been retaliated 
against for having done so. Those kinds of problems that Davis-
Besse had to fix, we feel the NRC needs to fix internally so it 
has a good safety culture, as well as all the plants in the 
country. Thank you.
    Senator Voinovich. I would be interested in working with 
the GAO and maybe getting input from you folks is: What is the 
standard is that we use to make sure that these things that 
have been long standing are taken care of?
    I think that is the problem. I think we should lay this 
out, work with some people, get the standards, and then just 
basically say, ``Here are the problems.'' Then when we come 
back for the next hearing, we want to do some things in the 
office beyond the hearings. But I am just saying that you have 
some measuring device to know whether or not you actually have 
made an improvement in the area.
    Mr. Lochbaum. One thing the NRC has incorporated into its 
reactor oversight program is a formal feedback mechanism every 
year where they go out and see: ``Have we achieved the 
expectation we set out for this?'' I think broadening that and 
continuing that is a good way to see if whatever fixes you 
implement, did you achieve what you were trying to do, and not 
cause some unintended consequences somewhere else.
    So I think that NRC initiative was a good thing to do. I 
think they should continue that.
    Senator Voinovich. Mr. Fertel, Mr. Lochbaum, or anybody, 
maybe one of the nicest things that we could do for the NRC 
would be to maybe find the best program in the country that 
monitors those kinds of things from a business point of view, 
and institute it there. It seems to me that that is missing. 
Maybe we could get a little public/private partnership going 
here and come in and help them out with that. It seems that 
they have had an ongoing problem with that.
    Like Mr. Diaz, they are all conscientious people that want 
to do the right thing. I do not mean hiring a consultant, but 
maybe the industry should think about that. This is an Agency 
that is very important to you.
    Dr. Lochbaum, it is important to you. I challenge you. 
Could we sit down with them and say: ``Here is what you should 
do. Find the best outfit in the country and say: `Would you be 
willing to come in and spend some time over there?' ''
    When I was Governor, I had private sector people to come in 
and spend 6 months and some of them for a year pro bono to help 
shape up some of the operations that we had in city and State 
government. It is very frustrating to me that we have these 
lessons learned but from Mr. Lochbaum's point, we have had 
lessons learned and lessons learned. We have had GAO reports, 
and we have had inspectors generals. I do not think that these 
are people who do not care. But maybe they need some help.
    Mr. Lochbaum. We did send a letter to the Commission on 
February 2nd volunteering to help on the safety culture issues. 
We thought they did a good job in addressing the Hope Creek and 
Salem issues. We volunteered to help work with the industry and 
with the NRC to figure out what is the right answer.
    Senator Voinovich. I am going to suggest that to Mr. Diaz 
that maybe we could get a little group together in my office 
and talk about it and see where we can go.
    Mr. Lochbaum. We would be glad to.
    Senator Voinovich. That would be very good.
    I want to thank you very much. You have been very patient. 
I appreciate your conscientiousness. We have a challenge ahead 
of us.
    Thank you.
    [Whereupon, at 1 p.m., the subcommittee was adjourned, to 
reconvene at the call of the chair.]
    [Additional statements submitted for record follow:]
     Statement of Chairman Nils Diaz, Nuclear Regulatory Commission
    Mr. Chairman and members of the subcommittee, it is a pleasure to 
appear before you today with my fellow Commissioners to discuss the 
Nuclear Regulatory Commission's programs. We appreciate the past 
support that we have received from the subcommittee and the committee 
as a whole, and we look forward to continue working with you.
    As you know, the NRC's mission is to license and regulate the 
Nation's civilian use of byproduct, source, and special nuclear 
materials to ensure adequate protection of public health and safety, 
promote the common defense and security, and protect the environment. 
The Commission does not have a promotional role--rather, the agency 
seeks to ensure the safe application of nuclear technology if society 
elects to pursue the nuclear energy option. The Commission recognizes, 
however, that its regulatory system should not establish inappropriate 
impediments to the application of nuclear technology. Many of the 
Commission's initiatives over the past several years have focused on 
maintaining or enhancing safety and security while simultaneously 
improving the effectiveness and efficiency of our regulatory system.
    With your permission Mr. Chairman, I will highlight a few of our 
ongoing initiatives and achievements.
                        reactor safety programs
    The past 3 years have seen the maturing of the reactor oversight 
process. We believe that this program is a significant improvement over 
the former inspection, enforcement, and assessment processes. We 
received external recognition of the effectiveness of our Reactor 
Inspection and Performance Assessment program when the Office of 
Management and Budget evaluated it using its Performance Assessment 
Rating Tool (PART) and awarded the top rating, ``effective,'' a rating 
achieved by only 11 percent of the Federal programs assessed. One of 
its strongest attributes is its transparency and accessibility to 
members of the public. You will find performance indicators and 
inspection findings for every power reactor on NRC's public web site 
page, as well as our current assessment of each reactor's overall 
performance. The transition to the reactor oversight process has gone 
well, and we will strive to make further improvements.
    Overall, the industry has performed well. As of the end of CY 2003, 
there were two plants designated for the highest level of scrutiny 
under the reactor oversight process, the Cooper plant in Nebraska and 
the Point Beach plant in Wisconsin. In addition, the Davis-Besse plant 
in Ohio has been treated under our Manual Chapter 0350 Startup 
Oversight Process. The Cooper and Point Beach plants have received 
significant attention from our regional and headquarters offices, and 
we are confident that these plants are on a path to resolving long-
standing problems.
    Over the past 2 years, the NRC staff has devoted significant 
resources for enhanced regulatory oversight of the Davis-Besse plant 
following the discovery of extensive degradation of the reactor vessel 
head. After an extgensive plant recovery program and comprehensive 
corrective actions by the licensee, FirstEnergy, and considerable NRC 
inspection and assessment, the staff determined that there was 
reasonable assurance that the plant could be safely restarted and 
operated. This decision was made in a deliberate manner, based on sound 
regulatory and technical findings, and in accordance with the 
requirements of Federal statutes and NRC regulations. On March 8, 2004, 
the NRC staff gave approval for the restart of Davis-Besse. In 
addition, the staff issued a confirmatory Order requiring independent 
assessments and inspections at Davis-Besse to assure that long-term 
corrective actions remain effective. The NRC's oversight panel will 
continue to coordinate the inspection and regulatory activities for 
Davis-Besse until plant performance warrants resumption of the normal 
reactor oversight process.
    We acknowledge the extensive interest in, and concerns about, the 
restart of Davis-Besse by area residents; public interest groups; 
Federal, State, and local officials; and others. We have conducted our 
regulatory responsibilities in an open and candid manner, keeping the 
public informed to the maximum extent possible at each step of the 
process. We have not been able to share the results of our Office of 
Investigations' reports because those have been referred to the 
Department of Justice for its consideration. Those reports have, 
however, been fully considered by NRC staff prior to restart. We have 
had extensive communication with our stakeholders, including 
establishing a web site and issuing monthly newsletters. Also during 
the past 2 years, the NRC staff conducted 75 public meetings on Davis-
Besse most of these meetings were held in the vicinity of the plant and 
held 50 briefings for Federal, State, and local government officials. 
The oversight panel will continue to hold periodic public meetings near 
Davis-Besse with FirstEnergy officials to review the status of ongoing 
activities at the plant.
    Concurrently, we have undertaken a significant and critical review 
of our programmatic and oversight activities to evaluate our own 
actions associated with the reactor vessel head degradation at Davis-
Besse. These actions have considered the Davis-Besse Lessons Learned 
Task Force Report. The Task Force completed its review in September 
2002 and issued a report that contained a number of recommendations for 
improvements to the reactor research, oversight, and licensing 
programs. These recommendations are being implemented as part of four 
action plans, encompassing: (1) stress corrosion cracking, (2) 
operating experience program effectiveness, (3) inspection, assessment 
and project management guidance, and (4) barrier integrity 
requirements. Of the 49 recommendations, 16 were completed in 2003, 
including all seven high priority items scheduled to be completed that 
year. Inspection program guidance was revised to address the high-
priority recommendations regarding followup to long-standing equipment 
issues and oversight of plants in extended shutdowns. Enhancements to 
inspector training programs were initiated. Guidance was issued 
regarding the adequate documentation of certain decisions. We continue 
to work on addressing the remaining recommendations and are making 
significant progress. Except for three items, all other high-priority 
recommendations will be completed by the end of 2004. The remaining 
high priority items will be completed during 2005.
    In April 2004, we completed an examination of reactor vessel 
cladding and structural analyses. Based on these efforts, the staff 
concluded that near-term vessel failure was unlikely and that it was 
highly likely the vessel could have operated safely for at least 
several more months following the February 2002 Davis-Besse shutdown. 
As you are aware, the plant restarted with a new reactor vessel head; 
thus, the degraded condition no longer exists.
    The NRC's Office of the Inspector General conducted an inquiry into 
our oversight of the Davis-Besse reactor vessel head degradation. The 
issues identified in the IG's report are similar to a subset of those 
identified by the Lessons Learned Task Force; and as such, corrective 
actions have either been completed or are in progress for each of the 
IG's findings. The IG was particularly concerned with the flow of 
information within the agency--communication between headquarters, the 
regional offices, and the resident inspector staff. We are committed to 
improving this communication and have already witnessed a lowering 
threshold for raising issues. For example, there has been a significant 
increase in the scope and level of detail discussed during daily status 
meetings among NRC regional, headquarters, and site offices, as well as 
improvements in internal communications. We have also placed renewed 
emphasis on improving communication with the international nuclear 
community to ensure that new issues are promptly communicated as they 
arise. Going forward, we are dedicated to improving our inspection and 
assessment programs to prevent recurrence of this or similar 
significant challenges to safety.
                       reactor licensing programs
    Let me now turn to significant achievements in our reactor 
licensing programs. The reactor licensing program ensures that 
operating nuclear power plants maintain adequate protection of public 
health and safety throughout the plant's operating life. NRC licensing 
activities include reviewing license applications and changes to 
existing licenses, reviewing reactor events for safety significance, 
and improving safety regulations and guidance. In fiscal year 2003, the 
NRC met or exceeded all established measures for the timeliness and 
quantity of completed nuclear power plant licensing-related actions.
    The reactor licensing program's timeliness in responding to 
licensee requests has improved dramatically since 1997. At the end of 
fiscal year 2003, 96 percent of licensing actions in the working 
inventory were less than 1 year old and 100 percent of licensing 
actions in the working inventory were less than 2 years old. We also 
completed 500 other licensing activities, most of which were associated 
with identification and resolution of emerging technical issues. For 
example, we issued generic communications to the industry alerting them 
to emerging issues such as leakage from reactor pressure vessel lower 
head penetrations, the potential impact of debris blockage on emergency 
sump recirculation at pressurized-water reactors, and control room 
habitability. We will not be able to sustain this level of timeliness 
in fiscal year 2004 because of a very large volume of security 
licensing actions which we are giving the highest priority. We are 
managing our licensing action inventory to ensure that appropriate 
timeliness goals are being established for each action, and that no 
safety-significant issue is left untreated.
    A significant type of reactor licensing action, called a power 
uprate, is a request to raise the maximum power level at which a plant 
may be operated. Improvement of instrument accuracy and plant hardware 
modifications have allowed licensees to submit power uprate 
applications for NRC review and approval. The focus of our review of 
these applications has been and will continue to be on safety. In 
addition, we continue to monitor operating experience closely to 
identify issues that may affect power uprate implementation.
    Power uprates range from requests for small increases of less than 
2 percent based on the recapture of power measurement uncertainty, to 
large increases in the range of 15 to 20 percent that require 
substantial hardware modifications to the plants. In all instances, the 
NRC must be satisfied that appropriate safety margins remain. To date, 
the NRC has approved 101 power uprates which have safely added 
approximately 4175 megawatts electric to the nation's electric 
generating capacity and is the equivalent of about four large nuclear 
power plants.
    Currently, the NRC has four power uprate applications under review 
and expects to receive an additional 25 applications through calendar 
year 2005. This would add approximately 1760 megawatts electric to the 
nation's electric generating capacity. The NRC recently issued a Review 
Standard for Extended Power Uprates (i.e., uprates that increase the 
current power by 7 percent or more), which is available publicly, that 
enhances the NRC's focus on safety and improves consistency, 
predictability, and efficiency of these reviews.
    As stated earlier, the NRC monitors operating experience at plants 
that have implemented power uprates. Cases of steam dryer cracking and 
flow-induced vibration damage affecting components and supports for the 
main steam and feedwater lines have been observed at some of these 
plants. We conducted inspections to identify the causes of several of 
these issues and evaluated many of the repairs performed by the 
licensees. We continue to monitor the industry's generic response to 
these issues and will consider additional regulatory action, as 
appropriate.
    License renewals are another significant type of licensing action. 
In 2003, thirteen units--North Anna Units 1 and 2 and Surry Units 1 and 
2 in Virginia, Peach Bottom Units 2 and 3 in Pennsylvania, Saint Lucie 
Units 1 and 2 in Florida, Fort Calhoun in Nebraska, McGuire Units 1 and 
2 in North Carolina, and Catawba Units 1 and 2 in South Carolina--had 
their licenses extended for an additional 20 years. Thus far in 2004, 2 
units--H.B. Robinson, Unit 2 and V.C. Summer, Unit 1 in South 
Carolina--have had their licenses renewed. That brings the total of 
renewed reactor licenses to twenty-five. The staff currently has 
license renewal applications under review for seventeen additional 
units. In every instance, the staff has met its timeliness goals in 
carrying out the safety and environmental reviews required by our 
regulations. If all of the applications currently under review are 
approved, approximately 40 percent of the nuclear power plants in the 
U.S. will have extended their operating licenses. We expect that almost 
all of the 104 reactors licensed to operate will apply for renewal of 
their licenses. The staff will continue to face a significant workload 
in this area with the sustained strong interest in license renewal by 
nuclear power plant operators due to many benefits of license renewal.
    While improved performance of operating nuclear power plants has 
resulted in significant increases in their electrical output, it is 
expected that continuing increased demands for electricity will need to 
be addressed by construction of new generating capacity. As a result, 
industry interest in new construction of nuclear power plants in the 
U.S. has recently emerged. The NRC is ready to accept applications for 
new power plants. New nuclear power plants will likely utilize 10 CFR 
Part 52, which provides a stable and predictable licensing process. 
This process ensures that all safety and environmental issues, 
including emergency preparedness and security, are resolved prior to 
the construction of a new nuclear power plant. The design certification 
part of the process resolves the safety issues related to the plant 
design, while the early site permit process resolves safety and 
environmental issues related to a potential site. The issues resolved 
in these two parts can then be referenced in an application which would 
lead to a combined construction permit and operating license, referred 
to as a combined license. This license contains inspections, tests, 
analyses, and acceptance criteria that must be attained before the 
facility can commence operation.
    As you know, the NRC has already certified three new reactor 
designs. These designs include General Electric's Advanced Boiling 
Water Reactor and Westinghouse's AP600 and System 80+ designs. In 
addition to the three advanced reactor designs already certified, there 
are new nuclear power plant technologies which some believe can provide 
enhanced safety, improved efficiency, and lower costs. The NRC staff is 
currently reviewing the Westinghouse AP1000 design certification 
application. The staff has met all scheduled milestones for the AP1000 
design review and is on track to issue its recommendations to the 
Commission this fall on whether the final design should be certified. 
This recommendation would be followed by the design certification rule 
in 2005. The NRC staff is also actively reviewing pre-application 
issues on two additional designs and has four other designs in various 
stages of pre-application review.
    In September and October of last year, we received three early site 
permit applications for sites in Virginia, Illinois, and Mississippi 
where operating reactors already exist. The staff has established 
schedules to complete the safety reviews and environmental impact 
statements in approximately 2 years. The mandatory adjudicatory 
hearings associated with the early site permits will be concluded after 
completion of the NRC staff's technical review. As with design 
certification rulemaking, issues resolved in the early site permit 
proceedings will not be revisited during a combined license proceeding 
absent new and compelling information.
                                security
    During the past year, the Commission has continued to enhance 
security of licensed nuclear facilities and materials through close 
communication and coordination with other agencies in the intelligence 
and law enforcement communities and with the Department of Homeland 
Security. For commercial nuclear power reactors, we issued Orders in 
April 2003 to impose a revised design basis threat (DBT) and enhanced 
requirements for security officer work hour limits (to ensure officers 
remained fit for duty) and standards for their training and 
qualification. With these requirements, we have established an enhanced 
set of security requirements for power reactors that is appropriate in 
the post-9/11 threat environment. The work-hour limits and the 
previously imposed access authorization enhancements have been fully 
implemented. Revisions to site security plans (including training and 
qualification) and site modifications to provide protection against the 
revised DBT have been submitted to the NRC for review and 
implementation. The review is in progress with full implementation 
scheduled for October 2004. We have redefined our baseline inspection 
program for security and are phasing in the new inspection program 
consistent with the new requirements. As a complement to licensee 
security measures, NRC is working with the Department of Homeland 
Security and the Homeland Security Council, and other partners to 
enhance the integrated Federal, State, and local response to threats.
    We continue to conduct force-on-force exercises to evaluate 
licensees' defensive capabilities and identify areas for improvement. 
During 2003, we implemented a pilot force-on-force exercise program and 
conducted exercises at 15 power plants to evaluate the significance and 
impact of enhanced adversary characteristics and associated 
compensatory measures and to develop program improvements to enhance 
the realism and effectiveness of the exercises. In 2004, we are 
conducting exercises roughly twice a month to evaluate the 
effectiveness of program enhancements including the use of Multiple 
Integrated Laser Enhancement System (MILES) equipment, adversary force 
standards, improved controller training, and other enhancements to 
improve the realism of the exercises while maintaining safety of both 
the plant and personnel. In November of this year, we will begin full 
implementation of the triennial force-on-force exercise program for 
power reactors.
    In the area of materials security, we have coordinated closely with 
State agencies and affected licensee groups to develop additional 
security requirements for two classes of materials licensees who 
possess high-risk radioactive materials (irradiator licensees and 
manufacturers and distributors of radioactive materials). We are 
preparing proposed Orders for other materials users. We are developing 
enhanced import and export controls for high-risk sources. In addition, 
we have developed an interim data base for high-risk sources and, with 
the assistance of other Federal agencies as well as the States, we are 
laying the foundations for the national source tracking system. We are 
also engaged with other Federal agencies to increase security involving 
transportation of large quantities of radioactive materials and are 
conducting a comprehensive review of material control and accounting 
requirements and practices.
    The NRC has completed most of its work on vulnerability assessments 
and identification of mitigation strategies for a broad range of 
threats to NRC-licensed activities involving radioactive materials and 
nuclear facilities. Thus far, the results of these studies have 
validated the actions NRC has taken to enhance security. These efforts 
have continued to affirm the robustness of these facilities, the 
effectiveness of redundant systems and defense-in-depth design 
principles, and the value of effective programs for operator training 
and emergency preparedness. Our vulnerability studies confirm that the 
likelihood of damaging the reactor core and releasing radioactivity 
that could affect public health and safety is low. Further, the studies 
confirm that even in the unlikely event of a radiological release due 
to terrorist use of a large aircraft, NRC's emergency planning basis 
remains valid. The aircraft vulnerability studies also indicate that 
significant damage to a spent fuel pool is improbable, that it is 
highly unlikely that the impact on a dry spent fuel storage cask would 
cause a significant release of radioactivity, and that the impact of a 
large aircraft on a transportation cask would not result in a release 
of radioactive material. Thus, we believe that nuclear power plant 
safety, security, and emergency planning programs continue to provide 
reasonable assurance of adequate protection of the public health and 
safety.
    In summary, NRC licensees had robust private sector security 
programs long before the attacks of September 11, 2001, and those 
programs have been further enhanced over the past 30 months. We 
continue to ensure that our licensees implement effective security 
programs for the current threat environment. In addition, we continue 
to work closely with our Federal, State, and local partners and with 
the private sector to ensure an appropriate integrated response to 
threats to licensed nuclear facilities and materials.
                     emergency preparedness program
    The events of September 11, 2001, highlighted the need to examine 
the way the NRC is organized to carry out its safeguards, security, and 
incident response functions. Consequently, the NRC has taken several 
actions in response to the new environment, including the issuance of 
compensatory measures and Orders to licensees, re-examination of the 
emergency planning basis, creation of the Office of Nuclear Security 
and Incident Response, and evaluation of reactor integrity to new 
threats. In addition, the NRC as well as our stakeholders have become 
increasingly aware of the importance of emergency preparedness to 
mitigating the effects of potential security threats. Along with this 
increased awareness, the NRC recognizes the need for increased 
communication of our emergency preparedness activities with internal 
and external stakeholders, including the public; industry; the 
international nuclear community; and Federal, state, and local 
government agencies. As a result, the NRC established the Nuclear 
Emergency Preparedness Project Office. The Project Office is 
responsible for the continuing development and refinement of emergency 
preparedness policies, regulations, programs, and guidelines for both 
currently licensed nuclear reactors and potential new nuclear reactors. 
The Project Office provides technical expertise regarding emergency 
preparedness issues to other NRC offices and also coordinates and 
manages emergency preparedness communications with internal and 
external stakeholders including the public, industry, the international 
nuclear community, and Federal, State, and local government agencies.
                           materials program
    The NRC, in partnership with the 33 Agreement States, conducts a 
comprehensive program to ensure the safe use of radiological materials 
in a variety of medical and industrial settings. As some of NRC's 
responsibilities, including inspection and licensing actions, have been 
assumed by Agreement States, our success depends in part on their 
success, and we closely coordinate our activities with the States.
    Recently, the Commission has completed a complex rulemaking on the 
medical uses of byproduct material--a rulemaking in which there was 
significant interaction with Congress. We are now implementing that 
rule and assuring that compatible regulations are adopted by the 
Agreement States.
    The NRC is developing a web-based materials licensing system. The 
system is expected to provide a secure method for licensees to request 
licensing actions and to view the status of licensing actions on the 
Web. In addition, the NRC, with assistance from other Federal agencies 
and the States, is creating a National Source Tracking System that will 
be used to monitor radioactive sources in quantities of concern with 
respect to a radiological dispersal device (RDD) threat. The 
development of the National Source Tracking System will remain a high 
priority effort.
    The Commission has also implemented a major rule change related to 
large fuel cycle facilities. This rule requires licensees and 
applicants to perform an integrated safety analysis that applies risk-
based insights to the regulation of their facilities. Major licensing 
reviews currently underway, or soon to be submitted, will test the new 
rule. These licensing reviews include two new gas centrifuge enrichment 
facilities.
    The first proposed enrichment facility would be located in New 
Mexico and the second in Ohio. Louisiana Energy Services submitted an 
application for its facility in Eunice, New Mexico, to the NRC in 
December 2003. U.S. Enrichment Corporation is expected to submit its 
application to the NRC for its site in Piketon, Ohio, in August 2004. 
The Commission has directed its staff to conduct reviews of the 
applications for the two proposed enrichment facilities in a timely 
manner. The Commission will endeavor to identify efficiencies and 
provide the necessary resources to reduce the time the agency needs to 
complete these reviews.
    The staff is currently reviewing a request to authorize 
construction of a mixed oxide (MOX) fuel fabrication facility at the 
Savannah River site in South Carolina as part of the Department of 
Energy's program to dispose of excess weapons grade plutonium. The 
staff is also providing support to its Russian counterparts regarding 
the licensing of a Russian MOX facility that will have a design similar 
to the U.S. facility.
    In addition to the new facilities discussed above, the NRC 
regulates several other existing fuel facilities. NRC's oversight of 
these facilities includes licensing actions, inspection, enforcement, 
and assessment of licensee performance. Our Fuel Facilities Licensing 
and Inspection program was the second of our regulatory programs 
assessed under the Office of Management and Budget's Performance 
Assessment Rating Tool (PART) and awarded the top rating, 
``effective,'' a rating achieved by only 11 percent of the Federal 
programs evaluated.
                         nuclear waste program
    The NRC staff has made progress on a wide array of programs 
relating to the safe disposal of nuclear waste. A central focus of 
these programs is to ensure that the agency is prepared to review an 
application by the Department of Energy to construct a high-level 
radioactive waste repository at Yucca Mountain, Nevada. Progress has 
been made in our pre-application interactions with DOE in addressing 
technical issues that are significant to repository performance. The 
application is expected to be submitted to NRC in December 2004. The 
NRC would make a docketing decision on the license application, and, if 
docketed, review the license application and make a determination 
regarding to what extent the Yucca Mountain Final Environmental Impact 
Statement can be adopted.
    We are also preparing to conduct a related licensing proceeding. 
Our preparations include the creation of an information technology 
system to handle the large number of complex documents that will be 
involved and the leasing of a hearing facility near Las Vegas, Nevada. 
This licensing proceeding will present the NRC with a formidable 
challenge and the technical issues involved will be substantial. 
Moreover, no single NRC decision or set of decisions, since the Three 
Mile Island accident, is likely to be scrutinized as closely as those 
concerning this one-of-a-kind facility.
    In our waste program, the NRC staff also has a substantial effort 
underway in the area of dry cask storage of spent reactor fuel. Storage 
and transport cask designs continue to be reviewed and certified. 
Independent Spent Fuel Storage Installations (ISFSIs) continue to be 
licensed and inspected. The Atomic Safety and Licensing Board currently 
is expected to issue its final decision on the proposed Private Fuel 
Storage ISFSI in Utah early in 2005. The Surry ISFSI in Virginia is the 
lead facility for license renewal. Indeed, our workload related to 
ISFSIs and dry cask storage in general will increase substantially in 
the years ahead. This projection is based on licensees' plans to adopt 
dry cask storage at their sites. We are currently formulating a major 
research program, the Package Performance Study, which will include a 
demonstration test of the robustness of NRC-certified spent fuel 
transportation casks.
    The NRC staff is also continuing to make significant progress in 
ensuring the decommissioning of contaminated sites. The staff 
identified several policy issues requiring Commission direction that 
will help expedite decommissioning under NRC's License Termination 
Rule, and the Commission has provided the necessary guidance. 
Complicated decommissioning sites that pose technical challenges 
include the Safety Light site near Bloomsburg, Pennsylvania. We are 
currently working with the Environmental Protection Agency to have this 
site included on the National Priority List to make other Federal 
resources available for the cleanup of this site.
                             human capital
    The NRC is very dependent on a highly skilled and experienced work 
force for the effective execution of its activities. The Commission's 
human capital planning integrates strategies for finding and attracting 
new staff, and for promoting employee development, succession planning, 
and retention. The Commission has developed and implemented a strategic 
work force planning system to identify and monitor its human capital 
assets and needs and to address critical skills shortages. This 
includes the use of an agency-wide online skills and competency system 
to identify gaps in needed skills; the ongoing review of NRC's 
organizational structure to align with its mission and goals; and the 
development of a web-based staffing system that includes online 
application, rating, ranking, and referral features. The agency has 
also implemented two leadership competency development programs to 
select high-performing individuals and train them for future mid-level 
and senior-level leadership positions. In addition, the agency has 
continued to support its fellowship and scholarship programs and 
identified a significant number of diverse, highly qualified entry-
level candidates through participation in recruitment events and career 
fairs.
    NRC is utilizing a variety of recruitment and retention incentives 
to remain competitive with the private sector. So far we have been 
successful in attracting and retaining new staff, particularly at entry 
levels. Nonetheless, it is likely to become more difficult for NRC to 
hire and retain personnel with the knowledge, skills, and abilities to 
conduct the safety reviews, licensing, research, and oversight actions 
that are essential to our safety mission. Moreover, the number of 
individuals with the technical skills critical to the achievement of 
the Commission's safety mission is rapidly declining in the Nation, and 
the educational system is not replacing them. The maintenance of 
technically competent staff will continue to challenge governmental, 
academic, and industry entities associated with nuclear technology for 
some time to come.
                                 budget
    The NRC has proposed a Fiscal Year 2005 budget of $670.3 million. 
In developing the budget, the Commission has ensured that we continue 
only those programs that are effective in meeting our mission and 
goals. Even with our efforts to be more efficient in our utilization of 
resources, we must still request a Fiscal Year 2005 budget increase of 
approximately 7 percent ($44 million) over the Fiscal Year 2004 budget 
for essential activities. This budget proposal will allow the NRC to 
continue to protect the public health and safety, promote the common 
defense and security, and protect the environment, while providing 
sufficient resources to address increasing personnel costs and new 
work. Approximately 32 percent ($14 million) of the budget growth is 
for personnel costs, primarily the pay raise that the President has 
authorized for Federal employees. The remaining increase supports our 
High-Level Waste and Nuclear Reactor Safety programs. We are requesting 
an increase of approximately $30 million for our High-Level Waste 
program to initiate the review of the anticipated DOE application to 
construct a high-level waste repository at Yucca Mountain and to 
conduct a Package Performance Study, which will confirm that our 
regulations provide for the safe transportation of spent nuclear fuel 
even under accident scenarios. We are also requesting an increase of 
approximately $10 million for our Nuclear Reactor Safety programs 
primarily to keep pace with industry interest in new reactor 
initiatives and to strengthen our reactor inspection and performance 
assessment activities. These increases are offset by a decrease of 
approximately $10 million in our Homeland Security programs for 
completed homeland security activities.
                           legislative needs
    Over the years, the NRC has repeatedly expressed its support of 
enactment of legislation needed to strengthen the security of 
facilities regulated by the Commission. Although we did not support all 
the provisions contained in bills that addressed nuclear security in 
the first session of this Congress, we were encouraged by Congressional 
action on the subject. Although, the Commission has used existing 
authority to ensure robust security for nuclear power plants and high 
risk radioactive materials, provisions that the Commission supports 
would provide the statutory authority for steps that we believe should 
be taken to further enhance the protection of the country's nuclear 
infrastructure and prevent malevolent use of radioactive material. In 
particular, the Commission supports enactment of the nuclear security-
related provisions contained in H.R. 6, as approved by the conferees on 
that bill in the last session of this Congress, and S. 2095, which has 
been introduced in this session.
    The proposals that the Commission believes to be most important 
are: (1) authorization of security officers at NRC-regulated facilities 
and activities to receive, possess, and, in appropriate circumstances, 
use more powerful weapons against terrorist attacks, (2) enlargement of 
the classes of NRC-regulated entities and activities whose employees 
are subject to fingerprinting and criminal history background checks, 
(3) Federal criminalization of unauthorized introduction of dangerous 
weapons into nuclear facilities, (4) Federal criminalization of 
sabotage of additional classes of nuclear facilities, fuel, and 
material, (5) authorization for NRC to carry out a training and 
fellowship program to address shortages of individuals with critical 
nuclear regulatory skills, and (6) extension of NRC's regulatory 
oversight to discrete sources of accelerator-produced radioactive 
material and radium-226. All but the last of these are included in H.R. 
6 and S. 2095.
    In addition, enactment of the following proposals would enhance the 
NRC's ability to protect the public health and safety:
    (1) long-term extension of the Price-Anderson Act;
    (2) authorization to charge Federal agencies fees for licensing and 
inspections, rather than recouping the costs of these activities 
through charges to other licensees;
    (3) authorization for costs of security-related activities to be 
covered from the general fund (except for fingerprinting, criminal 
background checks, and security inspections);
    (4) elimination of NRC's antitrust review authority over new power 
reactor license applications;
    (5) clarification of the length of combined construction permits 
and operating licenses for new reactors;
    (6) allowing rehired annuitants to receive full pay from the NRC 
for their services without reduction in pension payments;
    (7) authorization to compensate individuals with critical skills at 
rates competitive with rates paid to persons with similar skills in the 
private sector;
    (8) modification of the organizational conflict of interest 
provisions in the Atomic Energy Act to allow the agency to engage 
valuable expertise at a national laboratory that also performs work for 
the nuclear industry; and
    (9) authorization to establish and participate in science, 
engineering, and law partnership outreach programs to increase the 
participation of Historically Black Colleges and Universities, Hispanic 
Serving Institutions, and Tribes.
    All but the last three proposals are included in H.R. 6 and S. 
2095. We look forward to working with you on the enactment of these 
proposals by this Congress.
                               conclusion
    Mr. Chairman, I can assure you that the Commission will continue to 
be very active in managing the staff's efforts on ensuring the adequate 
protection of public health and safety, promoting common defense and 
security, and protecting the environment in the application of nuclear 
technology for civilian use.
    We appreciate the opportunity to appear before you today. My 
colleagues and I welcome the opportunity to respond to your questions.
                                 ______
                                 
 Responses by Nils J. Dias to Additional Questions from Senator Inhofe
    Question 1. Have you considered the possibility of consolidating 
the employees at the four Regions to headquarters? Since every nuclear 
reactor has full-time NRC resident inspectors located at each facility, 
is it really necessary to have four regional offices? Please provide a 
breakdown as to the functions performed solely at the Regional Offices, 
and those functions which are performed at both headquarters and in the 
regions.
    Response. The NRC reviewed regional consolidation as recently as 
last year. Reviews were also conducted during the 1994-1995 timeframe, 
which resulted in the closure of NRC's Region V office in California, 
and in 1998 and 2002. The most recent review was in response to the 
fiscal year 2003 Energy and Water Development Appropriations Act, 
(House Report 108-10 and Senate Report 107-220), which directed the NRC 
to report to the Congress on regulatory efficiencies that would be 
gained by consolidating or eliminating regional offices. The Commission 
provided a response on June 26, 2003. The report noted that the 
Commission believes that in the context of its fundamental mission, a 
strong regional presence is essential for the effective implementation 
of the agency's health, safety, and security programs.
    Public health and safety are better served with critical NRC 
expertise located close to the geographical area of our licensed 
activities. Whether overseeing routine licensed activities or reacting 
to unforseen circumstances, a regional office can rapidly muster 
critical resources to a facility when a situation needs immediate 
attention and time is of the essence.
    The regional staff have unique expertise in the area of field 
inspections and are familiar with the licensee location, procedures, 
strengths, and weaknesses. The four regional offices each oversee 21 to 
32 operating reactors, which enables the NRC to deploy first responders 
to incidents and emergencies in four different geographical locations. 
Homeland security initiatives and objectives provide additional 
compelling reasons for the agency's current regional structure. All the 
regional offices are involved in heightened security, safeguards, and 
emergency preparedness activities in light of the current threat 
environment.
    The NRC's regional structure aligns well with the Administration's 
emphasis on close coordination with constituents and stakeholders. 
Regional offices bring NRC closer to the public it serves, giving 
stakeholders access to NRC officials in their own region of the 
country, thereby enhancing relationships with local and state officials 
and increasing public confidence in the NRC.
    With regard to the functions carried out by the regions and 
headquarters, the regional offices execute established NRC policies and 
assigned programs relating to inspection, licensing, incident response, 
governmental liaison, resource management and human resources. Each of 
the regional offices implement inspection and public interface 
activities in the following nine areas: investigations, public affairs, 
legal affairs, allegations/enforcement, State liaison, resource 
management, nuclear materials safety, reactor projects, and reactor 
safety. NRC headquarters develops policy and inspection guidance for 
programs assigned to the regional offices and assesses the 
effectiveness and uniformity of the regions' implementation of those 
programs.
    The Commission does look for efficiencies in the operation of its 
regional offices. For example, the Commission recently consolidated 
responsibility for all major fuel cycle facilities in its Atlanta 
office. Additionally, in 2000 the Commission attempted to close the NRC 
Technical Training Center, which is located in Chattanooga, Tennessee 
and move the approximately 27 personnel to our Rockville, Maryland 
headquarters. We had based the decision on justifiable training 
efficiencies to be gained from such a move. Nevertheless, the NRC was 
precluded from making the change by language included in Public Law 
106-246, The Military Construction Appropriations Act.

    Question 2. How is the interaction between the EPA and the NRC on 
the setting of radiation standards? Now that the standards for Yucca 
Mountain have been set, I think we should give serious consideration to 
consolidating the process at the NRC. Is it feasible/possible for the 
EPA's functions to be consolidated at the NRC?
    Response. EPA derives its responsibility to set generally 
applicable radiation standards from the statutory Reorganization Plan 
No. 3 of 1970. This plan gives EPA authority to set generally 
applicable standards for the protection of the general environment from 
radioactive material. As noted in the OMB Memorandum dated December 7, 
1973, known as the Ash Memorandum, EPA initially construed its 
responsibilities too broadly. The memorandum directed that EPA should 
continue setting standards for the total amount of radiation in the 
general environment from all facilities combined in the uranium fuel 
cycle. Facility specific standards would be set by the NRC (formerly 
the AEC) with EPA review and comment. Since that time the two agencies 
have continued to interact to avoid overlap and duplication regarding 
standards that apply to NRC regulated facilities. However, these 
interactions have generally been difficult and largely unsuccessful. 
Interface has occurred in a number of venues, and on a variety of 
topics under the Atomic Energy Act. NRC's interactions with EPA have 
consistently focused upon achieving an effective regulatory environment 
that protects public health and safety and minimizes duplication. NRC 
has worked to achieve this coordination through the Interagency 
Steering Committee on Radiation Standards (ISCORS), and through a 
Memorandum of Understanding. Overlap in legislative mandates continues 
to result in differences between the agencies.
    As to EPA's Yucca Mountain standards (the authority for which 
derives from the Nuclear Waste Policy Act and the Energy Policy Act of 
1992), we would note that the U.S. Court of Appeals for the DC Circuit 
issued a decision on July 9, 2004, in NEI v. EPA that vacated a part of 
EPA's Yucca Mountain standards in 40 CFR Part 197 (and NRC's identical 
standards in 10 CFR Part 63). Thus, at this time, we cannot say that 
the ``standards for Yucca Mountain have been set.''
    EPA's Yucca Mountain standard setting function aside, it would be 
possible, with legislation, to transfer EPA's radiation standard 
setting functions established by Reorganization Plan No. 3 of 1970 to 
the NRC as well as related standard setting for accelerator-produced 
radioactive material and certain discrete sources not currently covered 
by the Atomic Energy Act. If such a step were taken, roles and 
responsibilities would need to be carefully defined to clarify multiple 
legislative mandates from which each agency's authority derives. In 
addition, this consolidation would require adjustment of resources.
                                 ______
                                 
Responses by Nils J. Dias to Additional Questions from Senator Jeffords
    Question 1. I have a question regarding record keeping related to 
nuclear fuel. It is my understanding that the NRC used to have a more 
direct role in keeping records on the location of nuclear fuel and 
waste at power plants, but that it changed its policy in the 1980's. 
Now the license holders are primarily responsible for this task. In 
light of what has happened at Vermont Yankee, and with the increase in 
buying and selling of nuclear plants to new owners, is the NRC 
reconsidering taking a more active role? Would you need additional 
authority from Congress to do so.
    Response. In general, the NRC Material Control And Accounting 
(MC&A) inspection program verifies whether licensees have limited their 
possession and use of Special Nuclear Material (SNM), including spent 
fuel, to the locations and purposes authorized by their operating 
licenses. In addition, during these inspections, the NRC determines 
whether licensees have implemented adequate and effective programs to 
account for and control the SNM in their possession. Prior to 1988, the 
NRC routinely inspected MC&A programs at nuclear power plants including 
the location of spent fuel. This inspection process focused on fuel rod 
assemblies but not individual components, such as fuel rods. However, 
the NRC has never had an active or direct role in the creation or 
maintenance of records for the licensee. This has always been the 
licensee's responsibility.
    Findings from MC&A inspections at power reactors prior to 1988 did 
not indicate that there were major deficiencies in power reactor 
licensees' MC&A programs. At that time, the NRC considered there was 
low risk of improper storage of spent fuel at a power reactor since 
physical and radiological characteristics of spent fuel made it highly 
unlikely that spent fuel could be safely removed from the fuel pool 
without proper equipment and procedures. Therefore, In 1988 the NRC 
chose to allocate inspection resources to other more risk-significant 
areas.
    In 2001, the NRC staff conducted a re-examination of MC&A 
vulnerabilities as part of the comprehensive review of the NRC's 
Safeguards and Security Program which was conducted in response to a 
November 2000 event at Millstone Unit 1, in which two irradiated fuel 
rods were reported missing from the spent fuel pool. The Millstone 
events as well as subsequent equivalent events at other facilities 
involved individual fuel rods which were removed from fuel assemblies 
and the disassembly occurred well before 1988.
    As part of the lessons learned from the Millstone Unit 1 event, the 
NRC staff developed Temporary Instruction (TI) 2515/154, ``Spent Fuel 
Material Control and Accounting at Nuclear Plants,'' dated November 26, 
2003, to enhance the NRC's inspection of licensees' MC&A programs. The 
TI provides specific inspection guidance to NRC inspectors and consists 
of three phases. The first phase requires the NRC resident inspector at 
the reactor to determine through interviews if a licensee has ever 
removed irradiated fuel rods from a fuel assembly. If the answer is 
yes, Phase II of the TI is then implemented. Phase II of the TI 
determines, through detailed questions and review of records and 
physical inspection, if a licensee's MC&A program is adequate to 
account for items located in the spent fuel pool. At a minimum, Phase 
III of the TI will be implemented at plants where it has been 
determined that a licensee's MC&A program has potential deficiencies. 
Phase III is a much more detailed inspection of the MC&A program, which 
will be conducted by experienced MC&A inspectors and includes 
verification of records and the location in the spent fuel pool of all 
spent fuel rods that have been separated from their parent fuel 
assemblies. The NRC is developing a Bulletin which will be issued to 
power reactor licensees and requests information from licensees about 
their MC&A programs. The responses to this Bulletin will further inform 
the conduct of the Phase III inspections. A longer term decision 
regarding NRC inspection activities will be completed after the results 
of Phase III inspections have been evaluated. No additional authority 
is needed to conduct inspection activities in this area.

    Question 2. The discovery of missing fuel rods at Vermont Yankee 
resulted from NRC inspections required of all plants as a followup to 
the loss of fuel at the Millstone plant. Have other plants reported 
missing fuel? And when will the inspection of other plants be 
completed?
    Response. Yes, Humboldt Bay Nuclear Power Plant has reported 
missing fuel rod segments. Pacific Gas and Electric, the licensee, was 
unable to locate the missing segments in most likely and accessible 
locations. The NRC continues to provide oversight of key search 
activities and will conduct a management meeting in late September 
2004.
    MC&A inspections are being conducted under Temporary Instruction 
2515/154. Phases I and II of the temporary instruction, which are 
inspections conducted by the Resident Inspectors, have been completed 
at all plants. NRC is currently evaluating the information gathered 
during Phases I and II and plans to conduct additional inspections at 
some plants under Phase III. The temporary instruction calls for the 
Phase III inspections to be completed by November 2005.

    Question 3a. On May 4, 2004, the NRC responded to the Vermont 
Public Service Board's request for additional independent review at 
Vermont Yankee. Your letter stated that a pilot engineering assessment 
would be conducted. The assessment team will be comprised of NRC staff, 
state officials, and at least two independent contractors. When will 
these inspections start?
    Response. The inspection team was onsite at the Vermont Yankee 
facility during the weeks of August 9 and 16 and is scheduled to be 
onsite the week of August 30.

    Question 3b. On May 4, 2004, the NRC responded to the Vermont 
Public Service Board's request for additional independent review at 
Vermont Yankee. Your letter stated that a pilot engineering assessment 
would be conducted. The assessment team will be comprised of NRC staff, 
state officials, and at least two independent contractors. Will you 
commit to having an independent observer in addition to the independent 
contractor on the team?
    Response. The Vermont Yankee team will consist of a team leader, 
three NRC inspectors, three contractors, and a member from the NRC 
nuclear safety professional development program. The team leader will 
come from our program office in headquarters and is currently 
responsible for the overall engineering pilot program effort. He has 
extensive experience leading engineering team inspections and no 
previous involvement or inspection experience at Vermont Yankee. The 
three contractors have diverse backgrounds in the electrical, 
mechanical, and instrumentation areas, and have never been directly 
employed by Vermont Yankee or its owner, Entergy, and have not 
performed contract work for Vermont Yankee or Entergy for at least the 
last 2 years. The other NRC inspection team members will not have 
served or participated on engineering inspections at Vermont Yankee in 
the past 2 years. In accordance with our Memorandum of Understanding 
with Vermont, there also will be an observer from the State of Vermont 
who will be able to provide an independent perspective on the 
inspection. There were no plans for additional observers. Additional 
observers who do not have unescorted access could impede the 
effectiveness of the inspection effort as they would need to be 
continuously escorted while onsite.

    Question 4. There have been on-going allegations from nuclear 
advocacy groups in New England that NRC staff ``misled'' Senator Leahy 
and me regarding the extent to which the NRC's new power uprate 
guidelines were related to the Independent Safety Assessment conducted 
at Maine Yankee. These allegations have been made to the Commission in 
writing.
    Will you clarify this issue and provide a summary to the 
subcommittee of the provisions of the extended power uprate guidelines 
that were explicitly drawn from Maine Yankee Independent Safety 
Assessment?
    Response. The NRC received a letter from Mr. Ray Shadis on March 
24, 2004, regarding the NRC communications with yourself and Senator 
Leahy. He expressed concerns that you were misinformed about the nature 
and the evolution of the NRC's newly adopted Review Standard for 
extended power uprates (EPUs) and the scope of the EPU review process.
    In a letter to the NRC on February 27, 2004, you accurately stated 
that the NRC Review Standard for EPUs incorporates lessons learned from 
an independent assessment conducted at Maine Yankee. On March 29, 2004, 
the NRC responded to your letter and further reiterated that the Maine 
Yankee lessons learned was one input, along with others, into the 
development of the Review Standard. Our letter of March 29, 2004, 
provides a broader discussion of the NRC's review process and 
inspections related to the proposed power uprate.
    The development of the Review Standard for EPUs included a review 
of past experience, a part of which was a review of various reports 
related to the Maine Yankee Lessons Learned such as:
     Memorandum from the Office of the Inspector General to the 
Chairman and Commissioners, ``Event Inquiry--Maine Yankee Atomic Power 
Station (Case 96-04S),'' dated May 8, 1996.
     Letter to C. Frizzle, Maine Yankee Atomic Power Company, 
from S. Jackson, (former) Chairman, NRC, forwarding the ``Independent 
Safety Assessment (ISA) of Maine Yankee Atomic Power Company,'' dated 
October 7, 1996.
     Report of the Maine Yankee Lessons Learned Task Group, 
dated December 1996.
     Memorandum to W. Travers from S. Collins, ``Status of NRR 
Staff Actions Resulting from the Independent Assessment of Maine Yankee 
Atomic Power Company,'' dated January 11, 2001.
     Power Uprate Amendment for Surry Units 1 and 2--License 
Amendment Nos. 203 and 203, dated August 3, 1995.
     Power Uprate Amendment for Fermi 2--License Amendment No. 
87, dated September 9, 1992.
    The Maine Yankee Lessons Learned Task Group had identified ``Review 
Areas Not Addressed'' by comparing twenty-two previous power uprate 
safety evaluations to the most recent pressurized-water reactor and 
boiling-water reactor safety evaluations (i.e., for Surry Units 1 and 2 
and Fermi 2) and noting inconsistencies in the review scope. These 
areas were: human factors, station blackout, standby liquid control 
system, reactor vessel/internal stresses, control rod drive mechanisms, 
steam generator tube integrity, reactor coolant pumps, pressurizer, 
piping, equipment qualification, fire protection, control room 
habitability, loss-of-coolant accident (LOCA)/main steam line break 
containment performance, safety-related pumps net positive suction 
head, post-LOCA combustible gas control, service water, component 
cooling water, spent fuel pool cooling, heating ventilation air 
conditioning, radwaste, circulating water system, main steam, main 
turbine, instrumentation and control setpoints, reactor coolant system 
flow, auxiliary feedwater, residual heat removal, and general design 
criteria (GDC)-17 electric power systems.
    In the Review Standard for EPUs, the staff included the ``Review 
Areas Not Addressed'' identified by the Maine Yankee Lessons Learned 
Task Group, along with information developed from other past experience 
reviews. The staff also reviewed the Maine Yankee Lessons Learned Task 
Group recommendations for improving the overall power uprate review 
process and this information was used in the development of the process 
guidance portion of the Review Standard for EPUs.
    Specific to the issue of what experience from the Maine Yankee 
Independent Safety Assessment was incorporated into the EPU review 
guidance, the letter to C. Frizzle, Maine Yankee Atomic Power Company, 
from S. Jackson, (former) Chairman, NRC, forwarding the ``Independent 
Safety Assessment of Maine Yankee Atomic Power Company,'' dated October 
7, 1996, contained five issues in Section 6.0, ``Regulatory Issues.'' 
These areas were: (1) analytical code validation, (2) compliance with 
Safety Evaluation Reports, (3) Licensing Reviews for Power Uprates, (4) 
Regulatory Guide 1.1, ``Net positive Suction Head for Emergency Core 
Cooling and Containment Heat Removal System Pumps (Safety Guide 1),'' 
and (5) Inspection Program.
    The staff broke these issues into 33 actions in the following 
action categories: (1) Adequacy of Analytical Code Validation, (2) 
Adequacy of NRC Review of Analysis Codes, (3) Compliance with Safety 
Evaluation Reports, (4) Adequacy of Licensing Reviews for Power 
Uprates, (5) Clarity and Intent of NRC Regulatory Guide 1.1 (Safety 
Guide 1), (6) Adequacy of the NRC Inspection Program, (7) Agency 
Expectations regarding Licensee Performance, (8) Cumulative Effect of 
Operator Workarounds, (9) Agency Policy regarding Licensee Design Basis 
Recovery Efforts, (10) Public Involvement in the Assessment Process, 
and (11) Licensee Response to the ISA Report.
    The staff has completed 30 of the 33 actions. Three actions are on-
going. These three actions are related to adequacy of analytical code 
validation. The staff's interim action is the issuance of the Draft 
Regulatory Guide DG-1096, ``Transient and Accident Analysis Methods,'' 
and Draft Standard Review Plan (SRP) 15.0.2, ``Review of Analytical 
Computer Codes.'' The staff is resolving the public comments for these 
documents. The staff's actions will be complete when the final 
Regulatory Guide and SRP are issued. However, the staff placed guidance 
in the Review Standard for EPUs (RS-001) for the staff to confirm that 
licensees used codes and methods approved for the plant-specific 
application and the licensee's use of the codes and methods complies 
with any limitations, restrictions, and conditions specified in the 
approving safety evaluation.

    Question 5a. Constituents have raised concerns with me regarding 
the process for requesting a public hearing on the Vermont Yankee power 
uprate. I request that you clarify two issues:
    First, my constituents believe that the time in which they need to 
request a hearing begins when the notice of the application appears on 
the Commission's web site rather than in the Federal Register. Isn't 
the Federal Register notice, when one is submitted, the official start 
of the clock for hearing requests? Will that be the case for Vermont 
Yankee?
    Response. The publication date of the Federal Register notice on 
the Vermont Yankee power uprate amendment begins the period for 
requesting a hearing. A notice of opportunity to request a hearing for 
the Vermont Yankee power uprate was published in the Federal Register 
on July 1, 2004 (69 FR 39976), with a 60 day period for hearing 
requests.

    Question 5b. Constituents have raised concerns with me regarding 
the process for requesting a public hearing on the Vermont Yankee power 
uprate. I request that you clarify two issues:
    Second, my constituents are concerned about both the evidentiary 
and standing requirements contained in the new NRC hearing regulations. 
In response to a request for a hearing, does the NRC have the 
discretion to decide whether or not to use its current or former 
regulations to govern the hearing process?
    Response. The Commission does have considerable discretion to 
modify by order, in individual cases, the adjudicatory procedures to be 
applied in a particular proceeding. However, the new 10 CFR Part 2 rule 
(69 FR 2182, January 14, 2004), applies (by its terms) to proceedings 
noticed after February 13, 2004, which includes the Vermont Yankee 
power uprate proceeding. The new Part 2 is the product of a long and 
comprehensive rulemaking effort concerning the rules of practice. It 
does not change the evidentiary or standing requirements that were in 
the old Part 2. The new Part 2 does include new requirements regarding 
the submission of admissible contentions in informal proceedings, but 
these contention requirements are essentially the same as the 
contention requirements that applied under the old Part 2 proceedings 
involving power reactor license amendment requests. The new Part 2 
requires that contentions be submitted as part of the petition to 
intervene/request for hearing.

    Question 6a. On May 18, 2004, Senator Inhofe and I received a 
letter from you regarding the Commission's views on nuclear waste that 
is incidental to reprocessing at Department of Defense facilities. 
(NOTE: The NRC letter was in reference to DOE facilities, not DOD 
facilities). I noted with some dismay that while the Vermont Public 
Service Board waited 7 weeks for a reply to its questions regarding the 
proposed power uprate at Vermont Yankee, this response was obtained the 
same day questions were submitted to the NRC. I have a few questions 
regarding this letter, and I have written to you regarding this matter.
    In the letter you write that the NRC ``does not have regulatory 
authority or jurisdiction'' over the Savannah River, Hanford, or Idaho 
facilities. Isn't that because the high-level waste storage tanks at 
these locations were authorized only for short-term, temporary storage, 
and not for permanent disposal?
    Response. Section 202(4) of the Energy Reorganization Act of 1974 
gives NRC licensing and related regulatory authority over DOE 
facilities ``authorized for the express purpose of subsequent long-term 
storage of high-level radioactive waste generated by [DOE], which are 
not used for, or are part of, research and development activities.'' 
There are three important elements in this jurisdictional grant: (1) 
Congress must have expressly authorized the facility for its purpose; 
(2) that purpose must be long-term storage; and (3) the radioactive 
wastes to be stored must be high-level radioactive waste (HLW). All 
three elements must be present for NRC's jurisdiction to attach to a 
particular DOE facility. NRC currently does not have regulatory 
authority over the Savannah River Site (SRS), Hanford, and Idaho 
National Engineering and Environmental Laboratory (INEEL) radioactive 
waste storage tanks because Congress has not expressly authorized use 
of these tanks for the purpose of long-term storage of DOE's HLW. NRC's 
view that it does not have regulatory authority over the DOE 
radioactive waste storage tanks has been upheld by the courts. See 
Natural Resources Defense Council v. NRC, 606 F.2d 1261, 1266-1268 
(D.C. Cir. 1979).

    Question 6b. On May 18, 2004, Senator Inhofe and I received a 
letter from you regarding the Commission's views on nuclear waste that 
is incidental to reprocessing at Department of Defense facilities. 
(NOTE: The NRC letter was in reference to DOE facilities, not DOD 
facilities). I noted with some dismay that while the Vermont Public 
Service Board waited 7 weeks for a reply to its questions regarding the 
proposed power uprate at Vermont Yankee, this response was obtained the 
same day questions were submitted to the NRC. I have a few questions 
regarding this letter, and I have written to you regarding this matter.
    Isn't it the case that under Section 202 of the Energy 
Reorganization Act, the NRC has regulatory authority and jurisdiction 
over any ``facilities authorized for the express purpose of . . . long-
term storage of high-level radioactive waste generated by'' the 
Department of Energy?
    Response. Yes. As stated above, under Section 202(4) of the Energy 
Reorganization Act of 1974, NRC has regulatory authority and 
jurisdiction over any facilities authorized for the express purpose of 
subsequent long-term storage of HLW generated by DOE, which are not 
used for, or are part of, research and development activities.
    Question 6c. On May 18, 2004, Senator Inhofe and I received a 
letter from you regarding the Commission's views on nuclear waste that 
is incidental to reprocessing at Department of Defense facilities. 
(NOTE: The NRC letter was in reference to DOE facilities, not DOD 
facilities). I noted with some dismay that while the Vermont Public 
Service Board waited 7 weeks for a reply to its questions regarding the 
proposed power uprate at Vermont Yankee, this response was obtained the 
same day questions were submitted to the NRC. I have a few questions 
regarding this letter, and I have written to you regarding this matter.
    Wouldn't legislation allowing DOE to say that high-level waste 
isn't high-level anymore circumvent the NRC's responsibility for 
licensing and regulating the facility in which permanent disposal is to 
take place? Have you actually reviewed and taken a position on Section 
3116 of the DOD Authorization bill that is presently on the Senate 
floor?
    Response. Legislation allowing DOE to exclude radioactive material 
meeting certain criteria from the definition of HLW would not 
necessarily affect the scope of NRC's jurisdiction under the Energy 
Reorganization Act of 1974. NRC does not currently have jurisdiction 
nor responsibility for licensing and regulating the radioactive waste 
storage tanks at SRS, Hanford and INEEL because Congress has not 
expressly authorized use of these tanks for the purpose of long-term 
storage of DOE's HLW. Unless Congress expressly authorizes use of the 
tanks for disposal of DOE's HLW, NRC would not have jurisdiction 
irrespective of whether the waste remaining in the tanks is considered 
to be HLW or waste-incidental-to-reprocessing (WIR). NRC has expressed 
its general views on WIR in the Commission's letter of May 18, 2004 to 
you and Senator Inhofe. NRC also responded to your June 2, 2004, letter 
regarding NRC's jurisdiction over HLW tanks at SRS and possible effects 
of the proposed Section 3116 in a letter to you dated July 15, 2004.
                                 ______
                                 
    Responses by Nils J. Dias to Additional Questions from Senator 
                               Voinovich
    Question 1. GAO claims that the recommendations are being 
implemented slowly because of resource constraints at the NRC. What are 
some of these constraints and what needs to be done to address them?
    Response. After the Davis-Besse Lessons Learned Task Force (task 
force) published its final report in October 2002, the NRC convened a 
Senior Management Review Team to prioritize the task force's 
recommendations as high, medium, and low priority and provide guidance 
on an overall plan to implement the recommendations. An overall plan to 
put the recommendations in place was provided to the Commission in 
March 2003. In this plan, four specific action plans were developed to 
address the high-priority recommendations in the following areas: (1) 
stress corrosion cracking; (2) operating experience; (3) inspection, 
assessment, and project management; and (4) barrier integrity 
requirements. Two medium-priority and 3 low-priority items were 
included in the action plans because they were closely tied to high-
priority items. Resource implications of these action plans were 
specifically provided in the overall plan, and agency resources were 
reallocated to carry out the high-priority recommendations effectively. 
In subsequent reviews as work progressed, additional resources have 
been allocated.
    The overall plan called for implementation of the medium and low-
priority recommendations that were not captured by the action plans in 
accordance with the NRC's Planning, Budgeting, and Performance 
Management (PBPM) process. The PBPM process is an established process 
which prioritizes work in accordance with safety benefits. All of the 
medium and low priority recommendations were reviewed through the PBPM 
process prior to the first semiannual report (August 2003). 
Implementation schedules and resource allocation were established 
commensurate with the perceived safety benefit relative to other NRC 
activities. These schedules have been periodically revised in 
accordance with the PBPM process, but are being tracked to completion. 
Status information is reviewed semi-annually by the Commission. The 
Commission believes that resources have been appropriately allocated to 
this program. See the answer to question No. 2 for status of task force 
recommendations.
    The NRC is committed to the effective implementation of the task 
force's recommendations. In addition to completing the implementation 
of recommended actions, the NRC will complete effectiveness reviews to 
ensure implementation meets the intended purposes and to ensure that 
certain changes are ``institutionalized.''

    Question 2. What progress are you making in implementing the Davis-
Besse lessons-learned task force (DBLLTF) recommendations?
    Response. There were 49 DBLLTF recommendations that were 
recommended for implementation after the senior management review. The 
21 high-priority, 2 medium priority, and 3 low priority recommendations 
were captured in four action plans and the remaining 23 recommendations 
(14 medium-priority and 9 low-priority) were to be completed in 
accordance with priorities established through the PBPM process, as 
described in the answer to question No. 1. The status of implementation 
is reviewed frequently and schedules are adjusted as needed to reflect 
new information or conditions.
    Since my testimony on May 20, 2004, some additional items have been 
completed and the schedules for others have been changed. The status of 
the 49 recommendations as of August 19, 2004, is as follows:
     Sixteen were completed in 2003. This included all 7 high-
priority items scheduled for completion during 2003, plus 9 lower 
priority recommendations. Seven lower priority items were rescheduled.
     Eight additional items (4 high-priority and 4 lower 
priority) have been completed to date in 2004.
     Fifteen additional items (3 high-priority, 10 medium-
priority, and 2 low-priority) are planned for completion by December 
2004.
     Six additional items (5 high-priority and 1 low-priority) 
are planned for completion by May 2005.
     The remaining 4 items (2 high-priority, 1 medium-priority, 
and 1 low-priority) do not have a current completion schedule, 
primarily because the scope of work depends on the outcome of other 
recommendations, actions by industry, or completion of research 
activities. However, work on these items should be substantially 
complete in 2005.
    In summary, as of June 30, 2004, 11 of the 21 high-priority 
recommendations and 13 of the lower priority items have been completed 
and work is in progress on the remaining items. In fact, seventy 
percent of all the recommendations will be in place by the end of 
calendar year 2004, with the expectation that all will be substantially 
complete in 2005. The activities that will extend beyond 2005 include 
rulemaking activities for Reactor Vessel Head inspection, which are 
expected to be completed in 2006, and other potential regulatory 
requirement revisions regarding Reactor Coolant System leakage, which 
will be identified in 2005 following review of a research report on 
leakage detection and monitoring technologies.

    Question 3. GAO claims that several of the issues that led NRC to 
not prevent the Davis-Besse incident were identified in past GAO 
reports, Commission lessons-learned task force recommendations, and 
Inspector General reports. The GAO also states that the NRC is 
reviewing ``the effectiveness of its response to past NRC lessons-
learned task force reports.'' What is the progress of the review you 
are performing on your effectiveness to fully implement past 
recommendations?
    Response. The charter of the Davis-Besse lessons learned task force 
included a direction to look back at previous task force reports to 
determine whether they suggested any recurring or similar problems. The 
task force's review uncovered potentially recurring programmatic issues 
and these issues were discussed in Appendix F of the task force report. 
As a result of this effort, one of the task force's recommendations was 
to conduct a more detailed effectiveness review of the actions taken in 
response to past lessons-learned reviews. This recommended action has 
been completed. The results of the review are being considered by NRC 
senior management and the Commission to identify and take corrective 
actions, as necessary.

    Question 4. How are you addressing NRC's major communication 
failures that GAO identified as playing a significant role in the 
Davis-Besse incident?
    Response. The NRC recognize that communications failures were an 
underlying cause for issues discovered at Davis-Besse (DB). The 
corrective actions outlined in the lessons-learned task force (LLTF) 
action plans address communications beyond the topic of boric acid 
corrosion control. For example, corrective actions in the area of 
operating experience development and use are focused on enhancing 
communications. The recommendations to strengthen inspection guidance, 
institute training to reinforce a questioning attitude on the part of 
management and staff, and change the Inspection Manual to provide 
guidance for the staff to pursue issues identified during plant status 
reviews are intended to establish more definitive expectations for 
improved communications of operating experience. Developing the most 
effective and efficient communications channels will be key to the 
successful implementation of a more effective operating experience 
program.
    Beyond the DBLLTF Action Plan, the agency has several ongoing 
initiatives that provide examples of efforts to more broadly improve 
intra-agency communications. These examples include establishment of a 
Communication Council reporting to the Executive Director for 
Operations and the creation of a communications specialist position 
reporting to the Office of Nuclear Reactor Regulation (NRR) Deputy 
Director. NRR also continues to improve and enhance its Web site as a 
focused means of communicating with both internal and external 
stakeholders. From a regional perspective, examples of communication 
enhancements include lowering the threshold for communication of plant 
issues on morning status calls, devoting additional time to discussing 
lessons learned from plant events and inspection findings during 
counterpart meetings, and developing enhanced guidance for documenting 
significant operational event followup decisions. In another example, 
NRC has recently revised guidance for NRC project managers for 
operating reactor sites to enhance the expectation for communication 
with NRC resident inspectors at the sites with regard to linkage 
between licensing actions and relevant operating experience at the 
sites. Collectively, these examples provide a strong indication that 
NRC headquarters and regional staff have understood and sought to 
address two of the most important lessons from the Davis-Besse event. 
These two issues are (1) that on occasion, information initially 
considered to have low significance by the first NRC recipient is later 
found to be of greater significance once the information is shared and 
evaluated more collegially; and (2) with regard to the complex nature 
of commercial nuclear power operations, no one person can be aware of 
all aspects of an issue. As a result, the more information that is 
shared, the more likely significant problems will be identified and 
appropriate action(s) taken.

    Question 5. What is NRC's human capital situation? What are the top 
things Congress can do to support NRC's human capital development?
    Response. Although NRC continues to make progress in acquiring, 
developing, deploying and retaining the human capital critical to the 
accomplishment of its safety, security, and emergency preparedness 
mission, the agency continues to be challenged by aging work force 
issues and by new work requiring hard-to-find skills. The agency's 
systematic strategic work force planning system is identifying 
potential skill gaps and the agency is devoting resources to address 
them. The following additional authorities would greatly help the 
agency meet these challenges quickly and successfully:
     Provide the agency $5M ($1M in fiscal year 2004 through 
fiscal year 2008) for training to address knowledge transfer and close 
critical nuclear safety/security/emergency preparedness skills gaps 
through employee training, and to fund the grant programs described 
below.
     Allow the agency to establish a fellowship program at 
institutions of higher learning to pay the tuition of undergraduate 
students in disciplines of interest to NRC in return for an obligation 
for the individual to accept employment with the NRC upon graduation. 
These programs support the development of a supply of graduates with 
technical skills needed for NRC's future work force.
     Allow the agency to establish a partnership program with 
historically black colleges and universities, Hispanic serving 
institutions and tribal colleges. Such a program would broaden the 
recruiting base from which NRC draws new employees.
     Broaden the authority under Section 31a. and b. of the AEA 
to provide grants, loans, cooperative agreements, contracts, and 
equipment to academic institutions in support of courses, studies, 
training, curriculum, and disciplines important to nuclear safety. The 
agency would use this authority to support academic research and 
analysis in disciplines important to nuclear safety. This activity 
fosters the maintenance of centers of excellence at universities in 
fields of interest to the NRC. Enhancing such excellence at academic 
institutions generates a pool of expert faculty members on whom NRC 
might draw for consultant, advisory board, or administrative judge 
assignments.
     Provide the agency independent authority to waive the 
pension offset when hiring retired Federal employees. The agency 
already has limited authority from OPM to waive the pension offset, but 
it is time-limited, expiring in fiscal year 2006, and it applies only 
to engineers and scientists. It does not cover intelligence analysts, 
security specialists, or others whose knowledge and skill may be 
critical to the agency and who would decline re-employment absent the 
waiver. More flexible authority to waive the pension offset would, for 
example, enable the agency to deal with emergency needs and accomplish 
knowledge transfer in critical skill areas.
     Provide the agency direct-hire authority where expedited 
action to meet critical needs is required, for example, in engineering 
and scientific areas, intelligence analysis, and security to work on 
high priority safety, security, and emergency preparedness projects, 
and authority to compensate experts in these areas at higher pay rates. 
Under very restrictive circumstances, some direct-hire authority may be 
obtained from OPM, but we believe that independent NRC legislative 
authority would permit the agency to develop a direct-hire program that 
best meets its needs. Independent NRC legislative authority to pay 
salaries and/or additional compensation at a higher rate than the 
current EX-III cap, $145,600 (e.g., up to the Vice President's salary) 
would enable the agency to hire critically needed experts for whom the 
current salary range is inadequate. This would be similar to DOD's 
unique legislative authority which permits higher salaries to experts, 
or to NASA's, which permits higher compensation for critical positions.

    Question 6. What is required of onsite inspectors in terms of their 
daily responsibilities? What are their weekly hours, salary, other 
benefits, etc.? How much do the inspectors move around the country? How 
are they recruited and what are the basic qualifications? How are they 
trained?
    Response. NRC resident inspectors perform a basic mission in 
determining whether a licensee operates the plant safely and meets 
current regulatory requirements and commitments, including in the area 
of security. Their main focus is on performing in-depth evaluations of 
materials, systems, incidents, and abnormal conditions. Resident 
inspectors assist in determining the safety significance of events and 
findings, recommend enforcement action, and prepare reports of findings 
and licensee performance. More recently, resident inspectors have taken 
on an increasing role in security. All resident offices now have secure 
telephone and fax capability. Additionally, resident inspectors 
represent the NRC to the licensee, state and local officials, and the 
news media. Resident inspectors attend daily plant status meetings and 
review plant status reports. Major daily activities include control 
room and plant area walkdowns. They also communicate with regional 
offices on a daily basis to discuss plant status. Reactor resident 
inspectors are required to relocate from their site no later than at 
the end of a 7-year assignment. Very rarely are exceptions granted 
beyond the 7-year maximum tour length. Inspectors also relocate for 
promotions, voluntary reassignments, or at management's discretion. It 
is common for resident inspectors to occasionally participate in 
inspections at other sites.
    To recruit and retain qualified resident inspectors, the NRC 
established a special salary schedule in 1981 for inspectors at nuclear 
power plants. The special salary schedule provides a 3 additional step 
increase. Resident inspector pay levels are in the GG-11 ($55,904 for 
2004) through GG-14 ($104,071 for 2004) pay range. In addition to this 
special salary schedule, inspectors receive locality pay. Inspectors 
typically work 40 hours a week, some of which may be on weekends or 
backshifts. The inspector policy regarding backshift coverage is 
described in NRC Inspection Manual Chapter, IMC 2515, ``Light-water 
Reactor Inspection Program Operations Phase.'' The inspectors are 
compensated with premium pay for backshift coverages. Additionally, 
inspectors are offered the same benefits that most other Federal 
employees are offered, including leave, health benefits, life 
insurance, retirement benefits, and paid moving expenses.
    Resident inspectors are mostly recruited from within the agency, 
usually from the inspection staff at the regional offices. The goal is 
to have inspectors who are technically proficient and well-versed in 
NRC policy, structure, and procedures. In rare cases, a position is 
advertised outside the agency and any candidate would have to have 
substantial relevant experience and undertake extensive training and 
qualification before being qualified as an inspector. The basic 
qualification for inspectors typically include a bachelor's degree in 
an engineering, scientific, or technical field. Areas of study include 
electrical engineering, mechanical engineering, nuclear engineering, 
fire protection, metallurgy, and health physics. In many cases, 
inspectors have substantial relevant experience outside of the NRC, 
either in the nuclear industry or the Nuclear Navy.
    NRC has specific guidance that governs inspector training and 
qualifications for reactor inspectors. New hires are typically assigned 
to a regional office as an inspector trainee. The training and 
qualification program is designed to ensure the development of 
competency in the four general areas of: (1) legal basis and regulatory 
processes; (2) technical expertise; (3) regulatory practices; and (4) 
personal and interpersonal effectiveness. The inspector qualification 
process begins with the Basic-Level Program, designed to allow 
individuals to begin their training the first day they start work at 
the NRC. The emphasis in the Basic-Level Program is mainly on 
structured, self-paced and self-directed individual study and on-the-
job activities. As a competency-based program, the emphasis is on 
practicing specific activities until the individual can meet the 
evaluation criteria. Therefore, completion of the Basic-Level Training 
Program can take several months.
    Upon completion of the Basic-Level Training Program, the inspector 
completes the Proficiency-Level Training Program, which consists of two 
aspects of inspector performance: General Proficiency and Technical 
Proficiency. General Proficiency focuses on developing the Inspection, 
Teamwork and Interpersonal Skills needed by an inspector to function 
either independently or as part of a team to implement the inspection 
and oversight program. Technical Proficiency develops the appropriate 
depth of knowledge in one of the seven specific technical inspection 
areas, such as Operations and Engineering. The final qualification 
activity is an oral examination before a Board, designed to evaluate 
the ability of an individual to integrate and apply the acquired 
knowledge, skill, and attitudes in field situations. Upon passing the 
Qualification Board, the inspector is fully qualified and can be 
assigned the full scope of inspection-related activities to be 
independently performed.

    Question 7. Why specifically do you disagree with GAO's 
recommendation that you develop a set process and guidance for deciding 
whether to shutdown a plant?
    Response. As stated in NRC's response to the draft report entitled 
``Nuclear Regulation: NRC Needs to More Aggressively and 
Comprehensively Resolve Issues Related to the Davis-Besse Nuclear Power 
Plant's Shutdown'' (GAO-04-415) dated May 5, 2004, we disagreed with 
the GAO's finding that the NRC does not have specific guidance for 
deciding on plant shutdowns and with the report's related 
recommendation identifying the need for NRC to develop specific 
guidance and a well-defined process to determine when to shut down a 
nuclear power plant. We believe our regulations, guidance, and 
processes on plant shutdown provide sufficient guidance in the vast 
majority of situations. Plant technical specifications, as well as many 
other NRC requirements and processes, provide a spectrum of conditions 
under which plant shutdown would be required. Plants have been shut 
down numerous times in the past in accordance with NRC requirements, 
and these shutdowns do not require explicit actions by NRC (i.e., 
Orders). From time to time, however, a unique situation may present 
itself in which sufficient information may not exist or the information 
available may not be sufficiently clear to apply existing rules and 
regulations definitively. In these unique instances, the NRC's most 
senior managers, after consultation with staff experts and given all of 
the information available at the time, will decide whether to require a 
plant shutdown. Risk information is used consistent with Regulatory 
Guide (RG) 1.174, ``An Approach for Using Probabilistic Risk Assessment 
in Risk-Informed Decisions on Plant-Specific Changes to the Licensing 
Basis.'' This process considers deterministic factors as well as 
probabilistic factors (i.e., risk information) to evaluate whether a 
proposed plant configuration is acceptable for operation. We regard the 
combined use of deterministic and probabilistic factors to be a 
strength of our decisionmaking process.
    With respect to the recommendation to develop specific guidance for 
deciding when to shut down a nuclear power plant, we acknowledge that 
the decisionmaking guidance we used in the Davis-Besse situation, RG 
1.174, is guidance for approving license change requests. Although we 
continue to believe that the risk-informed decisionmaking process in RG 
1.174 is generally applicable to a wide range of NRC decisionmaking, we 
agree that it would be useful to develop additional risk-informed 
guidance on how to address emergent issues.
    The NRC agrees with the GAO that NRC staff lacked sufficient and 
appropriate documentation of its decision on Davis-Besse. Effective 
communication, including proper documentation of our decisions, will be 
the key to improving the accountability and credibility of our 
decisions in the future. This was one of the task force's findings and 
a number of recommendations were made to correct this deficiency. The 
agency is committed to making sure future decisions are documented in a 
proper and timely manner.

    Question 8. Does NRC have the tools needed to quickly license such 
applications as the gas centrifuge plant that USEC has decided to build 
in Piketon, Ohio?
    Response. The NRC has the tools and resources to conduct gas 
centrifuge plant license application reviews expeditiously, if we 
receive our budget request from Congress. The NRC is committed to 
conducting such reviews in a manner that ensures that the plant would 
be safe and secure and would not be detrimental to the environment. 
After the application for USEC Inc.'s commercial gas centrifuge plant 
in Piketon, Ohio, is submitted, the NRC staff will conduct its safety, 
security and environmental reviews on a timeframe similar to that 
established for Louisiana Energy Services' gas centrifuge enrichment 
plant license application submitted in December 2003. Through 
identifying efficiencies in the review process and reprogramming 
resources, we have been able to reduce the projected time needed to 
complete such reviews. In January 2004, the NRC completed its review 
for USEC Inc.'s license application for its gas centrifuge 
demonstration and test ``Lead Cascade'' facility. This was slightly 
ahead of the 1-year review schedule that the NRC had projected at the 
time USEC Inc. had submitted its Lead Cascade license application in 
February 2003.
    However, as I noted in my June 2, 2004, letter to you, a continuing 
resolution in fiscal year 2005 would likely delay our review of various 
new license applications, including the enrichment plants in New Mexico 
and Ohio.

    Question 9. Why specifically do you disagree with GAO's 
recommendation that you develop a methodology to assess early 
indications of deteriorating safety at nuclear power plants?
    Response. GAO's specific recommendation was to develop a 
methodology to assess licensees' safety culture that includes 
indicators of and inspection information on patterns of licensee 
performance as well as on licensees' organization and processes. GAO 
recommended that NRC should collect and analyze this data, either 
during the course of the agency's routine inspection program or during 
separate targeted assessments, or during both routine and targeted 
inspections and assessments. The GAO maintained this would provide an 
early warning of deteriorating or declining performance and future 
safety problems.
    Some context would be helpful in addressing this question. When 
some of the current Commissioners started with the Commission in the 
1996-97 timeframe, the NRC staff was using a process for assessing and 
identifying plants with degraded performance that involved a subjective 
assessment of licensee performance, the so-called ``systematic 
assessment of licensee performance (SALP).'' Plants were given 
subjective SALP scores in four areas. Performance indicators data, 
while collected, were not systematically utilized. Indeed, which inputs 
were most important in a SALP assessment often varied from region to 
region, even from plant to plant within a region. These subjective SALP 
assessments then fed into a senior management meeting process, 
conducted every 6 months, the output of which was a so-called ``watch 
list.''
    In 1997, the Commission unanimously charged the staff with 
replacing the SALP/watch list process with a process that was far more 
uniform (in its use of performance indicators and inspection findings, 
more systematic, more visible to the public, and more timely. In doing 
this the Commission had the benefit of an excellent study, done in a 
very short time period, by a contractor, Arthur Andersen. That study 
looked at significant deviations in licensee performance based on nine 
NRC performance indicators, and identified plant trends going back 10 
years using the composite performance indicators. The obvious question 
that arose from that study was whether the NRC staff would have made 
better decisions on allocating inspection resources and assessing 
licensee performance if they had simply used the Arthur Andersen 
methodology rather than the highly subjective SALP/watch list process. 
There is a very good discussion of the Arthur Andersen report and the 
NRC staff's and Commission's response to that report in the transcripts 
(available on our web page) of the February 18, 1997 and the April 24, 
1997 Commission meetings.
    At the very outset of the design of what we call today the reactor 
oversight process (ROP), the Commission was interested in trying to get 
leading indicators of licensee performance. Today, 7 years later, we 
have an enormously improved assessment process for power reactor 
licensees, the ROP. It systematically and objectively uses inspection 
findings and performance indicators to place plants in categories 
(columns of a so-called action matrix) and assigns inspection 
resources. It is transparent. It is uniform. It is timely. It was 
piloted in 1999 at 13 plants at 9 sites and went into full force at all 
plants on April 1, 2000.
    While it is an enormous improvement over the old SALP/watch list 
process, the Commission recognizes that the ROP must be constantly 
improved and we have established a process for developing, testing and 
making improvements, such as improved performance indicators. The ROP 
process did identify early problems at the Cooper power plant in 
Nebraska and resulted in NRC and licensee actions to arrest a decline 
in performance before any significant safety issues arose. However, the 
ROP process, like the SALP/watch list process before it (and the 
parallel Institute of Nuclear Power Operations (INPO) assessment 
process) missed the declining performance at Davis-Besse that 
contributed so clearly in hindsight to the February 2002 vessel head 
degradation event.
    That all said, the Commission continues to encourage the early 
identification of declining performance and safety problems. The NRC is 
committed to licensees' developing and maintaining a strong safety 
culture, including commitment to safety, technical expertise, and good 
management. Through the years, the Commission has taken a number of 
actions in the area of safety culture, including the issuance of the 
Policy Statement entitled ``Conduct of Nuclear Power Operations'' (54 
FR 3424, 01/24/89). The Commission issued the Policy Statement to help 
foster the development and maintenance of a safety culture at every 
facility licensed by the NRC. It also stated that ``. . . management 
has the duty and obligation to foster the development of a 'safety 
culture' at each facility and to provide a professional working 
environment, in the control room and throughout the facility, that 
assures safe operations. Management must provide the leadership that 
nurtures and perpetuates the safety culture.''
    In a 1996 Policy Statement, entitled ``Freedom of Employees in the 
Nuclear Industry to Raise Safety Concerns Without Fear of 
Retaliation,'' the Commission stated ``. . . licensees and other 
employers subject to NRC authority will establish and maintain safety-
conscious environments in which employees feel free to raise safety 
concerns, both to their management and to the NRC without fear of 
retaliation.'' If issues are noted in the maintenance of a safety-
conscious work environment, the NRC calls this to the attention of the 
licensee and states the problem in the NRC's semiannual assessment 
letters to the licensee.
    The Commission recognizes the difficulty in objectively assessing 
certain aspects of safety culture. As noted in the Commission comments 
on the draft GAO report, the NRC ROP currently assesses some underlying 
elements of safety culture such as identification and resolution of 
problems. NRC will continue to assess, based on objective parameters 
and direct observations of performance, how effectively licensees are 
managing safety at each facility. NRC's assessments and actions 
include:
     direct, daily observation of licensee operation of the 
facilities.
     problem identification and resolution (PI&R) inspections.
     followup of individual allegations and trending.
     enforcement of employee protection regulations.
     safety-conscious work environment assessments.
     early and aggressive action where safety performance or 
safety culture issues are confirmed (e.g., recent actions taken to 
address safety culture issues at the Salem and Hope Creek plants).
    In March 2003, the Commission directed the NRC staff to develop 
guidance that would identify to our licensees the best practices to 
encourage a safety-conscious work environment. The Commission also 
directed the staff to monitor efforts by foreign regulators to develop 
objective measures that serve as indicators of possible problems with 
safety culture. Following the Congressional hearing on May 20, 2004, I 
directed the NRC staff to provide options and recommendations in this 
area. The staff provided information to the Commission on July 1, 2004. 
The Commission has decided to proceed with public notice of a draft 
generic communication on establishing and maintaining a safety-
conscious work environment. The Commission also decided to enhance the 
ROP treatment of cross-cutting issues to more fully address safety 
culture and ensure NRC inspectors are properly trained in the area of 
safety culture. This is in addition to the evaluations of the 
licensees' safety-conscious work environment, the problem 
identification and resolution process, and human performance already 
included in the ROP. The NRC notifies licensees of degraded performance 
in these areas in the semiannual assessment letters which are issued to 
all power reactor licensees and are publicly available.
    In summary, the existing regulatory infrastructure previously 
outlined provides a framework for monitoring the impact of licensee 
safety culture on performance, and NRC oversight will be enhanced over 
the next 2 years by:
     revising the ROP to more fully address safety culture.
     taking followup actions in response to the Davis-Besse 
Lessons Learned Task Force recommendations.
     developing enhanced guidance to our licensees by 
identifying best practices to encourage a safety-conscious work 
environment and to promote the NRC's expectations.
     closely monitoring efforts by foreign regulators to 
measure and regulate safety culture.
    Therefore, we believe that we are continuing to make substantial 
progress on developing and refining an assessment process to assess 
early indications of deteriorating safety at nuclear power plants. What 
we can not promise is that the result of these efforts will be a 
validated methodology in the area of safety culture of declining 
licensee performance. That is clearly our goal, as it was in 1997, and 
as it was for our predecessors on the Commission in 1986. A lot of 
excellent research has been carried out for many years here and abroad 
without defining such a leading indicator or set of indicators. By 
carrying out a program of constant improvement in our ROP, the 
Commission believes that we are moving toward that ideal as rapidly as 
our knowledge will allow.

    Question 10. What steps have you required at Davis-Besse but not at 
other plants around the country? Why have these steps not been required 
at other plants? Additionally, you have required that Davis-Besse 
conduct independent assessments of safety culture over the next 5 
years. Why have you not required the same types of assessments, such as 
surveys, at other plants?
    Response. The requirements imposed on the Davis-Besse Nuclear Power 
Station that are beyond those at other operating reactors in the United 
States are annual independent assessments for 5 years in the areas of 
operations, engineering, corrective actions, and safety culture, and 
inspections of the reactor coolant system pressure boundary during a 
midcycle outage. These additional requirements are contained in the 
Confirmatory Order issued to Davis-Besse on March 8, 2004, modifying 
the Davis-Besse license. These plant-specific actions were designed to 
ensure sustained safe performance of the facility.
    One fundamental regulation applicable to all operating reactors 
requires that significant conditions adverse to quality be corrected, 
the cause determined, and actions taken to preclude repetition (10 
C.F.R. 50, Appendix B, Criterion XVI). The licensee program in place to 
implement these requirements is commonly referred to as the corrective 
action program. The reactor pressure vessel head degradation identified 
at Davis-Besse in early 2002 was a significant condition adverse to 
quality. Davis-Besse was required to correct the degradation, 
understand the cause(s), both from a hardware and organizational 
perspective, and take actions to address those cause(s) to prevent 
recurrence as required by NRC regulations.
    Since early 2002, following the discovery of the reactor pressure 
vessel head degradation, Davis-Besse has been removed from the routine 
reactor oversight process (ROP) applicable to operating reactors and 
placed under a special oversight process in accordance with the NRC's 
Inspection Manual Chapter 0350, ``Oversight of Operating Reactor 
Facilities in an Extended Shutdown as a Result of Significant 
Performance Problems.'' Pursuant to that manual chapter, the NRC 
established a special Oversight Panel and issued a Restart Checklist 
listing those actions that had to be completed prior to restart of the 
plant. The items on the Restart Checklist captured the critical actions 
necessary for the facility to comply with the corrective action program 
requirements applicable to all operating reactors.
    Included in the Restart Checklist is the completion of 
comprehensive root cause assessments. As part of these assessments, 
Davis-Besse identified equipment problems, organizational and human 
performance issues, and program and procedure deficiencies. The 
organizational and human performance issues Davis-Besse identified 
included safety culture concerns. Consequently, in addition to the 
inspection and repair of equipment, and improvement in programs and 
procedures, enhancements to human performance, organizational 
effectiveness and safety culture were also included in the Restart 
Checklist. Pursuant to the corrective action program requirements in 10 
C.F.R. 50, Appendix B, similar actions would be required to be 
accomplished at any operating reactor with equivalent performance 
deficiencies as Davis-Besse.
    One aspect of the performance problems at Davis-Besse was the 
ineffectiveness of licensee self-assessments and audits to identify 
degrading performance over time. The additional requirements for 
independent assessments imposed on Davis-Besse through the Confirmatory 
Order are unique to Davis-Besse. They are intended to assure lasting 
improvement in the effectiveness of the licensee's own internal 
assessments of performance and to ensure sustained safe performance of 
the facility. The Confirmatory Order requires the results of these 
independent assessments be provided to the NRC in publicly available 
documents.

    Question 11. What have you changed since the Davis-Besse incident 
to address the lessons-learned task force (LLTF) recommendations about 
safety? How do these changes interact with other initiatives that you 
are doing or have done?
    Response. All of the lessons-learned task force recommendations are 
tied to safety in either a direct or indirect manner. The items 
considered by the senior management review team to have direct linkage 
with corrective actions for Davis-Besse root causes were assigned the 
highest priority. The NRC staff has been focused on completing actions 
related to these recommendations in the most expeditious and efficient 
manner possible. Some examples of changes at the NRC related to the 
Davis-Besse lessons learned activity include: (1) An enhanced focus on 
communications, particularly regarding communications between the plant 
sites, regions, and NRC headquarters; (2) completion of a comprehensive 
evaluation of the operating experience assessment function with 
associated organizational changes that are being implemented; and (3) 
focused enhancements to NRC inspection guidance that relate to 
maintaining a questioning attitude in all aspects of inspection and 
assessment activities.
    In the communications area, actions taken in response to the LLTF 
recommendations complement the broader agency initiative on enhancing 
communications both within the NRC and with external stakeholders. 
Actions taken in response to LLTF recommendations have also 
complemented the broader agency initiative on risk-informing agency 
decisionmaking processes through focusing resources on areas most 
critical to safety.

    Question 12. In the past, have you considered regulating safety 
culture? If so, what conclusions have been reached and why? What 
changes (if any) have you made in response to these considerations?
    Response. In 1989, the NRC first set forth its expectation that 
licensees establish a strong safety culture in its ``Policy Statement 
on the Conduct of Operations.'' The NRC continues to place a high value 
on the importance of establishing and maintaining a strong safety 
culture at licensed facilities. The Commission has considered various 
staff proposals for directly regulating the area of safety-conscious 
work environment (SCWE), one attribute of safety culture, and approved 
assessment of SCWE by the NRC staff on a case-by-case basis. The 
Commission has also directed the staff to: (1) develop further guidance 
that would identify for the industry practices to encourage a SCWE; and 
(2) monitor efforts by foreign countries to develop objective measures 
that may serve as indicators of possible problems with safety culture. 
The Commission is taking additional measures as discussed in the 
response to Question 9.

    Question 13a. What are other countries doing to regulate safety 
culture at their nuclear plants?
    Response. Currently, only one country, Finland, has a specific 
regulation that directly addresses safety culture. Several other 
countries, including England, Spain, Canada, Sweden and France, inspect 
for safety culture problems even though they do not have specific 
regulations in the area of safety culture.

    Question 13b. How is this different from what is done in the U.S.?
    Response. The United States has no specific regulation for safety 
culture, but NRC conducts safety culture evaluations on a case-by-case 
basis. A subset of underlying elements of safety culture, such as 
identification and resolution of problems and maintenance of a safety 
conscious work environment, currently are assessed through the Reactor 
Oversight Process (ROP). Please see the response to part (A) above.

    Question 13c. Are there any foreign regulations and/or practices 
that should be replicated in the U.S.?
    Response. The NRC staff continues to monitor activities in other 
countries to determine how foreign regulators measure and regulate 
safety culture, but has not identified any regulations or practices in 
other countries to be considered for implementation in the United 
States.
    Responses by Nils J. Dias to Additional Questions from Senator 
                               Lieberman

                           OFFICIAL USE ONLY

    Question 1. Chairman Diaz, should there [be] a no-fly zone around 
the Indian Point power plant? It is my understanding that we have 
established no-fly zones around Disney theme parks, for security 
concerns. Why do we have no fly zones around theme parks, but not our 
nuclear facilities?
    Response. A publicly available map details the three nautical mile, 
3000 foot altitude no-fly zone around the Walt Disney theme parks. 
Commercial air traffic, however, is allowed to transit through the 
zone. Pursuant to Federal Aviation Administration regulations (14 CFR 
Section 99.7), a published flight restriction is in place for nuclear 
power plants, which, in part, states ``. . . pilots . . . are advised 
to avoid the airspace above or in proximity to all nuclear power 
plants. Pilots should not circle or loiter in the vicinity of such 
facilities. Pilots who do so can expect to be interviewed by law 
enforcement personnel . . .''
                           official use only

    May be exempt from public release under the Freedom of Information 
Act (5 U.S.C. 552)
    Exemption Number, 5, Nuclear Regulatory Commission review required 
before public release.
    Name and organization of person making determination, John E. 
Tomlinson, NSIR/DO
    Date of Determination, July 12, 2004

                           official use only

    The Indian Point facility is located in proximity to two major 
airports and within miles of a third airport. Instituting a broad ``no-
fly'' zone for the Indian Point facility would be problematic and have 
substantial repercussions for each of those airports and for area 
transportation. The protection of nuclear plants, including the Indian 
Point facility, is dependent on multiple measures, which in the 
aggregate result in the ability to maintain public health and safety. 
The Federal Aviation Administration (FAA), the North American Aerospace 
Defense Command (NORAD); and the Transportation Security Administration 
(TSA) manage programs that are intended to prevent assaults by air. For 
example, the TSA continues to oversee the implementation of multiple 
countermeasures such as the Federal Air Marshal program, enhanced 
passenger and baggage screening, and hardened flight decks. The FAA and 
NORAD have much improved ability to detect deviations from flight paths 
today than on 09/11/01. NORAD has the ability to communicate with every 
nuclear power plant control room, either directly or through the NRC 
Incident Response Center, upon detection of a possible threat. This 
allows the plant operator to place the plant in a safe condition while 
NORAD attempts to intercept this threat. These programs, combined with 
the response capabilities of local authorities provide a significant 
defense-in-depth to address such threats.
                           OFFICIAL USE ONLY
    Question 2. I am concerned about the Evacuation Plans for the area 
around Indian Point. My constituents have first-hand experience with 
the fact that our roads are already carrying nearly twice as much 
traffic as they were designed for. I-95 and I-84 are reduced to stop-
and-go speeds on a daily basis. It will require very careful planning 
based on realistic assumptions to be sure that our roads aren't reduced 
to a standstill in the event of an evacuation. Is it realistic to 
assume, for example, that families will be willing to separate to 
facilitate the evacuation, or would it be more realistic to assume that 
families will gather together first, and that each family will stay 
together, to evacuate as a family? Have we done the best demographic 
studies possible to facilitate evacuation plans?
    Response. The NRC is responsible for evaluating the adequacy of 
onsite emergency plans developed by the nuclear power plant licensee. 
The Federal Emergency Management Agency (FEMA) is responsible for 
assessing the adequacy of offsite (state and local) radiological 
emergency planning and preparedness activities. FEMA informed the NRC 
and Governor Pataki of New York, on July 25, 2003, that, ``after 
carefully considering all available information, we have reasonable 
assurance that appropriate protective measures to protect the health 
and safety of surrounding communities can be taken and are capable of 
being implemented in the event of a radiological incident at the Indian 
Point facility.''
    FEMA's finding recognized that the affected counties had received 
an updated ``evacuation time estimate `` (ETE) study (incorporating 
2000 census data and shadow evacuation estimates) for the 10 mile 
emergency planning zone. The counties had specifically included the 
updated ETE study in their Radiological Emergency Preparedness Plans. 
The ETE revisions included the latest census data, consideration that 
some family units will reunite prior to evacuation, an expanded 
geographic area of analysis, and an analysis of shadow evacuation. 
Shadow evacuation refers to people outside the evacuation zone who also 
decide to evacuate. In addition, the evacuation estimates required for 
nuclear evacuation plans must examine the sensitivity of evacuation 
times to key variables, including the nature and limits of 
transportation facilities in the affected area and other factors that 
may affect evacuation time, such as the public's use of public 
transportation or need for special transportation. The New York State 
and affected county plans provide for an active response to traffic 
obstructions in the event of a radiological emergency at Indian Point. 
Alternate evacuation routes are pre-designated. Responsibilities are 
assigned and resources identified for detecting and responding to 
traffic bottlenecks using law enforcement and public works personnel 
and equipment.
    Considering those FEMA findings and determinations in conjunction 
with the NRC onsite assessments, the NRC did not alter its 
determination that the overall state of emergency preparedness at 
Indian Point 2 and 3 provides reasonable assurance that adequate 
protective measures can and will be taken in the event of a 
radiological emergency.

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     Statement of Marvin Fertel, Senior Vice President of Nuclear 
                  Generation, Nuclear Energy Institute
    Chairman Voinovich, Ranking Member Carper and distinguished members 
of the subcommittee, I am Marvin Fertel, senior vice president and 
chief nuclear officer at the Nuclear Energy Institute (NEI). I am 
honored to represent NEI's member companies before this subcommittee 
today. Nuclear energy is vitally important to our environment, 
particularly in meeting the nation's clean air goals, and to our 
nation's energy security. It is also necessary that the nuclear 
industry has a Federal regulatory agency that is stable, effective and 
efficient.
    NEI is responsible for developing policy for the United States 
nuclear industry. NEI's 270 corporate and other members include every 
United States energy company that operates a nuclear plant, as well as 
a wide variety of organizations and businesses involved in the use of 
radioisotopes for beneficial purposes. NEI's membership also includes 
nuclear fuel cycle companies, suppliers, engineering and consulting 
firms, national research laboratories, and manufacturers of 
radiopharmaceuticals, universities, labor unions and law firms.
    The 103 reactors in the United States are among the world's most 
efficient and reliable. Nuclear energy is the largest source of 
emission-free electricity in the United States and the nation's second-
largest source of electricity after coal. The U.S. nuclear energy 
sector is also the world's largest, generating more electricity than 
the nuclear sectors of France and Japan-the next two largest-combined. 
On a percentage basis, nuclear energy provides electricity for 20 
percent of American homes and businesses. Globally, 18 nations generate 
a higher percentage of electricity from nuclear energy that the United 
States, including France at 78 percent, Japan at 35 percent. Nuclear 
energy is growing rapidly in the burgeoning economics like China and 
India.
    This testimony addresses:
    (1) actions needed to preserve this vital energy resource
    (2) essential steps needed to enhance progress toward a long-term, 
stable regulatory approach in the United States
    (3) essential Nuclear Regulatory Commission funding issues
    (4) changes needed in the Atomic Energy Act
    (5) industry initiatives toward preserving the integrity of 
materials, including metals that comprise components and equipment used 
in nuclear power plants
    (6) the need for resolution of conflicting radiation protection 
policies
    (7) advances in nuclear power plant security.
     nuclear power plants continue to operate at record safety and 
                           performance levels
    During the past decade, U.S. nuclear power plants have achieved 
record levels of production and efficiency while maintaining the 
highest levels of safety in the electricity sector. U.S. nuclear power 
plants produced 767 billion kilowatt-hours of electricity in 2003, a 25 
percent increase compared to 1993 output and the third best production 
year ever. Although no new U.S. plants have been built during this 
period, this increased production is equivalent to adding 19 new 1,000-
megawatt (MW) plants over the 10-year period.
    U.S. nuclear plants achieved a capacity factor of about 90 percent 
in 2003. This average is approximately double the capacity factors of 
20 years ago and is the highest of any generating source in the United 
States. In 2002, coal-fired power plants had a capacity factor of about 
69 percent; combined-cycle natural gas power plants, 40 percent; 
hydropower, 35 percent; and wind, 29 percent. Overall nuclear plant 
performance has been increasing steadily over the past decade as 
measured by the Institute of Nuclear Power Operations.
    Nuclear energy continues to be the most affordable baseload source 
of electricity for businesses and consumers. Average production costs 
in 2002 of 1.71 cents per kilowatt-hour (kWh) were lower than those for 
coal (1.85 cents per kWh), natural gas (4.06 cents per kWh) and oil 
(4.41 cents per kWh). Preliminary production costs for 2003 show that 
low-cost trend continuing.
    Throughout this period of record production and efficiency, the 
industry has maintained a steadfast commitment to safety. The level of 
significant events equipment malfunctions or operational anomalies is 
30 times lower than it was at the end of the 1980's. The industry 
average is currently 0.03 annual events per reactor, which is 
equivalent to three reportable events per year.
    With productivity and reliability on the rise and production costs 
falling, the profitability of nuclear plants also is improving. The 
industry expects incremental gains in profitability to continue for 
several more years. In addition to improving profitability, companies 
plan to increase revenue through power uprates. With these uprates and 
the restart of the Browns Ferry reactor in Alabama, the industry 
expects to add approximately 10,000 megawatts to the U.S. electricity 
system over the next decade.
    The efficiency and competitiveness of nuclear power plants are 
driving factors in the decision by U.S. energy companies to seek 
renewal of operating licenses from the Nuclear Regulatory Commission. 
One-quarter of U.S. reactors already have been approved by the NRC to 
extend their reactor operating licenses from 40 to 60 years. Seventeen 
other reactors are in the queue for NRC review of their license renewal 
applications, and the industry expects that nearly all reactors will 
pursue license extensions. The Department of Energy's Energy 
Information Agency is recognizing this trend in its most recent energy 
forecast.
 nuclear energy: an essential component of our nation's clean air goals
    Nuclear energy plays a vital role in U.S. energy security and 
diversity, producing electricity safely and cleanly for one of every 
five U.S. homes and businesses. Before the oil shocks of the early 
1970's, nuclear power provided just 4 percent of our electricity 
supply, and oil provided about 20 percent. The situation is now 
reversed, as nuclear energy essentially has phased out oil use in the 
electricity sector.
    This steady growth of nuclear power over the past three decades has 
produced enormous environmental and clean air benefits. Nuclear energy 
now generates three-fourths of all emission-free electricity generation 
in the United States and is making significant reductions in harmful 
emissions into the atmosphere from the industrial sector. Between 1973 
and 2001, U.S. nuclear power plants avoided the emission of 70.3 
million tons of sulfur dioxide (SO2) and 35.6 million tons 
of nitrogen oxide (NOx), compared to fuels that otherwise would have 
produced electricity.
    The value of the emissions prevented by using nuclear power is 
essential in meeting clean air regulations. In 2002, U.S. nuclear power 
plants avoided the emission of about 3.4 million tons of sulfur dioxide 
and about 1.4 million tons of nitrogen oxide. The requirements imposed 
by the 1990 Clean Air Act Amendments reduced SO2 emissions 
from the electric power sector between 1990 and 2002 by 5.5 million 
tons per year and NOx emissions by 2.3 million tons per year. Thus, in 
a single year, using nuclear power plants to generate electricity has 
eliminated nearly as much in emissions than has been achieved over a 
12-year period by all other sources combined.
    To put these numbers into perspective further, the NOx emissions 
prevented by U.S. nuclear power plants are the equivalent of 
eliminating the NOx emissions from 6 of every 10 passenger cars on our 
roads today. The carbon emissions prevented by U.S. nuclear power 
plants are equivalent to eliminating the carbon emissions from nine of 
every 10 passenger cars on our roads.
    According to a report issued last year by the U.S. Environmental 
Protection Agency and the Ozone Transport Commission, nuclear energy 
was one of the most significant compliance tools for reducing NOx 
emissions in Northeastern and mid-Atlantic states. The EPA assessment 
found that energy companies have been shifting electricity production 
from fossil-fueled power plants to emission-free nuclear power plants 
to help comply with Federal air pollution laws.
    Nuclear energy also is an environmental imperative for reducing 
greenhouse gases. New York is a good example of this phenomenon. New 
York's greenhouse gas emissions from fuel combustion have decreased 1 
percent from 1990 to 2002, despite a growth in population and the 
number of automobiles on the road. The increased production from the 
state's six nuclear power plants offset the need for electricity 
production at other power plants and therefore reduced greenhouse gas 
emissions during that period.
    In 1990, the FitzPatrick, Ginna, Indian Point and Nine Mile Point 
nuclear power plants generated more than 24 billion kilowatt-hours of 
electricity in New York. By 2000, nuclear energy production increased 
by 60 percent to more than 40,000 billion kilowatt-hours. This increase 
in nuclear production allowed for a decrease in the use of other fuels 
and offset an increase in emissions from the rising use of natural gas. 
The result is an overall 23 percent reduction in greenhouse gas 
emissions from the electricity sector.
    Two reactors at the Indian Point Energy Center near New York City 
produced 15.7 billion kilowatt-hours of electricity in 2003, 
approximately 11 percent of New York's power and enough for 1.5 million 
households. Some are recommending closure of the Indian Point Energy 
Center because of security concerns, but such a move would sacrifice a 
critical source of power for the state and needlessly reverse progress 
that New York has made in reducing greenhouse gas emissions. EPA has 
determined that all five counties that surround Indian Point already do 
not comply with Federal air rules. Taking Indian Point off the New York 
electricity grid would worsen air quality and unnecessarily drive up 
the cost of electricity to consumers and businesses.
    As the New York example shows, nuclear energy is vital to our 
nation's clean air programs. Expanding nuclear energy production 
through continued efficiency gains and building new nuclear plants 
would further enhance the role of nuclear energy in our environmental 
goals. Recent studies by the Earth Institute at Columbia University and 
the Massachusetts Institute of Technology underscore the importance of 
nuclear energy and renewable energy sources in meeting energy and 
environmental goals that are inextricably linked.
    a stable, effective, efficient nrc is vital to the operation of 
      existing reactors and the future expansion of nuclear power
    Nuclear power plants are a strategic national asset that contribute 
the fuel and technology diversity that is the foundation of our 
electric supply system. Together, large coal and nuclear power plants 
produce 70 percent of our nation's electricity, with a mix of 
hydroelectric, natural gas and renewables providing the balance. But 
this energy diversity is at risk because today's business and market 
conditions hamper investment in new large capital-intensive 
technologies, such as advanced design nuclear power plants and clean 
coal power plants. Although the industry expects that most reactors 
will be relicensed, the nuclear industry's potential obviously is 
severely limited if new nuclear plants cannot be financed.
    The United States faces a critical need for investment in energy 
infrastructure, including advanced nuclear designs. Nuclear plants are 
the most reliable of our sources of electricity and offer the greatest 
degree of price stability. Yet, since the passage of the Energy Policy 
Act of 1992, our Nation has built approximately 284,000 megawatts (MW) 
of natural gas-fired generating capacity more than 90 percent of the 
new capacity added during this period. Only 4,355 MW of new nuclear 
capacity and 9,500 MW of new coal-fired capacity have been added to the 
electricity grid during that same period.
    The nuclear energy industry is committed to the construction of new 
nuclear plants when the business conditions are appropriate. However, 
most of the factors involved in building new reactors the structure of 
the industry and markets, the technology itself and the Federal 
licensing process have changed since the last nuclear power plants were 
built.
    The industry has been working for several years on regulatory, 
financial and legislative initiatives that encourage investment in new 
nuclear plants. For example, recognizing that the construction of large 
power plants has a high degree of business risk, the industry proposed 
legislative initiatives that provide Federal financial support for the 
first few new nuclear plant designs. In addition, the industry supports 
the DOE's Nuclear Power 2010 program aimed at developing, in 
partnership with companies, detailed design and engineering on advanced 
reactor designs and demonstrate the early site permit and combined 
construction and operating license process.
    More pertinent to the jurisdiction of this subcommittee is the 
prospect that companies would pursue new nuclear plants would be 
greatly enhanced by continuity and stability in the regulatory 
processes and regulatory environment at the NRC. Regulatory uncertainty 
is the largest perceived risk with new nuclear plant construction, so 
any reduction in stability of the regulatory process will damage 
industry and financial community prospects for new nuclear plants.
    Regulatory stability and continuity also are vital for the 
continued success of current nuclear plants. As I have previously 
noted, that fleet continues to operate at high levels of safety and 
efficiency, and the NRC should regulate the industry commensurate to 
this excellent record of performance.
        the nrc reactor oversight process has proven successful
    The NRC now has 4 years of experience with its revised reactor 
oversight process, first launched in April 2000. The new oversight 
process focuses on those areas of the plant that are most important to 
safety. The new approach is successful in improving the transparency, 
objectivity and efficiency of regulatory oversight. It is an enormous 
improvement over the agency's previous approach to evaluating nuclear 
plant safety.
    The revised oversight process combines the results of performance 
indicators in 18 key areas and findings from an average of 2,500 hours 
of inspections per reactor to determine the appropriate allocation of 
inspection resources across the fleet of operating plants. The results 
among the nations 103 operating reactors after the first quarter of 
2004 were as follows:
     Seventy-seven reactors had all green performance 
indicators and inspection findings and will receive the baseline level 
of NRC inspection (approximately 2,500 hours per year).
     Twenty reactors had a single white performance indicator 
or inspection finding and will receive supplemental inspection beyond 
the baseline effort.
     Five reactors had more than one single white indicator or 
finding in a performance area or had white indicators or findings in 
different performance areas and will receive more in-depth 
inspection.\1\
---------------------------------------------------------------------------
    \1\ The Davis-Besse plant is receiving special inspection outside 
of the normal regulatory framework.
---------------------------------------------------------------------------
    During the past 4 years, there have been 83 performance indicators 
and 114 inspection findings across the industry that are less than the 
highest NRC level. Given that the 4-years encompass about 400 reactor 
operating years and over 1 million hours of NRC inspection, these 
results demonstrate that the industry continues to operate at excellent 
levels of safety. Although an internal NRC report expressed concern 
about the declining number of ``non-green'' performance indicators, the 
industry views this trend as achieving success and a strong example of 
the soundness of performance-based regulation.
                the need for continued regulatory change
    The NRC, however, has struggled to implement safety-focused 
insights into Federal regulation fully. The agency has made admirable 
progress in employing safety-focused principles that properly apply 
probabilistic risk assessment to apply regulation where it is needed. 
Although the NRC has applied the safety-focused approach to the reactor 
oversight process, it has yet to incorporate this into the actual 
regulations. This would result in a vastly more effective and efficient 
regulatory process, but much work remains to codify the safety-focused 
principles as part of the rules themselves.
    Rulemaking initiatives have been under way for several years to 
apply the safety-focused principles to 10 CFR Part 50, which deals with 
regulation of nuclear facilities. Successful promulgation of these 
rules is critical to the effective and efficient regulation of nuclear 
facilities. These rules also could aid in establishing a more stable 
and predictable regulatory process that supports both current and 
future nuclear plants.
    This approach is particularly necessary to address issues such as 
the integrity of plant materials--metals and alloys used in plant 
components and equipment. In addition, the application of the safety-
focused principles is essential to the regulation of programs related 
to the structural integrity of reactor systems and components.
    The NRC also has undertaken other projects of concern to the 
industry. With congressional approval of Yucca Mountain as the site of 
a national repository for used nuclear fuel, DOE in December is 
scheduled to submit a license application to the NRC for the 
construction of that facility. Having one Federal agency review and 
approve the actions of another is relatively unique and represents a 
major challenge for both agencies. The NRC has been actively engaged 
with DOE in prelicensing activities. The industry supports the efforts 
of the NRC to date and believes that it is providing sound oversight of 
the project. It is in the interest of all parties that the repository 
be built and operated safely.
    In reviewing the Yucca Mountain license application, the NRC will 
create multiple licensing boards. Creating and coordinating these 
various bodies will test the agency's management. The industry strongly 
urges continued oversight by this and other congressional committees to 
assure efficient management of resources and to hold the NRC to its 
timetable of acting on the license application within 3 years of 
receipt.
    The NRC also is active in licensing new nuclear facilities. 
Louisiana Energy Services (LES) submitted an application for the 
licensing of a new enrichment facility in January, and a similar 
license application is expected from the U.S. Enrichment Company within 
the next few months. The NRC responded to the LES application with an 
order that the application review be completed within 30 months, and 
the NRC appears to be keeping to that schedule.
    The industry is following the management of the LES applications 
closely, given that prior efforts by the NRC to review applications for 
new facilities have taken many years to resolve. Unnecessary delays in 
the licensing process for nuclear facilities add significant business 
risk and hamper the development of the nuclear industry. The industry 
encourages congressional oversight of these license applications to 
ensure that they are processed in a timely and thorough manner.
             nrc budget and staffing levels require review
    The NRC's budget has increased significantly over the past 5 years. 
The NRC's proposed fiscal 2005 budget totals $670.3 million, an 
increase of $44.2 from the fiscal 2004 budget, and the highest ever for 
this agency. This is, in large part, due to expanded security programs 
and staffing for those programs. However, the industry believes that 
the NRC has failed to leverage opportunities to become more efficient.
    Just as consolidation within the industry resulted in more nuclear 
plants being operated by a smaller number of companies, the NRC should 
review its regional structure and determine if changes are needed to 
respond to the new industry structure. In addition to the 
implementation of the revised reactor oversight process, the natural 
consolidation of the industry provides an opportunity for the NRC to 
reallocate existing resources.
    About 4 years ago, the Environment and Public Works Committee 
approved legislation that renewed the NRC's authority to collect user 
fees to offset its budget. That proposal was eventually passed into law 
in a slightly modified form. As a result, general revenues will be used 
to fund 10 percent of the NRC's budget in the coming fiscal year. That 
legislation expires at the end of the fiscal year 2005, and the NRC's 
budget again will be fully funded by user fees despite many programs 
that do not benefit the industry.
    As some form of reauthorization of the user fee is likely to be 
passed next year, the industry urges the committee to review the 
current fee structure and to identify improvements for the NRC. The 
industry believes that the NRC should tie activities and fees together. 
We believe it is inappropriate to categorize about 75 percent of the 
agency's budget in one ``general'' account (part 171). In addition, the 
committee's action 4 years ago that resulted in 10 percent of the 
agency's budget coming from general revenues was based upon a 
calculation of those services that do not directly benefit NRC 
licensees. The percentage of these services that do not benefit 
licensees should be reviewed, particularly in light of increased 
national security expenses that should be funded through general 
revenues. The industry supports legislative efforts that call for much 
of the security program at the NRC to be funded from general revenues 
and appreciates the committee's support of that proposal.
        the industry recommends changes to the atomic energy act
    The industry continues to support several proposed changes to the 
Atomic Energy Act. These proposals will facilitate reform of the NRC 
and its regulatory processes to ensure the effective and efficient 
regulation of the industry.
     In order to provide the commission with the flexibility 
and discretion to manage and organize the NRC in the most appropriate 
manner, Sections 203, 204 and 205 of the Atomic Energy Act should be 
repealed.
     Congress should remove the restriction on foreign 
ownership of commercial nuclear facilities.
     When a combined construction and operating license is 
issued by the NRC for a new nuclear power plant, Congress should 
clarify that the license term begins when the plant commences operation 
rather than when the license is issued.
     Congress should remove the requirement that the NRC 
conduct antitrust reviews as other Federal agencies, notably the 
Securities and Exchange Commission, the Federal Trade Commission, the 
Justice Department, and the Federal Energy Regulatory Commission, 
conduct such reviews.
    The industry is aware of and appreciates the efforts of the 
committee to pass several of these proposals into law. In addition, the 
industry strongly supports, and also appreciates, efforts of this 
committee to ensure that Price-Anderson Act coverage will be available 
to companies that are considering building new nuclear power plants and 
other nuclear facilities. The industry supports the Price-Anderson Act 
reauthorization language included in the energy bill conference report.
    radiation protection policy must be science-based and consistent
    As the industry works to increase energy production, it remains 
committed to maintaining the highest priority on safety. Achieving this 
goal depends in large part on the Federal Government's setting a 
uniform radiation protection policy. The policy should be based on the 
best available science and should be applied equitably and consistently 
by every Federal agency across all programs.
    Duplicative and conflicting regulation by different agencies, using 
different criteria, must be eliminated. In this area, Federal radiation 
protection policy falls short. Senator Pete Domenici requested in 2000 
that the General Accounting Office (GAO) produce a report on this 
issue. The report--``Radiation Standards: Scientific Basis 
Inconclusive, and the EPA and NRC Disagreement Continues'' (GAO/RCED00-
152)--concluded that U.S. radiation protection standards ``lack a 
conclusively verified scientific basis,'' involve ``differing exposure 
limits'' due to policy disagreements between Federal agencies, and 
``raise questions of inefficient, conflicting dual regulation.'' A 
troubling conclusion of the GAO report is that the costs related to 
complying with such standards ``will be immense, likely in the hundreds 
of billions of dollars'' of private and public funds.
    This situation has persisted for years, without any substantial 
resolution. For example, Senator John Glenn, as chairman of the Senate 
Committee on Governmental Affairs, asked the GAO to report on this 
issue in 1994. The GAO report, ``Nuclear Health and Safety: Consensus 
on Acceptable Radiation Risk to the Public is Lacking'' (GAO/RCED-94-
190), concluded that ``differences exist in the limits on human 
exposure to radiation set by Federal agencies, raising questions about 
the precision, credibility, and overall effectiveness of Federal 
radiation standards and guidelines affecting public health.''
    What is particularly troubling is that the 2000 report requested by 
Senator Domenici, issued 6 years after the report requested by Senator 
Glenn, reflected that the situation was essentially unchanged. Now 4 
years later, the nuclear energy industry still notes little substantive 
progress in resolving the issue of duplicative and conflicting 
radiation standards.
    Although Federal regulatory agencies contend this protects public 
health, it discourages enhancements to public health protection and the 
cost-effectiveness of doing so. In addition, this situation undermines 
public confidence in regulatory activities and, in the end, inhibits 
the availability the vast health and quality-of-life benefits from 
commercial applications of nuclear technology. This situation also 
creates significant uncertainties in projecting costs and schedules of 
licensing and building of new plants, the decommissioning of facilities 
that are no longer operational, and the disposal of radioactive waste.
    Federal radiation protection policy must provide a foundation to 
protect public health and safety, make the best use of public funding 
and resources, and help build public trust and confidence in Federal 
decisions. The current conflicting radiation standards and duplicative 
regulation work against those principles.
    Recently, the NRC and EPA have pursued initiatives to resolve 
duplication and conflict in their regulatory programs for radiation 
safety. The NRC and EPA have agreed on a communication process that 
addresses their conflicting standards for decommissioning site 
cleanups. Also, the agencies are coordinating efforts to create a more 
integrated framework for regulating the safe disposition of low-
activity radioactive material and mixed (radiological and chemical) 
waste.
    However, the greatest impediment to resolving issues of duplicative 
authority and conflicting standards are the various laws that mandate 
the respective agencies' regulatory programs. Congress should resolve 
the policy issues that the agencies cannot resolve on their own. We 
encourage this committee to provide appropriate, continued oversight to 
ensure that consistent radiation policy is established through 
legislation.
      industry has launched a proactive, comprehensive materials 
                           management program
    The nuclear industry has long known that radiation could have 
effects on metals and other structural materials previously unknown to 
scientists or engineers. Because commercial nuclear reactors operate at 
high temperatures and pressures, it had to find materials able to 
withstand radiation, stress, wear and corrosion. Through experience, it 
has.
    Some of the initial materials used to fabricate reactor and power 
generation components did not perform as well as predicted. In 
response, the industry, over the past 20 years, has formed four major 
programs related to boiling water reactor vessel internals, steam 
generator management, pressurized water reactor materials reliability, 
and robust fuels. Working with EPRI and the Institute of Nuclear Power 
Operators (INPO), these efforts have been successful in addressing many 
materials issues.
    Despite these efforts, an inspection at the Davis-Besse nuclear 
plant in 2002 identified component damage stemming from two issues: 
reactor vessel nozzle cracking and boric acid leakage. Since 1988, all 
U.S. pressurized water reactors have had programs for preventing boric 
acid leakage. In the early 1990's, the NRC and the industry began 
examining the potential for reactor vessel nozzle cracking, after tiny 
cracks were found in nozzles at a French reactor.
    Nozzle cracking and boric acid leakage at Davis-Besse combined to 
create a problem that the nuclear industry had not experienced before: 
significant corrosion on a reactor vessel head. The corrosion was 
caused by water that contains boric acid. The cracks developed over 
several years, ultimately permitting a small amount of water containing 
boric acid to leak and come into contact with the reactor vessel head.
    As a result of this corrosion, the Davis-Besse plant was shut down 
for corrective measures. In March, the NRC approved FirstEnergy's 
corrective actions and ongoing plant maintenance changes and permitted 
Davis-Besse to restart. FirstEnergy replaced the reactor vessel head at 
Davis-Besse and the NRC conducted a thorough inspection of the reactor. 
In addition, the company implemented, with NRC oversight, an overhaul 
of its management and management practices at the site.
    The nuclear industry and the NRC have responded quickly and 
responsibly to the Davis-Besse event. As the NRC has also been invited 
to testify, the commissioners can best detail actions taken by the 
agency. However two of these actions merit special attention: 
additional inspections of all U.S. pressurized water reactors and 
changes in the agency's oversight process to facilitate early detection 
of the type of corrosion that occurred at Davis-Besse.
    The nuclear industry has also responded to the event. INPO 
investigated the event and issued a report with recommendations aimed 
at preventing a similar event. EPRI, the industry's research 
organization, had previously developed a technical document on boric-
acid corrosion inspection and leakage detection. The owners of 
pressurized water reactors have completed inspections recommended by 
the NRC. There are no indications at any other plant of corrosion on 
reactor vessel heads similar to that found on Davis-Besse. Small cracks 
were found on the nozzles at several plants and reactor owners have 
scheduled replacement of 30 vessel heads by 2007. To date, vessel heads 
have been replaced at eleven nuclear plants. In the meantime, all of 
these reactors will continue to operate safely.
    Perhaps more importantly, the nuclear industry has also developed a 
integrated, coordinated, and proactive nuclear plant materials program. 
In 2003, a task force composed of senior industry executives with broad 
experience in materials issues, working with materials experts, 
completed a broad assessment of industry programs. Although materials 
integrity has long been a part of the industry's research and 
maintenance programs, companies are now replacing more equipment and 
components more rapidly than expected. The task force found that the 
industry would benefit from a proactive program to assess and, when 
needed, replace plant components and materials.
    Among the findings of the industry assessment is the recognition 
that when significant materials issues become known, they quickly 
consume all the attention, personnel and funding of diverse current 
materials groups. Current programs differ in levels of funding, scope, 
assessment processes, executive involvement, personnel resources and 
other areas. No industry group had looked holistically at the 
management of nuclear materials issues.
    The recent industry assessment stressed the importance of funding 
and organizational commitment to oversee materials issues. The 
assessment concluded that consistent funding at the level required to 
resolve current materials issues is a prerequisite to remaining an 
effective nuclear plant operator. As a result, the industry will spend 
nearly $65 million annually on this effort. We have put new inspection 
protocols in place and have developed techniques to anticipate and 
detect potential problems.
    NEI also has taken proactive action to address materials 
degradation at our nation's nuclear power plants. With the unanimous 
support of the chief nuclear officer of each company that operates a 
nuclear power plant, NEI has established an industry wide initiative to 
integrate materials programs and to establish ongoing, comprehensive 
management of materials issues. This approach integrates existing 
activities by INPO, EPRI and reactor owners' groups and refocuses them 
for future efforts. An executive-level oversight structure is in place 
to ensure appropriate resources and attention is given to ensure 
effective management of materials issues.
    The Davis-Besse event prompted the NRC and the nuclear industry to 
reexamine its programs for materials management issues. The industry is 
committed to detecting and resolving materials issues before they 
challenge the safe operation of our facilities. The industry believes 
that the NRC has taken appropriate steps to address these issues. 
Additionally, the industry believes that a proactive industry-led 
program, supported with appropriate resources, is the preferred 
approach.
  u.s. nuclear power plants are the most secure industrial facilities 
                 before 9/11 and even more secure today
    NEI has not had the opportunity, since the tragic attack of Sept. 
11, 2001, to review with this subcommittee the actions that the 
industry has taken in response to increased security concerns created 
by that event. The nuclear industry fully recognizes that the health, 
economic and national security benefits from nuclear energy easily 
could be overruled if our plants cannot be operated safely, even in the 
current environment of concern over terrorism.
    Even prior to Sept. 11, 2001, our nuclear power plants were the 
most secure industrial facilities in the United States. They were built 
to withstand extreme natural events, such as earthquakes and 
hurricanes, and the NRC has for more than 20 years required that 
private security forces defend against an attacking force of saboteurs 
intent on causing a release of radiation. The facilities are even more 
secure today, with voluntary and NRC-required security and emergency 
response implemented since 2001.
    In analyzing this changing global environment, the nuclear industry 
started with the firm knowledge that nuclear power plants although 
robust and difficult targets to penetrate nonetheless are considered by 
some to be potential terrorist targets. However, as stated by former 
NRC Chairman Richard Meserve:

         It should be recognized that nuclear power plants are massive 
        structures with thick exterior walls and interior barriers of 
        reinforced concrete. The plants are designed to withstand 
        tornadoes, hurricanes, fires, floods, and earthquakes. As a 
        result, the structures inherently afford a measure of 
        protection against deliberate aircraft impacts. In addition, 
        the defense-in-depth philosophy used in nuclear facility design 
        means that plants have redundant and separated systems in order 
        to ensure safety. That is, active components, such as pumps, 
        have backups as part of the basic design philosophy. This 
        provides a capability to respond to a variety of events 
        including aircraft attack.

    As former Chairman Meserve noted, the industry's ``defense-in-
depth'' philosophy includes protection by well-trained, heavily armed 
security officers, fortified perimeters and sophisticated detection 
systems. The industry also assumes that potential attackers may attempt 
to achieve the help of a sympathetic insider, so the companies that 
operate nuclear plants conduct extensive background checks before 
hiring employees. Even then, to be conservative, our security plans 
assume that attackers are successful in obtaining insider help.
security at nuclear facilities has increased significantly since sept. 
                                11, 2001
    Nuclear power plants were our nation's most secure industrial 
facilities before Sept. 11, 2001, but new threats required the industry 
to take action to bolster security even more. The industry has 
increased well-trained, paramilitary security forces at the plants by 
one-third, to some 7,000 officers at 67 sites. The industry also has 
worked with the NRC to implement the security improvements mandated 
both in 2002 and 2003. Overall, the industry has invested more than 
$500 million in security-related improvements since September 2001, and 
the industry will invest another $500 million in security enhancements 
by the end of this year.
    The industry's security has been recognized as excellent in 
independent assessments conducted by the Progressive Policy Institute, 
a panel of security and infrastructure experts for The Washington Post 
and by current and former law enforcement officials. The Progressive 
Policy Institute, in a report issued last summer, gave nuclear plant 
security its only A rating. When The Washington Post reviewed security 
in several U.S. private and government sectors a year after Sept. 11, a 
panel of experts gave the nuclear industry a rating of ``A-/B+'' the 
second-highest rating in the survey. More recently, the National 
Journal, in a bipartisan survey, gave nuclear plant security its third-
highest ranking.
    A copy of an NEI publication entitled ``Post-Sept. 11 Improvements 
in Nuclear Plant Security Set U.S. Industry Standard'' is attached. It 
provides additional detail regarding the many security changes that 
have been made at our plants since September 2001.
    The nuclear industry has cooperated and worked with the NRC to 
review nuclear plant security completely, and many improvements have 
been implemented as a result. Changes include measures to provide 
additional protection against vehicle bombs, as well as additional 
protective measures against water- and land-based assaults. The 
industry has increased security patrols, augmented security forces, 
added more security posts, increased vehicle standoff distances, 
tightened access controls, and enhanced coordination with state and 
local law enforcement.
    In April 2003, the NRC issued new security requirements that 
effectively revised the agency's ``design basis threat,'' which defines 
the characteristics of the threat against which a plant must defend and 
is the foundation for the industry's security programs. Since then, the 
nuclear industry has been working in cooperation with the NRC to 
resolve issues related to the new orders and in late April of this 
year, every company that operates a nuclear power plant submitted 
revised security plans to the NRC. These plans determine how each plant 
will be able to meet the new standards by the NRC-imposed deadline of 
October 29.
    Regarding an issue that received a considerable amount of 
congressional concern, the industry has worked with the NRC to develop 
a revised program to constantly test the security at our facilities. 
This program includes ``force-on-force'' drills using advanced 
equipment. Although the tests were suspended for several months after 
Sept. 11, they are being conducted at plants throughout the nation. 
Every plant will conduct NRC-evaluated force-on-force exercises at 
least once every 3 years, in addition to exercises conducted by energy 
companies on a more frequent basis.
    It is highly unlikely that attackers could successfully breach 
security at a nuclear power plant and produce a release of radiation 
that would endanger the residents near the plant. NRC Chairman Nils 
Diaz on May 15 said that facilities that shield reactor fuel the 
containment building, spent fuel pools or dry storage containers are 
protected from scenarios as extreme as an aircraft crashing into a 
nuclear power plant. ``The NRC has conducted an extensive analysis of 
the potential vulnerability of nuclear power plants to aircraft 
attacks,'' Diaz said. ``While the analysis is classified, the NRC 
remains convinced that nuclear power plants are the most heavily 
protected civilian facilities in the United States.'' Diaz noted that 
the possibility that such an attack would result in a radiological 
release is low.
    Even so, we recognize that the security programs at our nuclear 
power plants must not be static. We are constantly reviewing and 
reevaluating our security programs. In that regard, the industry is 
ready to work with this subcommittee to help you and the American 
public better understand our industry's strong commitment to security 
and protecting public safety.
    Mr. Chairman, the nuclear energy industry is proud of our efforts 
in security and emergency preparedness. We believe that no other 
industry can match or even approach the level of sophistication and 
commitment that the nuclear industry has exhibited in operating safe 
and secure power plants.
    We have enhanced security significantly since the Sept. 11 
terrorist attacks and we continue to work with Federal, state and local 
officials to ensure there is a seamless shield of protection at our 
facilities both for our workers and for residents who live near our 
facilities. The industry also needs regulatory stability during this 
period of complying with the most recent NRC security requirements and 
thereafter. The industry's plans to meet the new NRC requirements 
include costly physical improvements that will bolster plant security. 
Constantly changing the security requirements could delay current 
improvements or could result in the improvements being outdated even as 
they are being built.
     nei supports nrc-endorsed legislative proposals and urges the 
        subcommittee to support comprehensive energy legislation
    The nuclear energy industry has followed the legislative proposals 
of the Senate Environment and Public Works Committee closely over the 
past 2 years. The industry appreciates the cooperation that members and 
staff, on a bipartisan basis, have provided.
    In general, the industry has supported several NRC proposals on 
security, and we appreciate the committee's efforts in including those 
initiatives in legislation approved last year and in agreeing to 
include those proposals as part of the comprehensive energy bill 
conference report still be considered by the Senate. We were 
disappointed that language was not agreed upon to resolve the issue 
regarding when our security personnel may use deadly force. We continue 
to support efforts to assure that they can use deadly force under 
appropriate circumstances. Although the industry still has concerns 
regarding the proposals in the energy bill conference report, it 
supports passage of the legislation, along with those proposals 
included in a broad energy package for America.
    Mr. Chairman, the nuclear energy industry has responded to many of 
the concerns that the full committee voiced regarding security at our 
plants over the past 2 years. The NRC has created a new security 
division. The industry's security is being tested with force-on-force 
drills on a more frequent basis. The design basis threat has been 
increased to reflect today's potential security threats after the NRC 
conducted a review of the requirements with other Federal agencies. Our 
emergency response plans, already the gold standard for emergency 
planning, have been improved.
    The industry remains hopeful that an energy bill, including nuclear 
security provisions, can be passed this year. Yet, we urge this 
subcommittee and the full committee to consider that this industry has 
maintained its long-standing commitment to security, is making the 
changes required to defend against new threats and is re-examining its 
emergency preparedness programs to ensure that our facilities continue 
to be the most secure in the nation.
    By October 29, we will have spent approximately $1 billion industry 
wide on security enhancements, working with the NRC and Department of 
Homeland Security. The industry will continue its long-standing 
practice of re-examining security based on emerging global events. We 
take that initiative as an industry and we must do so in a climate of 
regulatory stability and certainty so that there is time to comply with 
the new requirements imposed by the NRC and bring stability to the 
programs that make America's nuclear power plants the most secure 
industrial facilities in the country.
                               conclusion
    America's 103 nuclear power plants comprise a critical element of 
our energy portfolio. Nuclear power is vital not only to our nation's 
energy security and economic future but also to our environmental and 
clean air goals. The industry continues to operate nuclear plants 
safely and efficiently. During the past decade, performance and safety 
have been consistently at, or near, record levels. In addition, nuclear 
power plants also are the most secure industrial facilities in the 
country.
    The nuclear industry has significantly increased the amount of 
electricity that it generates over the past two decades. But for the 
nuclear industry to continue generating three-quarters of our nation's 
emission-free electricity, new nuclear plants must be built. The 
industry has made great strides toward its goal of constructing new 
nuclear plants and is committed to achieving this objective in the near 
term.
    The NRC plays an important role in the nuclear energy sector. 
Achieving the goal of new plant construction depends on a stable 
regulatory environment, one that assures the safe operation of our 
plants. The NRC has made significant progress toward this end, yet more 
must be done. The NRC must continue to modernize its regulatory 
environment to incorporate safety-focused principles. For the nuclear 
industry to continue to play an important role in our nation's energy 
and environmental future, the NRC must be more effective and more 
efficient.
                                 ______
                                 
 Responses by Marvin Fertel to Additional Questions from Senator Inhofe
    Question 1. In your opinion, with the resident inspectors, is it 
necessary today to continue having four NRC regions as well?
    Response. We believe it is likely that the NRC could gain 
additional efficiencies and effectiveness by further consolidation of 
its regional offices. As noted in my testimony, the NRC's budget and 
overall staffing levels have increased significantly over the past 
several years. According to its budget request for fiscal year 2000, 
the NRC was to have 2,810 full time equivalent employees. But, by 
fiscal year 2005, that number had increased to 3,109. Most of this 
increase reflects efforts to address uprates, relicensing, new plant 
licensing, emergency preparedness and security. While these are areas 
the industry recognizes as priority activities requiring NRC resources, 
we believe the NRC has other areas where resource commitments could be 
decreased or reassigned to address the priority areas and where 
efficiencies could be gained-both improving NRC regulatory 
effectiveness and also decreasing licensee costs. Specifically, 
recognizing the extremely high level of plant performance in the 
industry, the more effective and safety-focused reactor oversight 
process, and the changes in ownership and management of operating 
plants in the industry, the NRC should be able to decrease resources 
committed to inspections and should seriously consider further 
consolidation of their regional offices.
    With specific regard to the regional offices, a key factor that 
should be considered in evaluating the structure of the regional 
offices is the amount of industry consolidation that has taken place. 
When the regional offices were created, all of the operating units 
owned by an individual utility were located in the same NRC region and 
one regional office would interface with the utility management team. 
Today, we have individual utilities that own operating units in 
multiple regions, creating a situation where multiple regions are 
interacting with one utility management group. We don't believe this is 
necessarily the most effective way for the NRC to oversee company 
performance, or for licensees to effectively interact with the 
regulator.
    The industry also believes that the NRC could become more efficient 
by eliminating, or consolidating its regional offices. Each regional 
office has approximately 65 positions that do not have any direct 
inspection responsibility. The functions of these individuals include 
management positions, administrative staff, public affairs offices, 
travel offices, etc. There are also considerable facility-related 
costs.
    In assessing its overall organizational staffing levels, the NRC 
should also avoid creating large new permanent staff positions to 
handle short-term resource requirements. A specific example where this 
appears to be the case is in the area of security. With the changes to 
the regulatory requirements and to licensee plans and strategies, the 
NRC has faced a ``bow-wave'' of activities over the past 3 years. 
However, going forward, the industry, not the NRC, has the bulk of 
implementation requirements. NRC should assess their staffing needs, 
everywhere and particularly in the area of security, based upon a 
longer-term perspective of fulfilling their responsibilities and be 
careful to not establish large organizations that do not have relevant 
longer-term activities to fulfill.
    In summary, the industry believes that the changing regulatory 
environment as well as the changing nature of the industry has provided 
opportunities for the NRC to review and evaluate its staffing levels 
and that the NRC has significant opportunities to increase both 
efficiency and effectiveness by both structural organizational changes 
and more focused staff assignments. Consolidating its regional offices 
is but one example of how legitimate increases in staffing levels in 
some areas could be offset by decreases elsewhere without diminishing 
NRC's effectiveness.

    Question 2. Has NEI noticed a difference in the way the NRC 
conducts their enforcement actions since they have been moving toward 
risk-based decisionmaking?
    Response. The enforcement program changes that were put in place 
coincident with the revised Reactor Oversight Process have resulted in 
enforcement actions that are much more closely tied to the significance 
of the performance issue. This is a much improved process and has led 
to a better safety focus on performance issues. However, further 
enhancements can be made.
    In our view, there remain compliance requirements that have little 
or no safety significance. For example, over 98 percent of the NRC's 
inspection findings are determined to have little or no safety 
significance. The new enforcement policy appropriately defers these 
issues to licensee management for resolution as part of the plant's 
corrective action program, with follow-up from the resident inspector 
to ensure the issues are properly addressed. In many cases, these 
issues had already been identified by the licensee. What this result 
says is that significant NRC inspection resources are being committed 
to issues of low, or no safety significance.
    While the output from the Reactor Oversight Process is successfully 
focusing NRC resources on safety-related issues, the fact that 98 
percent of the inspection findings have little or no safety 
significance, is indictive of a situation where the inspectors are 
inspecting existing codified regulations which are not safety focused. 
In essence, while the oversight process and its enforcement process 
have been made safety-focused, many of the existing codified 
regulations are not safety-focused. This is a primary area where the 
NRC's inspection/enforcement requirements can be more risk-informed.
    While the Commission is committed to addressing this issue, and 
while some progress is being made in revising outdated and ineffective 
regulatory requirements, the pace of change is far too slow to provide 
any significant improvement in the foreseeable future. The Commission 
should set a goal of eliminating or modifying those regulations that 
have little safety value within 5 years. In an attempt to facilitate 
such changes, the industry has provided the NRC with a white paper 
describing a new, risk-informed regulatory framework, which includes 
sample regulation language that is risk-informed and performance-based 
where appropriate. The new framework is technology neutral and could be 
applied to both current and future plants.
                                 ______
                                 
       Response by Marvin Fertel to an Additional Question from 
                            Senator Jeffords
    Question. Mr. Fertel, in light of the consolidation in the nuclear 
industry you describe in your testimony, do you think the NRC should be 
doing more to track wastes and fuels?
    Response. The industry fully recognizes and accepts its 
responsibility to safely and securely control and manage fresh nuclear 
fuel and all byproducts, including spent nuclear fuel generated at the 
plants. We find the recent, though very limited, incidents unacceptable 
from a credibility and public confidence perspective, though they posed 
no threat to public health and safety.
    The NRC currently has strict regulatory requirements regarding the 
control and recordkeeping associated with special nuclear material, 
including new fuel, spent nuclear fuel, high-level wastes and low-level 
wastes. To meet these requirements, every commercial nuclear power 
plant utilizes computerized systems to track the movements and storage 
locations of all nuclear materials. Every delivery to the site and 
transports away from the site are tracked and recorded.
    The industry recognizes that there have been three recent problems 
identified that raise questions regarding the effectiveness of the 
current regulations. However, events contributing to the recently 
identified concerns occurred decades ago. At the Vermont Yankee plant, 
the used fuel pieces that could not be properly accounted were 
subsequently found at the plant in the used fuel storage pool. In the 
Millstone event, fuel rods that were also unaccounted for were 
determined by the NRC to not be a public safety hazard and that they 
were most likely disposed of in a low-level waste facility and thus 
properly sequestered away from the public. The most recent problem is 
expected to result in finding the material in the pool.
    The industry and the NRC have proactively investigated these 
circumstances to develop lessons learned and initiate corrective 
actions. In addition, the NRC has informed all licensees about these 
circumstances and expects the licensees to review the effectiveness of 
their individual material control and accounting programs in order to 
avoid similar problems at their facilities.
    The consolidation of the industry, as described in my testimony, 
has little or no impact upon the NRC's ability to control and track 
nuclear materials at the sites owned by those companies. Regardless of 
the owner, the requirements are clear and the recordkeeping should be 
accurate. Also, with respect to consolidation, a valid argument could 
be made, for example, that the consolidation and thus shared management 
of several facilities will result in better and more uniform management 
practices.
    In our view, these few incidents, while undesirable, did not pose a 
threat to health and safety. On the positive side, they demonstrated 
the value of the inspection and reporting requirements imposed by the 
NRC, illustrated the transparency of the NRC process to the public, 
resulted in a very systematic resolution of the identified problem, and 
provided lessons-learned to the NRC and he industry. As such, we 
believe the existing regulatory requirements are both adequate and 
effective. The strength of these tracking systems and the utilities 
commitment to safety have resulted in what in an excellent overall 
record of controlling and tracking nuclear material by the NRC.
                               __________
        Responses by Marvin Fertel to Additional Questions from 
                           Senator Voinovich
    Question 1a. What are the human capital needs in the nuclear 
industry?
    Response. The nuclear energy industry recognizes that it faces a 
human resource challenge. It has an aging work force, which will 
require careful evaluation and comprehensive planning in order for the 
industry to meet its human resources needs over the next decade.
    In 2003, NEI completed a comprehensive staffing study which 
indicated that nearly 28 percent of workers at generating stations and 
35 percent of workers at key suppliers will be eligible to retire 
within the next 5 years. (A copy of the study is attached.) Further, 
significant skills shortages were identified in the 2001 NEI Staffing 
Study. Absent some proactive industry and government initiatives, we 
project that demand will exceed supply for nuclear engineers by 56 
percent and health physicists by 63 percent. It is important to keep in 
mind that all of these assessments were based on the continued 
operation of the current fleet and have not considered the work force 
demands for the construction and operation of new plants, which could 
add thousands to the work force need in the latter part of the next 
decade.
    We are particularly concerned that there are very few education and 
training programs available at universities or community colleges for 
health physicists, radiation protection technicians, chemistry 
technicians, instrumentation and control technicians (analogue) and 
non-destructive examination professionals.

    Question 1b. What can be done to help human capital development in 
the industry?
    Response. As result of our concerns in this area, NEI recommends 
continued support for University Programs in the Department of Energy's 
Office of Nuclear Energy at the $27.5 million level and expansion of 
these programs to include funding support for Health Physics programs. 
In addition, support for the development of e-learning and community 
college initiatives in a variety of fields including radiation 
protection, instrumentation and control, and non-destructive 
examination would greatly assist the industry to successfully tackle 
its work force challenges. In this area, NEI urges support for the 
Department of Labor's High Growth Job Training Initiative at the 
administration requested funding level of $250 million specifically for 
community college programs. Finally, NEI recommends that all of the 
agencies whose mandates encompass supporting education and training in 
this area, including the National Science Foundation, the Departments 
of Energy, Labor and Education work collaboratively with the industry 
in new program design and development to ensure that appropriate, 
seamless and adequate programs are supported and to avoid needless 
duplication of programs.
    In addition to the broad-based industry activities, the Federal 
Government can play a large role in assisting the industry and the 
American worker in gaining the education and job skills necessary for 
employment in the nuclear industry. Furthermore, programs that build a 
competency in this area will also help ensure a pool of qualified 
candidates with nuclear and radiological skills for the Departments of 
Energy, Defense and Homeland Security, the Nuclear Regulatory 
Commission and the national laboratory system.

    Question 2. Do you agree or disagree with GAO's recommendation that 
the NRC should develop a methodology to assess early indications of 
deteriorating safety at nuclear power plants? Why? What do you think 
the NRC should do to address safety culture at nuclear plants around 
the country?
    Response. The NRC certainly has the responsibility to assess 
indications of deteriorating safety at nuclear plants and to take 
appropriate regulatory actions. They had that responsibility prior to 
Davis-Besse and the responsibility remains.
    There is, however, single metric the NRC can use to effectively 
evaluate safety culture. Therefore, when the GAO says the NRC should 
develop a ``methodology'' to assess safety culture, I believe that the 
best manner for the NRC to achieve that goal is for the NRC to ensure 
that it is effectively integrating safety culture insights from all its 
activities. My following comments explain how I would implement such a 
``methodology''.
    The NRC has been very systematic in reviewing the Davis-Besse event 
to identify improvements in their assessment process. A lessons-learned 
task force (LLTF) was established by the NRC to develop recommendations 
from the Davis-Besse event to improve the NRC's regulatory process. I 
believe the actions taken are consistent with the industry's view of 
the event.
    While the creation and maintenance of the desired safety culture is 
the responsibility of corporate and plant management, the NRC does have 
an important role to ensure that the desired safety culture exists. In 
1989 the Commission issued a policy statement that outlined the 
expectation that the management of a nuclear plant has the duty and 
obligation to foster the development of a ``safety culture'' at each 
facility and provide a professional working environment that assures 
safe operations.
    The NRC currently has many tools to assure that result. As there 
are generally two full time inspectors at every nuclear plant site, the 
NRC has a real-time view of the performance of every nuclear plant. The 
NRC also performs inspections of systems and components during 
operation and shutdown conditions. These inspections give the NRC the 
ability to make continuous observations of performance, including 
safety culture.
    Following the Davis-Besse incident, the NRC through the LLTF, 
recognized several areas for improvement in observation training and 
questioning attitude of the resident inspectors regarding the 
maintenance of a safety culture at the plant and has improved its 
oversight by enhancing the recognition of safety culture concerns by 
the resident inspectors.
    The reactor oversight process (ROP), through the performance 
indicators and cross-cutting issue inspections, provides a view of unit 
performance, material condition and culture at the plants. 
Complimentary to the ROP is the corrective action program at every 
nuclear plant. Not only does the NRC have real time access to the daily 
review of corrective action documents but they also perform periodic 
inspections of the performance indicators, corrective action programs 
and work activities. These inspections provide valuable insight into 
the way safety issues are identified, trended and resolved, all 
providing good indications of the safety culture at the plants.
    The NRC should use all the program reviews, inspections and direct 
oversight by resident inspectors discussed above plus the allegation 
and employee concerns programs, which is a component of a safety 
conscious work environment, to review safety culture at nuclear plants.
    In addition, the NRC has a memorandum of agreement with the 
Institute of Nuclear Power Operations (INPO) to allow them to place 
observers on the evaluation teams that perform the every 2 year plant 
evaluations for the industry. These teams specifically look at the 
safety culture of the plant and review the results of the evaluation 
directly with the company's chief executive officer. INPO has increased 
its focus on safety culture since the Davis-Besse incident.
    The strength of safety culture can best be determined by a 
combination of direct contact with station personnel and management, 
reviewing results of plant performance, trending allegations resulting 
from the safety conscious work environment, routine inspections, and 
inspections of the corrective action process. The onsite resident 
inspectors along with the various visiting inspectors provide 
continuous, as well as, periodic sampling of the safety culture at a 
nuclear plant. The inspectors observe behavior during routine 
operation, refueling outages and special evolutions. They can 
determine, if properly trained, when there is a major shift in culture 
at a plant. This concept was recently demonstrated by the 
identification of a problem and the significant actions taken by the 
NRC at the Salem-Hope Creek nuclear plants.
    Taking into consideration the changes the NRC has made based upon 
their Davis-Besse LLTF plus all the activities and opportunities to 
observe and evaluate safety culture, the NRC currently has the ability 
to effectively assure that every site maintains a safety culture. As 
part of its ``methodology'', the NRC should continue to integrate, and 
look for ways to improve, the input from its systematic oversight, 
inspections and safety conscious work environment related allegations 
to gather the complete picture of safety culture at a plant.

    Question 3a. What has the industry learned from the Davis-Besse 
incident? What changes have been made across the industry?
    Response. The industry recognizes that the Davis Besse incident was 
the result of a significant failure on the part of the company, the 
industry, as well as the NRC. As such, it has taken many actions to not 
only identify lessons-learned but also to assure that every plant has 
acted to implement changes and recommendations as a result.
    The industry participated on many of the teams that were sent to 
Davis-Besse to help determine root cause and corrective actions. Due to 
this direct participation, several changes have occurred throughout the 
industry. As discussed, subsequently in this answer, INPO has been the 
major driver in changing its processes and in driving change in the 
industry.
    One of the major lessons-learned was a heightened awareness of 
plant material condition and degradation mechanisms. To address this 
issue, senior industry leadership through NEI developed an initiative 
to address the material condition and degradation at nuclear plants. 
This initiative is more fully explained in my written testimony already 
submitted to the subcommittee. Because of this increased focus on 
materials, the industry has taken a very aggressive stance on 
inspections and repair/replacement of components susceptible to 
material degradation, e.g. steam generators and reactor vessel heads.

    Question 3b. Please detail the work that Nuclear Energy Institute 
(NEI) and the Institute of Nuclear Power Operations (INPO) has done on 
safety culture and safety-conscious work environment.
    Response. With respect to safety culture, NEI has played a role in 
activities relating to safety culture and safety conscious work 
environment (SCWE). NEI has sponsored forums and formed working groups 
to address safety culture and SCWE issues. NEI has assisted in the 
development of guidelines for principles associated with safety culture 
and guidelines for developing robust employee concerns programs which 
is an important aspect of SCWE. The latter guideline has been shared on 
our public web site so that all nuclear related industries can share 
our collective expertise and lessons learned.
    Following the Davis-Besse event, major systematic changes were made 
to INPO's programs. From an industry perspective, the assessment and 
oversight of safety culture for the industry, falls directly within the 
domain of the INPO. INPO has significantly changed its oversight of 
nuclear plants, particularly in the area of safety culture, as a result 
of the Davis-Besse incident.
    INPO established a very aggressive internal program review related 
to safety culture following the Davis-Besse incident in the fall 2002. 
This review developed recommendations that were acted upon by the INPO 
executives resulting in comprehensive and broad-based corrective 
actions that touched every cornerstone and technical employee. Many of 
the corrective actions were focused on the plant evaluation process and 
how INPO evaluates safety culture. Safety culture ``touch points'' were 
adopted from pre-evaluation analysis to preexit meeting to exit meeting 
with the utility CEO. Safety culture is now discussed with each utility 
CEO as part of the evaluation process.
    INPO also conducted a series of workshops for the industry to cover 
the lessons learned from Davis-Besse and INPO. These work shops were 
regional throughout the United States and included participation by the 
Davis-Besse management team.
    Along with the internal review and workshops, INPO also issued a 
Significant Operating Experience Report (SOER) in November 2002 to be 
implemented by every U.S. nuclear utility. The SOER contained three 
specific recommendations summarized as follows: (1) to discuss the 
Davis-Besse case study outline (provided with the SOER) with all 
nuclear organization managers and supervisors. Continue this effort 
periodically with all new managers and supervisors. Include a 
discussion of the technical and non-technical contributors to the 
event; (2) to conduct a self-assessment to determine to what degree 
your organization has a healthy respect for nuclear safety and that 
nuclear safety is not compromised by production priorities. The self-
assessment should emphasize the leadership skills and approaches 
necessary to achieve and maintain the proper focus on nuclear safety. 
The components of this self-assessment should be included in the plants 
on-going self-assessment program; and (3) to identify and document 
abnormal plant conditions or indications at your station that cannot be 
readily explained. Pay particular attention to long-term unexplained 
conditions. Thoroughly investigate and evaluate each condition 
individually and in an aggregate to determine the causes and potential 
consequences and to ensure timely and effective resolution.
    INPO members were asked to provide a copy of their internal self-
assessment required by the SOER to be reviewed by INPO mangers and 
executives. The aggregate findings of the self-assessments were shared 
with the utility CEOs at the November 2003 CEO Conference. The 
discussion highlighted some of the industry's safety culture best 
practices, including how some CEOs were personally communicating their 
safety culture expectations.
    In addition, INPO developed a principles document with the 
assistance of several prominent current and retired nuclear industry 
executives and a smaller number of culture experts. The document is 
titled, ``Principles for a Strong Nuclear Safety Culture''. (A copy is 
attached.)
    The document was introduced at the November CEO Conference with the 
expectation that the CEOs will use the principles during discussions 
with utility senior management and that each utility will incorporate 
the principles into their nuclear program. As part of INPO's systematic 
evaluations of individual plants, the implementation of the principles 
will be assessed.
    Safety culture discussions have been incorporated into the 
appropriate leadership courses and seminars offered through INPO. These 
seminars cover all levels of the nuclear plant management structure. 
Safety culture will also continue to be a primary theme at the Annual 
INPO-CEO Conferences.
    In conclusion, the lessons-learned from the Davis-Besse event have 
resulted in major changes to almost all of the ongoing INPO programs, 
most prominently the evaluations program and its leadership training 
programs. Of equal significance, the importance of safety culture and 
its characteristics are now a fundamental theme in all interactions 
with CEO's, NEI, INPO and the leadership in the industry are committed 
to prevent events like what occurred at Davis-Besse. The increased 
focus on and to substantive programmatic changes made to address safety 
culture should result in success on that commitment.

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  Statement of David Lochbaum, Nuclear Safety Engineer, on behalf of 
                     Union of Concerned Scientists
    On behalf of the Union of Concerned Scientists (UCS), it is my 
pleasure to appear before this subcommittee. My name is David Lochbaum. 
After obtaining a degree in nuclear engineering from The University of 
Tennessee in 1979, I spent more than 17 years in the nuclear industry, 
mostly at operating power reactors in Georgia, Alabama, Mississippi, 
Kansas, New Jersey, Pennsylvania, New York, Ohio, and Connecticut, 
before joining UCS in October 1996 as their nuclear safety engineer. 
UCS, established in 1969 as a non-profit, public interest group, seeks 
to ensure that people have clean air, energy and transportation, as 
well as food that are produced in a safe and sustainable manner. UCS 
has monitored nuclear plant safety issues for over 30 years.
                         lessons from the past
    Twenty five years ago this past March, the Three Mile Island Unit 2 
reactor outside Harrisburg, Pennsylvania experienced the worst nuclear 
plant accident in U.S. history. The 25th anniversary of that meltdown 
got considerable media attention. One reporter asked me how the nuclear 
industry would be different today had the Three Mile Island accident 
not happened. ``There would be no difference,'' I answered him, 
``because that accident was bound to happen--if not at Three Mile 
Island, then at some other reactor.'' One-of-a-kind design flaws, 
isolated operator training deficiencies, or unique equipment failures 
did not cause the accident. Degraded conditions prevalent at and 
tolerated on all reactor sites ultimately produced a meltdown at one 
site--Three Mile Island. The many post-mortem inquiries into that 
accident resulted in extensive changes in the organization and 
management of the nuclear industry and its regulator, the Nuclear 
Regulatory Commission (NRC).
    This history is relevant to today's hearing because compelling 
evidence suggests that extensive, degraded conditions at reactor sites 
are once again being tolerated. The NRC's response to these warning 
signs have amounted to little more than rearranging the deck chairs on 
the Titanic. Fortunately, there is still time for the NRC to plot a 
different course so as to avoid the icebergs looming on the horizon.
                      warning signs in the present
    The Davis-Besse nuclear plant in Ohio recently restarted after 
being shut down more than 2 years for repairs to emergency equipment. 
The NRC concluded that deteriorating conditions at Davis-Besse had, 
over a period of nearly 6 years, reduced safety margins to the point 
where the reactor was within two to 13 months of having an accident 
like Three Mile Island. The NRC identified more than four-dozen flaws 
in its regulatory oversight processes that allowed Davis-Besse to flirt 
with disaster. Many of those regulatory flaws remain uncorrected and 
are not even scheduled for correction.
    Davis-Besse is not an isolated case. It is the twenty-eighth (28th) 
nuclear power reactor to be shut down for a year or longer for safety 
repairs since September 1984. In fact, there has not been a single 
minute in the past two decades without at least one reactor mired in a 
year-plus outage.
    A year-plus outage adversely affects the reliability of the 
electrical power grid. It adversely affects the costs paid by 
ratepayers for electricity and the returns received by stockholders. It 
adversely affects safety levels exposing workers and the public to 
undue hazards. Twenty-eight year-plus outages in 20 years is an 
extremely poor report card for both the nuclear industry and its 
regulator. Nuclear safety problems must be found and fixed before they 
grow to epidemic proportions.
    The NRC's report cards from internal and external auditors are 
equally bad, especially since so many of yesterday's problems still 
factor into today's problems. Very little is getting fixed. A review of 
reports issued by NRC Lessons Learned Task Forces, the NRC Office of 
the Inspector General (OIG), and the U.S. General Accounting Office 
(GAO) over the past 8 years shows the same regulatory problems 
contributing again and again to unacceptable safety levels. Examples of 
these recurring, uncorrected findings are:

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    The NRC attempted to remedy the shortcomings identified by its 
auditors. However, these efforts failed to achieve the necessary 
outcome of preventing recurrence. The NRC's current regulatory 
processes rated Davis-Besse in 2002 as one of the best performing 
reactors in the U.S.--it now appears that Davis-Besse was the worst 
performer. Obviously, the NRC failed to correct enough of its many 
shortcomings. If the agency corrected its regulatory impairments, it 
would be able to detect declining safety levels sooner and intervene 
long before year-plus outages are needed to restore the necessary 
safety margins.
                       roadblocks to nrc reforms
    The NRC has many talented and capable employees committed to the 
agency's vital mission of protecting public health and safety. But as 
NASA learned with the Challenger tragedy and re-learned with the 
Columbia tragedy, technologies where risk is dominated by high-
consequence, low-probability events require much more than the 
commitment of talented, capable workers. They require an unrelenting, 
uncompromising approach to safety.
    The NRC strives to provide that level of oversight, but falls short 
too often as demonstrated by the 28 year-plus reactor outages in the 
past 20 years. The agency's efforts are stymied by its hiring and 
promotion policies. Very few of the NRC's senior technical managers are 
new to the agency. The majority worked their way up through the ranks. 
Consequently, NRC's managers come from the same mold and have the same 
habits. Retirements and reorganizations at NRC merely put new faces on 
the same management style. Reform efforts fail because merely re-
packaging and re-applying that management style cannot yield 
substantive changes.
    The aforementioned 28 reactors that endured lengthy outages shared 
the common trait of bringing in new--really new--management to direct 
the restart and recovery efforts. New management is the fastest way to 
meaningful and lasting reforms. New managers can assess policies and 
practices unencumbered by ``traditions.'' New managers can stake out a 
new path with implicitly conceding it led troops down old paths. New 
management is a tried and true method for bringing about needed reforms 
in a timely manner. Yet it is an untried method at NRC, which 
desperately needs reform at any pace.
    UCS is not advocating a massive infusion of new managers at NRC. 
This would be the fastest and surest way to the much-needed reforms, 
but it would be unfair to many fine public servants who have devoted 
many years of hard work on nuclear safety issues. Instead, we urge 
Congress to work with the NRC to revamp the agency's hiring and 
promotion policies. Retirements and other voluntary departures should 
provide opportunities for finding the most qualified replacements--not 
just the most qualified replacements from within the NRC. The salaries 
and benefits for NRC managers must be sufficient to attract and retain 
qualified candidates from inside and outside the agency.
                           nuclear crossroads
    The future of nuclear power in the United States depends on 
decisions made now. The NRC's regulatory impairments make nuclear 
power's cost and risks higher than is necessary. Left unchecked, the 
only question is whether economics or disaster will bring down the 
curtain on nuclear power in America.
    Whatever role nuclear power plays in our energy future, the NRC 
must become an effective regulator. To hasten that transformation, the 
agency needs fresh perspectives from outside managers. One of the NRC's 
strengths is its work force of talented, capable, and dedicated 
employees. Properly led, they can make sure that nuclear power's costs 
are not too high or its safety levels too low.
    The NRC is like NASA in that both agencies struggle with complex 
technologies where risk is dominated by low probability, high 
consequence events. We hope NRC is unlike NASA in not needing a tragic 
reminder to trigger the reform efforts that are so desperately needed.
    The time for NRC to reform is running out. The Three Mile Island 
meltdown and other nuclear accidents at Chernobyl, Browns Ferry, St. 
Laurent, Fermi Unit 1, SL-1, and Sodium Reactor Experiment occurred in 
the first year or two of the plant's lifetime--during the break-in 
phase. As indicated in the figure of what is called the ``bathtub 
curve'' due to its distinctive shape, risk of failure is highest early 
and late in life. The 104 nuclear power reactors in the U.S. are 
heading toward, if not already within, the wear-out phase of life where 
risk once again rises. The NRC recurring, chronic problems must be 
fixed if the American public is to be adequately protected from the 
hazards of aging nuclear power plants.

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    On behalf of UCS, I wish to thank the subcommittee for conducting 
this hearing on nuclear plant security and for considering our views on 
the matter.
       Responses by David Lochbaum to Additional Questions from 
                            Senator Jeffords
    Question 1. How can NRC enhance its enforcement efforts? In your 
view, is the issue a lack of personnel, or is additional training 
needed?
    Response. The two major problems with the NRC's enforcement efforts 
are timeliness and clarity of communications. Based on the NRC's 
ability to meet schedule goals in other areas--such as reviewing 
license amendment requests--we believe that timeliness in enforcement 
actions can be achieved without additional staffing. The clarity of 
NRC's communications about enforcement actions can be improved by a 
combination of training and process refinements.
    The NRC's enforcement actions on nuclear plant safety issues since 
spring of 2000 fall into two categories: willful violations and non-
willful violations. Willful violations involve determinations by the 
NRC that plant personnel and/or management knowingly and deliberately 
violated regulations. Such determinations can prompt the NRC into 
enforcement actions such as fines against the individuals involved and 
the company. Non-willful violations involve determinations by the NRC 
that companies unknowingly or inadvertently failed to comply with 
regulations. Both categories suffer from lack of timely NRC decisions 
that harm plant owners and the public. When the NRC ultimately 
determines that no violations occurred, clouds of suspicion hung longer 
than necessary over suspected individuals and companies. On the other 
hand, when the NRC ultimately determines that violations occurred, 
individuals and companies remained at the controls of nuclear power 
plants unaccountable longer than necessary.
    The fix is simple--the NRC must establish schedule goals for 
enforcement decisions and abide by them. The NRC established goals for 
decisions involving license renewal requests and has met every single 
deadline to date despite some involving intervenor action. Likewise, 
the NRC established goals for decisions involving other licensing 
requests by plant owners and it meets those deadlines over 95 percent 
of the time. By applying this proven management control to its 
enforcement decisions, the NRC should be able to achieve the similar 
on-time performance.
    Regarding clarity of communications about enforcement actions, I 
began engaging the NRC in 1997 in a continuing series of discussions 
and correspondence about inconsistent enforcement actions. Many of 
those discussions occurred during public meetings conducted by NRC 
where representatives of the Nuclear Energy Institute (NEI), the 
nuclear industry's trade group, expressed similar comments about the 
vagueness of NRC's communications. By procedure, the NRC's 
communications about enforcement actions use templates where blanks for 
specific information (i.e., who, when, where) are filled in. This 
`boilerplate' approach to communications force-fits varying reasons 
into the same messages. When queried by me or NEI, the NRC promptly 
reveals the true reasons why enforcement actions were or were not 
taken. Obviously, the true reasons had not been withheld for privacy or 
legal reasons or the NRC could not have divulged them so freely during 
public meetings and in public correspondence.
    Again, the fix is simple--the NRC must publicly divulge the true 
reasons for its enforcement decisions. The current procedure that makes 
the NRC issue trite communications must be revised. Training on the 
revised procedure should be given to NRC staffers.

    Question 2. Nuclear plants that are seeking license renewal may not 
always conform to current safety standards, but to a number of 
regulations dating back 40 years with exemptions, deviations, and 
waivers granted along the way. While each individual exemption or 
waiver may be justified and not reducing safety margins, the cumulative 
effective of so many exceptions can adversely affect safety. What 
should NRC be doing to properly manage the risk at aging reactors? Is 
having all plants meet current standards the appropriate solution?
    Response. Having all nuclear plants conform to current standards 
before being granted permission to operate for up to 20 additional 
years would solve the problem. But that solution poses an undue burden 
on plant owners, their ratepayers and stockholders. Therefore, UCS 
advocates that the NRC adopt a more practical and reasonable solution.
    The NRC's license renewal process assumes that nuclear power plants 
have adequate safety margins today and focuses the license renewal 
review efforts on aging mechanisms with the potential for eroding those 
safety margins. UCS feels strongly that this license renewal process 
must also include the NRC's verification that today's safety margins 
are indeed adequate.
    The adequacy of safety margins is established by the NRC's 
regulations. UCS is not aware of a single U.S. nuclear power plant that 
meets today's regulations. Instead, U.S. nuclear power plants are 
supposed to meet (a) the regulations in effect when the NRC initially 
licensed them to operate, and (b) regulations subsequently adopted by 
the NRC that the agency specifically applied to existing plants 
(otherwise, the new regulations only applied to reactors licensed 
thereafter by the NRC). In addition, the NRC approved literally 
thousands of waivers, deviations, and exemptions to the regulations.
    A prime purpose of the NRC's reactor oversight process is to 
determine if the reactors meet their applicable regulations (not 
today's regulations, but the hodge-podge of old regulations, new 
regulations, and hundreds of approved waivers, deviations, and 
exemptions).
    Collectively, the NRC's reactor oversight process and its license 
renewal process seek to assure that a reactor has the safety margins 
provided by applicable regulations and that aging of structures and 
equipment throughout two more decades of operation will not erode those 
safety margins. The vital missing link is a verification that the 
reactor's safety margins provide the public with protection comparable 
to that afforded by today's regulations.
    Before the NRC grants a license renewal, the NRC should verify the 
adequacy of today's safety margins by formally reviewing the 
regulations applicable to a reactor and all the approved waivers, 
deviations, and exemptions from those applicable regulations against 
the agency's current regulations. [NOTE: Wherever possible, the NRC's 
review should be streamlined by limiting its scope to only a comparison 
of regulations having a safety nexus. For example, regulations 
involving merely the frequency and content of reports to be submitted 
to the NRC by licensees could be excluded.]
    UCS believes that it is necessary, practical, and prudent for the 
NRC to verify the adequacy of today's safety margins before granting a 
20-year extension to the original 40-year license. After all, an option 
to extending the life of the 40-year old reactor would be to construct 
a brand new reactor at the same site to use the same transmission lines 
and infrastructure. There is no question that a new reactor would have 
to meet today's regulations and the safety margins they require. 
Prudent protection of public health dictates there should be no 
unanswered questions about whether ancient reactors have comparable 
safety margins.
                               __________
  Statement of Marilyn Kray, Vice President for Project Development, 
     Exelon Generation, on Behalf of NuStart Energy Development LLC
    Chairman Voinovich, Senator Carper, and Members of the 
Subcommittee:
    I am Marilyn Kray, Vice President of Project Development for Exelon 
Nuclear, a subsidiary of Exelon Corporation. I am appearing today in my 
capacity as the lead representative of NuStart Energy Development, a 
recently formed consortium of power companies and reactor vendors. 
Thank you for the opportunity to appear before you today.
    Congress has an important role in providing oversight of the 
Nuclear Regulatory Commission, and this oversight will be particularly 
important as the Commission proceeds with a new process for licensing 
nuclear power plants. My testimony today will focus on the benefits of 
nuclear power, the Department of Energy's Nuclear Power 2010 
Initiative, the formation of NuStart Energy Development, and the 
prerequisites for the construction of new nuclear power plants.
                       benefits of nuclear power
    Nuclear power is a safe, clean, reliable and economic method of 
generating electricity. Indeed, the nation's 103 operating reactors 
provided over 20 percent of the electricity generated in the United 
States last year.
    Nuclear plants are safe, both from an operational and a homeland 
security perspective. Despite concerns expressed by some that nuclear 
plants would become less safe as plant operators focused improving 
operational efficiency, data has shown that plant performance and 
safety go hand-in-hand. The best performing plants in terms of capacity 
factor also have the fewest safety-related incidents. Operational 
excellence not only increases plant output, it also enhances safety. In 
fact, commercial nuclear plants have an exceptional record of worker 
safety.
    From a security perspective, independent reviews of commercial 
nuclear power plants have shown these plants to be perhaps the most 
secure industrial facilities in the United States. The same plant 
features that are used to isolate the public from radiation also serve 
to fortify the plants against outside intruders. Nuclear security, 
already robust prior to September 11, 2001, has been significantly 
enhanced since that time. Plants have made significant capital 
investments to upgrade security and have roughly doubled the size of 
their security forces.
    Nuclear power is also one of the cleanest sources of electric 
generation. Since nuclear power is not based on combustion, nuclear 
plants emit none of the air pollutants associated with climate change, 
acid rain, or smog. Since the electricity produced by nuclear plants 
displaces electricity that would otherwise be supplied by fossil-fired 
power plants, it is estimated that U.S. nuclear plants avoided 3.38 
million short tons of sulfur dioxide, 1.39 million short tons of 
nitrogen oxides, and 189.5 million metric tons of carbon dioxide during 
2002.\1\
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    \1\ Calculated by the Nuclear Energy Institute using regional fuel 
emission rates from EPA CEMS data and individual plant generation data 
from the Energy Information Administration. Last updated September 
2003.
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    Nuclear plants do not discharge pollutants into the water, though 
they do discharge warm water into the environment. These discharges are 
carefully regulated and monitored to protect aquatic life. And while 
nuclear plants do generate radioactive waste materials, these wastes 
are carefully managed and are isolated from the environment.
    From a reliability perspective, nuclear plants are an ideal source 
of baseload generation. Demand for electricity is expected to grow by 
50 percent by 2025, according to the Department of Energy. Nuclear 
power will be necessary to ensure that the U.S. maintains a balanced, 
diverse and reliable electricity supply while protecting the 
environment.
    In 2003, the U.S. reactor fleet produced 766.5 billion kWh of 
electricity at an average capacity factor of nearly 90 percent. In 
part, this is due to the inherent design philosophy to run for extended 
periods of time between scheduled refueling outages. Most nuclear 
plants now run on a 2-year cycle between refueling outages. Because of 
these long run cycles, nuclear plants are not subject to fuel delivery 
issues that can affect some generation sources. In addition, unlike 
other generation sources, nuclear plants are generally not affected by 
weather conditions.
    Finally, nuclear generation has proven to be an extremely cost 
competitive form of electricity generation. For 2002, nuclear plant 
production costs, which encompass fuel and operation and maintenance 
costs, were 1.71 cents/kWh. These productions costs were lower than 
comparable costs for coal, which were 1.85 cents/kWh, and significantly 
lower than natural gas and oil, whose production costs were 4.06 cents/
kWh and 4.41 cents/kWh, respectively.\2\
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    \2\ U.S. DOE/Nuclear Power Industry, Strategic Plan for Light Water 
Reactors Research and Development, First Edition, February 2004.
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                  doe's nuclear power 2010 initiative
    Despite the nuclear industry's impressive performance in recent 
years, companies have been reluctant to consider investing in new 
nuclear plants. Uncertainty regarding the NRC's new licensing process, 
new advanced reactor designs, the future regulatory environment, the 
existence of a repository for used nuclear fuel, and the future of 
electricity markets in the U.S. all represent risks that give investors 
pause when it comes to nuclear power.
    Recognizing the valuable role of nuclear energy in meeting the 
nation's current and future energy needs, Energy Secretary Spencer 
Abraham unveiled the Department of Energy's Nuclear Power 2010 
initiative in February of 2002. The program seeks to partner with the 
private sector to achieve three goals: (1) to evaluate potential sites 
to host new reactors; (2) to demonstrate the Nuclear Regulatory 
Commission's licensing process for new plants; and (3) to conduct 
research to promote safer and more efficient nuclear plant technologies 
in the United States.
    In June 2002, the Department awarded grants to Dominion, Entergy, 
and Exelon in support of their proposals to develop and submit Early 
Site Permit applications to the Nuclear Regulatory Commission. Each 
company submitted their application to the NRC for review in the Fall 
of 2003. Final NRC action on the applications is expected in 2006.
    In November 2003, the Department issued a formal solicitation 
inviting cooperative agreement applications to demonstrate the NRC's 
combined operating license (COL) process. The solicitation encouraged a 
consortium approach among power generation companies, plant owners and 
operators, reactor vendors, architect engineers and construction 
companies and proposed a 50 percent minimum industry cost share over 
the life of the project.
    In 1989, the NRC introduced 10 CFR Part 52, an improved and more 
efficient licensing process for new nuclear plants. However, this 
process has not been demonstrated, and the prolonged regulatory 
interactions on previously licensed plants only serves to increase the 
financial community's uneasiness over the NRC's licensing process. This 
is why DOE's Nuclear Power 2010 Initiative is essential.
    The Part 52 process has three subparts: Early Site Permits, Design 
Certification, and Combined Construction Permits and Operating 
Licenses. These subparts have common concepts and common principles. It 
is important for these common concepts and principles to be maintained 
during the reviews, issuance and implementation of the Part 52 
subparts. For example, one of these common concepts, the Inspections, 
Tests, Analyses, and Acceptance Criteria (ITAAC), is applicable in 
design certification and in the combined license element. The 
principles for the design certification ITAAC are the same as for the 
combined license ITAAC, though the regulatory reviews may be years 
apart. If these concepts and principles--which include implementation--
are not maintained, the reviews will become prolonged. Every effort 
should be made to maintain personnel stability within a project for the 
duration of the combined license review and plant construction.
    The majority of the existing 103 reactors in the U.S. are unique 
design. Standardization was not a consideration in the early plants, 
where incorporating lessons learned as previous plants were built took 
priority. In the 1990's, the industry made a commitment to standardize 
new plants to the fullest extent possible. As a result, once the first 
plant receives its license, subsequent licensing activities for future 
plants of the same design should be easier and take less time. The only 
issues to review would be associated with site-specific differences and 
design compatibility with the site.
    The industry commends the NRC for moving forward with improvements 
to 10 CFR Part 2, Rules of Practice for Domestic Licensing Proceedings 
and Issuance of Orders. These improvements will make the licensing 
process more objective and efficient, while maintaining full public 
involvement on issues that are relevant and germane to the proceedings. 
When coupled with the new Part 52 process, these regulatory and process 
improvements should assure that a combined construction and operating 
license for a completely new design can be issued in 24 months of the 
application being filed. For subsequent application of the same design, 
the licensing review and process should take no more than 18 months. 
This timeframe assumes that that all the elements of the Part 52 
process are being used (an approved early site permit, and a certified 
design) and that there is no need for a formal adjudicatory hearing.
    In response to the COL solicitation, three consortia applied for 
assistance from DOE. The three consortia include a team composed of 
Dominion, AECL of Canada, Bechtel and Hitachi; a team composed of the 
Tennessee Valley Authority, General Electric, Bechtel and USEC; and 
NuStart Energy Development, which includes Constellation Energy, Duke 
Energy, EDF International North America, Entergy Corporation, Exelon 
Corporation, Southern Company and the Tennessee Valley Authority, as 
well as General Electric and Westinghouse.
                       nustart energy development
    As noted above, NuStart includes nine participating companies. Of 
these companies, TVA is a limited participant, providing in-kind 
services only, while GE and Westinghouse serve as subcontractors to the 
formal LLC.
    The total cost of the project is just over $800 million over a 7-
year period. We are requesting that DOE provide one-half the cost. Each 
of the six power companies will provide $1 million cash annually for 5 
years from 2004 through 2008, and reduced amounts in 2009 and 2010. In 
addition, each of the six power companies will provide inkind services 
throughout the 7-year duration of the project, for a total project 
share of $6.2 million of cash and in-kind services from each of the six 
power companies. The reactor vendors will provide significantly greater 
funding--Westinghouse approximately $208.3 million and GE approximately 
$157.2 million--over the course of the project.
    The NuStart Energy Development proposal is divided into three 
overlapping phases: Planning, Evaluation and Licensing. The significant 
activities of each phase are outlined below:
Planning Phase (2004-2005)
     Finalize consortium organization
     Finalize contractual relationships
     Prepare for design selection
     Identify candidate sites
     Develop general licensing strategy
Evaluation Phase (2004-2005)
     Develop design selection criteria
     Select site
     Finalize licensing strategy
     Reevaluate economic evaluation for nuclear investments
Licensing Phase (2004-2010)
     Receive from NRC Design Certification for selected designs

         Westinghouse AP1000
         General Electric ESBWR

     Issue Request for Proposal to reactor vendors
     Select reactor design for submittal
     Submit COL application to NRC
     COL granted by NRC
                prerequisites to new plant construction
    As defined by DOE, the scope of the NuStart Energy Development 
proposal is limited to the pursuit of a combined operating license. The 
consortium has made no commitment beyond obtaining the operating 
license. While the consortium, or members of the consortium, would be 
able to use the COL to pursue construction of a new plant, there is no 
commitment to build a plant once the COL is obtained.
    Successful completion of the proposed COL project will address two 
of the main areas of risk associated with new nuclear investments--lack 
of regulatory predictability and lack of completed designs to allow for 
accurate estimates of construction and operation cost. The industry 
expects to develop significant information regarding cost estimates of 
new plant construction and operation through the COL process. However, 
the issue of regulatory uncertainty remains a concern for those 
companies interested in pursuing new plant opportunities. The financial 
community has stated that it considers regulatory predictability and 
stability to be prerequisites to obtaining funding for a new nuclear 
power plant, and continued Congressional attention toward future 
regulatory stability and the licensing of new plants will help build 
confidence among investors and within the industry.
    In addition to mitigating the risks of regulatory predictability 
and design completion, other pre-conditions are necessary before new 
nuclear investments can be made:
          (1) Congress and the Administration must fully fund the 
        Nuclear Power 2010 program at $80 million for fiscal year 2005, 
        and DOE must commit to fund the program at levels that will 
        sustain it to meet the above mentioned targets by 2010.
          (2) The industry must continue to ensure outstanding 
        performance of the current fleet of operating reactors. Recent 
        trends indicate that the industry is succeeding: performance 
        and safety indicators are at record levels. For instance, 
        nuclear plant capacity factors averaged 90 percent, the highest 
        of any source of electricity generation. Public perception of 
        new nuclear power is based, in part, on the performance of the 
        current fleet of operating plants. Thus, continued solid 
        industry performance is essential to maintain the confidence of 
        the regulators, the financial community and the general public.
          (3) Congress and the Administration must continue to support 
        a clear path forward to resolve the issue of spent fuel 
        disposal. Particular milestones that will signal progress 
        include adequate funding levels for the Yucca Mountain program, 
        the submittal of the Yucca Mountain license application by DOE 
        to the NRC--which is scheduled to occur in December 2004, and 
        the NRC's timely review of the application.
          (4) Power companies must have confidence that open and 
        competitive wholesale markets for electricity exist. Many power 
        companies are operating in a deregulated environment. Although 
        they no longer need to demonstrate that their investment in new 
        generation is ``used and useful,'' these companies must have 
        confidence that there will be a consistent market for the 
        power. The ideal solution to this issue is to have a power 
        purchase agreement in place for the sale of the proposed 
        project's output, at least for the early years of production. 
        In addition to alleviating the uncertainty regarding the need 
        for the additional power, the power purchase agreement would 
        remove the risk associated with price fluctuations by 
        establishing a price schedule for the output. The power 
        purchase model is used extensively in the wind generation 
        business. In the absence of a power purchase agreement, very 
        high confidence in the projections for demand growth and market 
        prices will be needed for companies to consider investing in 
        new nuclear plants.
          (5) Congress and the Administration must support incentives 
        to alleviate concerns by the financial community concerning the 
        risks associated with being a ``first mover'' in the 
        construction of new plants. These incentives are particularly 
        important given the significant capital investment required for 
        nuclear construction. A number of financial incentives have 
        been identified by the industry New Plant Task Force in 
        conjunction with the Department of Energy. Some of the 
        incentives being considered include:

                  Insurance against substantial cost increases 
                or cancellation resulting from the regulatory process
                 Low interest government loans or loan 
                guarantees
                 Seven year depreciation schedule
                 Investment tax credits
                 Production tax credits
                  Protection against electricity price 
                fluctuations, especially for the early years of plant 
                operation

    A successful and sustainable program to build new nuclear plants in 
the United States does not require all of the above incentives. Various 
combinations or even a portfolio approach which caps the value of the 
incentive could be used.
    It is important to emphasize that the industry is not seeking a 
totally risk-free business environment. Rather, it is seeking 
government assistance to contain those risks that are beyond the 
private sector's control. The goal is to ensure that the level of risk 
associated with the next nuclear plants built in the United States 
generally approaches what the electricity industry would consider 
normal for a commercial project.
    There is ample precedent in other areas for this type of government 
support for critical infrastructure. The Transportation Department's 
Transportation Infrastructure Finance and Innovation Act (TIFIA) is 
just one example. The TIFIA was developed to address a similar scenario 
where major investments in bridges and tunnels were needed for the 
common public benefit, but the construction projects were not 
attractive enough for individual entities to pursue. The incentives 
within the TIFIA framework were developed to stimulate private capital 
investments using limited government funds.
                                summary
    Nuclear power will play a critical role in allowing the Nation to 
meet its future energy needs while preserving a sound environment. Not 
only is nuclear power a safe, reliable and economic source of 
electricity--allowing it to meet the nation's future need for baseload 
power generation, it is also the only major emissions-free source of 
generation currently in operation. While aggressive efforts must be 
made to explore and expand other forms of environmentally responsible 
generation, including wind, solar, biomass, natural gas and clean coal, 
the U.S. must also take steps today to ensure that the Nation will 
enjoy the benefits of a new generation of nuclear plants in the future.
    Congress and the Administration should fully fund the Department of 
Energy's Nuclear Power 2010 Initiative, take steps to assure a stable 
regulatory environment, continue to support work on the Yucca Mountain 
project, and provide financial incentives for the construction of the 
first series of new nuclear plants that are built.
                                 ______
                                 
      Response by Marilyn C. Kray to an Additional Question from 
                            Senator Jeffords
    Question. Nuclear plants that are seeking license renewal may not 
always conform to current safety standards, but to a number of 
regulations dating back nearly 40 years with exemptions, deviations, 
and waivers granted along the way. While each individual exemption or 
waiver may be justified and not reducing safety margins, the cumulative 
effect of so many exceptions can adversely affect safety. Is your 
consortium concerned that the new reactor you are proposing will have 
to meet standards that older plants do not, and does that present a 
competitive disadvantage?
    Response. The most important aspect of this response is to clarify 
the misperception that the existing nuclear plants have defaulted to a 
relaxed set of safety standards. The suggestion is that this relaxed 
safety environment is the result of the vintage of the plants and the 
cumulative effect of the various exemptions or waivers granted over the 
life of a plant.
    The activities or tools in place to prevent this relaxed safety 
environment from occurring can be categorized into three areas: 
continuous plant upgrades, reassessment against new regulations and 
maintenance of a ``living'' Probabilistic Risk Assessment (PRA).
    With respect to the first area, the components and systems of the 
existing fleet of plants are continuously tested and monitored to 
ensure that they are capable of performing their required safety 
functions. Based on results of this continuous monitoring as well as 
pre-emptive actions by the plant owners, equipment and components are 
periodically upgraded or replaced. Examples of this range from the 
replacement of small devices such as piping, fittings and valve 
packings to the replacement of large components such as reactor vessel 
heads, steam generators and turbine rotors. Current plant licensees 
have also installed new, more modern systems to replace or supplement 
original systems that may become obsolete or no longer considered 
adequate. Examples of this include replacement of various analog 
control systems with digital control systems. In addition to the owner-
initiated upgrades, the Nuclear Regulatory Commission (NRC) also has 
required licensees to correct design deficiencies that could impact 
plant safety.
    Regarding the second category of new regulations, the NRC 
frequently updates its regulations as a result of improvements to 
technology and operating experience. When NRC requirements are changed, 
the NRC applies a rigorous evaluation standard to determine if the 
safety benefit of the new requirement justifies imposing the changes on 
existing licensees. Examples where licensees have been required to 
``backfit'' new requirements include the many hardware and program 
changes that resulted from the accident at Three Mile Island as well as 
the security enhancement changes resulting from the September 11 
attacks. While later plants may need to demonstrate compliance with 
certain requirements beyond those of the existing plants, cost 
effective solutions have generally been established which are not 
onerous when incorporated into the initial plant design engineering 
prior to construction.
    The last area that upholds the safety standards of existing plants 
is the maintenance of a PRA individualized for each plant. The PRA is a 
sophisticated computer model of the entire plant that accounts for each 
of the risks and mitigators that contribute to potential core damage. 
The PRA calculates the probability of core damage based on inputs from 
all of the modeled systems and components along with their status. It 
is this important tool that allows the cumulative effects to be 
evaluated including any plant equipment that might be degraded or out 
of service as a result of a waiver, exemption or routine maintenance. 
This allows an ongoing and comprehensive assessment of plant risk to be 
made as opposed to a ``compartmentalized'' approach where each 
condition was evaluated exclusively.
    Aside from attempting to characterize the vigilance associated with 
upholding the safety standards of existing plants, it is necessary to 
discuss briefly the design philosophy of the next generation of 
Advanced Light Water Reactors. The nine power companies comprising the 
NuStart consortium deliberately selected two reactor designs based on 
their optimization of passive safety systems. The two designs selected 
are the Westinghouse AP1000 and the General Electric ESBWR. The 
incorporation of ``passive safety systems'' refers to the design 
principle wherein laws of nature such as gravity feed, convective heat 
transfer and natural circulation are used in place of complex systems 
comprised of numerous pumps, valves and actuation devices. This passive 
safety system approach translates into very tangible results. For 
example, when comparing the AP1000 against current light water 
reactors, the Westinghouse AP1000 requires:

     50 percent fewer safety-related valves
     80 percent less safety-related piping
     35 percent fewer pumps
     85 percent less cable
     45 percent less seismic building volume

    For the General Electric ESBWR, similar improvements are realized. 
Most notably, the ESBWR does not require any safety related diesel 
generators or safety system pumps, including reactor recirculation 
pumps. For both of the selected reactor technologies, this passive 
safety system approach makes the operation of the plant safer in that 
it is less prone to equipment malfunction or human error, and more 
economical since there are fewer components to design, construct and 
maintain.
    In summary, the NuStart consortium is not concerned that the new 
reactors will be competitively disadvantaged as compared to the 
existing plants as a result from any differences in safety standards. 
The existing plants are continuously upgraded and re-evaluated. NuStart 
Energy Development sees that one of the critical elements to the 
success of a future generation of nuclear plants is the continued 
strong performance of the current fleet. Excellent safety performance 
is needed to establish and sustain the confidence of the public, 
regulators, financial community as well as any future power company 
investors.
                               __________
Statement of Barclay G. Jones, Ph.D., Professor, Department of Nuclear, 
Plasma, and Radiological Engineering, University of Illinois at Urbana-
                               Champaign
    Chairman Voinovich, Mr. Carper and members of the Committee, thank 
you for the opportunity to provide your committee with some information 
and perspectives about the roll that nuclear engineering programs have 
in providing a supply of educated professionals to the required work 
force in the nuclear field. This topic is a central concern of the 
Nuclear Engineering Department Heads Organization (NEDHO), which I 
chaired several years ago. This organization includes the Heads and 
Chairs of all nuclear engineering departments/programs in the US and is 
broadly representative of our common interests. I am speaking this 
morning from my personal interests as a long time faculty member and 
former Head of the Department of Nuclear, Plasma and Radiological 
Engineering at the University of Illinois at Urbana-Champaign. It is 
the sole department of nuclear engineering in Illinois, the birthplace 
of the first man-made nuclear reactor and currently the state with the 
most operating nuclear power plants, eleven at six sites.
    Last year testimony was presented before the Energy Subcommittee of 
the House Committee on Science by my colleague Professor James Stubbins 
at the Hearing on University Resources for the ``Future of Nuclear 
Science and Engineering Programs.'' That presentation delineated the 
interacting forces that were bringing attention to the need for support 
and growth of university programs in nuclear science and engineering to 
address the manpower needs facing the field. These forces are equally 
active today and point to the continued need to nurture and support 
these educational programs. In particular, several activities impact 
directly on the workload of the Nuclear Regulatory Commission and its 
need for human resources to address them in a timely manner. I will 
list only four:
     licensing of the Yucca Mountain high level waste 
repository;
      evaluation of early site permits and combined 
construction license applications for new nuclear power plant 
construction;
     continued evaluation of existing nuclear plant life 
extension requests: and
     evaluation for licensing of Generation IV reactor designs;
    To meet the demands of this increased workload, the Commission will 
be faced with strong competition for educated and experienced 
professionals in the field. The emerging graduates from nuclear 
engineering programs generally are not highly experienced, but they are 
well educated. The experienced workers in the field will continue to be 
in high demand, but are shrinking in numbers due to the 
disproportionate distribution of mature persons in the demographic 
making up the work force. This will be a continuing and increasing 
challenge, at least over the next decade.
    The work force demographic, thus, becomes a significant issue. It 
cannot be transformed to meet demand in a short timeframe because of 
the inherent 4-year BS educational timeframe, and even longer if MS and 
PhD degrees are involved. In addition, there is a period immediately 
following graduation in which experience is an important aspect to 
fully integrate the graduates into being productive employees. But all 
is not bad news.
    Over the past 2 or 3 years there have been increases in 
undergraduate enrollments in nuclear science and engineering programs. 
This increase will also work its way into graduate degree programs. 
However, graduate programs are driven, not so much by the workplace 
demand conditions, but by limitations imposed by the availability of 
funded research contracts to support graduate study. It is important to 
note that much of the fundamental research funding is from government 
sources. Thus, it is no surprising to observe that there is a strong 
correlation between such funding and enrollments. Funding remains a 
vitally important necessity to retain viable nuclear science and 
engineering programs within leading universities.
    Focusing more directly on the manpower needs side in the nuclear 
engineering field, a common issue emerges, the aging of the experienced 
work force. In the nuclear power sector, many of the experienced 
employees will reach normal retirement age within the present decade. 
Although there has been downsizing of operating and support staff at 
power stations since deregulation of the electric utility industry, 
there is projected to remain a shortfall in vital experienced and 
certified staff. Similar conditions exist in the Nuclear Regulatory 
Commission technical staff, in government nuclear laboratories and in 
university nuclear engineering faculties.
    These shortages cut across BS, MS and PhD degree levels. The supply 
of a decade ago of operational and support staff from US Navy personnel 
entering the civilian work force has also diminished. Estimates of the 
shortfall between BS and MS Annual Employment Needs and students 
graduated range from 350 in 1999 to more than 450 in 2003. This has 
been exacerbated by the rapid and precipitous decline of enrollments in 
BS nuclear engineering programs from 1500 in 1992 to less than 500 in 
2000. A steady growth has occurred to where there are about 1000 
currently enrolled. Continued growth is projected as next year's 
applications and admissions are remaining steady and strong. Thus, the 
supply side is currently strong, but well below the earlier mentioned 
short fall in graduating numbers of nuclear engineers.
    Can the remaining nuclear engineering programs handle the increased 
enrollments? The answer is generally yes, presently. But the teaching 
staff are also aging and replacements need to be immediately acquired 
to make the transition smooth and effective. A study in which the 
distributed age of nuclear engineering faculty by the Nuclear Energy 
Institute is incorporated in the bar graph included here. This clearly 
shows a skewed distribution with the expected significant retirements 
in the next 5 to 10 years. Working against the earlier replacement is 
the relatively small size of nuclear engineering departments and 
enrollments, compared to electrical, mechanical and computer science 
units. It requires enlightened administrations to respond favorably to 
the nuclear engineering national needs.
    In conclusion the educational programs in US universities have much 
of the necessary infrastructure but will need to replace and add 
faculty in a timely manner in order to continue the increased 
enrollments to meet the discussed personnel demands. Clearly continued 
and expanded government is essential to retain present trends and meet 
projected nuclear engineering staffing needs in the nuclear field.
    I would be pleased to respond to your questions.
                                 ______
                                 
        Report of The Nuclear Energy Research Advisory Committee
            Nuclear Power Engineering Curriculum Task Force
  andrew c. klein, chair, oregon state university; james f. stubbins, 
university of illinois, champaign-urbana; gilbert brown, university of 
 massachusetts, lowell; harold ray, southern california edison; eugene 
                      s. grecheck, dominion energy

                             april 7, 2004
I. Introduction and Charge to the Task Force
    In October 2002 the U.S. Department of Energy's (DOE) Office of 
Nuclear Energy Science and Technology asked the Nuclear Energy Research 
Advisory Committee (NERAC) to form a Nuclear Power Engineering 
Curriculum Task Force to investigate the assertion that university 
nuclear engineering departments and educational programs are not 
currently producing engineers with education optimal to the needs of 
industry.
    The specific DOE charge to the Task Force was:
     In the course of our efforts to support nuclear energy 
educational infrastructure in the United States, we have heard from 
various industry sources that university nuclear engineering 
departments are not producing engineers with training optimal to the 
needs of industry.
     We request that NERAC form a task force composed of 
current and former nuclear utility executives and university nuclear 
engineering professors to discuss and assess this concern.
     If the concern is found to have merit, we request that 
this task force evaluate the need for a new curriculum optimized to the 
needs of industry. If such a need is identified, we request that this 
task force work with expert consultants to outline an optimal 
curriculum as a model for the use of university nuclear engineering 
departments.
     Before any products are finalized, we request that NERAC 
review its draft conclusions with the broader nuclear industry and 
university community.
     We defer to the judgment of the task force regarding the 
time required for this effort.
    During the 2002-03 academic year the Task Force asked all of the 
universities that offer undergraduate degree programs in nuclear 
engineering to voluntarily provide a copy of their current curriculum 
and their curriculum from sometime in the second half of the 1980's. 
This request was made through an email solicitation to the Nuclear 
Engineering Department Heads Organization (NEDHO). In all, 14 schools 
provided curricula to the Task Force for evaluation. Responses were 
received from an excellent distribution of schools both geographically 
and by size of program. Information was received from small and large 
programs and from all corners of the U.S. It is important to note that 
all of the programs that responded have maintained accreditation of 
their undergraduate nuclear engineering programs through the ABET, 
Inc., the cognizant organization for engineering accreditation in the 
United States.

    The list of schools contributing curricula for evaluation includes:
          Massachusetts Institute of Technology
          North Carolina State University
          Oregon State University
          Rensselear Polytechnic Institute
          Texas A&M University
          University of California, Berkeley
          University of Florida
          University of Illinois at Urbana-Champaign
          University of Massachusetts, Lowell
          University of Michigan
          University of Missouri, Rolla
          University of New Mexico
          University of Tennessee
          University of Wisconsin

    The Task Force members conducted the initial analysis of the 
curricula independently and then the Task Force met on November 4, 2003 
to discuss their individual findings and directions for further 
analysis.
    The curricula from the 14 universities reviewed by the Task Force 
included courses and content beginning at general and basic 
fundamentals that continued through general engineering science and 
finished up with specific nuclear engineering discipline subjects. All 
curricula reviewed include general and basic fundamental content in 
advanced mathematics through differential equations, physical sciences 
in chemistry and physics and some include additional content in areas 
such as computer programming, numerical methods and analysis. All 
curricula also included education in the fundamental engineering 
science areas of statics, dynamics, mechanics, materials, economics, 
thermodynamics, fluid mechanics, and heat transfer and many curricula 
include additional content in areas such as electrical fundamentals, 
control systems and engineering graphics.
    Finally, all curricula included content with specialization in the 
nuclear engineering discipline. The topics covered by all of the 
curricula include--atomic and nuclear physics, laboratory classes to 
measure radiation and radioactivity, the interactions of radiation with 
matter, radiation protection, reactor physics and theory, reactor 
thermal hydraulics, and nuclear engineering design. Most of the 
curricula also include material related to nuclear reactor 
laboratories. Because of the variety of faculty interests from 
university to university some of the curricula also include more depth 
of coverage in topics such as reactor engineering, systems engineering, 
fuel management, reactor safety, fuel cycles, nuclear materials, 
nuclear waste management, risk assessment, applied radiation 
protection, radiation transport, fusion and other diverse topics.
II. Overview of the Evolution in Nuclear Engineering at Universities
    The curricula in all engineering and science majors can be expected 
to evolve over time as areas of focus become increasingly and 
decreasingly important to the industries and enterprises that utilize 
the graduates from the country's higher education system. The 
educational programs in nuclear engineering have also seen these 
evolutionary developments. When one examines the history of nuclear 
engineering education during the past half-century in this country, 
they recognize a variety of changes from the early days to present. In 
the 1950's as the country emerged from World War II with the 
realization that there would be a need for nuclear trained and educated 
engineers, there were numerous efforts to increase the number of 
nuclear-trained and--educated engineers and scientists, most notably 
through the USAEC fellowship programs and the Reactor School at ORNL. 
These programs gave high visibility to the nuclear engineering 
profession, attracted many outstanding students, and developed a large 
cadre of highly educated people. University programs in nuclear 
engineering also started developing in the late 1950's, predominantly 
growing out of departments of physics, mechanical and chemical 
engineering. In the 1960's and 1970's as commercial nuclear power began 
to develop, many universities started nuclear engineering programs and 
extended the educational enterprise in this area from the B.S. to the 
Ph.D. degree. Many of these same schools also added research reactors 
to give their graduates significant hands-on experiences as part of 
their education. There were also many research opportunities for 
students and faculty in the broad nuclear engineering discipline around 
this time, some of which directly or indirectly utilized the on-campus 
nuclear research reactors. In 1973 there were 48 schools that offered 
undergraduate and graduate education in nuclear engineering and more 
than 60 research reactors on campuses around the country. The changes 
in the power industry (no new plant orders, de-regulation, and 
consolidation of the industry) from the mid-1970's through the end of 
the 1990's were reflected on the nation's campuses through declining 
university enrollments in nuclear engineering, the closing of 
university nuclear engineering degree programs and the closing of 
university research reactors. In response to these declines, the 
remaining nuclear engineering programs were forced to restructure with 
results that ranged from mergers with other, larger departments to 
broadening of their education and research foci. Currently 26 schools 
that offer one kind of nuclear engineering degree or another remain. 
There are also 26 on-campus university research reactors remaining, but 
not all on campuses with nuclear engineering degree programs.
    In 1998 the Nuclear Engineering Department Heads Organization 
(NEDHO) conducted a study and developed a report that discussed ``the 
current status and future directions of the nuclear engineering 
profession in the United States as viewed by the nuclear academic 
community''. This report also surveyed ``the contributions of nuclear 
engineering to enhancing the well being of society, now and in the 
future'' and laid out the ``steps that the university community and the 
U.S. Government can take to ensure that our national needs are met''. 
The report goes on to state that:

          ``The main conclusion of this report is that the nuclear 
        engineering profession is essential to the well being of the 
        country since it brings great benefits to society in terms of 
        energy security, national defense, medical health, and 
        industrial competitiveness. We further recognize that the 
        nuclear engineering profession is in a period of transition to 
        one encompassing a much broader range of applications of 
        nuclear science and radiation technologies. The country has a 
        persistent demand for nuclear engineers that will almost 
        certainly increase in the future, notably in nontraditional 
        areas of nuclear engineering.

    The report concludes by making the following recommendations:

          The university community needs to make a major 
        cultural shift in its thinking about nuclear engineering 
        education. In essence it has to make a transition from a 
        curriculum dominated by a single technology, nuclear power, to 
        a unified curriculum characterized by a common educational core 
        from which flows a multitude of diverse applications. This core 
        is to be centered on applied nuclear sciences and encompasses 
        low energy nuclear physics, the interaction of ionizing 
        radiation with matter, and plasma science and technology.
          In order to satisfy increasing societal demands for 
        nuclear engineers with training in radiation science and 
        technology it is recommended that the DOE establish a 
        separately designated, clearly distinguished, program for 
        bionuclear and radiological research similar to basic energy 
        sciences or high energy physics. Bionuclear technology and 
        radiological engineering are applications of nuclear 
        engineering of particular importance to the medical health of 
        the country. Currently, governmental funding of such research 
        is dispersed in many small segments over many different 
        programs.

    Changes in direction for nuclear engineering departments were 
reflected in this NEDHO report which was written during a time when 
industry was consolidating and it appeared to many observers that most 
of the existing plants might not pursue re-licensing and would 
terminate operation at the end of their design life. This meant that 
most of the existing power reactor fleet in the U.S. would be retired 
in the first quarter of the 21st century. It was also perceived by many 
that no new reactors were likely to be in the planning process for more 
than a decade or beyond. This perception signaled further declines in 
university enrollments in nuclear related disciplines with no hope of 
recovery in the fission power area.
    During this time, schools were seen to be moving their research 
programs away from power engineering into other varying research 
directions. This was to be expected since the power industry was not 
directly supporting the research programs at the universities. Also 
during this time nuclear engineering faculty, in order to meet the 
demands of their universities for greater research support, began 
looking for other applications of their capabilities, some completely 
outside the nuclear field. Additionally, when universities were able to 
replace faculty who left or retired, schools often replaced them with 
someone with a research focus away from the power industry.
    Since 1998 much has changed in the nuclear power industry. Most of 
the currently operating power plants appear to be headed toward re-
licensing and upgrade, new plants are under consideration for 
construction and operation as early as this decade, Generation IV 
reactor concepts are being seriously considered for development and 
appear to be very competitive with other means of energy generation, 
USDOE is developing new research programs on advanced fuel cycles and 
the direct production of hydrogen using high temperature heat from a 
reactor as a new energy carrier to replace petroleum based 
transportation fuels. All of these developments have also spurred 
significant increases in nuclear-related university enrollments across 
the country principally in the nuclear power area.
    With current and future changes to the nuclear power industry, 
perhaps the charge to the Task Force was too narrowly defined to just 
including nuclear utilities. There is a spectrum of needs within the 
industry, ranging from technician level individuals who can succeed 
with a high school or community college education and specialized 
training through the B.S. or M.S. educated engineers and scientists 
covering a wide set of disciplines, including what has traditionally 
been called nuclear engineering, to PhD educated scientists and 
engineers needed for the development of the next generation of nuclear 
reactors, systems and fuel cycles. The solutions and types of personnel 
to provide the solutions that are chosen by each of the entities within 
the industry will no doubt be different. This indicates that 
educational opportunities in the nuclear discipline should be available 
at all levels.
III. Analysis of NE Curricula and Nuclear Power Industry Needs
    The first step in the Task Force's process was a review of the 
curricula submitted by the universities with an eye toward determining 
whether the curricula of university nuclear engineering departments had 
changed to such a degree over the past 15 years that they are not 
producing engineers with ``education optimal to the needs of 
industry''.
    It appears from the Task Force's review that for the most part, the 
curricula at the 14 universities who submitted information have not 
changed considerably over the past 15 years and are adequate and 
appropriate to support the needs of the broad nuclear industry and the 
power industry in particular. In fact, several programs have 
strengthened their nuclear engineering course offerings by adding 
courses at the Junior and Senior level. This is possible due to the 
improved math background of incoming students, which also allows some 
introductory courses to be moved into the Freshman and Sophomore years.
    There is one area that could be improved in the education of 
nuclear engineers, however. That is the development of a practical 
understanding of the workplace and the individual practical skills that 
are needed to be successful. This can be best accomplished by providing 
a practical work experience for all students interested in nuclear 
power engineering. These experiences can be best provided either 
through co-op programs throughout the academic year or through summer 
internships. The Task Force encourages the university nuclear 
engineering programs to include at least one practical work experience 
opportunity in all of their undergraduate programs. It also encourages 
the nuclear industry to make numerous opportunities available for 
undergraduates studying nuclear engineering in the country. To work, 
this approach must be supported by both the universities and industry. 
This could be a required part of each university's curriculum, and 
industry would need to make these opportunities available for all 
students. To help make internships possible for students, the Nuclear 
Energy Institute has recently established an internship clearinghouse 
on their web site.
    The Task Force was also asked to evaluate the need for a new 
curriculum optimized to the needs of industry. The Task Force's 
analysis and discussion led to the conclusion that a new curriculum was 
not needed and that the development of a common, or model, curriculum 
for use by all academic departments offering the nuclear engineering 
discipline was not in the best interests of either the schools or the 
broad nuclear industry. In general the current nuclear engineering 
curricula currently are already similar in nature with minor 
differences between curricula determined by faculty expertise and 
research interests. The Task Force also believes it is better to have a 
mix of curricula with different focus areas in order to stimulate high 
quality education and research across the country.
    The Task Force also feels that there really is no need for a direct 
role for the U.S. Department of Energy in formulating undergraduate 
nuclear engineering curricula.
    Adapting the universities nuclear engineering curricula to meet the 
needs of the broad nuclear industry can best be accomplished through 
following established ABET accreditation procedures since all schools 
now are working in a ``continuous improvement process'' regime which 
relies on stakeholders to help them tailor their curricula to the needs 
of their constituents. Thus, all ABET accredited programs have self-
correcting, self-regulating processes in place which help them develop 
curricula suitable to those aspects of the nuclear industry that they 
are aiming to serve and that are consistent with the input that they 
receive from the constituents they serve.
    As a part of the current ABET accreditation process each program 
must consider who their clients and constituents are and this is to be 
used to guide each institution in the design of their curricula. For 
example, most programs consider their constituents to be the companies 
in the nuclear power industry (including the operating companies and 
utilities, reactor manufacturers, and fuel vendors), the national 
laboratories, government and regulatory agencies (including DOE), and 
graduate schools. A typical university departmental advisory committee 
is made up of a diverse membership including members from power 
producers, vendors, utilities, national laboratories and others. The 
Task Force feels that over the long run, this process will support the 
evolution of the best curricula to meet the needs of the broad nuclear 
industry. Thus, the Task Force recommends that all sectors of the 
broadly based nuclear industry become active with the university 
nuclear engineering programs across the country to ensure a strong 
educational environment that produces graduates who will meet their 
future staffing needs.
    The Task Force's recommendation for industry involvement in 
development and support undergraduate curricula extends to support 
faculty. The development of professors in the universities is driven by 
the need for faculty to build and maintain strong research programs. 
This has led many young faculty members to develop research programs in 
areas that are not of direct interest or applicability to the nuclear 
power industry. To change this, industry must work more directly with 
university faculty to develop appropriate research programs. This will 
enable these faculty members to bring currency to their classes and 
work on research issues that will move the industry forward.
    Finally, prior to completion of this report a draft was made 
available for review and comment to the nuclear energy community 
through the Nuclear Engineering Department Heads Organization, the 
American Nuclear Society's Education and Training Division and Special 
Task Force on Work Force Issues, the Institute for Nuclear Power 
Operations, the Nuclear Energy Institute, and the Electric Power 
Research Institute. This final report contains certain additions and 
changes to reflect the comments that were received as a part of this 
review.
IV. Conclusions and Recommendations
    Conclusion #1: The nuclear engineering curricula at the U.S. 
universities have not changed considerably over the past 15 years and 
are adequate and appropriate to support the needs of the broad nuclear 
industry. It is the observation of the Task Force that the curricula 
are now stronger, even in the power area, since students are doing more 
in their first 2 years of study based on their better math skills, and 
because faculty are connecting with students early in their programs in 
order to keep them involved in the nuclear engineering degree programs. 
Furthermore, the ABET accreditation process supports continuous 
improvement with input from various constituencies, including the 
nuclear power sector, and has had a positive effect on strengthening 
these programs.
    Conclusion #2: It is impractical to attempt to establish an 
``optimal'' educational curriculum for all ``nuclear engineers'' since 
there is a wide range of needs within the nuclear industry.
    Conclusion #3: There is no need for a direct role for the U.S. 
Department of Energy in formulating undergraduate nuclear engineering 
curricula.
    Conclusion #4: The one area that could be improved in the education 
of nuclear engineers is the development of practical engineering work 
experience and the individual practical skills appropriate nuclear 
power venues.
    Recommendation #1: The Task Force recommends that the university 
nuclear engineering programs consider including at least one practical 
work experience opportunity in all of their undergraduate programs. It 
also encourages the nuclear industry to make numerous opportunities 
available for all undergraduates studying nuclear engineering in the 
country.
    Recommendation #2: All components of the nuclear industry should 
become closely involved in the undergraduate curricula development at 
universities through their active participation on departmental 
advisory committees and boards. This also supports the ABET 
``continuous improvement'' requirements.
    Recommendation #3: All components of the nuclear industry are 
encouraged to directly support the research programs at universities to 
develop faculty who will work on industry specific research problems 
and involve students with industrial interests.
    Recommendation #4: All components of the nuclear industry are 
encouraged to support faculty members with research projects, including 
summer and internship work experiences and sabbatical opportunities for 
faculty.


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