[Senate Hearing 109-896]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 109-896
 
             OVERSIGHT ON THE NUCLEAR REGULATORY COMMISSION

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

                                HEARING

                               before the

     SUBCOMMITTEE ON CLEAN AIR, CLIMATE CHANGE, AND NUCLEAR SAFETY

                                and the

               COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS
                          UNITED STATES SENATE

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                               __________

                              MAY 26, 2005

                               __________

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


      Available via the World Wide Web: http://www.access.gpo.gov/
                            congress.senate












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               COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS

                       ONE HUNDRED NINTH CONGRESS

                             FIRST 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            JOSEPH I. LIEBERMAN, Connecticut
LINCOLN CHAFEE, Rhode Island         BARBARA BOXER, California
LISA MURKOWSKI, Alaska               THOMAS R. CARPER, Delaware
JOHN THUNE, South Dakota             HILLARY RODHAM CLINTON, New York
JIM DeMINT, South Carolina           FRANK R. LAUTENBERG, New Jersey
JOHNNY ISAKSON, Georgia              BARACK OBAMA, Illinois
DAVID VITTER, Louisiana
                Andrew Wheeler, Majority Staff Director
                 Ken Connolly, Minority Staff Director

                              ----------                              

     Subcommittee on Clean Air, Climate Change, and Nuclear Safety

                  GEORGE V. VOINOVICH, Ohio, Chairman
CHRISTOPHER S. BOND                  THOMAS CARPER
JIM DeMINT                           JOSEPH I. LIEBERMAN
JOHNNY ISAKSON                       FRANK R. LAUTENBERG
DAVID VITTER                         BARACK OBAMA
                      James M. Inhofe, ex officio
                     James M. Jeffords, ex officio



























                            C O N T E N T S

                              ----------                              
                                                                   Page

                              MAY 26, 2005
                           OPENING STATEMENTS

Carper, Hon. Thomas R., U.S. Senator from the State of Delaware..     3
Inhofe, Hon. James M., U.S. Senator from the State of Oklahoma...    10
Jeffords, Hon. James M., U.S. Senator from the State of Vermont..     4
Lautenberg, Hon. Frank, U.S. Senator from the State of New Jersey     6
Obama, Hon. Barack, U.S. Senator from the State of Illinois, 
  prepared 
  statement......................................................    40
Voinovich, Hon. George V., U.S. Senator from the State of Ohio...     1

                               WITNESSES

Diaz, Nils J., Chairman, U.S. Nuclear Regulatory Commission......     8
    Prepared statement...........................................    40
    Responses to additional questions from:
        Senator Inhofe...........................................    49
        Senator Jeffords.........................................    56
        Senator Lautenberg.......................................    58
        Senator Voinovich........................................    60
Kray, Marilyn C., president, NuStart Energy Development..........    30
    Prepared statement...........................................    75
    Responses to additional questions from:
        Senator Inhofe...........................................    78
        Senator Voinovich........................................    79
Lyman, Dr. Edwin, senior scientist, Global Security Program, 
  Union of 
  Concerned Scientists...........................................    31
    Prepared statement...........................................    80
    Responses to additional questions from:
        Senator Jeffords.........................................    87
        Senator Lautenberg.......................................    89
Wells, Jim, Director, Natural Resources and the Environment, 
  Government Accountability Office...............................    28
    Prepared statement...........................................    63
    Response to additional question from Senator Lautenberg......    74

                          ADDITIONAL MATERIAL

Reports:
    Chernobyl on the Hudson? The Health and Economic Impacts of a 
      Terrorist Attack at the Indian Point Nuclear Plant by Dr. 
      Edwin S. Lyman.............................................    91
    Nuclear Security: Federal and State Action Needed To Improve 
      Security of Sealed Radioactive Sources (GAO-03-804, Aug. 
      2003)......................................................   145
    Nuclear Regulatory Commission: Oversight of Security at 
      Commercial Nuclear Power Plants Needs To Be Strengthened 
      (GAO-03-752, Sept. 2003)...................................   269
    Nuclear Regulation: NRC Needs More Effective Analysis To 
      Ensure Accumulation of Funds To Decommission Nuclear Power 
      Plants (GAO-04-32).........................................   308
    Nuclear Regulation: NRC's Liability Insurance Requirements 
      for Nuclear Power Plants Owned by Limited Liability 
      Companies (GAO-04-654, May 2004)...........................   365
    Nuclear Regulation: NRC Needs To More Aggressively and 
      Comprehensively Resolve Issues Related to the Davis-Besse 
      Nuclear Power Plant's Shutdown (GAO-04-415)................   390
    Nuclear Regulatory Commission: NRC Needs To Do More To Ensure 
      That Power Plants Are Effectively Controlling Spent Nuclear 
      Fuel (GAO-05-339, April 2005)..............................   526
Statements:
    Fertel, Marvin S., senior vice president and Chief Nuclear 
      Officer, Nuclear Energy Institute..........................   568
    Wells, Jim, Director, Natural Resources and the Environment, 
      Government Accountability Office: Testimony before the 
      Subcommittee on National Security, Emerging Threats, and 
      International Relations, Committee on Government Reform, 
      House of Representatives...................................   579
Summary of:
    The Nuclear Fees Reauthorization Act of 2005 (S. 858)........   597
    The Nuclear Safety and Security Act of 2005 (S. 864).........   598
    The Price Anderson Admendments Act 2005 (S. 865) as 
      introduced by Senators Voinovich and Inhofe................   599
























   HEARING TO CONDUCT OVERSIGHT ON THE NUCLEAR REGULATORY COMMISSION

                              ----------                              


                         THURSDAY, MAY 26, 2005

                               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 9:00 a.m. in 
room 406, Senate Dirksen Office Building, Hon. George V. 
Voinovich (chairman of the subcommittee) presiding.
    Present: Senators Voinovich, Inhofe, Isakson, Jeffords, 
Carper, Lautenberg, and Obama.
    Senator Voinovich. The hearing will come to order.
    Good morning, and thank you all for coming. I will give a 
short statement, and would encourage other members to do the 
same, as everyone's statements will be inserted into the 
record.

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

    Today's hearing continues this committee's strong oversight 
of the Nuclear Regulatory Commission. This is the seventh in a 
series of oversight hearings that began in 1998, when Senator 
Inhofe was chairman of this subcommittee. This committee is 
very busy on nuclear issues this year. We held a nominations 
hearing in April and a closed nuclear security session last 
week.
    I welcome back the commissioners. I understand that 
Commissioner Merrifield cannot be here today due to a family 
commitment, and I send my thoughts and prayers to Mr. Lyons and 
his family, who also could not be here today because of a 
family medical situation.
    At last week's hearing we addressed nuclear security, as 
well as many other issues, and I wish that many of my 
colleagues had been there, because we went beyond the security 
issues and got into some of the things that we are probably 
going to get into today. So you may get some questions on some 
of the things we already discussed, but it is important that 
the committee hear from you on those issues.
    Although the Commission has made significant progress in 
the area of security, they need help from us in Congress. You 
need help. Chairman Inhofe and I have introduced S. 864, the 
Nuclear Safety and Security Act of 2005, which includes 
provisions that you have requested for many years. Since last 
week's hearing focused solely on security, I encourage members 
and the witnesses to focus on non-security issues as much as 
possible today.
    Chairman Inhofe and I have also introduced the Nuclear Fees 
Reauthorization of 2005 and the Price-Anderson Amendments of 
2005, S. 865.
    I want to thank you, Senator Carper, for co-sponsoring 
these 2 pieces of legislation.
    S. 858 reauthorizes the current fee requirement that 
expires on September 20, 2005. That requirement says that the 
industry itself has to pay 90 percent of the fees, and if we 
don't pass this legislation, it slips back to their paying 35 
percent of the costs, to my understanding. It also contains 
several NRC reform and human capital provisions which are very, 
very important for the Commission to get the job done that we 
are asking you to do. You can't do it unless you have the staff 
and the team to get the job done, and if we don't get this 
taken care of, you are not going to be in a position to do 
that.
    The third bill, 865, reauthorizes the Price-Anderson Act--
we have been doing that now for, what, 3 or 4 years--which for 
45 years has provided a proven framework of liability 
protection for the public should a nuclear accident occur.
    Several staff briefings have occurred on the issues 
addressed by these bills and bipartisan negotiations are 
occurring on a daily basis. I encourage members to let us know 
of any issues or concerns with these 3 pieces of legislation. 
As I understand it, the Chairman intends to mark them up on 
June the 8th.
    I thank everyone for attending this very important 
oversight hearing. The NRC and the industry must keep safety at 
the center of all these things that they do, and we are going 
to continue to have these oversight hearings just to kind of 
touch base with you periodically.
    [The prepared statement of Senator Voinovich follows:]
       Statement of Hon. George V. Voinovich, U.S. Senator from 
                           the State of Ohio
    The hearing will come to order. Good morning and thank you all for 
coming.
    Today's hearing continues this Committee's strong oversight of the 
Nuclear Regulatory Commission. This is the seventh in a series of 
oversight hearings that began in 1998 when Senator Inhofe was chairman 
of this Subcommittee. I thank the Chairman for his leadership on this 
issue as strong oversight of the NRC is critical to the welfare of the 
American public.
    I am a strong advocate of nuclear power because it plays a critical 
role in meeting our nation's energy, economic, and environmental needs. 
Ensuring that our nuclear power plants are safe and secure is 
absolutely essential if we plan to continue and hopefully increase our 
nation's use of this valuable energy source.
    This Committee is very busy on nuclear issues this year. In April, 
we held a nominations hearing where the Commission's two newest members 
testified. I welcome you--Mr. Jaczko--back this morning and send my 
thoughts and prayers to Mr. Lyons and his family who could not be here 
due to a family medical issue.
    I also welcome back Chairman Diaz and Commissioner McGaffigan who 
testified last week at our closed nuclear security hearing. I found 
that hearing to be extremely informative because it allowed us to have 
a frank discussion about nuclear security.
    I am pleased with the Commission's work on security enhancements, 
strengthened control access, and development of a supplemental design 
basis threat. These actions have increased the number of guards at 
power plants by 60 percent--from around 5,000 to around 8,000 guards--
and required the nuclear industry to make physical improvements at 
every plant to a tune of $1.2 billion industry-wide.
    We here in Congress now need to do our part. Chairman Inhofe and I 
have introduced S. 864, the Nuclear Safety and Security Act of 2005, 
which includes provisions that the NRC has requested for many years on 
weapons, fingerprinting, and Federal crimes. Since last week's hearing 
focused solely on security, I encourage members and the witnesses to 
focus on non-security issues today.
    Chairman Inhofe and I have also introduced the Nuclear Fees 
Reauthorization Act of 2005 (S. 858) and the Price-Anderson Amendments 
Act of 2005 (S. 865). I thank Senator Carper for cosponsoring these two 
pieces of legislation.
    We need to address the current fee requirement, which must be 
reauthorized by September 20, 2005. If this fee requirement expires, 
the Commission will only be allowed to collect 33 percent of their fees 
from licensees with the remaining amount coming from the Treasury. S. 
858 allows the Commission to continue to recover 90 percent of its 
costs through licensee fees.
    This bill also contains several NRC reform and human capital 
provisions--many of which have passed this Committee and the Senate in 
the past. As the Commission's workload increases over the next few 
years due to the next generation of nuclear power plants, re-licensing, 
increased security oversight, and Yucca Mountain activities, I am 
increasingly concerned about the availability of qualified personnel. 
Where are we going to find the necessary reactor engineers, shielding 
engineers, reactor and environmental health physicists, licensing 
specialists, etc? We learned at last week's hearing that the Commission 
will be at least 300 personnel short in critical areas by 2007 and this 
does not even address the yearly attrition of 200 personnel.
    S. 858 contains provisions to attract young technical college 
students via internships, co-op programs, and fellowships by providing 
incentives. It also allows the Commission to hire retirees as 
contractors, exempting them from the annuity reductions that would 
otherwise apply.
    The third bill would reauthorize the Price-Anderson Act, which for 
45 years has provided a framework of liability protection for the 
public should a nuclear accident occur. Given this proven record, I 
encourage my colleagues to renew the law as outlined in S. 865.
    Several staff briefings have occurred on the issues addressed by 
these bills and bipartisan negotiations are occurring on a daily basis. 
I encourage members to let us know of any issues or concerns with these 
three pieces of legislation, as I understand that the Chairman intends 
to mark them up on June 8.
    Finally, I thank the Commission for their focused scrutiny of the 
Davis-Besse nuclear plant over the past 3 years. Last week, the NRC 
terminated its special Oversight Panel which is a sign of the 
significant progress that the plant has made. I commend the NRC, the 
operator, and its employees for their hard work. However, I continue to 
expect that the lessons-leaned during their special reviews will be 
fully implemented not only at Davis-Besse but throughout the industry. 
With this in mind, I am concerned about recent developments at the 
Perry nuclear plant and look forward to discussing them with you today.
    I thank everyone for attending this very important oversight 
hearing. The NRC and the industry must keep safety as the center of all 
that they do, and I will continue to conduct strong oversight as 
Chairman of this Subcommittee to make sure that remains the case. I 
look forward to working with my colleagues to pass needed legislation 
early next month.
    Thank you.

    Senator Carper.

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

    Senator Carper. Thank you, Mr. Chairman. Thanks for holding 
the hearing.
    To our witnesses, thank you for joining us and for your 
service.
    We gather here today when our dependence on foreign oil 
continues to grow; it approaches some 60 percent of the oil 
that we consume comes from other sources. We gather at a time 
when our Nation's trade deficit now exceeds, I think, about 
$700 billion per year. About a quarter of that is related to 
our dependence on foreign oil.
    We gather here at a time when emissions of sulfur dioxide, 
nitrogen oxide, mercury are fouling our air and harming our 
health. And we gather here at a time when enormous amounts of 
carbon dioxide are being emitted into the air and, I think, 
threaten the warming of our planet, with dire consequences, 
maybe not for us, but for our children and for our 
grandchildren.
    There is no silver bullet to remedy all of those ills, but 
one of the important arrows in our quiver, if I can mix 
metaphors, is safe, dependable nuclear energy to generate the 
electricity that we consume in this country.
    The one sure way to reduce the likelihood that nuclear 
energy can be a growing part of the strategy to meet our 
electricity needs is for a lapse in safety to lead to an 
incident at one of our nuclear power plants. Anything 
approaching a Three Mile Island would set us back another 10, 
20, 30 years. One of the best ways to make sure that that 
doesn't happen is for all of us to be vigilant; for those folks 
who are running the nuclear power plants, for their management, 
obviously for this Commission, and for those of us who are in 
power to oversee the work that you do.
    Chairman Diaz and I, and perhaps other members of the 
Commission, were present last week at an event hosted by the 
Nuclear Energy Institute, and in my comments, Mr. Chairman and 
colleagues, I spoke of zero tolerance. I spoke of the absolute 
commitment to doing everything well. If we take that spirit, go 
forward with that spirit, we will be better, safer as a country 
and I think we will be more secure in more ways than one.
    The last thing I would say, Mr. Chairman, thank you for 
introducing the legislation that you have. I am pleased to join 
you as a co-sponsor in two of the three bills, and hope to join 
you as a co-sponsor in the third as we work through the 
remaining differences that we have there. I, frankly, very much 
appreciate the approach that is being taken to resolve the 
remaining differences with the third piece of legislation.
    That having been said, I am pleased to be here. We look 
forward to hearing from our witnesses. Thank you.
    Senator Voinovich. Thank you, Senator Carper.
    Senator Jeffords.

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 seventh 
oversight hearing the subcommittee has held in the last 8 
years. Chairman Voinovich, you and ranking member Carper 
deserve credit for continuing the commitment to hold these 
hearings regularly in order to review the NRC's activities.
    Today, I want to discuss the Commission's follow-up on an 
incident involving the missing pieces of fuel rods at the 
Vermont Yankee Nuclear Power Plant in my State. The Government 
Accountability Office is here today to discuss the results of 
the study that was completed on this issue at my request. I am 
pleased with their work and with their close attention to the 
concerns of Vermont and Massachusetts delegation in drafting 
it.
    I appreciate too that Chairman Diaz has always been willing 
to discuss my concerns with operational and safety issues at 
the Vermont Yankee with me directly. I also want to say to the 
chairman and all the commissioners present that I am pleased 
you are all here today. Good to see you all.
    The mission of the NRC is one of the most vital missions 
carried out 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 very 
critical. I want to make myself perfectly clear--and I know 
that the Chairman and the Ranking Member of the subcommittee 
share my view--the top priority for the NRC is safety. There is 
no greater issue than safety. I want my Vermont constituents 
and people across the country to be safe, and it is the NRC's 
job to guarantee it.
    As you are all aware, last year there were some serious 
problems at Vermont Yankee, which I discussed at length in the 
last oversight hearing. Vermont Yankee, operated by Entergy, 
discovered that two pieces of radioactive fuel rods were 
missing from the plant's storage facility. Either was capable 
of quickly giving a lethal dose of radiation to an unshielded 
handler.
    Though the materials were found to have never left the 
plant, and were in the spent fuel pool, the search to locate 
these materials raises serious questions about whether NRC is 
conducting the appropriate oversight of nuclear materials at 
individual nuclear plants and whether the Federal Government 
should change its nuclear materials management policies.
    The loss of the fuel rods at Vermont Yankee was the second 
incident of missing fuel rods at a Northeastern nuclear plant 
in the last 5 years. When the Millstone incident occurred, the 
NRC said that the fuel rods had never before gone missing in 
the history of the commercial nuclear power in the United 
States. While I know that the materials at Vermont Yankee were 
found to be missing due in part to the new inspection 
procedures that the NRC institutes after Millstone, the sad 
fact is that the fuel again went missing. We must improve our 
nuclear materials accounting system. We must do it now, and I 
hope that the GAO's work is the first step in drafting better 
materials accounting legislation.
    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 we burn fossil fuels, and promote 
energy efficiency and make certain that the nuclear plants 
operate well and safely.
    Again, I want to thank Chairman Diaz, the rest of the 
commissioners, and the other witnesses who are coming here to 
discuss these issues today. I look forward to hearing their 
testimony, Mr. Chairman. Thank you.
    [The prepared statement of Senator Jeffords follows:]
    Statement of Senator Hon. James M. Jeffords, U.S. Senator from 
                          the State of Vermont
    Thank you Mr. Chairman, today's hearing continues our ongoing 
oversight of the Nuclear Regulatory Commission. I believe this is the 
seventh oversight hearing the Subcommittee has held in the last 8 
years. Chairman Voinovich, you and Ranking Member Carper deserve credit 
for continuing the commitment to hold these hearings regularly in order 
to review the NRC's activities.
    Today, I want to discuss the Commission's follow up to an incident 
involving missing pieces of fuel rods at the Vermont Yankee nuclear 
power plant in my state. The Government Accountability Office is here 
today to discuss the results of a study they completed on this issue at 
my request. I am pleased with their work, and with their close 
attention to the concerns of the Vermont and Massachusetts delegation 
in drafting it. I appreciate too that Chairman Diaz has always been 
willing to discuss my concerns with operational and safety issues at 
Vermont Yankee with me directly. I also want to say to the Chairman and 
all the Commissioners present that I am pleased you are here today.
    The mission of the NRC is one of the most vital missions carried 
out 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 Ranking Member of this Subcommittee share 
my view: the top priority for the NRC is safety. There is no greater 
issue than safety. I want my Vermont constituents and people across the 
country to be safe and it is the NRC's job to guarantee it.
    As you are well aware, last year there were some serious problems 
at Vermont Yankee which I discussed at length at our last oversight 
hearing. Vermont Yankee, operated by Entergy, discovered that two 
pieces of radioactive fuel rods were missing from the plant's storage 
facilities. Either was capable of quickly giving a lethal dose of 
radiation to an unshielded handler. Though these materials were found 
to have never left the plant and were in the spent fuel pool, the 
search to locate these materials raises serious questions about whether 
the NRC is conducting appropriate oversight of nuclear materials at 
individual nuclear plants and whether the Federal Government should 
change its nuclear materials management policies.
    The loss of fuel rods at Vermont Yankee was the second incident of 
missing nuclear fuel at a Northeastern nuclear plant in 5 years. When 
the Millstone incident occurred, the NRC said that fuel rods had never 
before gone missing in the history of commercial nuclear power in the 
United States. While I know that the materials at 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 fuel again went 
missing. We must improve our nuclear materials accounting system, we 
must do it now, and I hope the GAO's work is the first step in crafting 
better materials accounting legislation.
    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 we 
burn fossil fuels, promote energy efficiency, and make certain that 
nuclear plants operate well and safely.
    Again, I thank Chairman Diaz, the rest of the Commissioners, and 
the other witnesses for coming here to discuss these issues. I look 
forward to their testimony and to working with my colleagues.

    Senator Voinovich. Thank you, Senator Jeffords.
    Senator Lautenberg.

 OPENING STATEMENT OF HON. FRANK LAUTENBERG, U.S. SENATOR FROM 
                    THE STATE OF NEW JERSEY

    Senator Lautenberg. Mr. Chairman, thanks for convening this 
hearing.
    This is being forced on us by the reality of life, whether 
or not we are going to be blackmailed by those who produce 
fossil fuels that we import, whether it is the assault on the 
environment, or whether or not we can realistically be assured 
that safety with nuclear plants is obtainable.
    In my home State of New Jersey there is much concern about 
our three nuclear plants. We get more than half of our electric 
power from them, so the mission of the Nuclear Regulatory 
Commission is extremely important to me. It is critical in the 
economy of our region and our country, and I believe that it 
can make increasing contribution to our Nation's growing energy 
needs.
    By the way, for those who might hear Frank Lautenberg 
talking now and say you talk on both sides of your mouth, 
Senator, because there were times in the past when I thought 
that nuclear energy was a bad idea; we had abandoned two major 
plants at billions and billions of dollars worth of cost, 
because of escape route limitations. We change as time goes by 
and recognize that nuclear energy is required as one of the 
alternative sources for energy production, but we also have to 
be assured that we can do it with safety. Safety doesn't begin 
with the production, it begins also with the conclusion of a 
plant's ability or the fuel that it has to be disposed of and 
stored safely.
    So, Mr. Chairman, I am pleased that you are doing this.
    I mentioned to our commissioners, I thank you for the work 
you do. It is public service, in my view, at the very highest 
level, and it by no means is an easy assignment. We recognize 
that when we have placed new commissioners on the team, and the 
difficulty it had getting assurances, etc. You do good work and 
we congratulate you for it. We only want you to do more good 
work. The Oyster Creek Nuclear Plant in New Jersey is the 
oldest operating facility in the country and I hear regularly 
from my constituents who live near the facility about their 
safety concerns. There is a question about whether Oyster Creek 
ought to be licensed, so it is absolutely essential that we 
turn to the NRC for factual, unbiased data. There have also 
been concerns about our other plants, Salem and Hope Creek 
Nuclear Power Plants, and we all depend, again, on the NRC to 
enforce a culture of safety at every nuclear facility.
    Lastly, we must come up with a safe, feasible solution to 
the problem of nuclear waste. Not an easy problem to solve, 
obviously. Dry cast storage may be the best we have at this 
time, but we have to continue to look pass what we have at this 
time and look for new ways to do it.
    Mr. Chairman, I am sorry that I can't stay for this 
hearing. I consider it important, but, unfortunately, I have 3 
important hearings at the same time. So I wish our witnesses 
well, and I know that they will be energetically reviewed by my 
colleague from Delaware, as well as Vermont, and the Chairman. 
Thank you.
    [The prepared statement of Senator Lautenberg follows:]
         Statement of Hon. Frank Lautenberg, U.S. Senator from 
                        the State of New Jersey
    Mr. Chairman, thank you for holding this hearing and giving us the 
opportunity to learn about the energy project permitting process. I 
look forward to hearing from all of our witnesses. Former President 
Richard Nixon was a man who made a lot of political enemies. In fact, I 
was on his official `enemies list' during the time when I was CEO of a 
major company.
    As we look back today, I think we all acknowledge that despite his 
many enemies, Richard Nixon was in many ways a friend of the 
environment. It was during his presidency that our nation made a 
commitment to cleaning up our air and water, with the landmark Clean 
Air Act and Clean Water Act.
    It was during his Republican Administration that we created the 
Environmental Protection Agency. And it was President Nixon who signed 
the National Environmental Policy Act (NEPA) which required 
Environmental Impact Statements for major projects like roads and 
drilling for natural gas. Since then, five presidents of both parties 
have continued the legacy of protecting our environment, and honoring 
the right of citizens and states to have a voice in the process.
    Unfortunately, the current Administration has chosen not to follow 
that path. This Administration seems especially sympathetic to 
complaints about regulatory processes that were put in place to protect 
our environment and health.
    While, I am always willing to look for ways to improve efficiency, 
effectiveness and fairness in our rules and laws, I see no reason to 
backtrack from our commitment to ensure that citizens have a strong 
voice in matters that affect our environment.
    NEPA--and the role it gives to citizens--is one of the best 
manifestations of democracy in our country. We must not erode NEPA's 
protections or silence the voice of Americans, especially in projects 
that affect their own communities.
    Yes, environmental reviews cost money--and energy companies can 
afford it. To take just one example, ExxonMobil's profits increased by 
44 percent in the last quarter!
    We can--and we should--look for ways to improve and perhaps 
streamline our processes for granting permits for vital projects. But 
we must never allow the convenience of corporations to trample the 
rights and the health of the American people.

    Senator Voinovich. Thank you, Senator Lautenberg. You have 
been very diligent about your attendance at our hearings, and 
we appreciate it.
    I am going to ask permission to have my entire opening 
statement inserted in the record. Without objection, it will be 
put in the record.
    Chairman Diaz, Commissioner McGaffigan, and Commissioner 
Jaczko, it is nice to see you again. I greatly appreciate your 
coming here today for our annual NRC oversight hearing, and I 
really appreciate your candor and straightforwardness at the 
closed session that we had.
    Due to time constraints this morning, I am going to ask 
only Chairman Diaz to give an opening statement. Of course, if 
someone wants to chime in after Chairman Diaz about something, 
I would welcome that. But we will ask you for an opening 
statement, and if you could keep it to 5 minutes, we would be 
most grateful. As you know, the tradition is that your entire 
statement will be put in the record.
    Chairman Diaz.

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

    Mr. Diaz. Thank you, Mr. Chairman and members of the 
subcommittee. It is a pleasure to appear before you today with 
my fellow commissioners to discuss the U.S. Nuclear Regulatory 
Commission programs.
    The NRC continues to take an integrated approach to safety, 
security, and emergency preparedness in carrying out the 
mission chartered by the Congress. I will highlight our key 
ongoing oversight and licensing activities today.
    The Reactor Oversight Process is being implemented with 
increasing effectiveness. Nuclear power plants continue to 
operate in a safe and secure manner. We have resolved most of 
the issues of manpower and communications related to oversight 
that the committee was concerned with last year. The Davis-
Besse nuclear power plant has received attention and resources 
commensurate to the problems found and to the resolution. The 
plant has been operating safely and the NRC staff recently 
determined that plant performance warranted termination of the 
special panel that was created specifically for Davis-Besse 
oversight.
    Reactor licensing program, coupled with a strong oversight 
program, ensures protection of public health and safety 
throughout a plant's operating life. I know that the NRC has, 
to date, renewed a total of 32 reactor licenses, has 16 under 
review, and has approved 105 power upgrades.
    The industry has expressed interest in new construction of 
nuclear power plants. The NRC is prepared to discharge this 
responsibility if applications for new power plants are filed. 
We anticipate that applicants will utilize the licensing 
processes which were developed to provide a more stable, 
timely, and predictable licensing process. This includes the 
sign certification and early site permits which can be 
referenced in an application for a combined construction permit 
and operating license.
    The Commission continues to conduct assessments and to 
impose new requirements, when appropriate, to enhance security 
of nuclear facilities and materials. The NRC is currently 
developing a proposed rule and supporting guidance to codify 
supplemental requirements, including the design basis threat. 
We are continuing to perform detailed nuclear power plant and 
spent fuel pool site-specific studies to further enhance our 
understanding of appropriate mitigative culpabilities and to 
ensure effective implementation of these culpabilities, 
including consideration of those recommended by the National 
Academy of Sciences. Thus far, the results of these assessments 
have validated the actions NRC has taken to enhance security.
    The NRC, in partnership with 33 agreement States, conducts 
comprehensive programs to ensure the safe use of radiological 
materials in a variety of medical, industrial, and research 
settings. With regards to material security, the NRC has 
thoroughly re-evaluated its safeguards and security programs, 
and we are confident that appropriate measures are being 
implemented.
    The NRC continues to ensure that the agency is prepared to 
review a potential application by DOE to construct a deep 
geologic high-level waste repository at Yucca Mountain, NV, and 
NRC stands ready to amend the regulations consistent with any 
forthcoming changes to the EPA standards. Also, storage and 
transport cask designs continue to be reviewed and certified.
    The NRC carries out an active international program of 
corporation and assistance involving 38 countries with which it 
exchanges nuclear safety information. We just approved an 
export and import rule which will enable the United States to 
meet its goal with the G-8 to implement the IAEA Code of 
Conduct provisions by December of this year.
    The NRC is very dependent on a highly skilled and 
experienced work force for the effective execution of its 
activities. NRC has developed an agency-wide set of strategic 
capital management strategies to mitigate and close gaps 
between available staffing resources and anticipated staffing 
needs. We greatly appreciate your support for NRC human capital 
and all the legislative proposals.
    Mr. Chairman, we can assure you that the Commission 
continues to be committed to fulfilling its statutory role. We 
appreciate the support we have received from the committee and 
the subcommittee as a whole, and we will need your support in 
the days to come.
    I would be pleased to respond to your questions.
    Senator Voinovich. Thank you, Chairman Diaz.
    Mr. Jaczko or Mr. McGaffigan, anything to add?
    Thank you.
    We are very fortunate that the chairman of this committee, 
the Senator who started this aggressive oversight, is here with 
us this morning. Senator Inhofe, we are interested in hearing 
from you in terms of a statement or questions or whatever it is 
that you would like to do this morning.
    Senator Inhofe. First of all, I appreciate that, and I 
would like to go ahead and have a very brief opening statement. 
I have some very strong feelings about this and, of course, as 
the Chairman knows and as you know, Senator Voinovich, when I 
had the chairmanship of this subcommittee, we hadn't had an 
oversight hearing in 10 years or so, and we have come a long 
way. So if I could just make a couple of comments.

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

    Well, I think I already said this. Since I became chairman 
of the subcommittee, we had not had an NRC oversight hearing in 
over a decade. The re-licensing process was estimated to take 
over 5 years per unit, if it could be completed at all. The NRC 
was more concerned about paperwork violations than real risk 
issues, and no one was even considering building a new nuclear 
unit.
    Today, we have regular oversight hearings. The re-licensing 
process is being completed on time. I commend you for that. The 
NRC has moved to a risk-based climate and people are actually 
talking about new nuclear generation.
    In addition, the industry has responded well to the 
security climate since 9/11. The nuclear industry operates some 
of the most secure, if not the most secure, sites anywhere in 
the country. In fact, most other industries could learn 
something from what you folks have been doing.
    I want to thank the Commission and the Commission staff for 
the work they have done. They have turned then NRC into both an 
effective and efficient agency. I do appreciate their efforts, 
and we will continue to work with them to ensure that these 
efforts and positive results continue.
    But today, we are kind of facing a crossroads. The next few 
months and years will determine whether or not nuclear energy 
will thrive in the 21st century. Nuclear power has a good story 
to tell: it is safe, low-cost, environmentally friendly, and, 
at 20 percent, an important part of our fuel mix. In fact, 
there is no reason why we don't, in the longrun, look at 
nuclear power, and there can't be a greater influence.
    I have said this so often, Mr. Chairman, we have a crisis a 
lot of people don't want to admit is there. We have an energy 
crisis in this country, and I look at nuclear energy as a very 
important part of the solution of this problem that we have; 
fossil fuels, oil, gas, coal, nuclear, renewable and all of the 
above.
    But I think as far as the potential that is out there, 
nuclear is it. I really believe, Mr. Chairman, that we can 
continue the progress that we have made and we can ensure that 
we are going to be able to resolve this crisis that we are 
faced in the nuclear energy, and its expansion will be a very 
important part of it.
    I would ask unanimous consent to put the remainder of my 
statement in the record and look forward to the questions and 
the progress that you have made.
    [The prepared statement of Senator Inhofe follows:]
         Statement of Hon. James M. Inhofe, U.S. Senator from 
                          the State of Okahoma
    Good morning and welcome to our witnesses today. I first want to 
thank Chairman Voinovich for holding this oversight hearing and for his 
continued commitment to oversight of the NRC. I believe we are at a 
cross roads for nuclear energy, but before I discuss where we are 
today, I just want to review briefly where we were in 1997 when I 
became Chairman of this Subcommittee.
     We hadn't had an NRC oversight hearing in over a decade,
     The relicensing process was estimated to take over 5 years 
per unit, if it could be completed at all,
     The NRC was more concerned about paperwork violations than 
real risk issues, and
     No one was even considering building new nuclear units.
    Today, we have regular NRC oversight, the relicensing process is 
being completed on time, the NRC has moved to a risk-based climate, and 
people are actually talking about new nuclear generation.
    In addition, the industry has responded well to the security 
climate since 9/11. The nuclear industry operates some of the most 
secure, if not the most secure, sites anywhere in the country. In fact, 
most other industries could learn something from the nuclear 
facilities.
    I want thank the Commission, and the Commission staff, for the work 
they have done. They have turned the NRC into both an effective and 
efficient agency. I do appreciate their efforts and will continue to 
work with them to ensure that these efforts and positive results 
continue.
    But today we face a cross roads. The next few months and years will 
determine whether or not nuclear energy will thrive in the 21st 
century. Nuclear power has a good story to tell. It is safe, low-cost, 
environmentally friendly, and at 20 percent, an important part of our 
fuel mix. In fact, there is no reason why in the long term, nuclear 
power can't or shouldn't increase its percent usage.
    But there is work to do to ensure that there is the regulatory 
climate for new generation, enhanced security, and the long-term 
resources in order for the NRC to carry out its mission of ensuring the 
safety and security of our commercial nuclear fleet. We on this 
committee have an obligation to continue our oversight in order to help 
keep NRC on track and to understand what they need in order to carry 
out their mission.
    This Congress, Senator Voinovich and I have introduced 3 bills to 
address many of the needs of the NRC: an NRC Fees bill; a nuclear 
security bill; and a bill to reathorized Price-Anderson. It is my hope 
that we can move all three of these bill shortly after Memorial Day 
recess.
    This year marks the expiration of the NRC Fees law. In 2000, I 
authored that bill that brought fairness to the fees that NRC collects 
from its licensees, while providing that 90 percent of the NRC budget 
is paid for by those fees. That bill also ensured that NRC could not 
seek reimbursement for those items, such as their international 
programs, which don't provide direct benefit to those who pay the fees. 
Absent Congressional action reauthorizing the fees law, the NRC fee 
base would drop to almost 30 percent of its budgets leaving it in a 
terrible financial position.
    This time Senator Voinovich and I are including in the Fees bill 
additional language to help with the human capital crisis at the NRC 
and a number of regulatory reforms such as eliminating the NRC 
antitrust reviews and streamlining the hearing process. Senator 
Voinovich has been a leader in addressing the human capital needs of 
the Federal Government, and NRC is an agency that headed toward crisis 
if we do not act. Much of the reforms in this bill were included in our 
2000 legislation that passed both the Committee and full Senate by 
Unanimous Consent, but unfortunately were not included in what was 
signed into law.
    We have also introduced a nuclear security bill. I want to thank 
Senator Voinovich for holding a classified hearing last week on this 
topic. This committee has twice reported out security bills, but they 
have unfortunately fallen victim to the fate of the Energy bills that 
they were attached to. It is my hope that we can once again pass a 
security bill and keep it separate from the energy bill and get it 
signed into law in the near future. Much of what we have included in 
past security bills has been implemented administratively by the NRC--
and I applaud them for those actions. But it is well past time that we 
provide them the additional authorities that can only be realized 
through legislation. The bill that I have introduced reflects those 
additional needs and I hope that we can get strong bipartisan agreement 
on moving those provisions very soon. NRC has done a tremendous job 
since the attacks of 9/11 and there is very little doubt that, because 
of the deterrent that these robust security measures provide, these 
facilities are not attractive targets for any terrorist who hopes to 
carry out a successful attack.
    And finally, Senator Voinovich and I have introduced legislation to 
reauthorize Price-Anderson. Without this bill, and the certainty that 
it provides, the long-term future of nuclear power would be in 
jeopardy.
    Because of oversight hearings like this one, we can talk about 
successes. Thank you for making sure that NRC is a priority to the 
Congress and I look forward from hearing from our witnesses today.

    Senator Voinovich. Thank you.
    Mr. Diaz, at last May's oversight hearing we discussed 
GAO's Davis-Besse report, which I requested. One of GAO's 
criticisms was that several of the issues that led NRC to not 
prevent Davis-Besse were identified in past GAO reports, the 
Commission lessons learned task force recommendations, and the 
inspector general reports. The GAO stated in their report that 
the NRC was reviewing ``the effectiveness of its response to 
past NRC lessons learned task force reports.'' This is of great 
concern to me because I want to make sure that the Davis-Besse 
recommendations are fully and comprehensively implemented.
    In a follow-up question at that hearing, I asked the 
Commission about the status of the report. This is the 
response: ``The task force recommendations to conduct a more 
detailed effectiveness review of the actions taken, response to 
past learned lessons has been completed. The results of the 
review are being considered by the NRC senior management and 
the Commission to identify and take corrective actions as 
necessary.''
    However, it is my understanding that NRC is yet to complete 
the evaluation of this review or take an appropriate corrective 
action. Although I know you have taken them at Davis-Besse, 
which is more than 2\1/2\ years since the completion of the 
task force report and more than a year since our last hearing 
when it was discussed. Can you tell me when are we going to 
have a report on lessons learned and, as a result of lessons 
learned, what things the Commission is doing differently that 
are going to make a difference?
    Mr. Diaz. Yes, sir. Reality is that we are very well on our 
way to finishing every one of the recommendations of the task 
force that actually go to fix the problems that contributed to 
the Davis-Besse issue. We have presently 44 of the 49 issues 
have been completed. Four more will be completed in the next 2 
or 3 months, and one issue, which is a lone, lead issue, which 
deals with modification
    Senator Voinovich. Chairman Diaz, I am appreciative of 
that. The real issue here is we have had past reports and we 
have had a GAO review again, and we have all these lessons that 
we should have learned. As a result of all the past things that 
have gone on, all of the recommendations, we need to know 
specifically what the Commission is doing differently as a 
result of those reports that are applicable not only to Davis-
Besse, but throughout the whole system, the 102 or 103 
facilities that we have.
    Mr. Diaz. Yes, sir. What we have done is once we realized 
that we have not used all the things we knew during the Davis-
Besse process, the Commission tasked the staff to come up with 
a process that will ensure that the knowledge that existed in 
the agency, and specifically all those issues that have 
relationship to safety that were learned, will continue to be 
applied. We have knowledge management transfer that is taking 
place in the agency
    Senator Voinovich. OK, all I can say is I want the report. 
OK? This is it. We learned this; here is what we are doing 
differently; here is how it is applied, so that we know that in 
fact the lessons learned are being applied. Because prior to 
Davis-Besse there were lots of recommendations from task forces 
about what to do, and the fact of the matter is that those 
recommendations weren't being followed by the Commission and, 
as a result of that, we had Davis-Besse.
    Mr. Diaz. We will get you the report and we will get you 
the results of the implementations of those actions.
    Senator Voinovich. I would be grateful.
    Last week, the NRC terminated its oversight panel, which is 
a sign, again, of the significant progress that has been made, 
and I congratulate you for that. You have been on them like hot 
sauce, and I commend the NRC, the operator and its employees 
for their hard work. At the same time that has occurred, the 
Perry Nuclear Plant in Ohio has received increased oversight. 
Can you please describe the recent developments at that plant 
and what the NRC is doing in response to that?
    These are my two nuclear plants, and I am real interested 
in them, and I would like to know.
    Mr. Diaz. Yes, sir. We have been trying to see if we can 
relocate them, but we have not been able to do that. The 
reality is that Perry Nuclear Power Plant started having a 
series of problems in 2 areas that are of great interest to our 
safety programs: One is the human factors area and how people 
actually conduct their work, how they follow procedures; and in 
the corrective action program.
    This program is where you actually put things that you need 
to have fixed, need to be corrected, they need to be properly 
dispositioned. The staff, during their normal inspections, and 
then in the inspections that actually lead to what we finished 
yesterday, which was our AARM, where we actually do the annual 
review of the plants, the Perry plant stands out as not being 
where it should be. We immediately notified them.
    Tonight, there is going to be a public meeting at the plant 
site or outside the plant to discuss this finding. We are 
putting them on an increased oversight, and it will remain 
there until they take care of these issues that have been 
identified.
    Senator Voinovich. Thank you.
    Senator Carper.
    Mr. McGaffigan. Mr. Chairman, could I just add one thing?
    Senator Voinovich. Certainly, Commissioner McGaffigan.
    Mr. McGaffigan. Perry has been very high on our screen for 
a couple of years now. It got into column 4 of the action 
matrix, which is the bad column--not the worst, but one you 
don't want to be, the one that gets you close attention--
sometime last spring or summer.
    We put in a plug for our monthly report to you, sir, that 
we have been trying to keep you up to date not just on Davis-
Besse, but on Perry. We give very aggressive attention to 
plants that are in trouble or give signs that they are going to 
be getting into trouble. We don't have very good leading 
indicators, I don't want to imply that--we had a discussion 
yesterday--but we have some leading indicators that seem to be 
leading, and we follow the plants.
    Perry has, unfortunately, gotten very close attention from 
us, and even at Beaver Valley, which is Region I, not far from 
your State, in Pennsylvania, we had to return a license renewal 
application a couple of months ago. So we continue to give 
First Energy, as a whole, very close attention. Those are the 
three plants that they run, and they deserve our attention and 
they get our attention.
    Senator Voinovich. Thank you.
    Senator Carper.
    Senator Carper. Thanks, Mr. Chairman.
    Gentlemen, what do we need to be doing in this committee 
and in the Senate and the Congress to enable you, to empower 
you to be as vigilant as you need to be to ensure the safety of 
nuclear power plants across the country? Give us a short to-do 
list and a time line, as well, for those tasks.
    Mr. Diaz. Sir, I appreciate the question and the support. I 
believe that in the area of legislation the committee and both 
Senator Inhofe and Senator Voinovich and yourself have already 
put on the table the type of actions that we need to both 
ensure the additional security that we need at power plants, 
including giving the right guns to the guards, being able to 
fingerprint the people when we need it. So all of those 
provisions and the human capital provisions are in there.
    So we appreciate that support. We hope that this year we 
will see those things taking place, because they will help us a 
long way in making sure that we can respond in the security 
arena.
    In the area of safety, which is our paramount focus, and in 
the area of new power plants, we find ourselves in the 
uncomfortable position of not having the resources to respond 
to what we believe are the new demands. We really have a very 
disciplined process in the budget. When we look at what we 
thought we were needing, we were acting, if I may use the word, 
in a fiscally responsible manner and tried to put in the budget 
just those things that we thought were absolutely 
indispensable.
    At the present time we have a shortfall in the area of 
security. The House Appropriations Committee looked at our 
shortfall and added $21 million to our 2006 appropriation. We 
believe that we also will have a shortfall in the area of the 
new reactor licensing. We need to hire new people. We need to 
have the space. We need to be able to really prepare our 
inspection infrastructure. It is a totally different way of 
what we are doing now, which is really operational-based.
    The support of the committee and the subcommittee in these 
areas will allow us to do our job.
    Senator Carper. What do we need to be doing with respect to 
Yucca Mountain to allow us to go forward and to prepare for a 
safe depository for nuclear waste for the near term?
    Mr. Diaz. Well, sir, we continue to observe----
    Senator Carper. When I say we, not just us in the Senate, 
but within the Administration as well.
    Mr. Diaz. Yes, I know. There is the fact that we are 
waiting for EPA and DOE to come up to us with a solution to a 
new standard. As you know, the 10,000-year standard was 
essentially considered not acceptable by the courts. EPA and 
DOE have responsibility to come with a standard that then we 
can proceed and put our rule into it. We are ready to do that; 
we have the manpower, we have the structure.
    We continue to be ready to do whatever is needed for making 
a potential application of Yucca Mountain an effective process. 
Our adjudication system is ready; we have a licensing support 
network, which is probably the largest support network that has 
ever been assembled in this country with information 
technology, being able to address the issue. But in our case 
right now, we are in a holding pattern. We are actually looking 
at what they are doing, and we are ready to come in as soon as 
there is a resolution to this issue and go to work.
    Senator Carper. One other question. I would appreciate 
hearing from Mr. Jaczko as well. Let me just ask one other 
related question. Other countries--I think among them France 
and Japan--have acted to reduce the volume of nuclear wastes 
that are either created or produced at their reactors. What are 
the pros and cons of doing that? And are there any encouraging 
new technologies on the horizon that we might want to emulate?
    That is for Mr. Jaczko and whoever would like to respond.
    Mr. Jaczko. Well, I think if you are referring to the issue 
of reprocessing, that is certainly a very complicated policy 
decision. I think this is something that involves the entire 
Administration, and there are issues related to national 
security, our non-proliferation goals, that are intimately 
related to how we deal with decisions about reprocessing.
    So certainly as a Commission there are issues that would 
come before us, if there were licensing actions, things of that 
nature, we would certainly be prepared to deal with those in 
the future, but at this time these are, in many ways, decisions 
that are for other policy organizations to make, and we then 
would potentially have regulatory activities related to those.
    Senator Carper. Do you want to add anything to that, Mr. 
Chairman?
    Mr. Diaz. Well, I do believe that what you said was totally 
correct, Senator. Reprocessing offers the capability of 
reducing the amount of long-lived radionucleides that would 
have to be stored. It is a complicated matter, like 
Commissioner Jaczko says, because of the issues of 
proliferation, if you really take those into account.
    But the thing that complicates it in the United States is 
the economics of it. Fundamentally, at the present time, with 
the price that uranium ore has been having for years, there was 
no economic incentive to reprocessing the spent fuel pool. As 
uranium has become more expensive, then maybe it is not a bad 
idea to technically analyze the possibilities with 
reprocessing, as well as trying to resolve in the Congress and 
the Administration the issues that are attached to the security 
of the materials and to actually the benefits that will come 
with it regarding disposition of the waste.
    Senator Carper. Mr. Chairman and to my colleagues, I will 
just share with you that Senator Coburn and I serve as chairman 
and ranking member of another subcommittee, this one on 
Government Affairs and Homeland Security, whose 
responsibilities include nuclear proliferation, and the thought 
that comes to me here is the idea of perhaps a joint hearing 
with this Subcommittee and that subcommittee to look, maybe 
later this year, at the issue of reprocessing once again, and 
to hear about its timeliness and the appropriateness of us 
revising that.
    Mr. McGaffigan. Sir, could I add one response? President 
Reagan, in October of 1981, ended any prohibition on 
reprocessing that had been initiated by Presidents Ford and 
Carter. It has been economics primarily, and non-proliferation, 
that have precluded reprocessing.
    The old Purex reprocessing process that is used in the 
United Kingdom and France, and the Japanese have spent tens of 
billions of dollars getting ready to reprocess, is very, very 
expensive, and President Reagan was only willing to--the 
subsidy in his October 1981 memo was he was willing to consider 
Federal purchase of plutonium for the then-planned Clinch River 
breeder reactor as the only incentive that he was willing to 
have as a fiscal conservative to enhance reprocessing. So the 
existing reprocessing technologies I think our industry, over a 
24-year period, has made a decision that isn't economical.
    Our role would be to hold the hearing. The reprocessing 
plant would be subject to a prior hearing, whichever private 
sector entity came forward. In the late 1970s, that hearing was 
probably the most--prior to Three Mile Island--the most 
resource-intensive activity that the Commission was engaged in. 
Then it stopped.
    Senator Voinovich. Thank you.
    Senator Inhofe.
    Senator Inhofe. Thank you, Mr. Chairman.
    Chairman Diaz, last year--or maybe longer than a year ago--
I asked a question about the potential increase in efficiencies 
and resource allocation, if you were to consolidate the 4 
regional offices into the headquarters, in addition to the 
employees at the NRC headquarters and the resident inspectors, 
we have the 4 regions, which have been in place since the 
1970s--which is a totally different environment than we have 
now.
    I asked the question, would the NRC function more 
efficiently if we consolidated all the staff to the 
headquarters, keeping the resident inspectors in place? I think 
that would be important.
    Now, in answering that question, what I don't want in an 
answer is, yes, we are looking at that and we are considering 
that, and this might be something worthwhile in the future. I 
would like to ask what have been the results of the review so 
far. What is the answer, are you going to do it?
    Mr. Diaz. Yes, sir.
    Senator Inhofe. OK, that answers that question. Very good.
    Mr. Diaz. No, no, no, no, no. I just said yes, sir, I am 
going to answer.
    Senator Inhofe. So the answer is no.
    Mr. Diaz. Yes. I have to be careful how I say yes, sir.
    We have been considering this issue. The last time we 
looked at it, what we did is we consolidated into Region II in 
Atlanta all of the functions related to the fuel cycle 
facilities. So we actually went and did a certain amount of 
consolidation to resolve some of these problems that different 
regions have, different type of technical personnel. We further 
made a distinct effort in consolidating the materials issues.
    We have actually provided an additional consolidation of 
materials issues in Region III. We asked the staff what else 
can be done, and the very, very thorough analysis came and said 
that at this time there is no significant advantage in 
consolidating the regions into headquarters or further 
consolidation.
    Senator Inhofe. The staff that you asked that question, who 
gave you that answer, is that the staff in the headquarters 
here or is that the staff in the regionals?
    Mr. Diaz. No, we asked the question from the staff in 
headquarters. They do consult with the staff in the regions. 
There is obviously interest in the regions--and I realize that 
it is true--for them to maintain the operations, because they 
are close to the licensees; many of them are a couple of hours, 
3 hours away from where the power plants are, they are where 
the manufacturers of radioactive sources are.
    Senator Inhofe. So you have looked at this and now the 
staff has made this recommendation that it would not be a good 
idea. Do you agree with that recommendation?
    Mr. Diaz. I agree with the recommendation at the present 
time. I do believe that there are changes that are taking place 
in the way we do business, changes that are taking place in the 
way that information technology is allowing us to do the work 
and inspection and so forth, and I do believe that this is a 
question that the Commission will have to reconsider
    Senator Inhofe. OK, that is fine.
    Commissioner Jaczko, you are the new guy on the block, so 
you don't come already carrying the baggage of the past. You 
have looked at this with fresh insight. I would like to know 
what you think about this.
    Mr. Jaczko. Well, I think----
    Senator Inhofe. Business as usual or do you want to try 
something new?
    Mr. Jaczko. I have had an opportunity, since I have been on 
the Commission, to actually visit 3 of our regional offices, 
and I found that--well, I think there are 2 examples. One, 
through my visits there, I found that the regions play a very 
unique role for the agency.
    As the Chairman mentioned, they are in very close proximity 
to the licensees, so they are able to visit the facilities on a 
much more regular basis, in a way that is cost-efficient for 
the agency. That proximity and that access is extremely 
important as we pursue our safety mission.
    Senator Inhofe. So you agree with the Chairman from your 
fresh outlook?
    Mr. Jaczko. Absolutely.
    Senator Inhofe. OK, that is fine.
    Mr. McGaffigan. Sir, could I mention that it is unanimous? 
We did send a report to Congress, I believe last year, and I 
would say, in light of housing prices in this area, it looked 
cost-prohibitive for any benefit that we might get.
    Senator Inhofe. OK, that is fine.
    Mr. McGaffigan. In light of housing prices today, it would 
be even more cost-prohibitive, and we would lose a lot of good 
people.
    Senator Inhofe. That is good.
    Mr. Chairman, my time is about to expire, but I want to ask 
one more question and just get some responses here.
    I am sure you have read the GAO's testimony in which they 
raise a number of issues. Would you like to respond to any of 
those specific questions that they raised?
    Mr. Diaz. Well, sir, we worked very seriously with the GAO 
when they were making this report. We take very seriously their 
recommendations. We do have disagreements with them, and some 
of the recommendations, for example, in today's statement or 
testimony, are a little bit outdated. However, some of them are 
very good recommendations, and we have actually acted on those 
ones that we consider have significant merit.
    Senator Inhofe. OK, then just for the record, then, I would 
like for the 3 of you and for the Commission to respond to 
these things. Some of them may be outdated, some may not, but 
there are a lot of them out there. None of these comments are 
made in a critical vein, because I like what you are doing. A 
few years ago we started working together, and we have seen, in 
licensing and permitting, just a lot more efficiencies than we 
had in the past, so I think you are doing a great job.
    Thank you.
    But for the record, I would like to have those responses.
    Mr. Diaz. We will.
    Senator Inhofe. Thank you, Mr. Chairman.
    Senator Voinovich. Thank you.
    Senator Jeffords.
    Senator Jeffords. The Government Accounting Office released 
a report that I requested, along with a Vermont delegation and 
Congressman Oliver of Massachusetts, on tracking of spent fuel 
stored at the nuclear power plant. They will testify about it 
here today. You wrote to me last week that you were looking at 
the report's recommendations. One recommendation in this report 
is that the NRC must develop specific requirements for the 
control and accounting of loose spent fuel rods and segments.
    Would you support action to require changes to the guidance 
that licensees receive regarding the records that they keep 
with respect to spent fuel?
    Mr. Diaz. Sir, we have already taken serious actions in 
that direction. The fact is that the finding of the missing 
spent fuel pieces in Vermont Yankee were initiated by the new 
inspection processes that the NRC has in place. However, we do 
consider a facile material control and accountability, whether 
it is fresh fuel or whether it is fuel that has already 
irradiated, a very serious issue. So we will consider very 
seriously whether we need to take any additional actions to 
enhance our processes to make sure that we have the best 
material accountability program that has to be in there to be 
responsive to what we have seen in the licenses.
    Senator Jeffords. Also, the GAO report suggests that 
inspection procedures for spent fuel need to be updated. In 
part, current inspection guidance developed in response to the 
Millstone incident led to the discovery of spent fuel missing 
at Vermont Yankee. Do you believe that the NRC has sufficient 
information about the problems with material control and 
accounting to proceed with revising the inspection system?
    Mr. Diaz. I believe we do. I believe that our revised 
inspection procedures give us a higher level of oversight. I do 
believe that we have communicated to our licensees the 
necessity that they have to maintain control and accountability 
of their materials. However, sir, the proof is in the pudding; 
we are continuing to look at a series of licensees that we 
believe might not be where they should be, and if they are not, 
then we will take appropriate actions. We will continue to 
exercise strict oversight over this area.
    Senator Jeffords. I am pleased to hear that. The NRC's 
public document system, the ADAMS computer database system, is 
an important public information tool. It is the primary way 
that facilities, State regulators, and the general public, even 
this committee and its staff, have access to the NRC's 
documents. Frankly, lately it seems that it is not working as 
often as it is working.
    Mr. Diaz. I must admit that we all have had a little bit of 
a problem with ADAMS, but ADAMS is getting better. It is now 
becoming a Web site-based system. The bottom line was to make 
it more usable, more user-friendly, more powerful, more capable 
to be used. I believe we are getting there, and our staff has 
been very clearly given the task to ensure that ADAMS becomes 
what it should be, a premier tool to communicate with the 
public and with the Congress and all the stakeholders. I have 
been told, to look at it, that before this year ends we will 
have a fully equipped Web-based system capable of doing what 
ADAMS should be able to do.
    Senator Jeffords. I believe you have answered this, but do 
you believe that the Commission has sufficient authority and 
resources to ensure that ADAMS is working properly over the 
long run?
    Mr. Diaz. We do.
    Mr. Jaczko. Senator, if I could add.
    Senator Jeffords. Yes.
    Mr. Jaczko. One of the challenges that we are facing with 
ADAMS right now is that, as an agency, we have strived very 
hard to be very open and very accessible, and I think in many 
ways the NRC has been a real leader in that role. One of the 
challenges that we face and one of the reasons, sometimes, for 
some of these problems with ADAMS recently has been part of our 
process to review documents on the ADAMS system, to make sure 
that there aren't any documents that would provide information 
that could be used by terrorists or by other people whose 
intention is to do harm.
    So that is one of the challenges that we have been faced 
with and one of the things that has led to some of the problems 
right now with ADAMS. So that is something we are working 
through and working to get that process completed.
    Senator Jeffords. I am not sure if you answered this or 
not, but on April 6, 2005, the National Research Council, part 
of the National Academy of Sciences, released a report on the 
safety and security of the commercial spent fuel storage. It 
has been reported that the Commission disagreed with some of 
the NAS recommendations and technical recommendations. I want 
to ask some specific questions regarding this report, its 
recommendations, and the Commission's follow-up.
    The National Academy recommended earlier movement of spent 
fuel into dry cask storage to reduce the potential consequences 
of a terrorist attack. The NRC has disagreed with this 
recommendation. Would you comment?
    Mr. Diaz. Yes, Senator. We find that with the upgrades that 
have been done to both safety and security in nuclear power 
plants since 9/11, that storage of fuel in spent fuel pools is 
adequate, that there is really no additional risk to public 
health and safety from when these plants were designed or when 
they were evaluated. There is a slight advantage on putting the 
fuel in dry cask, but the cost of doing it, plus the 
significant risks that are associated with moving the fuel to 
dry cask do not justify to the Commission to undertake this 
movement.
    We do believe that we have been responsive to several key 
recommendations from the National Academy, including the fact 
that spent fuel can be put in better positions in the pool or 
that additional cooling strategies should be put in place, and 
we agree with those and we are pursuing those very, very 
rapidly. But with regard to movement to dry cask, we believe 
that it definitely is something that can be done, but it is not 
justifiable in terms of the safety of the spent fuel pools.
    Mr. McGaffigan. Mr. Chairman, if I could just add very 
briefly I am not sure that the Academy recommended. I am pretty 
sure that the Academy got mad at us at one point for saying 
that they had recommended early movement of the spent fuel. 
They recommended we look at it, but they were not recommending 
a specific course of action.
    They specifically said that this was pretty tough stuff, it 
is very hard to do the cost-benefit analysis, it is very hard 
to make even qualitative judgments about benefits, but it 
wasn't a recommendation for early movement from spent fuels to 
dry cask storage, it was a much more nuanced Academy 
recommendation.
    The other thing, the chairman did submit a report to 
Congress, in classified and unclassified form, in March that 
outlined our specific judgments about these things. We have not 
been passive. Last July we issued an advisory. In February of 
this year we had a conference with all licensees who have spent 
fuel pools, a secure conference, and then we issued an 
additional set of instructions on February 25th, with responses 
due by May 31st.
    There are lots of other things we could tell you about in 
this area that we are doing. We got the report last July. So we 
have been acting on it since last July.
    Senator Jeffords. I am pleased to hear that. Thank you.
    Senator Voinovich. Thank you.
    We are going to have another short round of questions for 
you.
    It is my understanding that the House provided an 
additional $21 million to the NRC. It is also my understanding 
that that is not adequate, that in addition to that $21 
million, the Commission wants another $20 million to get the 
job done. I am very concerned about that because my original 
understanding was that the $21 million was going to take care 
of it. So I think that we need to get back from you a real good 
documentation about what it is that you would do with this 
additional money and how relevant it is to your being able to 
move forward with some of the things that you have to do and we 
are asking you to do.
    Mr. Diaz. Well, we would be pleased to do that, sir. They 
are 2 totally different things. The House was concerned with 
how do we actually close out this issue in security, especially 
the so-called plan specific assessments for spent fuel pools, 
series of issues regarding materials protection. So we put 
together a package that responded to the concerns of the House.
    At the same time, the Senate was concerned, and we 
testified in a meeting with Senator Domenici and Bingaman on 
the issue of what do you need to really get the structure for 
new plant licenses, and that is where the other $20 million 
happens to come from.
    So they are two different pieces, and I am sorry for the 
confusion if we did not make that clear. But they are actually 
2 totally separate issues, and we would be pleased to----
    Senator Voinovich. I would like a breakdown of it. Is the 
$21 million too much for security? Could some of that money be 
reduced so it would go for something else? This is pretty 
important.
    The other quick question is when we had the closed session 
you talked about your training facility in Tennessee, and I 
would like to see some cost benefit analysis. They send 
everybody down to Tennessee to get trained. How much does that 
cost? If that were moved to Washington, how much money would be 
saved?
    I am also asking, and I am sure my committee members share 
this--when I was governor, I talked about harder and smarter, 
and more with less. At the same time you submit your 
information to us, I would like to know what steps, if any, you 
have taken to try and figure out how you can save money at the 
Commission. That is going to be very important in terms of my 
consideration of urging the additional money that you are 
asking for. I want to be satisfied about that.
    Mr. Diaz. Sir, we will be pleased to send you an additional 
report that clearly marks out the steps the Commission has 
taken to be as fiscally conservative as we can be, but at the 
same time being able to discharge our functions. I think your 
staff received, this week, a series of answers on these issues, 
but we are going to review it and make sure they are thorough, 
complete, and resubmit them to you.
    Senator Voinovich. Thank you.
    Mr. McGaffigan. Sir, could I add one thing just to give you 
perspective on this matter? We talked a little bit last week 
about it. We face 4 major challenges in the years ahead. One is 
security; and that doesn't seem to be going away, and we have a 
lot of rulemakings to do, we have a lot of national source 
tracking system to put in place, etc.
    The second is this generational change. We talked about the 
need to hire 800, 900 people--I think it was documented in the 
letters we sent you--over the next 3 years. That is, a quarter 
of our staff will be 3 years or less with the agency. So there 
is just a bow wave of generational change occurring, which 
drives our infrastructure. We need to rent out the space and 
all that. We have Yucca Mountain and we have advanced reactors.
    The first 2 of those things are absolutely going to happen, 
the security and the generational change, and we have to manage 
it. We face great uncertainty with regard to how many 
applications we are going to get for advanced reactors. We, as 
the chairman said, underestimated in last year's budget. The 
industry has been playing its cards close to the table until 
recently. Then Yucca Mountain, I can't predict when DOE will 
file an application, but it will be the largest administrative 
proceeding in the history of mankind when it does happen.
    So we have those 4 challenges. I didn't even mention 
Chairman Inhofe's favorite, which is license renewal. We are 
going to continue to have license renewal applications. We are 
going to continue to have enrichment plant applications. We are 
going to continue to have mock plant applications from DOE. 
Those are not in my top 4. Those are very important to many 
members, but the top 4 are enormously resource-intensive, and 
we try to frugally use the resources the Congress gives us.
    Senator Voinovich. Senator Carper.
    Senator Carper. Thanks, Mr. Chairman. I have 1 question and 
a request. Let me just make the request first. I have a note 
here that Senator Clinton regrets not being able to attend the 
hearing, and she asks if we would simply tell the panel she 
regrets her absence and looks forward to working on security 
legislation that we have talked about here earlier today.
    My last question, if I could, is a question regarding 
Senator Voinovich's bill that I have co-sponsored to 
reauthorize the NRC's ability to collect fees from licenses. In 
the bill there is language that proposes to limit the scope of 
environmental review under NEPA, and specifically it requires 
that only the facility to be licensed be evaluated, and 
eliminates the requirement to include any consideration of the 
need for or, in the alternative, to the proposed facility.
    This may have been touched on earlier, but I want to come 
back to it again. NRC has completed license extensions, I 
think, at about a dozen plants, and has several applications 
that are pending. I presume you have done NEPA reviews at those 
facilities. Let me just ask again. How many alternatives are 
you considering now and have you been forced to look at non-
nuclear alternatives in these cases? Finally, is this a 
significant area of concern as the NRC prepares to review these 
new license applications?
    Mr. Diaz. I really do not understand the question. You went 
from no nuclear alternatives to nuclear alternatives. Are you 
talking about sites?
    Senator Carper. I think what I am going to do is, I am 
going to submit this question in writing, and we will ask for 
you to just respond to it, if you will.
    Mr. Diaz. I would be pleased to do that.
    Senator Carper. Thanks so much.
    That is it, Mr. Chairman.
    Senator Voinovich. Thank you.
    Senator Jeffords.
    Senator Jeffords. No further questions.
    Senator Voinovich. Senator Obama.
    Senator Jeffords. I am sorry?
    Senator Voinovich. I was just going to say, do you have any 
other questions?
    Senator Jeffords. No.
    Senator Voinovich. OK.
    Senator Obama, welcome. We are glad that you are here.
    Senator Obama. Thank you very much, Mr. Chairman. I 
appreciate it.
    You know, I had the opportunity to be in the closed hearing 
and addressed some of the most pressing questions that I had, 
so I don't know how broad the scope of this session is. I would 
just want to reiterate my general view that, given the ongoing 
energy demands that we have, we are, I think, out of necessity 
going to be taking a look at the possibility of nuclear power 
plant expansion.
    There seems to be a number of areas of concern. One is a 
mechanism to standardize design, something that I think I 
addressed last time. My understanding at least was that we are 
trying to move in that direction, which presumably would not 
only help us secure sites, but would also reduce some of the 
potential regulatory lag involved in approving facilities. The 
second aspect was fuel storage. I know you have addressed that 
a little bit before I arrived.
    Can we just talk about your staffing levels and whether, if 
in fact we started to see a willingness on the part of the 
industry to try to start building more plants, whether you guys 
currently have sufficient staffing levels and budget levels to 
keep up, or whether you anticipate a need to increase your 
budget to do what needs to be done?
    Mr. Diaz. Thank you, Senator, for the question. These are 
the kind of questions we really like, because fundamentally the 
answer is no, we do not have the staffing levels that could be 
needed if we receive the number of applications for design 
certification, for early site permits, and for combined 
construction and operating licenses that are now sounding 
around which we are getting letters and expressions of 
interest.
    In this regard, we have come up with a plan that we believe 
is adequate to allow us to maintain our safety oversight over 
the operating fleet, which we cannot slack off. We need to 
maintain the level of activities that are ongoing. We need to 
maintain the levels of activities over licensing activities.
    We disposition about 1800 licensing activities every year. 
Every single one of them is important. Some of them are 
considered more important than others. For example, Senator 
Inhofe has at the top of his list license renewal and power 
upgrade, and for very good reasons. They are all important 
activities.
    To be able to actually conduct the high technical work and 
prepare for all of the interactions that will be taken, 
including potential adjudications on these issues, we have come 
up with a new staffing program that increases about 145 
technical persons in this coming year
    Senator Obama. What percentage increase would that 
represent?
    Mr. Diaz. Well, if you look at what we call the NRR 
licensing staff, that is approximately, I would say, about 10 
percent increase from where we are.
    Senator Obama. Would there be a sort of commensurate 
increase in your budget, then, about a 10 percent increase, or 
slightly more?
    Mr. Diaz. Actually, for that it would be just about $20 
million, and that licensing activities is a little bit over 
$200 million. So it is approximately that.
    Senator Obama. Is that sort of phased in over a certain 
period of time?
    Mr. Diaz. No, this is on top. This is in addition of what 
we already have programmed. Then, the following year, year 
2007, there would be a $25 million increase to where we have 
programmed to be able to keep putting the right infrastructure, 
both personnel, space, work stations, training, protractors. A 
lot of those things need to be in place by the time we actually 
receive these applications.
    Mr. McGaffigan. Senator Obama, as I said in response to 
Senator Carper, we are facing the need to net hire 300 or 400 
people, and we lose about 5 percent of our 3,200 person work 
force each year to retirement and whatever, so that is an extra 
150 per year. So you are talking about 800 people the first 3 
years.
    If the full nuclear renaissance occurs, I just want to put 
you on notice in 2010--this is the leading edge. If we have 
multiple applications at multiple sites, our agency is going to 
have to grow additional hundreds of people while we are also 
losing 150, 160, 180 people a year because we have a bow wave 
of retirements. It is a very difficult thing to manage; not 
just for us, it is hard for the industry. They are facing the 
same generational change that we are facing.
    So this is coming along at a time, the potential nuclear 
renaissance, that we are dealing with security; we are 
potentially dealing with Yucca Mountain, which is the largest 
administrative proceeding, in my view, in the history of 
mankind, 40 million pages of documents in discovery; and 
managing the generational change.
    This is the leading edge. I don't want to be in front of 
Senator Voinovich 4 years from now, or you, Senator Obama, and 
you say, where are all these hundreds of additional people? It 
all is dependent on decisions made by the private sector that 
are uncertain decisions. We want to be able to meet the need 
without wasting resources.
    Senator Obama. Right. So I guess what I am trying to figure 
out is what the ramp up schedule on something like this is, 
given that, to some degree, it is contingent on what private 
industry does. If you suddenly got 10 applications for new 
plants next year or over the next 2 or 3 years, are you able to 
hire quickly enough to accommodate that?
    Mr. Diaz. No, sir.
    Senator Obama. You cannot.
    Mr. Diaz. No, sir. This is why we keep telling the industry 
that they need to give us early warning. The number of people 
with the skills are just not there, nor are they trained into 
our work processes and the way of doing things. So we need to 
have some heads-up. So the earlier the notice, the better the 
service that we can do this Nation.
    Senator Obama. Is this all premised on sort of a static 
model of how staffing takes place? Have you evaluated whether 
we are getting the most bang for the buck right now; whether we 
are sufficiently productive in terms of how staff operates, 
updating lines of authority and organizational structures and 
changes that may be made in terms of design, so forth?
    Mr. Diaz. It is a very dynamic model, but it has some 
fundamental assumptions. We started with 3 fundamental 
assumptions that we could only do like 3 major licensing 
decisions a year, and that was fundamentally, and that was what 
was worked out with OMB. OMB says this is a level that you can 
work with, so we went at that level.
    Once we are at that level, we actually are able to put a 
dynamic structure into place where people that were working and 
doing design certification actually can then move to the other 
arena. So there is a plan, and staff has been working very hard 
not only at that plan, but how to train the people to be able 
to do the different jobs.
    Senator Voinovich. Senator Obama, you know, one of the 
things that I think that we ought to do--because this is a big 
deal in terms of this thing--I am going to suggest that this 
committee have a hearing just on the budget and what the future 
looks like, and ask you to brief our staffs first and come back 
and talk about the future, and what are some of the conditions 
and so on, and your projections and what you need and so on, 
because this is going to have a lot of relevance on how hard we 
encourage members of Energy and Water to come up with some more 
money so that you can do your job. The better informed we are, 
the more relevant and more attention they will pay to our 
recommendations.
    Senator Obama. I am open to that, Mr. Chairman, and happy 
to yield back.
    Mr. McGaffigan. Sir, could I mention one successful model? 
That is license renewal. And I hope the industry is going to 
follow it with new reactors. We had 2 plants come in, Calvert 
Cliffs and Aconi, as sort of trials of our system, and our 
system succeeded. We are much more efficient today, as we 
process, I believe, 10 different additional applications. We 
have re-licensed 32 plants; we have another 16 or 18 that are 
currently in the process; and we have become more efficient.
    But what we did was we issued guidance as to how to do it, 
the staff followed it with the first couple applicants, then we 
issued a generic aging and lessons learned report that made it 
easier--standardized applications, standardized our process--
and it has worked very, very efficiently.
    I would predict that a future Commission will try to follow 
the license renewal model. I think the industry wants us to 
follow the license renewal model. I think we are likely to get 
a limited number of applications early on. Those are going to 
be resource intensive. We will not resource-load 5 years after 
that at the same rate that the first 2 are, because the history 
of license renewal has been that we are much more efficient 
today.
    So long as we and the industry are on the same page, there 
are lots of guidance documents that haven't been written yet 
and are best informed by an actual application. So we have a 
successful model.
    I know when Chairman Diaz and I sat in front of this 
committee in 1998 for the first of the oversight hearings, 
there was great, great skepticism that we were going to be able 
to deal with the bow wave of license renewal applications that 
were on the horizon. I think it is a success that the 
bipartisan commission has handled those applications. It is 
very hard; it is reading tea leaves to sort of figure out what 
our needs are. We will be more efficient, but if there are 12 
applications, it is going to take more than 2.
    Mr. Diaz. Mr. Chairman, we welcome the opportunity to come 
and put this thing in a manner that the committee can see the 
options and the decisions. We will be ready.
    Senator Voinovich. The first thing we are going to do is 
get the staff involved immediately so that when we do have a 
meeting, it is as productive as it can be.
    Thank you very much.
    Senator Isakson is here, and before we go to the next 
panel, Senator, would you like to----
    Senator Isakson. First of all, I want to apologize to the 
panelists and you, Mr. Chairman, for being late.
    Second of all, I want to thank Chairman Diaz and Chairman 
Voinovich for the secured briefing about 10 days ago, which was 
extremely informative. For the record, my impression of your 
attention, sir, and the other Commissioners to the security of 
present and future nuclear facilities is absolute, and I 
appreciate your attention to that and your commitment to that.
    I really have one question, since I probably would be 
redundant in anything else that I ask. You have how many 
current applications for new licenses?
    Mr. Diaz. We have no current applications for new licenses. 
We have 3 applications for early site permits in which the site 
is going to be analyzed from the environmental viewpoint, so we 
actually do an environmental impact statement. Those 3 early 
site permits are presently on track and they are also presently 
being adjudicated.
    Senator Isakson.With satisfactory environmental analysis, 
they would move to the second step?
    Mr. Diaz. That is the expectation, that with the 
satisfactory environmental impact and the site being cleared, 
that gives them 1 of the 3 legs of this process. The second leg 
is a design that has been certified by the NRC. We have several 
designs that have been certified, but the industry is now 
working to get 2 new designs certified, which are what we call 
Generation 3 Plus, they are beyond the advanced generation, 
they have additional features, and the industry is very 
interested in these 2 designs. We also have a French design. 
The EPR has already expressed a strong interest in being 
certified in the United States. So that is the second leg.
    If you have a site permit and you can pull off the shelf a 
certified design, you have now two-thirds of what you want. 
Then an applicant can come and say now I want to apply for a 
combined construction and operating license. That is the last 
step. That is a major licensing activity; it is actually the 
one that we consider we have an applicant for a plant.
    We have no applicants for COL presently, but what we have 
been discussing is what we hear from the industry is that we 
could have three, four, or five in the 2007, 2008, 2009 period. 
So what the Commission is trying to do is make sure that we 
will be responsive to the needs of the Nation at that time, 
when those things come in.
    Senator Isakson. So the three legs of that stool are site, 
design and final COL, is that correct?
    Mr. Diaz. That is correct.
    Senator Isakson. I know it may vary because of things that 
come out, but what is a reasonable time from the first leg of 
the stool to the last leg of the stool?
    Mr. Diaz. They can go in parallel, they don't have to be 
one after the other. The early site permits are going on, the 
design certifications are also going on.
    Senator Isakson. At the same time. OK.
    Mr. Diaz. At the same time. So they can go in parallel. 
They can reference each other or not. So there are all sorts of 
combinations that can take place. The most economical and 
streamlined combination is somebody comes and says I want to 
apply for a COL and I am going to use this site that I already 
have and I am going to use this certified design.
    By the way, that also costs a lot less money. From our 
viewpoint, it is about half the process, because you already 
have two-thirds of your three legs. They can also do a 
combination of those things, and, as you know, utilities have 
the capability of being selective; they may want to do certain 
types of things.
    There is no doubt that an existing site has an advantage 
over other sites, because I believe the community is already 
familiar with the technology, with the benefits, with the way 
the plants operate. They already have infrastructure with both 
water, railroads, electrical grid, so there are a series of 
advantages. And I would be surprised if the first few 
applicants would not be using an already existing site which 
has a site permit, and they will pick off the shelf a certified 
design.
    Senator Isakson. Thank you very much, Mr. Chairman.
    Thank you, Mr. Chairman.
    Senator Voinovich. Thank you.
    I would like to thank the members of the Commission for 
being here today. We will continue to work with you to try and 
make your life easier.
    Mr. Diaz. Thank you.
    Senator Voinovich. Our next panel is Mr. Jim Wells, who is 
the Director of Natural Resources and the Environment at GAO; 
Marilyn Kray, who is president of NuStart Energy Development; 
and Dr. Edwin Lyman, who is the Senior Staff Scientist for the 
Global Security Program at the Union of Concerned Scientists.
    Before we get started, I want to remind the witnesses that 
their entire statements will be submitted into the record, and 
I would urge them, to the best of their ability, to limit their 
presentations to 5 minutes.
    Mr. Wells, if you are ready, we will start with you.

  STATEMENT OF JIM WELLS, DIRECTOR, NATURAL RESOURCES AND THE 
         ENVIRONMENT, GOVERNMENT ACCOUNTABILITY OFFICE

    Mr. Wells. Yes, sir, I am ready.
    GAO is pleased to be here to discuss NRC. As I listened to 
the NRC commissioners earlier, they clearly have a right to be 
proud about what they have accomplished, and optimistic about 
what they are achieving. But I think we at GAO also have a 
right to suggest that they do it faster, and I will talk about 
that and some of our recommendations.
    Clearly, the world for NRC has changed since 9/11, and the 
future of nuclear power depends heavily on how well NRC does 
its job. While the safety and security record has been good, 
things have and will happen that will challenge NRC's 
credibility for guaranteeing the safety of the Nation's aging 
fleet of plants.
    Over the past 2 years, we have had the fortunate 
opportunity to issue 15 reports on NRC operations. While our 
reports have focused on identifying ways to strengthen NRC's 
activities, I think it is fair to say that we have documented 
very positive steps that have been taken by the agency. One 
example is the substantial effort that NRC has made in working 
with the industry to enhance security. They still have a way to 
go, however.
    Another example is NRC's considerable effort to analyze 
what went wrong with Davis-Besse and to incorporate lessons 
learned. Again, we think they could perhaps do some things 
faster.
    I want to just briefly summarize what we think NRC still 
needs to do and highlight for you some challenges that we think 
NRC is going to face in the future if it is truly going to be a 
credible regulator of the industry.
    In summary, of all the reports, I will just quickly say 
that we found that NRC has not developed adequate security 
measures for sealed sources of radioactive materials, the stuff 
they use in medicine, industry, and research which could be 
used to make a dirty bomb. We found that the oversight of 
physical security at the plants could be strengthened. We found 
that NRC's analysis of plant owners' contribution of funds for 
decommissioning may not be completely accurate.
    We found that issues surrounding the shutdown of Davis-
Besse revealed important weaknesses in the NRC oversight of its 
safety. We found that controlling and accounting for the 
location of spent fuel needs to improve. The chairman of the 
NRC commented this morning that true these issues are in the 
past; the past 2003, 2004. We would prefer to be here not next 
year or the year after raising the same type issues.
    Turning a minute to the future in terms of what we think 
NRC faces as challenges, if you want to keep and enhance the 
credibility as a regulator for our commercial nuclear power 
plants, in response to the agency's limited resources and the 
desire to reduce the regulatory burden and cost on the plants, 
as we see it, NRC is trying to accomplish two major things, and 
these are presenting some challenges. On the one hand, NRC is 
trying to implement a risk informed regulatory strategy that 
targets the industry's most important safety-related 
activities. We would agree with that because it gives them an 
opportunity to prioritize their limited resources in terms of 
what they can pay attention to.
    On the other hand, they are trying to strike a balance 
between verifying what the plant's compliance with its own 
inspection by having the NRC look at what the plant is doing; 
they are trying to balance that level of activity. At the same 
time they are trying to afford the licensees the opportunity to 
demonstrate on their own that they are operating the plants 
safely and they are policing their own activities. So that is 
the balancing act that NRC faces in the future.
    Accomplishing these tasks will not be easy. We believe that 
NRC must develop the ability to identify emerging technical 
issues and they need to adjust a little faster than what they 
have done in the past in terms of regulatory requirements 
before safety problems develop. We believe that NRC clearly 
faces challenges in balancing this oversight and the industry 
compliance so that it can identify diminishing performance in 
the industry at individual plants before they become a problem.
    I use as an example Davis-Besse. Clearly, that plant stayed 
in a green condition right up until the event. Yet, the problem 
that occurred, that cause had been developing for many years.
    Finally, as the chairman of the committee talked about 
today, NRC is facing challenges regarding managing of its 
resources while meeting the increasing regulatory and oversight 
demands. There is no doubt that the existing resources have 
been stretched at the NRC to enhance security. Its pressure on 
its resources is going to continue as the Nation's fleet of 
plants age--these nuclear power plants are getting older--and 
the industry's interest in expansion grows.
    Are we going to build new plants? Are we going to license 
new plants? Are we going to re-license? And are we going to 
increase the power output from the existing ones? All this is 
going to take time and effort by the NRC.
    In closing, I just want to recognize and say that GAO, in 
the activities we performed, we appreciate the complexities of 
the NRC in terms of what they need to do to be a good regulator 
and to continue strong oversight efforts. Clearly, NRC is doing 
a lot of things right, but we are here today, and have been as 
we continue to provide oversight, that it still has important 
things and important work that they need to do.
    Whether NRC, in the future, carries out this regulatory and 
oversight responsibilities in an effective and creditable 
manner will clearly have a significant impact on the future and 
the direction of whether or not we have an increased use of 
nuclear power.
    If I have one minute left, I want to respond, Mr. Chairman 
and Senator Carper, you asked the question what does NRC need.
    Senator Voinovich. Could we save that maybe for the 
questions, because you have gone over your time.
    Mr. Wells. I would be glad to stop here and wait and answer 
any questions you might have.
    Senator Voinovich. That would be great if you could do 
that. That would be swell. Thank you.
    Senator Voinovich. Ms. Kray.

    STATEMENT OF MARILYN C. KRAY, PRESIDENT, NUSTART ENERGY 
                          DEVELOPMENT

    Ms. Kray. Good morning, Chairman Voinovich, Senator Carper, 
and members of the subcommittee. My name is Marilyn Kray. I am 
the vice president of Exelon Nuclear. But I am here today in my 
role as President of NuStart Energy Development.
    The NuStart consortium is comprised of nine power companies 
and two reactor vendors. The power companies are Constellation, 
Duke, Entergy, EDF North America, Exelon, Florida Power & 
Light, Progress Energy, Southern Company, and TVA. The reactor 
vendors are Westinghouse and General Electric.
    As individual companies, we recognize the importance of 
nuclear power to our country's environment, electricity 
reliability, and the energy independence. We further recognize 
that there are certain challenges facing a new nuclear 
investment. If left alone, these challenges would inhibit the 
viability of the nuclear option for the future.
    My testimony identifies seven preconditions to the 
construction of new power plants in the United States. These 
are: The demonstrated need for base load power; confidence in 
the long-term solution to the spent fuel storage issue; 
regulatory process certainty; completed advanced designs; re-
establishment of the nuclear infrastructure; public confidence 
in nuclear power; and, lastly, acceptable financial returns.
    We noted that there were two challenges in the list above 
that were not being addressed by ongoing initiatives, yet 
required prompt attention. These were the need for regulatory 
certainty and the need for completed advanced designs. Given 
the nature of these challenges, in that they were both generic 
as well as one-time, we decided that the best strategy was for 
the industry to address them as a unified effort. Accordingly, 
the NuStart consortium was formed.
    The consortium power companies adopted or endorsed the two 
technologies, the Westinghouse AP-1000 and the General Electric 
Economic Simplified Boiling Water Reactor. Last spring, NuStart 
submitted a proposal to the Department of Energy. Our plan is 
to work with the rector vendors to complete the design 
engineering necessary to deploy these technologies. 
Additionally, we plan to submit two Combined Operating License, 
COL, applications, to the NRC, one for each technology. Our 
current plan is to submit these to the NRC in early 2008 with 
the NRC to review to be concluding in the 2010-2011 timeframe.
    I had the opportunity last year to appear before this 
subcommittee, and since then significant progress has been 
made. Highlights include the following: The NuStart proposal 
has been accepted by the Department of Energy and a cooperative 
agreement is in place; legal documents, governance, structure, 
and project management controls have been established to ensure 
that the NuStart entity will function efficiently; Westinghouse 
received its final design approval for the AP-1000 from the 
NRC, which is a milestone in the design certification process. 
It expects to receive final design certification in December of 
this year. General Electric has been engaged in meaningful 
discussions with the NRC staff as part of their pre-application 
phase of design certification. They expect to submit their 
application to the NRC this summer.
    NuStart most recently selected six finalist sites from a 
population of over 40, and these will be the subject of our COL 
applications. The finalist sites are Bellefonte in Alabama, 
Calvert Cliffs in Maryland, Grand Gulf in Mississippi, Nine 
Mile in New York, River Bend in Louisiana, and Savannah River 
in South Carolina. The next step is for NuStart to further 
analyze these six sites and select one to be the subject for 
each of the two applications.
    By meeting the objectives as outlined in our agreement with 
the DOE, we believe that we will be taking meaningful steps in 
not only assuring that the nuclear option is available, but 
also in obtaining additional confidence around certain vital 
investment assumptions. The alternative to the NuStart approach 
is to do nothing and hope for the best. We see this as 
synonymous with phasing out the nuclear industry in the U.S.
    I recognize that NuStart was not the only one busy, and 
that the Senate staff has been working on legislation resulting 
in three pieces that are before the committee. We find these 
three pieces of legislation to be important in setting the 
stage for new plants, and we urge the committee to approve 
them. The provisions as outlined in the Price-Anderson, the 
fees restructuring of the nuclear safety and security are all 
very important to the growth of nuclear power.
    I thank you for your interest and the opportunity to appear 
before you this morning.
    Senator Obama. Mr. Chairman, I just want to suggest for Ms. 
Kray that she not use the phrase nuclear option during her 
testimony.
    Ms. Kray. Well taken.
    Senator Voinovich. Thank you.
    Dr. Lyman.

 STATEMENT OF DR. EDWIN LYMAN, SENIOR STAFF SCIENTIST, GLOBAL 
             SECURITY PROGRAM, UNION OF CONCERNED 
                           SCIENTISTS

    Dr. Lyman. Mr. Chairman and members of the subcommittee, on 
behalf of the Union of Concerned Scientists, I appreciate the 
opportunity to present some of our views today on the security 
and safety of nuclear power plants in the United States. I 
think I will deviate slightly from my written remarks to 
address some of the things we have already heard this morning.
    First, I would like to thank the Chairman for raising the 
issue of the Perry plant and its increasingly degraded safety 
performance. Obviously, the issue of safety culture was one of 
the lessons that should have been learned at Davis-Besse, and 
it appears from the fact that even under increased oversight of 
First Energy's performance, the Perry plant's own attention to 
detail and performance and procedures, according to strict 
guidelines, is deteriorating indicates that maybe First Energy 
has not learned the lessons of Davis-Besse, and this of great 
concern.
    Another issue of concern to me with regard to the safety of 
the Perry plant is that it is one of the 13 nuclear power 
plants in this country that suffer from a containment design 
flaw that the NRC has known about for a long time but is 
dragging its feet in actually addressing, and this is the fact 
that Perry and the other 12 plants in this category have 
containment structures that are significantly weaker and 
smaller than most of the nuclear power plants in this country.
    The NRC has known for a long time that if a station 
blackout occurs at one of these plants, that is, if both 
offsite power and onsite power is lost, the potential for a 
hydrogen explosion could lead to failure of a containment like 
Perry's with near certainty. This could be addressed quite 
simply by adding additional backup power capacity so that, in 
the event of a station blackout, there will be a way to power 
the hydrogen ignitors, which would burn off hydrogen safely 
before a detonation could occur. The solution to this is not 
expensive, and the NRC actually decided, through its risk 
inform process, that such additions were warranted.
    However, more than 5 years after starting to address this 
issue, nothing has happened, and I am concerned about the 
potential at Perry and other plants. I would urge the committee 
to look at this issue, because it is an example of how the NRC 
appears to be more interested in relaxing regulatory burden 
than strengthening it when warranted.
    We also have great concerns about the security of nuclear 
power plants and nuclear materials in NRC-regulated facilities. 
I am testifying today in an unusual position in that I have 
been part of a hearing at NRC involving the security of 
plutonium-bearing MOX fuel at a nuclear power plant in South 
Carolina, and I have had access to safeguards information, both 
site-specific and relating to general NRC security policies. I 
can't discuss any of that information today, unfortunately, but 
I can say that the information I have seen does not make me 
feel any better about the state of security at nuclear power 
plants.
    Senator Jeffords has raised the issue of the material 
control and accounting of spent fuel at Vermont Yankee. We are 
also concerned about material control and accounting and 
security of materials that could be used to actually make 
nuclear explosive devised, as opposed to dirty bombs. The NRC 
does regulate the security of several facilities in this 
country that have enough material onsite that, if stolen, could 
be used to make a nuclear weapon. These include poorly 
protected university research reactors, which have highly 
enriched uranium, and now the Catawba plant in South Carolina, 
which became a Category I plutonium facility by virtue of 
receiving 80 kilograms of weapons-grade plutonium in the form 
of MOX fuel at that plant.
    The NRC should be increasing its attention to strengthening 
the security that terrorist groups like Al Qaeda would not be 
able to steal this material to make a nuclear weapon. The NRC 
also has a responsibility to show the rest of the world how to 
protect nuclear materials like plutonium. In fact, it is 
supposed to be working with Russian regulators to strengthen 
their security on these types of materials, but the NRC is 
actually backtracking by weakening standards in some cases on 
securing plutonium from theft, and this is something of 
considerable concern to us.
    We are also greatly concerned about the sabotage threat to 
nuclear reactors. Just to state what the stakes are, if a 
terrorist group was able to gain forced access to a nuclear 
power plant, I am convinced that within a matter of minutes 
they could start the process to cause a meltdown of the fuel 
and a significant radiological release to the environment.
    The NRC itself has been evasive about what the consequences 
of that type of event would be, so I undertook the opportunity 
to do that analysis myself, using NRC's own consequence 
assessment computer codes, and the result of that was a report 
that is focused on the Indian Point nuclear power plant.
    Just to discuss some of those results, I found that a 
terrorist attack in the worst case I looked at could cause up 
to 44,000 deaths from acute radiation sickness; 5,000 deaths in 
the long term from cancer; and economic damages that would 
exceed $2 trillion. These are the stakes and these are why 
security must be strengthened at nuclear power plants.
    Just to review some of the problems that I continue to see 
with security at power plants, one is the design basis threat 
level. When it was set in 2003, the standard was not what is 
the threat faced by nuclear power plants today by our 
adversaries, it was what is the greatest threat that we should 
expect utilities to be able to protect against themselves. 
Those threats may not be the same and, in fact, they aren't the 
same, because when that threat was reviewed by other Federal 
agencies, most of them recommended additional capabilities be 
added to the design basis threat. However, NRC apparently did 
not adopt those recommendations. The threat must be reviewed by 
other agencies, intelligence agencies, and their 
recommendations must be taken seriously.
    Another important aspect is force-on-force tests. Force-on-
force tests are an important component of security because the 
best security plan on paper may have problems that will not be 
revealed until they are actually tested. There are significant 
weaknesses with the force-on-force testing program which I have 
outlined in my testimony, and I recommend that you read those.
    Guard fatigue is another issue.
    Senator Voinovich. Dr. Lyman, could you kind of wrap it up?
    Dr. Lyman. Security guards have a hard job, and they really 
need enough rest to be able to perform that job. NRC has taken 
steps to control the work hours of security guards, but we 
understand those rules are being violated, are not strictly 
adhered to in some cases. That is a serious issue.
    In our view, legislation is needed to address the design 
basis threat issues, force-on-force, and the others I have 
mentioned.
    Thank you for your attention.
    Senator Voinovich. Thank you very much.
    Ms. Kray, you have expressed support for the human capital 
provisions in S. 858, the Nuclear Fees Reauthorization Act, 
which Chairman Inhofe and I have introduced. As your coalition 
looks to construct new nuclear power plants, I am wondering how 
much consideration is given to ensuring that the industry 
itself has the skill and knowledgeable work force it needs to 
get the job done.
    Does this bill help at all the industry's human capital 
needs? And is the industry doing anything to address this 
issue? You were here for the testimony before.
    Ms. Kray. Right. Yes, I was.
    Senator Voinovich. We have a real human capital challenge 
out there for the NRC to have the people that they need to get 
their job done. Then the question is do you have the people 
that you need to get the job done? You are both going to be 
drawing probably from the same pool, and what are we doing 
about expanding that pool? And does any of this stuff help you?
    Ms. Kray. The short answer is no, we don't have the human 
capital yet. The reason that we certainly endorse the 
legislation supporting the NRC resources is because we can 
empathize with that situation in that we are in the same one. 
We have very similar demographics with respect to an aging work 
force, and we also see a horizon of additional exciting, but, 
nevertheless, additional work for us.
    We have, over the past year, perhaps been in somewhat of a 
dilemma: not wanting to get too far ahead of ourselves, but at 
the same time wanting to be able to plan appropriately. We have 
begun discussions with a number of the architect and 
engineering firms--Stone & Webster; Sargent, Lundy and Shaw--
who would provide the personnel to actually construct the 
crafts and the trades that would be constructing these plants, 
looking at what the time lag would be to get a qualified work 
force up and running.
    The good news is that considering the lag time associated 
with building a new plant, we do think that we can plan for 
that. Essentially, the thought is, on the work side, the craft 
and trades, if you want to build it, they will come.
    The other issue is looking into the universities. We have 
seen increased enrollment in the nuclear area, in part, we 
believe, based on feedback from the universities, that is the 
optimism and perhaps renaissance of the industry that is 
attracting more professionals. We are also comforted a bit by a 
resurgence, particularly groups such as the North American 
Young Generation of Nuclear Engineers, which has become very 
active.
    So, again, in short, the answer today, we do not have that. 
It is a challenge for us going forward, and we are optimistic 
that we can meet it.
    Senator Voinovich. And you agree that, in terms of 
manpower, they really have a challenge not only for what you 
are suggesting--and if you heard the testimony, they need some 
more help from you, but given some is this for real, are you 
going forward, and so forth, so that they can plan for that?
    Ms. Kray. That is right. In December of 2004, NuStart 
submitted a letter to the NRC indicating our plans for 
submittal of the two COL applications. We do recognize the 
ramp-up time that they have in responding to these, and, again, 
we share the NRC concern for their staffing their own agency as 
far as us having to staff our own next generation.
    Senator Voinovich. We are appreciative also that the 
industry wants to continue the percentages in terms of the 
cost. I wonder would you like to comment, if you feel like you 
are qualified to comment, about the information that we had the 
House pass $21 billion more and the Commission said today they 
need another $20 million? How do you look at those numbers?
    Ms. Kray. I am probably not the best qualified to respond 
to that. Mr. Marfurtel of NEI, I know, had provided some 
testimony for the record addressing some of the bills, and that 
is based on the collective industry perspective. Anything 
beyond that, I would be happy to submit as follow-up for you.
    Senator Voinovich. I wish, Dr. Lyman, you had been able to 
be in that closed session, because some of the issues you 
raised were brought up at that session.
    Ms. Kray, do you feel confident that the Commission is 
doing everything possible to transfer knowledge about current 
safety and security environment to the new facilities? In other 
words, we have learned some lessons about security. We have 
increased security efforts underway. Some day I would like to 
really measure all of the additional costs that we have 
incurred because of a guy named Osama bin Laden and 9/11. It is 
just incredible what is happening.
    But the question I have is because of those increased 
security concerns, do you believe that in the designs of these 
that you are going to incorporate the best information that we 
have available today in terms of security?
    Ms. Kray. The power companies are working with the two 
reactor vendors, General Electric and Westinghouse, to ensure 
certainly that the enhanced security guidelines that have come 
out post-September 11th are incorporated into their designs.
    What is still remaining out there is if there are going to 
be any future changes to design basis threat or any additional 
requirements that might be imposed on new plants. The reason 
that I say that is because now is the time, when the designs 
are still on the drawing board, that it is easiest to 
incorporate any further changes. So if there are any additional 
changes beyond those known, the earlier we have those 
available, then the easier they can be incorporated into the 
evolving designs.
    Senator Voinovich. Senator Carper.
    Senator Carper. Ms. Kray, I am going to come to you second 
for a question, but I want you to be thinking about the 
question, then I am going to ask Mr. Wells to respond to my 
first question. I would like for you to revisit the issue I 
raised with the NRC commissioners, and that was the issue of 
disposal of nuclear waste.
    Going forward, if we are going to see a renaissance of 
nuclear energy and the next generation of power plants be 
built, how can we reduce the amount of waste to dispose of? How 
can we do that safely? If you would be thinking about that, I 
would appreciate it.
    Mr. Wells, I said in my opening statement that a great deal 
of responsibility rests with the NRC and on their need to be 
vigilant. Last year, in testimony, I think, before the House 
Government Reform Committee, the GAO highlighted a number of 
concerns with NRC's oversight of security measures. I don't 
know how familiar you are with that, but, specifically, GAO 
said a number of things. I just want to read briefly a couple 
of those.
    GAO stated at the time that, ``NRC is not yet in a position 
to provide an independent determination that each plant has 
taken reasonable and appropriate steps to protect against the 
new design basis threat.'' GAO went on to say, ``NRC's review 
of each facility's new security plans, which are not available 
to the general public for security reasons, has primarily been 
a paper review; it is not detailed enough for NRC to determine 
if the plans would protect the facility against the threat 
presented in the design basis threat.''
    GAO went on to say, ``In addition, NRC officials are 
generally not visiting the facilities to obtain site-specific 
information and assess the security plans in terms of each 
facility's layout. NRC is largely relying on force-on-force 
exercises it conducts to test the plants, but these exercises 
will not be conducted at all three facilities for 3 years.''
    In conclusion, GAO said, ``NRC's oversight of plant 
securities could also be improved. NRC is not following up to 
verify that all violations of security requirements have been 
corrected or taking steps to make lessons learned from 
inspections available to other NRC regional offices and nuclear 
power plants.'' That is the end of the quote.
    Mr. Wells, what I would simply like to do today is to ask 
if you would like to let us know if you believe that these 
concerns, stated about a year ago, have been addressed, are 
being addressed. And if not, do you have any recommendations 
for us to ensure that they are addressed?
    Mr. Wells. Yes, sir. I can say with fairly high confidence 
that those were the words that I said at that testimony; they 
sounded accurate. That was the status that we were finding at 
the NRC at the time we did that audit. We still stand by those 
findings. We are in the process of doing a much more 
comprehensive assessment of where the NRC is today related to 
those very significant findings.
    We are looking at the postulated threat that is out there. 
We are looking at the design based threat that has been 
established by the NRC and comparing that, as well as an 
objective we are visiting individual plants, looking at the 
actual brick and mortar that is being put in place to defend 
against that design basis threat. We hope to have that report 
available at the end of this year. We assume it will be in both 
the public and a classified version.
    I can say that, as we are doing our work, we are very 
vigilant in watching the force-on-force type program that NRC 
is putting in place. They are conducting these at a pace of 
approximately two a month. It is true that until you actually 
test what has been put in place, you do not have that answer 
with great certainty as to whether they can be protected. They 
are 3 years away from getting that type of answer. We are 
looking at the actual program and techniques that they are 
using.
    They have some growing pains; I will admit that. They are 
evolving and changing their inspection and their process as 
they go and as they learn ways in which they can be.
    So, yes, NRC is proceeding to have a better confidence 3 
years from now that they can make a much more confident public 
statement than they could in October of 2004, when we looked at 
that process.
    Senator Carper. Thank you. Thanks very much.
    Ms. Kray, can we return to your earlier question? Again, we 
are going to have a new generation of nuclear power; the issue 
of waste, what to do with it. Feel free to comment on Yucca 
Mountain, but any other new technology that other countries may 
be using, that may be under development. I welcome your 
thoughts.
    Ms. Kray. Sure. I stated in the testimony understanding the 
long-term solution for spent fuel storage is a precondition for 
going forward and actually investing, that is, signing a 
purchase order. But, at the same time, we don't want to stand 
still on the other challenges while this one is being 
addressed. And the industry fully endorses the science behind 
Yucca Mountain. Yet, at the same time, we are facing the 
reality of the political challenges associated with it. That 
then suggests, at least today, two possible alternatives.
    The first one, with respect to Yucca Mountain, is to look 
at it as more of a monitoring and retrievable facility, as 
opposed to just the long-term storage. That is, you would 
exchange the burden of having additional commitments with 
respect to retrieval and monitoring in exchange for relieving 
some of the uncertainty as far as trying to analyze well out 
into years that might be beyond the capability of computer 
modeling. It is expected that that would certainly help the DOE 
in their analysis, and then the NRC in their review of it.
    In addition to the Yucca Mountain piece is revisiting and 
reprocessing. Essentially, the United States has not been 
active in this area, so reprocessing as it stands today, from a 
utility perspective, is not attractive from a cost perspective. 
But we also know that perhaps if given the appropriate 
attention, the reprocessing could satisfy both certainly the 
safety proliferation concerns, and then also the cost-
effectiveness. So reopening or re-examining the possibility of 
reprocessing would certainly be warranted.
    Senator Carper. All right, thanks very much. Our thanks to 
each of you for being with us today and for your testimony. 
Thank you.
    Senator Voinovich. Senator Isakson.
    Senator Isakson. Thank you, Mr. Chairman.
    Mr. Wells, you were talking about force-on-force 
evaluation. I read Dr. Lyman's printed testimony with regard to 
some questions he raised. How does GAO monitor that process, 
onsite or by reading reports?
    Mr. Wells. I am sorry?
    Senator Isakson. Do you monitor by physically observing one 
of the force-on-force tests?
    Mr. Wells. Absolutely. That is the value of GAO in terms of 
having resources available to do original audit work. We made a 
request and NRC accepted and invited us to attend a force-on-
force that was conducted in New Jersey at a nuclear power 
plant, and we were observers. We participated in the exercise 
into the wee hours of the morning and watched the process; took 
a lot of notes about how things went.
    Senator Isakson. I thought I heard you say--and I am asking 
if I heard wrong--that in your evaluation they had identified 
technique problems and improved them. I think something to that 
effect. So that process is improving on the force-on-force 
evaluation?
    Mr. Wells. Our observations are that NRC is working very 
diligent toward--we had pointed out previously a lot of faulty 
techniques in the force-on-force weaknesses that exist. They 
went through a pilot exercise program; they worked with NEI and 
they actually developed a new program that they have started 
within this 2005 year.
    They are in that process. They have probably done about a 
dozen force-on-forces, and it is a process that is evolving and 
they continue making improvements. But our initial observation, 
until we finish, is greatly improved over the old process.
    Senator Isakson. Ms. Kray, when you talk about siting 
needs, needs base is a tremendous part of your final siting 
decision. That is future needs more than existing needs, or is 
it existing needs?
    Ms. Kray. Are you referring, sir, to the need for power in 
the area?
    Senator Isakson. Yes.
    Ms. Kray. It primarily is in the future, because we 
recognize that even if we were to start today to prepare an 
application, the earliest we would think that it would come 
online would be 2015. So we are looking at a longer horizon.
    Senator Isakson. On that basis, let me put in a plug for 
the Savannah River site. Having seen it, known what it is used 
for in the past, and the Regulatory Commission's comments that 
previous uses are excellent sites, that is a good one. We have 
a growing need in the State of Georgia.
    My only other question, Mr. Chairman, also in your nine 
items of concern that NuStart had--I think it was nine or 
seven----
    Ms. Kray. Seven, but that is OK.
    Senator Isakson [continuing]. One of them was financial 
concerns. Now, I know how Georgia operates in terms of the 
Public Service Commission, and I was a part of the legislation 
when Plant Vogel was approved, financed, and everything. Are 
you talking about the capital financing to build the facility 
or are you talking about the rate-making process and how the 
future revenue comes in?
    Ms. Kray. Primarily the financing to build it. And that 
needs to be looked at depending upon whether a new facility 
will be in a regulated environment or deregulated environment, 
because that certainly imposes different conditions on the 
investor. But essentially, we see that incentives will be 
needed to address the additional investment hurdles that will 
be facing just the first wave of the new nuclear plants, and we 
need to review any that are considered in context certainly of 
incentives offered to other fuel alternatives as well.
    As utilities, we are not predisposed to any form of 
generation, and that is, if convinced, that we need to build 
something, we will build whatever is certainly in compliance 
with all regulations and standards, but also one that has the 
best benefit for our shareholders. And we see with nuclear, at 
least for the uncertainties associated with that, are facing 
some challenges that are unique to that, especially compared to 
the other base-load alternatives.
    Senator Isakson. Well, real quickly--because I know my time 
is running out--in the 1970s, construction while in progress 
type financing mechanisms, CWIP, were the desire obviously, but 
one of the big problems that happened was the tremendous 
overruns that took place in the construction for these 
facilities. My question is will CWIP still be the ideal 
mechanism for a company for financing construction? And if it 
were, do you feel now that construction of nuclear plants, the 
problems that we had in the 1970s with the cost overruns, and 
the tremendous overruns in some cases, is highly less likely 
because of the technology and the past experience?
    Ms. Kray. We are optimistic that there have been lessons 
learned from that. I mean, there is not a good track record in 
the United States for having built plants on time and on 
budget. We can look to some success in the Asian markets, and 
we are also comforted by the fact that the plants we are 
adopting now are somewhat more simpler, that is, less 
components to actually build and construct.
    There have also been advances in modular construction which 
we would intend to use. So we would expect certainly a more 
commitment and sense of urgency around the construction, and 
also a more ease because of the design.
    With respect to the financing structure, we are open to 
some more innovative approaches, and that is looking for the 
vendors to engage with us in turnkey type of financing, and, 
again, models that we have seen similar to the Finland reactor 
that was recently commissioned. So we would be looking to that, 
and certainly one of the concerns is the financing during 
construction, the impact on the dilution of earnings. That 
remains a hurdle for the investment of a large capital- intense 
project.
    Senator Isakson. Thank you.
    Senator Voinovich. Senator Jeffords.
    Senator Jeffords. Mr. Wells, based upon your study, does 
GAO believe that the NRC has sufficient information about the 
problems with material control and accounting to proceed with 
revising the inspection system?
    Mr. Wells. Yes. We agree that there is a problem between us 
and NRC. We disagree at the speed at which they are 
implementing the corrective action. We suggested they already 
had enough. They are 5 years into this problem. They suggested 
to us that they weren't quite ready yet, they wanted to 
continue to study it.
    Senator Jeffords. What could Congress do to improve the 
materials tracking at power plants?
    Mr. Wells. Excuse me?
    Senator Jeffords. What could we do, as Congress, to improve 
materials tracking at the power plants?
    Mr. Wells. You have a regulatory agency that has a 
regulatory requirement that the licensee knows exactly where 
all this material is. The difficulty we encountered in terms of 
figuring out what caused this material to be missing was the 
lack of specificity in those recommendations.
    I believe you need to hold NRC accountable to write that 
specificity in there so that every licensee knows what type of 
inventory they need to use, how it is to be inspected, and how 
it is to be recorded, especially as it relates to missing and 
spent fuel pieces that are currently not addressed in the 
regulation. NRC agrees with that, yet they continue to want to 
look further to see if it is more prevalent elsewhere.
    Senator Jeffords. Thank you for that answer.
    Thank you, Mr. Chairman.
    Senator Voinovich. I would like to thank the witnesses for 
coming here this morning. If you have any comments that you 
would like to make in writing to the committee, we would be 
more than happy to receive them. Thank you very much.
    The meeting is adjourned.
    [Whereupon, at 11:00 a.m., the subcommittee was adjourned.]
    [Additional statements submitted for the record follow:]
Statement of Hon. Barack Obama, U.S. Senator from the State of Illinois
    Mr. Chairman, thank you for holding this hearing.
    As electricity demand throughout the Nation increases in the coming 
decades, we will be challenged in how best to meet these consumption 
demands without sacrificing the environment. That means creating jobs, 
protecting water and air quality, establishing energy independence, and 
using all of our energy resources fully and wisely.
    I strongly support greater energy conservation and greater Federal 
investment in renewable technologies such as wind and solar, which 
ought to receive greater attention in our national energy policy than 
they likely will this year.
    However, as Congress considers policies to address air quality and 
the deleterious effects of carbon emissions on the global ecosystem, it 
is reasonable--and realistic--for nuclear power to remain on the table 
for consideration. Illinois has 11 nuclear power plants--the most of 
any State in the country--and nuclear power provides more than half of 
Illinois' electricity needs.
    But keeping nuclear power on the table--and indeed planning for the 
construction of new plants--is only possible if the Nuclear Regulatory 
Commission is vigilant in its mission. We need better long-term 
strategies for storing and securing nuclear waste and for ensuring the 
safe operation of nuclear power plants. How we develop these strategies 
is a major priority for me.
    I look forward to hearing the testimony of the witnesses, and I 
thank the Chair for holding this hearing.
                               __________
Statement of Nils J. Diaz, Chairman, U.S. Nuclear Regulatory Commission
                              introduction
    Mr. Chairman and members of the Subcommittee, it is a pleasure to 
appear before you today with my fellow Commissioners to discuss the 
U.S. 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 working with you in the future. I 
request that my written testimony, on behalf of the Commission, be 
submitted for the record.
    The NRC is dedicated to the mission mandated by Congress--to ensure 
adequate protection of public health and safety, promote the common 
defense and security, and protect the environment--in the application 
of nuclear technology for civilian use. We have taken an integrated 
approach to safety, security, and emergency preparedness in carrying 
out this mission. Many of the Commission's initiatives over the past 
several years have focused on enhancing safety, security and emergency 
preparedness, while improving the effectiveness, efficiency, and 
openness of our regulatory system. I will highlight our key ongoing 
oversight and licensing activities, including pertinent initiatives.
                       reactor oversight programs
    The Reactor Oversight Process has now been implemented for 5 years, 
with increasing effectiveness and maturity. We believe that this 
program is a significant improvement over the former inspection, 
enforcement, and assessment processes, and has brought a more 
disciplined and objective approach to oversight of nuclear power 
plants. Performance indicators and inspection findings for every power 
reactor can be found on NRC's public web site, as well as our current 
assessment of each reactor's overall performance. We continue to strive 
to make further enhancements to the program, and specifically to 
improve the predictability of performance degradation with Performance 
Indicators.
    As you know, the NRC staff has devoted significant resources over 
the past 3 years to oversight of the Davis-Besse nuclear power plant in 
Ohio. We took these actions following the discovery of significant 
degradation of a portion of the reactor vessel head. The NRC authorized 
the plant to restart in March 2004 only after an extensive plant 
recovery program and comprehensive corrective actions by the licensee, 
and considerable NRC inspection and assessment. With the restart 
decision, the NRC issued a Confirmatory Order requiring independent 
assessments and inspections at Davis-Besse to ensure that long-term 
corrective actions remain effective. Overall, the plant has been 
operating safely, and the NRC staff recently determined that plant 
performance warrants termination of the special panel that was created 
specifically for the oversight of Davis-Besse. However, the NRC is 
continuing increased regulatory oversight under the reactor oversight 
process, including continued oversight of the independent assessments 
required by the Confirmatory Order.
    In April 2005, NRC proposed a $5.45 million fine against the 
licensee, FirstEnergy for violations of NRC requirements associated 
with the significant reactor vessel head damage discovered in March 
2002 at Davis-Besse. This is the largest single fine ever proposed by 
the NRC. This substantial fine emphasizes the high safety significance 
of FirstEnergy's failure to comply with NRC requirements, and the 
company's willful failure to provide the NRC with complete and accurate 
information. Matters related to Davis-Bessie have also been referred to 
the Department of Justice.
    As previously reported, we have undertaken a critical review of our 
programmatic and oversight activities to evaluate our own actions 
associated with the reactor vessel head degradation at Davis-Besse. 
This review includes NRC's internal Davis-Besse Lessons Learned Task 
Force Report together with reports from NRC's Office of Inspector 
General and the Government Accountability Office. Our corrective 
actions and program improvement efforts resulted in 49 significant 
recommendations. Currently, staff has completed addressing 44 of the 49 
recommendations. Four of the remaining items will be completed within 
the next few months. The one remaining action, which requires 
development of an engineering code, has a long lead time.
    NRC recognizes that communication failures were an underlying cause 
for issues discovered at Davis-Besse. The corrective actions outlined 
in the lessons-learned task force action plans specifically address 
communications. There has been a significant improvement in the 
communications among NRC regional, headquarters, and site offices, 
resulting in improved oversight activities.
    In response to the Commission directive issued in August 2004, the 
NRC staff is currently developing a list of safety culture attributes, 
indicators, and objective measures and identifying gaps relative to the 
evaluation of safety culture. The staff's activities will take into 
account the ongoing industry initiatives and the experience of foreign 
regulators. In October 2004, a guidance document outlining NRC's 
expectations for establishing and maintaining a safety conscious work 
environment, a key attribute of safety culture, was published for 
comment. The staff expects to issue the final document this summer. The 
next step is to modify the Reactor Oversight Process to more fully 
address the management of safety and safety culture issues by 
licensees, and to develop better methods, tools, and training for the 
NRC's inspection staff.
                       reactor licensinq programs
    The reactor licensing program, coupled with a strong oversight 
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 using state-of-the-art science, 
engineering and risk assessment methods and information from operating 
experience to establish reactor safety standards, to promulgate the 
related rules, regulations, orders and generic communications as 
appropriate, and to review applications consistent with these 
requirements. In Fiscal Year (FY) 2004, NRC staff completed 1,741 
licensing actions involving all 104 licensed reactors.
 License Renewal
    One of the most significant types of licensing actions for existing 
reactors involves license renewals. These reviews are focused on plant 
aging issues, including a thorough determination of the plant's passive 
components. In 2004, seven reactors had their licenses renewed for an 
additional 20 years and two reactor licenses were renewed thus far in 
2005. That brings the total number of renewed reactor licenses to 
thirty-two. In every instance, the staff has met its timeliness goals 
in carrying out the safety and environmental reviews required by our 
regulations. Sixteen additional license renewal applications are 
currently under review. The agency recently returned a license renewal 
application covering two reactors to a licensee because the staff's 
initial review determined that the application was not acceptable for 
docketing. The Agency also held significant discussions with another 
licensee about the adequacy of its license renewal application. We 
expect that almost all of the 104 reactors licensed to operate will 
apply for renewal of their licenses, and the staff will continue to 
face a significant workload in this area for the next 7 to 10 years.
 Power Uprates
    Another significant type of licensing action, called a power 
uprate, involves a request to raise the maximum power level at which a 
plant may operate. Improvement of instrument accuracy and plant 
hardware modifications, in addition to improvements in computational 
tools and engineering models enabling more accurate engineering 
analyses, have allowed licensees to propose power uprates from the 
level initially authorized while maintaining appropriate safety 
margins. The focus of our review of these applications has been and 
will continue to be on safety.
    To date, the NRC ias approved 105 power uprates which have safely 
added capacity equivalent to more than four large nuclear power plants. 
Currently, the NRC has 11 power uprate applications under review and 
expects to receive an additional 16 applications through calendar year 
2006.
    The NRC closely monitors operating experience at plants that have 
implemented power uprates. The NRC has observed cases of steam dryer 
cracking and flow-induced vibration damage affecting components and 
supports for the main steam and feedwater lines in Boiling Water 
Reactors with extended power uprates. 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 closely monitor 
the industry's response to these issues. We have factored this 
experience into our review of pending applications and plan to do the 
same for future applications.
 New Reactor Licensing
    Improved safety and reliability performance have resulted in 
significant overall improvements in nuclear power plants, including 
electrical generation output and production costs. The strong 
performance, increased electrical demand, and inclusion of nuclear 
energy in our nation's energy mix appear to be conducive to industry 
interest in new construction of nuclear power plants.
    The NRC is prepared to discharge its responsibilities if 
applications for new power plants are filed. We anticipate that 
applicants for new nuclear power plants will utilize the licensing 
processes promulgated in 10 CFR Part 52, which was developed to provide 
a more stable, timely and predictable licensing process. This process 
is designed to resolve safety and environmental issues, including 
emergency preparedness and security, prior to the physical construction 
of a new nuclear power plant. Under 10 CFR Part 52, the design 
certification process resolves the fundamental technical and safety 
issues related to the plant design, while the early site permit process 
resolves safety and environmental issues related to a specific 
potential site. Use of the design certification and early site permit 
processes can significantly increase regulatory certainty because the 
issues resolved through these two processes can be referenced in an 
application for a combined construction permit and operating license. 
This is referred to as a combined license. This license would specify 
inspections, tests, and analyses which the licensee must perform, and 
the acceptance criteria that will be used to verify conformance with 
the regulations before the facility can commence operation. The NRC 
considers Part 52 to be a strong and viable approach for review of 
future reactor applications and is working to incorporate recent 
experience gained from design certification reviews, current early site 
permit reviews, discussions with nuclear industry representatives, and 
input from the public to further enhance this process.
    The NRC has already certified three new reactor designs and 
codified them in the regulations, making them available for new plant 
orders. These designs include General Electric's Advanced Boiling Water 
Reactor and Westinghouse's AP600 and System 80+ designs. In addition, 
the NRC issued the Final Design Approval for the AP1000, and its 
proposed design certification rule was recently published for public 
comment. The NRC encourages early communication with potential 
applicants to identify unique design features or challenging licensing 
issues through the pre-application process. Currently, the NRC is 
engaged in conducting preliminary discussions on six additional reactor 
designs. These discussions indicate that we could receive several 
design certification applications in the near future.
    The NRC received three early site permit applications in late 2003 
for sites at which operating reactors already exist in Virginia, 
Illinois, and Mississippi. Schedules are in place to complete the 
safety reviews and environmental impact statements in approximately 2 
years from the date of an application. In fact, the NRC staff has 
already issued draft safety evaluation reports and draft environmental 
impact statements on all three early site permit applications for 
public comment. The mandatory adjudicatory hearings associated with the 
early site permits are currently ongoing.
    Finally, Part 52 provides for a combined construction/operating 
license process which allows applicants to seek, in a single 
application, a license authorizing both construction and operation 
prior to construction. This leads to combining adjudication of 
licensing issues in one hearing, instead of the two hearings utilized 
previously. Furthermore, the efficiency of NRC's safety-focused reviews 
would be substantially increased if applicants utilize an early site 
permit and certified design in their combined license applications. 
Although specific plans from the industry are not yet available, the 
NRC may receive up to five combined license applications beginning in 
2007-2008.
    The Commission is fully committed to ensuring that our agency is 
ready to meet the expected demand for new reactor licensing through 
maintaining a strong regulatory framework and adequate staffing and 
funds for handling multiple combined license applications. We will 
continue to work with stakeholders to address issues associated with 
implementation of our licensing process and Congress to ensure that our 
resource needs are identified.
                                security
    The Commission continues to impose new requirements, when 
appropriate, to enhance security of nuclear facilities and materials 
and communicate these requirements to our licensees. Our efforts also 
include close communication and coordination with the Department of 
Homeland Security (DHS) and other agencies in the intelligence and law 
enforcement communities.
 Nuclear Power Plant Security
    On February 25, 2002, the NRC required additional protective 
measures and strategies by each power plant licensee to protect against 
land-based and waterborne attacks and to provide additional mitigative 
capabilities for large explosions or fires at nuclear power plants, 
including those that could be caused by aircraft attack. Furthermore, 
increased coordination with local, state and national authorities was 
implemented to strengthen both prevention and mitigation. NRC power 
plant licensees were required to implement responsive measures by 
August 29, 2002. The NRC conducted inspections of each facility, 
required action to address noted deficiencies, and is in the process of 
further confirming implementation of best practices across the 
industry.
    Additional Orders were issued from January 2003 through April 2003. 
This set of Orders addressed access control, physical barriers, 
training and qualification programs--as well as work-hour limits--or 
security personnel, capabilities to defend against more challenging 
threats, and spent fuel storage and transportation. For the 
requirements relating to the supplemental threat characteristics, 
additional site-specific analyses were required. NRC licensees 
implemented these orders by October 29, 2004. Licensee measures to 
address supplemental threat characteristics were evaluated immediately 
upon submission, and implementation continues to be inspected by a 
variety of means.
    The NRC is currently developing a proposed rule and supporting 
guidance to codify supplemental requirements related to the Design 
Basis Threat (DBT). The proposed rule, due to the Commission in June 
2005, is expected to be issued later this year for public comment, and 
the final rule is scheduled for completion in 2006. Also, we have 
redefined our baseline inspection program for physical protection and 
are phasing in the new inspection program consistent with the new 
requirements at power reactors. As a complement to licensee security 
measures, NRC is working with DHS and the Homeland Security Council, as 
well as other partners to enhance the integrated Federal, State, and 
local response planning for threats and attacks on nuclear facilities. 
We are also supporting DHS's comprehensive review of security and 
emergency preparedness of nuclear power plant sites under the National 
Infrastructure Protection Plan.
    The NRC has completed a set of security assessments and identified 
mitigation strategies for NRC-licensed nuclear facilities. Thus far, 
the results of these assessments have validated the actions NRC has 
taken to enhance security as well as areas needing further 
improvements. These efforts have continued to affirm the robustness of 
these facilities, the effectiveness of redundant systems and defense-
in-depth design principles, the value of existing programs for operator 
training in severe accident management strategies, and emergency 
preparedness. Assessments performed to date confirm the low likelihood 
of damaging the reactor core and releasing radioactivity that could 
affect public health and safety.
    Further, these assessments confirm that even in the unlikely event 
of a radiological release due to terrorist activities, the NRC's 
emergency planning basis remains valid. These assessments 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 likely result in a 
release of radioactive material. Thus, we believe that measures 
implemented with respect to nuclear power plant safety, security, and 
emergency planning programs continue to provide reasonable assurance of 
adequate protection of the public health and safety. We are continuing 
to perform detailed plant-specific studies to further enhance our 
understanding of appropriate mitigative capabilities and to ensure 
effective implementation of these capabilities.
    We continue to implement the force-on-force exercise inspection 
program to evaluate licensees' defensive capabilities and identify 
areas for improvement. In late 2004, NRC began full implementation of a 
triennial force-on-force exercise program for power reactors following 
a pilot force-on-force exercise program. The triennial force-on-force 
exercise program applied lessons learned from the pilot program and 
additional enhancements including the use of Multiple Integrated Laser 
Enhancement System (MILES) equipment, Composite Adversary Force (CAF) 
standards, improved controller training, and other enhancements to 
improve the realism of the exercises while maintaining safety of both 
the plant and personnel.
    We have reviewed the Wackenhut Corporation's program for the CAF 
for force-on-force exercises, including the hiring and training of new 
members in accordance with the CAF standard established by the NRC. The 
review found that the Wackenhut Corporation's program meets the NRC's 
CAF standard, confirmed that appropriate management and administrative 
controls were in place within the Wackenhut organization to provide 
adequate independence between the CAF and nuclear guard force, and that 
some CAF members are selected from sites where security is provided by 
Wackenhut's competitors. Experience with recent force-onforce exercises 
has proven the existing CAF to be a significant improvement in ensuring 
a uniform high quality for mock-terrorist attack exercises.
    In relation to the study conducted by the National Academy of 
Sciences (NAS), the U.S. Congress directed the NRC to take the 
necessary steps to improve the analyses related to spent nuclear fuel 
storage at commercial reactor sites, including the preparation of site-
specific modals, and to ensure timely application of this information 
by the utilities to mitigate risks. The NRC has taken numerous actions 
to enhance the security-of spent nuclear fuel. The results of security 
assessments completed to date show that storage of spent fuel continues 
to be safe and secure. Nonetheless, the Commission agrees with the NAS 
recommendation that plant-specific analyses are needed and the NRC is 
conducting them and continuing to improve its analyses related to spent 
nuclear fuel.
 Material Security
    Since September 11, 2001, the NRC has thoroughly re-evaluated its 
safeguards and security programs. To date, has issued over 16 different 
categories of Orders and Confirmatory Action Letters covering hundreds 
of licensees and actions involving radioactive materials of greatest 
concern. The NRC continues to devote considerable effort to determining 
what additional actions should be used to enhance the security of these 
materials in use, in storage, or in transport. The emphasis of this 
effort is on preventing the use of radioactive materials that have the 
potential to pose a risk to public health and safety if used in a 
radiological dispersal device or a radiological exposure device (RDD/
RED).
    The Commission, in coordination with our Department of Energy (DOE) 
colleagues, has taken the following actions to improve the security of 
radioactive sources of greatest concern: (1) issued advisories to 
licensees to enhance security measures; (2) issued the DOE/NRC 
Interagency Working Group Report on RDD/REDs, which defined threshold 
quantities for radioactive materials that are the highest risk and have 
a potential for malevolent use; (3) worked with the Departments of 
Energy and State and the international community to reach agreement on 
which radioactive materials and sources are of the greatest concern, 
consistent with the International Atomic Energy Agency (IAEA) Code of 
Conduct on the Safety and Security of Radioactive Sources; (4) approved 
a final rule amending its export and import regulations, in 
coordination with the Departments of State, Energy, and Homeland 
Security, to impose more stringent controls over the Category I and 
Category II materials defined by the IAEA Code of Conduct; (5) is 
developing a National Source Tracking System to track radioactive 
materials of greatest concern specified in the IAEA Code of Conduct on 
a permanent basis; and (6) developed an interim data base of Category I 
and II radioactive sources for both NRC and Agreement State licensees 
which will be maintained until the National Source Tracking System is 
complete.
                  emerqency preparedness and response
    NRC recognizes the importance of the integration of safety, 
security, and emergency preparedness and response to fulfill the 
primary NRC mission of protecting public health and safety. Since 
September 11, 2001, the NRC has increased its focus on potential 
terrorist scenarios as initiating events. As part of the Orders issued 
in February 2002, the NRC required nuclear power plant operators to 
make enhancements in several areas of emergency preparedness, including 
emergency response facilities, emergency response organizations, 
classification of and response to credible threats, and evaluation of a 
broader range of hazards. Nuclear industry groups and Federal, State, 
and local government agencies have taken an active role in the prompt 
implementation of these measures and have participated in drills and 
exercises to test new planning and response elements.
    The NRC conducted a formal evaluation of the emergency preparedness 
planning basis in view of the current threat environment and determined 
that emergency preparedness at nuclear power plants remains strong. 
Improvements have been made in the areas of communications, resource 
management, emergency exercise programs, and NRC guidance documents 
used by licensees. These improvements are reviewed and inspected. 
Recently, the Commission directed the staff to issue a generic 
communication to licensees to further enhance emergency preparedness in 
the post 9/11 environment. The NRC intends to conduct outreach 
activities with external stakeholders, especially state and local 
government agencies, to describe the enhancements and solicit feedback 
on these changes and other emergency preparedness and response issues 
of mutual interest.
    The NRC has also implemented the National Response Plan on 
schedule. Between October 2004 and January 2005, NRC staff briefed over 
400 industry and government stakeholders in all four NRC regions on the 
implementation of the National Response Plan and the National Incident 
Management System.
                           materials program
    The NRC, in partnership with the 33 Agreement States, conducts 
comprehensive programs to ensure the safe use of radiological materials 
in a variety of medical, industrial and research 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.
    The NRC is developing a web-based materials licensing system that 
is expected to provide a secure method for licensees to request 
licensing actions and to view the status of licensing actions. In 
addition, the NRC, with assistance from other Federal agencies and the 
States, is establishing a National Source Tracking System that will be 
used to monitor radioactive sources that warrant the greatest control. 
The implementation of the National Source Tracking System continues to 
be a high-priority effort, and this project remains on schedule to be 
operational in 2007.
    The Commission has also implemented a major rule change related to 
large fuel cycle facilities which 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 use the requirements of the new rule. These 
licensing reviews include two proposed commercial gas centrifuge 
uranium enrichment facilities.
    The first of these proposed enrichment facilities 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. USEC then submitted its application to the NRC 
for its site in Piketon, Ohio, in August 2004. The NRC staff expects to 
complete its review of the Louisiana Energy Services' application and 
issue both the Final Environmental Impact Statement and the Safety 
Evaluation Report next month. The NRC staff review of USEC's 
application is well underway, and the staff is working to meet the 
established thirty-month schedule.
    In March 2005, NRC staff authorized construction of a mixed oxide 
(MOX) fuel fabrication facility at the Savannah River site in South 
Carolina as part of the DOE's program to dispose of excess weapons 
grade plutonium. At present, an adjudicatory proceeding concerning 
construction authorization for the facility is before the Commission's 
Atomic Safety and Licensing Board. The NRC 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 7 fuel facilities in California, North Carolina, South 
Carolina, Tennessee, Virginia, and Washington. NRC's oversight of these 
facilities includes licensing actions, inspection, enforcement, and 
assessment of licensee performance.
    NRC also authorized Duke Energy Corp. to use four MOX fuel 
assemblies, containing uranium and plutonium, as part of the nuclear 
fuel at its Catawba nuclear power plant in South Carolina. The MOX fuel 
assemblies designed for use in the Catawba reactor were produced by 
combining surplus plutonium from dismantled U.S. nuclear weapons with 
uranium into a form that can be used by commercial nuclear power 
plants. This usage of the MOX fuel assemblies at Catawba is the first 
use of MOX fuel in a commercial power reactor as part of the ongoing 
U.S.-Russian plutonium disposition program being implemented by the 
DOE.
                         nuclear waste program
    The NRC has made significant progress on activities related to 
protecting public health and safety in relation to disposal of nuclear 
waste. A major focus of these activities has been, and continues to be, 
ensuring that the agency is prepared to review a potential application 
by DOE to construct a deep, geologic, high-level radioactive waste 
repository at Yucca Mountain, Nevada. The Nuclear Waste Policy Act 
requires the NRC to complete its safety review of a license 
application, conduct a public hearing before an independent licensing 
board, and issue a decision on construction authorization in 3 years 
after submittal, with a possible extension to 4 years.
    In July of 2004, the D.C. Circuit Court of Appeals vacated the 
10,000-year compliance period established by the Environmental 
Protection Agency (EPA) and incorporated in NRC's regulations for Yucca 
Mountain. As required by the Nuclear Waste Policy Act, the NRC stands 
ready to amend its regulations consistent with any forthcoming changes 
to the EPA standards for Yucca Mountain.
    In anticipation of a DOE license application for Yucca Mountain, 
the NRC has prepared an electronic hearing system to conduct potential 
public hearings related to potential construction of a high-level 
radioactive waste repository at Yucca Mountain. An electronic 
information technology system data base has been developed to catalogue 
and allow public access to the vast array of complex documents 
involved. A hearing facility has been constructed near Las Vegas, 
Nevada.
    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 proposed Private Fuel Storage ISFSI in Utah is the subject of an 
ongoing adjudicatory proceeding. Indeed, our workload related to ISFSIs 
and dry cask storage will require continued technical review and 
licensing and inspection resources as the number of licensed ISFSIs 
will increase from 34 currently to approximately 50 by 2008. The NRC 
also began development of the Package Performance Study to confirm the 
suitability of spent nuclear fuel transportation casks. The study will 
involve testing the integrity of a full-scale transportation rail cask. 
In addition, NRC is supporting a study by the National Academies' Board 
on Radioactive Waste Management that is examining radioactive material 
transportation, with a primary focus on the technical and societal risk 
of spent fuel transportation.
    NRC staff is also continuing to make significant progress in 
ensuring the safe decommissioning of contaminated sites. During fiscal 
year 2004, the staff identified several policy issues requiring 
Commission direction that will help expedite safe decommissioning under 
NRC's License Termination Rule. The Commission has provided the 
necessary guidance to the staff for regulatory actions to be taken 
during fiscal year 2005-2007 under the staff's Integrated 
Decommissioning Improvement Plan. These regulatory improvements will 
facilitate decommissioning at existing sites and should reduce problems 
at future decommissioning sites.
    Program management changes will also be completed this year that 
will improve the efficiency and effectiveness of the program. Finally, 
we are completing the oversight of the decommissioning of a number of 
reactor and complex materials sites this year.
                         international program
    The NRC also carries out an active international program of 
cooperation and assistance involving thirty-eight countries with which 
it exchanges nuclear safety information. This program provides health 
and safety information and assistance to other countries to develop and 
improve regulatory organizations and overall nuclear safety and 
security worldwide. The NRC continues to strongly support multilateral 
programs for enhancing the level of nuclear safety worldwide, and 
serves in leadership roles on the technical committees that develop and 
monitor best practices, and in implementing certain treaties and 
conventions that encourage the wider adoption of basic standards and 
practices. It is worth noting that we just released the Export and 
Import Rulemaking, which will enable the U.S. to meet its goal with the 
G-8 to implement the export-import provisions of the IAEA Code of 
Conduct by December 2005.
                             human capital
    As you know, the NRC is very dependent on a highly skilled and 
experienced work force for the effective execution of its activities. 
The Commission has developed and implemented a strategic workforce 
planning system to identify and monitor its human capital assets and 
potential critical skills shortages, and to promote employee 
development, succession planning, and retention. 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 a fellowship and scholarship program and identify 
a significant number of diverse, highly qualified entry-level 
candidates through participation in recruitment events and career 
fairs.
    NRC has developed an agency wide set of strategic human capital 
management strategies to mitigate and close gaps between available 
staffing resources and anticipated staffing needs. NRC is utilizing a 
variety of recruitment and retention incentives and offers a wide range 
of technical and professional training to attract and retain staff to 
remain competitive with the private sector.
    Additionally, planning for and developing the agency's future 
leaders is a critical part of our approach for managing human capital. 
The NRC's strategic long-range human capital planning includes: 
succession planning (both managerial and technical); partnerships/
cooperative ventures with other stakeholders (e.g., academia, other 
agencies, national laboratories, private groups) to develop talent 
supply; continuous improvements to recruitment and training processes, 
such as the NRC legislative proposals submitted to the Congress on 
Marcn 30, 2005; a robust Knowledge Management Program; and 
organizational infrastructure improvements that include the rental of 
office space, workstation configuration and equipment, security 
clearances, and associated information system needs.
    The Commission is very much encouraged by S. 858, the bill recently 
introduced in the Senate which contains the provisions that would help 
the NRC to expand the pool of prospective employees who have the skills 
to carry out the agency's tasks, employ former Federal employees who 
have the skills that are critical to the performance of the 
Commission's duties, and encourage institutions of higher education to 
train their students in the skills needed to carry out NRC's work. We 
believe these provisions would significantly contribute to assuring the 
necessary regulatory expertise required by the NRC to accomplish its 
regulatory mission. We strongly urge the Congress to enact the human 
capital provisions in S. 858 into legislation.
                                 budget
    The NRC proposed a fiscal year 2006 budget of $702 million, which 
is a budget increase of approximately 5 percent ($32 million) over the 
fiscal year 2005 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 55 percent ($17.7 million) of the 
increase is for the nuclear reactor safety program to strengthen 
reactor inspection activities and keep pace with licensing needs of 
existing nuclear reactor facilities. An increase of $2.5 million 
supports our responsibilities for oversight of certain DOE 
wasteincidental-to-reprocessing, as required by Section 3116 of the 
Ronald W. Reagan National Defense Authorization Act of fiscal year 
2005. The remaining increase is to fund Federal pay raises and other 
non-discretionary compensation mid benefit increase.
    The NRC's fiscal year 2006 budget includes approximately $69.1 
million to support high-level waste activities. These activities 
include license application review, hearings, and inspection and 
performance confirmation oversight activities, reflecting DOE's 
anticipated license application for the Yucca Mountain waste repository 
in December 2005. The Package Performance Study, to confirm the 
suitability of spent nuclear fuel transportation casks, is also 
included.
    The NRC's proposed fiscal year 2006 budget request includes $37 
million for the NRC's continuing work on new reactor licensing, 
including review of the three early site permit applications, review of 
two standard design certification applications, and development and 
updating of the agency's regulatory structure to accommodate new, 
advanced reactor designs. The demand for new reactor licensing is now 
expected to grow more rapidly than previously anticipated and budgeted. 
As stated previously, the NRC may be faced with a significant increase 
in its workload for new reactor licensing, including receipt of up to 
five combined license applications beginning in 2007-2008, which 
creates additional demands on the NRC. The Commission notes that the 
House Appropriations Committee provided an increase of $21 million over 
the agency's budget request to address the increased security workload.
    On March 17, 2005, the NRC submitted proposed legislation which 
would authorize appropriations for fiscal year 2006. The proposed 
legislation included two provisions related to financing the budget. 
One would make permanent the NRC's 90 percent fee recovery requirement 
beginning in fiscal year 2006. Absent this legislation the NRC would 
only be authorized to collect 33 percent of its budget authority in 
fees after fiscal year 2005. Another provision would permit the NRC to 
assess and collect fees from other Federal agencies for licensing and 
inspection services rather than recovering those costs through annual 
fees assessed to private sector licensees. We are pleased that both are 
incorporated in the provisions of S. 858.
                           legislative needs
    The NRC urges the enactment of key legislative provisions needed to 
augment its oversight of such facilities and materials, and to enhance 
NRC's effectiveness and efficiency. As indicated earlier, the 
Commission strongly supports legislation that would contribute to the 
maintenance of the regulatory expertise required by the NRC to 
accomplish its regulatory mission. Most of the provisions in question 
have already been incorporated into legislation introduced in the 
Senate this year.
    Several provisions contained in S. 864, the Nuclear Safety and 
Security Act of 2005, are particularly important to further enhance the 
nuclear safety and security of facilities and materials that are 
regulated by the NRC. They are: (1) authorization of the Commission to 
allow security personnel engaged in the protection of designated 
nuclear facifties, radioactive material, and other property owned or 
possessed by an NRC licensee or certificate holder to possess and use 
more robust weapons for carrying out their official responsibilities, 
(2) amendment of the Atomic Energy Act to expand the requirements for 
fingerprinting, for criminal history record checks, (3) making 
unauthorized introduction of weapons into NRC-regulated facilities a 
Federal crime, and (4) making it a Federal crime to sabotage commercial 
nuclear facilities, fuel, or Commission-designated material or property 
not previously covered by the sabotage section of the Atomic Energy Act 
(section 236), and extending coverage to the construction period of all 
facilities addressed by that section.
    In addition, the Commission believes that public health and safety 
and the promotion of the common defense and security would be enhanced 
by NRC regulatory jurisdiction over accelerator-produced and certain 
other radioactive material. Such a provision was included in an omnibus 
bill that the Commission submitted to the Congress at the end of March 
of this year, but it has not been incorporated into any of the bills 
whose provisions are discussed here.
    Various provisions that would enhance NRC effectiveness and 
efficiency are contained in Title II of S. 858, the Nuclear Fees 
Reauthorization Act of 2005. These include the following: (1) 
clarification of the period of the license in the case of a combined 
construction and operating license for a nuclear power plant, (2) 
elimination of NRC's antitrust review authority with respect to pending 
or future applications for a license to construct or operate a 
commercial utilization or production facility, (3) permanent extension 
of NRC's authority to collect approximately 90 percent of its budget 
authority in fees, as noted earlier, (4) authorization of NRC to assess 
and collect fees from other Federal agencies for services provided to 
them, as noted earlier, and (5) clarification that the existence of an 
organizational conflict of interest does not bar NRC from entering into 
a contract or other arrangement for work to be performed at a DOE 
laboratory, if the Commission determines that the conflict of interest 
cannot be mitigated and that adequate justification exists to proceed 
with the arrangement. The NRC strongly supports these provisions.
    Key provisions relating to maintaining and improving the NRC's 
regulatory expertise are contained in Title III of S. 858, as noted 
earlier. Prominent among these are provisions that would help the NRC 
to expand the pool of prospective employees who have the skills to 
carry out the agency's tasks, by enabling the agency to employ former 
Federal employees who have skills that are critical to the performance 
of the Commission's responsibilities, and encouraging institutions of 
higher education to train their students in the skills needed to carry 
out NRC's work. The Commission strongly supports all the provisions of 
Title III of S. 858.
    S. 858 also contains provisions that would enhance NRC's ability to 
recruit appropriate individuals for NRC employment. These provisions 
would permit NRC to purchase promotional items of nominal value; 
provide transportation, lodging, and subsistence allowances to student 
interns hired by the NRC; and establish a scholarship and fellowship 
program to enable undergraduate and graduate students, respectively, to 
pursue education in science, engineering, or another field of study 
that the Commission determines to be critical to the NRC's regulatory 
mission. The Commission also supports the enactment of these 
provisions.
    In addition, the Commission supports the enactment of S. 865, 
extending the Price-Anderson Act as it applies to NRC licensees.
                               conclusion
    The Commission continues to be committed to 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 will continue to address existing and 
emergency activities within our mandate from Congress in a pro-active 
and thorough manner.
                                 ______
                                 
 Responses of Nils J. Diaz to Additional Questions from Senator Inhofe
    Question 1. Last year I asked a question about the potential 
increase in efficiencies and resource allocation if the NRC were to 
consolidate the regional offices' functions into the NRC headquarters. 
Would the NRC function more efficiently if we consolidated the regional 
functions, keeping the resident inspectors in place? This could 
eliminate some redundancy in overhead and help provide Headquarters 
with the experienced staff they need. What have been the results been 
of that review?
    Response. The NRC has considered consolidating the employees at the 
4 regions to headquarters. The most recent Commission review on the 
subject of regional consolidation was conducted 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 NRC's response to the report 
noted that the Commission believes that, in the context of its mission, 
a strong regional presence is essential for the effective 
implementation of the agency's health, safety, and security programs. 
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 Commission continues to believe that public health and safety 
are better served with critical NRC expertise located closer to the 
geographical area where our licensed activities occur. 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. Each of the four regional offices oversee 21 to 32 
operating reactors, which enables the NRC to rapidly deploy its 
personnel in response to incidents and emergencies in four different 
geographical locations. Homeland security initiatives and objectives 
provide additional compelling reasons for maintaining 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. Region-based inspectors are 
an essential complement to the resident inspector corps. Members of 
this group possess specialized expertise to perform more in-depth 
inspections and assessments in individual program areas, including a 
licensee's security-related facilities, equipment, procedures, 
training, and exercises.
    The NRC's regional structure aligns well with the Administration's 
emphasis on close communication 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 helping to ensure openness in its regulatory process. As a result 
of these interactions with local and state officials, as well as the 
public, regional staff become more sensitive to specific issues and 
concerns of interest to those stakeholders. With new reactor siting and 
construction expected in a few years, the regional offices will play an 
important role in the inspection of the construction activities, 
interacting with the local and state governments, and responding to 
local citizens' concerns.
    Finally, although our most recent review is 2 years' old, the 
Commission is aware of no information that would be contrary to the 
2003 report to Congress. The only substantial change is the apparent 
large increase in housing costs in the Washington, DC, area which would 
drive up costs and probably result in the loss of many staff at a time 
when NRC can least afford to lose staff.
    The Commission continues to look for efficiencies in other aspects 
of the operation of its regional offices. For example, the Commission 
recently consolidated the NRC's inspection and oversight responsibility 
for all major fuel cycle facilities in its Region II office in Atlanta, 
while consolidating responsibility for the inspection and licensing of 
the materials licensees located in Regions I and II in its King of 
Prussia, Pennsylvania, office.

    Question 2. Some witnesses today will express concern with NRC's 
oversight and enforcement of security requirements at nuclear 
facilities--what assurances can you provide this committee that not 
only are you taking the steps to ensure that security standards are 
robust, but also that the Commission is taking the necessary steps to 
ensure that these standards that you have set are being met by the 
licensees?
    Response. Nuclear power facilities have long been and continue to 
be among the most robust and best protected commercial structures in 
this country. The NRC regulations require that the licensees be able to 
protect their facilities with high assurance against acts of 
radiological sabotage or theft of nuclear material by a determined 
adversary. The Design Basis Threat or DBT provides a reasonable 
characterization of the threat against which physical security programs 
are developed. The DBT is based on an extensive analysis of current and 
projected terrorist capabilities and was arrived at in coordination 
with the Intelligence Community, law enforcement agencies, and State 
and local governments. We continuously monitor threats in the United 
States and abroad and can and will revise the DBT as necessary and 
appropriate. After the terrorist attacks of 9-11, NRC issued Orders to 
supplement the DBTs for nuclear power facilities and Category I fuel 
cycle facilities and will shortly initiate rulemaking to more formally 
revise the DBTs to reflect the post 9-11 environment.
    There are many Federal agencies working on preventing and 
protecting against terrorist attacks. The significant increase in 
aviation security since 9-11 goes a long way toward protecting the 
United States, including nuclear facilities, from an aerial attack. In 
February 2002, the NRC directed nuclear power plant licensees to 
develop specific plans and strategies to respond to a wide range of 
threats, including the impact of an aircraft.
    The NRC conducts regular inspections to ensure that reactor 
licensees are in compliance with NRC security requirements. The agency 
also has expanded its Force-on-Force exercise program in which it tests 
the ability of the licensees to defend their facilities against 
commando-type terrorist attacks. In 2003 and 2004, the NRC completed 
inspections of licensees' implementation of the power reactor security, 
access authorization, and fatigue Orders to verify that licensees were 
complying with these requirements. Beginning in late 2004 and 
continuing through 2005, the NRC is inspecting licensees' 
implementation of the DBT and security guard training Orders.
    The NRC has permanently assigned resident inspectors at operating 
power reactor sites who inspect and assess all areas of a licensee's 
programmatic performance. The NRC also has, at its four regional 
offices and headquarters office, additional inspectors who possess 
specialized expertise to perform more in-depth inspections and 
assessments in individual program areas, including a licensee's 
security-related facilities, equipment, procedures, training, and 
exercises. The results of inspections and licensee performance 
indicators are integrated and evaluated against performance metrics 
under the NRC's Reactor Oversight Program.
    In the area of nuclear materials security, the NRC has thoroughly 
reevaluated its safeguards and security programs since 9-11. To date, 
the NRC has issued over 16 different categories of Orders and 
Confirmatory Action Letters covering hundreds of licensees and actions 
involving radioactive materials of greatest concern. The emphasis of 
this effort has been on preventing the use of radioactive materials 
that have the potential to pose a risk to public health and safety in a 
radiological dispersal device or a radiological exposure device (RDD/
RED). The Commission, in coordination with our Department of Energy 
(DOE) colleagues, has taken the following actions to improve the 
security of radioactive sources of greatest concern:
     Issued advisories to licensees to enhance security 
measures;
     Issued the DOE/NRC Interagency Working Group Report on 
RDD/REDs, which defined threshold quantities for radioactive materials 
that are the highest risk and have a potential for malevolent use;
     Worked with the Departments of Energy and State and the 
international community to reach agreement on which radioactive 
materials and sources are of the greatest concern, consistent with the 
International Atomic Energy Agency (IAEA) Code of Conduct on the Safety 
and Security of Radioactive Sources;
     Approved a final rule amending its export and import 
regulations, in coordination with the Departments of State, Energy, and 
Homeland Security, to impose more stringent controls over the Category 
I and Category II materials defined by the IAEA Code of Conduct;
     Begun development of a National Source Tracking System to 
track radioactive materials of greatest concern specified in the IAEA 
Code of Conduct on a permanent basis; and
     Developed an interim data base of Category I and II 
radioactive sources for both NRC and Agreement State licensees which 
will be maintained until the National Source Tracking System is 
complete.

    Question 3. The NRC has taken a number of steps to increase 
security at power plants. With this latest upgrade of the DBT, is it 
correct to say that you have asked all that should be asked of 
licensees under the current threat condition? It is vital that we 
provide certainty to the licensees so that they can implement the 
requirements and train for these conditions. Can you assure me that we 
are at a stage where that certainty exists?
    Response. The NRC has required that its licensees be able to 
protect nuclear power plants with high assurance against acts of 
radiological sabotage by a determined adversary. The Design Basis 
Threat or DBT provides a reasonable characterization of the threat 
against which physical security programs are developed. The DBT is 
based on an extensive analysis of current and projected terrorist 
capabilities and was arrived at in coordination with the Intelligence 
Community, law enforcement agencies, and State and local governments. 
We continuously monitor threats in the United States and abroad and can 
and will revise the DBT as necessary and appropriate. After the 
terrorist attacks of 9-11, NRC issued Orders to supplement the DBTs.
    With the comprehensive actions to enhance security since September 
2001, the Commission believes it has now achieved a level of greater 
certainty and stability in expectations for licensees as well as high 
assurance of protection of nuclear power plants. Accordingly, the 
Commission is proceeding to codify DBT enhancements for current and 
future licensees by rulemaking.
    The NRC took a multi-pronged approach to enhance security at 
nuclear power plants, including:
     Ordered plant owners to sharply increase physical security 
programs to defend against a more challenging adversarial threat;
     Required more restrictive site access controls for all 
personnel; Enhanced communication and liaison with the Intelligence 
Community;
     Ordered plant owners to improve their capability to 
respond to events involving explosions or fires;
     Enhanced readiness of security organizations by 
strengthening training and qualifications programs for plant security 
forces;
     Required vehicle checks at greater stand-off distances;
     Enhanced Force-on-Force exercises to provide a more 
realistic test of plant capabilities to defend against an adversary 
force; and
     Improved liaison with Federal, State, and local agencies 
responsible for protection of the national critical infrastructure 
through integrated response training.
    The major requirements were implemented by licensees on October 29, 
2004. Those requirements include physical security improvements 
necessitated by the supplemented DBT and Orders. The NRC routinely 
inspects the licensee's physical security measures as part of its 
baseline inspection program and conducts Force-on-Force exercises to 
assess the effectiveness of licensee's security programs. In addition, 
the NRC has initiated an oversight program to confirm that the measures 
implemented and pertinent mitigative strategies are in place. The 
program consists of 3 phases: inspection of the February 25, 2002 
Orders, site-specific assessment of spent fuel pools, and site-specific 
assessments of reactors. The final phase will be completed in June 
2006.

    Question 4. It is my understanding that the NRC has been moving 
ahead with its plan to change its regulatory process to one that is 
risk-informed and performance-based. This is a process that is strongly 
supported by industry as well as by some of your critics. Would you 
explain to me where the NRC is at regarding this process and are you 
moving quickly on fully implementing this process change?
    Response. The NRC is making significant strides toward its 
objectives of fully integrating risk-informed regulation into its 
safety decisionmaking framework, most notably through efforts to risk-
inform its Reactor Oversight Process and reactor and materials 
regulations. By providing more safety-focused regulations and more 
objective processes, which the NRC initiated in the mid-1990s through 
the probabilistic risk assessment (PRA) Implementation Plan and PRA 
Policy Statement, the NRC can and is achieving significant improvements 
in safety.
    Recent examples include:
    (1) In June 2004, the NRC amended its fire protection requirements 
for nuclear power plants to allow licensees to adopt a new set of 
requirements that incorporates risk insights. The rule endorses the 
National Fire Protection Association Standard No. 805, ``Performance-
Based Standard for Fire Protection for Light Water Reactor Electric 
Generating Plants, 2001 Edition.'' The new rule maintains safety and 
provides flexibility to existing requirements.
    (2) In November 2004, the NRC amended the regulations to provide an 
alternative approach to establishing requirements for treatment of 
structures, systems, and components (SSCs) for nuclear power reactors 
using a risk-informed method for categorizing SSCs according to their 
safety significance. The categorization process uses a blend of 
deterministic and risk insights to develop an integrated assessment of 
the safety significance of particular SSCs and then specifies 
requirements commensurate with the significance.
    (3) Currently, the Commission is considering the merits of a 
proposed amendment to the regulations that would provide a risk-
informed alternative to the current requirements associated with the 
maximum reactor coolant system pipe break size that must be considered 
within the design basis of the plant under 10 CFR 50.46 (Emergency Core 
Cooling System Acceptance Criteria). The amendment is structured to 
allow and encourage operational as well as design safety improvements.
    (4) In the nuclear material and waste arenas, the NRC has developed 
a generic framework for risk-informed regulation which facilitates 
identifying areas where risk-informed regulatory changes would be 
beneficial. This approach was designed to focus agency and licensee 
resources on areas commensurate with their importance to safety.
    (5) In the area of decommissioning, guidance is being developed to 
use a graded approach to institutional controls, more realistic 
exposure scenarios, and risk-ranking of facilities for inspections.
    (6) In the area of high-level waste, the NRC has produced the Yucca 
Mountain Review Plan to provide guidance for performing a risk-informed 
review of a license application and a Risk Insights Baseline Report as 
a common reference for risk-informed issue resolution.
    (7) The risk-informed and performance-based revision of Subpart H, 
``Additional Requirements for Certain Licensees Authorized to Possess a 
Critical Mass of Special Nuclear Material,'' to 10 CFR Part 70, 
``Domestic Licensing of Special Nuclear Material,'' requires existing 
fuel cycle licensees to perform Integrated Safety Analyses of their 
facilities.
    (8) A multi-phased risk-informed review of nuclear byproduct 
materials regulatory programs has resulted in revision of the 
inspection program to concentrate on higher risk activities; and 
revisions to regulations and licensing guidance are underway.
    (9) The Commission, realizing the regulatory experience gained and 
utilizing the extensive body of existing know how, instructed the 
staff, under Staff Requirements Memorandum of May 9, 2005, to proceed 
with risk-informing 10 CFR Part 50, ``Domestic Licensing of Production 
and Utilization Facilities.''

    Question 5. During the hearing, I asked you to comment on GAO 
recommendations and what the NRC has done in response.
    Response. At the Senate Environment and Public Works Committee 
oversight hearing held on May 26, 2005, GAO testified that based on its 
analyses, it believes NRC has improved its operations in recent years 
in a number of ways. Nevertheless, GAO's testimony indicated that NRC 
needs to take additional actions to better fulfill its mission, and 
that it had made associated recommendations for improvement in seven 
reports issued during the past 2 years.
    NRC generally agrees with GAO that some improvements are 
appropriate, and we did disagree with some of GAO's findings and 
recommendations for various reasons. In each case, NRC's rationale is 
documented in written comments on the draft reports, and in the written 
statements to Congress submitted in accordance with 31 U.S.C. 720 on 
final report recommendations. In addition, NRC has described the 
progress made in addressing recommendations in its annual reports to 
Congress as required by Section 236 of Public Law 91-510, the 
``Legislative Reorganization Act of 1970.''
    The enclosure and its attachments summarize NRC's comments on 
specific report recommendations from the seven reports mentioned in 
GAO's testimony on May 26, 2005, NRC comments on the draft reports 
where applicable, and what NRC has done in response to the report 
recommendations.

Enclosure: GAO Reports and NRC Responses to Recommendations
            GAO Reports and NRC Responses to Recommendations
   gao-03-804, nuclear security: federal and state action needed to 
     improve security of sealed radioactive sources, august 6, 2003
    Draft Report: NRC provided comments to GAO in a letter from William 
D. Travers, NRC, to Robert A. Robinson, GAO, dated June 26, 2003 
(Attachment 1). In this letter, we informed GAO that the draft report 
did not fully present either the current status of NRC efforts to 
improve the security of high-risk radioactive sources or the large 
effort that NRC had devoted to this issue over the prior 18 months. We 
also informed GAO that the draft report reflected a limited outline of 
NRC's existing statutory framework and did not recognize that several 
recommendations would require statutory changes at both Federal and 
State levels. Our letter provided specific detail on the Commission's 
accomplishments and plans to improve the security of high-risk 
radioactive sources.
    Final Report: NRC's written response required by 31 U.S.C. 720 was 
provided to Rep. Tom Davis, et al., on February 4, 2004 (Attachment 2). 
In this letter, we informed Congress that NRC agreed with several of 
the recommendations and that we had already taken steps to implement 
those recommendations (and in several cases, implementation occurred 
before the GAO performed its review) as improvements in our regulatory 
programs. However, as stated in our June 26, 2003 comments on the draft 
report, we reiterated that the final report did not fully present 
either the current status of NRC efforts to improve the security of 
high-risk radioactive sources or the large effort we devoted to this 
issue prior to GAO publishing the report. We stated our continued 
belief that the level of health risk posed by the various sources 
should be the determining factor for application of security measures, 
and that other factors, such as psychological, social, and economic 
costs, can vary from region to region and over time and, thus, provide 
a less stable measure for establishing necessary security measures. The 
letter's enclosure provided our responses to the specific 
recommendations of the report.
    Annual Reports to Congress: Since providing our written statement 
to Congress on the final report, NRC's has reported twice to Congress 
on the progress of our actions in response to the report 
recommendations, as required by Section 236 of Public Law 91-510. 
Please refer to our CY 2003 report (Attachment 13) and CY 2004 report 
(Attachment 14).
  gao-03-752, nuclear regulatory commission: oversight of security at 
commercial nuclear power plants needs to be strengthened, september 4, 
                                  2003
    Draft Report: NRC provided comments to GAO in a letter from Nils J. 
Diaz , NRC to James Wells, GAO dated August 7, 2003 (Attachment 3). In 
this letter, the Commission informed GAO of its concern that the draft 
report did not provide an appropriately balanced or very useful 
perspective of the NRC's role in ensuring nuclear power plant security. 
The Commission recognized that the report accurately described some of 
the legal challenges that exist, but pointed out that it failed to 
fully recognize the significant effort the NRC has made in the post-
September 11, 2001 environment to strengthen what was already a very 
robust security program. The Commission also commented that the draft 
report's emphasis on non-cited violations as ``minimizing'' the 
significance of security problems was a serious misrepresentation and 
that the individual anecdotal issues noted in the report were 
appropriately treated within NRC's enforcement process. This letter 
also noted that the key issues identified in GAO's draft report were 
relatively minor, that the issues had already been identified by the 
NRC before the review was initiated, and that corrective actions for 
these issues either had been completed or were nearly complete. On 
August 15, 2003, NRC provided more detailed comments on the draft 
report to address issues of correctness, currentness, and clarity 
(Attachment 4).
    Final Report: NRC's written response required by 31 U.S.C. 720 was 
provided to Rep. Edward Markey, et al., on October 23, 2003 (Attachment 
5). In this letter, we informed Congress that the GAO report 
misrepresented the high level of security at these nuclear power plants 
by mischaracterizing NRC's inspection program and has not recognized 
the substantial enhancements of security at NRC-licensed facilities, 
and that it did not adequately acknowledge the extensive actions taken 
to enhance security and the role NRC's oversight program played in 
achieving these substantial enhancements since the events of September 
11, 2001. We also informed Congress that despite considerable NRC 
effort to support GAO in the performance of its study, we were 
concerned that the report did not provide a balanced perspective and 
did not recognize the breadth and effectiveness of NRC's security 
oversight program.
    Annual Reports to Congress: Since providing our written statement 
to Congress on the final report, NRC's has reported twice to Congress 
on the progress of our actions in response to the report 
recommendations, as required by Section 236 of Public Law 91-510. 
Please refer to our CY 2003 report (Attachment 13) and CY 2004 report 
(Attachment 14).
 gao-05-1064t, nuclear regulatory commission: preliminary observations 
 on efforts to improve security at nuclear power plants, september 14, 
                                  2004
    On September 14, 2004, GAO and NRC staff testified at a House 
Subcommittee on National Security, Emerging Threats, and International 
Relations hearing on its preliminary observations regarding NRC's 
efforts improve security at nuclear power plants, particularly with 
respect to capabilities to defend against a terrorist attack.
    At that time, NRC testified that even prior to the terrorist 
attacks, NRC had required nuclear power plants to have security 
programs that included sophisticated surveillance equipment and armed 
response forces, and that these already robust security measures had 
since been supplemented with increased security patrols, additional 
security posts, increased vehicle standoff distances, improved 
coordination with law enforcement, and other measures. NRC also 
informed Congress that it had completed an extensive set of 
vulnerability assessments and strengthened safety-related mitigation 
procedures and strategies for NRC-licensed activities involving 
radioactive materials and nuclear facilities and that it had also 
revamped its force-on force mock-attack program to test licensees' 
defense against new terrorist realities. While this GAO testimony 
required no specific response from NRC, in a letter dated October 14, 
2004, from NRC Chairman, NRC, to Rep. Christopher Shays, et al. 
(Attachment 6), NRC addressed some of the Subcommittee Members' 
concerns discussed at the hearing on the security of NRC-regulated 
nuclear facilities and radioactive materials.
  gao-04-32, nuclear regulation: nrc needs more effective analysis to 
   ensure accumulation of funds to decommission nuclear power plants 
                            october 30, 2003
    Draft Report: NRC provided comments to GAO in a letter from William 
Travers, NRC, to James Wells, GAO, dated October 3, 2003 (Attachment 
7). In this letter, we informed GAO that we did not agree with its 
recommendations and provided detailed rationale: (1) NRC's practice 
with respect to analyzing decommissioning funds where nuclear power 
plants have co-owners is consistent with its internal guidance; (2) the 
NRC has a methodology that is different from GAO's for assessing 
whether funds are being accumulated appropriately; and (3) the NRC's 
practice is to review licensees who have not accumulated sufficient 
funds on a case-by-case basis.
    Final Report: NRC's written response required by 31 U.S.C. 720 was 
provided to Sen. Susan Collins, et al. on February 10, 2004 (Attachment 
8). In this letter, we informed Congress that NRC has had established a 
method that was effective in analyzing whether owners are accumulating 
sufficient funds for decommissioning. Moreover, we reported that if NRC 
determined, based on available information, that an owner did not 
appear to be on track to accumulate sufficient funds for 
decommissioning, or that an owner's present decommissioning fund 
balance did not appear to be adequate, NRC had a procedural framework 
it would use to require licensees to take appropriate corrective 
actions. We advised Congress that contrary to GAO's recommendation, NRC 
did not believe it was necessary to establish specific criteria for 
responding to unacceptable levels of decommissioning funding assurance, 
considering the complexity and range of circumstances that may arise 
with any given owner, particularly those who are subject to the 
jurisdiction of State regulatory authorities and the Federal Energy 
Regulatory Commission. In addition, we indicated that the 
implementation of specific criteria was not necessary to protect public 
health and safety.
    Annual Report to Congress: Since providing our written statement to 
Congress on the final report recommendations, to which we did not 
agree, NRC has not taken additional action. Therefore, this report's 
recommendations were not addressed in our last report (CY 2004, 
Attachment 14) to Congress on the progress of our actions in response 
to the report recommendations.
gao-04-654, nuclear regulation: nrc's liability insurance requirements 
for nuclear power plants owned by limited liability companies, may 28, 
                                  2004
    Draft Report: NRC provided comments to GAO in a letter from William 
Travers, NRC, to James Wells, GAO, dated April 29, 2004 (Attachment 9). 
In this letter, we informed GAO that the draft report accurately 
reflected the insurance system for nuclear power plants. GAO determined 
that of the 103 operating nuclear power plants, 31 were owned by 11 
limited liability companies and found that NRC requires all licensees 
for nuclear power plants to show proof that they have the primary and 
secondary insurance coverage mandated by the Price-Anderson Act. In 
addition, GAO found that NRC does not treat limited liability companies 
differently than other licensees with respect to the Price-Anderson 
Act's insurance requirements.
    Final Report: This report had no recommendations for NRC action, 
therefore, a written response from NRC was not required by 31 U.S.C. 
720.
    Annual Report to Congress: This report had no recommendations for 
NRC action. Therefore, it is not addressed in our last report (CY 2004, 
Attachment 14) to Congress on the progress of our actions in response 
to GAO report recommendations.
  gao-04-415, nuclear regulation: nrc needs to more aggressively and 
comprehensively resolve issues related to the davis-besse nuclear power 
                     plant's shutdown, may 17, 2004
    Draft Report: NRC provided comments to GAO in a letter from William 
Travers, NRC, to James Wells, GAO, dated May 5, 2004 (Attachment 10). 
In this letter, we informed GAO that the draft report did not 
appropriately characterize, or provide a balanced perspective on, NRC's 
actions surrounding the discovery of the Davis-Besse reactor vessel 
head condition or NRC's actions to incorporate the lessons learned from 
that experience into our processes. We also told GAO that NRC also does 
not agree with two of the report's recommendations, and we provided 
detailed explanations. Our letter also stated that while there were a 
number of factual errors in the draft report, we had agreed with many 
of the findings, most of which we believed were similar to the findings 
of NRC's Davis-Besse Lessons-Learned Task Force (LLTF). We also 
indicated that NRC had made significant progress in implementing 
actions recommended by the LLTF and expected to complete implementation 
of more than 70 percent of them, on a prioritized basis, by the end of 
CY 2004. Further, we stated that semiannual reports tracking the status 
of these were and would continue to be provided to the Commission until 
all items were completed, and then a final summary report would be 
issued.
    Final Report: NRC's written response required by 31 U.S.C. 720 was 
provided to Rep. Tom Davis, et al., on September 2, 2004 (Attachment 
11). In this letter, we informed of Congress of actions we had taken to 
address the report's recommendations, indicating that we believed that 
actions we had already taken with respect to two of the recommendations 
relating to determining the resource implications of the LLTF's and 
long-term tracking of implementation of the LLTF's recommendations and 
those of future task forces.
    Annual Reports to Congress: Since providing our written statement 
to Congress on the final report, NRC's has reported once to Congress on 
the progress of our actions in response to the report recommendations, 
as required by Section 236 of Public Law 91-510. Please refer to our CY 
2004 report (Attachment 14).
  gao-05-339, nuclear regulatory commission: nrc needs to do more to 
  ensure that power plants are effectively controlling spent nuclear 
                          fuel, april 8, 2005
    Draft Report: NRC provided comments to GAO in a letter from Luis 
Reyes, NRC, to James Wells, GAO, dated March 25, 2005 (Attachment 12). 
In this letter, we informed GAO that NRC had found the draft report to 
be well written and balanced, and that NRC had generally agreed with 
the conclusions reached by GAO. However, we stated that the report did 
not sufficiently acknowledge NRC actions in the material control and 
accounting (MC&A) area that were already ongoing prior to the 
commencement of the GAO review. In addition, we commented that the 
report did not make clear that the problems at Vermont Yankee were 
identified as a direct result of NRC inspection activities.
    Our letter emphasized that we believed the likelihood that an 
adversary could steal spent fuel from a spent fuel pool or storage cask 
was extremely low, given the security and radiation protection measures 
in place and the ease of ``detect-ability'' and intense, physically 
disabling radiation from spent fuel. We agreed with the conclusion that 
licensees' efforts to account for and control spent fuel were uneven; 
however, we pointed out that this knowledge also came from the NRC 
inspections and responses to a temporary inspection effort, as did the 
knowledge that the biggest problem was accounting for and controlling 
pieces of spent nuclear fuel, as opposed to assemblies. We stated that 
performance-based approaches were often more effective and efficient at 
achieving the desired outcomes than prescriptive approaches. 
Consequently, we believe that dictating how licensees were to meet the 
MC&A requirements was not necessarily the most effective and efficient 
approach.
    With respect to GAO's findings related to the timeliness of NRC 
actions, we commented that in the broader context of all NRC activities 
that needed to occur since the events of September 11, 2001, work in 
this area had been postponed by the need to devote NRC's limited 
resources to security and radiological protection areas requiring more 
immediate attention and that the report should balance its discussions 
by crediting NRC for making prioritized decisions based on a variety of 
identified factors. Although the report identifies an important 
accounting issue for fuel rod segments, it did not, in our view, 
identify a security or safety issue because there is no reason to 
conclude that any of the missing fuel segments were removed for any 
malevolent purposes.
    Final Report: NRC's written response required by 31 U.S.C. 720 has 
been developed and is under the Commission's review. We expect to issue 
it to Congress in June 2005.
    Annual Reports to Congress: After providing our written statement 
to Congress on the final report, NRC will update Congress annually on 
the progress of our actions in response to the report recommendations, 
as required by Section 236 of Public Law 91-510.

Attachments:

Attachment 1: Ltr W. Travers, NRC, to R. Robinson, GAO, dtd 6/26/03
Attachment 2: Ltr N. Diaz, NRC, to Rep. T. Davis, et al., dtd 2/4/04
Attachment 3: Ltr N. Diaz, NRC, to J. Wells, GAO, dtd 8/7/03
Attachment 4: Ltr W. Travers, NRC, to J. Wells, GAO, dtd 8/15/03
Attachment 5: Ltr N. Diaz, NRC, to Rep. E. Markey, et al., dtd 10/23/03
Attachment 6: Ltr N. Diaz, NRC, to Rep. C. Shays, et al., dtd 10/14/04
Attachment 7: Ltr W. Travers, NRC, to J. Wells, GAO, dtd 10/03/03
Attachment 8: Ltr N. Diaz, NRC, to Sen. S. Collins, et al., dtd 2/10/04
Attachment 9: Ltr W. Travers, NRC, to J. Wells, GAO, dtd 4/29/04
Attachment 10: Ltr W. Travers, NRC, to J. Wells, GAO, dtd 5/5/04
Attachment 11: Ltr N. Diaz, NRC, to Rep. T. Davis, et al., dtd 9/2/04
Attachment 12: Ltr L. Reyes, NRC, to J. Wells, GAO, dtd 3/25/05
Attachment 13: Ltr N. Diaz, NRC, to Sen. Voinovich, et al., dtd 4/6/04
Attachment 14: Ltr N. Diaz, NRC, to Sen. Voinovich, et al., dtd 4/27/05
                                 ______
                                 
Responses by Nils J. Diaz to Additional Questions from Senator Jeffords
    Question 1. The National Research Council report also highlights 
the continuing security concerns presented by spent nuclear fuel pools. 
About a third of the nuclear facilities are designed with the spent 
fuel pool above ground, including the Vermont Yankee facility in my 
state. Though the Commission will certainly have to discuss these 
issues further, what immediate steps has the Commission taken [to] 
address the risks identified in the report posed by above ground pool 
storage?
    Response. After 9-11, the NRC conducted detailed site-specific 
security assessments at four selected sites. While those studies were 
underway, the NRC took direct regulatory action to enhance safety and 
security at nuclear power plants and spent fuel pools. In February 
2002, the NRC ordered the nuclear power industry to develop and 
implement mitigation strategies to deal with structural or fire damage 
to a facility. Furthermore, the NRC also decided that additional site-
specific inspections and site-specific studies of mitigation 
capabilities should be conducted at all sites, including all spent fuel 
pools to enhance protection capabilities further. All site-specific 
spent fuel pool assessments are scheduled to be completed by the end of 
this calendar year.
    In conducting the detailed site-specific security assessments 
studies, the NRC drew on national experts from several U.S. Department 
of Energy (DOE) laboratories using state-of-the-art structural and fire 
analyses. The NRC also enhanced its ability to predict realistically 
accident progression due to the loss of large areas of reactor sites 
from fires and explosions and consequent releases of radiation to the 
environment. These studies confirm that it is very unlikely that there 
would be a significant release of radioactivity from a deliberate 
attack of a large commercial aircraft on a spent fuel pool at a nuclear 
reactor site.
    In addition, these Orders addressed both in-ground and above-ground 
spent fuel pools. The NRC issued a letter on July 29, 2004, with a 
sensitive unclassified Safeguards Information enclosure specifying 
certain mitigative measures for licensees to take to enhance their 
ability to restore and maintain effective fuel cooling if the pool or 
the overlying structure were severely damaged. The NRC met with power 
reactor licensees in February 2005 on the NRC's spent fuel pool 
mitigation measures. At the end of February 2005, power reactor 
licensees were given until May 2005 to respond to the additional 
specific recommendations. The NRC staff is currently evaluating these 
responses to ensure they meet our expectations. The staff will conduct 
inspections in September and October of this year. A final report is 
due to the Commission in December. The NRC continues to evaluate power 
reactor security, including spent fuel pool security, in Force-on-Force 
exercises, which the NRC will carry out at least once every 3 years at 
each of the power reactor sites. Licensee actions to address those 
measures will be inspected by the NRC staff later this year.

    Question 2. The last chapter of the National Research Council 
report suggests that the Commission's controls on information may be 
inhibiting security improvements. It states that representatives of the 
study team, and even of industry were frustrated by the Commission's 
restrictions on sharing data that could help with ``early actions to 
address identified vulnerabilities.'' The panel stated it was `` unable 
to examine several important issues'' related to the security of spent 
fuel, in part ``because it was unable to obtain needed information from 
the Nuclear Regulatory Commission.'' I know the real need to protect 
classified security information, but would you describe for the 
Committee your general view about the types information that must be 
shielded from the companies charged with the security of nuclear 
material and what information should be given to them.
    Response. The Commission carefully weighs all instances where 
authorized stakeholders with a need-to-know request access to sensitive 
information. The Commission's policy is to ensure that the NRC is 
striking the right balance between making information publicly 
available and withholding information for security reasons. As a 
result, the Commission established an internal task force to review 
information security and protection, including classified information, 
sensitive unclassified Safeguards Information, and other information 
that should be withheld from public disclosure. Representatives of this 
task force interacted with appropriate members of the executive branch 
in conducting its review and has made recommendations for Commission 
consideration.
    The NRC agrees that maintaining this balance is vital to 
maintaining public confidence while ensuring the appropriate levels of 
security for licensees. The Commission has taken prompt action since 
the events of September 11, 2001, in increasing the availability of 
classified and Safeguards Information with persons who have a need-to-
know, are authorized access, and can protect the information. Although 
there was some difficulty in obtaining security clearances for industry 
personnel to the right level, the NRC now has in place security 
clearances for a limited number of individuals at each power plant site 
to enhance prompt communication of classified information. To date, 
each site has an average of three individuals cleared for this purpose. 
Where the Commission has independent authority over dissemination of 
sensitive information (e.g., Safeguards Information), the NRC has moved 
forward expeditiously. In other areas (e.g., National Security 
Information), the NRC has worked carefully with industry and other 
Federal agencies to provide greater access to this information.

    Question 3. The Congressional request for the recent National 
Academy study was prompted by conflicting claims about the safety and 
security of spent nuclear fuel at power plants done by researchers at 
Princeton in 2003. Do you support NAS's call for the development of 
``maximum credible threat scenarios'' that incorporate the use of 
outside expert judgment?
    Response. While the NRC is in broad agreement with the principal 
findings of the NAS study, the NRC holds a different view regarding the 
NAS recommendation of ``maximum credible scenarios'' as the preferred 
basis for assessing safety and security. The NRC considers that the use 
of maximum-credible scenarios, particularly as described in the NAS 
study, would not be an effective approach. This method would direct 
analyses at an overly large scope of scenarios, including some 
unrealistic scenarios. Rather, the NRC believes it should focus its 
resources, as well as those of its regulated licensees, on a realistic 
spectrum of credible scenarios. Additionally, the NRC considers that 
analysis of ``bounding'' or unrealistic scenarios can lead to a 
misinterpretation of the actual risk and that this can cause confusion 
among the public and other stakeholders.
    With respect to using outside expert judgment, NRC works closely 
with the Department of Homeland Security, FBI, and other intelligence 
agencies to continually evaluate information from experts in the 
homeland security, law enforcement and intelligence communities to 
determine the threat to facilities licensed by the NRC, including those 
storing spent nuclear fuel, and evaluating potential risks and 
vulnerabilities associated with these facilities. The NRC has also 
involved outside experts from national laboratories onsite-specific 
studies associated with spent fuel pool protection capabilities.

    Question 4. For NRC Chairman Nils Diaz--I would like to give you an 
opportunity, Chairman Diaz, to address the April 7, 2005 Matthew Wald 
New York Times story. In that story, you are quoted as having said that 
spent fuel pools are ``not easily breached structures,'' and that after 
an attack they would be easy to cool with ``a couple of fire hoses.'' 
These statements caused concern in my state both among the public and 
among some technical experts regarding whether the cooling system you 
describe would be sufficient or able to be deployed in the event of an 
attack. Do you still stand by this statement? Do you believe that 
additional analysis is warranted to determine appropriate methods for 
fuel pool fire response? Is the Commission considering additional 
guidance or regulations regarding cooling systems?
    Response. Yes. In a publicly released version of the National 
Academy of Sciences (NAS) report on the safety and security of 
commercial spent nuclear fuel storage, the NAS panel references a 
calculation which suggested that 50-60 gallons per minute of water 
sprayed over an entire pool would likely be adequate to prevent a 
zirconium cladding fire in a loss-of-pool coolant event. The capacity 
of ``a couple of fire hoses'' would easily provide much more than that 
amount of water, with redundancy.
    The NRC recognizes the concern regarding the environment in which 
such strategies would have to be implemented. Therefore, we have 
advised our licensees to consider the potential for hostile 
environments, including large fires, extreme radiation environments, 
and the presence of armed adversaries, in developing procedures to 
implement such strategies. The NRC has provided guidance to licensees 
on spent fuel management techniques in July 2004 and February 2005. 
Furthermore, additional plant-specific assessments and analyses will be 
completed for all U.S. nuclear power plants by November 30, 2005. These 
analyses are intended to confirm the effectiveness of previously 
required mitigation capabilities and are expected to identify other 
appropriate and redundant methods to effectively cool the spent fuel 
pool.
                                 ______
                                 
    Responses by Nils J. Diaz to Additional Questions from Senator 
                               Lautenberg
    Question 1. Though the NRC has improved its oversight of the 
industry in recent years, why is it that the Inspector General, the 
GAO, interest groups and whistleblowers, continue to highlight safety 
issues? Is the NRC really committed to a ``Safety Conscious Work 
Environment?''
    Reponses. Yes, the NRC is fully committed to ensuring a Safety 
Conscious Work Environment (SCWE) at all of our licensed facilities. 
Safety issues do arise at nuclear power plants, although the frequency 
and radiological significance of these issues have decreased over the 
years. Many of these issues are found through NRC's strict oversight, 
and others are identified by licensees. We take each one seriously, and 
take measures to prevent recurrence. We expect our licensees to do the 
same. The NRC and its nuclear power plant licensees continue to 
maintain a record of performance without injury to a member of the 
public from a radioactivity release from a nuclear power plant.
    Highlighting safety issues to the NRC is consistent with the 
agency's 1996 Policy Statement definition of SCWE as a work environment 
where ``employees feel free to raise safety concerns, both to their 
management and to the NRC, without fear of retaliation.'' Employees are 
also encouraged to raise their concerns to their employers either prior 
to or contemporaneously with coming to the NRC. The NRC encourages 
employees to come to the NRC at any time they believe the Commission 
should be aware of their concerns. The agency is in the process of 
developing both guidance to the industry concerning establishing and 
maintaining a SCWE, as well as guidance to NRC inspection staff to 
monitor and assess the SCWE better, as one attribute of Safety Culture. 
An example of the agency's efforts in this area is the recent focus of 
the NRC on the work environment at Salem and Hope Creek.
    The NRC staff conducted in-depth interviews between October 2003 
and June 2004 of over 60 current and former Salem/Hope Creek employees 
from various levels of the organization. The review also considered the 
inspection and assessment records over the past several years, as well 
as allegations involving Salem and Hope Creek. Although no serious 
safety violations were identified, the NRC found weaknesses in the 
licensee's corrective action program and management efforts to 
establish an environment where employees are consistently willing to 
raise safety concerns. The NRC is continuing to provide close oversight 
of the Salem and Hope Creek stations to monitor and assess SCWE.

    Question 2. The Government Accountability Office has found that the 
NRC has ``no plans to address the systemic weaknesses that allowed'' 
the near disaster at Davis-Besse to occur in 2002. What is being done 
within the NRC to prevent the lax oversight which occurred at Davis-
Besse from occurring again?
    Response. The NRC has addressed the issues that allowed the 
significant vessel head degradation at the Davis-Besse power plant. 
Among other things, the NRC required inspection of reactor vessel heads 
at all pressurized-water reactors. The measures implemented will 
prevent recurrence of reactor vessel and vessel head degradation from 
all nuclear power plants in the U.S.
    In response to the Davis-Besse reactor vessel head degradation and 
subsequent Davis-Besse Lessons Learned Task Force (LLTF) 
recommendations, the NRC has implemented numerous changes to our 
regulatory processes and programs, and we plan to take additional 
actions. The changes to the inspection and operating experience 
programs will have the most systematic impact. Examples of some 
significant changes are provided below.
    The implementation of the Davis-Besse LLTF recommendations included 
improved Reactor Oversight Process (ROP) management guidelines, 
revisions and additions to inspection procedures, and inspector 
training and qualification enhancements. The changes to the program 
management aspects of the ROP include new guidance for managing NRC 
resources devoted to plants that are in an extended shutdown as a 
result of performance issues to ensure there will be less impact on 
routine oversight at other plants. Also, to ensure continuity of 
regulatory oversight by certified inspectors, the staff developed and 
issued a site staffing metric to monitor permanent resident and senior 
resident staffing at reactor sites, and established the criterion of 
maintaining a minimum of 90-percent coverage. The Regional staffs have 
conducted benchmarking reviews based on Davis-Besse LLTF 
recommendations to identify ``best practices'' that can be consistently 
applied in ROP activities.
    The NRC has made several changes to the ROP to enhance the NRC's 
ability to detect declining plant performance, including the specific 
issues identified at Davis-Besse. The NRC inspection program procedures 
have been revised to increase evaluation of licensee programs and 
actions relating to long-standing unresolved problems. Several 
inspection procedure changes were made to address the reactor vessel 
head and boric acid inspections. The procedures for monitoring 
inspection activities during refueling outages have been updated, as 
have procedures that evaluate licensees' programs and processes to 
detect, monitor, and take corrective actions for adverse trends in 
reactor coolant system leakage.
    The NRC inspector training program has been enhanced by a Web-based 
system that provides more timely dissemination of information to the 
inspection staff, and a method for individual study. New training 
modules were developed to address lessons learned from the Davis-Besse 
event such as the effects of boric acid corrosion and the importance of 
maintaining a questioning attitude toward potential safety issues. The 
latter training module used the case of the Columbia space shuttle 
accident to reinforce this message. There have been several recent 
examples of an improved questioning attitude. At other plants, resident 
inspectors have identified a peeling paint condition inside 
containment, a turbine building flooding issue, and a previously 
unanalyzed condition regarding a crane used to move the reactor vessel 
head at their respective sites.
    In a related effort responding to the Davis-Besse LLTF 
recommendations, the NRC launched a revised operating experience 
program in January 2005. The new program systematically collects, 
communicates, and evaluates operating experience and has substantially 
advanced the use of information technology in making operating 
experience information available. There is a new powerful data base for 
managing all reported events and a new operating experience information 
gateway that consolidates a large collection of individual data bases 
and Web sources of information onto a single Web access page. Ready 
access to this information will be a valuable help to NRC inspectors in 
planning and conducting their inspections, and to other NRC staff in 
conducting licensing reviews and rulemaking.
    Additionally, as a result of the Davis-Besse experience, the NRC 
has improved internal communications. To ensure effective communication 
among inspectors and NRC management, important elements of 
communication activities as well as regional communications best 
practices were identified and shared throughout the agency. These 
elements and best practices are being reviewed and adopted, as 
appropriate, by the regional offices.

    Question 3. What is the NRC doing to encourage people with safety 
concerns to speak up and how are ``whistleblowers'' being protected and 
supported by the agency? Were any ``whistleblowers'' invited to speak 
at today's hearing? What message does it send that they were/were not?
    Response. The NRC encourages its employees to raise concerns 
through its Open Door Policy, Generic Safety Issues program, non-
concurrence process, the Differing Professional Opinion (DPO) program, 
and the Office of Inspector General (OIG) Hotline. The NRC recently 
initiated a revised DPO program which further encourages employees to 
speak up and make differing views known. The position of a DPO Program 
Manager was established to improve implementation, administration, 
communication, and assessment of the program. The DPO program 
encourages employees to raise issues or concerns involving technical, 
legal or policy issues to their management. The revised program 
reemphasizes the importance of two-way communication between staff and 
management as an important element in the informal resolution of 
concerns before a concern reaches the DPO threshold. The DPO program 
also emphasizes employee confidentiality, protection from retaliation 
in any form for expressing a differing opinion, and recognition and 
awards for employees who raise concerns through the DPO program.
    The NRC constructed an internal Employee Concerns web site, which 
highlights the various programs where employees can voice their 
concerns on a variety of areas and includes contact names and numbers 
of those to whom concerns may be addressed. The agency also improved 
its leadership training, which sets expectations for managers and 
institutionalizes the concept that leadership training and skills will 
be an ongoing agency focus. Additional management training on the DPO 
program is being developed.
    Consistent with the Notification and Federal Employee Anti-
Discrimination and Retaliation Act of 2002 (No Fear Act), the NRC 
provides information to all employees about their rights, protections, 
and remedies under whistleblower and anti-discrimination and protection 
laws, as well as NRC's policies about appropriate disciplinary action 
for engaging in prohibited personnel activities. Employees are 
encouraged to familiarize themselves with this information on the 
Whistleblower and Anti-Discrimination Rights internal web page. All 
supervisors are required to receive training on whistleblower 
protections and the prevention of prohibited practices.
    Finally, the NRC has invited employees who have dissenting views to 
speak at various forums, including Commission meetings, to ensure that 
their views are encouraged and heard. We believe this sends a positive 
message that employees are encouraged to raise their concerns in an 
open and candid environment.

    Question 4. My constituents are deeply concerned about a repeat of 
a September 11th style attack--in which nearly 700 New Jerseyans lost 
their lives. If a large passenger jet can bring down the World Trade 
Center, can the NRC really be sure that nuclear reactor containment 
systems would withstand such a direct, high-speed hit?
    Response. After 9-11, the NRC conducted detailed site-specific 
security assessments at four selected sites. While those studies were 
underway, the NRC took direct regulatory action to enhance safety and 
security at nuclear power plants and spent fuel pools. In February 
2002, the NRC ordered the nuclear power industry to develop and 
implement mitigation strategies based on a general understanding that 
terrorist activities could result in some level of structural or fire 
damage to a facility. Furthermore, the NRC also decided that additional 
site-specific inspections (of the items ordered in 2002) and site-
specific studies of mitigation capabilities should be conducted at all 
sites, including all spent fuel pools, to further enhance protection 
capabilities. Guidance for those activities has been developed and 
pilot programs have been conducted. All site-specific spent fuel pool 
assessments are scheduled to be completed by November 30, 2005.
    In conducting these studies, the NRC drew on national experts from 
several U.S. Department of Energy (DOE) laboratories using state-of-
the-art structural and fire analyses. The agency also enhanced its 
ability to predict realistically accident progression due to the loss 
of large areas of reactor sites due to fires and explosions and any 
consequent releases of radiation to the environment. For the facilities 
analyzed, the studies confirm that the likelihood of both damaging the 
reactor core and releasing radioactivity from an aircraft crash event 
that could affect public health and safety is low.
                                 ______
                                 
Responses by Nil J. Diaz to Additional Questions from Senator Voinovich
    Question 1.  NRC's testimony indicates that the Commission is 
taking action to address safety culture by identifying appropriate 
measures and developing guidance for licensees--leading up to the 
modification of the Reactor Oversight Process. Please go into greater 
detail for the Committee on what the Commission has discovered and what 
actions the NRC has and will take.
    Response. In response to direction provided by the Commission in 
August 2004, the NRC staff is currently conducting activities to 
enhance the Reactor Oversight Process treatment of cross cutting issues 
to address safety culture more fully. These activities include new 
tools and training for the inspection staff. The staff's activities 
will take into account the ongoing industry initiatives and information 
from the international community.
    One element of a safety culture is maintaining a safety conscious 
work environment. In October 2004, NRC issued a draft guidance document 
entitled, ``Guidance for Establishing and Maintaining a Safety 
Conscious Work Environment'' in the Federal Register for public 
comment. This guidance document was developed to provide supplementary 
guidance on fulfilling the expectation to ensure safe operation of 
facilities, in part, by establishing and maintaining a safety conscious 
work environment. It provides guidance on (1) encouraging employees to 
raise safety concerns, including recognition initiatives and 
communication tools, (2) Safety Conscious Work Environment training 
content, (3) alternative processes for addressing concerns, such as 
employee concerns and ombudsman programs, (4) tools to assess the 
Safety Conscious Work Environment, including performance indicators, 
behavioral observations, and surveys, (5) contractor awareness of 
Safety Conscious Work Environment principles and expectations, and (6) 
processes that help detect and prevent discrimination, and avoid the 
appearance of discrimination. NRC staff has been evaluating comments 
received on the draft document, and the final version of this guidance 
document is expected to be issued in August 2005.
    The NRC staff continues to monitor closely the licensees' 
corrective actions associated with safety culture and Safety Conscious 
Work Environment issues at both the Davis-Besse Nuclear Plant and 
Salem/Hope Creek Nuclear Plants. In addition, the Institute of Nuclear 
Power Operations, a nuclear industry organization which routinely 
performs peer evaluations at member nuclear facilities, has agreed to 
having an NRC observer on its plant evaluation team. This will be 
supportive of the Commission direction to monitor industry efforts to 
assess safety culture.
    The existing regulatory infrastructure provides a framework for 
monitoring the impact of licensee safety culture on performance. This 
includes the following items: (1) direct, daily observation of licensee 
operation of the facilities by Resident Inspectors at each site; (2) 
periodic inspections focusing on Problem Identification and Resolution 
at each site by Region-based inspection team; (3) followup of 
individual Allegations and trending for Safety Conscious Work 
Environment Assessments; (4) enforcement of employee protection 
regulations which prohibit adverse action against employees who raise 
safety concerns; (5) the Reactor Oversight Process--management 
evaluation of insights gained from inspections and allegations to 
determine regulatory action; (6) early and aggressive action where 
potential safety performance or safety culture issues are observed 
(e.g., Salem and Hope Creek); and (7) implementation of corrective 
actions, such as those included in the Davis-Besse Lessons Learned Task 
Force recommendations, to improve the assessment capability. These are 
in addition to our continuing oversight of safety management.

    Question 2. In its 1998 report to Congress, the Commission 
concluded that the Price-Anderson Act has proven to be ``remarkably 
successful'' and is ``prudent public policy.'' The report's specific 
recommendation was: ``Because the Act has benefited from extensive 
public discussion and legislative modifications over the years, only 
modest changes, if any, need be contemplated in connection with its 
renewal.'' Does NRC still support the conclusion of your 1998 report to 
Congress that the Price-Anderson Act should be extended with only 
modest--or perhaps no--changes?
    Response. Yes. As stated in our written testimony submitted for the 
May 26, 2005 hearing, the Commission supports the enactment of S. 865, 
extending the Price-Anderson Act as it applies to NRC authority to 
indemnify certain classes of licensees. The provisions of the Price-
Anderson Act applicable to NRC's authority to indemnify expired on 
December 31, 2003, having previously been extended for only 1 year as 
an interim measure. Until the Act is renewed, the Commission lacks the 
authority to enter into new indemnity agreements with licensees for new 
facilities. Expiration of the Price-Anderson Act does not affect the 
currently licensed facilities since the indemnification agreements, 
which are required by the Act for certain facilities and implement the 
Act, remain in force for the life of the facility.

    Question 3. NRC has requested increased funding. What steps has the 
Commission taken to save money?
    Response. The NRC has long been committed to the goal of being 
effective and efficient. The Commission emphasized this commitment by 
making effectiveness and efficiency one of the five goals in its FY 
2004-FY 2009 Strategic Plan, along with safety, security, openness, and 
management excellence. This commitment to efficiency is also reflected 
in the Commission's annual budget request for resources to conduct an 
effective regulatory program that enables the Nation to use nuclear 
energy and nuclear materials safely for civilian purposes. This budget 
is developed using the agency's Planning, Budgeting, and Performance 
Management (PBPM) process. This disciplined process, including the 
Commission review and decisions, ensures that only those programs that 
are effective in meeting the agency's mission and goals continue. 
Additionally, efficiencies which reduce program and support costs are 
identified and incorporated in the resource estimates. These 
efficiencies are highlighted by the following actions that have been 
taken to save money.
    The Commission has modified its programs and processes to make them 
more efficient, effective, and predictable. This includes consolidating 
programs where it has made sense to do so. For example, the Commission 
recently consolidated oversight responsibility for all major fuel cycle 
facilities in its Region II office. The Commission also recently 
consolidated responsibility for the inspection and licensing of 
materials users for two of its regions in its Region I office. The 
Reactor Oversight Process was implemented several years ago to 
streamline the inspection process by using a risk-informed approach. 
The Commission has made continuous improvement to its reactor license 
renewal process. This has resulted in reducing the time to review an 
application from 30 months to 22 months without a hearing, while 
realizing a reduction in the resources necessary for the review. More 
discipline has also been applied to managing the NRC's adjudicatory 
hearing process, which has made it more efficient. The Commission also 
leverages its resources by developing collaborative arrangements with 
industry, foreign governments, and international organizations to share 
the costs of research and other technical evaluations in areas such as 
material degradation, human factors, and fuel behavior.
    The Commission has also taken actions to save operating costs. For 
example, the Commission has used available information technology to 
reduce the cost of its safety analysis by moving scientific computer 
codes from the relatively high cost mainframes at the DOE national 
laboratories to a much lower cost in-house computing environment. The 
Commission has been able to significantly reduce the operating and 
maintenance costs for agency financial systems by cross servicing such 
services with other Federal agencies. The Commission has recently 
reconfigured existing headquarter offices to avoid having to obtain 
additional space to accommodate its increased workload.
    The above examples have all been implemented during over a period 
of increased workload and inflation. These examples demonstrate the 
Commission's recognition of the importance of being an efficient 
regulator. The Commission remains committed to maximizing the 
effectiveness, efficiency and predictability of its programs and 
supporting systems.

    Question 4. NRC has proposed to move their Technical Training 
Center (TTC) in Chattanooga, Tennessee to a location near its 
headquarters in Rockville, Maryland. Please provide the cost-benefit 
analysis on moving this Center.
    Response. The agency performed a cost-benefit analysis of moving 
the TTC to a location near Rockville, Maryland, in 1999. The study 
indicated that over a 10-year period the costs of operating the TTC in 
either Rockville or Chattanooga, including the cost of the move, would 
be roughly equal. The Commission continues to look for opportunities to 
enhance the efficiency and effectiveness of our technical training 
program for staff. A new study would be necessary to reflect the 
current environment (i.e., staffing increases, skill needs, space cost, 
etc.).





    Mr. Chairman and Members of the Subcommittee:
    I am pleased to be here today to participate in the Subcommittee's 
oversight hearing on the Nuclear Regulatory Commission (NRC). NRC has 
the regulatory responsibility to ensure that the nation's 103 operating 
commercial nuclear power plants are operated in a safe and secure 
manner. These plants provide about 20 percent of the country's 
electricity, but safety of their operations is paramount, given the 
potentially devastating effects of a nuclear accident. While the 
nuclear power industry's overall safety record has been good, safety 
issues periodically arise that raise questions about NRC's regulation 
and oversight of the industry and challenge its credibility for 
guaranteeing the safety of the nation's aging fleet of nuclear power 
plants. NRC plays an important role in protecting public health and the 
environment through its regulation of the nuclear power industry and 
other civilian use of nuclear material, and we commend the Subcommittee 
for holding this hearing.
    NRC was formed in 1975, to regulate the various commercial and 
institutional uses of nuclear energy, including nuclear power plants. 
NRC's mission is to regulate the nation's civilian use of nuclear 
material to ensure adequate protection of public health and safety, to 
promote the common defense and security, and to protect the 
environment. NRC's activities include, among other things, licensing 
nuclear reactors (including license transfers and operating experience 
evaluation), reviewing plant safety procedures, imposing enforcement 
sanctions for violations of NRC requirements, and participating in 
homeland security efforts (including threat assessment, emergency 
response, mitigating strategies, security inspections, and force-on-
force exercises). NRC also has regulatory oversight for the 
decommissioning of nuclear reactors, including accumulating sufficient 
funds to carry out decommissioning, and for the interim storage of 
spent nuclear fuel--the used fuel periodically removed from reactors in 
nuclear power plants.
    The importance of NRC's regulatory and oversight responsibilities 
is made readily apparent by recent events. The terrorist attacks on 
September 11, 2001, and the subsequent discovery of nuclear power 
plants on a list of possible terrorist targets have focused attention 
on the security of the nation's commercial nuclear power plants. Safety 
concerns were heightened by the discovery of a pineapple-sized cavity 
in the carbon steel reactor vessel head, and subsequent 2-year 
shutdown, of the Davis-Besse nuclear power plant in Ohio in 2002. 
Additional safety concerns were raised by the discovery of missing or 
unaccounted for spent nuclear fuel at three nuclear power plants. 
Further, the decommissioning of some of the nations' aging nuclear 
power plants raises the issue of whether NRC is ensuring that plant 
owners are accumulating sufficient funds for decommissioning plants in 
a way that best protects public health, safety, and the environment.
    Over the past 2 years, we have issued a total of 15 reports and 
testimonies on a wide range of NRC activities. (These reports are 
listed in Appendix I). While our work has primarily focused on 
identifying ways that NRC can strengthen its regulation and oversight 
of the nuclear power industry, we have documented a number of 
productive steps NRC has taken to improve its mission-related 
activities. One example is the substantial effort that NRC has made in 
working with the industry to enhance security at nuclear power plants 
since the September 11, 2001, terrorist attacks. Another example is 
NRC's considerable effort to analyze what went wrong at the Davis-Besse 
plant in 2002, and to incorporate the lessons learned into its 
processes. Today, my testimony will briefly summarize our recently 
completed NRC work. Specifically, this testimony (1) summarizes GAO's 
findings and associated recommendations for improving NRC mission-
related activities and (2) provides some observations on cross-cutting 
challenges that NRC faces in being an effective and credible regulator 
of the nuclear power industry.
    This testimony is based on seven of our recently issued reports. 
The other eight reports either address issues for which NRC is not the 
primary Federal agency--such as radioactive waste disposal and nuclear 
nonproliferation--or concern internal NRC administrative matters--such 
as fee recovery and information technology management. We did not 
perform additional audit work in preparing this testimony. The work for 
our previously issued reports was conducted in accordance with 
generally accepted government auditing standards.
                                summary
    While NRC has improved its operations in a number of ways in recent 
years, GAO believes that the agency needs to take a number of 
additional actions to better fulfill its mission of ensuring that the 
nation's nuclear power plants and other civilian users of nuclear 
material operate in a safe and secure manner. First, operations related 
to NRC's security mission need to be improved. Specifically, we found 
that NRC has not developed adequate security measures for sealed 
sources of radioactive materials--radioactive material encapsulated in 
stainless steel or other metal used in medicine, industry, and 
research--which could be used to make a ``dirty bomb.'' We also found 
that despite taking numerous actions to respond to the heightened risks 
of a terrorist attack, NRC's oversight of physical security at the 
nation's commercial nuclear power plants could be strengthened. Second, 
operations related to NRC's public health and safety, and environmental 
missions need to be improved. Specifically, we found that NRC's 
analyses of plant owners' contributions of funds for the 
decommissioning of nuclear power plants, and its processes for acting 
on reports that show insufficient funds, do not ensure that the 
significant radioactive waste hazards that exist following the 
permanent closure of a nuclear power plant will be properly addressed. 
Further, we found that the issues surrounding the shutdown of the 
Davis-Besse power plant reveal important weaknesses in NRC's oversight 
of the safety of nuclear power plant operations. Finally, we found that 
NRC has not taken adequate steps to ensure that power plants are 
effectively controlling spent nuclear fuel, including developing and 
implementing appropriate inspection procedures to verify plants' 
compliance with NRC requirements.
    NRC faces several cross-cutting challenges in being an effective 
and credible regulator of the nuclear power industry. In response to 
the agency's limited resources and its desire to reduce the regulatory 
burden and cost on plants, NRC is taking two overarching approaches to 
meeting its regulatory and oversight responsibilities: (1) developing 
and implementing a risk-informed regulatory strategy that targets 
industry's most important safety-related or safety-significant 
activities, and (2) striking a balance between verifying plants' 
compliance with requirements through inspections and affording 
licensees the opportunity to demonstrate that they are operating their 
plants safely. We believe that NRC must overcome significant obstacles 
in implementing its risk-informed regulatory strategy across the 
agency, especially with regards to developing the ability to identify 
emerging technical issues and adjust regulatory requirements before 
safety problems develop. We also believe that NRC faces inherent 
challenges in balancing oversight and industry self-compliance, 
especially with regards to positioning the agency so it is able to 
identify diminishing performance at individual plants before they 
become a problem. Incidents such as the 2002 shutdown of the Davis-
Besse plant and the unaccounted for spent nuclear fuel at several 
plants raise questions about whether NRC has the risk information that 
it needs and whether it is appropriately balancing agency involvement 
and licensee self-monitoring. Finally, we believe that NRC will face 
challenges managing its resources while meeting increasing regulatory 
and oversight demands. NRC's resources have already been stretched by 
the extensive effort to enhance security at plants in the wake of the 
September 11, 2001, terrorist attacks. Pressure on NRC's resources will 
continue as the nation's fleet of plants age and the industry's 
interest in expansion grows, both in licensing and constructing new 
plants, and re-licensing and increasing the power output of existing 
ones.
       regulatory and oversight functions vital to nrc's mission 
                          need to be improved
    Our recent analyses of NRC programs identified several areas where 
NRC needs to take action to better fulfill its mission and made 
associated recommendations for improvement. With respect to NRC's 
security mission, we found that the security of sealed radioactive 
sources and the physical security at nuclear power plants need to be 
strengthened. With respect to its public health and safety, and 
environmental missions, we found several shortcomings that need to be 
addressed. NRC's analyses of plant owners' contributions could be 
improved to better ensure that adequate funds are accumulating for the 
decommissioning of nuclear power plants. By contrast, we found that NRC 
is ensuring that requirements for liability insurance for nuclear power 
plants owned by limited liability companies are being met. Further, to 
ensure the safety of nuclear power plants NRC must more aggressively 
and comprehensively resolve oversight issues related to the shutdown of 
the Davis-Besse plant. Finally, NRC's methods of ensuring that power 
plants are effectively controlling spent nuclear fuel need to be 
improved.
Operations Related to NRC's Security Mission Could Be Improved
    In August 2003, we reported on Federal and state actions needed to 
improve security of sealed radioactive sources.\1\ Sealed radioactive 
sources, radioactive material encapsulated in stainless steel or other 
metal, are used worldwide in medicine, industry, and research. These 
sealed sources could be a threat to national security because 
terrorists could use them to make ``dirty bombs.'' We were asked among 
other things to determine the number of sealed sources in the United 
States. We found that the number of sealed sources in use today in the 
United States is unknown primarily because no state or Federal agency 
tracks individual sealed sources. Instead, NRC and the agreement 
states\2\ track numbers of specific licensees. NEC and the Department 
of Energy (DOE) have begun to examine options for developing a national 
tracking system, but to date, this effort has had limited involvement 
by the agreement states. NRC had difficulty locating owners of certain 
generally licensed devices it began tracking in April 2001, and has 
hired a private investigation firm to help locate them. Twenty-five of 
the 31 agreement states that responded to our survey indicated that 
they track some or all general licensees or generally licensed devices, 
and 17 were able to provide data on the number of generally licensed 
devices in their jurisdictions, totaling approximately 17,000 devices. 
GAO recommended that NRC (1) collaborate with states to determine the 
availability of the highest risk sealed sources, (2) determine if 
owners of certain devices should apply for licenses, (3) modify NRC's 
licensing process so sealed sources cannot be purchased until NRC 
verifies their intended use, (4) ensure that NRC's evaluation of 
Federal and state programs assesses the security of sealed sources, and 
(5) determine how states can participate in implementing additional 
security measures. NRC disagreed with some of our findings.
---------------------------------------------------------------------------
    \1\ GAO: Nuclear Security Federal and State Action Needed to 
Improve Security of Sealed Radioactive Sources, GAO-03-804 Washington, 
D.C.: Aug. 6, 2003.
    \2\ Agreement states are the 33 states that have entered into an 
agreement with the NRC under subsection 274(b) of the Atomic Energy Act 
(AEA) under which NRC relinquishes to the states portions of its 
regulatory authority to license and regulate source, byproduct, and 
certain quantities of special nuclear material.
---------------------------------------------------------------------------
    In September 2003, we reported that NRC's oversight of security at 
commercial nuclear power plants needed to be strengthened.\3\ The 
September 11, 2001, terrorist attacks intensified the nation's focus on 
national preparedness and homeland security. Among possible terrorist 
targets are the nation's nuclear power plants which contain radioactive 
fuel and waste. NRC oversees plant security through an inspection 
program designed to verify the plants' compliance with security 
requirements. As part of that program, NRC conducted annual security 
inspections of plants and force-on-force exercises to test plant 
security against a simulated terrorist attack. GAO was asked to review 
(1) the effectiveness of NRC's security inspection program and (2) 
legal challenges affecting power plant security. At the time of our 
review, NRC was reevaluating its inspection program. We did not assess 
the adequacy of security at the individual plants; rather, our focus 
was on NRC's oversight and regulation of plant security.
---------------------------------------------------------------------------
    \3\ GAO: Nuclear Regulatory Commission: Oversight of Security at 
Commercial Nuclear Power Plants Needs to Be Strengthened, GAO-03-752 
(Washington, D.C.: Sept. 4, 2003).
---------------------------------------------------------------------------
    We found that NRC had taken numerous actions to respond to the 
heightened risk of terrorist attack, including interacting with the 
Department of Homeland Security and issuing orders designed to increase 
security and improve defensive barriers at plants. However, three 
aspects of NRC's security inspection program reduced the agency's 
effectiveness in overseeing security at commercial nuclear power 
plants. First, NRC inspectors often used a process that minimized the 
significance of security problems found in annual inspections by 
classifying them as ``non-cited violations'' if the problem had not 
been identified frequently in the past or if the problem had no direct, 
immediate, adverse consequences at the time it was identified. Non-
cited violations do not require a written response from the licensee 
and do not require NRC inspectors to verify that the problem has been 
corrected. For example, guards at one plant failed to physically search 
several individuals for metal objects after a walk-through detector and 
a hand-held scanner detected metal objects in their clothing. These 
individuals were then allowed unescorted access throughout the plant's 
protected area. By extensively using non-cited violations for serious 
problems, NRC may overstate the level of security at a power plant and 
reduce the likelihood that needed improvements are made. Second, NRC 
did not have a routine, centralized process for collecting, analyzing, 
and disseminating security inspections data to identify problems that 
may be common to plants or to provide lessons learned in resolving 
security problems. Such a mechanism may help plants improve their 
security. Third, although NRC's force-on-force exercises can 
demonstrate how well a nuclear plant might defend against a real-life 
threat, several weaknesses in how NRC conducted these exercises limited 
their usefulness. Weaknesses included (1) using more personnel to 
defend the plant during these exercises than during normal operations, 
(2) using attacking forces that are not trained in terrorist tactics, 
and (3) using unrealistic weapons (rubber guns) that do not simulate 
actual gunfire. Furthermore, at the time, NRC has made only limited use 
of some available improvements that would make force-on-force exercises 
more realistic and provide a more useful learning experience.
    Finally, we also found that even if NRC strengthens its inspection 
program, commercial nuclear power plants face legal challenges in 
ensuring plant security. First, Federal law generally prohibits guards 
at these plants from using automatic weapons, although terrorists are 
likely to have them. As a result, guards at commercial nuclear power 
plants could be at a disadvantage in firepower, if attacked. Second, 
state laws regarding the permissible use of deadly force and the 
authority to arrest and detain intruders vary, and guards were unsure 
about the extent of their authorities and may hesitate or fail to act 
if the plant is attacked. GAO made recommendations to promptly restore 
annual security inspections and revise force-on-force exercises. NRC 
disagreed with many of GAO's findings, but did not comment on GAO's 
recommendations.
    In September 2004, we testified on our preliminary observations 
regarding NBC's efforts to improve security at nuclear power plants.\4\ 
The events of September 11, 2001, and the subsequent discovery of 
commercial nuclear power plants on a list of possible terrorist targets 
have focused considerable attention on plants' capabilities to defend 
against a terrorist attack. NRC is responsible for regulating and 
overseeing security at commercial nuclear power plants. We were asked 
to review (1) NRC's efforts since September 11, 2001, to improve 
security at nuclear power plants, including actions NRC had taken to 
implement some of GAO's September 2003 recommendations to improve 
security oversight, and (2) the extent to which NRC is in a position to 
assure itself and the public that the plants are protected against 
terrorist attacks. The testimony reflected the preliminary results of 
GAO's review. We are currently performing a more comprehensive review 
in which we are examining (1) NRC's development of its 2003 design 
basis threat (DBT), which establishes the maximum terrorist threat that 
commercial nuclear power plants must defend against, and (2) the 
security enhancements that plants have put in place in response to the 
design basis threat and related NRC requirements. We expect to issue a 
report on our findings later this year.
---------------------------------------------------------------------------
    \4\ GAO, Nuclear Regulatory Commission: Preliminary Observations on 
Efforts to Improve Security at NuclearPower Plants, GAO-04-1064T 
(Washington, D.C.: Sept. 14, 2004).
---------------------------------------------------------------------------
    In the earlier work, we found that NRC responded quickly and 
decisively to the September 11, 2001, terrorist attacks with multiple 
steps to enhance security at commercial nuclear power plants. NRC 
immediately advised plants to go to the highest level of security using 
the system in place at the time, and issued advisories and orders for 
plants to make certain enhancements, such as installing more physical 
barriers and augmenting security forces, which could be quickly 
completed to shore up security. According to NRC officials, their 
inspections found that plants complied with these advisories and 
orders. Later, in April 2003, NRC issued a new DBT and required the 
plants to develop and implement new security plans to address the new 
threat by October 2004. NRC is also improving its force-on-force 
exercises, as GAO recommended in its September 2003 report. While its 
efforts had enhanced security, NRC was not yet in a position to provide 
an independent determination that each plant has taken reasonable and 
appropriate steps to protect against the new DBT. According to NRC 
officials, the facilities' new security plans were on schedule to be 
implemented by October 2004. However, NRC's review of the plans, which 
are not available to the general public for security reasons, had 
primarily been a paper review and was not detailed enough for NRC to 
determine if the plans would protect the facility against the threat 
presented in the DBT. In addition, NRC officials generally were not 
visiting the facilities to obtain site-specific information and assess 
the plans in terms of each facility's design. NRC is largely relying on 
the force-on-force exercises it conducts to test the plans, but these 
exercises will not be conducted at all facilities for 3 years. We also 
found that NRC did not plan to make some improvements in its inspection 
program that GAO previously recommended. For example, NRC was not 
following up to verify that all violations of security requirements had 
been corrected, nor was the agency taking steps to make ``lessons 
learned'' from inspections available to other NRC regional offices and 
nuclear power plants.
Operations Related to NRC's Public Health and Safety and Environmental 
        Missions Can Be Improved
    In October 2003, we reported that NRC needs to more effectively 
analyze whether nuclear power plant owners are adequately accumulating 
funds for decommissioning plants.\5\ Following the closure of a nuclear 
power plant, a significant radioactive waste hazard remains until the 
waste is removed and the plant site is decommissioned. In 1988, NRC 
began requiring owners to (1) certify that sufficient financial 
resources would be available when needed to decommission their nuclear 
power plants and (2) require them to make specific financial provisions 
for decommissioning. In 1999, GAO reported that the combined value of 
the owners' decommissioning funds was insufficient to ensure enough 
funds would be available for decommissioning. GAO was asked to update 
its 1999 report, and to evaluate NRC's analysis of the owners' funds 
and the agency's process for acting on reports that show insufficient 
funds.
---------------------------------------------------------------------------
    \5\ GAO: Nuclear Regulation: NRC Needs More Effective Analysis to 
Ensure Accumulation of Funds to Decommission Nuclear Power Plants, GAO-
04-32 (Washington, D.C.: Oct. 30, 2003).
---------------------------------------------------------------------------
    We found that although the collective status of the owners' 
decommissioning fund accounts has improved considerably since GAO's 
last report, some individual owners were not on track to accumulate 
sufficient funds for decommissioning. Based on our analysis and using 
the most likely economic assumptions, we concluded that the combined 
value of nuclear power plant owners' decommissioning fund accounts in 
2000--about $26.9 billion--was about 47 percent greater than needed at 
that point to ensure that sufficient funds would be available to cover 
the approximately $33 billion in estimated decommissioning costs when 
the plants are permanently closed. This value contrasts with GAO's 
prior finding that 1997 account balances were collectively 3 percent 
below what was needed. However, overall industry results can be 
misleading. Because funds are generally not transferable from funds 
that have more than sufficient reserves to those with insufficient 
reserves, each individual owner must ensure that enough funds are 
available for decommissioning their particular plants. We found that 33 
owners with ownership interests in a total of 42 plants had accumulated 
fewer funds than needed through 2000, to be on track to pay for 
eventual decommissioning. In addition, 20 owners with ownership 
interests in a total of 31 plants recently contributed less to their 
trust funds than we estimated they needed in order to put them on track 
to meet their decommissioning obligations.
    NRC's analysis of the owners' 2001 biennial reports was not 
effective in identifying owners that might not be accumulating 
sufficient funds to cover their eventual decommissioning costs. In 
reviewing the 2001 reports, NRC reported that all owners appeared to be 
on track to have sufficient funds for decommissioning. In reaching this 
conclusion, NRC relied on the owners' future plans for fully funding 
their decommissioning obligations. However, based on the owners' actual 
recent contributions, and using a different method, GAO found that 
several owners could be at risk of not meeting their financial 
obligations for decommissioning when these plants stop operating. In 
addition, for plants with more than one owner, NRC did not separately 
assess the status of each co-owner's trust funds against each co-
owner's contractual obligation to fund decommissioning. Instead, NRC 
assessed whether the combined value of the trust funds for the plant as 
a whole were reasonable. Such an assessment for determining whether 
owners are accumulating sufficient funds can produce misleading results 
because owners with more than sufficient funds can appear to balance 
out owners with less than sufficient funds, even though funds are 
generally not transferable among owners. Furthermore, we found that NRC 
had not established criteria for taking action when it determines that 
an owner is not accumulating sufficient decommissioning funds.
    We recommended that NRC (1) develop an effective method for 
determining whether owners are accumulating decommissioning funds at 
sufficient rates and (2) establish criteria for taking action when it 
is determined that an owner is not accumulating sufficient funds. NRC 
disagreed with these recommendations, suggesting that its method is 
effective and that it is better to deal with unacceptable levels of 
financial assurance on a case-by-case basis. GAO continues to believe 
that limitations in NRC's method reduce its effectiveness and that, 
without criteria, NRC might not be able to ensure owners are 
accumulating decommissioning funds at sufficient rates.
    In May 2004, we issued a report on NRC's liability insurance 
requirements for nuclear power plants owned by limited liability 
companies.\6\ An accident at one the nation's commercial nuclear power 
plants could result in personal injury and property damage. To ensure 
that funds would be available to settle liability claims in such cases, 
the Price-Anderson Act requires licensees of these plants to have 
primary insurance--currently $300 million per site. The act also 
requires secondary coverage in the form of retrospective premiums to be 
contributed by all licensees of nuclear power plants to cover claims 
that exceed primary insurance. If these premiums are needed, each 
licensee's payments are limited to $10 million per year and $95.8 
million in total for each of its plants. In recent years, limited 
liability companies have increasingly become licensees of nuclear power 
plants, raising concerns about whether these companies--which shield 
their parent corporations' assets--will have the financial resources to 
pay their retrospective premiums. We were asked to determine (1) the 
extent to which limited liability companies are the licensees for U.S. 
commercial nuclear power plants, (2) NRC's requirements and procedures 
for ensuring that licensees of nuclear power plants comply with the 
Price-Anderson Act's liability requirements, and (3) whether and how 
these procedures differ for licensees that are limited liability 
companies.
---------------------------------------------------------------------------
    \6\ GAO, Nuclear Regulation: NRC's Liability Insurance Requirements 
for Nuclear Power Plants Owned by Limited Liability Companies, GAO-04-
654 (Washington, D.C.: May 28, 2004).
---------------------------------------------------------------------------
    We found that of the 103 operating nuclear power plants, 31 were 
owned by 11 limited liability companies. Three energy corporations--
Exelon, Entergy, and the Constellation Energy Group--were the parent 
companies for 8 of these limited liability companies. These 8 
subsidiaries were the licensees or co-licensees for 27 of the 31 
plants. We also found that NRC requires all licensees for nuclear power 
plants to show proof that they have the primary and secondary insurance 
coverage mandated by the Price-Anderson Act. Licensees sign an 
agreement with NRC that requires the licensee to keep the insurance in 
effect. American Nuclear Insurers also has a contractual agreement with 
each of the licensees that obligates the licensee to pay the 
retrospective premiums to American Nuclear Insurers if these payments 
become necessary. A certified copy of this agreement, which is called a 
bond for payment of retrospective premiums, is provided to NRC as proof 
of secondary insurance. Finally, we found that NRC does not treat 
limited liability companies differently than other licensees with 
respect to the Price-Anderson Act's insurance requirements. Like other 
licensees, limited liability companies must show proof of both primary 
and secondary insurance coverage. American Nuclear Insurers also 
requires limited liability companies to provide a letter of guarantee 
from their parent or other affiliated companies with sufficient assets 
to pay the retrospective premiums. These letters state that the parent 
or affiliated companies are responsible for paying the retrospective 
premiums if the limited liability company does not. American Nuclear 
Insurers informs NRC that it has received these letters.
    In May 2004, we also issued a report documenting the need for NRC 
to more aggressively and comprehensively resolve issues related to the 
shutdown of the Davis-Besse nuclear power plant.\7\ The most serious 
safety issue confronting the nation's commercial nuclear power industry 
since Three Mile Island in 1979, was identified at the Davis-Besse 
plant in Ohio in March of 2002. After NRC allowed Davis-Besse to delay 
shutting down to inspect its reactor vessel for cracked tubing, the 
plant found that leakage from these tubes had caused extensive 
corrosion on the vessel head--a vital barrier in preventing a 
radioactive release. GAO determined (1) why NRC did not identify and 
prevent the corrosion, (2) whether the process NRC used in deciding to 
delay the shutdown was credible, and (3) whether NRC is taking 
sufficient action in the wake of the incident to prevent similar 
problems from developing at other plants.
---------------------------------------------------------------------------
    \7\ GAO, Nuclear Regulation: NRC Needs to More Aggressively and 
Comprehensively Resolve Issues Related to the Davis Besse Nuclear Power 
Plant's Shutdown, GAO-04-415 (Washington, D.C.: May 17,2004).
---------------------------------------------------------------------------
    We found that NRC should have, but did not identify or prevent the 
corrosion at Davis-Besse because agency oversight did not produce 
accurate information on plant conditions. NRC inspectors were aware of 
indications of leaking tubes and corrosion; however, the inspectors did 
not recognize the importance of the indications and did not fully 
communicate information about them to other NRC staff. NRC also 
considered FirstEnergy--Davis-Besse's owner--a good performer, which 
resulted in fewer NRC inspections and questions about plant conditions. 
NRC was aware of the potential for cracked tubes and corrosion at 
plants like Davis-Besse but did not view them as an immediate concern. 
Thus, despite being aware of the development of potential problems, NRC 
did not modify its inspection activities to identify such conditions. 
Additionally, NRC's process for deciding to allow Davis-Besse to delay 
its shutdown lacked credibility. Because NRC had no guidance for making 
the specific decision of whether a plant should shut down, it instead 
used guidance for deciding whether a plant should be allowed to modify 
its operating license. However, NRC did not always follow this guidance 
and generally did not document how it applied the guidance. 
Furthermore, the risk estimate NRC used to help decide whether the 
plant should shut down was also flawed and underestimated the risk that 
Davis-Besse posed. Finally, even though it underestimated the risk 
posed by Davis-Besse, the risk estimate applied to the plant still 
exceeded levels generally accepted by the agency. Nevertheless, Davis-
Besse was allowed to delay the plant's shutdown.
    After this incident, NRC took several significant actions to help 
prevent reactor vessel corrosion from recurring at nuclear power 
plants. For example, NRC has required more extensive vessel 
examinations and augmented inspector training. I would also like to 
note that, in April 2005, NRC proposed a $5.45 million fine against the 
licensee of the Davis-Besse plant. The principal violation was that the 
utility restarted and operated the plant in May 2000, without fully 
characterizing and eliminating leakage from the reactor vessel head. 
Additional violations included providing incomplete and inaccurate 
information to NRC on the extent of cleaning and inspecting the reactor 
vessel head in 2000.
    While NRC has not yet completed all of its planned actions, we 
remain concerned that NRC has no plans to address three systemic 
weaknesses underscored by the incident at Davis-Besse. Specifically, 
NRC has proposed no actions to help it better (1) identify early 
indications of deteriorating safety conditions at plants, (2) decide 
whether to shut down a plant, or (3) monitor actions taken in response 
to incidents at plants. Both NRC and GAO had previously identified 
problems in NRC programs that contributed to the Davis-Besse incident, 
yet these problems continued to persist. Because the nation's nuclear 
power plants are aging, GAO recommended that NRC take more aggressive 
actions to mitigate the risk of serious safety problems occurring at 
Davis-Besse and other nuclear power plants.
    In April 2005, we issued a report outlining the need for NRC to do 
more to ensure that power plants are effectively controlling spent 
nuclear fuel.\8\ Spent nuclear fuel--the used fuel periodically removed 
from reactors in nuclear power plants--is too inefficient to power a 
nuclear reaction, but is intensely radioactive and continues to 
generate heat for thousands of years. Potential health and safety 
implications make the control of spent nuclear fuel of great 
importance. The discovery, in 2004, that spent fuel rods were missing 
at the Vermont Yankee plant in Vermont generated public concern and 
questions about NRC's regulation and oversight of this material. GAO 
reviewed (1) plants' performance in controlling and accounting for 
their spent nuclear fuel, (2) the effectiveness of NRC's regulations 
and oversight of plants' performance, and (3) NRC's actions to respond 
to plants' problems controlling their spent fuel.
---------------------------------------------------------------------------
    \8\ GAO, Nuclear Regulatory Commission: NRC Needs to Do More to 
Ensure that Power Plants Are Effectively Controlling Spent Nuclear 
Fuel, GAO-05-339 (Washington, D.C.: Apr. 8, 2005).
---------------------------------------------------------------------------
    We found that nuclear power plants' performance in controlling and 
accounting for their spent fuel has been uneven. Most recently, three 
plants--Vermont Yankee and Humboldt Bay (California) in 2004, and 
Millstone (Connecticut) in 2000--have reported missing spent fuel. 
Earlier, several other plants also had missing or unaccounted for spent 
fuel rods or rod fragments. NRC regulations require plants to maintain 
accurate records of their spent nuclear fuel and to conduct a physical 
inventory of the material at least once a year. The regulations, 
however, do not specify how physical inventories are to be conducted. 
As a result, plants differ in the regulations' implementation. For 
example, physical inventories at plants varied from a comprehensive 
verification of the spent fuel to an office review of the records and 
paperwork for consistency. Additionally, NRC regulations do not specify 
how individual fuel rods or segments are to be tracked. As a result, 
plants employ various methods for storing and accounting for this 
material. Further, NRC stopped inspecting plants' material control and 
accounting programs in 1988. According to NRC officials, there was no 
indication that inspections of these programs were needed until the 
event at Millstone. At the time of our review, NRC was collecting 
information on plants' spent fuel programs to decide if it needs to 
revise its regulations and/or oversight. It had its inspectors collect 
basic information on all facilities' programs. It also contracted with 
the Department of Energy's Oak Ridge National Laboratory in Tennessee 
to review NRC's material control and accounting programs for nuclear 
material. NRC is planning to request information from plants and plans 
to visit over a dozen plants for more detailed inspection. The results 
of these efforts may not be completed until late 2005, over 5 years 
after the incident at Millstone that initiated NRC's efforts. However, 
we believed NRC has already collected considerable information 
indicating problems or weaknesses in plants' material control and 
accounting programs for spent fuel.
    GAO recommended that NRC (1) establish specific requirements for 
the way plants control and account for loose rods and fragments as well 
as conduct their physical inventories, and (2) develop and implement 
appropriate inspection procedures to verify plants' compliance with the 
requirements.
   nrc faces several broad challenges in effectively regulating and 
                    overseeing nuclear power plants
    Based on our recent work at NRC, we have identified several cross-
cutting challenges that NRC faces as it works to effectively regulate 
and oversee the nuclear power industry. First, NRC must manage the 
implementation of its risk-informed regulatory strategy across the 
agency's operations. Second, and relatedly, NRC must strive to achieve 
the appropriate balance between more direct involvement in the 
operations of nuclear power plants and self-reliance and self-reporting 
on the part of plant operators to do the right things to ensure safety. 
Third, and finally, NRC must ensure that the agency effectively manages 
resources to implement its risk-informed strategy and achieve the 
appropriate regulatory balance in the current context of increasing 
regulatory and oversight demands as the industry's interest in 
expansion grows.
NRC Must Manage the Implementation of Its Risk-Informed Regulatory 
        Strategy
    Nuclear power plants have many physical structures, systems, and 
components, and licensees have numerous activities under way, 24 hours 
a day, to ensure that plants operate safely. NRC relies on, among other 
things, the agency's onsite resident inspectors to assess plant 
conditions and oversee quality assurance programs, such as maintenance 
and operations, established by operators to ensure safety at the 
plants. Monitoring, maintenance, and inspection programs are used to 
ensure quality assurance and safe operations. To carry out these 
programs, licensees typically prepare numerous reports describing 
conditions at plants that need to be addressed to ensure continued safe 
operations. Because of the significant number of activities and 
physical structures, systems, and components, NRC adopted a risk-
informed strategy to focus inspections on those activities and pieces 
of equipment that are considered to be the most significant for 
protecting public health and safety. Under the risk-informed approach, 
some systems and activities that NRC considers to have relatively less 
safety significance receive little agency oversight. With its current 
resources, NRC can inspect only a relatively small sample of the 
numerous activities going on during complex plant operations. NRC has 
adopted a risk-informed approach because it believes that it can focus 
its regulatory resources on those areas of the plant that the agency 
considers the most important to safety. NRC has stated the adoption of 
this approach was made possible by the fact that safety performance at 
plants has improved as a result of more than 25 years of operating 
experience.
    Nevertheless, we believe that NRC faces a significant challenge in 
effectively implementing its risk-informed strategy, especially with 
regards to improving the quality of its risk information and 
identifying emerging technical issues and adjusting regulatory 
requirements before safety problems develop. The 2002 shutdown of the 
Davis-Besse plant illustrates this challenge, notably the shortcomings 
in NRC's risk estimate and failure to sufficiently address the boric 
acid corrosion and nozzle cracking issues. We also note that NRC's 
Inspector General considers the development and implementation of a 
risk-informed regulatory oversight strategy to be one of the most 
serious management challenges facing NRC.
NRC Must Balance Oversight and Industry Self-Compliance
    Under the Atomic Energy Act of 1954, as amended, and the Energy 
Reorganization Act of 1974, as amended, NRC and the operators of 
nuclear power plants share the responsibility for ensuring that nuclear 
reactors are operated safely. NRC is responsible for issuing 
regulations, licensing and inspecting plants, and requiring action, as 
necessary, to protect public health and safety. Plant operators have 
the primary responsibility for safely operating their plants in 
accordance with their licenses. NRC has the authority to take actions, 
up to and including shutting down a plant, if licensing conditions are 
not being met and the plant poses an undue risk to public health and 
safety.
    NRC has sought to strike a balance between verifying plants' 
compliance with requirements through inspections and affording 
licensees the opportunity to demonstrate that they are operating their 
plants safely. While NRC oversees processes, such as the use of 
performance measures and indicators, and requirements that licensees 
maintain their own quality assurance programs, NRC, in effect, relies 
on licensees and trusts them to a large extent to make sure their 
plants are operated safely. While this approach has generally worked, 
we believe that NRC still has work to do to effectively position itself 
so that it can identify problems with diminishing performance at 
individual plants before they become serious. For example, incidents 
such as the 2002 discovery of the extensive reactor vessel head 
corrosion at the Davis-Besse plant and the unaccounted for spent 
nuclear fuel at several plants across the country, raise questions 
about whether NRC is appropriately balancing agency involvement and 
self-monitoring by licensees. An important aspect of NRC's ability to 
rely on licensees to maintain their own quality assurance programs is a 
mechanism to identify deteriorating performance at a plant before the 
plant becomes a problem. At Davis-Besse, NRC inspectors viewed the 
licensee as a good performer based on its past performance and did not 
ask the questions that should have been asked about plant conditions. 
Consequently, the inspectors did not make sure that the licensee 
adequately investigated the indications of the problem and did not 
fully communicate the indications to the regional office and NRC 
headquarters.
NRC Must Manage Agency Resources to Meet Increasing Regulatory and 
        Oversight Demands
    Finally, Mr. Chairman, I would also like to comment briefly on 
NRC's resources. While we have not assessed the adequacy of NRC's 
resources, we have noted instances, such the shutdown of the Davis-
Besse plant, where resource constraints affected the agency's oversight 
or delayed certain activities. NRC's resources have been challenged by 
the need to enhance security at nuclear power plants after the 
September 11, 2001, terrorist attacks, and they will continue to be 
challenged as the nation's fleet of nuclear power plants age and the 
industry's interest grows in both licensing and constructing newplants, 
and re-licensing and increasing the output of existing plants. Resource 
demands will also increase when the Department of Energy submits for 
NRC review, an application to construct and operate a national 
depository for high-level radioactive waste currently planned for Yucca 
Mountain, Nevada. We believe that it is important for NRC and the 
Congress to monitor agency resources as these demands arise in order to 
ensure that NRC can meet all of its regulatory and oversight 
responsibilities and fulfill its mission to ensure adequate protection 
of public health, safety, and the environment.
                               conclusion
    In closing, we recognize and appreciate the complexities of NRC's 
regulatory and oversight efforts required to ensure the safe and secure 
operation of the nation's commercial nuclear power plants. As GAO's 
recent work has demonstrated, NRC does a lot right but it still has 
important work to do. Whether NRC carries out its regulatory and 
oversight responsibilities in an effective and credible manner will 
have a significant impact on the future direction of our nation's use 
of nuclear power.
    Finally, we note that NRC has generally been responsive to our 
report findings. Although the agency does not always agree with our 
specific recommendations, it has continued to work to improve in the 
areas we have identified. It has implemented many of our 
recommendations and is working on others. For example, with respect to 
nuclear power plant security, NRC has restored its security inspection 
program and resumed its forceon-force exercises with a much higher 
level of intensity. It is also strengthening these exercises by 
conducting them at individual plants every 3 years rather than every 8 
years, and is using laser equipment to reduce the exercises' 
artificiality. Another example involves sealed radioactive sources. NRC 
is working with agreement states to develop a process for ensuring that 
high-risk radioactive sources cannot be obtained before verification 
that the materials will be used as intended. NRC anticipates that an 
NRC-agreement state working group will deliver a recommended approach 
to NRC senior management later this year. In addition, NRC continues to 
work on its broader challenges. For example, the agency intends to 
develop additional regulatory guidance to expand the application of 
risk-informed decisionmaking, including addressing the need to 
establish quality requirements for risk information and specific 
instructions for documenting the decisionmaking process and its 
conclusions.
    We will continue to track NRC's progress in implementing our 
recommendations. In addition, as members of this subcommittee are 
aware, GAO has been asked to review the effectiveness of NRC's 
activities for overseeing nuclear power plants, that is, its reactor 
oversight process. An important part of that work would be to review 
the agency's risk-informed regulatory strategy and its effectiveness in 
identifying deteriorating plant performance as well as whether NRC is 
making progress toward effectively balancing agency inspections and 
self-monitoring by licensees.
    Mr. Chairman, this completes my prepared statement. I would be 
pleased to respond to any questions that you or other Members of the 
subcommittee may have.
                gao contacts and staff acknowledgements
    For further information about this testimony, please contact me at 
(202) 512-3841 (or at [email protected]). John W. Delicath, Ilene Pollack, 
and Raymond H. Smith, Jr. made key contributions to this testimony.
                               appendix i
Related GAO Products
Nuclear Waste: Preliminary Observations on the QualityAssurance Program 
    at the Yucca Mountain Repository. GAO-03-826T. Washington, D.C.: 
    May 28, 2003.
Nuclear Regulatory Commission: Revision of Fee Schedules; Fee Recovery 
    for fiscal year 2003 GAO-03-934R. Washington, D.C.: June 30, 2003.
Spent Nuclear Fuel: Options Exist to Further Enhance Security. GAO-03-
    426. Washington, D.C.: July 15, 2003.
Nuclear Security: Federal and State Action Needed to Improve Security 
    of Sealed Radioactive Sources. GAO-03-804. Washington, D.C.: August 
    6, 2003.
Nuclear Regulatory Commission: Oversight of Security at Commercial 
    Nuclear Power Plants Needs to Be Strengthened GAO-03-752. 
    Washington, D.C.: September 4, 2003.
Nuclear Regulation: NRC Needs More Effective Analysis to Ensure 
    Accumulation of Funds to Decommission Nuclear Power Plants GAO-04-
    32. Washington, D.C.: October 30, 2003.
Information Technology Management: Governmentwide Strategic Planning, 
    Performance Measurement, and Investment Management Can Be Further 
    Improved GAO-04-49. Washington, D.C.: January 12, 2004.
Yucca Mountain: Persistent Quality Assurance Problems Could Delay 
    Repository Licensing and Operation. GAO-04460. Washington, D.C.: 
    April 30, 2004.
Nuclear Regulation: NRC Needs to More Aggressively and Comprehensively 
    Resolve Issues Related to the Davis Besse Nuclear Power Plants 
    Shutdown. GAO-04-415. Washington, D.C.: May 17, 2004.
Nuclear Regulation: NRC'S Liability Insurance Requirements for Nuclear 
    Power Plants Owned by Limited Liability Companies. GAO-04-654. 
    Washington, D.C.: May 28, 2004.
Low-Level Radioactive Waste: Disposal Availability Adequate in the 
    Short Term, but Oversight Needed to Identify Any Future Shortfalls. 
    GAO-04-604. Washington, D.C.: June 10, 2004.
Nuclear Nonproliferation: DOE Needs to Take Action to Further Reduce 
    the Use of Weapons-Usable Uranium in Civilian Research Reactors 
    GAO-04-807. Washington, D.C.: July 30, 2004.
Nuclear Regulatory Commission: Preliminary Observations on Efforts to 
    Improve Security at Nuclear Power Plants. GAO-04-1064T. Washington, 
    D.C.: September 14, 2004.
Low-Level Radioactive Waste: Future Waste Volumes and Disposal Options 
    Are Uncertain. GAO-04-1097T. Washington, D.C.: September 30, 2004.
Nuclear Regulatory Commission: NRC Needs to Do More to Ensure that 
    Power Plants Are Effectively Controlling Spent Nuclear Fuel GAO-05-
    339. Washington, D.C.: April 8, 2005.
                                 ______
                                 
  Response by Jim Wells to Additional Question from Senator Lautenberg
    Question. You raise questions about whether the NRC adequately 
balances oversight with the industry's self-monitoring. In today's 
increasingly competitive electricity markets would you agree that 
industry executives might feel compelled to place profits over consumer 
safety? Could this be one reason that needed plant shutdowns are 
sometimes delayed?
    Response. No doubt nuclear power plants must sell the electricity 
they generate in markets that are increasingly competitive, and keeping 
costs down is an important aspect of being successful in these markets. 
During plant shutdown, costs are incurred but no electricity is being 
generated, which only adds to the costs that need to be recovered from 
electricity sales when the plant is operating. These costs include the 
cost of purchasing likely more-expensive electricity from other sources 
to meet a plant's electricity commitments to customers during shutdown. 
Thus, a decision to shut down a plant can have substantial financial 
impacts. During our review of the issues surrounding the 2002 shutdown 
of the Davis-Besse plant in Ohio, we heard some concerns expressed that 
plant performance had deteriorated as plant management tried to keep 
expenses down and that financial considerations may have played too 
large a role in some of the decisions that plant management made. 
However, our review of the Davis-Besse incident focused on NRC's 
oversight, and we found no evidence that the owner placed profits over 
safety.
                               __________
   Statement of Marilyn C. Kray, Vice President, Exelon Nuclear and 
                 President, NuStart Energy Development
    Chairman Voinovich, Senator Carper, Members of the Subcommittee:
    Thank you for the opportunity to appear before you today to discuss 
NuStart Energy Development's activities. I am Marilyn Kray, Vice 
President of Project Development for Exelon Nuclear and President of 
NuStart Energy Development.
    NuStart is a consortium of nine U.S. power companies and two 
reactor vendors\1\ that was formed last year with two purposes: first, 
to demonstrate the Nuclear Regulatory Commission's never-before-used 
licensing process to obtain a combined Construction and Operating 
License (COL) for an advanced nuclear power plant; and second, to 
complete the design engineering for two advanced reactor technologies, 
General Electric's Economic Simplified Boiling Water Reactor (ESBWR) 
and Westinghouse's Advanced Passive AP-1000. NuStart activities are 
being funded by the Department of Energy on a 50/50 cost sharing 
arrangement under the Nuclear Power 2010 Program.
---------------------------------------------------------------------------
    \1\ Power companies include: Constellation Energy, Duke Energy, EDF 
International North America, Entergy Nuclear, Exelon Generation, 
Florida Power and Light, Progress Energy, Southern Company and 
Tennessee Valley Authority. Reactor vendors include General Electric 
and Westinghouse.
---------------------------------------------------------------------------
    Demonstrating the NRC licensing process and completing the 
engineering for new reactor designs are critical first steps toward the 
construction of a new generation of reactors in the United States, and 
the NRC will play a central role in both efforts.
    NuStart plans to submit two COL applications to the NRC in 2008, 
and we anticipate that the Commission will complete its review of the 
applications by 2011. COL approval would allow a company or consortium 
of companies to begin construction of a new reactor with the hope of 
having a plant begin operation by 2015.
    In general, the nuclear industry has identified seven preconditions 
to the construction of new nuclear plants. In addition to the NuStart 
objectives of demonstrating the regulatory process and completing 
reactor designs for passive technologies, these include:
     A demonstrated need for new base load power
     Confidence in a long-term solution for used fuel disposal
     Public confidence in nuclear power
     A sound nuclear power infrastructure
     Acceptable financial returns
    I would like to touch briefly on each of these issues and to 
discuss the important role that the NRC and this Committee play in many 
of these areas.
                  demonstration of regulatory process
    As noted above, one of NuStart's primary objectives is to 
demonstrate the Nuclear Regulatory Commission's never-before-used 
licensing process to obtain a combined Construction and Operating 
License (COL) for an advanced nuclear power plant.
    Obtaining a COL is a critical step in a potential renaissance of 
the nuclear power industry in the United States. By achieving this, 
NuStart hopes to demonstrate that the COL can be obtained on schedule 
and within budget, and that advanced plant designs can be approved. 
Further, NuStart's efforts will provide a realistic time and cost 
estimate for building and operating a new nuclear plant in today's 
environment.
    During the 1980s, nuclear plants were plagued with significant cost 
overruns due in large part to the regulatory uncertainty inherent in 
the NRC licensing process. Many major issues were argued and litigated 
only after plants had been constructed, in some cases delaying plant 
operations for years.
    Congress took an important step to reform the licensing process as 
part of the Energy Policy Act of 1992 with the codification of the 
NRC's combined Construction and Operating License regulations under 10 
CFR Part 52. The COL process is designed to provide all parties with an 
opportunity to raise issues related to siting and plant design before a 
license is granted. Once a plant is built, the only question before the 
Commission is whether the licensee has constructed the plant in 
conformance with its license. On paper the process appears to be sound; 
however, investor confidence will not be established until the process 
is demonstrated, as proposed under the NuStart project.
    The new licensing process also gives potential licensees an 
opportunity to have sites pre-approved by the Commission. The Early 
Site Permit (ESP) process allows a potential licensee to apply to the 
Commission for approval of a site for a new nuclear plant. Companies 
provide the NRC with extensive data on the proposed site, as well as 
information about the reactor design that could be built on the site. 
If a site is approved, a company can ``bank'' the site for as long as 
20 years.
    Also under the Department of Energy's Nuclear Power 2010 program, 
three companies have received matching funds to develop and submit 
Early Site Permit applications to the NRC: Dominion's North Anna site 
in Virginia, Entergy's Grand Gulf site in Mississippi, and Exelon's 
Clinton Power Station in Illinois. All three applications are currently 
under review by the NRC, and we expect the Commission to issue the 
resultant permits starting in second half of 2006.
    Other issues related to a stable regulatory environment include NRC 
management and security regulations for licensees.
    The Commission's Regulatory Oversight Process, which seeks to focus 
NRC activities on those issues which carry the highest level of safety 
significance, has provided objective, measurable, safety-significant 
performance indicators that can be used as a basis for the assessment 
of licensee performance.
    S. 864, the Nuclear Safety and Security Act, makes important 
reforms to the Atomic Energy Act to grant the NRC additional authority 
related to plant safety and security. The bill authorizes the use of 
firearms by security personnel and requires fingerprinting and criminal 
background checks for key personnel.
    What remains, however, is the identification of any additional 
security requirements that may be imposed on new plants. Incorporation 
of these further enhancements into the ongoing design development will 
be easier the earlier they are identified.
         completion of reactor designs for passive technologies
    Another aspect of the revised NRC licensing regulations allows 
reactor vendors to submit designs to the NRC for Design Certification. 
This process allows the NRC to evaluate potential designs and allows 
for public participation in the certification process. Once a design is 
certified by the Commission, it can be paired with an Early Site Permit 
and used in the submission of a Construction and Operating License.
    NuStart plans to complete the design engineering for two advanced 
reactor technologies, General Electric's ESBWR and Westinghouse's AP-
1000. NuStart selected these technologies because they represent the 
optimization of operational confidence and innovation. They are natural 
evolutions of the designs currently in operation, yet both of these 
technologies adopt simplified design features and technology 
improvements that rely on inherent, passive safety systems. In this 
context, ``passive'' refers to design principles 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. The result is an enhancement to safety 
because there is less reliance on equipment performance and operator 
action, and a reduction in cost because there is less equipment to 
construct and maintain.
    NuStart's work with the reactor vendors to complete the one-time 
generic engineering work necessary for the standardized plant designs 
will position these technologies for deployment when needed, thereby 
significantly reducing the time to market for a new nuclear plant.
    We are working closely with the Commission to assure that adequate 
staff resources will be in place to review the designs in a thorough 
and timely manner.
                        need for base load power
    Before any company commits to new generation, there must be 
confidence that there will be a need for new base load power. In some 
regions of the country, new base load power will be needed in the near 
future; in others, however, electric capacity is estimated to be 
sufficient to meet demand for the next 10 years or more. The market, 
not the energy industry nor the Federal Government, will dictate when 
new base load power is needed.
              a long-term solution for used fuel disposal
    While nuclear energy has a proven track record in the United States 
as a clean, economic and reliable source of energy, used fuel from 
nuclear plants must be managed to permanently isolate it from the 
environment.
    Before new plants can be built, energy companies, investors and the 
public must be confident that there is a long-term solution for the 
disposal of used nuclear fuel. While individual companies may have 
different views on what constitutes an acceptable solution, it is 
essential that the Federal Government continue to make progress on 
meeting its statutory and contractual obligation to begin removing used 
fuel from reactor sites.
    In 1982, the Federal Government codified its obligation to assure 
for the permanent disposal of high-level radioactive waste and used 
nuclear fuel. In 2002, Congress upheld President George W. Bush's 
designation of Yucca Mountain, Nevada, as the site for the nation's 
permanent, deep geologic repository. While the Yucca Mountain project 
faces a number of challenges, the industry is confident that it will 
prove to be a scientifically suitable site for the permanent disposal 
of nuclear material.
    The NRC will play a critical role in reviewing the license 
application for the proposed repository, and it is essential that the 
Commission have the resources necessary to complete its review.
                   public confidence in nuclear power
    New nuclear power plants cannot be built without a high degree of 
public confidence in the safety of the technology, the competence and 
commitment of reactor operators, and the dedication of regulators. The 
industry recognizes that public confidence is based on the performance 
of our current fleet of plants. We must remain ever vigilant to the 
safety responsibility entrusted to us.
    Public awareness of nuclear energy's positive contribution to 
energy independence, clean air, and a reliable, low-cost energy supply, 
has led to greater support in recent years. The nuclear industry's 
commitment to safe operations and its proven track record over the last 
25 years have also reinforced public support for nuclear technology. In 
fact, recent surveys conducted on behalf of the Nuclear Energy 
Institute indicates that support for nuclear energy is at an all-time 
high, with 67 percent of Americans favoring the use of nuclear energy.
    Public confidence in nuclear energy is also reinforced by the 
Price-Anderson Act, which assures that the public will be compensated 
quickly in the unlikely event of a nuclear incident. The Price-Anderson 
Act serves as a no-fault insurance policy, similar to that approved by 
Congress in the aftermath of the 9/11 attacks. Under Price-Anderson, 
the nuclear industry provides over $9 billion in coverage for a nuclear 
incident. Should claims exceed that amount, Congress is authorized to 
provide for additional compensation, including additional contributions 
from reactor owners. It is important to note that no taxpayer funds 
have been paid as a result of the Price-Anderson Act.
    Both the Department of Energy and the Nuclear Regulatory Commission 
support Price-Anderson extension. While S. 865, the Price-Anderson 
Amendments Act of 2005, calls for a 20-year extension of the Act, the 
nuclear industry strong supports an indefinite extension of the Act.
    The formation of NuStart resulted in significant public attention 
and led community leaders in Port Gibson, Mississippi; Oswego, New 
York; and Aiken, South Carolina to contact the consortium to express 
interest in having a new plant built in their area.
    Last week, NuStart reached a major milestone with the announcement 
of six candidate sites for new reactors. These sites will be evaluated 
over the next several months, and two sites will be chosen for 
inclusion in NuStart's COL applications. The sites named last week are:
     Bellefonte Nuclear Plant, Hollywood, Alabama, owned by the 
Tennessee Valley Authority
     Grand Gulf Nuclear Station, Port Gibson, Mississippi, 
owned by Entergy Nuclear
     River Bend Nuclear Station, St. Francisville, Louisiana, 
also owned by Entergy
     Savannah River Site, a Department of Energy facility near 
Aiken, South Carolina
     Calvert Cliffs Nuclear Power Plant, Lusby, Maryland, owned 
by Constellation Energy
     Nine Mile Point Nuclear Station in Scriba, New York, owned 
by Constellation Energy
                      nuclear power infrastructure
    A critical challenge for the nuclear industry is the continued 
presence of a strong nuclear power infrastructure. This infrastructure 
includes the engineering expertise to design, construct, and operate 
plants; the existence of a strong educational network at the nation's 
colleges and universities; and the presence of knowledgeable and 
dedicated personnel to staff the Nuclear Regulatory Commission.
    The lull in the construction of new nuclear power plants in the 
1990s led to a decrease in the number of nuclear engineering students 
in American universities. As with many other businesses, the nuclear 
industry faces an aging workforce. If the commercial nuclear power 
industry in the United States is to expand, it is imperative that the 
Nation has a skilled workforce that is ready to construct, operate, and 
support new plants.
    S. 858, the Nuclear Fees Reauthorization Act, includes provisions 
to addresses the human capital issue by authorizing the Commission to 
support institutions of higher learning to support courses related to 
nuclear safety, security or environmental protection; establishing an 
NRC scholarship and fellowship program; and authorizing the Commission 
to establish a partnership program with institutions of higher learning 
to promote education and research in relevant fields of study.
                      acceptable financial returns
    As a final prerequisite for new plant construction, companies will 
have to be confident that they can provide their shareholders with an 
acceptable financial return on their investment. Any investment in 
nuclear power must look attractive not only on an absolute basis, but 
superior to other fuel alternatives.
    While the industry is optimistic that nuclear generation can be 
competitive to the other alternatives, it does expect that the ``first 
mover'' investors will face significant hurdles unique to a nuclear 
investment. Accordingly, financial incentives to stimulate construction 
of new nuclear plants will be needed. These incentives should address 
factors such as the licensing risk, investments risks and the issues 
that make it difficult for companies to undertake capital-intensive 
projects (i.e. earnings dilution during construction and long period 
for recovery of capital investment under existing tax depreciation 
rules). Such a cooperative industry /government financing program for 
the first plants is a necessary and appropriate investment in U.S. 
energy security.
                               conclusion
    Nuclear power is a critical component to our nation's overall 
energy portfolio and our pursuit of energy independence. Our interest 
in nuclear power is not to the exclusion of other energy sources. To 
date, nuclear power has managed to uphold its 20 percent contribution 
level despite the growing demand. This was possible because of the 
improvement opportunities to uprate the units and improve capacity 
factor. These opportunities are close to being exhausted. As a result, 
the percentage contribution level of nuclear will begin to decrease 
absent the construction of new plants.
    One of the foundations of the nuclear industry is the commitment to 
planning. Although there is no immediate need for base load power, we 
recognize that action is needed now in order to preserve the nuclear 
option for the future. By identifying the preconditions for new plants 
we are able to develop action plans to address them. NuStart was formed 
to serve as the unified industry mechanism for addressing certain of 
these preconditions.
    Thank you for the opportunity to appear before you today.
                                 ______
                                 
  Responses by Marilyn C. Kray to Additional Questions from Senatror 
                                 Inhofe
    Question 1. With the announcement of the sites this week, you have 
reached an important milestone, what are the next milestones and 
timelines for NuStart--in other words, what is the next announcement 
that we should anticipate and when do you expect that to occur? What 
obstacles must (be) cleared to achieve that next milestone?
    Response. The announcement of the six finalist sites was a 
significant milestone for the NuStart project. This announcement was 
the result of establishing a methodical approach for identifying 
candidate sites and performing initial evaluations. For the remainder 
of the calendar year, the NuStart milestones are as follows:

Third Quarter, 2005: Submittal of the General Electric Design 
    Certification application to the NRC for the Economic Simplified 
    Boiling Water Reactor (ESBWR)
October 1, 2005: Selection the two sites for the Combined Operating 
    License (COL) applications
December 31, 2005: Westinghouse receipt of Design Certification from 
    the NRC for the Advanced Passive (AP) 1000

    With a Cooperative Agreement in place between NuStart Energy 
Development and the Department of Energy under the Nuclear Power 2010 
Program, NuStart is well positioned to meet these near-term project 
milestones. For the remainder of the NuStart project, however, the 
ability of NuStart to meet its intended milestones is contingent upon 
continued funding of the Nuclear Power 2010 Program. These future 
milestones include the submittal of the two COL applications to the NRC 
and the NRC's subsequent review and approval. For 2006, we estimate 
that $74M is needed to fund the NuStart project as well as other 
Nuclear Power 2010 programs.
    The $74M estimate is $18M above that suggested in the DOE 2006 
budget. This increase is primarily a result of a proposed revision to 
the NuStart project to enable two sites to be selected and a separate 
COL application prepared and submitted for each. Additionally, NuStart 
has worked with each reactor vendor to accelerate the schedule for 
submittal of the COLS to the NRC. Both of these changes were made in 
response to interactions with the Department of Energy and the 
President's call for more new nuclear power plants.

    Question 2. We often hear the argument that Price-Anderson was 
necessary 50 years ago to help an industry that had yet to be 
established, and that now that we have a mature nuclear industry, 
Price-Anderson is no longer necessary. Is Price-Anderson necessary for 
new nuclear units?
    Response. Yes. Renewing the Act is an important step for new 
nuclear plant construction and for the public. The need for the 
provisions afforded by Price-Anderson is not necessarily linked to the 
maturity of the industry. The Price-Anderson Act provides prompt 
compensation to any persons harmed by a severe accident at a nuclear 
power plant in the U.S., even though the probability of such an 
accident is extremely remote. The law has served as a model for 
legislation in other areas ranging from vaccine compensation and 
medical malpractice to chemical waste cleanup.
    The act provides substantial protection to the American public and 
eliminates any litigation regarding fault in the event of a severe 
accident at a nuclear power plant, which the U.S. Nuclear Regulatory 
Commission determines to be an ``extraordinary nuclear occurrence.'' No 
other industry or insurance mechanism provides this degree of 
protection, up to $10 billion.
    The costs of the Price-Anderson protection, like all the costs of 
nuclear-generated electricity, are borne by the industry, unlike the 
corresponding costs of some major power alternatives. Risks from 
hydropower (dam failure and resultant flooding), for example, are borne 
directly by the public. The 1977 failure of the Teton Dam in Idaho 
caused $500 million in property damage and the only compensation for 
individuals and businesses damaged by this event was about $200 million 
in low-cost government loans.
                                 ______
                                 
         Responses by Marilyn C. Kray to Additional Questions 
                         from Senator Voinovich
    Question 1. How well do you think the NRC is prepared to handle the 
several important licensing issues--re-licensing for existing plants, 
potential applications to build new facilities, and Yucca Mountain--
that are all occurring at the same time?
    Response. The NRC is facing a resource challenge similar to that of 
the rest of the nuclear industry. According to a Nuclear Energy 
Institute (NEI) staffing survey published in 2004, nuclear power 
generation companies may lose an estimated 16,000 workers over the next 
5 years, representing 28 percent of all jobs in the sector. The survey 
further found that nearly half of industry employees are over 47 years 
old, and less than 7 percent of employees are younger than 32 years 
old. This imbalance suggests a potentially inadequate supply of trained 
employees to replace departing personnel.
    The industry has a major workforce activity for ensuring that 
qualified personnel will be available to support extended operating 
lifetimes for existing plants and new plant design, construction and 
operations. While this challenge is far from being resolved, specific 
interactions and partnerships are being established with labor 
organizations, universities, community colleges, high schools and 
middle schools to increase interest in the nuclear industry and 
associated engineering technologies.
    We recognize that the NRC challenge is amplified by the need to 
staff for concurrent activities associated with new plants, the Yucca 
Mountain repository and re-licensing of existing plants. To date, the 
NRC has reviewed and approved approximately 30 license renewal 
applications. The process for re-licensing has evolved into one that is 
both stable and consistent.
    Similar NRC readiness will be needed to address the new plant 
activities. NRC management has expressed doubts on being able to manage 
more than three new plant licensing reviews at a given time: for 
example, a Design Certification review plus a Combined Operating 
License (COL) application review plus an Early Site Permit review, or a 
review of three parallel COL applications. This emerging NRC resource 
issue could become a barrier to new plant deployment, a critical 
element in the President and Congress's energy initiatives.
    In the last 9 months, as the pace of industry-NRC interactions has 
increased, the resource estimates for NRC new plant licensing review 
activities has grown more uncertain. The NRC resource estimate for the 
review of a COL application, which references an Early Site Permit and 
a Design Certification has risen from 33 Full-Time-Equivalents (FTEs) 
to over 60 FTEs, with a corresponding increase in estimated contractor 
costs. This uncertainty increases generating company anxiety over the 
new licensing process.
    To ease the new plant licensing resource burden, we encourage the 
NRC to incorporate lessons learned from the Design Certifications and 
Early Site Permit demonstration projects into the licensing process, 
emulating the successful improvements in license renewal review 
efficiencies.
    NuStart recognizes the role that the industry plays as potential 
applicants for these upcoming licensing actions. That is, we will 
continue to advise the NRC of our plans well in advance so as to allow 
the agency ample time to prepare.

    Question 2. While S. 865, the Price-Anderson Act of 2005, 
reauthorizes the program for 20 years, you have asked for an indefinite 
extension. What are the advantages of a longer--or indefinite--
extension?
    Response. The Price-Anderson Act provides substantial benefit in 
its comprehensive protection to the American public.
    Nuclear power plants provide up to a total of $10 billion in 
insurance coverage to compensate the public in the event of an 
extremely unlikely severe nuclear accident and the Federal Government 
pays nothing for this basic coverage. The act provides substantial 
protection to the American public and eliminates any litigation 
regarding fault in the event of a severe accident at a nuclear power 
plant, which the U.S. Nuclear Regulatory Commission determines to be an 
``extraordinary nuclear occurrence.'' No other industry or insurance 
mechanism provides this degree of protection, up to $10 billion.
    The costs of the Price-Anderson protection, like all the costs of 
nuclear-generated electricity, are borne by the industry, unlike the 
corresponding costs of some major power alternatives. Risks from 
hydropower (dam failure and resultant flooding), for example, are borne 
directly by the public. The 1977 failure of the Teton Dam in Idaho 
caused $500 million in property damage and the only compensation for 
individuals and businesses damaged by this event was about $200 million 
in low-cost government loans.
    The periodic renewal of Price-Anderson casts doubt and uncertainty 
on whether the coverage will be available in the future and that could 
impact the long-term planning strategies and decisionmaking process of 
U.S. generating companies. In addition, continued periodic renewal of 
Price-Anderson unnecessarily increases the Congressional workload and 
staffing burden, when an indefinite or 50-year renewal can be justified 
based on the benefit provided to the American public.
                               __________
  Statement of Dr. Edwin S. Lyman, Senior Scientist, Global Security 
                 Program, Union of Concerned Scientists
    Mr. Chairman and members of the Subcommittee, on behalf of the 
Union of Concerned Scientists, I would like to thank you for the 
opportunity to present our views on the effectiveness of the Nuclear 
Regulatory Commission (NRC) in overseeing the security and safety of 
nuclear power plants in the United States.
    My name is Edwin Lyman. I have been a Senior Scientist with the 
Global Security Program at the Union of Concerned Scientists (UCS) 
since May 2003, focusing on ways to prevent nuclear proliferation, 
nuclear terrorism and radiological terrorism. I have been working on 
these issues for 14 years. Prior to my current position, I was with the 
Nuclear Control Institute for 7 years, and served as its president from 
2002-2003. I received a PhD in physics from Cornell University in 1992, 
after which I did 3 years of postdoctoral work at Princeton, analyzing 
issues at the intersection of nuclear nonproliferation, nuclear safety 
and environmental protection.
    I am testifying today as a public interest advocate in an unusual 
position. As the resultof my participation in an NRC hearing on 
security issues at a nuclear power plant in South Carolina, I have had 
access both to site-specific security information and to general 
information pertaining to the NRC's post-9/11 security policies. I 
cannot discuss that information here in open session, although I would 
welcome the opportunity to do so at some future time in a closed forum. 
However, I am able to say that my long-standing concerns about security 
at NRC-regulated facilities have by no means been alleviated by what I 
have learned.
    As I will discuss, UCS has two basic concerns about security at 
U.S. nuclear facilities in the post-9/11 world. First, some of these 
facilities possess highly enriched uranium or plutonium, which can be 
used to make nuclear weapons, and this material is potentially 
vulnerable to theft by terrorists. Second, nuclear power plants remain 
vulnerable to terrorist attacks that could result in the release of 
significant radiation--far more deadly than any ``dirty bomb.''
    What I find most troubling is that I see little evidence of 
``outside-the-box'' thinking going on in the NRC or in the industry in 
response to emerging threats or safety concerns. They do not want to 
question the assumptions they have made because they are afraid of the 
answers they might get, especially if those answers end up costing the 
industry more money. But I doubt that America's adversaries put similar 
constraints on themselves when plotting attacks.
    The NRC has become too self-satisfied with the way it does 
business, too evasive about potential hazards, too unresponsive to 
external criticism, and too close to the industry that it regulates. 
Stringent oversight of the NRC by Congress and independent non-
governmental groups is essential to counterbalance the lax regulation 
and enforcement that can result from complacency and to ensure that the 
NRC can effectively protect public health and safety. Congressional 
action in the security area is especially important, because the 
American public cannot directly participate in the discussion and has 
little other recourse for ensuring that the government is doing 
everything it can to protect it from nuclear and radiological 
terrorism. To this end, legislation is needed to ensure that there is 
independent review of NRC policy decisions pertaining to the protection 
of America's commercial nuclear facilities against both radiological 
sabotage' and theft of weapon-usable materials.
                    theft of weapon-usable materials
    Only a relatively small number of NRC-licensed facilities possess 
significant quantities of highly enriched uranium or plutonium, which 
if stolen could be used to make nuclear explosive devices. These 
include a couple of fuel fabrication plants and a number of research 
reactors. But the NRC's responsibilities for regulation of the 
protection of nuclear materials against theft are growing in two key 
respects.
    First, in the post-9/11 world there is greater concern about the 
potential for theft of weapon-usable fissile materials, in light of 
revelations that al Qaeda and other terrorist groups are intent on 
acquiring nuclear weapons. This calls into question, for example, the 
relatively lax security requirements that the NRC imposes on university 
research reactors that possess substantial quantities of highly 
enriched uranium.
    Second, the number of NRC-licensed facilities that possess 
significant quantities of plutonium will increase if there is further 
action in the U.S. Department of Energy's troubled program to dispose 
of excess weapon-grade plutonium by converting it to mixed-oxide fuel 
(MOX) and irradiating it in commercial reactors. Only last month, Duke 
Energy's Catawba plant in South Carolina became the first U.S. nuclear 
power plant in decades to qualify as a ``Category I'' plutonium 
facility by virtue of its receipt of 80 kilograms of plutonium 
contained in four MOX lead test assemblies--enough to make a dozen 
Nagasaki-type nuclear bombs. If the test is successful, at least one 
other site, Duke's McGuire plant in North Carolina, will take part in 
the program, and much larger quantities of plutonium-bearing MOX fuel 
will be shipped to both sites for years.
    The NRC's approach to ensuring the security of materials at these 
facilities against theft should be evolving to keep pace with the 
growing threat, but in our judgment, it is not. Instead, the NRC is 
weakening the standards. This is a problem because, at the same time, 
the U.S. is trying to teach Russia to better protect its own weapon-
usable material. We would urge the Congress to take a closer look at 
these issues.
    terrorist attacks on nuclear power plants and their consequences
    More than 3 years after the 9/11 attacks, UCS continues to have 
serious concerns about the adequacy of NRC efforts to reduce the 
vulnerability of nuclear power plants to radiological sabotage attacks. 
If a team of well-trained terrorists were to succeed in gaining forced 
entry to a nuclear power plant, within a matter of minutes it could do 
enough damage to cause a meltdown of the core and a failure of the 
containment structure. Such an attack would have a devastating and 
long-lasting impact on public health, the environment, and the economy. 
A groundswell of public opposition to nuclear power would likely 
result, making it difficult for utilities to continue to operate 
existing nuclear plants, much less to construct new ones.
    The public has a right to know about the dangers that they may face 
from plants in their vicinity, and the NRC has a responsibility to 
ensure that emergency planning is based on the most accurate 
information and is conservative enough to provide ample protection. But 
the NRC is doing a disservice to the public by making misleading and 
confusing statements about the potential consequences of terrorist 
attacks or severe accidents at nuclear plants. It has backed away from 
its own publicly available pre-9/11 radiological assessments, and 
claims that more recent analyses show that there is much less cause for 
concern. But the public must take these claims on faith, because the 
new assessments are all classified.
    After the 9/11 attacks, the NRC repeatedly asserted that the public 
had little to fear from a jumbo jet attack on a nuclear plant, because 
of the plants' redundant safety systems, highly trained operators, 
robust structures, and emergency procedures. But the NRC admitted that 
it had never analyzed such attacks, so it commissioned classified 
vulnerability assessments from the national laboratories to determine 
what could actually happen.
    After these studies were completed, the NRC then conceded that 
there was a small chance that such an attack could cause a radiological 
release, but maintained that the NRC's ``emergency planning basis'' 
would remain valid.\1\ However, the NBC's emergency planning basis 
already includes, in principle, consideration of severe, Chernobyl-type 
accidents involving core melt and containment failure. So all the NRC's 
statement actually says is that a 9/11-style attack on a nuclear plant 
wouldn't cause an event worse than Chernobyl, which is not very 
reassuring. And, as I discuss below, in the event that such a calamity 
occurs, NRC's emergency planning procedures may help to limit the near-
term deaths from acute exposure to radiation, but would have little 
impact on the large numbers of cancer fatalities that could result from 
lower but still significant exposures to the radioactive plume.
---------------------------------------------------------------------------
    \1\ Statement submitted by Luis Reyes, U.S. Nuclear Regulatory 
Commission, to the Subcommittee on National Security, Emerging Threats 
and International Relations, Committee on Government Reform, U.S. House 
of Representatives, September 14, 2004, p. 8.
---------------------------------------------------------------------------
    The effects of such attacks would be particularly severe for 
nuclear plants situated in densely populated metropolitan areas and 
near nerve centers of our economy, such as Indian Point, only 25 miles 
north of New York City. A study that I prepared last year for the 
environmental group Riverkeeper found that the consequences of a 
terrorist attack at one of the reactors at Indian Point could be 
catastrophic, with up to 44,000 deaths in the near-term from acute 
radiation poisoning, 500,000 deaths in the long-term from cancer, and 
economic damages that could exceed $2 trillion.\2\ It is hard to 
conceive of a ``dirty bomb'' that could do as much damage. This study 
was performed using the same computer codes and radiological releases 
(``source terms'') that NRC itself uses for conducting radiological 
assessments.
---------------------------------------------------------------------------
    \2\ Edwin S. Lyman, ``Chernobyl-on-the-Hudson? The Health and 
Economic Impacts of a Terrorist Attack at the Indian Point Nuclear 
Plant,'' commissioned by Riverkeeper, Inc., September 2004.
---------------------------------------------------------------------------
    Another notable finding of the Indian Point study is the widespread 
extent of the contamination that can result from a nuclear plant 
attack. The calculations clearly showed that severe health consequences 
can occur at locations far downwind of the affected plant, with near-
term fatalities occurring up to 60 miles away. An attack on Indian 
Point could be catastrophic not only for New York City but also for 
densely populated parts of New Jersey and Connecticut.
    Perhaps the most troubling result of the study involved the doses 
to children from radioactive iodine exposure. Radioactive iodine can 
concentrate in the thyroid, delivering very high radiation doses to 
thyroid tissue and posing an elevated risk of thyroid cancer, 
particularly in children. One of the terrible legacies of the 1986 
Chernobyl accident is the epidemic of thyroid cancer among children 
exposed to radioactive iodine, a causal relationship that has now been 
conclusively established.\3\
---------------------------------------------------------------------------
    \3\ E. Cardis et al., ``Risk of Thyroid Cancer After Exposure to 
131I in Childhood,'' Journal of the National Cancer Institute 97 (2005) 
724-32.
---------------------------------------------------------------------------
    Potassium iodide (KI), if administered within a few hours of 
exposure to radioactive iodine, can be very effective in reducing the 
radiological impact. NRC's policy is to provide funds for purchase of 
KI, in states that request it, for individuals within the roughly 
circular, 10-mile-radius ``plume exposure'' emergency planning zone 
(EPZ). However, the results of the Indian Point study indicate that 
children hundreds of miles away from a nuclear power plant attack could 
receive exposures to the thyroid in excess of 5 rem, the dose that 
would trigger administration of KI under FDA guidelines. The current 
NRC policy appears to leave many children at serious risk in the event 
of a severe accident or terrorist attack at a nuclear plant.
    The NRC's position is that there is no need for KI distribution 
more than ten miles away from any nuclear plant. But although the NRC 
doesn't like to point this out, this assessment is appropriate only for 
accidents in which the containment building remains intact and 
significantly reduces radiological releases to the environment. In the 
post-9/11 era, such an assumption should no longer form the basis for 
emergency planning decisions, given that terrorists capable of 
attacking a plant and causing a meltdown would also likely be able to 
breach the containment as well. A more prudent KI policy should be 
based on a more realistic radiological assessment that considers 
containment breach events and uses plume mapping, based onsite-specific 
meteorological conditions, to determine the regions where KI is likely 
to be needed.
    These dangers are not exclusive to plants in urban areas like 
Indian Point. Over the last fifteen years, suburban sprawl has led to 
substantial population growth in rural areas, some of them near 
formerly remote nuclear power plants. Preliminary UCS data based on 
U.S. Census figures indicate that between 1990 and 2000, the number of 
people living within the 10-mile emergency planning zones of many 
nuclear plants, including Calvert Cliffs in Maryland, Catawba in South 
Carolina, North Anna in Virginia, Shearon Harris in North Carolina and 
Comanche Peak in Texas, increased by 35 percent or more from 1990-
2000--nearly three times the average population growth of the Nation 
during that period.
    Moreover, the attack scenario evaluated in the Indian Point report 
was far from the worst case. For instance, the study assumed that the 
attack only caused damage to the reactor itself and not to the spent 
fuel pools, which remained fully functional after the attack. However, 
the spent fuel pools themselves contain enormous quantities of long-
lived radionuclides, are not protected by containment buildings like 
the reactors themselves, and are vulnerable to zirconium cladding fires 
and fuel melting in the event of an extended interruption to their 
active cooling systems. As the recent National Academy of Sciences 
study on spent fuel pool risks has made clear, a terrorist attack on a 
spent fuel pool could, under some conditions, lead to the release of 
large quantities of radioactive materials to the environment.\4\ 
Calculations that I performed for an article published last year in the 
Princeton-based journal Science and Global Security showed that a 
terrorist attack on a spent fuel pool alone could result in thousands 
of cancer deaths and economic damages in the range of hundreds of 
billions of dollars.\5\
---------------------------------------------------------------------------
    \4\ Board on Radioactive Waste Management, National Research 
Council, ``Safety and Security of Commercial Nuclear Fuel Storage,'' 
Public Report, National Academies Press, Washington, D.C., 2005, 
Executive Summary, p. 6.
    \5\ J. Beyea, E. Lyman, F. von Hippel, ``Damages from a Major 
Release of 137Cs into the Atmosphere of the United States,'' Science 
and Global Security 12 (2004) 125-136.
---------------------------------------------------------------------------
 preventing terrorist sabotage attacks and thefts of nuclear materials
    There are several ways in which the NRC can strengthen its 
regulations for protecting the public from the threats of sabotage 
attacks on nuclear power plants and thefts of nuclear weapon-usable 
materials from Category I nuclear facilities. These include: (1) 
insuring that the ``design basis threats'' that facilities are required 
to protect against adequately represent the terrorist threats that 
those facilities actually face; (2) ensuring that force-on-force tests 
used to assess the adequacy of security measures at nuclear facilities 
are realistic and credible; (3) addressing the continuing problem of 
guard fatigue at nuclear plants; (4) reforming the implementation of 
``risk-informed regulation'' to allow an increase in regulatory burdens 
when warranted; and (5) imposing the same standards for safety culture 
at the NRC as the NRC does for nuclear plants. I discuss each of these 
in turn below.
Design Basis Threat (DBT)
    The DBT is a description of the size and other characteristics of 
the adversary group that certain nuclear facility licensees are 
required to design their security systems to protect against. There are 
different DBTs for the threat of radiological sabotage and for the 
threat of theft of ``Category I'' quantities of weapon-usable materials 
(2 kilograms or more of plutonium, 5 kilograms or more of highly 
enriched uranium). In April 2003, after a long deliberative process, 
the NRC issued revised DBTs to take into account the increased threat 
environment after the 9/11 attacks.
    Nuclear power plant licensees and Nuclear Energy Institute 
officials were allowed to review and comment on the proposed 
radiological sabotage DBT, but members of the public were not. The NRC 
argues that the interests of the public were represented because it 
sought comment on the DBT from other agencies. In fact, most other 
agencies apparently were not very happy with the proposal. As 
Commissioner Edward McGaffigan wrote in 2003:

          ``. . . every other Federal agency that reviewed the staff's 
        proposed DBT, other than the FBI, felt there could be 
        additional attributes in the DBT, but all of them declined to 
        help us on where the line should be drawn between the primary 
        responsibility of a regulated private sector guard force and 
        the primary responsibility of government . . . the agencies 
        instead answered what the overall threat might be, and in my 
        personal view covered their bets so that they could never be 
        accused of underestimating terrorists . . .'' \6\
---------------------------------------------------------------------------
    \6\ NRC Commissioner Edward McGaffigan, personal communication, May 
16, 2003.

    Ultimately, the NRC did not base the post-9/11 DBT on the maximum 
credible threat against U.S. critical infrastructure, as this comment 
suggests was the recommendation of most other agencies, but instead 
defined it as ``the largest reasonable threat against which a regulated 
private guard force should be expected to defend under existing law.'' 
\7\ Although the DBT is ``safeguards information'' and is not publicly 
available, one can infer from public statements by NRC officials that 
it is not commensurate with the 9/11 attack threat--that is, a large 
group of attackers, capable of acting in four coordinated teams, that 
is assisted by several insiders and may have multiple large aircraft at 
its disposal.
---------------------------------------------------------------------------
    \7\ NRC Approves Changes to the Design Basis Threat and Issues 
Orders for Nuclear Power Plants to Further Enhance Security,'' press 
release, April 29, 2003.
---------------------------------------------------------------------------
    This means that even today, more than 3 years after 9/11, private 
nuclear plant security forces would not be able to repel an attack on 
the magnitude of 9/11 on their own, but would require the assistance of 
additional forces (e.g. local law enforcement, National Guard) at 
public expense. Yet there is still no systematic mechanism in place to 
evaluate these vulnerabilities and quickly ensure that sufficient 
resources are provided to remedy them. Attempts to address these 
security gaps, like the Department of Homeland Security's National 
Infrastructure Protection Plan, which was issued in interim form in 
February of this year, are a long way from being implemented.
    While it is reasonable not to include members of the public in 
deliberations regarding sensitive details of the DBT, public confidence 
is hard to sustain when the public knows that industry representatives 
are full partners at the table, and the table is behind closed doors. 
There should be some way to give taxpayers a say in deciding where to 
draw the line between private and public obligations, since they will 
be responsible for paying for the public resources needed to supplement 
the security of private nuclear facilities. Moreover, this taxpayer 
subsidy will only continue to increase if, as some industry 
representatives want, the DBT will remain frozen from now on, with the 
government paying to provide the additional security needed if the 
threat level increases in the future.\8\
---------------------------------------------------------------------------
    \8\ Michael Wallace, President, Constellation Group, Chairman of 
NEI Security Working Group and Chairman of the Nuclear Sector 
Coordinating Council, ``Achieving Stability in a Post-9/11 
Environment,'' NRC Regulatory Information Conference, Rockville, MD, 
March 8, 2005.
---------------------------------------------------------------------------
    The NRC's current plan to revise its physical protection 
regulations through a rulemaking presents an opportunity to increase 
the transparency of its security decisionmaking, but only if the NRC 
makes every effort to maximize opportunities for public involvement and 
to minimize the amount of relevant information that is withheld from 
the public.
    Congress should mandate an independent review of the methodology 
used by the NRC to develop the DBT and the adequacy of the DBT itself, 
in light of intelligence on known and emerging threats. The views of 
all other agencies should be seriously considered. An approach similar 
to that proposed in the House and Senate energy bills, which would 
require an interagency review of threats and assignments of 
responsibility for addressing them, would be a good start.
Force-on-Force Tests
    A key aspect of a robust security program is force-on-force (FOF) 
testing. Security plans that look great on paper can have weaknesses 
that only become apparent during testing. UCS commends the NRC for 
instituting a mandatory FOF testing program, through its post-9/11 
security orders, that will test the security of each plant site every 3 
years. The credibility of this testing program is essential for public 
confidence. While the NRC has taken steps to make these tests more 
realistic, there are other issues that it must address to ensure the 
credibility of this program. Congress should consider legislation that 
would impose strict guidelines on the FOF testing program to ensure 
that these concerns and others are resolved.
    The public must be able to trust the FOF tests. The public cannot 
have confidence in the outcomes of these tests unless their integrity 
is beyond reproach. NRC's award of the contract for the mock adversary 
team to be used in all FOF tests to Wackenhut, the same contractor that 
supplies the security officers for nearly half of US nuclear power 
plants, obviously presents the potential for conflicts of interest. 
While NRC asserts that it is rigorously guarding against the 
possibility that the tests could be compromised, the public has no 
choice but to take NRC at its word. In this regard, appearance is 
everything.
    The FOF tests must be challenging. The NRC must ensure that the 
attack scenarios chosen for the FOF tests are sufficiently challenging 
to provide high assurance that the licensees' security programs are 
robust. In particular, they should probe vulnerabilities in a 
licensee's protective strategy that are likely to be known by an 
insider in a top security position and could be exploited by real 
adversaries.
    Also, FOF tests should not only test the ability of security forces 
to protect against the DBT, but should also evaluate the margin to 
failure of the security strategy with respect to increases in the 
threat beyond the DBT. Safety systems are typically designed with a 
margin to failure, so that they can continue to provide some protection 
even if design-basis accident conditions are exceeded. However, it is 
unclear if there is a comparable margin to failure with respect to 
security systems. The only way to determine this is to actually test 
the system with mock adversaries whose characteristics exceed the DBT 
in some respects.
    Finally, the amount of time that licensees are given to prepare for 
FOF tests remains an issue. In a real attack, the element of surprise 
is one of the greatest advantages of the attacking force, but for 
practical reasons the NRC must give some advance warning of an 
impending test. This diminishes the usefulness of the test as an 
accurate measure of the state of security during day-to-day operations. 
Prior to 9/11, the NRC would inform licensees 6 to 10 months in 
advance. Recently, the Commission was informed in a public meeting that 
the NRC staff has reduced the period of advance warning to 2 months. 
However, this still allows far too much time for licensees to prepare 
for and rehearse for the test.
    The FOF tests must not unreasonably restrict the capabilities of 
insiders. The regulatory DBT specifies that the external adversary 
force is assisted by an insider that can participate in an active role, 
a passive role, or both. However, in the FOF tests conducted before 9/
11, the role of the insider was limited to passive activities such as 
providing plant information to the external adversary team. But an 
active insider, who might be anyone from a control room operator to an 
armed responder, could give an enormous advantage to an adversary, and 
the serious threat such an insider could pose should not be ignored. 
Protective strategies should be developed with due consideration to the 
damage that could be caused by an active insider in any capacity, and 
those strategies should be fully tested in the FOF program.
    The grading process for the FOF tests must be clear, 
understandable, and sensible. When NRC does a safety inspection and 
finds a problem, it uses a ``significance determination process'' (SDP) 
to evaluate the severity of the finding. For the most serious problems, 
such as those, that have a high probability of leading to a core 
meltdown if left uncorrected, the process would generate a ``RED'' 
finding, which triggers a predetermined set of enforcement actions. For 
instance, for allowing the hole in the reactor vessel head to develop 
at Davis-Besse, First Energy clearly deserved, and got, a RED finding.
    However, when the NRC tried to apply the same logic to evaluating 
the findings of FOF tests back in 2000, it ran into problems. For 
example, since the adversaries were considered to have achieved their 
goal in a FOF if they could have done enough damage to safety systems 
to cause a meltdown, the licensee would get a RED finding any time the 
adversaries ``won'' a FOF. Since the licensees were losing FOF drills 
about 50 percent of the time, they were not happy about this result. 
Consequently, the NRC suspended application of the process to FOF tests 
and went back to the drawing board.
    Shortly before the 9/11 attacks, when this issue was still being 
discussed in public, the Nuclear Energy Institute made a proposal for 
an SDP process in which a FOF test could never result in a RED finding, 
no matter how badly a licensee's security force performed. The public 
never found out if the NRC adopted this proposal, since the 9/11 
attacks intervened and the security SDP methodology was designated as 
``safeguards information.'' However, there was a public discussion of 
the SDP issue during a Commission briefing in March, and it appeared 
that the NRC is still experiencing problems with implementation of the 
security SDP, including disagreements with licensees over the results.
    The public cannot have confidence in the FOF program if it does not 
have assurance that NRC is administering the most serious penalties 
when the most serious security violations occur.
                             guard fatigue
    Another critical issue is guard fatigue. The job of security 
personnel at nuclear plants is a demanding and stressful one. They must 
be poised to respond to an attack with little or no warning during 
their entire shift. And if an attack comes, they must respond 
consistently at the highest level of performance. Strong safeguards 
must be in place to ensure that security officers get enough rest to do 
their job effectively. In 2003, after numerous reports that security 
officers around the country were being compelled by management to work 
unreasonably long hours, such as six consecutive twelve-hour shifts per 
week, the NRC imposed an order putting modest restrictions on their 
work hours. But UCS and other watchdog groups continue to hear 
complaints that licensees are not fully complying with the order or are 
exploiting loopholes in it, and that the NRC is not aggressively 
enforcing the order. If these complaints have merit, this state of 
affairs needs to be immediately addressed.
          risk-informed regulation: still a single-edged sword
    One of the most glaring examples of the NRC's slant toward the 
interests of licensees can be found in its selective implementation of 
``risk-informed regulation.'' This is a process in which safety 
regulations are reviewed, using probabilistic risk assessment 
techniques, to evaluate their impact on radiological risk to the 
public. Those regulations that are determined not to have a significant 
impact on reducing risk can then be scrapped.
    The NRC has said that risk-informed regulation should be a 
``double-edged sword''--that is, the process should be used not only to 
eliminate regulations and reduce regulatory burden, but also to 
strengthen regulations when gaps in protection are found that have high 
risk significance. But, as UCS Reactor Safety Engineer David Lochbaum 
has said, the NRC's ``two-edged risk-informed sword'' is ``razor-sharp 
on one side, NERF-like on the other.'' \9\ In other words, it is much 
more effective in reducing regulatory burdens than in imposing new 
requirements.
---------------------------------------------------------------------------
    \9\ Presentation by David Lochbaum at the NRC Nuclear Safety 
Research Conference, October 30, 2002.
---------------------------------------------------------------------------
    When confronted with this criticism, the NRC has offered a 
counterexample: its revision of regulation 10 C.F.R. 50.44, which 
concerns the control of combustible gases (such as hydrogen) during 
accidents to prevent an explosion that could breach containment. 
However, a look at the specifics of this case demonstrates otherwise.
    The NRC's analysis found that most of the requirements for 
controlling hydrogen generation have little impact on the risk of 
containment failure. But it also found that there was one case in which 
the regulations did not adequately limit the risk of containment 
failure for certain types of plants during station blackouts, in which 
both offsite and onsite power is lost. Of the plants in this category, 
nine are pressurized-water reactors with ice-condenser containments, 
such as Catawba I and II in South Carolina, and four are boiling-water 
reactors with Mark III containments, such as Perry in Ohio. These 
plants have significantly smaller and weaker containments than other 
U.S. plants, and in the event of a hydrogen explosion, studies show 
that there would be a near certainty of containment failure,\10\ 
resulting in a catastrophic radiological release. For this reason, NRC 
requires that these plants be provided with hydrogen igniters to burn 
off hydrogen generated during an accident before it can reach an 
explosive concentration. However, these igniters require AC power to 
operate, so in the event of a station blackout, they would not be 
available, and operators would be helpless to prevent a containment 
failure.
---------------------------------------------------------------------------
    \10\ U.S. NRC, ``Director's Status Report on Generic Activities,'' 
April 2005, p. 90.
---------------------------------------------------------------------------
    The NRC revised 10 CFR 50.44 by throwing out all the provisions 
that it determined were unnecessary. However, it also decided to 
evaluate whether it would be cost-effective to require that ice-
condenser and Mark III plants be equipped with additional backup power 
supplies to ensure that the igniters would be available during a 
blackout. After several years of detailed analyses, the NRC decided 
that this problem could be fixed inexpensively and that the reduction 
in risk was well worth the cost. This seemed to be a win-win-win 
situation: the public would win because a serious risk would be 
mitigated; licensees would win because the fix was quick and not 
prohibitively expensive, and the NRC would win by being able to show 
naysayers that it wasn't afraid to impose additional requirements when 
necessary.
    However, 4 years later, virtually nothing has happened. Boiling-
water reactor operators insisted on imposing strict design criteria on 
replacement power systems that drove up their projected cost until they 
no longer looked justifiable. And not only has the NRC abandoned plans 
to fix the problem through a rulemaking, it has even declined to issue 
a generic letter requiring licensees to make the necessary changes. It 
is now relying on voluntary commitments, but some licensees may not 
even follow through with those, claiming that they are too expensive. 
Meanwhile, people living near those plants remain at an unnecessarily 
high risk of being victims of a Chernobyl-type accident. If 
uncorrected, this problem will pose an even greater risk if the Catawba 
and McGuire ice-condenser plants begin to utilize large quantities of 
plutonium-bearing MOX fuel, which can increase both the probability and 
consequences of a severe accident or a successful radiological sabotage 
attack. The second edge of NRC's risk-informed sword has yet again 
proved to be a dull blade.
                       safety culture at the nrc
    My colleague at UCS, David Lochbaum, who is an expert in safety 
issues, was not able to be here today. Here I would like to outline his 
views on the need for an improved safety culture at the NRC.
    According to the NRC, a safety culture ``can be characterized by a 
willingness on the part of licensee staff to raise and document safety 
issues to resolve risk-significant equipment and process deficiencies 
promptly, adhere to written procedures, conduct effective training, 
make conservative decisions, and conduct probing self-assessments.''
    In recent years, the NRC did not allow the Millstone and Davis-
Besse reactors to restart until their safety cultures had been restored 
to acceptable levels. However, independent assessments performed by the 
General Accounting Office and the NRC Inspector General of the safety 
culture within NRC conclude it is as bad as, if not worse, than that at 
Millstone or Davis-Besse.\11\ For example, nearly 50 percent of NRC 
staffers in a recent survey reported feeling unable to raise safety 
concerns without fear of retaliation and nearly one-third of NRC 
staffers who had raised safety concerns felt they had suffered 
harassment and/or intimidation as a result.
---------------------------------------------------------------------------
    \11\ GAO on NRC: United States General Accounting Office, ``Nuclear 
Regulation: NRC Staff Have Not Fully Accepted Planned Changes,'' GAO/
RCED-00-29, January 2000.
    IG on NRC: United States Nuclear Regulatory Commission Inspector 
General, ``Special Evaluation: OIG 2002 Survey of NRC's Safety Culture 
and Climate,' OIG-03-A-03, December 11, 2002.
    Millstone: Presentation by Little Harbor Consultants to Nuclear 
Regulatory Commission, ``Update on LHC Oversight Activities at 
Millstone,'' July 22, 1997.
    Davis-Besse: Letter from FirstEnergy Nuclear Operating Company to 
Nuclear Regulatory Commission, ``Submittal of the Report Titled 'Safety 
Culture Evaluation of the Davis-Besse Nuclear Power Station,' dated 
April 14, 2003,'' April 23, 2003.
---------------------------------------------------------------------------
    These assessments of the NRC safety culture are consistent with 
reports UCS has received from NRC staffers who have called with 
accounts of NRC inspectors being instructed by their managers not to 
find any violations, of NRC managers telling inspectors not to write up 
safety problems they found at nuclear plants, and of NRC managers 
ignoring the written objections of the agency's subject matter experts 
when making decisions about safety. Such behavior is unacceptable and 
must be corrected.\12\
---------------------------------------------------------------------------
    \12\ Letter from David Lochbaum, to NRC Chairman Nils Diaz, ``Kudos 
and Mea Culpa on Safety Conscious Work Environment,'' February 2, 2004.
---------------------------------------------------------------------------
    Thus far, the NRC has failed to do anything to remedy its own 
safety culture problems. The NRC will not allow a nuclear reactor to 
operate if it feels the work force labors under a poor safety culture. 
By the same token, the NRC's own staff must function in a good safety 
culture if we are to have confidence in its oversight of the entire 
reactor fleet. The safety culture within the NRC must be monitored and 
restored to at least the level that the NRC deems minimally acceptable 
for operating nuclear plants.
                                summary
    The NRC has repeatedly testified since 9/11 that it opposes many of 
the legislative initiatives proposed in both houses of Congress to 
strengthen nuclear plant security on the grounds that they are 
unnecessary. UCS believes that legislative reform is necessary and 
appropriate to ensure that design basis threats are realistic and 
conservative; that required resources are made available for protection 
against beyond-design-basis threats; that security testing is effective 
and credible; that emergency planning procedures are designed to 
protect all individuals at risk from a nuclear plant sabotage attack; 
and that protections against theft of nuclear weapon-usable materials 
are strengthened, not weakened. We look forward to working with you to 
ensure that operating nuclear power plants remain as safe and secure as 
possible.
                               __________
    Response by Dr. Edwin Lyman to Additional Question from Senator 
                                Jeffords
    Question.Since our last oversight hearing, a number of concerns 
have been raised about the content, scope and frequency of force on 
force testing. These commando style drills are an important part of the 
training for our security forces at nuclear plants.
    Your testimony alluded to this, but would you describe in greater 
detail how you think the requirements for the performance of these 
tests should be modified to ensure that guards are not ``tipped off' 
about the content of these drills and that they are true attack 
simulations? What do you think NRC's role should be in ensuring that 
nuclear plants aren't conducting a self assessment?
    Response. Without rigorous regulatory supervision and a strict 
``firewall'' between mock adversaries and site defense forces, 
performance tests can be easily manipulated. The Department of Energy 
Inspector General's report of January 2004, ``Protective Force 
Performance Test Improprieties,'' documents the many ways in which 
Wackenhut, which has been the security contractor at the Oak Ridge 
National Laboratory (ORNL) since January 2000, as well its 
predecessors, engaged in practices at ORNL during security performance 
tests to give unfair advantages to the defending force, thereby 
compromising the tests and rendering their results ``tainted and 
unreliable.''
    While it will never be possible to completely eliminate the 
possibility of collusion of mock adversaries with site security 
officers, the NRC could do a number of things to reduce it. First, the 
NRC should reverse its decision to accept the Nuclear Energy 
Institute's award to Wackenhut for the contract for establishing the 
Composite Adversary Force (CAF) and should instead oversee the 
formation, management and training of a mock adversary force that is 
completely independent of site security forces. The NRC continues to 
retain independent ``subject matter expert'' contractors with 
considerable experience in paramilitary operations who advise the mock 
adversary forces and choose the exercise scenarios. The adversary force 
itself could be drawn from the same community that provides the subject 
matter experts or from the pool of former military and Special Forces 
personnel who now work for private security firms such as Blackwater 
USA. The NRC also must provide more stringent oversight over the 
``controllers'' who act as referees during the tests, to ensure that 
they are making fair calls.
    Second, NRC regulations should be revised to make clear that the 
force-on-force tests are enforceable inspections and that any attempt 
to compromise them would be regarded as a serious violation that could 
result in both civil and criminal penalties. The Department of Energy 
requires personnel who have access to test scenario information before 
a test to execute ``trusted agent'' agreements that place restrictions 
on their ability to communicate that information. We do not know 
whether the NRC now requires similar agreements.
    In addition, the NRC must remain vigilant to ensure that force-on-
force exercises do not become stage plays put on for the NRC's benefit. 
The test scenarios should not be rote repetitions of often-rehearsed 
drills. To this end, it is essential that the scenarios chosen for the 
force-on-force tests by the NRC subject matter expert contractors be 
challenging and probe vulnerabilities in the protective strategy. The 
contractors' ability to choose challenging scenarios depends on the 
amount of information about licensees' protective strategies that is 
provided to them prior to the force-on-force tests.
    The NRC design basis threat regulations specify that the external 
attacking force must be assisted by an insider who is a ``knowledgeable 
individual.'' The regulations place no restrictions on what position 
this insider may occupy. In particular, the insider could be someone 
with a high position in the security organization, such as the armed 
response force commander. This individual would know sensitive details 
of the armed response procedures, such as how responders might be 
redeployed from their normal positions during an attack.
    In accordance with this regulation, the NRC's subject matter expert 
contractors should be aware of the licensee's protective strategy when 
choosing the scenarios for the force-on-force tests. In the Operational 
Safeguards Response Evaluation (OSRE) program that ended in 2001, it is 
my understanding that this knowledge was obtained by allowing the NRC 
contractors to participate in tabletop exercises conducted prior to the 
full-scale exercises. This approach enabled the contractors to search 
for weaknesses in the protective strategy that would be known to well-
placed insiders.
    However, industry representatives complained at the time that this 
approach gave an unfair advantage to the mock adversaries by giving 
them access to more detailed information than real terrorists would be 
likely to have. The Nuclear Energy Institute's 2000 guidelines for a 
proposed security ``self-assessment'' program placed strict limitations 
on the information that would be provided to the NRC contractors prior 
to force-on-force tests. For instance, the contractors would be allowed 
to observe the fixed positions of the armed responders but would not be 
given information about how the armed responders would be redeployed 
during an attack. Such artificial limitations would impair the ability 
of the contractors to detect weaknesses in the protective strategy, and 
they should not have a part in a realistic force-on-force test program.
    One issue raised in the DOE Inspector General's report on the ORNL 
test improprieties was the practice of having ``stand-by'' protective 
force personnel available during performance tests who would not 
normally have been available for armed response during a shift. The 
participation of such auxiliary personnel can cause confusion about the 
outcome of a force-on-force test. While the NRC no longer allows 
licensees to augment their security forces above security plan 
commitments solely in preparation for a test, the NRC must also ensure 
that only personnel that are wholly committed to armed response be 
allowed to participate in exercises that test protection against the 
design basis threat.
    At ORNL, the security contractor would also assign the most capable 
personnel to the shifts when performance tests would be conducted. To 
prevent this from occurring, the NRC should reduce the time of advance 
warning of performance tests to the extent that attempts by licensees 
to rearrange work schedules prior to the test would be easily 
detectable.
                                 ______
                                 
        Response by Dr. Edwin Lyman to Additional Question from 
                           Senator Lautenberg
    Question. The Oyster Creek nuclear facility in my state will turn 
40 years old in 2009, and as you're aware the re-licensing decision is 
a very controversial issue in my state. The operators claim they have 
already replaced most of the plant's parts so that it is not actually 
40 years old. Would you give me your view on the future of Oyster 
Creek?
    Response. The following response was submitted by Dave Lochbaum, 
UCS Nuclear Safety Engineer.
    While the owner of the Oyster Creek nuclear plant has replaced some 
of the plant's equipment (such as valve gaskets, electrical fuses, 
etc.), most of the structures and components within the scope of the 
Nuclear Regulatory Commission's license renewal regulation date back to 
original construction (e.g., reactor pressure vessel, reactor 
containment building, etc.).
    There is nothing magical about the 40-year operating license 
initially granted for Oyster Creek. It does not guarantee that the 
facility is safe up to age 40 and unsafe afterwards. But countless 
engineering, maintenance, and regulatory decisions were made in the 
past under the assumption that Oyster Creek would only operate for 40 
years.
    The NRC's license renewal rule attempts to verify past assumptions 
regarding equipment condition. This rule requires Oyster Creek's owner 
to have aging management programs for important systems, structures, 
and components. The aging management programs are supposed to monitor 
equipment conditions so as to allow replacements and/or repairs prior 
to safety margins being compromised.
    Unfortunately, many events at U.S. nuclear plants, including Oyster 
Creek, demonstrate that these aging management programs are inadequate. 
In some cases, such as the February 2000 steam generator tube rupture 
at Indian Point and the October 2000 coolant leak at Summer, the events 
are caused by aging management programs that look for potential damage 
using the wrong detection methods. Damage that is present and 
detectable has been overlooked. In other cases, such as the jet pump 
failure at Quad Cities and the March 2001 coolant leak at Oconee, the 
events are caused by aging management programs that look for potential 
damage in the wrong locations. By looking in the right places with the 
wrong detectors and looking in the wrong places with the right 
detectors, the aging management programs are not preventing safety 
margins from being compromised. To remedy this shortfall, the NRC must 
require inspections to be performed using diverse monitoring techniques 
to increase their reliability and must require the scope of the 
inspections to be broadened to reduce the frequency of ``misses.''
    The NRC's license renewal rule utterly fails to verify past 
regulatory assumptions. Oyster Creek does not comply with today's 
nuclear safety standards. Instead, it is supposed to comply with an 
array of standards spanning four decades. Oyster Creek was initially 
licensed in the 1960s by NRC's predecessor, the Atomic Energy 
Commission (AEC). As the AEC and then the NRC subsequently adopted new 
regulations, Oyster Creek was sometimes grandfathered from them, 
sometimes exempted from them, and sometimes required to meet them. Each 
of these regulatory decisions was made in isolation and based on the 
assumption Oyster Creek would only operate for 40 years. The NRC's 
license renewal rule must formally compare Oyster Creek's applicable 
regulatory requirements to today's safety standards to either verify 
equivalent protection of public health or identify shortfalls that must 
be remedied before the facility operates for two more decades.
    Collectively, these two measures would provide reasonable assurance 
that Oyster Creek was sufficiently safe today and would not decline 
from this safety level during the license renewal period. Absent these 
measures, there is little confidence that Oyster Creek is safe enough 
today or will remain safe enough during the next 20 years.




Statement of Marvin S. Fertel, Senior Vice President and Chief Nuclear 
                   Officer, Nuclear Energy Institute
    The Nuclear Energy Institute (NEI), on behalf of the nuclear 
technologies industry, appreciates the opportunity to provide this 
testimony for the record on the role of nuclear energy in U.S. energy 
policy, on the value of our 103 operating nuclear power plants, and on 
the strategic importance of building new nuclear power plants in the 
years ahead.
    NEI is responsible for developing policy for the U.S. nuclear 
industry. Our organization's 250 member companies represent a broad 
spectrum of interests, including every U.S. energy company that 
operates a nuclear power plant. NEI's membership also includes nuclear 
fuel cycle companies, suppliers, engineering and consulting firms, 
national research laboratories, manufacturers of radiopharmaceuticals, 
universities, labor unions and law firms.
    America's nuclear power plants are the most efficient and reliable 
in the world. Nuclear energy is the largest source of emission-free 
electricity in the United States and our nation's second largest source 
of electricity after coal. Nuclear power plants in 31 states provide 
electricity for one of every five U.S. homes and businesses. More than 
8 out of 10 Americans believe nuclear energy should play an important 
role in the country's energy future.\1\
---------------------------------------------------------------------------
    \1\ Bisconti Research Inc./NOP World, May 2005, 1,000 U.S. adults.
---------------------------------------------------------------------------
    Given these facts and the strategic importance of nuclear energy to 
our nation's energy security and economic growth, NEI encourages 
Congress to maintain policies that ensure continued operation of our 
nation's nuclear plants, and to provide the impetus required to expand 
emission-free nuclear energy as a vital part of our nation's diverse 
energy mix.
    NEI's testimony for the record will address two major areas:
     The strategic value of America's nuclear power plants as a 
source of safe, reliable, clean electricity at stable prices, and 
industry initiatives to ensure continued operation of today's nuclear 
plants at sustained, high levels of performance, and to prepare for 
construction of new nuclear power plants.
     The critical importance of stable and efficient regulation 
of the industry in sustaining safe operation of today's nuclear plant 
fleet and in building the investor confidence needed to support the 
next generation of nuclear power plants.
                i. the strategic value of nuclear energy
    The United States has 103 nuclear reactors operating today. Nuclear 
power represented 20 percent of U.S. electricity supply 10 years ago, 
and it represents 20 percent of our electricity supply today, even 
though we have 6 fewer reactors than a decade ago and total U.S. 
electricity supply has increased by 25 percent in the period.
    Nuclear power has maintained its market share thanks to dramatic 
improvements in plant reliability, safety, productivity and management. 
Today's reactors routinely operate at a 90 percent average capacity 
factor. Improved productivity at U.S. nuclear plants satisfied 20 
percent of the growth in electricity demand over the last decade.
    Increased output from U.S. nuclear plants in the past 10 years--
from 640 billion kilowatt-hours in 1994 to 789 billion kilowatt-hours 
in 2004--is approximately equivalent to bringing 18 new 1,000-megawatt 
power plants into service.
    Nuclear energy provides several important national benefits.
    First, nuclear power plants contribute to the fuel and technology 
diversity that is the core strength of the U.S. electric supply system. 
This diversity is at risk because today's business environment and 
electricity sector market conditions make investment in large, capital-
intensive technologies difficult, particularly in advanced nuclear 
power plants and advanced coal-fired power plants best-suited to supply 
baseload electricity. More than 90 percent of all new electric 
generating capacity added over the past 5 years is fueled with natural 
gas. Natural gas has many desirable characteristics and should be part 
of our fuel mix, but over-reliance on any one fuel source leaves 
consumers vulnerable to price spikes and supply disruptions.
    Second, nuclear power plants provide price stability that is not 
available from electric generating plants fueled with natural gas. 
Intense volatility in natural gas prices over the last several years is 
likely to continue, largely because of unsustainable demand for natural 
gas from the electric sector. Such price volatility also subjects the 
U.S. economy to potential damage. The operating costs of nuclear power 
plants are stable and can dampen volatility of consumer costs in the 
electricity market.
    Third, nuclear plants reduce pressure on natural gas supply, 
thereby reducing costs for other users of natural gas that have no 
alternative fuel source.
    Fourth, nuclear power plants play a strategic role in meeting U.S. 
clean-air goals and the nation's goal of reducing greenhouse gas 
emissions. Nuclear power plants produce electricity that otherwise 
would be supplied by gas- or coal-fired generating capacity. They 
therefore prevent the emissions that fossil-fuel fired plants would 
otherwise produce.
    The emissions prevented by U.S. nuclear power plants are essential 
in meeting clean-air regulations. In 2003, they prevented the emission 
of about 3.4 million tons of sulfur dioxide (SO2) and about 
1.2 million tons of nitrogen oxide (NOx). To put these numbers in 
perspective, requirements imposed by the 1990 Clean Air Act amendments 
reduced SO2 emissions from the electric power sector between 
1990 and 2001 by about 5 million tons per year and NOx emissions by 
about 2 million tons year.\2\ Thus, in a single year, nuclear power 
plants avoid emissions nearly equivalent to those reduced over an 11-
year period by other sources.
---------------------------------------------------------------------------
    \2\ ``EPA Acid Rain Program: 2001 Progress Report,'' U.S. 
Environmental Protection Agency, November 2002.
---------------------------------------------------------------------------
    The NOx emissions prevented by U.S. nuclear plants are equivalent 
to eliminating NOx emissions from 6 out of 10 passenger cars in the 
United States. The carbon emissions prevented by nuclear power plants 
are equivalent to eliminating the carbon emissions from 9 out of 10 
passenger cars in the United States. Without nuclear energy, greenhouse 
gas emissions from the electric power sector would be approximately 30 
percent higher. This is significant, since the electricity sector is 
responsible for approximately one-third of U.S. greenhouse gas 
emissions.
    Finally, nuclear energy is a secure source of energy, and the 
United States is not alone in recognizing nuclear energy's importance 
to its energy security, and therefore, national security. The decision 
to use nuclear power as a major energy source in countries such as 
France and Japan was based on energy security. The governments of both 
countries recognized in the 1970s that nuclear energy protects their 
nations' energy supplies from disruptions caused by political 
instability and protects consumers from price fluctuations caused by 
market volatility. France depends on 59 reactors to meet more than 
three-quarters of its electricity demand, while one-quarter of Japan's 
comes from its 54 reactors.
    Despite strong international commitment to nuclear power, evidenced 
by the 26 nuclear reactors under construction today around the world, 
the U.S. nuclear energy sector remains by far the world's largest in 
terms of electricity production--larger than the nuclear sectors of 
France and Japan combined.
    In summary, nuclear energy represents a unique value proposition. 
Nuclear power plants provide a tremendous supply of baseload 
electricity--cleanly, reliably and safely. They provide low-cost 
electricity for consumers and business today, and serve as a hedge 
against price and supply volatility. Nuclear plants have valuable 
environmental attributes, and they help preserve our nation's energy 
security. These characteristics demonstrate why nuclear energy has 
strategic importance in U.S. energy policy.
    Public support for nuclear energy is at an all-time high due in 
part to excellent plant safety and performance and growing awareness of 
nuclear energy's benefits, The industry has monitored public opinion 
closely since the early 1980s, and two key trends are clear: First, 
public favorability to nuclear energy has never been higher. Second, 
there is a 3 to 1 ratio between those who strongly support the use of 
nuclear energy and those strongly opposed, and that ratio is widening.
    A May 2005 survey revealed that 70 percent of Americans favor the 
use of nuclear energy--the highest level to date. More than 8 in 10 
Americans think nuclear power is important for our energy future. 
Nearly three-quarters of the respondents favor keeping the option to 
build more nuclear power plants. More than three-quarters said that 
``electric utilities should prepare now so that new nuclear power 
plants could be built if needed in the next decade.'' Six in 10 agree 
that the United States should definitely build more nuclear plants.\3\
---------------------------------------------------------------------------
    \3\ Bisconti Research Inc./NOP World, May 2005, 1,000 U.S. adults.
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industry initiatives to increase nuclear energy production and prepare 
                for new nuclear power plant construction
    Nuclear plants are such valuable electric generating assets that 
virtually all companies are planning to apply to the Nuclear Regulatory 
Commission for 20-year extensions to their operating licenses. 
Companies have renewed the licenses for 32 reactors, formally applied 
for extensions at 16 reactors and have indicated their intension to 
file for license renewal at 28 additional reactors. The industry 
believes that virtually all U.S. nuclear plants will renew their 
licenses and operate for an additional 20 years.
    In order to maintain safety and reliability, and to prepare the 
plants for an additional 20 years of operation, the industry is 
investing in large capital improvement projects, including the 
installation of new steam generators, new reactor vessel heads and 
other modifications to increase plant generating capacity.
    These capital improvement projects position the plants for many 
years of operation and demonstrate the industry's commitment to making 
the capital investments necessary to maintain safety and reliability.
    Although it has not yet started to build new nuclear plants, the 
industry continues to achieve small but steady increases in generating 
capacity--either through power uprates or refurbishing nuclear capacity 
that has been shut down. An uprate increases the flow of steam from the 
nuclear reactor to the turbine-generator so that the plant can produce 
more electricity. Uprates can increase a plant's capacity up to 20 
percent, depending on plant design and how much capital a company is 
prepared to invest.
    Over the past several years, the NRC has authorized power uprates 
that represent approximately 2,000 megawatts (MW) of additional 
generating capacity. Over the next 5 years, the NRC anticipates that 
companies will apply for approximately 30 power uprates, which could 
add an additional 2,000 MW of new capacity.
    In addition, the Tennessee Valley Authority is refurbishing a 
reactor at its Browns Ferry site in northern Alabama. This is a very 
complex project--fully as challenging as building a new nuclear plant 
and it is on schedule and within budget at the midpoint of the project.
    However, there are obviously limits on how much additional 
electricity output the existing nuclear power plants can produce. The 
Department of Energy projects that by 2025 U.S. electricity demand will 
increase by 50 percent.\4\ Meeting this rising demand will require 
construction of many new nuclear power plants in the years ahead.
---------------------------------------------------------------------------
    \4\ ``Annual Energy Outlook 2005,'' Energy Information 
Administration.
---------------------------------------------------------------------------
    The factors that make operating nuclear power plants a strategic 
national asset also justify a systematic, disciplined program to build 
new nuclear power plants in the years ahead to help meet growth in 
electricity demand, particularly the need for new baseload power 
plants. In addition to nuclear energy's other benefits, new nuclear 
plant construction would create thousands of skilled, high-tech jobs--
to design and build the plants, manufacture the equipment and fuel, and 
operate the plants when built. A program of new nuclear plant 
construction would maintain U.S. technological leadership in this high-
tech field.
    The nuclear energy industry and DOE launched the Nuclear Power 2010 
program several years ago that will aid the industry in building new 
nuclear capacity when needed, by creating the business conditions under 
which companies can order new nuclear plants. This is a comprehensive 
program designed to address the business issues--including licensing 
and regulatory issues, development of new plant designs, and 
financing--that could be roadblocks to new nuclear plant construction.
    The NRC has developed a new licensing process created as a result 
the 1992 Energy Policy Act. Under this process, a company or other 
entity can obtain all necessary regulatory approvals from the NRC 
before it commits significant capital to a new nuclear power plant. The 
process allows for advanced site approval, as well as early reactor 
design approval. And new nuclear plants will receive a single license 
for construction and operation--not the separate proceedings that 
created excessive delay in the period between construction and 
operation of many of today's plants.
    This approach should help limit the regulatory risks that delayed 
construction and licensing in the past. This process also allows 
meaningful input from the public and other stakeholders, before plant 
construction, at a time when such input can influence plant design and 
licensing issues. This should also avoid the costly delays common to 
the old way of licensing a nuclear plant. Because the old licensing 
process was a two-step process and did not require all the design and 
engineering to be complete when the construction permit was issued, it 
often resulted in lengthy and costly hearings after the plant was built 
and before it was allowed to operate.
    The industry is validating this new licensing process. In 2003, 
Dominion, Exelon and Entergy initiated a 3-year effort to obtain NRC 
approval for early site permits. If approved, the permits will allow 
the companies to ``bank'' those sites for possible future use, 
deferring their decision to build reactors until later.
    Three industry consortia, consisting of 16 leading energy 
companies, construction firms, architect/engineers, fuel companies and 
equipment suppliers, have announced they will demonstrate the process 
for obtaining a combined construction/operating license (COL). The 
companies, in partnership with DOE, will test the COL process, which 
will provide a more effective and efficient means of licensing a new 
nuclear power plant. DOE will share the demonstration costs--obtaining 
a COL will require a substantial investment of design and engineering 
work on new nuclear reactor designs. The NuStart Energy consortium last 
week announced the following locations from which it will select two 
sites where it will demonstrate the COL licensing process:
     Bellefonte Nuclear Plant in Northeast Alabama, owned by 
the Tennessee Valley Authority
     Grand Gulf Nuclear Station, Port Gibson, Miss., owned by 
Entergy Nuclear
     River Bend Nuclear Station, St. Francisville, La., also 
owned by Entergy
     Savannah River Site, a Department of Energy facility near 
Aiken, S.C.
     Calvert Cliffs Nuclear Power Plant in Lusby, Md., owned by 
Constellation Energy
     Nine Mile Point Nuclear Station in Scriba, N.Y., owned by 
Constellation Energy
    The design, engineering and licensing work required before a 
company orders or builds new nuclear plants represents a substantial 
investment. Projected costs to complete the licensing demonstrations 
and the first-of-a-kind design and engineering for one reactor design 
range from $400 million to $500 million. The industry would expect to 
share that cost with the Federal Government under DOE's Nuclear Power 
2010 program. The private sector would therefore commit the equivalent 
of $200 million to $250 million to the effort. To carry two new designs 
forward would require twice that amount from the private sector. 
Government funding for the DOE Nuclear Power 2010 program is therefore 
critically important.
    The Environment and Public Works Committee has a critical role to 
play in ensuring that the NRC manages the new licensing processes in a 
disciplined and efficient manner. This committee can also verify that 
the NRC provides appropriate guidance to its licensing boards so that 
any hearing after issuance of the COL but before commercial operation 
meet the high threshold included in the agency's underlying statute.
    The overall objective for this industry initiative is to ensure new 
nuclear plants can be operational between 2010 and 2020. This will 
require an aggressive program to complete design, engineering and 
licensing work before companies can place orders and invest in 
construction.
    At that time, three factors--growth in electricity demand, 
increasingly stringent environmental controls on coal-fired and gas-
fired generating capacity, and continued pressure on natural gas supply 
and prices--will make construction of new nuclear generation an 
imperative.
  ii. the importance of a stable and efficient regulatory environment
    Only through a sustained focus on the necessary programs and 
policies will the industry meet the demand for new emission-free 
baseload nuclear plants in the 2010 to 2020 timeframe.
    As it has in the past, strong congressional oversight will be 
necessary to ensure certainty and efficiency in the Nuclear Regulatory 
Commission regulations, ensure effective and efficient implementation 
of the Federal Government's nuclear energy programs, and maintain 
America's leadership in nuclear technology development and its 
influence over important diplomatic initiatives like nonproliferation.
    Continued progress toward a Federal used nuclear fuel repository at 
Yucca Mountain, Nev., is necessary to support nuclear energy's vital 
role in a comprehensive national energy policy and to support the 
remediation of DOE defense sites. Since enactment of the 1982 Nuclear 
Waste Policy Act, DOE's Federal repository program has repeatedly 
overcome challenges, and challenges remain before the Yucca Mountain 
facility can begin operation. But as DOE addresses these issues, it is 
important to keep the overall progress of the program in context.
    The consensus of the international scientific community is that a 
deep geologic repository as envisioned at Yucca Mountain is the best 
solution for long-term disposition of used military and commercial 
nuclear power plant fuel and high-level radioactive byproducts. The 
Bush administration and Congress, with bipartisan support, affirmed the 
suitability of Yucca Mountain in 2002. Over the past 3 years, the 
Energy Department and its contractors have made considerable progress 
toward providing yet greater confirmation that this Federal approach is 
correct and that Yucca Mountain is an appropriate site for a national 
repository.
    During the past year, Federal courts have rejected significant 
legal challenges by the state of Nevada and others to the Nuclear Waste 
Policy Act and the 2002 Yucca Mountain site suitability determination. 
These challenges questioned the constitutionality of the Yucca Mountain 
Development Act and DOE's repository system, which incorporates both 
natural and engineered barriers to safely contain radioactive material.
    In the coming year, Congress will play an essential role in keeping 
this program on schedule, by taking the steps necessary to provide 
increased funding for the project in fiscal 2006 and in future years. 
Meeting DOE's schedule for initial repository operation requires 
certainty in program funding. This is particularly critical in view of 
projected annual expenditures that will exceed $1 billion beginning in 
fiscal 2007.
    The industry also believes that it is appropriate and necessary to 
consider an alternative perspective on the Yucca Mountain project. This 
alternative would include an extended period for monitoring operation 
of the repository for up to 300 years after used fuel is first placed 
underground. The industry believes that this enhanced repository 
concept would provide ongoing safety assurance and greater confidence 
that the repository is performing as designed, and it would ensure the 
protection of the public and the environment. It would also allow DOE 
to apply evolving innovative technologies at the repository.
    Through this approach, a scientific monitoring program would 
identify additional scientific information to apply in repository 
performance models. DOE then could update the repository models, and 
modify design and operations as appropriate.
    The industry fully supports the fundamental need for a repository 
so that used nuclear fuel and the byproducts of the nation's nuclear 
weapons program are securely managed in an underground, specially 
designed facility. World-class science by some 3,000 scientists and 
engineers has demonstrated that Yucca Mountain is the best site for 
that facility. A public works project of this magnitude will inevitably 
face challenges. Yet, none is insurmountable. DOE and its contractors 
have made significant progress on the project as it enters the 
licensing phase.
    The process of licensing the Yucca Mountain facility will require 
discipline. We encourage the Committee to exercise its oversight 
responsibility to ensure that the NRC is appropriately staffed and 
organized, and to ensure that the commission is providing appropriate 
policy guidance to its staff and hearing boards to conduct an effective 
and disciplined licensing review.
    The radiation standard for the Yucca Mountain project is critical 
to moving forward. The Environmental Protection Agency's standard was 
remanded last year by a court ruling. Oversight of EPA by the Committee 
on Environment and Public Works will be important to ensure that EPA 
addresses the issues raised by the Court in a responsible manner, 
consistent with the way our nation regulates other hazardous materials.
    If EPA's standard-setting process becomes unduly protracted and 
threatens significant delays in progress on the Yucca Mountain project, 
Congress may need to step in to provide guidance and resolve the issue 
through legislation.
        the nrc reactor oversight process has proven successful
    Congressional oversight performs an important role in maintaining 
and encouraging the certainty of the NRC's regulatory process. Such 
certainty is essential for today's nuclear power facilities and equally 
critical in licensing new nuclear power facilities. Several years ago, 
the committee helped encourage the NRC to move toward a new reactor 
oversight process for the nation's nuclear plants, a process based on 
quantitative performance indicators and safety significance. Today's 
reactor oversight process is designed to focus industry and NRC 
resources on equipment, components and operational issues that have the 
greatest importance to, and impact on, safety.
    The NRC now has 5 years of experience with this revised reactor 
oversight process. 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 reactor oversight process combines the results of performance 
indicators in 18 key areas and findings from about 2,500 hours of NRC 
inspections per reactor to determine the appropriate allocation of 
inspection resources across all operating plants. The most recent 
results, after the fourth quarter of 2004, are as follows:
     78 reactors had all green (best level) performance 
indicators and inspection findings and will receive the baseline level 
of NRC inspection (approximately 2,500 hours per year).
     21 reactors had a single white (second best level) 
performance indicator or inspection finding and will receive 
supplemental inspection beyond the baseline effort.
     3 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.
    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 a safety-focused performance-based approach to regulation.
    We believe the NRC, the industry and other stakeholders would 
benefit if the intent of the Reactor Oversight Process were codified 
through an NRC Policy Statement, drafted by commissioners who provided 
the policy guidance that established the process. This will be 
particularly important as changes occur within the NRC staff over the 
next several years.
        the need for continued progress toward safety-focused, 
                      performance-based regulation
    The industry needs greater certainty both in regulatory processes 
for today's plants and in licensing. When the NRC first implemented its 
new reactor oversight process, few believed that safety-focused 
regulatory concepts would work. Today, not only do these concepts work, 
but our plants are safer and more efficient than ever.
    During the past 2 years, NRC Chairman Nils Diaz has articulated a 
sound approach to the future regulatory structure of our industry. He 
said, ``21st century nuclear regulation needs to be anchored in 
realistic conservatism or conservative realism if we are to avoid the 
twin pitfalls of underregulation and overregulation.'' Such an approach 
would recognize conservative defense-in-depth regulation informed by 
science, engineering and nearly 10,000 reactor years of experience 
worldwide. But achieving a fair, predictable regulatory environment 
requires the same predictability and realism in plant security and 
emergency preparedness.
    The NRC has begun to incorporate safety-focused insights into 
Federal regulation. In November 2004, the agency issued 10 CFR 50.69, a 
new rule that will allow the use of probabilistic risk assessment 
insights to determine a safety-focused scope of plant components 
governed by NRC requirements (e.g., quality assurance, monitoring, 
environmental qualification). In March, a proposed rule was forwarded 
to the commission that would redefine the limiting pipe-break size used 
in plant design analyses, based on industry operating experience. When 
final, this rule would provide both safety and operational benefits.
    The commission should be commended for its progress with these 
initiatives. These rulemakings will not only improve the safety focus 
of regulations. They will also aid in making the agency's reactor 
oversight process more consistent with the regulations, resulting in a 
more efficient and effective regulatory process.
    As the NRC moves to ensure that its regulations are safety-focused 
and performance-based, the industry sees an urgent need for the NRC to 
develop an integrated rulemaking plan that shows the committee, and 
other stakeholders, its plan to transform the existing deterministic 
regulations into a more effective, safety-focused regime. Such an 
integrated plan would avoid unnecessary near-term actions that would 
not be required in a more safety-focused process.
         congress should review nrc budget and staffing levels
    The NRC's budget continues to increase significantly. Its fiscal 
2006 budget request of $702 million is the highest ever for this 
agency--a 44 percent increase from its $488 million budget just 5 years 
ago. The number of full-time-equivalent (FTE) positions at the NRC has 
increased by more than 13 percent, from 2,785 to 3,154 during the same 
period. The vast expansion of the agency's security division and 
increased staffing for license renewal is largely responsible for this 
increase.
    The NRC's security division has increased from approximately 30 
FTEs to approximately 180 FTEs in just a few years. That increase, in 
part, was required by a full review of security at nuclear power plants 
after Sept. 11, 2001, and the subsequent review of plant security 
plans. Most of those efforts have been completed. In addition, the 
industry is concerned that the NRC is performing threat analysis and 
other functions that are duplicative of those funded at the Department 
of Homeland Security.
    The nuclear energy industry acknowledges that budget and staffing 
increases may be necessary for certain functions at the NRC, as well as 
to addressing impending work force issues. However, the industry 
believes that the NRC can be both an effective and efficient regulator, 
while increasing public safety. For example, the performance 
demonstrated in the reactor oversight process should provide an 
opportunity for the NRC to reallocate existing resources. The NRC also 
should continue to review its regional structure to determine if 
changes are needed to respond to the continued consolidation in the 
nuclear industry.
    As such, we urge that the committee review the NRC's structure and 
management. The industry believes that the NRC would benefit from an 
independent management assessment of the agency's needs and plans to 
meet its organizational and work force challenges.
    The NRC's budget request also included a proposal to extend the 
agency's authority to collect user fees from licensees to fund 90 
percent of its annual budget. As the committee is aware, that proposal 
is an extension of current law. In 2000, this committee passed 
legislation (S. 1627) that removed up to 12 percent of the NRC's budget 
from the user fee base to address the fair and equitable assessment of 
the NRC's fee structure.
    As was the case 5 years ago, the NRC continues to provide 
governmental functions that are related only indirectly to services 
that are provided to its licensees. As such, it is appropriate that the 
agency fund a portion of its budget from general revenues. The industry 
urges the committee to review the appropriate percentage to be 
recovered from user fees. Also, the industry appreciates the 
committee's efforts to allow some of the NRC's security functions to be 
supported by general funds. Functions that are for the common defense 
of our nation should be funded through general revenues, not a user fee 
on a specific industry.
    The industry further urges the committee to review the current fee 
structure and identify improvements to be implemented by the NRC. For 
example, the industry believes that the NRC should directly link 
activities to fees. We believe it is inappropriate to categorize about 
75 percent of the agency's budget in one ``general'' account, as is the 
case today.
    Finally, the NRC's budget needs to be more transparent and needs to 
provide more accessible and understandable data. This year's NRC 
budget, for example, does not provide historical data on overall 
funding or the number of positions at the NRC. Also, although the NRC 
budget measures the amount of resources allocated for security, it 
fails to provide budgetary details on its security division. Without 
greater transparency and additional data, it is difficult for Congress 
and stakeholders to analyze how the agency is utilizing its resources.
        the industry recommends changes to the atomic energy act
    As in previous years, the industry supports changes to the Atomic 
Energy Act that will facilitate reform of the NRC and its regulatory 
processes to ensure the effective and efficient regulation of the 
industry.
    If the committee reauthorizes the NRC to recover user fees to 
offset a portion of its budget, it should remove an appropriate amount 
for NRC functions that should be supported with general revenues. Those 
functions, as noted above, should include services that do not directly 
regulate industry licensees as well as security functions that are the 
responsibility of the government in providing for the common defense of 
our nation.
    The industry also recommends the following changes to the Atomic 
Energy Act:
     Congress should repeal Sections 203, 204 and 205 of the 
Atomic Energy Act to provide the commission with the flexibility and 
discretion to manage and organize the NRC in the most appropriate 
manner.
     Congress should remove the restriction on foreign 
ownership of commercial nuclear facilities.
     When the NRC issues 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.
    Noting our reservations regarding the proper offset for the user 
fee, NEI endorses and supports the provisions included in S. 858, as 
introduced by Chairman James Inhofe and Sen. George Voinovich. Some of 
those provisions overlap the above suggestions made on behalf of the 
nuclear energy industry.
    In addition, the industry supports S. 865, also introduced by 
Chairman Inhofe and Sen. Voinovich. The industry fully supports the 20-
year extension of the Price-Anderson Act included in that bill, but 
given almost 50 years of experience with the Act, and the ongoing 
oversight authority of the committee, we believe the act should be 
renewed indefinitely. In addition, we urge the committee to clarify 
that punitive damages are not available in liability actions covered by 
the Price-Anderson Act.
    The Price-Anderson Act guarantees immediate insurance coverage of 
more than $10 billion for the public in the case of an extraordinary 
nuclear occurrence, and this insurance is fully funded by the industry. 
Taxpayers and the Federal Government pay nothing for this coverage. The 
Price-Anderson Act has provided effective coverage since 1957, and it 
has been extended by Congress four times.
    The Price-Anderson Act has served as a model for legislation in 
other areas, ranging from vaccine compensation and medical malpractice 
to chemical waste cleanup. In addition, DOE and the NRC both support 
extending the Price-Anderson Act. Without extension of the law, no new 
nuclear power plants could be built to meet growing electricity demand 
while protecting the nation's air quality.
    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. To achieve 
this goal, it is necessary for the Federal Government to have a uniform 
radiation protection policy. The policy should be based on the best 
available science and should be applied equitably and consistently by 
all Federal agencies.
    Duplicative and conflicting regulation by different Federal 
agencies, using different criteria, must be eliminated. In this area, 
Federal radiation protection policy falls short. Sen. Pete Domenici 
requested in 2000 that what is now the Government Accountability Office 
(GAO) produce a report on this issue. The report, ``Radiation 
Standards: Scientific Basis Inconclusive, and the EPA and NRC 
Disagreement Continues'' (GAO/RCED-00-152), concluded that U.S. 
radiation protection standards ``lack a conclusively verified 
scientific basis,'' involve ``differing exposure limits'' because of 
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 substantial 
resolution. For example, former Sen. John Glenn, as chairman of the 
Senate Governmental Affairs Committee, 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 GAO report found 
that the situation remained essentially unchanged in the 6 years since 
GAO reported on the issue to Sen. Glenn. Now, 5 years later, the 
nuclear energy industry notes little substantive progress in resolving 
the issue of duplicative and conflicting radiation standards.
    This situation undermines public confidence in regulatory 
activities related to radiation and also creates significant 
uncertainties in projecting costs and schedules of licensing and 
building new plants, decommissioning of facilities that have closed, 
and disposal of used nuclear fuel and low-level radioactive byproducts.
    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.
    The NRC and Environmental Protection Agency have pursued 
initiatives to help 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. Continued oversight will 
be necessary to ensure that the agencies are achieving consistent 
radiation protection policy. Ultimately, Congress may be required to 
resolve through legislation the policy issues that the agencies cannot 
resolve on their own.
 u.s. nuclear power plants were the most secure industrial facilities 
               before 9/11 and are even more secure today
    The need for regulatory stability in nuclear plant security is 
particularly important. The NRC and the industry have significantly 
enhanced security at nuclear power plants. In the three-anda-half years 
since the Sept. 11 terrorist attacks, the NRC has issued a series of 
requirements to increase security and enhance training for security 
programs. The industry has complied--fully and rapidly.
    Even prior to September 2001, 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 enhancements 
implemented since 2001.
    A copy of an NEI fact sheet 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.
    In analyzing this changing global environment, the nuclear industry 
started with the firm knowledge that nuclear power plants--although 
strongly built, heavily guarded and extremely difficult targets to 
penetrate--nonetheless are considered by some to be potential terrorist 
targets. However, as former NRC Chairman Richard Meserve said in 2002:

          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.

    Meserve noted that the industry's defense-in-depth philosophy 
includes protection by well-trained, heavily armed security officers; 
fortified perimeters; and sophisticated intruder 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.
    The nuclear industry has cooperated 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. The 
industry is also cooperating fully with the Depaitalent of Homeland 
Security in its efforts to better protect our critical infrastructure.
    In April 2003, the NRC issued new security requirements that 
revised the agency's ``design basis threat,'' which defines the 
characteristics of the threat against which the industry must defend 
and is the foundation for the industry's security programs. Every 
nuclear power plant submitted a new security plan to comply with the 
new design basis threat and was required to demonstrate compliance with 
that plan last October.
    In response to considerable congressional concern, the industry has 
worked with the NRC to develop a revised program to test security at 
our facilities. This program includes ``force-onforce'' drills using 
advanced equipment. Although the tests were suspended for several 
months after Sept. 11, they are now being conducted at plants 
nationwide. The NRC observes and evaluates approximately two sets of 
force-on-force drills per month. At this rate, every plant will conduct 
NRC-evaluated force-on-force exercises at least once every 3 years, in 
addition to security exercises conducted by nuclear plants multiple 
times each year.
    The industry has reviewed the recently released study by the 
National Academy of Sciences (NAS), ``Safety and Security of Spent 
Nuclear Fuel Storage.'' In response to the NRC actions and the NAS 
report, nuclear plants are systematically assessing potential 
augmentation of already redundant safety systems for used fuel pools. 
The intent is to provide yet greater assurance in the ability to cool 
used fuel in pools. While the NRC's response to the study indicated 
that the NRC considers the likelihood of releasing large amounts of 
radiation to the environment from a spent fuel pool to be ``extremely 
low,'' the NRC is initiating an independent, site-specific assessment 
of used fuel pools.
    Today, the industry is at the practical limit of what private 
industry can do to secure our facilities against the terrorist threat. 
NRC Chairman Nils Diaz and other commissioners have said that the 
industry has achieved just about everything that can be reasonably 
achieved by a civilian force. On March 14, Diaz said ``both nuclear 
security and safety are better than they have ever been and both are 
getting better. What we have done in the last three and a half years is 
to make it very difficult for anyone to find ways to attempt acts of 
radiological sabotage, even more difficult to succeed in doing real 
harm, and to be very prepared to protect our people in the very 
unlikely event of radiological release.'' \5\
---------------------------------------------------------------------------
    \5\ NRC Chairman Nils Diaz, National Press Club briefing as 
reported by Agence France-Presse news agency, March 14, 2005.
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    The industry believes that the focus of security enhancements 
should be on those that increase our coordination with DHS and state 
and local response entities. Security enhancements should also focus on 
the effective implementation of onsite changes to our security 
infrastructure and ensure we fully integrate our new security 
procedures into plant operations. We must ensure they are not 
interfering with our commitment to safety--our highest priority.
 the industry supports the nuclear safety and security act of 2005, s. 
                                  864
    The Nuclear Safety and Security Act of 2005 (S. 864), introduced by 
Chairman Inhofe and Sen. Voinovich, includes several provisions 
regarding nuclear plant security. NEI supports those proposals and 
urges the committee to move the bill to the full Senate for further 
consideration.
    Section 4 of S. 864 is particularly important because it will allow 
some companies to utilize weaponry that may not be allowed by various 
state laws. The industry asks that the committee include language to 
clarify the use of deadly force by nuclear power plant security 
officers if necessary to protect the plant against terrorist threats. 
In addition, the industry urges the committee to review and consider 
legislation that will allow the industry, or the NRC, to have greater 
access to various Federal data bases.
                               conclusion
    America's nuclear power plants are a critical element of our energy 
portfolio and a driver of economic growth. Nuclear energy also is vital 
to our energy security, environmental protection and clean-air goals. 
The industry continues to operate nuclear plants at exceptional levels 
of safety and efficiency, and 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 through 
efficiency improvements and power uprates. 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 to set the stage for new nuclear plant construction and 
is committed to achieving this objective in the near term.
    Nothing is more important to the industry than ensuring that the 
NRC is an effective and credible regulator. In this regard, 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 today's plants and 
the efficient licensing of new facilities. The NRC has made significant 
progress toward this end, yet more must be done. Continued oversight by 
this committee to ensure that the NRC has the appropriate resources, 
priorities and focus will be critical to achieving these ends.
 Fact Sheet: Post-Sept. 11 Improvements in Nuclear Plant Security Set 
                         U.S. Industry Standard
November 2004
                               key facts
     Nuclear plants are the most secure facilities in the U.S. 
industrial infrastructure.
     The nuclear energy industry, working with the Nuclear 
Regulatory Commission, has implemented additional security measures at 
nuclear facilities since Sept. 11, 2001.
     Recent studies and exercises have confirmed that nuclear 
facilities are well defended and difficult for terrorists to penetrate.
              setting the standard for industrial security
    The nuclear industry responded quickly and effectively to the 
events of Sept. 11. Security at nuclear plants, already the most secure 
facilities in the U.S. industrial infrastructure, was bolstered and has 
remained at a heightened level of alert.
    Security forces at nuclear plants have increased by 60 percent to 
approximately 8,000 officers at 64 sites. In addition, the industry has 
spent an additional $1 billion in security-related improvements since 
September 2001.
    The industry, working with the NRC, instituted additional security 
measures since Sept. 11, such as:
     extending and fortifying security perimeters
     increasing patrols within security zones
     installing new barriers to protect against vehicle bombs
     installing additional high-tech surveillance equipment
     strengthening coordination of security efforts with local, 
state and Federal agencies to integrate approaches among the entities--
a position the industry continues to support.
    Since Sept. 11, the NRC has twice significantly increased the 
definition of the threat against which nuclear plants must provide 
protection. As a result, nuclear plants now are able to defend against 
a greater number of attackers, armed with more weapons than ever 
before.
    In February 2002, the NRC formalized many of the security 
enhancements that the industry had implemented since Sept. 11. In 
addition, the orders further restricted access at nuclear plants.
    In April 2003, the NRC issued new orders that limit the hours 
security personnel may work each week. In addition, the NRC increased 
the training requirements for nuclear plant security officers, 
including training in weapons proficiency. All U.S. commercial nuclear 
plants have met these requirements.
    Working with the NRC, the industry continues to examine ways to 
improve security at all U.S. nuclear facilities at every level.
           studies confirm strength of nuclear plant security
    A 2-day national security exercise conducted by the Center for 
Strategic and International Studies (CSIS) in 2002 found that nuclear 
plants would be less attractive than other potential targets to 
terrorist organizations because of the industry's robust security 
programs. The exercise was designed to explore difficulties and reveal 
vulnerabilities that might arise in the event of a credible, but 
ambiguous, threat of a terrorist attack on American soil.
    At the conclusion of the exercise, CSIS President John Hamre said 
that nuclear power plants ``are probably our best-defended targets. 
There is more security around nuclear power plants than anything else 
we've got.''
    Peer-reviewed analyses conducted by EPRI, a Palo Alto, Calif.-based 
research firm, revealed that structures that house the reactor and 
nuclear fuel facilities would be protected against a release of 
radiation even if struck by a large commercial jetliner.
    State-of-the-art computer modeling techniques determined that 
typical nuclear plant containment structures used fuel storage pools, 
fuel storage containers and used fuel transportation containers would 
withstand a potential impact despite some concrete crushing and bent 
steel. In all cases, public security would be protected.
    More information on NRC security initiatives since Sept. 11 is 
available at www.nrc.gov.
    This fact sheet is also available at www.nei.org, where it is 
updated periodically.



    Summary of the Nuclear Fees Reauthorization Act of 2005 (S. 858)
As Introduced by Senators Voinovich and Inhofe on April 20, 2005
                          fee reauthorization
Nuclear Regulatory Commission User Fees and Annual Charges
    A statutory requirement that the NRC recover 90 percent of its 
costs (minus certain exceptions) through licensee fees would be made 
permanent. The current fee requirement, imposed by the Omnibus Budget 
Reconciliation Act of 1990 (42 U.S.C. 2214), is set to expire September 
20, 2005. NRC's costs in regulating residual defense radioactive waste 
under Section 3116 of the Ronald W. Reagan National Defense 
Authorization Act for Fiscal Year 2005 (50 U.S.C. 2601 note) would be 
excluded from costs subject to the 90 percent cost recovery 
requirement.
                              nrc reforms
Treatment of Nuclear Reactor Financial Obligations
    Funds held to pay for decontamination and decommissioning of 
nuclear power plants could not be used to satisfy the claim of any 
creditor under this title until decommissioning was complete. 
Decommissioning obligations could not be avoided or reduced by any 
liquidation, reorganization, or other legal proceeding. Nuclear 
liability insurance premiums held and maintained under the Price-
Anderson Act (42 U.S.C. 2210) could not be used to satisfy the claim of 
any creditor under this title.
Period of Combined License
    The initial 40-year period for a commercial nuclear reactor license 
would begin when NRC authorized the reactor to commence operation after 
construction had been completed. Currently, under Atomic Energy Act 
Section 185 b. (added by the Energy Policy Act of 1992, P.L. 102-486), 
the 40-year initial license period may begin when a ``combined 
construction and operating license'' is issued several years before the 
reactor is to start operating. All previous reactor operating licenses 
had been issued only after construction was complete, but any future 
licenses are expected to use the combined license option which was 
added in 1992.
Elimination of NRC Antitrust Reviews
    NRC would no longer have to submit nuclear reactor license 
applications to the Attorney General for antitrust reviews, as 
currently required by Atomic Energy Act Section 105 c.
Scope of Environmental Review
    In conducting environmental reviews in connection with nuclear 
power plant license applications, NRC would not have to consider the 
need for the nuclear plant or potential alternatives.
Medical Isotope Production
    Highly enriched uranium (HEU) could be exported to Canada, Belgium, 
France, Germany, and the Netherlands for production of medical isotopes 
in nuclear reactors. Those countries would be exempt from existing 
requirements (under Section 134 of the Atomic Energy Act) that they 
agree to switch to low-enriched uranium (LEU) as soon as possible and 
that LEU fuel for their reactors be under active development. Instead, 
those countries would have to agree to convert to suitable LEU fuel 
when it became available. NRC would have to review current security 
requirements for HEU used for medical isotope production and impose 
additional requirements if necessary. The National Academy of Sciences 
(NAS) would study the potential availability and cost of medical 
isotopes produced in LEU reactors. This study would be used by the 
Department of Energy (DOE) to help determine whether U.S. medical 
isotope demand could be reliably and economically met with production 
facilities that do not use HEU. If the Secretary of Energy certified 
that such demand could be met, the export exemption would be 
terminated. The current HEU export restrictions are intended to spur 
foreign cooperation with U.S. efforts to convert all HEU reactors to 
LEU, but supporters of the exemption contend that the restrictions 
could disrupt the supply of medical isotopes produced in foreign HEU 
reactors.
Cost Recovery from Government Agencies
    NRC would be authorized to charge cost-based fees for all services 
rendered to other Federal agencies. Such authority is limited under 
current law (Atomic Energy Act, Section 161 w.).
Conflicts of Interest Relating to Contracts and Other Arrangements
    NRC could enter into contracts with DOE or operators of DOE 
facilities despite the presence of a conflict of interest if NRC 
determined that the conflict could not be mitigated and that there was 
adequate justification for the contract without mitigation.
Hearing Procedures
    NRC hearings for nuclear power plant licenses and other purposes 
would be required to use informal adjudicatory procedures unless NRC 
determined that formal procedures were necessary to develop a 
sufficient record or to achieve fairness.
Authorization of Appropriations
    Such sums as necessary would be authorized to carry out this title.
                        human capital provisions
Provision of Support to University Nuclear Safety, Security, and 
        Environmental Protection Programs
    NRC would be authorized to provide grants and other assistance to 
institutions of higher education to support nuclear safety and other 
fields critical to the NRC mission.
Promotional Items
    NRC could purchase promotional items of nominal value to help 
recruit new employees.
Expenses Authorized to be Paid by NRC
    NRC would be authorized to pay transportation, lodging, and 
subsistence expenses of employees who assist NRC scientific and other 
staff and are taking higher education courses related to their 
employment. NRC could also pay health and medical costs of employees 
and dependents serving in foreign countries.
NRC Scholarship and Fellowship Program
    NRC would be authorized to provide scholarships and fellowships for 
students in fields critical to the NRC mission. Recipients would have 
to work for NRC for at least as long as the scholarship or fellowship 
assistance had been provided, unless NRC granted a waiver.
Partnership Program with Institutions of Higher Education
    NRC would be authorized to conduct partnership programs to 
strengthen the ability of historically minority-serving institutions of 
higher education to teach students and conduct research in fields 
important to NRC's mission.
Elimination of Pension Offset for Certain Rehired Federal Retirees
    When NRC has an emergency need for the skills of a retired 
employee, NRC could hire the retiree as a contractor and exempt him or 
her from the annuity reductions that would otherwise apply.
Authorization of Appropriations
    Such sums as necessary to carry out this title would be authorized.
                               __________
    Summary of the Nuclear Safety and Security Act of 2005 (S. 864)
As Introduced by Senators Inhofe and Voinovich on April 20, 2005
                 use of firearms by security personnel
    Authorizes NRC to allow security guards to possess more powerful 
weapons (machinegun, semiautomatic assault rifles, etc.) when they are 
engaged in the protection of NRC-licensed or NRC-certified facilities.
           fingerprinting and criminal history record checks
    Expands requirements for fingerprinting for criminal history record 
checks to any individual who is permitted access to safeguards 
information or unescorted access to an NRC-licensed utilization 
facility or property subject to NRC regulation.
             unauthorized introduction of dangerous weapons
    Makes unauthorized introduction of weapons into NRC-regulated 
facilities a Federal crime.
      sabotage of nuclear facilities, fuel, or designated material
    Makes it a Federal crime to sabotage commercial nuclear facilities, 
fuel, and Commission-designated material or property not previously 
covered by the sabotage section of the Atomic Energy Act.
                               __________
       Summary of the Price Anderson Amendments Act 2005 (S. 865)
As Introduced by Senators Voinovich and Inhofe on April 20, 2005
                 extension of indemnification authority
    Extends Price Anderson liability coverage for an additional 20 
years (until 2025).

  

                                  
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