[Senate Hearing 110-1241]
[From the U.S. Government Publishing Office]







                                                       S. Hrg. 110-1241

   NUCLEAR REGULATORY COMMISSION OVERSIGHT: SECURITY OF OUR NATION'S 
                             NUCLEAR PLANTS

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

                                HEARING

                               before the

              SUBCOMMITTEE ON CLEAN AIR AND NUCLEAR SAFETY

                                 of the

               COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS
                          UNITED STATES SENATE

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                               __________

                           FEBRUARY 28, 2008

                               __________

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






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               COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS

                       ONE HUNDRED TENTH CONGRESS
                             FIRST SESSION

                  BARBARA BOXER, California, Chairman
MAX BAUCUS, Montana                  JAMES M. INHOFE, Oklahoma
JOSEPH I. LIEBERMAN, Connecticut     JOHN W. WARNER, Virginia
THOMAS R. CARPER, Delaware           GEORGE V. VOINOVICH, Ohio
HILLARY RODHAM CLINTON, New York     JOHNNY ISAKSON, Georgia
FRANK R. LAUTENBERG, New Jersey      DAVID VITTER, Louisiana
BENJAMIN L. CARDIN, Maryland         LARRY E. CRAIG, Idaho
BERNARD SANDERS, Vermont             LAMAR ALEXANDER, Tennessee
AMY KLOBUCHAR, Minnesota             CRAIG THOMAS, Wyoming
SHELDON WHITEHOUSE, Rhode Island     CHRISTOPHER S. BOND, Missouri

       Bettina Poirier, Majority Staff Director and Chief Counsel
                Andrew Wheeler, Minority Staff Director
                              ----------                              

              Subcommittee on Clean Air and Nuclear Safety

                  THOMAS R. CARPER, Delaware, Chairman
JOSEPH I. LIEBERMAN, Connecticut     GEORGE V. VOINOVICH, Ohio
HILLARY RODHAM CLINTON, New York     JOHNNY ISAKSON, Georgia
BERNARD SANDERS, Vermont             LAMAR ALEXANDER, Tennessee
BARBARA BOXER, California (ex        JAMES M. INHOFE, Oklahoma (ex 
    officio)                             officio)
























                            C O N T E N T S

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                                                                   Page

                              MAY 16, 2007
                           OPENING STATEMENTS

Carper, Hon. Thomas R., U.S. Senator from the State of Delaware..     7
Voinovich, Hon. George V., U.S. Senator from the State of Ohio...     8
Cardin, Hon. Benjamin L., U.S. Senator from the State of Maryland    16
Inhofe, Hon. James M., U.S. Senator from the State of Oklahoma...    17
Craig, Hon. Larry E., U.S. Senator from the State of Idaho.......    19

                               WITNESSES

Casey, Hon. Robert P. Jr., U.S. Senator from the State of 
  Pennsylvania...................................................     1
    Prepared statement...........................................     4
Specter, Hon. Arlen Specter, U.S. Senator from the State of 
  Pennsylvania...................................................    10
    Prepared statement...........................................    12
Klein, Dale E., Chairman, Nuclear Regulatory Commission..........    20
    Prepared statement...........................................    23
    Responses to additional questions from:
         Senator Boxer...........................................    30
        Senator Casey............................................    32
        Senator Inhofe...........................................    33
        Senator Voinovich........................................    38
        Senator Specter..........................................    39
Jaczko, Gregory B., Commissioner, Nuclear Regulatory Commission..    41
    Prepared statement...........................................    43
    Responses to additional questions from:
         Senator Boxer...........................................    45
         Senator Casey...........................................    46
Lyons, Peter B., Commissioner, Nuclear Regulatory Commission.....    47
    Prepared statement...........................................    49
    Response to an additional question from Senator Casey........    52
Crane, Christopher M., Chief Operating Officer, Exelon Generation    69
    Prepared statement...........................................    72
    Response to an additional question from Senator Inhofe.......    77
    Response to an additional question from Senator Specter......    77
    Responses to additional questions from:
         Senator Boxer...........................................    77
         Senator Casey...........................................    78
         Senator Voinovich.......................................    79
Wilson, Eric, Chief Executive Officer, Regulated Security 
  Solutions, Formerly Wackenhut Nuclear Services.................    80
    Prepared statement...........................................    83
    Responses to additional questions from:
         Senator Boxer...........................................    88
         Senator Casey...........................................    88
        Senator Inhofe...........................................    90
         Senator Voinovich.......................................    91
Lochbaum, David, Director, Nuclear Safety Project, Union of 
  Concerned Scientists...........................................    91
    Prepared statement...........................................    94
         Senator Boxer...........................................   102
        Senator Inhofe...........................................   102
         Senator Voinovich.......................................   102
Fertel, Marvin, Senior Vice President and Chief Nuclear Officer, 
  Nuclear Energy Institute.......................................   103
    Prepared statement...........................................   107

 
   NUCLEAR REGULATORY COMMISSION OVERSIGHT: SECURITY OF OUR NATION'S 
                             NUCLEAR PLANTS

                              ----------                              


                      WEDNESDAY, FEBRUARY 28, 2008

                               U.S. Senate,
         Committee on Environment and Public Works,
              Subcommittee on Clean Air and Nuclear Safety,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 10 a.m. in 
room 406, Dirksen Senate Office Building, Hon. Thomas R. Carper 
(chairman of the subcommittee) presiding.
    Present: Senators Carper, Cardin, Craig, Inhofe, Specter 
and Voinovich.
    Senator Carper. Welcome everyone.
    Normally, we don't swear in our witnesses, but I would just 
suggest to Senator Voinovich, we talked earlier and we were 
thinking about swearing in our first witness to get the 
straight skinny here.
    [Laughter.]
    Senator Carper. We are delighted our colleague Senator 
Casey is here from Pennsylvania. Since Peach Bottom is in your 
State, one of your corporate constituents, and a lot of your 
constituents actually work there, it is great that you are here 
to testify. I know you have been to visit Peach Bottom in the 
last week or two. We look forward to hearing from you.
    I would invite you to come and join us and to sit on this 
side of the dais once you have concluded your statement, and 
after we have the opportunity to grill you with a whole lot of 
questions of your own. We are happy that you are here, and we 
look forward to hearing from you and then from our other 
witnesses who have joined us.
    Please proceed.

        OPENING STATEMENT OF HON. ROBERT P. CASEY, JR., 
          U.S. SENATOR FROM THE STATE OF PENNSYLVANIA

    Senator Casey. Mr. Chairman, thank you very much. We 
appreciate this opportunity to testify and I am grateful for 
the time that you have given me and other witnesses who will be 
here today. I want to thank you and also thank Senator 
Voinovich and Senator Inhofe and Senator Craig for being with 
us today.
    I especially appreciate this because of the importance of 
this issue, the issue of nuclear security, not only to the 
Commonwealth of Pennsylvania, but indeed to the Country. I come 
from a State that has 5 nuclear plants and 9 reactors, and we 
have 10 million people in Pennsylvania that live within 50 
miles of those reactors, so nuclear safety and nuclear security 
is extremely important to our State and the Country.
    The recent incident with a team of sleeping guards at the 
Peach Bottom atomic power station in York County, Pennsylvania 
has raised the profile of nuclear security across the Country. 
The incident, in a word, was inexcusable. There is no other way 
to say it than that, but it has highlighted some of the 
problems with the way security is implemented in our Country 
and overseen. So I think it is our duty as members of the U.S. 
Senate, but also as citizens, to learn from this mistake.
    We know that the Nuclear Regulatory Commission recently 
reported a ``white'' Peach Bottom incident. The finding, as 
many people here know, is based upon the agency's color coded 
threat analysis. A white finding means that the problem with 
the sleeping security team presented a low to moderate safety 
significance. But I would argue, and I think anyone on this 
panel would argue, that the 10 million Pennsylvanians living 
near nuclear plants, for them a low or moderate safety threat 
is still too great a threat to those families.
    But for good fortune in this case, a serious security issue 
could have occurred at the Peach Bottom plant while security 
guards who were supposed to standing ready to provide rapid 
response were in fact sleeping. I don't think anyone here is 
willing to leave the safety of people in Pennsylvania or the 
safety of Americans and the peace of mind of Americans to 
something as unpredictable and as unreliable as luck, pure luck 
in some instances.
    So we need to do a couple of things to address this 
problem. I think there are at least five. First of all, what I 
believe we must do is make sure that we fully understand what 
happened in this instance. Today's hearing is a good first step 
to do that, and that is why I am so grateful that we have the 
opportunity to talk about what happened at Peach Bottom, but 
also to take steps to prevent it from happening there and in 
other places across the Country.
    My staff and I personally have met with many of the 
witnesses who will testify today. I also met this past Monday 
with Mr. Kerry Beal, who is a constituent of mine, but also was 
the whistleblower who alerted us to the sleeping guards in the 
first place. This past Monday, I toured the Peach Bottom plant 
to get a better understanding of what happened, and also what 
Exelon, the company that runs that plant, what they have 
changed in their own security operations. Senator Carper, I 
know that you were there not too long ago, and I think you were 
actually at the plant longer than I was. We are grateful for 
the time you spent there. I was there about 2 hours, and I know 
you were there even longer than that. I think as a Senator from 
a neighboring State, to take that kind of time to come to 
Pennsylvania to visit Peach Bottom, we are grateful for that. I 
think it speaks volumes about the commitment of this 
Subcommittee and your leadership to this issue. We are grateful 
that you did that.
    I think the second thing we have to focus on here is 
restoring faith, the faith of the American people in our 
Nation's nuclear security. I say that not extrapolating from 
one incident, but I think what happened here is serious enough 
that it bears scrutiny and attention from the Country overall. 
So even though in this case no imminent security threat took 
place, the knowledge that those in charge of guarding a 
potential target and securing the surrounding communities has 
caused a lot of local residents to ask questions about what 
happened here.
    So I think a lot of work is ahead of us at public officials 
to earn the trust of the public with regard to public safety 
and in particular nuclear safety.
    No. 3, we must make changes to a system that allows a 
serious security problem to go undetected for many months, even 
after it was brought to the attention of the Federal agency, 
the plant owner and the security contractor. I am pleased that 
the NRC, Exelon and Wackenhut Nuclear Services, the three 
parties that have responsibility here, have taken actions to 
correct the problems that occurred at Peach Bottom, but we have 
to make sure these actions actually do the job as they must do 
to ensure this doesn't happen again.
    Finally, I think we must do this: We must ensure that the 
people who report incidents at our nuclear plants, whatever 
they are reporting, whether it is security or otherwise, but 
especially if it is a security matter, can do so freely and 
with peace of mind when they make those reports. These 
whistleblowers must know that if they make the difficult 
decision to report a safety or security problem, they will be 
treated with respect and that their concerns will be carefully 
and thoroughly investigated.
    As the Chairman knows, I was an elected official in 
Pennsylvania for a decade, basically being a CEO of two State 
agencies, one with about 800 employees and the other with 500 
employees. So I have a sense in the context of government how 
difficult it is to balance a budget, to run an agency, and to 
deal with all of the difficulties that you face running an 
agency. I think the same is true in private industry. Running 
Peach Bottom or running a nuclear plant is a difficult 
assignment.
    But when an employee of a company or a government agency 
reports a problem, whether it is a personnel matter or a 
security matter, whatever it is, there must be a procedure in 
place for that employee to follow and for the company to follow 
or the agency. And also, there must be followup to ensure that 
that problem is indeed addressed. That is the responsibility of 
the leadership, the leadership of a government agency, the 
leadership of a private company, and certainly the leadership 
of a nuclear power plant. That agency must ensure that every 
employee has the peace of mind to know that they can report 
confidentially and that action will be taken.
    That is what we need to implement here, and I am looking 
forward to listening to the witnesses today to bring some light 
to what happened, but more importantly in the long run, to make 
sure that this never happens again at Peach Bottom or any other 
nuclear power plant.
    Mr. Chairman, I will take any and all questions that you or 
the other members of the panel have.
    [The prepared statement of Senator Casey follows:]



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    Senator Carper. Just one quick question. Of the five 
factors you listed, which is most important in your judgment?
    Senator Casey. I think making sure going forward that we 
put in place procedures, especially with regard to what the NRC 
does, but also to demand that companies put procedures in place 
to prevent this from happening again. So literally, it is 
almost as if you have to look into the mind of a whistleblower 
and create conditions for them so that when they have a 
concern, it may be unfounded, it may be something that is not 
that serious, but especially if it something serious, they have 
to, in their own mind, feel that their complaint or their 
concern is addressed and addressed quickly, not months down the 
road, not weeks down the road, but very quickly, especially if 
it involves security.
    Part of that is creating a culture that foster this. My 
sense of this, having read news articles, having talked to some 
people involved, this is my sense, and I don't profess to be an 
expert on what happened there, but my sense of this is the 
culture was contrary to everything I just said, that the 
culture was not such that this employee felt free to report it, 
and that he had a sense that it would be followed up on very 
quickly and very thoroughly. In fact, it was resistance the 
other way. Don't be a team player, that was one of the phrases 
that came out of this. So I think that is really the most 
important.
    Senator Carper. I will just say to my colleagues, one of 
the things that I learned on our visit there with Chairman 
Klein and others was I think there was a policy in place with 
Wackenhut of zero tolerance. One screw-up and you are fired 
from the security force. As a result, there was a reluctance on 
the part of some who were behaving appropriately to turn in the 
others because they knew that their colleagues would be out of 
there right away. I think that kind of reduced the likelihood 
that people would step forward and blow a whistle because it 
would mean somebody's career and livelihood and so forth.
    Other questions of Senator Casey?
    Senator Inhofe. Yes, just out of curiosity, Bob, you 
mentioned that in Pennsylvania that your elected position put 
you in two groups. What were they?
    Senator Casey. Auditor General and State Treasurer.
    Senator Inhofe. I see. OK.
    Senator Craig. Mr. Chairman, I have no questions of the 
Senator. I have some brief opening comments.
    Senator Carper. We will have an opportunity to do that.
    Senator Craig. That is what I thought, so I will wait. 
Thank you.
    Thank you, Bob.
    Senator Carper. I would just say before you come up to join 
us, Senator Casey, one of the reasons why I felt a sense of 
ownership and wanted to come to our neighboring State, to Peach 
Bottom, is there was a time in the history of Pennsylvania and 
Delaware when we were the same State, as you may know.
    [Laughter.]
    Senator Carper. And you never know how some of this history 
repeats itself, so it was an early excursion.
    Senator Craig. And Bob, we also must remember he was once a 
Governor. He is probably looking for territory.
    Senator Carper. That is true.
    Senator Inhofe. When that was true, we weren't a State.
    Senator Carper. People used to say to me, when you are no 
longer Governor of Delaware, what would you like to do next 
when your term expires. I don't know what George used to say, 
but I used to say I want to move to another State and be their 
Governor, too.
    [Laughter.]
    Senator Carper. We didn't have any takers so I had to find 
another job.
    Senator Casey. We would love to have you move the entire 
population of Delaware into Pennsylvania.
    Senator Carper. Three great counties.
    Well, please feel free to join us.
    We are going to take a few minutes and have opening 
statements. I am going to ask my colleagues and I to try to 
hold ourselves to maybe 5 minutes.

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

    Senator Carper. I think along with everyone who is sitting 
up here on the dais with me, I have been a long-time supporter 
of nuclear power. I believe clean, safe energy is what this 
Country needs and what nuclear power has to offer.
    Nuclear power provides solutions to a number of the 
challenges that face our Country today. It can help to reduce 
our growing reliance on foreign oil and to unchain our economy 
from the whims of hostile governments. It can also reduce air 
pollution that damages our environment, harms our health, and 
contributes to global warming.
    In short, our Country needs nuclear power, and luckily 
nuclear power just might be on its way, more new nuclear power 
just might be on its way. The Nuclear Regulatory Commission, as 
represented here today by three of its commissioners, has 
already received five license applications for the first new 
reactors to be built in some 30 years and the Nuclear 
Regulatory Commission is expecting several more applications 
this year. If all goes well, we will have the first of possibly 
30 new reactors built within the next seven or 8 years, not 
only providing clean electricity, no emissions, no increased 
reliance on foreign oil, but also providing extraordinary 
employment opportunities for tens of thousands of people 
throughout our Country to work to build those plants and then 
to turn around and to operate them.
    While that one reactor 7 years down the road is important, 
and the others that might be built are important, the 104 
reactors that are currently operating in the United States must 
remain our top priority. If any one of our current reactors 
fails to continue to operate safely and securely, it will 
undermine the nuclear renaissance we are beginning to witness.
    In short, we have to get it right every day at every plant. 
Perfection cannot just be a lofty goal. It has to be a goal 
that is diligently pursued every single day. I said to Chairman 
Klein and the folks up at Peach Bottom when we were up there, I 
often say to my teenage boys, there is nothing wrong with 
making a mistake. We all make mistakes. In this industry, there 
is less margin for error and mistakes can have extraordinary 
consequences. But when there are mistakes, we have to learn 
from them and fix them.
    When it comes to the Peach Bottom incident last fall, we 
failed to get it right. Last year, the NRC and Exelon were 
warned that security guards were sleeping on duty and failed to 
address the issue until video evidence was leaked to the press. 
Obviously, the security guards implicated in this incident 
failed to properly carry out their jobs, but the reason we are 
here today is because the NRC apparently failed to carry out 
its job. By its own admission, the NRC, and I commend the NRC 
for basically saying, we screwed up, too. We all make mistakes 
and I appreciate the spirit that you have brought to this, Mr. 
Chairman and commissioners. But the NRC failed to adequately 
respond to the concerns that were raised, and the Commission 
was overly reliant on Exelon to investigate these concerns.
    The role of the NRC is to regulate the nuclear industry, 
not just ask the industry to do it for them. When the NRC is 
perceived to be weak or passive, there is opportunity to cut 
corners and to do things outside the lines. A strong, robust 
future for the nuclear industry requires a strong and robust 
Nuclear Regulatory Commission. Chairman Klein and the 
commissioners have made that clear to me. We understand that 
and they do, too.
    Two weeks ago, as others have suggested, I went to the 
Peach Bottom plant to personally see what happened and to find 
out how it is being addressed. While there, I had a chance to 
talk with the facility's employees. In closing, let me repeat 
what I said to them. I told them that I will do all that I can 
to promote safe nuclear power and to provide the NRC with the 
resources and tools necessary to do its job and do it well. I 
know my colleagues take the same spirit to their responsibility 
here, too. But all of our efforts on this Subcommittee will be 
meaningless without a commitment to excellence from the 
industry and from the Nuclear Regulatory Commission.
    I will now recognize my colleague, Senator Voinovich, with 
whom it is a pleasure to serve in this oversight capacity.
    Senator Voinovich.

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

    Senator Voinovich. Thank you, Mr. Chairman.
    I would like to welcome the witnesses. I want to thank you 
for being here to examine the status of security at our 
Nation's nuclear power plants.
    With increasing environmental constraints, particularly the 
desire for limits on carbon emissions, expanding nuclear 
power's share of the baseloading generating capacity is both 
logical and necessary. The 104 nuclear power plants operating 
today represent over 70 percent of the Nation's emission-free 
electric generation portfolios, avoiding 681 million metric 
tons of carbon dioxide. By comparison, wind power avoids about 
three million tons and solar energy avoids about a half million 
tons.
    Indeed, the Clean Air Task Force modeling of the Warner-
Lieberman climate bill which passed out of this Committee, 
indicates that 117,000 megawatts of new nuclear generation must 
be in operation by 2030 to meet the objectives of the bill. 
That is the equivalent of doubling the number of nuclear plants 
we have today within the next 22 years, which obviously, I 
think from many of our perspectives, is a little unrealistic.
    Nevertheless, I think we can agree on one thing. If we are 
to meet the growing electricity needs in this Country and also 
address global climate change, nuclear power has a crucial role 
to play. That is why we focused a great deal of effort on ways 
to achieve secure and safe growth of nuclear power. Last fall, 
Senator Carper and I held a nuclear energy roundtable with 
representatives from organized labor, industry, academia, 
professional societies and government agencies, along with 
Senators Isakson and Domenici, to talk about what it is that we 
need to do to make the nuclear renaissance a reality. I have 
worked on a paper with several people in this room and copies 
of it are available at the back table, which outlines the 
things that we need to do in terms of making sure the 
renaissance takes place.
    But there is an old challenge that has been dogging both 
the NRC and the nuclear industry for a long time. That is 
public confidence. Without public confidence in NRC as a strong 
and objective regulator, and without public confidence in the 
nuclear industry workers as highly competent and safety-
conscious professionals, I am afraid the future of the nuclear 
renaissance is in doubt. Without public confidence, we can't 
get there from here to there.
    In my view, nothing will damage public confidence more than 
giving the appearance of not taking each employee-raised 
concern seriously. A video message of sleeping security guards 
at a nuclear power plant airing on CNN certainly doesn't help.
    Mr. Chairman, that is why this hearing is so important and 
timely. We need to better understand exactly what happened and 
the extent of the problem which led to the situation, and what 
is being done to make sure that it doesn't happen again.
    This Committee has held 10 NRC hearings since September 11, 
in which security enhancements at the Nation's nuclear 
facilities and protection and control of radioactive materials 
was examined. Through these hearings, we learned the NRC issued 
interim compensatory security measures and numerous orders to 
enhance security at these facilities. One of these orders 
specifically restricted security officer work hours, 
established new security force training and qualification 
requirements, and increased the design basis threat the nuclear 
forces must be able to defend against. We understand that 
nuclear power plant operators spent about $1.5 billion to 
implement these new NRC regulations.
    I have toured two plants in Ohio, at Davis-Besse and Perry. 
I was very impressed with what they have in place at those two 
facilities. I should also note that the safety record of the 
Nation's nuclear power plants has steadily improved. NRC 
oversight of these plants has improved by applying lessons 
learned from Davis-Besse back in 2002, understanding that 
public perception and confidence in the industry is only as 
good as its weakest link.
    I was recently pleased to meet with the President of the 
Institute of Nuclear Power Operation, Jim Ellis, concerning his 
efforts in the industry to control the whole industry. In other 
words, this is a watchdog within the industry. The industry 
understands that things like Peach Bottom hurt everyone. The 
industry is doing everything they can to make it clear to the 
people that run these operations, what you do impacts on us and 
you had better do the job that you are supposed to be doing, 
not only for yourself, but for the entire industry.
    I think that is it. The NRC, the industry itself, and then 
oversight from this Committee is going to really make the 
difference in terms of restoring people's confidence in this 
industry.
    Senator Carper. Senator Voinovich, thank you.
    Under early bird rules, Senator Cardin would be recognized 
next, but he has been graciously willing to defer.
    Senator Inhofe. I would defer also to Senator Specter.
    Senator Specter. Thank you very much, Mr. Chairman.
    Senator Carper. Thanks for joining us.

               STATEMENT OF HON. ARLEN SPECTER, 
          U.S. SENATOR FROM THE STATE OF PENNSYLVANIA

    Senator Specter. I want to thank you for the deference. I 
have never had that much deference in the Senate.
    [Laughter.]
    Senator Specter. I think I may come to this Committee more 
often, with the congeniality.
    [Laughter.]
    Senator Carper. We will leave the light on.
    Senator Specter. I would ask consent that my full statement 
be made a part of the record, and I will summarize it in a 
brief way.
    Senator Carper. Without objection.
    Senator Specter. I think there is no doubt that we need to 
develop nuclear energy in America because of the grave problems 
associated with dependence on foreign oil. The issues about 
safety are in pretty good shape as long as people stay awake.
    I recall the days very vividly back in 1978, March 28, when 
there was the Three Mile Island incident in Pennsylvania. There 
was really a lot of worry that day. I was in Philadelphia at 
the time and reports were being given as to how long it would 
take the air to come back in a contaminated form and what the 
risks were. But I think we are a long way from that, with that 
kind of a mechanical breakdown over at Chernobyl, but I think 
we need to look to nuclear.
    Also in the context of the issues on global warming which 
we are talking about. Legislation has been proposed in this 
Committee. Senator Lieberman, Senator Warner, Senator Bingaman 
and I have proposed legislation, and nuclear has a lot to offer 
because it is clean, so it would ease up on our problems of 
global warming as well.
    We have problems at Yucca Mountain which we have not yet 
solved, and the waste matters have to be taken care of, but 
there is nothing as fundamental as safety. I have made it a 
point to visit the facilities in my State. I couldn't make the 
last one because we were at a Republican convention in 
Harrisburg at the same time and we had to endorse a 
Presidential nominee. But what happened at Peach Bottom is 
inexcusable, inexcusable.
    That is especially troublesome, not only because of the 
inherent dangers in nuclear, but because of the terrorism 
factor. That is a prime target in a prime location. I commend 
the Chairman and others, Senator Casey, for focusing attention 
on the issue. We can't emphasize too strongly the importance of 
having the security operational, especially where you have a 
professional organization and the issue in the area where the 
guards were located was very bad. They have to stay awake. That 
is the issue not only for the contracting party, but for the 
principal.
    We are really dealing here with matters that are so 
serious, they are really in the non-delegable category. The law 
makes a sharp distinction, depending on the nature of the 
danger, as to what can be delegated. These are really non-
delegable items.
    My distinguished colleague, Senator Casey, has taken the 
lead on legislation, which I expect to join him on. I am very 
glad to see this Committee very much on top of this issue.
    I am going to excuse myself because the Judiciary Committee 
is meeting at this time.
    Thank you for the deference, colleagues.
    [The prepared statement of Senator Specter follows:]



[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    
    Senator Carper. Thank you so much for coming and for your 
testimony.
    Senator Cardin, you are recognized, and then we will turn 
to Senator Inhofe.

          OPENING STATEMENT OF HON. BENJAMIN CARDIN, 
            U.S. SENATOR FROM THE STATE OF MARYLAND

    Senator Cardin. Thank you very much, Mr. Chairman.
    I want to thank our colleagues from Pennsylvania for 
joining us, Senator Specter and Senator Casey.
    It is a pleasure to have Chairman Klein here. I appreciated 
his hospitality when I recently visited the Nuclear Regulatory 
Commission and was very impressed by the dedication of the men 
and women who serve at that Commission and the work that they 
are doing in order to carry out a very challenging mission not 
only dealing with the safety of our nuclear facilities, but 
also the application process that is moving forward to deal 
with the energy policies of this Country.
    Mr. Chairman, I want to agree with you in your statement. I 
think nuclear energy is very important for this Country, but it 
must be done in a safe manner. We have had lapses. We need to 
learn from those lapses to make sure that that does not take 
place in our Country.
    What happened at Peach Bottom is inexcusable. Peach Bottom 
may be located in Pennsylvania, but it is right near the people 
of Maryland. If there had been an incident there, it would have 
affected the health of the people in my State of Maryland and 
as far as the entire region. So we all have an interest in what 
is happening in regards to security issues.
    I am also concerned about the GAO undercover operation that 
was able to get a license. That is something that we need to 
make sure never happens and that we have the right protections 
in place.
    So I would ask that my full statement be made part of the 
record. I just really want to join in thanking you, Mr. 
Chairman, for holding this hearing to make sure that we do 
everything we can as a Congress to support efforts for the 
safety of our communities.
    I was in Chernobyl last year and saw the consequences of 
the most extreme circumstances of failure of government to 
properly protect not only the citizens of Ukraine, but 
basically the international community. We have a major 
responsibility. The NRC is our principal agency that has that 
responsibility. We need to work together to make sure that 
every safety precaution is taken as we deal with this most 
important subject.
    I thank you for holding this hearing.
    [The prepared statement of Senator Cardin follows:]

       Statement of Hon. Benjamin Cardin, U.S. Senator from the 
                           State of Maryland

    Mister Chairman, thank you for holding this hearing and for 
allowing me to join your subcommittee for the day. I am 
grateful for your courtesy. Because we have so many important 
witnesses to hear from today, I will keep my opening statement 
brief.
    For the first time in 30 years, the nuclear industry is 
moving forward with plans to construct and activate a new 
generation of nuclear power plants. Already, TVA has begun to 
expand its nuclear capacity with the recent restart of a 
reactor at Browns Ferry Nuclear Plant in Athens, Alabama. In 
his testimony today, NRC Chairman Klein states that, just over 
the last few months, the Commission has received five complete 
combined license applications for new nuclear power plants. 
Dozens of new plants could be online by 2015.
    If we are to going to expand the nuclear power industry in 
the United States, then Americans need to have confidence that 
the nuclear plant operations are dependable and plant 
operations must, in fact, be secure. I want to impress just how 
weighty this matter is.
    NRC's No. 1 priority must be to ensure that adequate 
security systems and processes are in place, and that they are 
working properly and efficiently at all times.
    We have seen two recent instances in which security 
shortcomings have come to light. The first of these was 
uncovered in July 07 after investigators from the 
Government Accountability Office fraudulently secured a license 
from the NRC which would have allowed them to buy the 
radioactive materials needed to make a dirty bomb.
    The only portion of the GAO's security test that did not 
work was when it attempted to obtain a license from the State 
of Maryland, which said it would require a visit to the 
business first. While I am proud of Maryland regulators, I am 
disappointed that my State government could recognize a danger 
my national government overlooked.
    The second instance of security failures was the unsettling 
scenes of security guards at Peach Bottom Nuclear Plant in 
Pennsylvania asleep on the job when they should have been 
protecting the plant from security breaches.
    Peach Bottom is only a matter of miles from the border of 
my home State of Maryland. The consequences of a security 
failure there could be catastrophic for Maryland residents and 
many others.
    I am glad to hear Chairman Klein has instituted Maryland's 
licensing procedures at the national level to prevent the type 
of licensing fraud GAO was able to undertake. And I am pleased 
to see the NRC's thorough evaluation of its response to the 
Peach Bottom allegations.
    I want to hear assurances from the Commissioners that the 
review team's recommendations will be implemented. I want to 
hear that the Commission is developing ways to expand on those 
recommendations and share those lessons beyond the region that 
surrounds the Peach Bottom facility. I want to hear that all 
that can be done is being done to ensure that the nation's 
Nuclear Plants are being well run and adequately protected.
    In my home State of Maryland, 28 percent of electricity 
generation is in the form of nuclear energy. The Energy 
Information Administration is forecasting output of nuclear 
energy will grow by 42 percent by 2030.
    It is essential that we be 100 percent confident in our 
assertions that the public in Maryland and across the United 
States are secure, and will remain secure as we move forward 
with plans to expand our nuclear energy infrastructure and 
capacity. I look forward to hearing answers today to their 
concerns and my own.
    Thank you, Mister Chairman.
    Senator Carper. We are delighted that you are here. Thanks 
so much for your statement. Your entire statement will be made 
part of the record, without objection.
    Senator Inhofe.

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

    Senator Inhofe. Thank you, Mr. Chairman. I will make the 
same request that my statement be made a part of the record.
    Senator Carper. Without objection.
    Senator Inhofe. Let me say that I have another reason for 
appreciating your holding this hearing today, and that is that 
it is continuing this vigorous oversight that we started. It is 
hard for me to believe it was a little over 10 years ago I 
became Chairman of this Subcommittee. At that time, we had gone 
something like 12 years since we had any kind of oversight. We 
started a tradition. And even those who are here today, they 
want the oversight. So I think that is good.
    I know the purpose of this hearing is to talk about the 
safety problems that are out there. I think that we probably 
will be able to do that.
    Let me agree with the comments that were made by Senator 
Voinovich on the necessity of nuclear. You just can't run this 
machine called America without the component of nuclear energy. 
This is a time when we have to accelerate our activity there. 
The question that I am going to ask, in fact, some members of 
the NRC might want to do this in their opening statement, is 
respond to a concern that I have on the budget request. Maybe 
you did or maybe you didn't hear.
    I was a little bit critical when we had the EPA hearing on 
their budget request, that there are some things like the SRF, 
some things that are very popular, that they fund way low 
knowing that we are going to raise it up. This has been 
happening in the 22 years since I have been here, so I don't 
think it is going to stop overnight, but I suspect that is what 
is happening here with the budget request.
    You have a budget increase in the reactor licensing of only 
$3.1 million. Everything that we have seen indicates to us that 
it is going to have to be more than that if you are going to 
stay on the track that we, as oversighters, want you to stay on 
and continue to be aggressive. So I suspect that that is 
happening again and I hope that you will address that because 
if we are going to be as aggressive and ambitious as we need to 
be, and as I think every member of this Committee wants to be, 
we are going to have to be willing to fund it and make it 
happen.
    Thank you, Mr. Chairman.
    [The prepared statement of Senator Inhofe follows:]

       Statement of Hon. James M. Inhofe, U.S. Senator from the 
                           State of Oklahoma

    I commend Senators Carper and Voinovich for holding this 
hearing today, continuing the tradition of rigorous oversight 
that I started when I assumed the Chairmanship of this 
Subcommittee over 10 years ago. The safety and security of our 
nation's nuclear plants is essential. Responsibility for 
maintaining security rests not only with the industry's 
security forces, as they are vigilant and thorough in their 
protection of the facilities, but with the NRC as a regulator 
and with this Committee in its oversight role. It is our job 
today, as Members of this Committee, to ensure that the NRC 
remains a strong and independent regulator, true to its mission 
of protecting public health and safety, and promoting the 
common defense and security.
    The NRC cannot condone, and this Committee cannot ignore, 
security guards sleeping on duty in violation of procedures. I 
appreciate that Mr. Crane shares my extreme disappointment to 
learn that a group of security officers did just that. I am 
eager to learn what conditions created this situation and what 
has been done to prevent it from happening again. Inappropriate 
behavior on the part a few guards should be firmly addressed 
but it should NOT be allowed to tarnish the reputation of the 
dedicated, vigilant professionals that comprise the vast 
majority of these security forces or to undermine public 
confidence in them.
    In addition to security issues, I'm glad to have this 
opportunity to ask questions about the NRC's budget proposal. 
The NRC has repeatedly acknowledged the challenges associated 
with the growing number of new reactor license applications 
that will likely be filed. Yet, the requested budget increase 
for new reactor licensing is only $3.1 million. There are 
reports that NRC staff recommended an additional $22 million 
for new reactor licensing that was NOT included in the final 
budget request and that the shortfall will lead to delays of 8 
months or more in reviewing applications filed in FY'09. If 
this is true, then I am very concerned to hear that the NRC may 
already be jeopardizing its ability to conduct thorough reviews 
in a timely fashion by setting the stage for a funding 
shortfall.
    In contrast, the requested budget increase for reactor 
oversight--a process that even GAO has found to be logical and 
well-structured--is $16.1 million, over 5 times the increase 
for new reactor licensing. Testimony from our October hearing 
certainly didn't indicate program shortcomings requiring a 
strong funding increase as a remedy.
    I'm concerned by this disparity and I'm eager to understand 
the basis for it.
    Senator Carper. You bet. Thank you very much, and thank you 
for your leadership and for setting a good example that we have 
tried to follow under Senator Voinovich's leadership and for 
the last year under mine.
    Senator Craig, thank you for being here today.

           OPENING STATEMENT OF HON. LARRY E. CRAIG, 
              U.S. SENATOR FROM THE STATE OF IDAHO

    Senator Craig. Mr. Chairman, let me join the chorus of all 
of us thanking you for due diligence in oversight. That is a 
critical tool that we have and can use and oftentimes don't use 
across the face of Congress when we should be using it. I thank 
you for that.
    Let me track on where Senator Inhofe is coming from, but in 
a slightly different way. Let me not address this to the 
Commission, but to us.
    Fellow Senators, let me approach this by saying, where is 
the outrage? Listen to me. Where is the outrage? Senator Casey 
has said, no security threat took place, but there should be an 
outrage that people who were prepared and ready and alert to go 
out on a moment's notice were asleep. That is a part of the 
outrage.
    But there is something else here that is not being 
addressed today that we are politically letting slide. By June, 
Greg Jaczko, if we don't act, his term will expire and there 
will be two commissioners left in a five commissioner body. 
There are two commissioners, Greg is one, or proposed 
renomination, and another one, Kristine Svinicki, sitting at 
the desk in our Senate and we will not act. We won't act 
because of politics. It is blunt and it is simple and it is 
direct and we ought to be honest about it.
    Now, there is even a suggestion that we won't act until 
after the Presidential elections because maybe we can get three 
Democrats instead of two Democrats and one Republican. Where is 
the outrage on that? If we are so hand-wringingly concerned 
that this Commission do its job and get its budgets, then we 
ought to fully staff it with responsible, knowledgeable 
Americans, and we are not doing it, and I will be honest, 
because the majority leader isn't allowing it to come to the 
floor for a vote. So where is the outrage there?
    A major utility came to my State not long ago, spent $10 
million, bought property and 25,000 acre feet of water to build 
a new 1,500 megawatt reactor. They chose not to proceed, and 
their pockets are as deep as anybody's in America. They don't 
have to go to Wall Street to finance it. And the reason they 
chose not to proceed was the uncertainty of licensing over a 
five or 6 year period of time because time was critical to 
them. They wanted to be in production in 10 yeas, and not 15 
years, to meet their needs. They chose to stop. That is a 
little bit of the secrecy behind what is going on now, or the 
reality of timeliness.
    That is not a criticism of the Commission. That is a 
criticism of us. We are not allowing the Commission to be fully 
operational based on its total load of commissioners, and yet 
we are asking more of it today, to be more responsible, more 
effective than they demonstrated possibly at Peach Bottom.
    I will stop. Mr. Chairman, where is the outrage? We are 
quietly letting politics dictate to us a Commission unfilled at 
a time when we are speaking glowingly about nuclear 
renaissance, 30 plus reactors on the drawing boards, the need 
for 115,000 new megawatts of power by a given time to keep our 
climate and our globe from warming. And yet we will not staff, 
because of political purposes, a full Commission.
    Thank you.
    Senator Carper. I will just respond very briefly.
    As Chairman of the Subcommittee responsible for oversight, 
I have no interest in seeing this Commission trying to operate 
with two members. It is not good for them and even more it is 
not good for our Country. We just need to work together to make 
sure that when Commissioner Jaczko's term is going to expire, 
he will be in a position to be reconfirmed and have at least 
one person to join him, maybe two. Thank you.
    Senator Craig. He is in position right now. All we have to 
do is have one vote on the floor of the U.S. Senate and it 
would happen tomorrow, two new commissioners.
    Senator Carper. I understand.
    All right. I think that is it for opening statements.
    I am going to invite our commissioners to come forward, led 
by Chairman Klein at this time.
    Chairman Klein, I understand that you are joined today by 
your boss. I am going to ask you to introduce her. If any other 
commissioners have a family member they would like to 
introduce, you are welcome to. It is not every day that the 
spouse of the Chairman of the Commission comes by, so we would 
like to certainly recognize and welcome her.
    I will be watching carefully to see if her lips move while 
you speak. That is usually the way it works with my family.

   STATEMENT OF DALE E. KLEIN, CHAIRMAN, NUCLEAR REGULATORY 
                           COMMISSION

    Mr. Klein. Thank you, Mr. Chairman. It is always a pleasure 
to introduce my real boss, my wife Becky is in the audience 
today. As we have said, we have been living together separately 
since 2001 when I came up at the Department of Defense, so we 
have been commuting. So it is nice that she is able to join 
today.
    Senator Carper. Mrs. Klein, thank you for sharing your 
husband with our Country, literally.
    Mr. Klein. Mr. Chairman, Ranking Member Voinovich, and 
members of the Subcommittee, it is a pleasure to appear before 
you today with my colleagues, Mr. Jaczko and Commissioner 
Lyons. On behalf of the Commission, I would like to thank you 
for your continued support of the NRC as we work to protect the 
public health and safety, common defense and security, and the 
environment. We are particularly grateful for your help 
recently in addressing our space needs as we continue to grow 
and accommodate our increasing workload.
    Let me first say a comment about Tuesday's power outage in 
Florida before I begin. Contrary to the early press reports, 
the nuclear plants at Turkey Point were not the initiating 
event of the outage in Florida. The automatic trip of the 
reactors, which was observed by the NRC resident inspectors, is 
a standard safety measure. The automatic trip at Turkey Point 
worked exactly as it should. So it is nice to know that 
contrary to the report, the nuclear plants were not the 
initiating event.
    Mr. Chairman, I ask that my written testimony be entered 
into the record.
    Senator Carper. Without objection, your full testimony will 
be entered into the record, as will the testimoneys of each of 
the commissioners who joined you.
    Mr. Klein. Thank you.
    This statement describes a number of security issues in 
detail, but the important message I wish to convey to you today 
is that the NRC is aware that there are things we need to fix. 
As I have heard you say before, Mr. Chairman, if it isn't 
perfect, make it better.
    Senator Carper. You have been listening.
    [Laughter.]
    Mr. Klein. We know we are not perfect, and we are 
identifying and implementing steps to become better.
    First, on the matter of security officers at the Peach 
Bottom plant who were found to be inattentive in the ready 
room. I want to make it very clear that this behavior is 
unacceptable. The NRC has taken actions to address the specific 
issues at Peach Bottom and is taking appropriate action aimed 
at precluding similar incidents from occurring at any nuclear 
plant.
    Let me emphasize that at no point did we have reason to 
doubt that the overall security at Peach Bottom was adequate. 
Nuclear power plants have redundant and overlapping security 
measures based on defense in depth principles and the security 
program at Peach Bottom continued to ensure that the health and 
safety of the public was adequately protected at all times.
    The NRC takes allegations very seriously. To provide some 
perspective, our agency receives between 500 and 600 
allegations every year. Only about one in ten is substantiated 
and warrants enforcement action. Nevertheless, we are reviewing 
our own procedures and are taking actions to position us to 
detect inattentiveness better and to evaluate the effectiveness 
of our response to these allegations.
    Mr. Chairman, my written testimony also addresses the issue 
of possible aircraft impacts. As part of a comprehensive review 
of security of NRC-licensed facilities, the NRC conducted 
detailed, specific engineering studies at each site, which 
confirmed that the likelihood of both damaging the reactor core 
and releasing radioactivity that could affect public health and 
safety is low.
    Nevertheless, in response to the orders from the NRC, 
operating owners have implemented mitigating strategies that 
further reduce any effects of any aircraft impact on public 
health and safety.
    Mr. Chairman, another issue is source control for medical, 
industrial and research applications of radioactive materials. 
After 9/11, the NRC worked with Federal, State and 
international partners to identify which radioactive sources 
would be the first to receive increased regulation and orders 
were issued to accomplish that.
    Furthermore, the NRC is implementing a comprehensive action 
to address concerns identified by the GAO, the Senate Permanent 
Subcommittee on Investigations, and NRC's Office of Inspector 
General regarding all of the security of radioactive sources. 
The NRC is also considering the recommendations of the National 
Academy of Sciences' report that was issued this month.
    In addition, the Commission has been developing a national 
source tracking system that we expect to be implemented by 
December 2008 for these high-risk sources. The NRC is also 
conducting a series of rulemakings to establish a clear 
regulatory basis for the security of new power plants. This 
includes specific revision to the design basis threat 
requirements, which was published as a final rule in March 
2007.
    An ongoing rulemaking would revise a number of security 
requirements applicable to both current and future nuclear 
power plants, including the requirements for physical security, 
access authorization, fitness for duty, and training and 
qualification of security officers.
    Finally, allow me to say a word about research and test 
reactors in light of the recent report by the GAO that raised 
questions about the adequacy of the security at these 
facilities. As we communicated to GAO, we believe that the 
report provides a misleading and incomplete picture of our 
actions to ensure the safe and secure operation of research and 
test reactors. NRC's assessment of research and test reactor 
security is based on well-founded technical and security 
practices, as well as expertise from numerous outside sources.
    Of course, the NRC will continue to evaluate the threat 
environment and the effectiveness of these security measures 
and will take additional steps if necessary.
    Mr. Chairman, in closing, let me emphasize that the 
Commission remains dedicated to ensuring public health and 
safety and that the conduct of all our activities flows from 
that fundamental commitment.
    Thank you very much, and I look forward to your questions, 
and I also will answer Senator Inhofe's questions about the 
budget at that time.
    [The prepared statement of Mr. Klein follows:]



[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    
            Responses by Dale Klein to Additional Questions 
                           from Sentor Boxer

    Question 1. The NRC received word of security lapse at 
Peach Bottom in March 07, but did not respond adequately until 
September 2007 when you learned of the video tape obtained by 
the media. Why did the NRC's response change once the media got 
involved?
    Response. In March 2007, the NRC received an allegation 
indicating that security officers at the Peach Bottom Station 
had been sleeping on duty while in bullet resistant enclosures 
(BREs), and in other (unspecified) areas, due to fatigue from 
working excessive overtime and from not being able to adjust to 
12 hour shift schedules. There was no mention at that time of 
more than one security officer at anyone location being 
inattentive on duty or of any effort by other officers to 
conceal that inattentiveness. At that time, the alleger did not 
indicate that any video evidence of inattentiveness existed, 
nor was any corroborating information provided other than the 
statement made by the alleger. While the NRC Allegation Review 
Board (ARB) considered reaching out to the alleger for further 
information, the concerned individual explicitly stated in the 
allegation that he did not want to be contacted by the NRC.
    In response to the allegation, NRC Region I conducted an 
ARB meeting on March 29, 2007, as well as an additional ARB 
meeting on April 11, 2007, to determine appropriate follow-up 
actions to address the allegation. Based on the ARB 
discussions, NRC Region I decided to request information from, 
and an evaluation by, the licensee of the concerns, then review 
the licensee's written response to determine if the licensee 
adequately evaluated the concerns. Before making that decision, 
Region I conducted a historical review of allegation records 
involving security related issues at the Peach Bottom Station.
    NRC Region I determined that there was no immediate safety 
significance to the assertions in the March allegation based on 
the results of the staff's review of previously identified 
security related issues at the Peach Bottom Station. From a 
process standpoint, it is agency policy for an ARB to consider 
providing technical allegations to a licensee for evaluation 
since the licensee has responsibility for ensuring safe 
operation of its facility and, in most cases, can promptly 
address issues through ready access to site personnel and 
documentation related to the issues that are the subject of the 
allegation. The NRC always requires the licensee to respond 
with the results of its review, and the NRC then evaluates the 
adequacy of the licensee response.
    When a subsequent allegation was received by the NRC in 
September 2007 from a WCBS-TV reporter indicating that he 
possessed video evidence of inattentive security officers at 
Peach Bottom, the NRC not only promptly informed Exelon senior 
management of the allegation so that they could initiate a 
prompt investigation of the matter and take appropriate 
compensatory actions, but also increased resident inspector 
monitoring of security officer activities and subsequently 
initiated an Augmented Inspection Team review of the matter. 
The potential safety significance of this allegation was 
considered to be greater than the original March allegation 
since multiple security officers may have collaborated to 
conceal their inattentiveness, and corroborating evidence in 
the form of a video made substantiation of the allegation more 
likely.

    Question 2. You mention in your testimony that the NRC 
issued a Security Bulletin to gather information about 
licensees' programs to prevent and correct inattentiveness and 
ensure that employees report security concerns. What did you 
find from the information you gathered? Are there best 
practices that can be shared among plants?
    Response. The NRC has received licensee responses to NRC 
Bulletin 2007-01: ``Security Officer Attentiveness.'' The staff 
performed an initial review of the responses and has concluded 
that although all licensees provided answers as required by the 
Bulletin. the answers lacked sufficient detail for a 
qualitative analysis. Additional information will be requested 
from most licensees to better understand the results of their 
assessments. After obtaining and evaluating the additional 
information, the staff will recommend to the Commission whether 
further regUlatory action is warranted.
    At this time, the staff is still reviewing licensee 
responses and therefore has not identified best practices that 
can be shared across the industry. However, prior to licensee 
submittal of responses to NRC Bulletin 2007-01, the industry 
developed draft guidance for licensee evaluations of security 
officer inattentiveness. The purpose of this guidance is to 
provide a standard methodology to licensees for evaluating 
conditions that may impact the ability of security personnel to 
perform their assigned duties and responsibilities. The staff 
will issue final guidance after it completes its review of the 
adequacy of licensee submissions.

    Question 3. In your testimony you mention that NRC receives 
500-600 allegations a year, but only about 1 in 10 is 
substantiated and warrants enforcement action. How can you be 
sure you aren't missing real problems if you are only able to 
substantiate about 10 percent of all allegations? How do you 
know there aren't more Peach Bottoms where you didn't 
significantly follow up on an allegation?
    Response. To clarify, about 30-40 percent of the 
allegations NRC receives each year involve a substantiated 
concern. This substantiation rate is similar for those 
allegations that involve a written request for response from 
the licensee and those that are independently evaluated by the 
NRC. About 10 percent involve a substantiated concern that 
warrants formal NRC enforcement action (e.g., notice of 
violation of a regulatory requirement).
    Allegations are an important source of information to the 
NRC and programs and processes are in place to address every 
allegation the NRC receives. The implementation of the NRC 
allegation program at specified NRC offices is assessed 
biennially by the NRC Office of Enforcement, the program office 
with lead responsibility for allegations at the NRC. Self--
assessments are conducted by offices in years when the office 
does not receive an independent assessment. Historically, the 
results of the program assessments and self-assessments have 
shown that NRC follow up is effective. It is also noted that 
every alleger whose identity is known, in receiving closure 
documentation related to his or her allegation, is offered an 
opportunity to re-contact the NRC if he or she feels that NRC's 
response was, in some way, insufficient, inaccurate, or 
otherwise unacceptable. In such instances, NRC reviews the 
alleger's feedback and responds appropriately. The percentage 
of allegations involving such feedback has been historically 
small (1-2 percent).
    NRC is evaluating the circumstances of the Peach Bottom 
situation to identify opportunities that may have been missed 
and to consider appropriate changes to improve the 
effectiveness of the NRC allegation program.

    Question 4. In your testimony you mention proposed NRC 
regulations that would require applicants for new standard 
design certificates to assess the effects of a large, 
commercial aircraft hitting their nuclear power plant. Why 
wouldn't this same requirement apply to existing facilities or 
facilities that have yet to be constructed but whose designs 
have already been certified? Do you believe existing plants 
should meet the same security standards as newly constructed 
plants?
    Response. For the existing operating, commercial, nuclear 
power plants, the NRC staff and its contractors have conducted 
detailed, state-of-the-art analyses to evaluate the physical 
behavior of systems, structures, and components of the plants 
as a consequence of aircraft impact. These classified studies 
have confirmed that there is a low likelihood that an airplane 
attack on a nuclear power plant would affect public health and 
safety, thanks in part to the inherent robustness of the 
structure. A second study identified new methods that plants 
could use to minimize damage and risk to the public in the 
event of any kind of large fire or explosion. NRC staff, 
working with industry, has developed mitigation strategies for 
minimizing damage to the containment, spent fuel pool and 
reactor core. These mitigation strategies have been 
incorporated into the license of all operating nuclear power 
plants. The staff is in the process of codifying these 
strategies in a 10 CFR Part 50 rulemaking. Thus, all existing 
plants and all future plants will be required to meet these 
requirements.
    Whether already certified or not, NRC staff has completed 
assessments of aircraft impacts on four of the five new light-
water reactor (LWR) designs expected to be included among the 
combined license applications over the next few years. These 
four new LWR designs are the Advanced Passive Reactor (AP1 
ODD), the Advanced Boiling-Water Reactor (ABWR), the Economic 
Simplified Boiling-Water Reactor (ESBWR), and the U.S. 
Evolutionary Power Reactor (EPR). The staff is currently 
conducting an assessment of the Advanced Pressurized Water 
Reactor (APWR).
    Further, the Commission issued a proposed rule for public 
comment that will codify aircraft impact assessment 
requirements in 10 CFR Part 52. The objective of this rule is 
to require nuclear power plant designers to perform a rigorous 
assessment of design features that could provide additional 
inherent protection to avoid or mitigate, to the extent 
practicable. the effects of an aircraft impact. with reduced 
reliance on operator actions. The public comment period has 
closed and the NRC is evaluating the comments. The NRC staff is 
scheduled to provide a draft final rule to the Commission in 
summer 2008.

            Responses by Dale Klein to Additional Questions 
                           from Senator Casey

    Question 1. On March 27, 2007, the NRC received the 
whistleblower's allegation. Rather than directly investigating, 
the Commission's Review Board forwarded the concerns on to 
Exelon. It was not until June 2007 that Exelon reported back 
with its finding that it had not found any instance of 
inattentive security personnel. But footage surfaced in 
September showing the contrary was true. How would you 
strengthen coordination between NRC, the plant owners, and the 
security contractors to ensure that important information like 
this is uncovered sooner?
    Response. The March 2007 allegation only provided a general 
concern about security officer inattentiveness without 
providing details or direct evidence. Current NRC policy calls 
for the Allegation Review Board (ARB) whenever possible and 
appropriate, to refer the allegation on to the licensee and 
require a response. Therefore, NRC requested Exelon to evaluate 
the allegation and provide a response, believing that Exelon 
would be better able to inconspicuously observe such 
conditions. Exelon's evaluation did not identify any instances 
of inattentive security personnel. The video footage provided 
in September 2007 provided direct evidence of security officer 
inattentiveness in an area not mentioned in the March 2007 
allegation. This prompted immediate notification of Exelon and 
independent inspection by the NRC.
    NRC is evaluating the circumstances of the Peach Bottom 
situation to identify opportunities that may have been missed 
and to consider appropriate changes to improve the 
effectiveness of the NRC allegation program. The evaluation 
includes an assessment of and recommended changes to, how NRC 
ensures licensee understanding of the allegation concerns, and 
how the NRC conveys its expectations with regard to the 
licensee's response quality and timeliness. The results of the 
evaluation will be used to determine whether coordination with 
the licensee in a different manner and/or at different times 
would contribute to more effective and timely review.

    Question 2. According to information gathered by my staff, 
the letter sent to the NRC concerning the sleeping guards was 
written anonymously. But the letter was delivered via a person 
who provided the NRC with his name and contact information, 
including contact information for his lawyer. It is my 
understanding that the NRC never made contact with this person 
or his lawyer about the allegations. If this is true, how can 
the NRC say it didn't have enough information to pursue the 
allegations when attempts to get further information were not 
attempted?
    Response. The allegation received by the NRC in March 2007 
was in the form of a letter from a former security manager for 
Wackenhut (the company contracted by Exelon to provide security 
services at the Peach Bottom Atomic Power Station) who 
expressed concerns with aspects of the security program at the 
Peach Bottom Station. The former security manager did provide 
his name, but indicated that he was providing the information 
on behalf of other security officer(s) who wished to remain 
anonymous. The letter was mailed to the NRC resident inspector 
office at Peach Bottom and did not contain contact information 
for the alleger's lawyer. Although the NRC was aware that the 
alleger had been represented by an attorney in a prior issue 
raised to the NRC, the alleger did not indicate in his March 
correspondence that the attorney still represented him, nor did 
that letter indicate that the attorney could be contacted.
    The alleger specifically requested in the letter that the 
NRC: (1) provide complete anonymity regarding the letter; (2) 
not inform the licensee or the security contractor of the 
letter's existence; (3) not tell the licensee or the security 
contractor that any security employee had voiced concerns 
captured in the letter; and (4) not contact him in any manner. 
Consistent with NRC practice to avoid alienating allegers, 
which could make them reluctant to bring forward other concerns 
to the NRC in the future, NRC honored the alleger's requests. 
Specifically, while the NRC paraphrased the alleger's concerns 
and provided them to Exelon, the NRC did not reveal the 
alleger's name, the licensee was not informed of the existence 
of the letter, the licensee was not informed of the source of 
the allegation, and the alleger was not contacted by the NRC.
    NRC is evaluating the circumstances of the Peach Bottom 
situation to determine opportunities that may have been missed 
and to consider appropriate changes to improve the 
effectiveness of the NRC allegation program.

    Question 3. The Peach Bottom incident highlights the 
important function of allegations. They serve as a check on 
dangerous practices that can-and too often do-go unnoticed. It 
is vitally important that we not only encourage the employees 
to continue to make these allegations, but to have in place the 
right system to effectively respond to them. What procedures 
would ensure that the NRC work with the individual to 
understand the allegation and better tailor an investigation 
plan? Please provide a chart that shows the process for 
responding to allegations.
    Response. The Office of Enforcement (OE), the NRC office 
with lead responsibility for allegations at the NRC, has been 
meeting on a frequent basis with the allegation staff 
throughout the agency to discuss and implement enhanced 
practices identified by various lessons learned initiatives. 
Formalized changes to the process guidance documents have been 
developed and will be issued after internal and external 
stakeholder review.
    To date, OE has:

     Revised allegation process terminology and correspondence 
templates. The term allegation ``referrals'' was changed to 
``requests for information'' (RFI) to more clearly reflect 
that, with respect to the process by which the NRC requests a 
licensee to develop information regarding an allegation at its 
facility, NRC maintains responsibility and authority to assess 
and respond to every allegation concern.
     Reemphasized the need for NRC staff to contact an alleger 
whose identity is known, even if initially s/he indicates that 
s/he does not want to be contacted by the staff. The alleger 
would be contacted to request additional information, if 
needed, to assist in the assessment of the allegation, and to 
stress that further NRC contact will help ensure:
     NRC's understanding of the alleger's concerns;
    -- the alleger's understanding of the NRC's plan for 
assessing the allegation, including the use of an RFI if the 
alleger has no objection; and,
    -- the adequacy of the NRC's conclusions with regard to the 
concerns.
     Emphasized to the staff the need to include direction in 
the RFI that the licensee specifically address how their 
evaluation was independent, of sufficient scope and depth, and, 
if samples were taken, that they were appropriate.
     Reemphasized the need for NRC staff to clearly document 
the agency's assessment of a licensee's response to an RFI and 
to specifically articulate the agency's conclusion regarding 
each allegation concern.
    The staff continually looks for enhancements to the 
agency's Allegation Program, through annual assessments and 
incident analyses. A Senior Executive Review Panel recently 
evaluated the agency's handling of the Peach Bottom concerns 
and their report is being reviewed by the Commission and is 
expected to be issued shortly. Additionally, the NRC Office of 
Inspector General's investigation into the agency's handling of 
allegations is ongoing. The staff will assess any findings or 
observations resulting from these efforts and work to ensure 
changes are appropriate.

            Responses by Dale Klein to Additional Questions 
                          from Senator Inhofe

    Question 1. The U.S. military is responsible for many 
sensitive security operations, including protection of the 
airspace over the Capitol and protection of our nation's 
nuclear deterrent. Has the NRC consulted with any branches of 
the military regarding best practices for addressing 
inattentiveness in comparable security situations?
    Response. Yes. As part of NRCs effort to update its 
fitness-for-duty requirements applicable to personnel at 
nuclear power plants, including security personnel, the NRC 
consulted with representatives of the Army, Air Force, and 
Coast Guard regarding their guidelines and research and 
development efforts to address personnel fatigue. The NRC also 
consulted with other Federal agencies including the Department 
of Transportation, the National Space and Aeronautics 
Administration and the Department of Justice.

    Question 2. Mr. Lochbaum has expressed concern about 
``zero-tolerance'' policies, that security officers would be 
fired the first time they are found to be inattentive, 
suggesting that such policies might have a chilling effect, 
discouraging employees from raising concerns if they feel 
they'd be responsible for getting a colleague fired. Is that 
concern valid? If so, what actions is the NRC taking to address 
the issue?
    Response. The NRC has taken a number of actions to ensure 
that employees can report concerns without fear of retaliation. 
As early as May 1996, the NRC issued a Commission Policy 
Statement entitled, ``Freedom of Employees in the Nuclear 
Industry to Raise Safety Concerns Without Fear of 
Retaliation,'' to emphasize that licensees and their 
contractors are responsible for achieving and maintaining a 
work environment which is conducive to the reporting of 
concerns without fear of retaliation. All NRC licensees and 
contractors are expected to establish and maintain such a work 
environment, called a safety conscious work environment (SCWE).
    In August 2005, after continuing to note weaknesses in some 
SCWEs at both reactor and materials facilities subject to NRC 
regulation, the staff issued supplementary guidance on how 
licensees can fulfill this expectation. This guidance, found in 
Regulatory Issue Summary (RIS) 2005-18, ``Guidance for 
Establishing and Maintaining a Safety Conscious Work 
Environment,'' includes specific advice on effective ways for 
licensee management to prevent a chilling effect'' on workers' 
willingness to raise safety concerns potentially resulting from 
disciplinary or other employment actions. The RIS includes 
guidance for conducting reviews of proposed employment actions 
to determine what, if any, effect the employment action may 
have on the
    SCWE, and to take mitigating actions to minimize potential 
chilling effects, if necessary. Ensuring that disciplinary 
policies, as well as specific disciplinary actions, do not have 
a significant effect on the SCWE is part of the licensees' 
responsibility, as outlined in the NRC's policy documents.
    The NRC assesses licensees' SCWEs primarily through 
inspections, as well as allegation activities. About 6 percent 
of allegations received at the NRC in calendar year 2007 
concerning reactor licensees involved unhealthy or ``chilled'' 
work environments. Assessments of a SCWE involve interviews 
with plant personnel in the impacted area; observations of 
management interactions with the work force during meetings 
that typically include discussion of safety concerns; and 
document reviews, including licensee policies, training 
modules, corrective action program/employee concerns program 
use records, etc. Allegation trends in general are also 
reviewed on a periodic basis to assess the licensee1s SCWE. If 
the allegation of a chilled work environment is substantiated, 
or the trend analysis indicates a concern in this area, the NRC 
considers issuing a ``chilling effect letter'' to the licensee 
or otherwise engaging the licensee in a public forum. The 
purpose of such engagement is to pUblicly notify the licensee 
of NRC's concern that their SCWE may not be effective and to 
request information on what corrective actions will be taken to 
address those concerns. Unlike issues handled within the 
Allegation Program, chilling effect letters are pUblic 
documents. This ensures public notification of an NRC concern 
and sends a message to the licensee's workforce that the NRC is 
requesting the licensee take action to establish a SCWE.
    The NRC also conducts periodic baseline inspections that 
include a series of interview questions designed to address NRC 
expectations for establishing and maintaining a SCWE, as 
outlined in the 1996 Policy Statement. Questions address: 
Finally, pursuant to the requirements of ``Fitness for Duty 
Programs'' 10 CFR Part 26, licensees are required to take 
specific actions in response to confirmed misuse of alcohol, 
valid prescriptions, and over-the-counter drugs. Part 26 does 
not require, prohibit, or make specific reference to sanctions 
in situations involving worker fatigue. In a related manner, 
the agency also provided clarification to the industry in May 
2002 (RIS 2002-07, ``Clarification of NRC requirements of 
Applicable to Worker Fatigue and Self-declarations of Fitness-
For-Duty'') of the regulatory requirements associated with 
worker fatigue and self-declarations of fitness-for-duty 
concerns. The guidance specifically addressed the potential for 
licensee sanctions, policies, and practices related to worker 
fitness-for-duty issues to discourage declarations, in 
particular, self-declarations of fatigue, to highlight the 
NRC's concerns in this area.

    (a) employee willingness to raise concerns;
    (b) management behaviors to encourage raising concerns;
    (c) the effectiveness of concern resolution processes, 
including the Corrective Action Program
    and Employee Concerns Program; and
    (d) the effectiveness of management in detecting and 
preventing retaliation and chilled SCWE.

    Question 3. Regarding the proposed increase tor reactor 
oversight activities, was any effort made to find offsets among 
projects or programs that are ramping down or no longer 
necessary?
    Response. Yes. As part of our budget development process, 
NRC looked for ways to achieve efficiencies in our programs and 
applied the resources saved to the program.

    Question 4. The fiscal year 1909 budget requests 121 
additional FTE's. Please indicate which activities the new 
employees will be assigned to and how many FTE's to each 
activity.
    Response. (See table and additional information presented 
below.)



[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



               the activities to be conducted by the new 
                       employees are as follows:


Nuclear Reactor Safety
    New Reactors
    Continued development of the Construction and Vendor 
inspection program and reactivation of licensing and 
construction oversight for Watts Bar Unit 2;
    Licensing Tasks
    Conduct power uprate applications (increase from 4 in 
fiscal year to 11 in fiscal year 9), detailed fire protection 
reviews, and research on materials degradation issues;
    License Renewal
    Work on license renewal applications and guidance revisions 
(e.g. Generic Environmental Impact Statement);
    Reactor Oversight
    Improve Force-on-Force program and conduct security 
inspections, increasing license renewal inspections (6 to 8 
license renewal inspections per year starting in fiscal year 
9), generic issue inspections, and allegation/enforcement 
activities.
Nuclear Materials and Waste Safety
    Fuel Facilities
    Support the review of two new uranium enrichment facility 
applications and continuation of licensing and inspection 
activities for existing fuel facilities;
    Nuclear Materials Users
    Support increasing regulatory oversight activities in 
response to a GAO materials licensing investigation;
    Decommissioning and Low-Level Waste
    Support uranium recovery licensing activities and 
initiation of related environmental reviews.

    Question 5. The NRC's enforcement policy was recently 
revised with regard to contractors of a licensee. What 
enforcement action can the NRC take against contractors and 
subcontractors?
    Response. The NRC has regulatory authority to take 
enforcement action against contractors and subcontractors in 
three specific areas. Specifically, the NRC can take 
enforcement action against contractors and subcontractors who:

    (1) engage in deliberate misconduct or knowingly submit 
incomplete or inaccurate information as provided in the rule on 
deliberate misconduct (e.g., 10 CFR 30.10 and 10 CFR 50.5);
    (2) violate 10 CFR Part 21, Reporting of Defects and 
Noncompliance; and
    (3) violate the Commission's employee protection 
regulations, (e.g., 10 CFR 50.7).

    The enforcement actions available to the NRC for viorations 
of these regulations include Notices of Violations, Orders, and 
civil penalties. In addition, Notices of Nonconformance can be 
issued to contractors who fail to meet commitments related to 
NRC activities, but are not in violation of specific 
requirements. Specific guidance regarding enforcement actions 
against individuals and non-licensees, including contractors 
and subcontractors, is contained in NRC Enforcement Policy 
(Sections VIII and X).

    Question 6. Please summarize the safety-significant 
findings in the Inspector General's audit report OIG-07-A-15 
entitled ``Audit of NRC's License Renewal Program,'' and 
describe any actions taken to address them.
    Response. The NRC Office of the Inspector General's (OIG) 
report noted that overall the NRC has developed a comprehensive 
license renewal process to evaluate applications for extended 
periods of operation. The OIG report findings were specific to 
the documentation of the technical review, not the sufficiency 
of the technical review.
    In response to the OIG's recommendations, the staff is 
enhancing its report-writing guidance. In addition, staff 
training was conducted to ensure the staff was aware of the 
OIG's recommendations and management's expectations. Until the 
staff confirms that corrective actions have been effective, it 
is using internal peer reviews to ensure the quality of the 
safety evaluation report documentation. The OIG has told the 
staff that the OIG regards the staff's response as having 
resolved the seven recommendations the OIG directed to the 
staff.

    Question 7. Please describe the rulemakings or other 
actions that the NRC would need to undertake in preparation to 
consider a license application for a reprocessing plant. Please 
include the timeframe to complete those actions and the 
resources needed.
    Response. The NRC currently has the authority to license a 
reprocessing plant under its regulations in 10 CFR Part 50. Use 
of the current Part 50, however, would require a lengthy two-
step licensing process: issuance of a construction permit 
followed by issuance of an operating license. Moreover, the 
terminology and the logic of Part 50 are based upon the 
licensing of a light-water reactor, not a reprocessing 
facility. Due to these factors, the NRC does not consider Part 
50 to be an ideal regulatory mechanism to license the 
construction and operation of a reprocessing facility.
    The NRC is conducting a regUlatory ``gap analysis'' to 
determine which of its regulations would need to be revised to 
allow for a thorough, safe, and predictable licensing review of 
a spent nuclear fuel reprocessing and fuel fabrication 
facility. The purpose of this effort is to identify what NRC 
regulations clearly apply, what regUlations clearly do not 
apply and identify and characterize gaps in the regulations 
that would need to be addressed through rulemaking. Both 10 CFR 
Parts 50 and 70 are being reviewed, as well as other applicable 
regUlations. Preliminary results of the gap analysis indicate 
that significant changes would need to be made to NRC 
regulations and associated regulatory guidance before a license 
application for a reprocessing facility could effectively and 
efficiently be considered. Part 70, (Domestic Licensing of 
Special Nuclear Material) which is both risk-informed and 
performance-based, appears to be the NRC regulation best-
suited, after rulemaking amendments, for the licensing and 
regulation of a reprocessing facility. The NRC has internally 
reprogrammed about two full-time equivalents (FTEs) to support 
this activity in fiscal year 2008.
    After completing the gap analysis, the NRC plans to prepare 
a technical bases document to support rulemaking. The NRC staff 
anticipates completing the technical bases document 
approximately 1 year after completing the gap analysis. At that 
time, the NRC will make a decision on whether to move forward 
with rulemaking.
    The necessary rulemaking effort would involve multiple, 
simultaneous rulemakings and parallel development of the 
associated regulatory gUidance documents. This process would 
take approximately 2 years to complete and expend a total of 10 
to 14 FTE. It would take another one to 2 years to issue the 
final rule. The amount of effort for the final rule is 
estimated to be an additional four to six FTE.



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    Question 8. Please summarize the actions being taken to 
address the ``red oil'' issue that has been raised in an August 
9, 2007, memo to the Commission in connection with construction 
of the MOx plant at Savannah River Site.
    Response. A red oil explosion event is one of many safety 
issues currently being evaluated by the NRC in its review of 
Shaw Areva MOx Services' (the applicant's) license 
application to possess and use radioactive material at the MOX 
Fuel Fabrication Facility (MFFF). The evaluation of red oil 
safety strategies, as described in the license application and 
supporting documentation, began in January 2008 as part of the 
NRC's normal safety review. A decision on this and other issues 
will be documented in a draft safety evaluation report, which 
is scheduled to be issued in December 2010.
    The NRC is conducting its review of the MFFF in two stages. 
The first stage of the review pertained to DOE's construction 
authorization request. The NRC approved DOE's construction 
authorization request on March 30, 2005. A red oil explosion 
event is one of the chemical safety issues that the applicant 
addressed in its construction authorization request and that 
the NRC evaluated in its safety evaluation report prior to 
issuing a construction authorization. Based on the applicant's 
multi-tiered approach, the NRC determined that there was 
sufficient defense-in-depth to provide reasonable assurance 
that the applicant had an adequate strategy for preventing and 
mitigating red oil events. However, the NRC staff also 
understood that this approach would have to be further 
developed and evaluated during the review of the subsequent 
possession and use license application.
    The applicant submitted a license application in November 
2006 to support the second stage of the MFFF review. Since 
NRC's approval of the construction authorization, the applicant 
has revised its safety strategy with respect to red oil to 
focus more on prevention than mitigation. This new strategy is 
described in the license application and supporting 
documentation and is currently under review by the NRC. The NRC 
has also requested that Brookhaven National Laboratory update a 
previous study on the risks of a red oil explosion to reflect 
this new strategy in order to help inform NRC's decisionmaking 
process. The conclusions of the earlier study were consistent 
with the consensus staff view.

    Question 9. Please describe the actions being taken to 
address the Inspector General's findings in Case No. 05-46 
regarding potential problems with the use of Hemyc to protect 
electrical cables in the event of a fire.
    Response. The following actions are being taken to address 
the OIG's findings:
    OIG finding: The NRC did not communicate the results and 
perform further testing following 1993 NIST small-scale 
testing.
    Staff response: The purpose of the small-scale tests was to 
determine if any of the non Thermo-Lag fire barrier materials 
exhibited the same failure mechanisms as Thermo-Lag (e.g., 
burnthrough). These tests were not designed to evaluate the 
performance of the barriers in large-scale tests. During this 
time period, the NRC was focused on resolving the more safety 
significant Thermo-Lag issue. These activities eventually led 
to improved testing and acceptance criteria for fire barriers, 
and an expanded and improved NRC inspection program to more 
effectively identify safety significant fire protection design 
concerns.
    OIG finding: The NRC did not require licensees to take 
corrective actions in 2000 following inspection findings 
regarding Hemyc.
    Staff response: When the NRC concluded that the Hemyc fire 
endurance results were inconclusive, the staff engaged the 
industry and the specific affected licensees to address the 
questions regarding Hemyc. During meetings with the industry 
and licensees, the industry declined to participate in 
addressing the questions regarding Hemyc. After concluding that 
further testing was necessary regarding Hemyc fire resistance, 
the NRC initiated a program to perform full-scale confirmatory 
fire endurance tests in 2001.
    OIG finding: The NRC April 2005 Information Notice did not 
require licensees to take action or provide a written response.
    Staff response: NRC Information Notices provide timely 
operating experience to licensees. While Information Notices do 
not require licensees to take action or provide a response, 
pursuant to the NRC approved fire protection program, each 
licensee is required to consider all operating experience to 
determine the need for compensatory measures and corrective 
actions. The NRC followed the issuance of the April 2005 
Information Notice with a Generic Letter in April 2006. The 
generic letter required licensees to provide a written 
response, and to establish compensatory measures and initiate 
corrective actions, as appropriate.
    OIG finding: The NRC has not scheduled or bUdgeted for 
inspections to review licensees' Hemyc resolution.
    Staff response: The NRC is inspecting licensees' resolution 
of Hemyc fire barrier issues. The NRC annually budgets 
resources for fire protection inspections. The schedules for 
these inspections performed by the staff include quarterly fire 
protection field inspections and annual inspections of fire 
brigade training and capability. The NRC also performs 
triennial fire protection design and operational safety 
inspections.
    OIG finding: In 1993, the NRC Chairman committed to conduct 
assessments of all fire barriers used to protect electrical 
cables.
    Staff response: The NRC has completed the actions committed 
to by the Chairman in 1993 in assessing fire barrier 
capabilities. In 1993, the NRC obtained and reviewed design and 
test information from all fire barrier vendors, and observed 
installed fire barrier configurations at selected nuclear 
plants. The NRC also performed small-scale fire barrier tests 
of selected fire barriers. Finally, the NRC issued updated 
guidance on fire barrier testing and acceptance criteria in 
Generic Letter 1986-10, Supplement 1.

            Responses by Dale Klein to Additional Questions 
                         from Senator Voinovich

    Question 1. Chairman Klein, in your testimony, you 
mentioned that NRC has an ongoing. rulemaking that would revise 
a number of security requirements applicable to both current 
and future nuclear power plants. Could you please give us a 
sense of breakdown on how much of this rulemaking involves 
codifying requirements imposed in various post 9-11 orders 
versus new requirements not addressed in the orders?
    Response. In developing the proposed rule the NRC 
considered experience and insights gained during the 
implementation of the Commission's Orders as well as the 
implementation of the current requirements over the past 30 
years. A significant percentage (approximately 90 percent) of 
the rulemaking would codify the Commission Orders, fulfill 
certain provisions of the Energy Policy Act of 2005 (EPAct 
2005), or update the regulatory framework in preparation for 
receiving new reactor license applications. This rulemaking 
would add new requirements to assess and manage the safety/
security interface, and would add new requirements that 
resulted from the NRC's review of revised site security plans, 
lessons learned from the enhanced baseline inspection program, 
and lessons learned from force-on-force inspections.
    Question 2. In one of our recent periodic meetings together 
with Senator Carper, you suggested that the industry might 
consider having security officers carry an electronic device 
which senses inactivity and alerts the security command center. 
I think something like that could be a very good, practical 
solution to security officers working the midnight shift. Have 
you pursued that idea with the industry?
    Response. Based on licensee responses to the Security 
Bulletin, some have already implemented the use of these 
devices for their security force and others are considering 
their use and application for their security programs. Given 
that only a few licensees have recently started using these 
devices, the effectiveness has not been determined. Over time, 
as more experience is gained, we will have a better 
appreciation of their benefits to curb inattentiveness. After 
NRC staff completes their final reviews of licensee responses 
to the Security Bulletin, the staff will report their 
recommendations to the Commission which may include, among 
other recommendations, best practices that can be shared among 
licensees. The staff may also recommend the appropriate methods 
to communicate those best practices to the industry and whether 
further regulatory action is warranted.
    Question 3. The new reactor program is just getting off the 
ground. I know you have hired staff and have received several 
applications. Do you have everything you need in terms of 
resources for accomplishing your mission?
    Response. Resources in the fiscal year budget request will 
enable the agency to continue review of the 14 combined license 
(COL) applications that have been received or are anticipated 
to be received during fiscal year 8, and perform acceptance 
reviews of 6 additional COls expected in fiscal year 9.
    However, resource constraints in fiscal year may 
necessitate a delay in initiating the review for these 6 
applications.
    Additional resources would enable the agency to initiate 
review of the 6 COls expected to be received in fiscal year 
without any delay and support industry plans and schedules for 
new electric power sources.
    Two additional areas that would benefit from increased 
resources are the advanced reactor/next-generation nuclear 
plant (NGNP) program and the new reactor construction 
inspection program. Increased resources to conduct research 
necessary to support NRC's licensing responsibilities for the 
NGNP, and resources to develop adequate staff knowledge and 
expertise for the new technology, technical basis for 
requirements, guidance, and independent analytical capabilities 
to confirm safety analyses and results will allow NRC to meet 
its responsibilities under the Energy Policy Act of 2005. The 
new reactor construction and inspection program would benefit 
from additional resources to develop the program to train and 
qualify inspectors to meet the anticipated inspection 
requirements in 2011 and 2012. The lead time necessary to 
recruit, hire, train, qualify, and deploy a qualified inspector 
is 2 years.

            Responses by Dale Klein to Additional Questions 
                          from Senator Specter

    Question 1. One of the issues here is NRC's failure to 
respond to whistleblower allegations. In a statement NRC 
chairman stated that NRC receives ``between 500 and 600 of 
these allegations per year and only about 1 in 10 is serious 
enough to warrant an enforcement action of some kind against a 
plant.'' What is happening with the majority of these 
allegations? Has the NRC changed the way it looks at these 
allegations in light of the incident at Peach Bottom? How do 
you determine if an incident warrants enforcement action?
    Response. To clarify, about 30-40 percent of the 
allegations NRC receives each year involve a substantiated 
concern. This substantiation rate is similar for those 
allegations that involve a written request for response from 
the licensee and those that are independently evaluated by the 
NRC. About 10 percent involve a substantiated concern that 
warrants formal NRC enforcement action (e.g., notice of 
violation of a regulatory requirement).
    Allegations are an important source of information to the 
NRC and programs and processes are in place to address every 
allegation the NRC receives. NRC is evaluating the 
circumstances of the Peach Bottom situation to identify 
opportunities that may have been missed and to consider 
appropriate changes to improve the effectiveness of the NRC 
allegation program. The implementation of the NRC allegation 
program at specified NRC offices is assessed biennially by the 
NRC Office of Enforcement (OE), the NRC office with lead 
responsibility for allegations, and self-assessments are 
conducted by those offices in years when the office does not 
receive an independent assessment. Historically, the results of 
the program assessments and self assessments have shown NRC 
follow up to be effective.
    Since the incident at Peach Bottom, OE has been meeting on 
a frequent basis with the allegation staff throughout the 
agency to discuss and implement enhanced practices identified 
by various lessons learned initiatives. Formalized changes to 
the process guidance documents have been developed and will be 
issued after internal and external stakeholder review.
    To date, OE has:

     Revised allegation process terminology and correspondence 
templates. The term allegation ``referrals'' was changed to 
``requests for information'' (RFI) to more clearly reflect 
that, with respect to the process by which the NRC requests a 
licensee to develop information regarding an allegation at its 
facility, NRC maintains responsibility and authority to assess 
and respond to every allegation concern.
     Reemphasized the potential need for NRC staff to contact 
an alleger whose identity is known, even if initially s/he 
indicates that s/he does not want to be contacted by the staff. 
The alleger would be contacted to request additional 
information, if needed, to assist in the assessment of the 
allegation, and to stress that further NRC contact will help 
ensure:
     RC's understanding of the alleger's concerns;
    -- the alleger's understanding of the NRC's plan for 
assessing the allegation, including the use of an RFI if the 
alleger has no objection; and,
    -- the adequacy of the NRC's conclusions with regard to the 
concerns.
     Emphasized to the staff the need to include direction in 
the RFI that the licensee specifically address how their 
evaluation was independent, of sufficient scope and depth, and, 
if samples were taken, that they were appropriate.
     Reemphasized the need for NRC staff to clearly document 
the agency's assessment of a licensee's response to an RFI and 
to specifically articulate the agency's conclusion regarding 
each allegation.
    The staff continually looks for enhancements to the 
agency's Allegation Program, through annual assessments and 
incident analyses. A Senior Executive Review Panel recently 
evaluated the agency's handling of the Peach Bottom concerns 
and their report is being reviewed by the Commission and is 
expected to be issued shortly. Additionally, the NRC Office of 
Inspector General's investigation into the agency's handling of 
allegations is ongoing. The staff will assess any findings or 
observations resulting from these efforts and work to ensure 
changes are appropriate.
    The NRC considers both allegations that result in findings 
under the Reactor Oversight Program (ROP) and those that result 
in enforcement action issued under 10 CFR Part 2, Subpart B, to 
comprise those allegations ``warranting enforcement action.'' 
The ROP, initiated in 2000, comprises the NRC oversight and 
assessment program at all nuclear plants, and uses objective, 
timely, and risk-informed criteria to assess plant performance. 
The NRC uses inspection findings together with objective 
performance indicators to assess plant performance. The NRC 
addresses any significant performance issues and follows up any 
other performance issues until they are corrected. When a 
safety problem or failure to comply with requirements is 
discovered, the NRC requires prompt corrective action by the 
licensee and takes appropriate enforcement action. The NRC's 
procedures exercising its enforcement authority (issuing 
notices of violation, issuing orders, and assessing civil 
penalties) are set forth in 10 CFR 2.201, 10 CFR 2.202 and 10 
CFR 2.205, respectively, and implemented through its 
Enforcement Policy.

    Question 2. Despite Exelon terminating its relationship 
with Wackenhut, it is my understanding that Wackenhut is still 
providing security at a number of nuclear facilities. At how 
many facilities is Wackenhut providing security, and is the NRC 
confident in Wackenhut's ability to carry out the task?
    Response. At this time, 27 NRC-regulated nuclear facilities 
use Wackenhut for security services. However, all of Exelon's 
nuclear facilities are in transition from Wackenhut contractor 
forces to a proprietary security force. These transitions are 
scheduled to be completed by July 2008. After the Exelon 
transition, the number of NRC-regulated nuclear facilities 
using Wackenhut for their security services will be 18. The NRC 
is conducting inspections of these facilities to oversee 
transition activities.
    Yes, based on continued NRC oversight of all licensee 
programs, and a focus on recent issues, the staff is confident 
in the current security forces' ability to protect licensed 
facilities. NRC licensed nuclear facilities continue to be 
among the best protected private sector facilities in the 
Nation, and through the inspection and oversight processes, the 
NRC is committed to ensuring strong security at these 
facilities, inclUding the role performed by security officers 
regardless of which company provides the security force.

    Question 3. Both NRC and Wackenhut contend that plant 
security was not in jeopardy. It would seem on the face of it, 
that sleeping or inattentive guards would jeopardize security. 
Chairman Klein, you stated on February 8th that you were 
``confident-that the overall security of the plant was 
adequate'' and that ``Nuclear power plants have redundant and 
overlapping security measures''. Could you Elaborate on that 
point, and touch on some of these overlapping measures?
    Response. NRC regulated nuclear power plants have been 
implementing strong physical protection programs for several 
decades. The plants were already surrounded by fences with 
continuously monitored perimeter detection and surveillance 
systems, and they were guarded by well-trained and well-armed 
security forces. Following the attacks of September 11, 2001, 
the NRC issued a series of Orders from February 2002 through 
April 2003 to enhance security at all nuclear power plants. 
Some enhancements included, increased vehicle standoff 
distances, augmented security forces, enhanced security force 
training, additional security posts, increased security patrols 
and improved coordination with local law enforcement and 
intelligence communities.
    The concept of overlapping security measures as I have 
discussed in my testimony refers to a licensee's protective 
strategy and a defense in depth methodology employed by our 
licensees. The concept of defense in depth is utilized so as to 
maximize security through a variety and combination of physical 
barriers, electromechanical sensors and devices and human 
interdiction. Defense in depth at NRC nuclear facilities 
consists of: 1) formidable physical and vehicular barriers 
extending the time needed by an adversary for a successful 
intrusion into the Protected and Vital areas, 2) redundancy of 
alarm and detection devices, 3) interdiction by the security 
force to neutralize an adversary threat by interposing 
themselves between vital components of the facility and the 
adversary, and 4) prompt support and response by local law 
enforcement agencies.
    Based on the duties that were assigned to the inattentive 
security officers at Peach Bottom, our assessment has indicated 
that the site protective strategy would have still been able to 
defeat a Design Basis Threat attack. I want to assure you that 
the NRC takes the matter of inattentive security officers very 
seriously and the robust defense in depth methodology employed 
by each of our nuclear power plants provides me the confidence 
that while this situation was not acceptable, the potential 
degradation of one component of a facilities' defense in depth 
is not indicative of a total failure of the implementation of 
the security program. This potential degradation of one 
component is mitigated by the continued operation of other 
security program components to assure the adequate protection 
of the facility. A facility's protective strategy, from a 
perspective of armed response, consists of multiple layers of 
responding security officers that can arrive in time and are 
suitably armed to defend the facility from an adversary attack 
with prompt support and response by local law enforcement 
agencies.

    Senator Carper. Fair enough. Chairman Klein, thanks very 
much not just for joining us and for your testimony today. 
Thanks for your leadership. We look forward to asking you a 
series of questions.
    Commissioner Jaczko, you are up next. Welcome.

     STATEMENT OF GREGORY B. JACZKO, COMMISSIONER, NUCLEAR 
                     REGULATORY COMMISSION

    Mr. Jaczko. I, too, want to thank you, Chairman Carper and 
the rest of the members of the Subcommittee, for having us here 
to testify on this very important issue of how the NRC oversees 
the security of the Nation's commercial nuclear reactors.
    I, too, was very concerned to discover that security guards 
on duty at Peach Bottom conspired to sleep during their shift. 
My concern in many ways was more heightened by the fact that 
they had conspired to do this, rather than simply that it was a 
matter of fatigue. This is absolutely unacceptable. There were 
failures not only in the security officer's ability to perform 
their functions, but also in the program to identify behavior 
among security officers that would identify them as individuals 
who weren't willing to perform their jobs successfully, 
something we call a behavioral observation program.
    As an agency, we are focused on two things: investigating 
those directly involved and taking a long, hard look at our own 
performance as an agency. We have made some positive initial 
changes in our security oversight program to look for these 
types of issues, but I do not believe that that is enough. We 
should make several straightforward improvements to another 
program that we have that deals with allegations specifically, 
and also conduct a more comprehensive review than we have done 
so far.
    Any broader changes the Commission decides are necessary 
should be informed by this broader, more comprehensive review, 
along with the consideration of findings from our own Inspector 
General.
    My colleagues and I have also directed the staff recently 
to develop a Commission policy statement on safety culture. 
This gets to a point that many people talked about about the 
importance of culture in this incident. This statement will for 
the first time make clear the Commission's safety culture 
expectations for its licensees, and most importantly for this 
hearing, it will expand consideration of safety culture to 
include the idea of security culture as well, to reinforce with 
licensees that security is just as much an important part of 
safety as operations, maintenance and engineering.
    Another way that the agency will ensure security is better 
integrated in plant operations is through the implementation of 
fitness for duty requirements the Commission approved last 
year. Based on my discussions with staff and discussions I have 
had with security officers at several facilities, I think these 
new work hour limitations are a substantial improvement on what 
we did in orders following September 11th. I am very interested 
in looking at ways that we can accelerate some or all of the 
provisions of that rulemaking, in particular as they apply to 
security officers to ensure that we get the advantages of that 
rulemaking as early as possible.
    Before concluding, I did want to briefly mention that I 
remain concerned that the agency has not yet completed a 
rulemaking to add new security requirements for nuclear power 
plants. In addition, the Commission is proceeding with a 
rulemaking I proposed a year ago to require new plants to be 
designed to withstand the impact of an aircraft crash.
    Right now, we are in the process of reviewing comments that 
we have received from members of the public on that rule, and I 
am encouraged by many of the comments that we have received 
that I think we will be able to move forward with an effective 
rule. But I strongly believe that the key to the successful 
rulemaking will be ensuring two important points: one, that the 
rule applies to any new plant built in this Country; and two, 
that it has very clear criteria on how we determine that a 
plant will be designed to withstand the impact of an aircraft.
    Again, I thank you for the opportunity to appear today and 
to provide this testimony. Thank you.
    [The prepared statement of Mr. Jaczko follows:]



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          Responses by Gregory Jaczko to Additional Questions 
                           from Senator Boxer

    Question 1. In your testimony you stated that the NRC 
should take a more active role in investigating allegations 
rather than sending the allegation to the licensee for 
investigation. Does the NRC defer safety allegations to the 
licensee? Please explain how you think the NRC should respond 
to security allegations and whether this differs from how they 
respond to safety allegations.
    Response. Current allegation policy calls for the agency to 
consider requesting information from the licensee in writing in 
support of allegation closure whenever possible and 
appropriate, because the licensee is responsible for safely 
operating the facility. I believe, however, that we should 
consider some fundamental changes to the current program. The 
agency should change the presumption that we request 
information about the allegation from licensees unless certain 
circumstances are present. Instead, the presumption should be 
that the agency will seek to obtain the information itself 
unless extraordinary circumstances are present that would 
dictate the need to request it from the licensee.
    The policy as written sends the message that we generally 
send the allegations on to the licensee, when in fact in a 
majority of cases, the opposite is true. According to recent 
staff statistics, only 35 percent to 40 percent of allegations 
are currently forwarded to the licensee for information. Thus, 
it appears that changing the presumption would be a more 
accurate reflection of current practice. The agency has changed 
the allegation terminology from ``referral'' to ``request for 
information.'' Using the correct language is important and this 
represents both a better focus and more transparently captures 
the agency's actual practice.
    Additionally, the agency should stay more involved in those 
few cases where it is determined that the more appropriate path 
forward is to request information from the licensee. More 
active NRC oversight of a licensee as it develops its responses 
to the agency will both highlight the seriousness with which 
the agency reviews allegations and make for a more efficient 
process. It also makes clear that the NRC is ultimately 
responsible for the evaluation and closure of every allegation 
it receives.
    Regarding the assessment of security and safety 
allegations, the Allegation Review Board (ARB) evaluates both 
in terms of their significance to plant security and plant 
safety to determine the appropriate course of action. NRC staff 
knowledgeable about the issues meet with the ARB and provide 
insights into the significance of the allegation so that an 
informed decision may be made. Because of the sensitivity of 
information associated with security related allegations and 
their disposition, the NRC policy for responding to individuals 
with such security concerns differs somewhat from the practice 
for responding to safety concerns. I believe the goal of the 
staff is to be as responsive to an alleger as is possible, 
while continuing to protect any information that could be used 
by an adversary to exploit potential security vulnerabilities.

    Question 2. In your testimony you stated that the NRC needs 
to strengthen its proposed rule on aircraft impact. Do you 
believe existing plants should meet the same security standards 
as newly constructed plants? What do you think a final rule 
should encompass?
    Response. The purpose of the aircraft impact rule should be 
to require that any new plant built in the U.S. is designed to 
withstand the impact of a large commercial aircraft. All 
current vendors have stated an intention to address this issue 
and public comments received during the rulemaking support 
meeting this standard.
    There are, however, two major deficiencies in the current 
proposed rule. First, it only requires nuclear power plant 
designers to perform an assessment of design features that 
could provide additional inherent protection to avoid or 
mitigate the effects of an aircraft impact, while reducing or 
eliminating the need for operator actions, and to only do even 
that ``where practicable.'' The proposed rule does not require 
vendors or licensees to include these design features and there 
are no clear criteria for making a determination about the 
benefit of the optional design features. Second, the proposed 
rule language does not apply to designs already certified by 
the time the rule is finalized.
    The NRC received public comments suggesting the need to 
expand the scope of the rule to include existing design 
certifications and to include specific criteria that plants 
would be required to meet. They included industry comments 
which reinforced my conclusions that relying on a 
practicability standard is ambiguous and subjective. Such an 
approach fails to require and then convey the extent to which a 
design addresses aircraft impacts, is not good public policy, 
and will not engender public confidence in the safety of new 
reactor designs. The staff is currently evaluating the public 
comments in preparation of the final rule, and I am hopeful it 
will be substantially improved based on the comments received 
from stakeholders.
    It was not easy to address new security threats for the 
fleet of existing reactors, but the Commission thought it was 
vital to do so following September 11, 2001. The agency, 
therefore, issued orders requiring licensees to identify and 
implement strategies to maintain or restore cooling for the 
reactor core, containment building, and spent fuel pool. The 
NRC directed licensees to identify mitigative strategies--or 
measures they could take to reduce the potential consequences 
of a large fire or explosion--that could be implemented with 
resources already existing or readily available. I believe this 
was an acceptable approach for the existing fleet of reactors. 
Nuclear power plants are robust and it is difficult to alter 
their features. This is not, however, a sufficient reason to 
miss an opportunity to design away the need for these 
mitigating strategies in new plants.

          Responses by Gregory Jaczko to Additional Questions 
                           from Senator Casey

    Question 1. What protocols and procedures did the NRC have 
in place for dealing with security incidents? How have these 
protocols or procedures changed as a result of the Peach Bottom 
incident? Does NRC have plans to take further action through 
regulation or other internal measures?
    Response. The agency uses a variety of programs to respond 
to security incidents. When incidents come to the agency's 
attention, as did the Peach Bottom incident. through an 
allegation, the concern is handled through the agency's 
allegation program. As a result of the allegation, or if the 
security incident is identified as part of the agency's 
inspection program, the agency may also determine that the use 
of our incident investigation program is warranted. This 
program allows for more in-depth inspection and investigation 
when a specific incident is brought to the agency's attention 
that warrants a review beyond that provided as part of the 
routine annual baseline inspection program.
    In the case of Peach Bottom, in March 2007 the NRC received 
an allegation from a former security manager for Wackenhut (the 
company contracted by Exelon to provide security at Peach 
Bottom Atomic Power Station) expressing concerns with aspects 
of the security program at Peach Bottom Station. The concerns 
were that security officers had been sleeping on duty due to 
fatigue from working excessive overtime; security officers were 
fearful of retaliation if they raised concerns; and that Exelon 
managers were aware of inattentiveness but had not taken proper 
actions to address it. The NRC informed Exelon of these 
concerns in April and requested that the licensee investigate 
the allegations, take appropriate corrective actions, and 
provide the NRC with a written response. In that sUbsequent 
response in May, Exelon concluded it was not able to 
substantiate the concerns and in August the NRC made a 
determination that the licensee's response was adequate to 
resolve the allegation.
    It was not until September 2007 when the NRC was presented 
with video-taped evidence of on duty security officers sleeping 
in a ready room (a tape made by a security officer employed by 
Wackenhut at the time) that the agency initiated its own 
investigation. At that time the agency performed an augmented 
inspection of this incident under our incident investigation 
program to ensure that Exelon and Wackenhut had taken 
appropriate corrective actions to address this unacceptable 
performance.
    I believe that the agency acted appropriately in September, 
but we clearly missed an important opportunity to discover and 
correct this issue 6 months earlier--an opportunity that an 
earlier whistleblower had provided us. Rather, it took a second 
individual who felt he had to go to such lengths as obtaining 
actual video of officers conspiring to sleep before anyone took 
direct action.
    In response to the events at Peach Bottom the agency has 
changed some aspects of the allegation and inspection program. 
In the allegation area, the agency has changed the allegation 
terminology from ``referral'' to ``request for information.'' 
While this is may appear to be a minor change, using the 
correct language is important and more clearly reflects that 
NRC maintains responsibility and authority to assess and 
respond to every allegation concern. Additionally, in the 
inspection area, I support staff efforts currently underway to 
expand the scope of the NRC resident inspectors at each nuclear 
power plant to focus more on security issues such as that 
identified at Peach Bottom, and I believe we must focus on the 
requirements for behavioral observation programs that should be 
able to identify people prone to the type of collusion 
demonstrated by the security team in question.
    I believe we must continue to make improvements. The agency 
is continuing to evaluate the Peach Bottom incident to 
determine what other changes to our allegation, inspection and 
behavioral observation program may be necessary to improve the 
programs and ensure that our response to security incidents is 
as effective as possible.

    Question 2. NRC's Review Board decided that NRC did not 
need to initiate its own investigation into the allegations at 
Peach Bottom. Instead, it referred the issue back to the 
licensee for investigation. How does the Review Board determine 
which allegations rise to the level of an NRC investigation 
versus a licensee investigation? What were the factors that led 
to the decision that an allegation concerning a team of 
sleeping guards was not an NRC-level investigation.
    Response. In response to the three concerns provided in the 
March Peach Bottom allegation, NRC Region I conducted an 
Allegation Review Board (ARB) meeting on March 29,2007, as well 
as an additional ARB on April 11, 2007, to determine 
appropriate follow-up actions to address the subject 
allegation. Based on the ARB discussions, NRC Region I decided 
to request information from and an evaluation by the licensee 
of the allegation concerns and then review the licensee's 
written response to determine if the licensee adequately 
evaluated the concerns. Unfortunately, this decision clearly 
turned out to be wrong. The licensee did not substantiate any 
part of the allegation that security guards were sleeping on 
duty. If the agency had taken a larger role in this 
investigation, it may not have taken the revelation of 
videotaped evidence 6 months later to initiate corrective 
action.
    Current allegation policy calls for the agency to consider 
requesting information from the licensee in writing in support 
of allegation closure whenever possible and appropriate, 
because the licensee is responsible for safely operating the 
facility. I believe, however, that we should consider some 
fundamental changes to the current program. The agency should 
change the presumption that we request information about the 
allegation from licensees unless certain circumstances are 
present. Instead, the presumption should be that the agency 
will seek to obtain the information itself unless extraordinary 
safety circumstances dictate the need to request it immediately 
from the licensee.
    The policy as written sends the message that we generally 
send the allegations on to the licensee, when in fact in a 
majority of cases, the opposite is true. According to recent 
staff statistics, only 35 percent to 40 percent of allegations 
are currently forwarded to the licensee for information. Thus, 
it appears that changing the presumption would be a more 
accurate reflection of current practice. After I raised this as 
an issue last Fall, the agency has changed the allegation 
terminology from ``referralll to IIrequest for information.'' 
Using the correct language is important and this represents 
both a better focus and more transparently captures the 
agency's actual practice.
    Additionally, the agency should stay more involved in those 
few cases where it is determined that the more appropriate path 
forward is directly to request information from the licensee. 
More active NRC oversight of a licensee as it develops its 
responses to the agency will both highlight the seriousness 
with which the agency reviews allegations and make for a more 
efficient process. It also makes clear that the NRC is 
ultimately responsible for the evaluation and closure of every 
allegation it receives.
    Senator Carper. Mr. Jaczko, thank you so much. I look 
forward to asking some questions.
    Mr. Lyons, welcome. Thank you.

          STATEMENT OF PETER B. LYONS, COMMISSIONER, 
                 NUCLEAR REGULATORY COMMISSION

    Mr. Lyons. 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 Commission's oversight of the 
security of our Nation's nuclear power plants. I will just 
briefly summarize my written statement.
    Our security activities encompass many areas, including our 
roles in intelligence gathering and assessment and in 
information sharing. These capabilities support the 
Commission's screening process whenever potential new threats 
are evaluated. In the last year, the Commission improved our 
screening process by involving other agencies, removing cost 
considerations, and ensuring consideration of the integrated 
threat mitigation capabilities of Federal, State and local 
agencies.
    We have also supported completion of the comprehensive 
reviews of security led by the Department of Homeland Security 
at each of the nuclear plants. I believe the security of the 
nuclear sector will excel when compared to other elements of 
our critical infrastructure in these reviews.
    Last year, we completed the first cycle of realistic force 
on force tests for all of our plants. Security of these plants 
is stronger today because of those tests.
    A number of events of concern involving nuclear plants 
occurred during the last year. The Chairman and Commissioner 
Jaczko addressed Peach Bottom. But as another example, let me 
mention the issue of safety culture at Palo Verde, where our 
inspectors identified weaknesses in 10 of our 13 safety culture 
components. In this area of safety culture, as Commissioner 
Jaczko just mentioned, the agency is currently assessing the 
possible expansion of our current policy in order to address 
security.
    This Subcommittee's support for work force development has 
been essential and helped toward the appropriation of NRC 
resources to foster educational programs supporting the entire 
nuclear industry. The agency's 2009 budget shortfall is an 
issue for which we may need to seek your support.
    Mr. Chairman and members of the Subcommittee, we remain 
committed to fulfilling our statutory role. We appreciate the 
support we have received from the Subcommittee and the full 
Committee, and we look forward to working with you in the 
future. I look forward to your questions.
    [The prepared statement of Mr. Lyons follows:]



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           Response by Peter Lyons to an Additional Question 
                           from Senator Casey

    Question 1. Throughout these testimoneys, the NRC has 
repeatedly mentioned the need to improve communications between 
resident inspectors and regional inspectors. Opening these 
lines of communication, especially when allegations are 
received, seems like common sense. How is it that this issue 
has yet to be addressed?
    Response. The lines of communication between each NRC 
Region and its inspectors are open and strong. Nevertheless, 
assessment of the Peach Bottom case showed that improved 
information-sharing with inspectors regarding allegations may 
have afforded additional opportunities to identify 
inattentiveness among security officers. The NRC is considering 
a number of ways to enhance the sharing of allegation-related 
information with resident and region-based inspectors while 
still maintaining appropriate protection of allegation-related 
information and allegers' identities.
Current Communications with Inspectors Regarding Allegations
    Each NRC Region communicates daily with its resident 
inspectors regarding current plant conditions and promptly 
shares significant safety and security issues that reqUire 
immediate action or attention by the resident. When an 
immediate safety or security concern is raised through an 
allegation, the resident is informed of the concern and 
cautioned to act upon the concern in a manner that does not 
identify the alleger, if possible.
    Typically, only those inspectors who are assigned to 
evaluate or inspect a particular allegation have access to 
information regarding the allegation. This policy, which limits 
allegation information to those who have a ``need to know,'' 
limits the dissemination of information that could identify an 
alleger. That, in turn, reduces the risk that an alleger's 
identity might be compromised. Accordingly, the status of all 
open allegations may not be known by, or communicated to, all 
inspection staff. However, in the Peach Bottom case the initial 
allegation was received anonymously and the resident inspection 
staff clearly should.have been informed of the allegation. Even 
in cases where an alleger reveals their identity, the resident 
inspection staff should be kept informed of the nature of all 
safety and security allegations, so they can be alert for 
evidence useful to other inspector(s) who may be assigned to 
follow up.
    A Region may also assign a resident inspector to evaluate 
an allegation even when it does not present a significant 
safety or security concern requiring immediate action. For 
example, if a resident has an ongoing or near-term inspection 
in a functional area related to the allegation, the Region may 
assign the resident to also evaluate the allegation. Similarly, 
a Region may choose to assign a ``region-based'' inspector 
rather than the resident inspector to evaluate an allegation 
that is related to one of his or her regularly scheduled 
inspections. A Region may also request the licensee to evaluate 
an allegation and then assign a resident or region-based 
inspector to review or inspect the licensee's evaluation.
    In summary, each Region currently shares allegation 
information with resident and region-based inspectors who have 
a ``need to know'' in order to perform their inspection duties.
Changes to Current Practice Under Evaluation
    As a result of the Peach Bottom case, the NRC is 
considering options for sharing allegation related information 
with resident and region-based inspectors based on the 
principle that resident or region-based inspectors 
automatically have a ``need-to-know'' status regarding open 
allegations at their facilities. This approach would ensure 
that such inspectors maintain an awareness of asserted concerns 
as they accomplish daily inspection activities.
    The NRC is also considering how to clarify guidance used by 
the Regions to determine when region-based inspectors should be 
informed of open allegations at facilities other than those 
they may be assigned to inspect directly. For example, as in 
the Peach Bottom case, it may have been beneficial for the 
Region to direct all region-based inspectors visiting the 
facility for a specified period of time after receipt of the 
initial allegation, to be cognizant of asserted inattentiveness 
issues related to security officers. Finally, the NRC is 
considering whether changes to its current allegation-tracking 
data base are needed to simplify data extraction and 
information sharing with inspectors.
    The Commission is currently considering the extent to which 
changes are needed, even as some of the above changes are 
already being implemented, and we will provide the final 
Commission decisions to the Committee.

    Senator Carper. Thank you so much for your testimony.
    What I would like to suggest to my colleagues is that we 
use roughly 5 minutes for an opening round. There will be a 
second round. If we run a little long, that is quite all right, 
but let's try to stick fairly close to that.
    Let me just start by saying, Senator Voinovich and Senator 
Casey both heard me refer in the past to the time I spent in 
the Navy. I was a naval flight officer with 5 years on active 
duty, and another 18 years at Willow Grove Air Station where I 
was a mission commander of a Navy P3 airplane.
    Chairman Klein heard me say this to the folks up at Peach 
Bottom that the most important thing that we did every day in 
our job in the Vietnam War was to fly low-level missions off 
the coast of Vietnam and Cambodia and track Soviet and other 
surface targets. And when we weren't doing that, to track 
Soviet nuclear submarines in the oceans of the world. That is 
what I did for a living for a number of years.
    The most important thing that we did every day in the 
service in my squadron wasn't the work that we did flying 
missions off of Vietnam and Cambodia. It wasn't being out there 
chasing Soviet nuclear submarines in all the oceans in the 
world. The most important thing that we did every day was to 
take off safely and come back and land safely so that at the 
end of the day everybody on my crew, all 13 men, and at the 
time we had no women on our crew, but all 13 men went home to 
their families and we made that our priority, and it permeated 
everything that we did.
    That was a culture of safety, where the leadership set the 
tone. Not just the leadership of our squadron, but the Chief of 
Naval Operations, and it permeated down throughout the 
organization. One of the reasons why we focus so much on safety 
and a culture of safety is because we believe that the 
leadership starts with us. If we are not attentive to these 
details and set the right tone, why should we expect the NRC 
and its leadership to feel that way? Why should we expect the 
folks who own and run these nuclear power plants to feel that 
way?
    So it really starts right here, and we are attempting to 
provide through our oversight and our attention to detail the 
kind of leadership that is needed. Going back to the time that 
Senator Inhofe provided the leadership for this Subcommittee, 
we have endeavored to play that role. It is important and I 
think it is actually helpful. I am quite sure it is helpful.
    I am going to take us back to Peach Bottom with my first 
question or two. I am just going ask the commissioners, and we 
will start with you, Chairman Klein. Would you just give us a 
brief description of the investigation of the sleeping guards 
allegation at Peach Bottom, including why Exelon was unable to 
substantiate the report of inattentive guards and why wasn't 
some attempt made to followup with the whistleblower when there 
was no substantiating evidence uncovered?
    Mr. Klein. Mr. Chairman, I think all of us have been very 
frustrated at the specific events at Peach Bottom. It clearly 
is unacceptable behavior. So we are learning a lot about how 
did it happen and what steps do we take so it doesn't happen 
again.
    The original allegation was interesting, and I read through 
that at some length when it first came in. The initial 
allegation was by a former employee and was allegating on 
behalf of some of the other individuals there. As you probably 
know, that initial allegation focused a lot on what is called 
the BREs, the bullet-resistant enclosures and of 
inattentiveness in those.
    Senator Carper. You all have been excellent so far in not 
using acronyms and so I would urge you to continue that as much 
as possible. Stay away from those things.
    Mr. Klein. That is why I wanted to explain that the BRE was 
the bullet-resistant enclosure.
    So as you know, when we walked up to that, it is fairly 
hard to sneak up on an individual that is in there because it 
is up in a tower with metal stairs on the way up there. So it 
was very difficult to find those initial sleeping allegations, 
or the inattentiveness.
    The other thing that made this one particularly 
disheartening, as Commissioner Jaczko had indicated, was there 
was collusion. That is something you very seldom find at the 
level that we found it in that area. So it was difficult.
    I must say on our behalf on the NRC, we were not as 
rigorous as we should have been. We were not as rigorous in 
challenging the utility in their investigation, and we were not 
as rigorous as we should have been on followup. So we have 
lessons to learn from that and we will learn from that.
    But the initial allegation, we made a mistake in the 
initial alleger that said specifically, do not contact me 
again. We should not have honored that. We should have followed 
up and contacted that individual. That is one of the mistakes 
that we made and we followup with that in the future.
    Senator Carper. Why was the request not to followup with 
this person? I am sure you have asked that question. What is 
the answer?
    Mr. Klein. I am sure the next panel can talk a little bit 
more in detail, but the individual had been terminated for 
cause. I think there were some hostile feelings. In his initial 
allegation he said specifically, do not contact me at all. It 
was very clear. We honored that, but we should not have. We 
should have followed that up.
    Senator Carper. I agree.
    I have a followup to that. Let me just ask my followup and 
then I will yield to Senator Voinovich.
    At Peach Bottom, the NRC relied almost exclusively on 
Exelon to actually investigate the allegation. When evaluating 
your methods for investigating allegations, what did the NRC 
conclude in terms of its reliance on licensees to investigate 
allegations of wrongdoing? Any of you are welcome to respond to 
that.
    Mr. Klein. Commissioner Jaczko.
    Mr. Jaczko. At this point, we haven't finished answering 
that question. Right now, the NRC has a process that whenever 
we get an allegation, we will look at several factors to 
determine who does the primary investigation. Our general 
assumption going in is that, the standard response is to send a 
letter to the licensee asking them to provide information. We 
right now have a series of internal reports from a variety of 
different groups at the agency, the primary one being a self-
assessment from Region I that has looked at that particular 
issue.
    I think right now, we don't have any firm conclusions about 
what the right way is to address that. My personal view is that 
instead of having an assumption going in that we would refer 
the allegation, I think the assumption going in should be we 
should ask the question, can we get this information with our 
own inspection resources, with our own investigators first? If 
that is not possible, then we would consider going to the 
licensee for the information.
    So it is certainly something that was brought to my 
attention in this incident as something we might need to change 
in our process as we review it. But those reviews are still 
ongoing and we are really waiting to collect information from a 
variety of sources before we complete the review.
    Senator Carper. Commissioner Lyons, Chairman Klein, do you 
want to add anything to that?
    Mr. Lyons. I would concur with what Commissioner Jaczko has 
already said. I would note that in the past in about 60 percent 
of the allegations, we have investigated about 40 percent have 
been referred. But as Commissioner Jaczko indicated, as part of 
the ongoing exploration of how to improve, we may well seek to 
change that ratio and possibly change our criteria.
    Senator Carper. All right.
    Mr. Klein. One point, our No. 1 concern when anyone raises 
allegations is that we protect the identity of the alleger.
    Senator Carper. OK. Thank you.
    I have used 7 minutes. Co-Chairman Voinovich, you are 
recognized for 7 minutes, my friend.
    Senator Voinovich. Thank you.
    In my view, the silver lining in this incident of the 
sleeping guards is it provides the NRC and the industry with a 
very timely opportunity to do some serious self-assessments on 
how do you handle whistleblower cases. From a management 
perspective, handling these things are fraught with 
difficulties. You just mentioned that the person said, don't 
contact me. How do you decide whether you are going to contact 
him or not contact him? It gets into personalities, 
verification of what may appear to be questionable allegations 
and so forth.
    Anyhow, in your testimony, you mentioned that NRC receives 
between 500 and 600 allegations per year. I would be interested 
to know, and maybe you can't give me the answer to that, about 
how does that fit in with some other regulatory agencies in the 
number of whistleblowers they might get, the Securities and 
Exchange Commission or whatever.
    And can you give us a sense of the criteria your agency is 
using to determine which ones would be turned over to licensees 
and which ones would be handled by the agency employees and do 
you have any numbers on it. You know, turn this over to the 
licensee or, red light, we better get in there and do this 
ourselves. How do you handle that, and how is that going to 
change, if any, because of what happened?
    Mr. Klein. Senator Voinovich, we take allegations very 
seriously. As you might expect, being a regulatory body, we 
have procedures that we follow. I think in summary for this 
particular Peach Bottom event----
    Senator Voinovich. By the way, how many people handle that? 
For 600 a year, is that a part-time job for somebody to handle 
these, or how does that work?
    Mr. Klein. It depends on where they come in. For example, 
if they come in, the resident inspector is one that might see 
these first. We also have a review board that will at the 
region determine what level of involvement it should be, 
whether we do it; where it is handled. Again, we have the 
Office of Investigation that follows up on all of the 
allegations and whistleblower activities. So we have a complete 
structure and a complete office that handles these allegations. 
So we have an office that is called the Office of Investigation 
that focuses on those.
    In addition, in a case like Peach Bottom, after this 
surfaced, I asked the Inspector General to look at our 
procedures to see how we can make those better. We haven't 
gotten that information back yet, but we have a variety of 
levels that we look at.
    In terms of the criteria, as I indicated, the first one is 
we protect the identity of the alleger because we believe that 
we need open and honest communications in the business that we 
are in, more than other agencies. I don't know what the record 
of other agencies is on the number of whistleblower allegations 
that they might have, but we believe very strongly in open 
communication. The men and women that work at these power 
plants should feel free to raise questions anytime, anywhere 
and we take those very seriously.
    One of my concerns on this particular allegation was did we 
get back to the individual. As I read the letter, and then I 
was rather surprised at how strong this individual said, don't 
contact me at all. But we have a criteria to determine whether 
we handle it or whether we ask the licensee to address it. As 
Commissioner Lyons indicated, on average 60 percent of the 
allegations are handled by the NRC and 40 percent are referred 
back to the licensee for initial information. We hold the 
licensee accountable, but we should also hold ourselves 
accountable.
    Senator Voinovich. You had somebody in residence. How many 
in-residence did you have from NRC at Peach Bottom?
    Mr. Klein. At Peach Bottom, we have two resident 
inspectors. At Palo Verde, for example, as Commissioner Lyons 
indicated, because of the concern of their performance, we have 
an additional resident inspector. So at that site, we have 
four, for three operating plants. So typically, we will have at 
least two resident inspectors at a two-unit site.
    Senator Voinovich. Should the resident inspector, is that 
part of their responsibility to mosey around and look at things 
and see whether or not they are doing things like that or not?
    Mr. Klein. Absolutely. We expect the resident inspectors to 
walk through the plants, to observe, to look at activities. So 
we expect them to find those. In fact, the resident inspector 
was aware of the allegation, and obviously had looked, had 
walked around during backshifts and at other times of operation 
to find if there was any inattentiveness, and was able to 
verify those allegations.
    Senator Voinovich. Well, the question I have is, what kind 
of action has the Commission taken in regard to the inspectors 
that were there?
    Mr. Klein. We are clearly not finished with all of the 
actions that we expect to result from this investigation.
    Senator Voinovich. I am talking about the individuals that 
are on your payroll that at there, have the responsibility to 
get around, and in this particular case they didn't observe 
anything like this activity of somebody sleeping on the job. 
Correct?
    Mr. Klein. That is correct.
    Senator Voinovich. OK. The issue then is were they doing 
their job and what action has the Commission taken in regard to 
those specific individuals in terms of their behavior, et 
cetera?
    Mr. Klein. For the guards that were inattentive, that is an 
issue that they have been addressed. For our resident 
inspectors, we don't believe that because of the collusion that 
they necessarily were derelict in their duties. In other words, 
the resident inspectors were thorough in the way that they 
conducted themselves. Knowing what we know now, we should have 
provided those resident inspectors with additional support.
    So we don't believe that the resident inspectors 
particularly failed in their duties, because of the difficulty. 
For example, in the ready room that Senator Carper and I had 
observed, this was where they were inattentive, not on post. 
This was basically in an area that they should have been ready 
to respond.
    What we have done since, there are now cameras in those 
ready rooms so they can be observed at the command post. So 
there have been a lot of actions. But for the resident 
inspectors, we believe that this was an event that for their 
training and for how this was conducted, it would have been 
very difficult for them to have observed.
    Commissioner Lyons.
    Mr. Lyons. If I could add to that. As you have already 
indicated, Senator Voinovich, as well as several of your 
colleagues, this needs to be a learning experience. I am sure 
it will also be a learning experience for the resident 
inspectors. But to followup slightly on what the Chairman said, 
the original letter that came in referred to bullet-resistant 
enclosures and other areas. It said nothing about the ready 
room. It is my understanding that our resident inspector did 
focus his attention on the bullet-resistant enclosures and did 
not detect inattentiveness in those areas.
    Mr. Jaczko. Senator, if I could add. Before this incident, 
security inspections were generally handled by regional 
inspectors only. We did not have a lot of responsibilities that 
we had given to the resident inspectors to be looking for areas 
of security violations. There is always a balance and a 
tradeoff. If they are looking in one area, it means they 
certainly can't be looking at something else.
    So one of the things we did immediately after this incident 
was to change that. We sent out notice to all our resident 
inspectors that this was something that they should 
particularly be looking out for as they do their activities. So 
as the Chairman indicated, we don't consider this to be 
something where the resident inspectors were at fault here in 
not identifying this.
    Senator Voinovich. In other words, it wasn't part of their 
charge.
    Mr. Jaczko. It was not part of their charge, no. And it is 
something that we are really looking at, is seeing how we 
balance that security responsibility between the regional 
inspectors and the residents. We are looking at providing more 
responsibility for the resident inspectors in this particular 
area.
    Senator Carper. Senator Casey, you are recognized. You have 
7 minutes, if you would. Thanks.
    Senator Casey. Mr. Chairman, thank you very much.
    As a guest of this Committee, we are honored to be a part 
of this discussion.
    Chairman Klein and the commissioners, we want to thank you 
for your work and your testimony today.
    I have a couple of questions about the process and 
procedure here, before and after this incident. One thing that 
I wanted to, Chairman Klein, direct your attention to is that 
one of your responses to Senator Carper's question about what 
happened with the initial allegation here. It is my 
understanding based upon work that our staff has done and 
people they have spoken to, that even though in this instance 
you had an anonymous letter, which triggered this ultimate 
inquiry, that letter was in fact delivered to the NRC by an 
individual who left their name, address and their lawyer's 
name. I think that alone should have triggered action by the 
NRC that a minimum contact would be made to the lawyer of this 
person, and certainly that there should have been followup 
done. Even though where this thing started it is anonymous, but 
that was in fact delivered.
    What can you tell me about the details of how this 
information came to the attention of the NRC?
    Mr. Klein. Senator Casey, the letter was not anonymous. The 
individual actually signed it, and he did not refer initially 
to a lawyer. So when the allegation came in, it came in to the 
resident inspector. The resident inspector, according to 
procedures because of the nature of this, sent the letter to 
the region. We have an Allegation Review Board that then 
determines how to handle that activity.
    So it did not fall in a crack, in other words. This 
allegation was taken seriously. It was followed up, but because 
the individual that had signed the letter that said don't 
contact him, that again is a lessons we have learned. 
Fundamentally, we should have gone back and contacted the 
individual.
    In the letter, as Commissioner Lyons and Commissioner 
Jaczko indicated, the primary complaint that the initial 
allegation letter had was alleging long work hours and 
inattentiveness in the bullet-resistant enclosures. Again, what 
the photographs that were taken later demonstrated, the 
inattentiveness was in the ready room, where people were 
supposed to be waiting in order to respond. In those ready 
rooms, I am sure you saw the same room that Senator Carper and 
I saw, the initial ready room was not very conducive to 
maintaining attentiveness. It was not well cooled. It was warm. 
There were not activities in which they could work on. So there 
are a whole variety of reasons why inattentiveness occurred in 
that room.
    Senator Casey. But I ask you, how do we get from March 27, 
2007, when NRC received the whistleblower's allegation, and it 
wasn't until June 2007 that Exelon reported back with its 
finding that it had not found any instance of inattentive 
security personnel? How does that happen, to have that much 
time transpire? I don't care how incomplete the allegation is 
or how off target it may have been compared to what was 
happening in the ready room. How does that happen that that 
much time passes when you have an allegation which involves 
security?
    Mr. Klein. Again, what we did is we followed our 
procedures. As I indicated earlier, our procedures were there, 
but the outcome was not what we expected. The resident 
inspector passed that allegation to the regional office. The 
regional office had an Allegation Review Board that determined, 
yes, this is serious.
    Again, we get a lot of allegations. We treat all of them 
seriously, but some are handled differently than others. 
Because of this nature, it went to the Allegation Review Board 
in Region I. Region I then put it in their process to 
administer and followup. Part of that followup put the 
responsibility back on the licensee and said we have this 
allegation; tell us what you have done; how you can verify that 
this is not occurring.
    In other words, we then put the burden on Exelon, the 
licensee, to tell us, convince us that this is not happening. 
Once they conducted their interview process. They talk to 
people, and then they write their response. We then review it.
    So it was a process of allegation going to region; region 
coming back to the licensee; licensee conducting their 
assessment; and then getting back to us.
    Senator Casey. What is different now?
    Mr. Klein. What is different now is that we will contact 
the alleger directly. We will followup.
    Senator Casey. Let me just interrupt for a second. You are 
saying that in this instance, the individual signed it, but my 
point on anonymity is they wanted to remain anonymous. Is that 
correct?
    Mr. Klein. This individual was actually reflecting 
conditions on the plant. This individual had been terminated 
about 2 years earlier. So he indicated of his concerns, and was 
representing other guards. So the individual that signed the 
letter, the complaint, had been terminated 2 years earlier. So 
he was no longer an employee, but he was expressing these 
concerns on behalf of the other guards.
    Senator Casey. OK. I think we are talking about two 
different things here. We are talking about whistleblowers, in 
this instance Mr. Kerry Beal. And you are talking about a 
second person, are you not?
    Mr. Klein. No. Kerry Beal was the second, the first 
alleger, the written response.
    Senator Casey. But we are talking about two people here?
    Mr. Klein. Yes.
    Senator Casey. I think that has to be clear for the record.
    Mr. Klein. The second person, unfortunately, never 
contacted the NRC. Again, that was disappointing for us, the 
fact that he did not come forward and express those concerns to 
us. But Mr. Beal was the one who had the evidence. In other 
words, the first alleger was a written letter claiming facts. 
What Mr. Beal had was actual evidence. We didn't hear of that 
information until September.
    Senator Casey. Tell me what is different now. If something 
like this transpired now, what specifically have you changed in 
your process? I think in these instances, the procedure--I 
should use the word procedure, process is not the right word--
the procedure is very important, and then how it is implemented 
and followed is obviously critical.
    What has changed specifically with regard to procedure and 
also with regard to how that procedure is implemented or 
followed up on when you have an allegation?
    Mr. Klein. I will talk initially, and then I will ask 
Commissioners Jaczko and Lyons to followup.
    Senator Carper. I am just going to ask you to go ahead and 
be fairly succinct in responding to this question so we can 
recognize Senator Craig. But go ahead and respond.
    Mr. Klein. OK.
    What we are doing is, we are not finished with all of our 
improvements because we still have to hear from our Office of 
Enforcement and the IG. What we have done now is that an 
allegation like this that will come in, we will be much more 
rigorous. We will followup immediately and we will be notified 
from the resident inspector all the way up through the region 
to the commissioners.
    Senator Casey. When you say followup, what does that mean? 
In other words, my understanding is prior to this, you had a 
review board. In this instance, that was referred back to the 
company. What is different about that initial activity that 
takes place? When the allegation come to NRC, what happens? 
What events are triggered in that initial time period?
    Mr. Klein. Our allegations, if it comes into the resident 
inspector, will still go to the region to make sure that we 
handle it appropriately, but we will be much more thorough and 
much more timely.
    Senator Casey. When you say it will go to the region, do 
you mean----
    Mr. Klein. In this case, it would be near Philadelphia for 
Region I. We have four regional offices in the United States.
    Senator Casey. You mean the regional inspector will be the 
first level of review, is that what you are saying?
    Mr. Klein. The resident inspector will probably get the 
initial allegation, and we will make sure whether we handle it 
internally, how it is handled, or whether it goes back to the 
licensee. For a case like this, obviously everyone's 
expectations and antennas have been raised. We will handle it 
much more thoroughly and much quicker.
    Senator Casey. OK. I just want to take another couple of 
minutes.
    The allegation comes to your attention. Who reviews it at 
that moment?
    Mr. Klein. Initially, whoever receives it, probably the 
resident inspector.
    Senator Casey. The resident inspector. Then when does the 
regional part of this come in?
    Mr. Klein. Probably about 30 minutes later.
    Senator Casey. OK. And then what happens after that?
    Mr. Klein. The region will determine how to handle it, 
whether we handle it totally internally or whether we go back 
to the plant.
    Senator Casey. Do you have a timeframe for this within 
which, 30 days, 60 days?
    Mr. Klein. I think in a case involving security, it will be 
very quick.
    Senator Casey. But you don't have any final procedure in 
place?
    Mr. Klein. Our procedures now say within 30 days, but again 
we are modifying those procedures.
    Senator Casey. OK. I want to come back, because I know that 
Senator Craig has been waiting, but I will try to come back to 
this. Thank you.
    Senator Carper. And you will have a second round.
    Senator Craig, thanks for your patience. You are 
recognized.
    Senator Craig. Thank you very much.
    I am going to take a slightly different track because I 
think these questions have been very thorough and are getting 
to the heart of it. I guess my only reaction, Commissioner 
Klein, is that don't make it too bureaucratic. Make is nimble 
and responsive in a very timely fashion when these kinds of 
things happen. I am always fearful, you know, clouds can have 
silver linings, and in this instance where clearly a 
whistleblower exposed, there was not a security breach, but 
from it we can learn a great deal. You are learning a great 
deal.
    My only cautionary note would be won't make the process so 
bureaucratic that somewhere along the line, someone doesn't 
respond in a timely fashion.
    My question is of you, Commissioner Lyons, in a slightly 
different tack, but something that does relate to security. You 
are familiar with the advanced test reactor at the Idaho 
National Laboratory. We have now designated it as a national 
user facility for research for all universities to use onsite 
and even remote for research projects.
    Now, I move to two, could you please take a moment to 
reflect on your views of the importance of university reactors 
and user facilities such as ATR in teaching, and how important 
it is to maintain these reactors as we teach the next 
generation of nuclear professionals, and this third caveat, in 
the context of GAO's recently issued report on the security of 
university reactors and their questioning of the NRC's risk 
assumptions.
    Now, that may be a little bit of a convoluted question, but 
I think when we are talking security, there are reactors that 
are intensely safe and secure, even though we have slips within 
them, and then there are a lot of other reactors out there that 
are secure, but possibly less secure in the sense of where they 
are and how they are handled and who deals with them, and the 
protocols. And now we have had a GAO audit in part that I 
question as to its assumptions.
    Would you react in that context?
    Mr. Lyons. Senator Craig, as you said, you had a number of 
different questions embedded with that. Let me try to briefly 
address several of them.
    Senator Craig. All right. Thank you.
    Mr. Lyons. You asked about the importance of support for 
university reactors and the importance of supporting the 
educational program in general. I think the whole Commission 
has been very outspoken in past visits with this Committee on 
our very strong support for a national educational program that 
supports the overall nuclear power industry. This Committee, 
and I believe other committees, have had some concern with the 
way the Department of Energy has chosen--I am not sure how to 
say it--with the DOE's program that has been authorized in this 
area, and that led to appropriations to the NRC in the current 
year for us to undertake an educational program in support of 
this national need.
    We strongly support, the need for that education. We are 
moving as expeditiously as humanly possible to set up a strong 
national educational program in these areas. That educational 
program, of course, needs to be supported, and must be 
supported by university reactors, the research reactors that 
are around the Country. ATR, I believe, that you referenced, is 
strictly speaking a DOE reactor and not considered one of the 
RTRs. It is regulated by DOE. But there certainly are a number 
of research and test reactors around the Country which have 
absolutely critical missions.
    There are many, many differences, as I think this Committee 
is well aware, between the research reactors and the power 
reactors, starting with a gigantic factor, multiple decades of 
difference in power levels and potential concerns from the 
amount of radioactive materials involved.
    You asked for brief comments on the recent GAO report about 
which our Chairman spoke in his testimony. He indicated very 
strong concerns. I certainly share those very strong concerns. 
We believe, based on the evaluations that we have done, very 
extensive evaluations, that the research reactors at 
universities around this Country are safe and secure, based on 
the level of threat that they present. We can expand on that 
answer as you wish with details on the GAO report, but perhaps 
I should stop there on initial answer.
    Senator Craig. And that satisfies me. Obviously, you are on 
point and that is what is critical here as we look at the GAO 
report and move from that, and your reaction to it.
    Mr. Chairman, I have not seen your full testimony and I 
will look at it in response to that. That is important because 
there is a broader range of security here, but you have said it 
well, Commissioner Lyons, in relation to mission. I don't know 
that the average citizen in our Country can distinguish the 
difference, and I think it is important that we help shape the 
distinguishing of difference between a commercial production 
reactor and a test facility and what it does or doesn't mean to 
the average person as it relates to security, and therefore 
methods of operation.
    Thank you.
    Mr. Jaczko. Senator.
    Senator Craig. Yes.
    Mr. Jaczko. If I could offer one point on something that 
Commissioner Lyons mentioned where I think there is some 
disagreement among the commissioners, and it does have to do 
with the university programs that he referred to. While those 
programs are certainly valuable programs and I personally 
believe at $15 million, that program is probably significantly 
underfunded.
    I don't believe that that program is appropriately placed 
at the Nuclear Regulatory Commission. As the regulatory body 
that often may interact with the university reactors and others 
in that community in a regulatory capacity, I think it calls 
into question and raises issues of public confidence and 
potentially conflicts of interest between the Commission and 
the regulated if we are the same entity that is giving out 
grants to those same entities that we regulate.
    So I certainly understand the Congress's interest in this 
program, but I think fundamentally that is a program that 
belongs back at the Department of Energy or at some other 
agency that may have an interest in educational programs, but 
not fundamentally long term at the Nuclear Regulatory 
Commission.
    Senator Craig. OK. Thank you.
    Mr. Klein. As Commissioner Jaczko indicated, this is not 
one in which I agree, and Commissioner Lyons agrees. We believe 
education is very important for the work force that not only 
the Nuclear Regulatory Commission needs, but also other Federal 
agencies and also the industry. So the nuclear education 
program that is proposed and we are now operating at Congress' 
request is a work force initiative. It includes trade schools, 
new faculty, individuals, and also scholarships and 
fellowships. This has nothing to do with regulatory activities. 
This is a work force initiative education program and it is one 
which the Country needs.
    Senator Craig. Yes. I thank you.
    With 47 seconds left, Mr. Chairman, let me suggest that the 
work force issue and the training issue, the educational issue 
is a component that is critical out there at the moment as we 
grow ourselves back into a capability as a Country to respond 
to what appears to be the demand and the need to build these 
reactors. I had mentioned a major utility that chose to stand 
down.
    They gave a lot of reasons for standing down. One of them 
just happened to be the licensing process and its timing. The 
other one was simply the ability to staff, the ability to find 
the right and properly trained people, and all of that as we 
now compete in a world market for these trained individuals. So 
those educational tools, wherever they are placed, we ought to 
focus on them, and they are critical in the overall growth of 
this industry for all the reasons that we are now and 
appropriately support it.
    Thank you.
    Thank you, gentlemen.
    Senator Carper. Thank you, Senator Craig.
    Commissioner Jaczko, if I could, I think in your prepared 
statement you discussed the NRC's new rules, I think they are 
proposed rules, to restrict work hours for security guards. Let 
me just ask, is security guard fatigue a serious issue across 
the fleet of 104 nuclear power plants? And what is the timeline 
for implementing these new fitness for duty requirements?
    Mr. Jaczko. To clarify, it is a final rule for the 
Commission at this point, but it is still undergoing the 
subsequent bureaucratic process for OMB review and other 
processes that happen before it actually becomes a final 
regulation. So that is working its way through.
    The question about whether fatigue is an issue is something 
that we have recently asked our licensees. Following the Peach 
Bottom incident, we sent out a request for information from 
licensees to tell us what their work hours are and what are the 
kinds of hours that we are seeing.
    But there have been, since 2004 over 20 incidents of 
inattentive security officers, some of which have been 
identified by NRC inspectors, some of which have been self-
reported. So there is clearly evidence that these kinds of 
incidents are occurring.
    We will have better information when we complete our review 
of the responses to this request for information that the 
licensees provided.
    Senator Carper. One of the things I want to better 
understand is the timeline for completely implementing the new 
requirements.
    Mr. Jaczko. The new requirements won't go into effect 
probably for about another 22 months. We are hoping to get the 
rule finalized in March, and then it has an 18 month 
implementation timeframe. So what I have certainly asked the 
staff to look at is are there ways we can accelerate some of 
those components, particularly on the security side, for the 
fatigue requirements. I think there are some areas, 
particularly in the programmatic elements of the new rule, 
things like having a better process in place for individuals 
who are fatigued to be able to report that to their supervisors 
and not have an adverse employment decision because of that. 
Getting that kind of program in place earlier I think would be 
a real enhancement.
    Senator Carper. I am not interested in trying to 
micromanage that process, but one of the questions I will ask 
for the record, and I will just telegraph it now, is whether or 
not it might make sense for Senator Voinovich and I, and maybe 
others on this Subcommittee, to consider legislation that would 
somehow reduce that 18 months. It seems like a long time. So I 
just wanted you to know we are thinking about that, and we 
would ask you to think about it as well. We will reach out to 
you in writing for your thoughts.
    The last question I wanted to explore deals with the 
composite adversary force. As I understand it, the NRC tests 
every facility security force using what they call force on 
force exercises. The composite adversary force that is used to 
challenge each plant's security is contracted by the Nuclear 
Energy Institute.
    Let me ask, why doesn't the NRC have its own security force 
to test each plant's security?
    Mr. Klein. Senator Carper, I will start and then I will 
delegate to our resident expert on force on force, Commissioner 
Lyons.
    We have looked at a variety of ways on how we can better 
challenge and verify the force on force activities. Having 
spent 5 years at DOD watching a lot of force on force 
activities and then coming to the NRC and observing those, we 
do it well. So the system is working.
    I will let Commissioner Lyons give additional guidance on 
that.
    Senator Carper. Yes, as I understand it, the folks who do 
that, who actually come in as the adversary force, are people 
who are drawn from the industry itself, who come in and maybe 
cycle through an 18 month to 36 month commitment, and then go 
back to work within their own plant. Is that the way it works?
    Mr. Lyons. That is correct, Senator Carper. Those 
individuals are not drawn only from Wackenhut facilities. They 
are drawn from all facilities.
    I have to admit that when I was on Senate staff and when I 
first joined the NRC, I was quite skeptical about the current 
situation which has continued in which the NEI contracts for 
the composite adversary force. However, despite my skepticism, 
I have been very pleasantly impressed to learn how the NRC has 
maintained oversight of the activities of the composite 
adversary force. Frankly, it is a very, very impressive record.
    One of the concerns that I have heard expressed is whether 
that composite adversary force, since it is contracted by NEI 
to Wackenhut, would find issues at a Wackenhut site. And they 
most certainly have found issues at Wackenhut sites. 
Furthermore, with the change in Exelon's practices, the number 
of sites with Wackenhut will be substantially reduced.
    I have continued, therefore, to support the current 
situation, even though I came in very skeptical of it. I 
believe that the composite force is doing an outstanding job 
under the oversight of the NRC.
    Senator Carper. All right. Well, thanks for that 
observation.
    Commissioner Jaczko, and then I am going to ask Senator 
Voinovich if he has any closing questions for this panel.
    Mr. Jaczko. If I could just briefly say, I think the issue 
that we are dealing here is an appearance of a conflict of 
interest. As I am sure you are aware, in those kind of 
situations an appearance can be as significant sometimes as an 
actual conflict of interest. So I think it is an important 
issue that we need to address and explore other possibilities 
about how we could conduct this.
    The Commission does have in front of us right now a voting 
paper to decide this issue and look at alternative approaches. 
One of the biggest drawbacks right now to an alternative 
approach of having the NRC itself contract and manage that 
adversary force is fundamentally cost. We would be talking 
about a program that would be in the range of several million 
dollars to do that. So in many ways, I think that is the real 
impediment in my mind to moving forward in a different 
direction.
    As others have said, the issue here, from what we have 
seen, is really more of an appearance of a conflict than an 
actual conflict at this point, but sometimes those can be as 
significant as an actual conflict.
    Senator Carper. Good. OK, well, thank you for adding that.
    Senator Voinovich, anything else for this panel?
    Senator Voinovich. No, thank you.
    Senator Carper. OK. Senator Casey, you are recognized for 5 
minutes.
    Senator Casey. Very briefly. Thank you very much.
    I think in the interest of time, in order to supplement the 
record to followup on some of the questions that I was posing 
to Chairman Klein, I would ask that the NRC provide to the 
Committee for the record a fairly detailed summary or flow 
chart of how allegations are handled. Because of the time 
period within which the change in regulations may not be able 
to be expedited, it sounds that way that it won't be, you won't 
be able to accelerate that, that you annotate or add to that 
flow chart anything that is new in terms of--in other words, 
procedures you can follow without having to go through the 
regulatory process. I think it would be important to know that.
    Commissioner Jaczko, I wanted to highlight something that 
you had in your written testimony, which struck me. You talked 
about the report done by the regional office regarding the 
allegation at Peach Bottom, and then you say, and I am looking 
at the fifth paragraph of your testimony, you say, ``We have 
already begun making changes such as those I just mentioned, 
but I believe there is more agency-wide work that needs to be 
done to fully evaluate the agency's handling of this issue.'' I 
am happy to read that. But then you go on to say, ``The 
foundation of the Commission's additional allegation program 
improvements must be built on a more comprehensive review than 
we have allowed the staff to conduct so far, along with 
consideration of forthcoming findings by the Inspector 
General.''
    In the context of that statement and the context of some of 
the questions that I posed to Chairman Klein, where do you 
think the NRC is with regard to having learned from this 
incident? And where do you think it needs to go? Because I have 
no doubt that Chairman Klein and the Commission have and will 
learn from this, but the Congress and I think the American 
people need to see evidence that you have learned. I just want 
to get your perspective on this, as well as Commissioner Lyons, 
in the time that I have.
    Mr. Jaczko. In my view, we are still early in the process 
of learning. For me, the most important thing is that we learn 
the right lessons, not that we learn something quickly. I think 
the focus of our effort so far has been on self-assessment from 
the region in which this incident occurred. We haven't yet 
fully integrated all the allegation individuals and other 
experts in other regions, for instance, into the process to 
really independently evaluate what happened in Region I.
    So far what I think the indications I have are is that it 
was not strictly a procedural problem, that there may have also 
just been issues with implementing the procedures that we have. 
So we want to take a look in other regions about how they may 
implement the procedures, to make sure that we are learning all 
the right lessons.
    So I think there is still a lot that we have to learn, but 
I think it is worth taking the time to get it right and make 
sure we talk to all the experts. The Chairman mentioned we have 
an Office of Enforcement that actually has the responsibility 
for this allegation program. We want to make sure that they are 
fully involved and that their experts are able to provide 
information on this process as well. Really, the most important 
piece that I think is missing is really bringing in the other 
regions as well, and getting their insights and their input 
into the process.
    And then, of course, the one that I did specifically 
mention, which is the Inspector General, because that really 
provides the independent look at this. And they are looking at 
it in really much the same way. They are looking specifically 
at Region I to see what they did, and then they are looking to 
see how other regions handle these allegations as well. So they 
will get both sides, in a way, of that picture.
    But the most important focus for me, really, is just to 
make sure that we do this right, and not that we be too 
concerned with how quickly we move. We want to do it quickly, 
obviously, but we want to make sure we get good information.
    If I could just add one other brief point, and it is 
something that hasn't been highlighted as much here. We have 
talked a lot about the allegations, but one of the areas that 
we actually identified as a weakness at Peach Bottom was in 
their behavioral observation program. This is a very important 
program in the security arena that we use to identify people 
who could exhibit characteristics that would indicate that they 
are an individual who is not necessarily there for the benefit 
of the facility, that they may have ulterior motives. That is a 
very important program and it is a very crucial part of our 
force on force exercises.
    The way that we do security is to be able to identify 
individuals who, as I said, are doing things that are 
intentionally or could intentionally damage the facility. That 
program failed in this instance, obviously, when you have an 
entire security shift that is not focusing on security, but 
rather is colluding to be inattentive. And we have seen other 
facilities, Turkey Point for instance, where there have been 
similar instances of a failure in this behavioral observation 
program among the security officers.
    So that is an area that I think we also need to make sure 
that we fully explore and evaluate as we go forward.
    Senator Casey. Thank you.
    Commissioner Lyons.
    Mr. Lyons. Just to add very briefly. Mr. Jaczko already 
summarized that we currently have the report of the region. 
There is a senior staff group that is now assessing that 
report, pulling in more information from the other regions, and 
of course the Inspector General. All of those will contribute 
to a package coming to the Commission for our review, and 
certainly to look toward improvements.
    One comment I wanted to make, though, as Commissioner 
Jaczko mentioned involves, the behavior observation. The 
behavior observation program is certainly very important and 
ties in with the comment that several of the members of the 
Subcommittee have already made with regard to zero tolerance.
    The fact that there has been in the past (and this is not 
dictated by the NRC, but by the licensee and the contractor) a 
zero tolerance policy to some extent undermines the behavioral 
observation program. To me, part of the answer to the issues 
that we are facing at Peach Bottom is to recognize that there 
needs to be flexibility in that zero tolerance. We need to 
encourage individuals who are fatigued to self-report or 
perhaps be reported by others into the behavioral observation 
program.
    There has been some discussion of the so-called fireman's 
assistants, the small devices that people might wear. To me, if 
an indication on one of those devices can be entered into a 
corrective action program, which we would be doing for all 
other safety aspects of the site, instead of leading to 
immediate termination of the individual, we would have a far 
different response from the security officers. I am looking 
forward to the opportunity to blend all of these different 
points of view into the final set of responses.
    Senator Casey. Thank you very much.
    Senator Carper. Before our commissioners leave, on behalf 
of all of us, thank you for coming today. Thank you for your 
preparation and your responses to our questions. We will be 
following up with some questions in writing, as you know. We 
would ask that you continue to provide thorough and prompt 
responses there.
    I hoped we would have an opportunity to get more 
specifically into the issue of a culture of safety today. We 
have not, though several of you have spoken to it directly in 
your testimoneys and some of your responses. What I think we 
have in mind, and our goal should be for everyone of the 104 
nuclear power plants that operate in this Country, and those 
that may be built in the future, that there is an environment 
or culture that exists so that when any employee or supervisor 
or an inspector from the NRC sees what he or she believes to be 
a problem that could undermine the safe and sound operation of 
a facility, that they would feel compelled to report it 
promptly and fully to the appropriate authority.
    The next step would be for the appropriate authority to 
take that report, to take it seriously, to fully investigate 
what has come to them, and as appropriate, to send up the chain 
of command to others, whether it is the regional offices that 
you have spoken to here today, so that others know that 
something has been raised and it is being investigated.
    Subsequently, after a full vetting, and the concern is 
deemed to be unfounded or not one that we really need to be 
concerned about, that whoever has brought the concern be 
debriefed or briefed as to the outcome, and we explain to him 
or her that we appreciate what they have brought forward, but 
here is why we have not deemed it appropriate to act on.
    On the other hand, when we have a situation like we have at 
Peach Bottom, where there was a problem, and it is a problem 
that could affect all 103 other nuclear power plants, that we 
take that lesson that we have learned at Peach Bottom and we 
fully spread that lesson across the Country so that other plant 
operators, others that are providing security and your 
inspectors are fully aware of this, and that we can learn from 
the mistakes, in this case at Peach Bottom.
    I think that is our goal. My hope in conducting a hearing 
of this nature is that we will help further that goal in the 
creation of that kind of culture of safety at every plant 
because we need it.
    With that having been said, again we thank you for being 
with us today.
    Again, Mrs. Klein, thank you for joining us, too. Thank you 
so much.
    The third and last panel is welcome to come forward and to 
join us.
    To the members of our third panel, thanks for waiting, and 
thank you for your presence here today and your testimony. We 
look forward to asking you some questions.
    Let me just introduce the panel from our left to our right, 
and Mr. Crane, we will give you the privilege of being our 
lead-off hitter.
    Mr. Fertel, nice to see you. You can bat cleanup, if you 
would.
    David Lochbaum is Director, Nuclear Safety Project, Union 
of Concerned Scientists. Thanks for coming. Welcome.
    Second is Eric Wilson. Mr. Wilson is the Chief Executive 
Officer of G4S Regulated Security Solutions, which I believe 
was formerly Wackenhut Nuclear Services. Thank you for coming 
today.
    Mr. Crane, Christopher Crane, is the Chief Operating 
Officer of Exelon Generation. Thank you. Nice to see you.
    And then we will skip over Mr. Wilson and go right to the 
real David Lochbaum, who is Director of Nuclear Safety Project, 
Union of Concerned Scientists.
    And finally to Marvin Fertel over here. He is the Senior 
Vice President and Chief Nuclear Officer of the Nuclear Energy 
Institute.
    I think I got it right that time.
    All right. Mr. Crane, in any event, you are No. 1, and we 
look forward to your testimony. Take it away. I am going to ask 
you to limit your testimony to about 5 minutes. If you run a 
little bit long, that is OK, but not much longer, and we will 
ask our questions. Thanks.

           STATEMENT OF CHRISTOPHER M. CRANE, CHIEF 
              OPERATING OFFICER, EXELON GENERATION

    Mr. Crane. Mr. Chairman, Senator Voinovich, thank you very 
much for the opportunity to be here today to discuss the 
security at our nuclear plants. I want to review what we are 
doing to ensure that all Exelon nuclear plants are safe and why 
the public can have complete confidence in the continued safety 
and reliability at our plants.
    Exelon is the largest owner and operator of nuclear power 
plants in the United States. We have 17 reactors that we 
operate at 10 locations in Pennsylvania, New Jersey and 
Illinois, with over 8,000 employees, one eighth of those being 
security personnel providing protection on 24/7 at our 
facilities.
    Although the security-related issues that were uncovered 
last year at Peach Bottom are completely unacceptable, it 
should not disparage the excellent work of the other thousands 
of employees at our facilities. Nuclear plants being part of 
the critical infrastructure, continue to be some of the best-
protected facilities in the United States. Since 9/11, Exelon 
has spent $160 million enhancing the architecture and the 
security forces at our facilities. We are proud at Exelon of 
our continued sustained performance in safety and reliability 
at our facilities, and safety is priority one.
    Because of our strong commitment to safety, our reaction 
was outrage when we saw the video of the clear images of 
sleeping guards at our Peach Bottom facility. I will explain 
our investigation, what it revealed, and the actions we have 
taken, but a little bit on the ready room. Senator Carper, you 
have been to the ready room so you understand. The ready room 
is not a guard post. It is a staging area for personnel to be 
ready and able to respond to other security officers and posts 
as needed, based off an adversarial attack.
    Although the security at the plant and the health and 
safety of the public were never at risk due to our extensive 
defense in depth, as the Chairman of the NRC previously stated, 
the behaviors were definitely contrary to Exelon standards and 
were completely unacceptable.
    Equally disturbing, as Commissioner Jaczko stated in his 
testimony, was the realization of a subculture that existed 
where the poor behavior was tolerated by other security guards. 
Upon becoming aware of the details, we launched a comprehensive 
investigation and immediately made changes in the security 
procedures to ensure we had the enhancements as required.
    At the beginning of it was our decision to terminate our 
contract with Wackenhut. I want to make a clear point here. 
This was not to make Wackenhut the scapegoat. The 
responsibility for having attentive security guards, as with 
all attentive employees at our facilities, is born by the 
licensee and that is Exelon. Our decision to terminate our 
agreement with Wackenhut was to greater enhance our flexibility 
for programs like behavior observation, training, selection, 
and better align the security organization into the site family 
and feel part of that organization.
    We have increased our oversight by performance of senior 
management doing direct observations, face to face 
communications with the guards, and believe have put effective 
measures in place to continue to grow the trust of the 
organization between the work force and management. The 
security transition at Peach Bottom has gone well and we 
believe the security force feels that they are part of the 
team, but it is a beginning of that part and we still have 
actions to go to continue to build their trust and integrate 
them.
    We also have conducted evaluations at the remaining 
facilities and found no evidence of inattentiveness, but have 
decided that it is the best organization structure to have the 
security forces at those locations brought in-house also.
    Prior to implementing the full transition, we have made 
some changes, modified procedures, and conducted training 
emphasizing compliance, looking at shortened security rotations 
and random post checks. We have a highly trained paramilitary 
security force that is coupled with extensive physical barriers 
and architectural mechanisms to provide additional containment 
to any potential releases or accidents within our facilities.
    Before I conclude, I do want to comment on our allegation 
review process. As a result of this issue, we have made 
improvements to our process. However, even prior to this issue, 
our review process was robust. It is regrettable that we 
received the initial comments from the NRC in April 2007 and 
our investigation did not uncover the sleeping guards. We have 
talked about the terminology, the wording in the investigation, 
but we still believe the onus was on our process to uncover and 
to fully evaluate.
    We receive on average about 28 referred allegations from 
the NRC on an annual basis, and 6 of those we substantiate. We 
receive from internal employee concerns on average a few 
hundred a year and 25 percent of those are substantiated. We 
have employees reporting on issues within the plants, all of 
our plants, around 10,000 individual reports on an annual 
basis. So there is a culture for reporting issues. There is a 
process in place for taking referred allegations and employee 
concerns and diving into those. We have and will continue to 
make enhancements on the process.
    Exelon is committed to safe operations of our plants, and 
we provide a strong security program at each site. We continue 
to make significant financial and personnel resources to comply 
with the NRC regulations, but that is not as a minimum. That is 
just as a base, and we continue to drive from the corporation 
to enhance above that. We will continue to work closely with 
the NRC and all appropriate Federal and State agencies to drive 
this compliance.
    I will end it there, and look forward to your questions. 
Thank you for the opportunity.
    [The prepared statement of Mr. Crane follows:]



[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


      Response by Christopher M. Crane to an Additional Question 
                          from Senator Inhofe

    Question. Mr. Wilson commented in his testimony that there 
was ``too much separation'' between security and other plant 
operations. Do you agree, and, if so, how do you think it 
should be addressed?
    Response. The creation of Exelon Nuclear Security provides 
Exelon management the opportunity to directly engage the 
security workforce as Exelon employees. Feedback from security 
officers indicates an overwhelming appreciation for the 
opportunity to be a part of Exelon. The new security 
organization now has a complete Exelon Nuclear Security site 
management team versus our previous method of functioning in a 
contract administrative role. This team, similar to other 
Exelonsite organizations, is completely integrated within the 
station and works under the direct management of the site 
leadership team.

      Response by Christopher M. Crane to an Additional Question 
                          from Senator Specter

    Question. Exelon terminated its relationship with Wackenhut 
in the wake of this incident last fall, and decided to make 
security an in house operation. Regarding this, in a December 
18 letter to senator Casey, former Wackenhut CEO David Sanders 
states that ``security is not a core competency of the energy 
manufacturer . . . it will be a challenge for them to conduct 
security operations better than Wackenhut''. What steps are 
being taken to ensure that a similar situation doesn't reoccur?
    Response. One of the major causes of the problems at Peach 
Bottom was inadequate leadership, management, and supervisory 
oversight of security by the Wackenhut leadership team to 
ensure that Exelon's expectations were being met. By creating 
the Exelon Nuclear Security Company, Exelon has developed the 
site security management organization in accordance with the 
proven Exelon management model. The Exelon management model 
includes focus on excellence in management and supervisory 
skill sets. Additionally, Exelon has taken a number of steps to 
ensure that we possess and maintain the core competencies 
necessary to meet the challenges of security in today's world. 
We have developed a corporate staff of security management and 
specialists that have years of experience in commercial nuclear 
security, military special operations, project management, and 
labor relations. As part of transitioning our security 
operations in house, we have added 11 individuals to the 
corporate security staff. Our site management teams are made up 
of not only experienced security management personnel but in 
many cases, managers with significant plant operations 
experience as well. This blend of talent and experience along 
with the fact that Exelon continues to be very active in 
industry working groups and task forces ensures that we 
maintain the required core competencies for functioning in 
commercial nuclear security.

       Responses by Christopher M. Crane to Additional Questions 
                           from Senator Boxer

    Question 1. In your testimony you stated that the NRC 
should take a more active role in investing allegations rather 
than sending the allegation to the licensee for investigation. 
Does the NRC defer safety allegations to the licensee? Please 
explain how you think the NRC should respond to security 
allegations and whether this differs from how they respond to 
safety allegations.
    Response. My testimony did not State that the NRC should 
take a more active role in investigating allegations rather 
than sending the allegations to the licensee. The NRC does 
refer both safety and security allegations to Exelon for us to 
investigate. We recognize that protection of the alleger's 
identity is important, but on occasion, valuable details of the 
concern are removed to assure anonymity is maintained. In these 
cases, NRC has full benefit of the details and should consider 
providing that information to ensure that the investigation is 
complete.
    Security plays an important role in plant safety and I 
believe that the response to security allegations should be 
handled in the same rigorous manner as safety concerns. This is 
how we do business today.

    Question 2. In your testimony you stated that the NRC needs 
to strengthen its proposed rule on aircraft impact. Do you 
believe existing plants should meet the same security standards 
as newly constructed plants? What do you think a final rule 
should encompass?
    Response. While my testimony does not State that the NRC 
needs to strengthen its proposed rule on aircraft impact, 
Exelon endorses the industry position, as presented in the 
Nuclear Energy Institute (NEI) letter to Ms. Annette L. Vietti-
Cook (NRC), ``NEI Comments on NRC Proposed Rulemaking on the 
Consideration of Aircraft Impacts for New Nuclear Power Reactor 
Designs (72 Fed. Reg. 56287) (Oct. 3, 2007),'' dated December 
17, 2007. Exelon supports the intent of the proposed rule (for 
10 CFR Part 52) and believes all new plants being licensed 
should address aircraft impacts. This would be accomplished by 
requiring the aircraft impact assessment as part of the design 
certification; by voluntarily amending existing design 
certifications; or by requiring the assessment at the time of 
the combined license (COL) application.
    Exelon agrees that new plants should be required to meet 
the proposed rule. The proposed rule should not apply to 
holders of construction permits and plants where construction 
is substantially complete because it would be impractical.
    Exelon believes that the aircraft impact rule should not be 
applied to existing operating plants. The security programs 
mandated by the NRC orders, the Design Basis Threat rule, and 
the protection provided by other Federal, state, and local 
entities, provide an adequate level of protection against the 
effects of aircraft impacts.
    In regard to final rulemaking, the design features and 
mitigative activities resulting from aircraft impact assessment 
are part of the design and are not part of the physical 
security requirements of the plant. As such, it is appropriate 
for the rule to be in 10 CFR Part 52, as opposed to 10 CFR Part 
73. The NRC, in conjunction with the Department of Homeland 
Security, sets the standards and provides the basis for 
security regulations at commercial nuclear facilities. The 
standard for commercial security forces at nuclear power plants 
is a reasonable expectation standard. It recognizes that that 
there are terrorist scenarios that are beyond the capability of 
a commercial company to provide protection. The protection 
against such events is the responsibility of the Federal 
Government.

       Responses by Christopher M. Crane to Additional Questions 
                           from Senator Casey

    Question 1. Your testimony lays out Exelon's basic 4-step 
procedure for responding to whistleblower allegations (first, 
senior corporate management reviews the NRC-referred 
allocations; second, management appoints internal and external 
investigators and provides them with guidelines for conducting 
an in-depth review; third the licensing re-looks at the facts; 
and finally management reviews the report and, if the claim is 
substantiated, creates a plan of action). Can you provide me 
with the detailed protocol Exelon implements when responding to 
these complaints? And what new protocols have been instituted 
as a result of the incident with the sleeping guards?
    Response. Exelon's detailed protocol for responding to NRC-
referred allegations is contained in a procedure titled, 
``Responding to Allegations Referred by NRC and to NRC 
Investigations.''
    This procedure establishes roles and responsibilities for 
conducting the internal evaluation. An individual in our 
corporate Licensing and Regulatory Affairs department is 
assigned to act as the project manager for the allegation 
response. Investigators, who are independent of the asserted 
activities and possess the required knowledge and skill 
appropriate for the allegation, are assigned to conduct the 
investigations.
    These assignments are determined by a senior management 
committee that includes Licensing and Regulatory Affairs, Human 
Resources, Nuclear Oversight, Legal personnel and a 
representative from the affected functional area, such as 
Operations, Maintenance or Engineering. This senior management 
committee also discusses scope of the allegation. The 
investigators conduct an evaluation that is sufficient in depth 
to establish the scope of the problem and to identify potential 
generic implications.
    The results of the investigation are reviewed by selected 
members of the senior management committee prior to being 
approved and issued to the NRC. This process is typically 
performed within 30 days of the referral per NRC request. For 
assertions that have been substantiated, corrective actions are 
established and entered into the appropriate program (e.g., 
Corrective Action Program).
    New protocols in the allegation procedure have been 
established since the Peach Bottom security personnel 
inattentiveness event. These changes were identified as part of 
the root cause evaluation conducted for the event. The 
allegation response procedure was revised to include 
consideration of external legal counsel to assist the 
investigators when an allegation has potential safety conscious 
work environment implications. Explicit direction was added to 
consider other types of investigative techniques when direct 
interviews are deemed inappropriate or ineffective. For 
investigations requiring a sampling of the affected population, 
a comprehensive sampling plan must be established such that the 
population of individuals interviewed is adequate to determine 
if the problem is isolated to a specific shift/team/crew or if 
it is present at the department or site level. A procedural 
requirement was added to obtain clarification or additional 
information if needed. Additionally, enhanced requirements for 
documentation retention have been established; the allegation 
file will contain the investigation plan, the list of documents 
reviewed and personnel interviewed, interview notes, corrective 
action program search criteria and results, disposition of 
recommended actions, and confidential reports related to the 
investigation.

    Question 2. How do you think your internal allegation-
response protocol could be improved to maintain safety and help 
foster a culture in which employees feel free and comfortable 
with coming forward with such valuable information?
    Response. Safety is our overriding priority. Exelon 
strongly believes in, and actively promotes, a safety conscious 
work environment (SCWE). The current policy on safety conscious 
work environment (SCWE) has been revised to strengthen 
applicability to supplemental personnel (i.e., contractors). 
The Chief Nuclear Officer (CNO) has reissued a letter 
reinforcing safety culture and SCWE policy. A SCWE video, 
featuring an introductory message from the CNO, and safety 
culture training have been cascaded throughout the entire 
nuclear organization. Plant Managers discuss our expectations 
regarding safety culture and SCWE during face-to-face meetings 
with contractors prior to outages. Contractors and contractor 
management are required to read and sign the SCWE policy. For 
the SCWE in the security functional area, the previous 
Wackenhut policy of zero tolerance for security infractions is 
being reevaluated in regards to Exelon policies to strengthen 
and improve the Security Behavior Observation Program as the 
contractor security forces are being transferred in-house as 
Exelon employees.
    Additionally, allegation investigators and licensing 
personnel are more sensitized to SCWE when an allegation is 
referred to us for investigation. We now consider other 
investigative techniques if direct interviews may not ascertain 
the validity of the concern. These changes ensure we identify 
and correct any impedance to the free flow of information so 
that each of our employees feels free to raise issues and 
assist with their resolution.

    Question 3. How do you expect bringing management and 
security within Exelon will help prevent future incidents? 
Since a significant portion of your new in-house security 
personnel were retained from Wackenhut, how do you plan to 
change the culture that made it for important information to 
surface?
    Response. Exelon made the decision to bring the security 
force in-house to both prevent recurrence of the problems at 
Peach Bottom and to change the culture within the organization 
to ensure that issues are promptly reported to leadership and 
corrected using our Corrective Action Program. Expectations for 
oversight and leadership are outlined in the Exelon Nuclear 
Management Model and the new Exelon Nuclear Security 
organization was designed with the same model. This Management 
Model has been used successfully to create the strong 
performance that Exelon has shown in our nuclear plant 
operations. Specifically, security leadership teams are 
structured such that security management is directly engaged 
with the performance of the security forces and not merely 
oversight of a security contract. The Exelon Model includes 
improvements in security work force oversight such as on the 
job inspections to validate individual and organizational 
performance, improvements in the quality and effectiveness of 
training, and implementation of the corrective action program. 
Because the security force is now part of the Exelonsite 
operating team, they also receive additional oversight and 
support from the onsite senior leadership team. The 
implementation of the proven Exelon Nuclear Management Model 
provides Exelon senior leadership adequate opportunity to 
ensure the desired cultural change is occurring and that site 
and corporate security management is monitoring and reinforcing 
these behaviors.

       Responses by Christopher M. Crane to Additional Questions 
                         from Senator Voinovich

    Question 1. Mr. Crane, I'm encouraged by your testimony in 
which you acknowledge the realization of a ``subculture'' 
within the Peach Bottom security force which tolerated such 
unacceptable behavior. And it appears that Exelon has taken 
aggressive steps to address these issues.
    One of the complaints I have heard anecdotally is that 
nuclear plant security guards in general do not feel that they 
are fully accepted as part of the site organization. And 
somehow they feel that they are less than equal partners 
compared to other plant workers, such as operators and 
maintenance workers. I would like to get your perspective on 
this.
    Response. Your comment on security officers not feeling 
accepted as part of the site organization is one of the reasons 
that Exelon made the decision to bring the organization in-
house. Security personnel are now part of the Exelon team and 
employees of the site organization with comparative standing as 
other station employees. Exelon Nuclear Security officers 
receive comparative compensation and benefits and feedback 
indicates they appreciate being part of the Exelon team. There 
is no longer the ``less than equal'' partner connotation, real 
or perceived, associated with being a contract employee 
assigned to the site.

    Question 2. There is a suggestion that the industry might 
consider having security officers carry an electronic device 
which senses inactivity and alerts the security command center. 
I think something like that could be a very good, practical 
solution to security officers working the midnight shift. Has 
Exelon given any thoughts to this suggestion?
    Response. We are aware of electronic devices that are being 
developed that would sense inactivity and alert the security 
control center. Exelon plans to evaluate the use of these 
electronic devices to enhance our ability to oversee security 
officers once they become available. A new device under 
development could be used to assist security officers in 
maintaining alertness as well as provide supervisors with 
assistance in monitoring the officers. Exelon has volunteered 
two sites to pilot these devices if and when they become 
available for testing from the vendor.
    Senator Carper. You bet. Thank you, Mr. Crane.
    Welcome, Mr. Wilson, you are recognized for 5 minutes, 
please.

    STATEMENT OF ERIC WILSON, CHIEF EXECUTIVE OFFICER, G4S 
   REGULATED SECURITY SOLUTIONS, FORMERLY WACKENHUT NUCLEAR 
                            SERVICES

    Mr. Wilson. Thank you very much, Mr. Chairman.
    Mr. Chairman and distinguished members of the Subcommittee, 
thank you for your invitation to be here today. My name is Eric 
Wilson and I am the CEO of Regulated Security Solutions, or 
RSS, a newly formed company owned by G4S.
    I am pleased today to represent the 4,000 professional 
employees of RSS, most of whom like myself have a military 
background, and frequently a law enforcement background. This 
is a group of people whose experience and personal beliefs give 
them a deep commitment to protecting our Country. I proudly 
served as an Army Ranger with the 75th Ranger Regiment and was 
a member of the U.S. Army Special Forces before starting my own 
security consulting company within this industry.
    I have held various positions at Wackenhut, including head 
of the Nuclear Services Division. Much of my life has been 
devoted to securing nuclear facilities. I have visited nearly 
all of the commercial nuclear facilities in this Nation.
    Because of my background, I was hired a little more than a 
year ago by Wackenhut to discuss a thorough assessment of the 
quality of security at all the nuclear facilities that we 
provided services for. Before I get to that assessment, I want 
to address the incident at Peach Bottom. Let me be very clear: 
the conduct of the Wackenhut security officers and supervisors 
at Peach Bottom was completely unacceptable and inexcusable. 
The inattentiveness of the company's officers was troubling for 
me, but even more troubling was the inaction of their 
leadership.
    In my written testimony, I provide greater detail on the 
immediate and long-term corrective actions we took not just at 
Peach Bottom, but at all the facilities we safeguard. I believe 
strongly that this incident is not reflective of the 
approximately 4,000 dedicated security officers in our company.
    That said, I am not here today to make any excuses. I take 
full responsibility for the actions of my people at any level, 
from the frontline officer to the Vice President. In my mind, 
part of taking responsibility is to make absolutely sure 
incidents of this sort do not happen again, as well as ensure 
high quality performance is always sustainable.
    This gets me back to the principal finding of my assessment 
that was conducted a little over a year ago when I assumed the 
position. That is that while security of nuclear facilities 
today is very good, we have an opportunity to make it even 
better from a human performance standpoint, by developing a new 
model that will more easily adapt to the ever-changing 
regulatory needs of this industry.
    Through our assessment, we concluded that contract security 
providers have traditionally focused on price as a competitive 
advantage, and consistent with that, trained security officers 
to comply with a standard set of regulatory needs and 
requirements. Moreover, we saw too much separation between 
security and other station operations. With focus on price and 
a tendency to isolate security, we saw a model that performed 
well to regulatory standards, but needed to be updated in order 
to keep pace with rapid change in the regulatory environment 
and deliver the highest quality, sustainable level of service 
in relation to human performance.
    To address this decisively, I believe that security 
functions must be more closely aligned with other station 
operations, and that we can achieve this through focusing on 
three areas in the contract security arena: developing leaders, 
forming strategic alliances, and greater use of technology.
    First, contract security companies need to provide a 
significant level of ongoing leadership development in a 
continuous learning environment. At the end of the day, 
effective leadership is the answer to most organizational 
needs. In my mind, enhanced leadership development is 
indispensable and should not and will not be separated from the 
security we provide our clients.
    Second, as I mentioned, security must be better aligned 
with a station's operations through strategic alliances. We 
must develop close partnership with operators based on a set of 
clear, measurable deliverables. Contract security providers 
should measure their performance on their ability to deliver on 
specific results and objectives.
    Finally, greater use of technology can significantly help 
our security officers fulfill their responsibilities and 
optimize their performance. We have developed software products 
and handheld devices that facilitate better partnerships with 
our clients, measure performance across facilities, and 
identify best practices to increase quality.
    For me, this is where the contract security industry needs 
to go. The most important element of this model is 
accountability. I believe strongly in this. Put simply, if we 
don't meet set key performance criteria that are predetermined 
in partnership with our clients, we shouldn't make any money.
    Let me finish by emphasizing a very important point. 
America's nuclear power facilities today are among the safest 
and most secure facilities in this Nation. What I have 
addressed this morning is not only a preventive solution to 
inattentiveness, but a better way to ensure the quality and 
sustainability of security services at nuclear and other 
regulated facilities in the U.S.
    Again, I appreciate the opportunity to address this 
committee today and am prepared to answer any questions you may 
have.
    [The prepared statement of Mr. Wilson follows:]



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           Responses by Eric Wilson to Additional Questions 
                           from Sentor Boxer

    Question 1. Do you believe Exelon will provide better 
security than Wackenhut provided?
    Response. It is important to stress that nuclear power 
plants are among the most secure facilities in the Nation, 
regardless of whether security is managed in-house or through a 
contract security provider. Wackenhut's record at Peach Bottom, 
excluding the inattentive event isolated to a specific work 
crew, at a minimum achieved and in some cases, exceeded NRC 
security compliance standards. The main purpose behind the 
creation of G4S Regulated Security Solutions is to make high 
quality security sustainable over the long-term with a specific 
focus on leveraging cost efficiencies.
    I believe that the Strategic Alliance Model offered through 
G4S Regulated Security Solutions (formerly Wackenhut Nuclear 
Services) will provide the highest levels of performance and 
service reliability and is the model necessary in today's 
environment. Adopting the principles of the Strategic Alliance 
Model will allow Exelon or any other security service 
organization to perform at the necessary level however, I am 
confident that G4S RSS can provide those services much more 
cost effectively and efficiently.

    Question 2. In your testimony, you mention that security 
service providers focused on price to gain a competitive 
advantage. How did this focus on price affect security, In what 
areas are there price differentials, and how can we make sure 
price isn't the focus in the future?
    To be clear, the contract security industry's pricing 
structure never negatively affected the level of security at a 
nuclear power plant. However, the drive to continually reduce 
cost results meant that the security department was not fully 
integrated with other plant departments in the post-9/11 
security arena. This in turn meant that security services were 
always delivered, but the impact of those services on nuclear 
power plant were never fully quantified, refined or fully 
optimized in a manner that has become imperative in the post-
9111 world.
    To address this, we have adopted a new strategic direction 
through the creation of G4S RSS, which essentially measures us 
against our ability to reduce performance shortfalls and 
deliver on predetermined outcomes.

    Question 3. If the NRC is correct that fatigue was not the 
problem at Peach Bottom, what was the problem and how do you 
think we can prevent similar problems In the future?
    Lack of leadership among the shift supervisors was the 
underlying issue in the events at Peach Bottom. Under G4S RSS, 
we have recognized the need for higher levels of training in 
the areas of leadership, integrity and professional development 
specifically for first and second line supervision. Starting 
from the Security Officer up through Project Manager level, we 
have initiated additional training requirements targeting the 
delivery and implementation of the necessary tools and skills 
to perform at the levels required in today's nuclear security 
environment.

           Responses by Eric Wilson to Additional Questions 
                           from Sentor Casey

    Question 1. What procedures did Wackenhut have in place to 
deal with employee concerns and how were these advertised to 
employees? What changes have you made to these procedures since 
the incident at Peach Bottom?
    There were several specific procedures and policies in 
effect allowing employees the opportunity to bring forth 
concerns:
    1) G4S RegUlated Security Solutions Policy WPO-1314--Open 
Door Policy
    Provides specific guidance to employees to bring forth any 
concern involving the degradation of security or any condition 
that could negatively affect the safety of the plant. Employees 
are encouraged to first use their ``chain of command'' and if 
they are provided a response not consistent with procedures and 
regulations or they are not comfortable discussing with their 
supervision, they have the right and obligation to contact 
facility and/or corporate management.
    2) G4S RegUlated Security Solutions Policy WPO-1318--Safety 
Conscious Work Environment
    Provides specific guidance to our employees of the 
importance of establishing a working environment in which 
employees have the right and are obligated to bring forth 
issues and concerns--without fear of retaliation. Specific 
expectations for supervision and management address their 
responsibility to respond to these concerns, elevate the 
concerns to proper supervisory or management level, when 
appropriate, and to ensure employees are treated with respect 
and confidentiality in the process. Also, incorporated are 
requirements for monitoring employees' knowledge of their 
rights and obligations through employee survey assessments.
    3) G4S Regulated Security Solutions Procedure WPR-1313--
Safe-2-Say Program
    For those employees that would prefer to submit concerns to 
a source independent to RSS, we have established a program 
allowing them to formally contact our Human Resource Department 
through a toll-free access line staffed 24/7.
    This program was established to address issues related to 
harassment. discrimination and retaliation and other issues 
related to non-ethical treatment of employees. Additionally, 
employees are directed to use the utility-licensee Employee 
Concern Program for nuclear safety concerns if they do not feel 
comfortable submitting these to RSS supervision and management 
through other available RSS processes.
    4) Employee Concerns Program (utility-licensee) Each 
utility-licensee is required to provide a means for all plant 
employees, whether utility or contracted, to submit concerns 
through an ombudsman'' program. Utilities have submitted these 
programs for review to the NRC for approval. Specifics of these 
programs include: (a) the rights and obligations of employees 
to submit concerns of a nuclear safety issue (operations, 
maintenance, security); (b) employees will be capable of 
submitting concerns without fear of retaliation and (c) 
supervision and management have an obligation to address all 
concerns thoroughly and provide feedback to the employee(s).
    5) NRC Form 3
    All utilities are required to inform employees of their 
obligation and right to bring forth concerns to the NRC if 
employee concerns are not properly addressed by the utility-
licensee or contractor. Furthermore, it informs employees that 
they have protection under the law from retaliation for 
submitting these concerns. Address and phone numbers of NRC 
offices and representative are provided on the form.
    To ensure employees are informed and knowledgeable of these 
processes, both the utility-licensee and RSS conduct initial 
and annual re-qualification training on the regulations, 
policies, procedures and programs identified above. These 
measures are extensive as they allow employee multiple avenues 
to submit concerns.
    RSS elected not to change our processes, as we consider 
them extensive and more than adequate if properly utilized. 
After the Peach Bottom occurrence, we did conduct employee 
refresher training of the processes at each RSS fleet location 
to re-emphasize the available avenues, RSS expectations, 
utility-licensee expectations, and NRC expectations. 
Additionally, we significantly increased our management on-
shift presence at each fleet location to discuss the incident 
and again re-emphasize our expectations with regards to 
reporting nuclear safety concerns.
    In a continuing effort to address the issue, RSS has 
recently prepared a video re-emphasizing our performance 
expectations with regard to inattentiveness and that employees 
are encouraged to use the processes available to them to bring 
nuclear safety issues to the attention of supervision and 
management. The videos have been distributed and are being 
viewed by our employees.

    Question 2. In your opinion, would there be a benefit In 
requiring the NRC to deal with the licensee and security 
contracts directly and simultaneously? Would this have 
eliminated the information gap between your onsite management 
and your corporate managers?
    Response. Yes, there would be significant benefit and RSS 
encourages a simultaneous communication process for allegations 
concerning our employee's performance. Recent regulation places 
more accountability on the contractor with fines being directly 
leveled against the contractor for non-compliance issues. yet 
current practices with regard to communicating allegations 
include the utility-licensee only.
    Additionally, we support the position that a simultaneous 
communication of allegations would have eliminated the 
information gap between our onsite management and our corporate 
managers and provided RSS the opportunity to conduct a 
corporate directed investigation that potentially would have 
properly addressed Mr. Beal's concerns, identified the 
inattentiveness, and allowed the proper corrective action to be 
applied.

    Question 3. Kerry Beal, your former employee at Peach 
Bottom, experienced retaliation at the plant after he went to 
Wackenhut supervisors with his concerns about sleeping guards. 
The retaliation seems to continue even though he's no longer 
employed by Wackenhut or within the nuclear industry. According 
to a recent newspaper story, Beal's partial employee records 
were released by one of his former Wackenhut managers (who is 
also no longer employed by Wackenhut) to the press. What 
actions are you taking regarding this matter? And, more 
broadly, what kind of actions are you taking within Wackenhut 
as new CEO In G4S to correct this kind of behavior at other 
Wackenhut protected nuclear sites?
    Response. It is not true that Kerry Beal was subjected to 
retaliation by his Wackenhut supervisors after he raised 
concerns about sleeping officers. Any adverse action taken by 
Wackenhut was based on legitimate reasons. While Mr. Beal was 
not retained as a security officer when Exelon assumed the 
security functions at Peach Bottom, Wackenhut was not involved 
in the selection and retention of security officers, which was 
conducted by Exelon. Moreover, no retaliation by Wackenhut or 
its employees occurred after his departure.
    With regard to Mr. Beal's employee records, Wackenhut took 
prompt and assertive action in response to the disclosure of 
draft employee records for Mr. Beal. Wackenhut's understanding 
is that one of Mr. Beal's former supervisors had draft records 
because the supervisor worked on administrative tasks on his 
home computer. On February 1, 2008, the same day that Wackenhut 
became aware of the release of these draft records to a 
newspaper, and before the newspaper published the article, 
Wackenhut's outside counsel contacted the supervisor by letter, 
which was delivered by special courier to his home. Counsel's 
letter demanded that the former supervisor cease and desist 
from disclosure of the draft records and return them to 
Wackenhut's legal counsel. Also that day, Wackenhut's counsel 
wrote to the reporter for the York Daily Record, requesting in 
very strong language that the newspaper not print the 
information that had been disclosed without authorization.
    Until February 1, 2008, by which time Mr. Beal's former 
supervisor was no longer a Wackenhut employee, Wackenhut had no 
knowledge that this former supervisor had any plan to speak to 
the press. At no time did Wackenhut in any way support or 
encourage the former supervisor's actions. By the same token, 
Wackenhut is mindful that it should not act to hamper anyone, 
including a current or former supervisor, from raising concerns 
about issues like inattentive security officers, nor from 
delivering to the NRC and the press accurate information on 
such issues, as such activity should be protected by 
``whistleblower'' laws. Similarly, Mr. Beal was not adversely 
treated by Wackenhut or its employees for raising concerns 
about inattentive security officers.
    The former supervisor agreed to return the computer disc 
with the draft employee records that very day, and he did so. 
The former supervisor also advised Wackenhut's counsel that he 
informed the newspaper reporter that the newspaper should not 
use or reference the draft documents in any story.
    Exelon, Wackenhut and Mr. Beal settled and resolved all of 
their disputes in a settlement agreement, in which none of the 
Parties admitted any liability to any other Party. The terms of 
the settlement agreement are confidential. The NRC has reviewed 
the terms of the settlement agreement and accepted it.
    Subsequent to this incident, Wackenhut has reviewed its 
policy manual and confirmed that prior to February 2008, it has 
had in place written provisions which articulate sufficiently 
the confidentiality of employee records. Wackenhut reviews and 
revises its policy manual on an on-going basis.

           Responses by Eric Wilson to Additional Questions 
                           from Sentor Inhofe

    Question 1. Exelon fired Wackenhut following the Peach 
Bottom problem. That has led some to question whether security 
can be effectively maintained by a contracted force. Mr. 
Lochbaum contends that the opposite question would be asked if 
the sleeping guards had been utility employees and not 
contractors. With nearly half of our nuclear plants guarded by 
a contracted security force, please describe why we can be 
confident that those plants are just as secure as an ``in-
house'' force.
    Response. According to most industry and regulatory 
authorities, including Nuclear Energy Institute and the Union 
of Concerned Scientists, security services provided by the 
contract security industry or nuclear power industry itself are 
very comparable (almost indistinguishable). The standards by 
which nuclear security organizations are held accountable and 
tested are the same whether the organization is ``in house'' or 
contracted. In fact, commercial nuclear power plants are the 
most highly secured commercial critical infrastructure in the 
Nation. Additionally, it's important to note that a contracted 
force affords greater flexibility in dealing with abnormal 
issues such as contingency force requirements, handling support 
requirements in response to natural disasters as well as 
leveraging capabilities and best practices across a broader 
range.

    Question 2. The U.S. military Is responsible for many 
sensitive security operations, including protection of the 
airspace over the Capitol and protection of our nation's 
nuclear deterrent. Has your company consulted with any branches 
of the military regarding best practices for addressing 
inattentiveness in comparable security situations?
    Response. Many of our employees actually come from various 
military backgrounds, including previous members of special 
operations units, and provide valuable input into our 
operations. The challenge we face is operating a highly 
specialized paramilitary organization within the constraints of 
commercial enterprise. There are fundamental differences in 
acceptable operational and accountability methodologies between 
military organizations and security organizations within the 
commercial arena. However, I believe that the commercial 
nuclear industry has made great progress in addressing today's 
threat, ensuring the security and safe operations of our 
nuclear reactors.

           Responses by Eric Wilson to Additional Questions 
                         from Sentor Voinovich

    Question 1. Mr. Wilson, one of the complaints I have heard 
anecdotally is that nuclear plant security guards in general do 
not feel that they are fully accepted as part of the site 
organization. And somehow they feel that they are less than 
equal partners compared to other plant workers, such as 
operators or maintenance workers. I would like to get your 
perspective on this.
    Response. Traditionally, the security organization has not 
been viewed as a critical element for energy production, but 
more as only necessary for regulatory compliance. The events of 
9/11 have highlighted the threat we face and the vital nature 
of security however instituting cultural change is a process, 
one that does not happen over night. As an industry, we feel 
change regarding the value of security has begun. Integrating 
the security function, but also moving toward measuring 
performance on outcomes instead of whether or not the service 
was delivered. is--I believe--the direction which the contract 
security industry must take.

    Question 2. There is a suggestion that the Industry might 
consider having security officers carry an electronic device, 
which senses inactivity and alerts the security command center. 
I think something like that could be a very good, practical 
solution to security officers working the midnight shift. I 
would like to get your thoughts on this suggestion.
    Response. We are currently in the final stages of 
production of such a device called the Advanced Security 
Assistant 100 (ASA-100). The device is equipped with motion 
sensing accelerometers designed to detect periods of 
inactivity, generating local and remote alarms once preset 
thresholds have been reached. The ASA-100 provides for not only 
inactivity monitoring but also other key tracking and 
monitoring functions to include equipment tracking and patrol 
logging. Additionally, this devise can assist in the deployment 
and implementation of the defensive strategy during drills or 
in an actual engagement. I believe that this device will 
provide an essential safeguard to ensure accountability and the 
sustained performance required today.
    Senator Carper. Good. Thank you, Mr. Wilson.
    Mr. Lochbaum.

STATEMENT OF DAVID LOCHBAUM, DIRECTOR, NUCLEAR SAFETY PROJECT, 
                 UNION OF CONCERNED SCIENTISTS

    Mr. Lochbaum. Mr. Chairman, I appreciate this opportunity 
to present our views on this important topic.
    The NRC has taken many steps since 9/11 to improve nuclear 
power plant security. Last year's event at Peach Bottom 
indicate that three additional steps are required.
    The first step corrects inadequate responses to security 
allegations. Last spring, NRC, Exelon and Wackenhut received 
allegations that security guards were sleeping at Peach Bottom. 
Their responses were untimely and inadequate until media 
reports surfaced last fall exposing the same problem. The NRC, 
Exelon and Wackenhut were then able to quickly substantiate 
facts that had been elusive before.
    When workers raise concerns in good faith to Wackenhut, to 
Exelon and then to NRC, Newton's third law, for every action 
there is an equal and opposite reaction, should have triggered 
good faith responses. But instead, all three applied Newton's 
first law, an object at rest tends to stay at rest. Neither 
Wackenhut nor Exelon nor NRC reacted to correct the problems.
    The NRC referred the allegations back to Exelon. Exelon 
investigated and informed the NRC that it did not substantiate 
the allegations. Yet last September, warned that a video of the 
sleeping existed, Exelon was able to quickly substantiate that 
it existed, that it showed security guards sleeping, as well as 
the identity of the videographer.
    The allegations remained exactly the same between Exelon's 
initial denial and its subsequent mea culpa. This is not the 
National Football League's instant replay booth. It should not 
take and did not take indisputable visual evidence for Exelon 
to substantiate the allegations. Hence, when NRC entrusted 
Exelon to investigate the allegations, Exelon violated that 
trust with its shoddy response. The NRC must significantly 
sanction Exelon for that shortfall.
    By the same token, the NRC should not have waited for the 
video either. After the NRC received the allegations last 
March, its inspectors took no steps to investigate them. After 
the NRC received Exelon's response last May, its resident 
inspectors took no steps to verify the response. But when the 
NRC received the same allegations from a reporter last 
September, backed by an alleged video, the agency responded 
vastly differently. Within hours, its resident inspectors at 
Peach Bottom were directed to investigate the charges. The NRC 
dispatched an inspection team to Peach Bottom about a week 
later. The different reaction suggests the NRC is more 
interested in protecting its reputation than the lives of 
American civilians. NRC must not stand for Nielsen Ratings 
Commission.
    The second step restores public communication about 
security. Wackenhut, Exelon and NRC all applied Newton's first 
law in response to the security allegations. The full statement 
of Newton's first law explains why the reactions changed when 
the video surfaced: an object at rest tends to stay at rest, 
unless acted upon by an outside force.
    In August, 2004, the NRC removed virtually all security 
information from its website. The removal created a vacuum that 
is now being filled by rumor, supposition, innuendo and 
occasional facts. For example, after the Peach Bottom story 
broke last fall, the lack of context allowed people to 
extrapolate from that single datapoint to whatever conclusion 
they wanted, from Peach Bottom being an isolated case to it 
being the tip of an iceberg of a total security sham.
    Security information can be discussed without compromising 
national security. Earlier this month, the NRC announced the 
issuance of a ``white'' finding for the sleeping security 
guards at Peach Bottom. Last month, the NRC announced a 
$208,000 fine for security guards intentionally disabling their 
weapons at the Turkey Point nuclear plant. If the NRC can 
communicate about these serious problems, then the NRC can also 
communicate about less serious problems and the lack of 
problems at other nuclear plants.
    Equally important, public communication of this security 
information serves as the outside force needed to put resting 
objects in motion. Plant owners falling short of NRC security 
requirements would be publicly identified, providing ample 
incentive to correct those shortfalls. Today, NRC's refusal to 
report security information enables underperformers to remain 
at rest.
    The third step eliminates the zero tolerance policies. Many 
people have said already today at the hearing that zero 
tolerance policies can do more harm than good. We totally agree 
with that concept. It is clearly wrong for security officers to 
sleep on duty. Being asleep impairs a guard's ability to 
perform the job, but slipping on ice during an outside patrol 
and breaking an arm or coming down with a stomach virus also 
impairs that guard's ability, but those are not grounds for 
immediate termination.
    It could be argued that the zero tolerance policy doesn't 
apply in those cases because those aren't deliberate acts. Yet 
zero tolerance policies applied to sleeping assumes that every 
act of sleeping is an intentional function. That is not true. 
Sometimes people simply fall asleep because they are bored or 
they are fatigued.
    When a security guard falls asleep, the proper response is 
to enter that incident into the plant's corrective action 
program. The corrective action program is required by Federal 
regulation to identify causes of human and equipment 
performance problems and correct them. When the corrective 
action determines that an individual deliberately took steps to 
sleep, then termination is an appropriate reaction. But when 
the corrective action program identifies a number of security 
guards accidentally falling asleep, the appropriate reaction 
might be shorter working hours, more frequent shift rotation, 
and other things to offset the tedium. A zero tolerance policy 
is a one size fits all approach that often fails to correct the 
underlying causes.
    In closing, as Senator Voinovich pointed out, the silver 
lining about these problems is the opportunity to be better 
prepared tomorrow. Adequate nuclear plant security is like 
adequate car insurance: protecting against an event one hopes 
never to encounter. Adequate nuclear power plant security 
requires plant owners and the NRC to provide timely and 
effective responses to security allegations. It did not happen 
last year at Peach Bottom. It must happen the next time.
    The American public has a right to know that the nuclear 
power plants in their backyards have adequate security. The NRC 
needs to restore public communication about security to satisfy 
that right.
    Security guards have a responsibility to perform their jobs 
properly. Security guards must not be held to a higher standard 
than other nuclear plant workers, especially with zero 
tolerance policies that cause more harm than good.
    We thank this Subcommittee for holding this hearing and 
placing a spotlight on this important issue.
    Thank you.
    [The prepared statement of Mr. Lochbaum follows:]



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        Responses by David A. Lochbaum to Additional Questions 
                           from Senator Boxer

    Question 1. The Peach Bottom incident was reported as an 
isolated problem. Are there other ``isolated incidents'' of 
which this Committee should be aware?
    Response. The ``isolated incident'' at the Turkey Point 
nuclear plant in Florida was significantly more serious than 
the ``isolated incident'' at Peach Bottom. Both involved 
security guards conspiring to cover for each other as they 
slept on duty. But the security guards at Turkey Point also 
took steps to sabotage their equipment, such as removing the 
firing pins from weapons. But no video exists, to our 
knowledge, of the antics at Turkey Point so these incidents, 
while far more serious, got far less attention.

    Question 2. Do you think Exelon will provide better 
security than Wackenhut provided?
    Response. No, but I don't think Exelon will provide worse 
security either. Security will be the same regardless of what 
emblem appears on the guards' uniforms because the underlying 
factors remain unchanged. The NRC's Augmented Inspection Team 
report documents that mangers and supervisors for both 
Wackenhut and Exelon heard repeatedly about security guards 
sleeping on duty and did little about it. When the videotapes 
were broadcast, a scapegoat was needed. Wackenhut could not 
fire Exelon, but Exelon could and did fire Wackenhut. This 
measure provides the allusion of remedying the problem without 
addressing the root causes why did Exelon's managers ignore 
repeated warnings about sleeping security guards? Because that 
root cause remains uncorrected, security cannot get better.

    Question 3. Do you agree with Commissioner Jaczko that the 
NRC should take a more active role in investigating allegations 
rather than sending the allegations to the licensee for 
investigation? In your opinion, will the NRC do a better job 
investigating allegations than the licensee?
    Response. Yes, but not necessarily active in the same way 
that Commissioner Jackzo proposes. NRC lacks the resources to 
investigate 100 percent of the allegations it receives. Thus, 
while NRC may very well investigate a higher percentage of 
allegations, it will not investigate all of the allegations. 
When NRC refers allegations back to plant owners for 
investigation, the NRC must become more active in two ways: (1) 
NRC must do a better job monitoring the plant owners' 
investigations to verify that their efforts were thorough and 
their results reasonable, and (2) NRC must sanction plant 
owners who conduct incomplete or shoddy investigations.

        Response by David A. Lochbaum to an Additional Question 
                          from Senator Inhofe

    Question 1. In your testimony, you stated: ``NRC's refusal 
to responsibly report security information enables poor 
performers to remain at rest,'' indicating you disagree with 
the NRC's restrictions on security information that is 
available to the public. Yet the purpose of the hearing was to 
publicly discuss security and guards' attentiveness in detail 
to ensure the proper steps are taken to prevent this situation 
in the future. Wouldn't you agree that any reporting of 
security successes or problems should be subject to 
requirements that protect security information?
    Response. I absolutely agree and appreciate the opportunity 
to clarify our position on this important point. We 
wholeheartedly agree that information about current 
vulnerabilities at nuclear power plants should not be publicly 
available. But information about past problems, now resolved, 
can and should be made public. For example, the NRC's reactor 
oversight process (ROP) provides quarterly reports to the 
public on safety performance and used to provide quarterly 
reports on security performance. By restoring the quarterly 
reports on security performance to the ROP webpage, the many 
plant owners who are getting the job done and achieving solid 
security performance would have all ``green'' results reported. 
When media reports like the one last year on Peach Bottom 
surface, the people living around plants with ``green'' 
security performance results would have little to fear and the 
owners of those facilities would not be guilty by association. 
And plant owners who didn't get the job done in the past would 
have thus past failures publicized, giving them extra incentive 
to get the job done properly.

        Responses by David A. Lochbaum to Additional Questions 
                         from Senator Voinovich

    Question 1. Mr. Lochbaum, one of the complaints I have 
heard anecdotally is that nuclear plant security guards in 
general do not feel that they are fully accepted as part of the 
site organization. And somehow they feel that they are less 
than equal partners compared to other plant workers, such as 
operators or maintenance workers. I would like to get your 
perspective on this.
    Response. My 17 years in the industry is consistent with 
these anecdotes. Although I worked at more than 20 of our 
reactors, I never worked at a site where security was 
integrated into the work force. Security personnel and other 
personnel were there to do their jobs at the same site, but not 
as part of the same overall team. Eric Wilson of Regulated 
Security Solutions and another witness during the hearing 
relayed a related conclusion he reached following his 
examination of how the nuclear industry responded to the Three 
Mile Island accident. That accident revealed weaknesses in 
training of operators and other key workers. In response, the 
nuclear industry significantly upgraded initial and ongoing 
training for these workers. As new issues emerged, like safety 
culture following the Davis-Besse incident, the lessons were 
incorporated into these training platforms. But security 
officers were excluded from this training and no separate 
training program was provided for them. This separation 
manifests itself in some of the safety culture surveys 
conducted at plant sites. For example, in recent years the 
security department scores on the safety culture surveys 
conducted at the South Texas Project (TX) and San Onofre (CA) 
nuclear plants were among the lowest of any group onsite. As a 
minimum, the ongoing training provided to operators and key 
plant workers must be extended to security officers.

    Question 2. There is a suggestion that the industry might 
consider having security officers carry an electronic device 
which senses inactivity and alerts the security command center. 
I think something like that could be a very good, practical 
solution to security officers working the midnight shift. I 
would like to get your thoughts on this suggestion?
    I agree that these electronic devices could be very 
beneficial depending on how they are deployed. If the devices 
are deployed with zero tolerance policies that mean one alert 
back to the security command center results in termination, the 
devices will alienate the security officers. For example, 
operators and other key workers covering shifts are also 
subject to fatigue and occasionally fall asleep at work. The 
security officers may view the devices as further evidence of 
their being held to a different standard when alarming devices 
end their careers while sleeping operators are treated 
differently. If, however, the devices are deployed in a 
constructive way to help security officers perform their vital 
roles more effectively, they can enhance security.
    Senator Carper. And we thank you for your testimony here 
today.
    Mr. Fertel, welcome.

  STATEMENT OF MARVIN FERTEL, SENIOR VICE PRESIDENT AND CHIEF 
           NUCLEAR OFFICER, NUCLEAR ENERGY INSTITUTE

    Mr. Fertel. Thank you, Chairman Carper, Senator Voinovich. 
It is a pleasure to be here and have the opportunity to 
testify.
    My testimony will address three subjects: first, the 
security at our Nation's 65 nuclear power plant sites; the 
actions that the industry has taken in response to the security 
officers inattentiveness incidents; and the use of Wackenhut 
Special Operations as the contractor to support the industry's 
composite adversary force.
    As you know, prior to 9/11, nuclear power plants had to 
meet security requirements required by the NRC, and following 
the September 2001 attacks, NRC increased nuclear facility 
security requirements numerous times and is now in the process 
of codifying additional requirements in rulemakings.
    Since 9/11, the industry has invested more than $2 billion 
in additional security at nuclear power plant sites, and has 
increased the number of security officers by more than 60 
percent to about 8,000. Compared to other commercial 
facilities, nuclear plants start with a clear advantage in the 
area of security. The structures that house reactors and 
critical systems are built to withstand natural events such as 
earthquakes, hurricanes, tornadoes, fires and floods.
    Furthermore, nuclear power plant security is designed with 
concentric perimeters, with increased security at each level. 
Both of you have visited plants and gone through this, and know 
you have physical barriers to protect against unauthorized 
personnel and vehicle intrusion, including truck bombs. These 
security zones are protected by trained and armed professionals 
who use hardened defensive fighting positions located 
throughout the plants, like the BREs that were discussed 
before.
    In the innermost security zones, access to the vital areas 
of our plants is strictly controlled using biometrics and other 
technologies. Critical areas are constantly surveilled and 
monitored, and strict access control is also maintained, with 
industry employees with unescorted access subject to a 
systematic fitness for duty program, a continual behavioral 
observation program, and they must undergo comprehensive 
background checks.
    Every plant also has extensive plans and arrangements with 
State and local law enforcement and emergency response 
entities. A significant security standard mandated by the NRC 
is the so-called design-basis threat. Every site tests its 
security forces against this standard, and the NRC inspects 
against it at mandated force on force exercises. Based upon 
tabletop exercises done at all of our sites, and additional 
simulations done at some sites, we would expect to be 
successful against most credible threats even at levels greater 
than the DBT.
    But at some point, such threats require a more integrated 
response. So since September 11th, DHS, NRC and the industry 
have recognized the importance of coordinating Federal, State 
and local authorities with the industry to best defend against 
such an attack. As a result, a program was established by DHS 
to integrate the response planning around nuclear plant sites. 
This program is called comprehensive reviews and brought 
together the full potential of local, State and Federal 
capabilities. Last year, these comprehensive reviews were 
completed for every site.
    As I just briefly described, the improvements to an already 
robust security program since 9/11 have been pretty broad-based 
and significant, and they continue today.
    Let me turn now to the subject of this hearing, which is 
security officer attentiveness. In an environment of strong 
security and professionalism, we still have had isolated 
incidents of security officer inattentiveness. Every company 
expects the on duty security force to be fully attentive and 
able to respond when called upon. And certainly, that is the 
predominant situation when you look across our sites.
    In 2007, we are aware of 17 incidents of inattentive 
officers at our sites reported to the NRC, and that is out of 
roughly about 16 million manhours of security officers on duty. 
Now, that doesn't make it OK. It shouldn't be happening at all. 
As the Chairman said, you are going for perfection. But we 
should keep in mind, we have 24/7 security offices on guard at 
every site and we have had 12 incidents--not acceptable, but 
not systemic.
    Immediately following the Peach Bottom situation, NEI 
communicated with the industry's chief nuclear officers and 
recommended several immediate actions be taken by each site. 
Consistent with the Chairman's statement about his P3 
experience, one of the things we emphasized at that point was 
the need for leadership at the site and encouraged each chief 
nuclear office to meet with the security organization to 
discuss the importance of offices being attentive to their 
duties, and too, reinforce the organization's expectations and 
standards.
    We also created a task force which is actively engaged 
examining security organization cultural issues, as well as 
additional measures that may be effective for ensuring security 
officer attentiveness. The task force is working to define the 
performance and professional standards needed to promote the 
security culture desired across all of our plants. It is also 
looking at the behavior observation program and how we can 
strengthen it.
    This task force is also looking at the appropriate policy 
for addressing incidents where inattentiveness occurs. 
Fundamentally, I agree with what the Chairman said and what 
David said on zero tolerance. There are cases where zero 
tolerance is appropriate, but it is for egregious behavior, not 
behavior that you shouldn't have, but isn't egregious. We can 
talk about that more later.
    Leadership at every company and every site expects and 
advocates a safety-conscious work environment program which is 
designed to ensure individuals feel free to raise concerns and 
are confident these concerns will be promptly reviewed and 
resolved with the priority appropriate to their significance. 
Security officers, just like other personnel on the site, are 
therefore encouraged and expected to promptly report concerns 
and issues to supervision for resolution. Our expectation is 
that those concerns are addressed effectively by management.
    Let me turn now quickly to the force on force exercises and 
the industry composite adversary force. Prior to September 11, 
NRC evaluated force on force exercises roughly once every 8 
years at each site and there were no NRC requirements for 
annual exercises to be conducted by the site. Also, the pre-9/
11 program did not have specific performance requirements for 
the adversary force that participated in the evaluated 
exercises.
    Since 2004, each plant has been required to conduct force 
on force exercises of security several times each year, with 
each security shift being tested every year, as well as an 
annual exercise. As Commissioner Lyons mentioned, in 2007 we 
completed the first 3-year cycle with NRC-evaluated force on 
force security exercises at every plant. We are now into the 
second cycle.
    The NRC has also established standards for the 
qualification of the adversary force that participates in the 
drills. Given these defined requirements, the industry decided 
to establish a composite adversary force that is skilled in 
offensive tactics and has the training and qualifications to 
meet the NRC standards. The adversary force is used in the 
triennial NRC-evaluated exercises and thus presents a state-of-
the-art challenge to the plants.
    In addition to evaluating the defensive capabilities of the 
plant, the NRC also evaluates the adversary force to ensure a 
robust exercise.
    Senator Carper. Mr. Fertel, I am going to ask you to wrap 
up, if you would.
    Mr. Fertel. Yes, I am.
    Senator Carper. Thank you.
    Mr. Fertel. This is a subject you raised. Let me just touch 
on this.
    The composite adversary force is managed under a contract 
with Wackenhut Special Operations Group. The management team is 
composed of five individuals, all of which have extensive 
special operations experience. The rest of the adversary team 
consists of individuals from power plant sites that are trained 
to meet the NRC standards and perform as a team. While some of 
the team members do come from Wackenhut sites, less than 50 
percent do. We don't believe it matters where they come from 
because they are held to a standard by both the NRC and us that 
it doesn't matter whether they are Wackenhut people or not. 
They have to meet the standard.
    With that, I would be prepared to answer any questions.
    [The prepared statement of Mr. Fertel follows:]



[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    Senator Carper. Thank you very much.
    Senator Voinovich is going to ask the first round of 
questions, and then I will wrap it up. Thank you.
    Senator Voinovich. I would like to put this into 
perspective, and maybe you could shed some light on it.
    First of all, we had a serious matter where somebody slept 
on the job and ultimately somebody took a picture and so on. In 
terms of the overall public, has anybody evaluated on a scale 
of one to ten why terrorists would want to go after a nuclear 
power plant? We have nuclear power plants. We have chemical 
plants. We have all kinds of facilities all over the Country.
    From a threat assessment, and maybe we need to do this in a 
closed session, but if you had a guard sleeping and then 
something did happen, was there enough other stuff in place 
that it could have taken care of it, i.e. the guy wasn't there, 
he was sleeping on the job, the whistle blows, you have to do 
this, and he's not there. Could they have handled it if the guy 
remained sleeping? I am just talking practical things. So that 
is one thing.
    I have been out to see two of our plants, Perry Nuclear and 
Davis-Besse, particularly at Perry Nuclear on the security side 
of this thing. So you have the internal problem of making sure 
that the plant works and things like Davis-Besse don't occur 
about the head of the gizmo that is there and so forth.
    And then it is the security threat. I recall being at a 
Federal facility where they were bragging about how they had 
security in place. I said, get in a car and go up to Perry and 
find out how you really secure a place.
    So I think the public ought to know that in terms of 
security, probably these facilities are more protected than 
anyplace anywhere in the Country, just to put things in 
perspective. I think so often they get the publicity, and I 
have to believe there may be some other things out there that 
are a lot more dangerous in communities that need to be secured 
than what we are talking about in terms of our nuclear 
facilities. So that is to put things in perspective.
    And then you have the outside contractor and the internal 
people. And half of the operations have private people coming 
in and half do it internally. I don't know, Mr. Fertel, whether 
or not you guys have looked at this and said, when they do it 
in-house it is a little better done than if they hire somebody 
from outside to come into the operation. I think, Mr. Crane, in 
your testimony you talked about some kind of cultural 
difference there, people feeling they weren't part of the team. 
I would be interested in your comments on that.
    And last but not least, Mr. Crane, when this thing went 
awry, I would be really interested in how did you go about 
dealing with the situation in terms of the people that were in 
security? I think you have now moved to your own people. OK? I 
would be interested in knowing how do you determine what really 
works in terms of security? What methodology? I am talking 
about a management issue here. For example, I would like to 
ask, do you have quality management in your company? Do you 
know what quality management is?
    Mr. Crane. We have a program similar to that, yes.
    Senator Voinovich. OK. What did you do? What have you done?
    Mr. Crane. Yes, I can start first and go backward on the 
questions and then turn it over.
    Our decision to bring the program in-house and no longer 
have it as an out-sourced service is wrapped around a few 
things. One is being able to have access to select, train and 
continue to develop the managers. We have a very detailed 
management training program where we start off and we do 
behavioral assessments. We look at gaps to standards that we 
want.
    Senator Voinovich. You want to take over the H.R. part of 
this thing?
    Mr. Crane. Not only the HR. That is the first part. Being 
able to select the people. I think the basis of the program is 
the quality of the people and the development of the people, 
then the oversight of the people. The actual mechanism that we 
secure the plant by is set by regulatory standards, design 
standards. We are very well aware of how to operate a security 
force. What we did not have was the security force within our 
programs as far as assessment, development and continued 
nurturing, or deciding if the individuals should be part of the 
team or not. So that is one of our primary goals, and that is 
the focus that brought us to bring the program in-house.
    Senator Voinovich. Are you doing this in all of your 
plants?
    Mr. Crane. We are. We are in the process. Peach Bottom is 
completed and we are in the process by the end of June of this 
year, we will have all the facilities with the guards being 
Exelon employees, the security personnel being Exelon 
employees.
    Senator Voinovich. Now, when you finish with the job, is 
the NRC going to come in and evaluate what you have done?
    Mr. Crane. Yes. They have been evaluating Peach Bottom as 
an ongoing inspection, and we anticipate as they have told us 
that we will continue to get these inspections at our other 
facilities on a regular basis.
    Senator Voinovich. How about you? Are you going to have a 
team in place to go out there and oversee this thing to make 
sure that it is at the standard where you want it to be?
    Mr. Crane. We do. We have a special team, an issues 
response team, that was set up at the beginning of this and 
they will continue on as the change management and oversight 
organization to provide the management support as required.
    Senator Voinovich. Mr. Fertel, is it INPO? I can never 
remember the name of it.
    Mr. Fertel. INPO.
    Senator Voinovich. INPO, yes. Because this happened at this 
place, is INPO going to do anything about it? This shed a bad 
light on the industry. What are you going to do about it? Or is 
that something that you don't touch?
    Mr. Fertel. Actually, NEI is doing stuff. INPO would stay 
on the safety side of the issue, not the security side. They 
will keep looking at safety-security interface.
    Senator Voinovich. So INPO doesn't do security. They do the 
internal operation of the plant to make sure the maintenance is 
there, if things are replaced and so forth.
    Mr. Fertel. Right.
    Senator Voinovich. OK.
    Mr. Fertel. But maybe starting at the top of your 
questions, Senator Voinovich, does the public understand this 
threat, the significance of the threat at Peach? The NRC did do 
a pretty in-depth review of it, and their conclusion was that 
there was no diminishment of their ability to defend the site, 
and they have made that public. Whether the public has read it 
is a whole other story.
    The other thing that the NRC did determine, and this goes 
to a question asked earlier by Senator Carper, was that fatigue 
was not an issue. To be honest, we don't think fatigue is a big 
issue for security officers as much as boredom. We like them to 
be bored, just like we like the operators to be bored, because 
that means there is nothing happening. But we need to do 
something so that when they are bored, they don't get 
inattentive.
    That is another thing. Inattentiveness across our industry, 
and this task force we put together is looking at trying to 
come up with the right standards, is defined pretty broadly. 
Inattentiveness in some companies could be sleeping. In other 
companies, it could be anything from sleeping to actually doing 
something that is not part of the job assignment. Say, I am 
reading a book and I am not supposed to be doing that. So it 
depends upon where you are on that.
    I would say that the public is not fully aware at all, 
Senator Voinovich, of the relative threat. We are told, and 
this is not a safeguards issue, but we are told when we deal 
with law enforcement and the FBI and everybody else is that 
nuclear plants are always on the list, just like the White 
House is probably always on the list. But that from the 
robustness of the security, we are a very hardened target and 
not one that most people and most groups want to take on. But 
we are always on the list and we take the responsibility very 
seriously.
    You asked a question about contractor versus proprietary, 
versus taking it in-house. I think what you heard both Chris 
Crane say what he is trying to do by integrating it into the 
family, and actually what you heard Eric Wilson say about his 
new approach, you want security to be integral to everything at 
the site. It is easier if it is in-house because it is in-
house, but it doesn't have to in-house to be integral. It is 
just a little harder. They should use the same systems. They 
should have the same culture. They should know that they are 
part of the same shift as the operations people. And they 
should feel that they are treated with the same respect as 
operators, maintenance people and anybody else on that site.
    So I have a bias where I think in-house might be better, 
but I don't think it is the only way you can do it.
    Mr. Wilson. Senator Voinovich, if I could speak to your 
questions.
    Again, I agree with Mr. Fertel and Mr. Crane on the 
management piece and the integration and why Exelon looked to 
go in-house. Because as I talked about in my written testimony, 
as well as my oral testimony, you will see that a little over a 
year ago, from a contract security perspective, we found that 
to be one of the three main areas that needed to be addressed 
was that closer relationship operationally with the site. So we 
are in agreement.
    Obviously, Exelon will make the right business decisions 
for them, but we would disagree obviously that in-house is 
better than contract or vice versa. We think that we all need 
to do the right thing at the end of the day.
    One thing I did want to mention to you that you brought up 
at first, and I think is very important from a public 
perception standpoint, is I happen to have had the opportunity 
of doing target analysis on targets in critical infrastructure 
in this Country and others in my military career. I can tell 
you very comfortably that while we see nuclear being targets, 
it is not because they are vulnerable, OK? The only reason why 
they would be a target, in my mind, is the fact that because 
they are a nuclear facility, because I don't see success as it 
relates to it, nor do I see them as targets of opportunity, not 
in this Country. I just got back from the Middle East. This 
country itself and its nuclear facilities are very secure. I 
don't think there is any question of that.
    Senator Voinovich. Thank you.
    Senator Carper. Senator Voinovich and I are supposed to be 
in another place right now. If you feel like you want to slip 
out, I will join you just as soon as we wrap up here. Thanks so 
much for being my partner in all this, and letting me be yours.
    I want to go back to the issue of zero tolerance just for a 
moment, because I think that really is critical as to why there 
was this collusion and, if you will, a coverup and reluctance 
of people to stand up and say this is wrong and be public about 
it.
    I understand, Mr. Wilson, that Wackenhut had a zero 
tolerance policy. I agree with Mr. Lochbaum, there are some 
things you want to have a zero tolerance policy about. There 
are others that maybe it is not appropriate.
    Let me just ask you, do you all still have a zero tolerance 
policy? Did you ever have a zero tolerance policy? And how do 
you think it is appropriate or inappropriate in this instance?
    Mr. Wilson. Well, I think again the intent of today is to 
learn from the experiences that we had.
    Senator Carper. That is what we are trying to do here.
    Mr. Wilson. Yes, and I agree with that. And I agree with 
Mr. Lochbaum. We have talked on prior occasions. I have also 
talked to the NRC. We do have a zero tolerance policy, and I 
think that is a mistake because it is not conducive to wanting 
to bring forth concerns as far as inattentiveness goes. I think 
that is something we need to look at. I think it is something 
we need to change.
    I have been in discussion with the NRC on that. I will 
continue those discussions at least as it concerns regulated 
security solutions and Wackenhut and the sites that we provide 
security for. We will continue those discussions with our 
clients at those sites, too. But I am in agreement that we have 
to change it or you will never see people wanting to bring 
forth an issue. It can't be black and white. I think in this 
regulatory space, this is an area where we can't be. We need to 
create a different culture.
    Senator Carper. All right. Thank you.
    Mr. Lochbaum, in your testimony you stated that Exelon's 
firing, well, firing may be the wrong word, but discontinued 
relationship with Wackenhut in response to the video of 
sleeping guards, I think you said misses the mark. What do you 
believe would have been a more appropriate response? Do you 
believe that the safety culture at Peach Bottom may be the root 
of the problem with some of the security personnel there?
    Mr. Lochbaum. Well, the video rendered the status quo 
untenable. If Exelon had been using in-house guard, they would 
have had to bring in security professional like Wackenhut 
because they couldn't continue the status quo once the video 
aired. So there had to be a change, whatever it was, flipped.
    And that really wasn't the underlying problem. It didn't 
matter what hats or shoulder emblems were on the jackets. That 
had little to do with it. At Peach Bottom, conditions existed 
there where security guards felt that their conditions weren't 
cared for. They were put in the ready room. The problem had 
been raised. They had been promised fixes for many years. So 
they got to the point where they reacted out of frustration. 
That was the equal force. They were treated badly, so they 
responded in kind, badly. That was the underlying cause. 
Changing the uniform doesn't fix that frustration.
    Exelon since then has fixed some of those underlying causes 
that forced the guards into that improper response. But the 
right thing to do was figure out what the causes were that led 
the guards to feel that way and address those, not giving them 
new uniforms.
    Senator Carper. I would just say, Mr. Crane, when we 
visited your facility at Peach Bottom, and I might say Exelon 
has a great reputation throughout the industry. You guys aren't 
the black hats, you are the white hats, or one of the white 
hats. We appreciate very much the work your company did at 
Salem and Hope Creek, taking a couple of facilities that 
frankly were nothing to be proud of in terms of their safety 
record, and bringing them a long, long way. So I just feel 
compelled to acknowledge that.
    Maybe one more, if I could, for Mr. Fertel. Let me ask you 
the same question I posed to the commissioners a little bit 
earlier, one of the questions. The NRC has discussed efforts 
needed to integrate security forces into the licensee's 
organization. I understand that the institute that you are 
representing houses and hires the composite adversary force 
used in force on force exercises.
    If it is appropriate to integrate security forces in the 
plant's operation, similarly shouldn't it be appropriate to 
integrate the composite adversary force into the Commission's 
operation?
    Mr. Fertel. Let me explain why we think----
    Senator Carper. I know you spoke on this earlier, but I 
want you to come back to again.
    Mr. Fertel. Yes, fine, Senator. I think it is an important 
subject.
    There were a couple of motivations when we first decided to 
go forth with the composite adversary force. One was lessons 
learned from the experience on force on force in the past. When 
the sites would exercise force on force training and drills for 
themselves, which before 9/11 wasn't that often, you got smart 
and you learned that the people who were now attacking were 
officers that most of the time defended. So there is a real 
difference if I spent most of my life defending, and then once 
or twice a year I am asked to become an attacker.
    What we found was, we needed to figure out how to get 
better adversaries for ourselves. Put aside the NRC for a 
second.
    Senator Carper. In my business, I would like to have better 
adversaries, too.
    [Laughter.]
    Senator Carper. Not more successful, but I have had good 
ones.
    Mr. Fertel. We should take some lessons.
    Senator Carper. I have had good ones.
    Mr. Fertel. But what we decided was that if we put together 
the composite adversary force that met the NRC standards, and 
we did it by having, as you pointed out, individuals from our 
sites running through there on an 18 to 36 month period. When 
we bring them back to the sites, they become trainers and 
leaders for the adversary forces at the site. So we saw a 
benefit to us by going that way.
    To be honest, we understood the perception issue. We didn't 
have our heads in the sand. But we were saying, look, if you 
are meeting the standards that NRC has, and they have set them. 
If you didn't have them, it would be hard, but you have them. 
Two, they are evaluating the performance of that particular 
group. So if they actually took it in-house, it would be very 
hard for them to evaluate it.
    I could say there is a perception of conflict if they took 
it in-house, potentially, but we were looking at an effective 
force that would give us value at the sites. Wackenhut manages 
it, but we have five individuals that manage it that hardly 
ever see Wackenhut. I think your staff may have met with a 
couple of them. These are individuals from Delta Force. They 
are all special ops. Actually, Eric was one of the first 
leaders of it.
    The one thing all these people want to do is win. So when 
they go out and try and do this, their goal is to win.
    The other thing in all honesty for the officers at the 
sites, the officers at the sites are very professional. There 
are people, and maybe they are mistreated as David said, and I 
am sure Exelon and other sites will fix that, but they are very 
professional. They want to do their job right. The last thing 
they want to do is game a force on force exercise and 
potentially not identify a vulnerability that could get them or 
their colleagues killed if somebody actually did show up with 
real guns and not lasers.
    So we think it works real well. We understand the 
perception problem, but this is one of those where if we 
changed it, and I heard what Commissioner Jaczko said, if we 
changed this for perception, we would actually be diminishing, 
in my opinion, the strength of a very good program that not 
only helps in force on force, but helps the sites.
    Senator Carper. OK. Good.
    A concluding word, Mr. Lochbaum?
    Mr. Lochbaum. I just wanted to add to what Marv said. One 
of our concerns if the NRC took over that function, it would 
eliminate the conflict of interest perception, but if you look 
at how the NRC ensures the safety of the plant. The NRC doesn't 
run the test of the diesel generators. They don't run the test 
of the safety systems. They ensure that the plant workers do 
that right to the standards and regulations that the NRC has, 
but they don't run the safety tests. They make sure it is done 
right. Likewise, we think the NRC's role is to ensure that the 
security testing is done right.
    To address the perception issue, Commissioner Lyons on the 
earlier panel said that Wackenhut's composite adversary force 
is identifying problems. That information is generally not 
publicly known. I didn't know that until I heard Commissioner 
Lyons say it. If they provided that information to the public, 
not necessarily that Plant X did bad, but just overall, that 
would help the public see that there is not a perception. And I 
think that is the way to address the problem, more so than 
putting NRC hats on the fellows.
    Senator Carper. Good. I think that is an important point 
and not a bad one to conclude on.
    Before you all pack it up and head out, I will just mention 
a couple of things in closing.
    One of those is going back to what we observed at Peach 
Bottom and the conversations we had with some of the security 
guards there, who I think used to be part of your force and now 
are part of the team at Exelon. They indicated the ready room 
where they went when they weren't up in the towers or on some 
other rotational duties. They indicated that the room was warm; 
that there weren't a lot of activities to keep them alert. I 
would suggest as we go forward that I think we need to consider 
the issues of fatigue. But just as important, we need to 
consider the kind of environment, temperature, other activities 
that are available for the guards when they are not on specific 
duty assignments to have to do to stay sharp.
    When I was in my old job as a naval flight officer, in my 
squadron we would have FE and I might say, Mr. Wilson, thank 
you for your service to our Country in another capacity FE but 
we had ready alert crews. In our job, you had to be ready. When 
the balloon goes up, you have to go find Soviet nuclear subs 
and you have to be ready to go in 30 or 45 minutes. We would 
always have a ready alert crew ready to go.
    Our ready alert crews would usually pre-flight around five 
or six in the morning and take over around eight. By noon, we 
all had our primary jobs on the ground, in addition to our jobs 
in the plane. Around noon, you had to knock off and go to the 
ready alert room and go to bed or sleep, crew rest. The idea 
there was quite the opposite of what we have in the ready room 
here in this instance.
    But the reason why this is so important, sometimes the bad 
guys trying to come in and take over a facility may not be the 
composite adversary force. It will be the really bad guys. And 
we need to have whoever is in that ready room ready to head out 
the door and to grab their weapon and to be effective like 
right now. So it is a different kind of State of readiness.
    I know read alert, because we stayed on duty for 24 hours. 
These guys don't. They stay on eight, nine, or 10 hours, and 
they are on their way home. So there is just a difference here.
    Let me close, if I may say, I think this has been a most 
valuable hearing. Some of the hearings that I have been 
privileged to attend or preside over, they were of help, but 
maybe not as much as this one, not just in terms of what we 
have learned, but just in terms of the important lesson that we 
send out across the Country, the reminder that we send across 
the Country to folks that are running these important 104 
facilities.
    I liked one part of your testimony, Mr. Lochbaum, 
especially. It reminded me of my old physics lessons. I am 
talking about Newton's first law: an object at rest tends to 
remain at rest. And then you came back and added on the caveat: 
unless acted upon by an outside force.
    This Subcommittee is one of those outside forces. The 
Congress is one of those outside forces. It is important that 
we keep that in mind and know that when we see an object that 
is at rest that ought not to be at rest, that we ought to be 
there to make sure that we get some action. My hope is by 
today's hearing, we will not only have put a spotlight on what 
happened, what went wrong at Exelon, both at Peach Bottom not 
only for Exelon and for Wackenhut, and Wackenhut's successor, 
but also for the NRC, especially for the NRC and a reminder for 
them to be vigilant.
    I will close with one of the things I said to the employees 
that I spoke with and we met with when we were there. I said 
there is more for the employees at Peach Bottom at stake than 
just their own safety. There is more at stake than just the 
safety of the folks who live in the community around Peach 
Bottom. There is a whole lot at stake for our Country.
    We have this huge and growing reliance on foreign oil. Over 
60 percent of our oil now is imported and a lot of it comes 
from people who don't like us too much. I am convinced they 
take our money to hurt us. People sometimes say to me, well, 
why can a nuclear power plant and greater reliance on nuclear 
power, how can that help reduce our reliance on foreign oil?
    I will just say two words: Chevrolet Volt. I went to the 
Detroit Auto Show, the North American Auto Show a year ago last 
January, one of the coolest cars, neatest cars I saw was the 
flex-fuel plug-in hybrid Chevrolet Volt, which hopefully will 
be on the roads of this Country in the year 2010. It is a 
vehicle you plug it in at your garage, you plug in where you 
work, go leave the next day and go 40 miles, if we can develop 
a battery to do that, on a charge. And use the auxiliary power 
to recharge the battery so you can go further than the 40 
miles.
    But we need clean energy that nuclear can provide to help 
provide the electricity for whether it is a Chevrolet Volt or 
other plug-in hybrids that will follow. So the potential to 
reduce our reliance on foreign oil through ample safe nuclear 
energy is very substantial.
    The other thing is, in my State and States like Maryland 
and New Jersey and others in the mid-Atlantic States, we live 
at the end of the tailpipe for the rest of the Country in terms 
of air pollution, air emissions. We have in our region very 
high levels of child asthma and we have a lot of other problems 
with breathing disorders. That is unacceptable. One of the ways 
we can help reduce that problem, address that problem is by 
figuring out how to introduce a new generation of nuclear power 
plants into our Country, operate them safely, and make sure 
that ones that have been around for a while continue to operate 
safely, too.
    So there is a lot riding on this, a lot for our Country.
    You have been generous with your time. We appreciate the 
preparation that you made in coming here today and for the time 
you spent with us today. We will be sending you some questions 
to followup and we ask that you respond promptly.
    Again, we thank you, and with that, this hearing is 
adjourned.
    Thanks so much.
    [Whereupon, at 12:40 p.m. the committee was adjourned.]
  

                                  
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