[Federal Register Volume 65, Number 90 (Tuesday, May 9, 2000)]
[Proposed Rules]
[Pages 26772-26776]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-11535]


 ========================================================================
 Proposed Rules
                                                 Federal Register
 ________________________________________________________________________
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
 
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 

  Federal Register / Vol. 65, No. 90 / Tuesday, May 9, 2000 / Proposed 
Rules  

[[Page 26772]]



NUCLEAR REGULATORY COMMISSION

10 CFR Chapter I


Revised High-Level Guidelines for Performance-Based Activities

AGENCY: Nuclear Regulatory Commission.

ACTION: Request for comments.

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SUMMARY: The Nuclear Regulatory Commission (NRC) is requesting public 
comment on its proposed revised high-level guidelines for developing a 
more performance-based regulatory framework. In addition, a process is 
proposed for implementing these guidelines. An on-line public workshop 
will be held to discuss the revisions and the proposed process.

DATES: The comment period expires June 23, 2000. Comments received 
after this date will be considered if it is practical to do so, but the 
Commission is able to assure consideration only for comments received 
on or before this date. Our preference is for members of the public to 
use the on-line workshop on June 8, 2000 as the medium for providing 
comments.

ADDRESSES: Written comments may be sent to: Secretary, U.S. Nuclear 
Regulatory Commission, Washington, DC 20555-0001, Attention: 
Rulemakings and Adjudications Staff. Hand deliver comments to 11555 
Rockville Pike, Rockville, MD, between 7:30 a.m. and 4:15 p.m. on 
Federal workdays.

FOR FURTHER INFORMATION CONTACT: N. Prasad Kadambi, (301) 415-5896, 
Internet: [email protected] of the Office of Nuclear Regulatory Research, 
U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001.

SUPPLEMENTARY INFORMATION:

1. Background
2. On-Line Public Workshop
3. NRC Staff Response to Public Comments
4. Revised High-Level Guidelines
5. Implementation of Revised Guidelines

1. Background

    In the Staff Requirements Memorandum (SRM) to SECY-99-176, ``Plans 
for Pursuing Performance-Based Initiatives,'' issued on September 13, 
1999, the Commission directed the staff to develop high-level 
guidelines to identify and assess the viability of candidate 
performance-based activities. In response, the staff developed proposed 
guidelines which were published in the Federal Register on January 24, 
2000 (65 FR 3615). Comments from stakeholders were discussed at a 
public workshop held on March 1, 2000, and also obtained through the 
submission of letters. This FRN addresses the staff's response to those 
comments.

2. On-Line Public Workshop

    The NRC will hold an on-line public workshop on June 8, 2000, for 
the purpose of soliciting stakeholder reaction to the staff's response 
to comments offered relative to the high level guidelines published in 
65 FR 3615 and the resulting changes to the guidelines. In addition, 
this workshop is being offered to provide a second opportunity for 
comment from members of the public who were unable to attend the first 
workshop held on March 1, 2000.
    This workshop will be conducted over the internet. Stakeholders 
will be able to log onto the NRC's ``Rulemaking Forum'' website and 
offer comments at any time but preferably on June 8, 2000. The concept 
includes interaction with cognizant staff over the period of the 
workshop. All relevant documents, including comments submitted 
electronically by others, will be available at this site. In 
recognition of the different time zones where stakeholders may be 
located, electronic comments submitted after normal NRC business hours 
will be posted on June 9, 2000. Effective June 1, 2000, the public is 
invited to check the NRC's website at: http://ruleforum.llnl.gov/   
cgi-bin/rulemake?source=PBA_RFC to obtain detailed instructions on how 
to participate in the on-line workshop.
    Because some members of the public may not have ready access to the 
internet, an alternate method of communication will also be available 
during normal business hours on June 8, 2000. Toll free calls can be 
made to 1-800-368-5642. Callers may request Dr. N. Prasad Kadambi at 
415-5896, or Dr. Sidney Feld at 415-6193 to take note of their 
comments.

3. NRC Staff Response to Public Comments

    The Federal Register Notice (FRN), 65 FR 3615 on January 24, 2000, 
requested comments on the proposed high-level guidelines with 
particular interest in a set of specific questions. Comments were 
provided at the March 1, 2000 workshop and in writing. The workshop was 
conducted as a facilitated discussion among stakeholders representing a 
wide variety of interests, including NRC staff representatives from 
various program offices. A transcription of the workshop is available 
on the internet under the ``Meeting Transcripts'' link in the NRC 
external website.
    In the January 24, 2000 FRN, the staff specifically requested 
comments on a number of key questions concerning the proposed 
guidelines. The NRC's response to comments has been structured within 
the framework of the questions published in the January FRN. Comments 
not associated directly with any of the questions are shown under the 
heading ``Other Comments'.
    The NRC's response to the comments and any indication as to how the 
guidelines have changed in response to the comments follows:

A. Clarity and Specificity of the Guidelines

    1. Are the proposed guidelines appropriate and clear?
    Diverse opinions were expressed regarding appropriateness and 
clarity of the guidelines with a strong indication that those opposed 
to the performance-based approach provided unfavorable responses and 
those supporting the approach provided favorable responses. Because the 
Commission has directed that performance-based initiatives be pursued, 
no revisions have been made in the main guidelines themselves. 
Revisions involving the amplifying language have been incorporated, as 
noted below.
    2. Are there additional guidelines that would improve clarity and 
specificity?
    One comment proposed a guideline to increase safety and another 
comment proposed a guideline to prevent incentives to ``perverse'' 
outcomes. As discussed below, a framework and process to increase 
safety by adding to

[[Page 26773]]

regulatory requirements (subject to the Backfit Rule) exists and it 
would not be efficient to duplicate this through additional guidelines. 
No changes were made in the main guidelines because safety and 
beneficial outcomes are generally desirable goals which form parts of 
normal staff considerations. However, the amplifying guidelines under 
``Maintain Safety'' have been modified to emphasize that safety 
considerations will play the primary role in NRC's assessments. Since 
the Commission addressed the matter of encouraging and rewarding 
improved outcomes in the White Paper (SRM to SECY-98-144, ``White Paper 
on Risk-Informed and Performance-Based Regulation'') an amplifying 
guideline to this effect has been added. This amplifying guideline 
under overall net benefit generated a comment indicating a 
misunderstanding that cost would be given a greater emphasis than 
safety. A revision has been made regarding the considerations related 
to a simplified net benefit test.
    3. How does the ``high-level'' nature of the guidelines affect the 
clarity and specificity of the guidelines?
    The comments provided did not indicate any need to change any of 
the guidelines due to this factor. One commenter specifically endorsed 
the ``high-level'' approach to the guidelines, while also suggesting a 
graded approach incorporating a minimum acceptable risk. The staff 
interpreted ``minimum acceptable risk'' to mean a level of risk 
consistent with adequate protection considerations. The NRC agrees that 
a graded approach is appropriate for regulatory changes above and 
beyond adequate protection. The staff maintains that the guidelines, as 
currently formulated, allow for this; thus, no changes were made to 
address this comment.

B. Implementation of the Guidelines

    1. What guidelines, if any, are mandatory for an activity to 
qualify as a performance-based initiative?
    No mandatory guidelines were identified.
    2. What is the best way to implement these guidelines?
    An issue of considerable interest was whether a performance-based 
approach should be voluntary or not. Certain commenters believed that 
voluntary changes negatively affect the NRC's inspection and 
enforcement role whereas others maintained that changes must be 
voluntary to ensure flexibility on the part of licensees. It is 
anticipated that voluntary implementation will often be proposed, and 
where mandatory implementation is proposed, such a change would be 
subject to the Backfit Rule.
    3. How should the Backfit Rule apply to the implementation of 
performance-based approaches?
    Most commenters indicated that reliance on a performance-based 
approach would have no bearing on whether or not the Backfit Rule 
applied. The NRC concurs that increased reliance on a performance-based 
approach poses no unique considerations relative to the Backfit Rule. 
One commenter expressed the view that the Backfit Rule should apply to 
reductions in regulatory burden. This comment goes well beyond the 
scope of these guidelines as currently envisaged.
    4. Should these guidelines be applied to all types of activity, 
e.g. should they be applied to petitions for rulemaking?
    To the extent that commenters favored application of the 
guidelines, they also supported application to all activities directed 
at improving the effectiveness of regulations. However, the staff 
maintains that if the activity does not possess the necessary 
attributes to support identification as a performance-based approach, 
it cannot be considered a candidate. It is in this context that one 
commenter acknowledged that it may not be appropriate for some 
regulations, such as the Fitness for Duty Rule. It should be noted that 
the guidelines would be applied to NRC's determinations in responding 
to and resolving petitions for rulemaking.
    5. Should these guidelines only be applied to new regulatory 
initiatives?
    Although some comments preferred widespread implementation, NRC 
currently plans to only implement the guidelines for new initiatives 
primarily because of NRC resource constraints.
    6. Will these guidelines be effective in determining whether we can 
make a regulatory initiative more performance-based?
    In general, to the extent that any comments were offered in this 
regard, the response was in the affirmative.

C. Establishment of Objective Performance Criteria

    1. In moving to performance-based requirements, should the current 
level of conservatism be maintained or should introduction of more 
realism be attempted?
    Commenters expressed the view that the appropriate level of 
conservatism depends on the analysis methodology and the applicable 
assumptions. Defense-in-depth and uncertainty factors also need to be 
considered. One commenter stated that it should not be assumed that the 
level of defense-in-depth remain the same in a performance-based 
approach. In response to these comments, amplifying guidelines have 
been added under the main guideline of ``Increase effectiveness, 
efficiency and realism of the NRC activities and decision-making''.
    2. What level of conservatism (safety margin) needs to be built 
into a performance criterion to avoid facing an immediate safety 
concern if the criterion is not met?
    The comments and response from (C.1) above are also applicable 
here.
    3. Recognizing that performance criteria can be set at different 
levels in a hierarchy (e.g., component, train, system, release, dose), 
on what basis is an appropriate level in the hierarchy selected for 
setting performance-based requirements, and what is the appropriate 
level of conservatism for each tier in the hierarchy?
    Oral and written comments expressed the view that performance 
criteria are best set at the function or system level. Some amplifying 
guidelines have been added under the main guideline of ``Increase 
effectiveness, efficiency and realism of the NRC activities and 
decision-making''.
    4. Who would be responsible for proposing and justifying the 
acceptance limits and adequacy of objective criteria?
    A commenter suggested that the proponent of a change should bear 
the responsibility for justifying the criteria and the adequacy of 
acceptance limits. Some amplifying guidelines have been added under the 
main guideline of ``The performance-based approach can be incorporated 
into the regulatory framework''.
    5. What are examples of performance-based objectives that are not 
amenable to risk analyses such as PRA or Integrated Safety Assessment?
    Examples offered were cross-cutting issues, including fitness-for-
duty, safety conscious work environment and management effectiveness. 
No changes were made to the guidelines in response to these comments.
    6. In the context of risk-informed regulation, to what extent 
should performance criteria account for potential risk from beyond-
design-basis accidents (i.e., severe accidents)?
    A commenter stated that risk-informed regulation reaches beyond 
design basis events by its nature. Performance criteria would not 
normally go beyond the design basis. Exceptions, if they occur, are 
most likely if the design is found not to provide the expected safety 
margin. If exceptions arise, the generic issue

[[Page 26774]]

process followed by the staff is capable of addressing the special 
circumstances. As currently constructed, these considerations can be 
readily handled in the guidelines, and no changes in the guidelines 
were made.

D. Identification and Use of Measurable (or Calculable) Parameters

    1. How and by whom are performance parameters to be determined?
    Comments were presented expressing concern that the NRC would be 
entirely dependent on licensees' own reports regarding performance. One 
commenter has stated that information collection at nuclear facilities 
may require changes to better measure performance. In the NRC's view, 
performance parameters are typically determined jointly by NRC and 
licensees, with the NRC having final authority in the determination. 
Further, the NRC would always maintain vigilance over performance 
observations. If information collection requirements need to be changed 
to implement a performance-based approach, such proposals will be 
addressed in the context of the specific regulatory requirement under 
consideration. No changes were made in the guidelines on account of 
this consideration.
    2. How do you decide what a relevant performance parameter is?
    Some commenters expressed reservations with the use of performance 
parameters such as core damage frequency as a calculable parameter. 
Other comments cautioned against drawing broader conclusions (such as 
overall level of safety or lack thereof) from performance measures than 
may be justified. As these considerations are context specific, and the 
merits of specific performance parameters are explicitly considered by 
the guidelines, no changes are proposed in the guidelines.
    3. How much uncertainty can be tolerated in the measurable or 
calculated parameters?
    Comments indicate a strong connection between consideration of 
uncertainty and the level of conservatism in establishing the 
performance parameters and acceptance criteria. Changes made in 
response to (C.1) above are also applicable to this issue.

E. Pilot Projects

    1. Would undertaking pilot projects in the reactor, materials, and 
waste arenas provide beneficial experience before finalizing the 
guidelines?
    Some commenters stated that pilot projects would be useful, and 
others stated that they were not needed. One commenter suggested that 
it was important to learn appropriate lessons from implementation of 
the maintenance rule. Another commented that Option B of 10 CFR 50, 
Appendix J has already appropriately demonstrated the favorable results 
from a performance-based regulation. The staff plans to consider an 
exercise to apply the guidelines to specific regulations as part of the 
implementation process.
    2. What should be the relationship between any such pilot projects 
and those being implemented to risk-inform the regulations?
    Commenters generally stated that the ongoing pilot projects related 
to risk-informing the regulations need not be perturbed by including 
consideration of the guidelines, but appropriate coordination should be 
maintained. Any screening of regulations should be done one time as 
opposed to subjecting each regulation to various screenings at 
different times under different processes. The staff proposes to 
integrate the interfaces between performance-based and risk-informed 
activities so as to help ensure a more integrated approach and avoid 
duplication.

F. Other Comments

    1. Eliminate all high-level guidelines used to evaluate 
opportunities for regulatory improvement (II. Guidelines to Assess 
Performance-Based Regulatory Improvement):
    One commenter at the public workshop suggested that the set of 
guidelines to assess performance-based regulatory improvement be 
eliminated. The staff continues to believe that this set of guidelines 
constitutes an integral part of a structure and logic to consider 
explicitly the values important to any regulatory improvement program. 
No changes were made based on this comment.
    2. Inclusion of the Advisory Committee on Medical Uses of Isotopes 
(ACMUI):
    One commenter at the public workshop suggested that ACMUI should be 
included among the advisory committees which would have an opportunity 
to review the high-level guidelines. ACMUI has been included with ACRS 
and ACNW as committees whose feedback will be sought before the 
guidelines are submitted to the Commission.
    3. Inclusion of perspective from the NRC regions in the work of the 
Performance-Based Regulations Working Group (PBRWG):
    One commenter at the public workshop suggested that a 
representative from the NRC regional offices should be included in the 
PBRWG, which will play an instrumental role in developing and applying 
the guidelines. The NRC staff accepted the merit of this suggestion and 
regional representation has been added to the PBRWG.
    4. Inspection and enforcement considerations:
    An NRC staff member provided a comment that inspection and 
enforcement aspects should be front-end considerations. Another 
commenter has suggested that performance above a threshold should 
result in reduced NRC scrutiny. An amplifying guideline has been added 
under the guideline ``The performance-based approach can be 
incorporated into the regulatory framework'' to address this comment.
    5. Consideration of a significantly different regulatory paradigm:
    One commenter offered suggestions to significantly modify the 
regulatory framework so that any changes undertaken by the NRC would 
have as a pre-requisite an improvement in the level of safety. The 
proposals presented would have wide ranging impacts, and consideration 
of performance-based initiatives would be only tangentially related to 
most of them. No specific changes to the guidelines were made in 
consideration of these comments.

4. Revised High-Level Guidelines

    The following proposed revised guidelines are to be applied in the 
reactor, materials, and waste arenas. The nature of the regulated 
activity would determine which guidelines apply and the extent of the 
application.

I. Guidelines To Assess Viability

    The NRC will apply the following guidelines (which are based on the 
four attributes in the White Paper) to assess whether a more 
performance-based approach is viable for any given new regulatory 
initiative. This assessment would be applied on a case-by-case basis 
and would be based on an integrated consideration of the individual 
guidelines. The guidelines are listed below:
    A. Measurable (or calculable) parameters to monitor acceptable 
plant and licensee performance exist or can be developed.
    a. Directly measured parameter related to safety objective is 
preferred;
    b. A calculated parameter may also be acceptable; if it is related 
to the safety objective of the regulatory activity.
    c. Parameters which licensees can readily access, or are currently 
accessing, in real time are preferred.

[[Page 26775]]

    d. Parameters monitored periodically to address postulated or 
design basis conditions may also be acceptable.
    B. Objective criteria to assess performance exist or can be 
developed.
    a. Objective criteria are established based on risk insights, 
deterministic analyses and/or performance history.
    C. Licensees would have flexibility in meeting the established 
performance criteria when a performance-based approach is adopted.
    a. Programs and processes used to achieve the established 
performance criteria would be at the licensee's discretion.
    b. A consideration in incorporating flexibility to meet established 
performance criteria will be to encourage and reward improved outcomes.
    D. A framework exists or can be developed such that performance 
criteria, if not met, will not result in an immediate safety concern.
    a. A sufficient safety margin exists.
    b. Time is available for taking corrective action to avoid the 
safety concern.
    c. The licensee is capable of detecting and correcting performance 
degradation.

II. Guidelines To Assess Performance-Based Regulatory Improvement

    If a more performance-based approach is deemed to be viable based 
on the guidelines in (I. Guidelines to Assess Viability) above, then 
the regulatory activity would be evaluated against the following set of 
guidelines to determine whether, on balance, after an integrated 
consideration of these guidelines, there are opportunities for 
regulatory improvement:
    A. Maintain safety, protect the environment and the common defense 
and security.
    a. Safety considerations play a primary role in assessing any 
improvement arising from the use of performance-based approaches.
    b. The level of conservatism and uncertainty in the supporting 
analyses would be assessed to ensure adequate safety margins.
    B. Increase public confidence.
    a. An assessment would be made to determine if the emphasis on 
results and objective criteria (characteristics of a performance-based 
approach) can increase public confidence.
    C. Increase effectiveness, efficiency and realism of the NRC 
activities and decision-making.
    a. An assessment would be made of the level of conservatism 
existing in the currently applicable regulatory requirements 
considering analysis methodology and the applicable assumptions. Any 
proposal to increase or decrease conservatism would take into account 
uncertainty factors and defense-in-depth relative to the scenario under 
consideration.
    b. An assessment would be made of the performance criteria and the 
level in the performance hierarchy where they have been set. In 
general, performance criteria should be set at a level commensurate 
with the function being performed. In most cases, performance criteria 
would be expected to be set at the system level or higher.
    D. Reduce unnecessary regulatory burden.
    E. A reasonable test shows an overall net benefit results from 
moving to a performance-based approach.
    a. A reasonable test would begin with a qualitative approach to 
evaluate whether there is merit in changing the existing regulatory 
framework. When this question is approached from the perspective of 
existing practices in a mature industry, stakeholder support for change 
may need to be obtained.
    b. Unless imposition of a safety improvement or other societal 
outcome is contemplated, expending resources for a change in regulatory 
practice would be justified in most cases only if NRC or licensee 
operations benefit from such a change. The primary source of initial 
information and feedback regarding potential benefits to licensees 
would be the licensees themselves.
    c. A simplified definition of the overall net benefit (such as net 
reduction in worker radiation exposure) may be appropriate for weighing 
the immediate implications of a proposed change.
    F. The performance-based approach can be incorporated into the 
regulatory framework.
    a. The regulatory framework may include the regulation in the Code 
of Federal Regulations, the associated Regulatory Guide, NUREG, 
Standard Review Plan, Technical Specification, and/or inspection 
guidance.
    b. A feasible performance-based approach would be one which can be 
directed specifically at changing one, some, or all of these 
components.
    c. The proponent of the change to the components of the regulatory 
framework would have the responsibility to provide sufficient 
justification for the proposed change; all stakeholders would have the 
opportunity to provide feedback on the proposal, typically in a public 
meeting.
    d. Inspection and enforcement considerations would be addressed 
during the formulation of regulatory changes rather than afterwards. 
Such considerations could include reduced NRC scrutiny if performance 
so warrants.
    G. The performance-based approach would accommodate new technology.
    a. The incentive to consider a performance-based approach may arise 
from development of new technologies as well as difficulty stemming 
from technological changes in finding spare components and parts.
    b. Advanced technologies may provide more economical solutions to a 
regulatory issue, justifying consideration of a performance-based 
approach.

III. Guidelines To Assure Consistency With Other Regulatory Principles

    A. A proposed change to a more performance-based approach is 
consistent and coherent with other overriding goals, principles and 
approaches involving the NRC's regulatory process.
    a. The main sources of these principles are the Principles of Good 
Regulation, the Probabilistic Risk Assessment (PRA) Policy Statement, 
the Regulatory Guide 1.174, ``An Approach for Using PRA in Risk-
Informed Decisions on Plant-Specific Changes to the Licensing Basis,'' 
and the NRC's Strategic Plan.
    b. Consistent with the high-level at which the guidance described 
above has been articulated, specific factors which need to be addressed 
in each case (such as defense in depth and treatment of uncertainties) 
would depend on the particular regulatory issues involved.

5. Implementation of Revised Guidelines

    Implementation of the guidelines could have an agency-wide impact. 
Hence, implementing the revised guidelines requires that the staff 
obtain Commission approval for the guidelines themselves and the 
process for implementing them. Additionally, the NRC has been directed 
by Congress to revise existing outdated or paperwork-oriented 
regulations to make them performance-based. Subject to any Commission 
guidance received, the staff plans to apply the guidelines proposed in 
this FRN relative to meeting this Congressional mandate.
    A two-step process is proposed to implement the above guidelines. 
Each step is addressed as follows:

A. Step 1: Obtain Commission Approval of Guidelines

    Subsequent to the public workshop on June 8, 2000, the NRC staff 
will make presentations or provide information to the ACRS, ACNW and 
ACMUI so as to obtain their advice on the above

[[Page 26776]]

guidelines. The staff will propose sample case studies to exercise the 
guidelines. Included in the presentations will be a discussion of 
stakeholder comments and responses. The feedback from the advisory 
committees will be incorporated into a Commission paper, as 
appropriate, and the paper will be submitted to the Commission by 
August 21, 2000.

B. Step 2: Implement the Finalized Guidelines into the Regulatory 
Improvement Process

    The guidelines, which will be used to identify and assess 
performance-based activities, will only be applied to new initiatives. 
The basic process would be institutionalized by incorporating the 
elements into internal NRC procedures. Regulatory requirements that are 
overly prescriptive may be proposed for improvement by members of the 
NRC staff, industry, or the public (as a petition for rulemaking, for 
example). More widespread acceptance of the guidelines would be likely 
if the guidelines were also used by industry to increase the level of 
performance-based activities. For example, the guidelines could be 
adopted for use by standards developing organizations or industry 
working groups as they develop proposals for consideration by NRC. NRC 
review of such proposals for incorporation into the regulatory 
framework would then be considerably more streamlined.
    The guidelines would serve as one of the tools available to the 
staff to assess whether a more performance-based approach is 
appropriate for a given regulatory initiative. If the evaluation shows 
that safety improvements are justified, relevant requirements 
associated with the proposed change (e.g. compliance with the Backfit 
Rule, preparation of a regulatory analysis, etc.) would be undertaken. 
If the evaluation shows that unnecessary regulatory burden can be 
reduced, the proposed changes to requirements will most likely be 
voluntary. In either case, stakeholder input would be obtained in a 
timely manner.

    Dated at Rockville, Maryland, this 3rd day of May, 2000.
Charles E. Rossi,
Director, Division of Systems Analysis and Regulatory Effectiveness, 
Office of Nuclear Regulatory Research.
[FR Doc. 00-11535 Filed 5-8-00; 8:45 am]
BILLING CODE 7590-01-P