Nuclear Regulatory Commission: NRC Needs to Do More to Ensure	 
that Power Plants Are Effectively Controlling Spent Nuclear Fuel 
(08-APR-05, GAO-05-339).					 
                                                                 
Spent nuclear fuel--the used fuel periodically removed from	 
reactors in nuclear power plants--is too inefficient to power a  
nuclear reaction, but is intensely radioactive and continues to  
generate heat for thousands of years. Potential health and safety
implications make the control of spent nuclear fuel of great	 
importance. The discovery, in 2004, that spent fuel rods were	 
missing at the Vermont Yankee plant in Vermont generated public  
concern and questions about the Nuclear Regulatory Commission's  
(NRC) regulation and oversight of this material. GAO reviewed (1)
plants' performance in controlling and accounting for their spent
nuclear fuel, (2) the effectiveness of NRC's regulations and	 
oversight of the plants' performance, and (3) NRC's actions to	 
respond to plants' problems controlling their spent fuel.	 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-05-339 					        
    ACCNO:   A21177						        
  TITLE:     Nuclear Regulatory Commission: NRC Needs to Do More to   
Ensure that Power Plants Are Effectively Controlling Spent	 
Nuclear Fuel							 
     DATE:   04/08/2005 
  SUBJECT:   Accountability					 
	     Counterterrorism					 
	     Federal regulations				 
	     Health hazards					 
	     Nuclear energy					 
	     Nuclear facilities 				 
	     Nuclear facility security				 
	     Nuclear waste management				 
	     Nuclear waste storage				 
	     Performance measures				 
	     Radioactive wastes 				 
	     Records management 				 
	     Regulatory agencies				 
	     Homeland security					 
	     Nuclear materials					 
	     Policies and procedures				 
	     Millstone Nuclear Power Station (CT)		 
	     Vermont Yankee Nuclear Power Plant (VT)		 
	     Humboldt Bay Nuclear Power Plant (CA)		 

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GAO-05-339

                 United States Government Accountability Office

                     GAO Report to Congressional Requesters

April 2005

NUCLEAR REGULATORY COMMISSION

  NRC Needs to Do More to Ensure that Power Plants Are Effectively Controlling
                               Spent Nuclear Fuel

                                       a

GAO-05-339

[IMG]

April 2005

NUCLEAR REGULATORY COMMISSION

NRC Needs to Do More to Ensure that Power Plants Are Effectively Controlling
Spent Nuclear Fuel

                                 What GAO Found

Nuclear power plants' performance in controlling and accounting for their
spent fuel has been uneven. Most recently, three plants-Vermont Yankee and
Humboldt Bay (California) in 2004 and Millstone (Connecticut) in 2000-have
reported missing spent fuel. Earlier, several other plants also had
missing or unaccounted for spent fuel rods or rod fragments.

NRC regulations require plants to maintain accurate records of their spent
nuclear fuel and to conduct a physical inventory of the material at least
once a year. The regulations, however, do not specify how physical
inventories are to be done. As a result, plants differ in the regulations'
implementation. For example, physical inventories at plants varied from a
comprehensive verification of the spent fuel to an office review of the
records and paperwork for consistency. Additionally, NRC regulations do
not specify how individual fuel rods or segments are to be tracked. As a
result, plants employ various methods for storing and accounting for this
material. Further, NRC stopped inspecting plants' material control and
accounting programs in 1988. According to NRC officials, there was no
indication that inspections of these programs were needed until the event
at Millstone.

NRC is collecting information on plants' spent fuel programs to decide if
it needs to revise its regulations and/or oversight. In addition to
reviewing specific instances of missing fuel, NRC has had its inspectors
collect basic information on all facilities' programs. It has also
contracted with the Department of Energy's Oak Ridge National Laboratory
in Tennessee to review NRC's material control and accounting programs for
nuclear material, including spent fuel. It further plans to request
information from plant sites and visit over a dozen of them for more
detailed inspection. These more detailed inspections may not be completed
until late 2005, over 5 years after the instance at Millstone that
initiated NRC's efforts. However, we believe NRC has already collected
considerable information indicating problems or weaknesses in plants'
material control and accounting programs for spent fuel.

Source: Nuclear Energy Institute.

Nuclear fuel rods are filled with ceramic pellets of uranium and grouped
into fuel assemblies, typically 5 to 10 inches square and 12 to 14 feet
long.

United States Government Accountability Office

Contents

Letter                                                                   1 
                                  Results in Brief                          3 
                                     Background                             6 
               Nuclear Power Plants Have Had Unaccounted-For Spent Nuclear 
                                        Fuel                               11 
              NRC Regulations and Oversight Activities Are Insufficient to 
                                                                    Ensure 
                             Control of All Spent Fuel                     16 
            NRC Is Studying Spent Fuel Control and Accounting Problems but 
              Has Yet to Revise Its Regulations or Oversight Policies      20 
                                    Conclusions                            25 
                        Recommendations for Executive Action               26 
                                  Agency Comments                          27 

Appendixes

Appendix I: Appendix II:

Appendix III: Appendix IV:

Scope and Methodology 29

Summary Results of GAO Survey of NRC Senior/Lead
Resident Inspectors 31

Comments from the Nuclear Regulatory Commission 35

GAO Contacts and Staff Acknowledgments 38
GAO Contacts 38
Staff Acknowledgments 38

Figures	Figure 1: Example of Fuel Rods in a Nuclear Power Reactor 7 Figure
2: Example of Dry Cask Storage 9

Abbreviations

DOE Department of Energy
ISFSI independent spent fuel storage installation
NRC Nuclear Regulatory Commission
OIG Office of the Inspector General
TI temporary instruction

This is a work of the U.S. government and is not subject to copyright
protection in the United States. It may be reproduced and distributed in
its entirety without further permission from GAO. However, because this
work may contain copyrighted images or other material, permission from the
copyright holder may be necessary if you wish to reproduce this material
separately.

A

United States Government Accountability Office Washington, D.C. 20548

April 8, 2005

The Honorable James M. Jeffords
Ranking Minority Member
Committee on Environment and Public Works
United States Senate

The Honorable Patrick Leahy
United States Senate

The Honorable Bernie Sanders
House of Representatives

The Honorable John Olver
House of Representatives

Spent nuclear fuel-the used fuel periodically removed from reactors in
nuclear power plants-is one of the most hazardous materials made by
humans. Without protective shielding, the fuel's intense radiation can
kill a
person within minutes if directly exposed to it or cause cancer in those
exposed to smaller doses. The nation's 103 operating nuclear power plants,
which generate about 20 percent of U.S. electricity, annually produce over
2,000 metric tons of spent fuel. Absent a national repository, these
materials must be stored on site. Given the potential harm to human health
and the environment, the Nuclear Regulatory Commission (NRC) requires
licensees or operators of commercial nuclear power plants to strictly
control and account for their spent fuel. However, several recent
discoveries of missing or unaccounted-for spent fuel have raised concerns
about nuclear power plants' control over these materials and NRC's
oversight. The terrorist attacks of September 11, 2001, heightened these
concerns by raising questions about whether these highly radioactive
materials could be diverted or stolen and used maliciously.

A commercial nuclear power plant's reactor is fueled by small ceramic
pellets of uranium, roughly the size of the tip of one's little finger.
These
pellets are placed end-to-end inside hollow metal tubes (made today of
zirconium alloy), which are then gas pressurized and welded closed. The
filled metal tubes are called fuel rods or pins. Rods are grouped together
into fuel assemblies (also known as fuel bundles), typically about 5 to 10
inches square and 12 to 14 feet long, and placed in the reactor core.
Depending on the type of reactor, an assembly consists of 36 to 289 rods

and the core contains from 150 to 800 assemblies.1 An assembly can weigh
over half a ton. About every 12 to 18 months, the reactor must shut down
for refueling. During this time, about one-fourth to one-third of the fuel
assemblies are removed from the reactor core and replaced with new fuel
assemblies. Removed assemblies are those that have become too inefficient
to power the nuclear reaction (but which have become intensely radioactive
and will continue to generate some amount of heat for tens of thousands of
years).

When removed from the reactor, spent fuel assemblies are placed in racks
in a spent fuel pool. Spent fuel pools are typically 40-foot deep,
steel-lined, concrete vaults filled with water. Water is a natural barrier
to radiation, and it allows the fuel to cool as it becomes less
radioactive. Over the course of years, the spent fuel within the pools has
been typically moved or rearranged to accommodate more spent fuel while
maintaining safety. At some nuclear power sites, spent fuel has also been
transferred to dry storage casks to await permanent disposition at a
national repository for spent fuel, such as the deep underground
repository planned at Yucca Mountain, Nevada. Spent fuel is typically
cooled for 5 years before it can be moved to dry storage casks, which are
extremely large and heavy containers made of steel or steel surrounded by
additional concrete that can hold from 7 to 68 fuel assemblies. However,
the majority of spent fuel at nuclear power plants remains within spent
fuel pools. In addition, at a number of nuclear power plants, fuel
assemblies have been disassembled or reconstituted2 due to damaged or
leaking fuel rods or for inspection and testing purposes. Disassembly or
reconstitution is a delicate process involving heavy machinery. These
individual fuel rods and, if broken, rod fragments are also stored in the
spent fuel pool, either placed at the bottom or in special containers,
repackaged, or in some cases, put back into the parent spent fuel
assembly.

This report discusses (1) nuclear power plants' performance in controlling
and accounting for their spent nuclear fuel, (2) the effectiveness of
NRC's

1In the United States, there are two types of nuclear power reactors
(boiling water and pressurized water) and several designs for each. With
the inclusion of modifications over time, specifications regarding the
number and length of fuel rods and the number of assemblies required to
fuel a reactor core will vary. Specifications may also be influenced by
the type of reactor design.

2Reconstitution in this sense refers to the process by which fuel rods are
removed from complete fuel assemblies and the replacement of these rods
with good ones.

regulations and oversight of nuclear power plants' performance in
controlling and accounting for spent nuclear fuel, and (3) actions that
NRC is taking in response to licensees' spent fuel control and accounting
difficulties. In the context of this report, control and accounting for
spent nuclear fuel refers to plants' tracking of and record-keeping for
the movement and storage of their spent nuclear fuel. We did not assess
plants' safety procedures for the handling or storage of spent fuel or
plant security and the vulnerability of spent fuel to theft or terrorist
attacks.

To assess nuclear power plants' performance in controlling and accounting
for their spent nuclear fuel, we reviewed and analyzed relevant documents,
including NRC and nuclear power plant licensees' event reports, NRC
studies and investigations of missing fuel rods, and other related
documents. We also interviewed NRC and nuclear power plants officials. To
assess NRC's material control and accounting requirements for spent fuel
stored at nuclear power sites, we reviewed and analyzed relevant
regulations, NRC orders and policies, and interviewed NRC and industry
officials to identify the key NRC requirements and how they are
implemented. To determine how NRC performs oversight of nuclear power
plant material control and accounting activities, we reviewed NRC
inspection policies, instructions, and reports; analyzed relevant
Inspector General reports and internal NRC analyses and studies;
interviewed appropriate NRC program and regional officials; and conducted
an e-mail survey of all NRC lead/senior inspectors located on site at
plants about inspection practices, management controls, and suggestions
for improvements, if viewed necessary. To determine the status of NRC
actions and plans in response to licensees' spent fuel control and
accounting problems, we reviewed internal NRC memoranda, instructions, and
reports and interviewed appropriate program officials.

A more detailed description of our scope and methodology is presented in
appendix I. More detailed results of our survey of NRC resident inspectors
is presented in appendix II. We performed our work between July 2004 and
February 2005 in accordance with generally accepted government auditing
standards.

Results in  Brief	Nuclear power plants' performance in controlling and
accounting for spent nuclear fuel has been uneven. Most recently, three
nuclear power plants have reported missing or unaccounted-for spent
nuclear fuel to NRC. These plants were the Millstone Nuclear Power Station
in Connecticut in 2000, the Vermont Yankee plant in Vermont in 2004, and
the Humboldt Bay Power

Plant in California in 2004. The Millstone and Vermont Yankee plants are
still operating, while the Humboldt Bay plant has been shut down since
1976. The unaccounted-for material from Millstone was never found, while
the unaccounted-for material at Vermont Yankee was found 3 months later in
its spent fuel pool but in a location other than that indicated by the
inventory records. At Humboldt Bay, NRC and licensee officials are still
investigating the plant's missing spent nuclear material. In all three
cases, the missing spent fuel was in loose fuel rods or segments of fuel
rods that had been removed from the fuel assemblies. NRC is also aware of
several earlier instances of lost or unaccounted-for spent fuel at other
facilities. In 1990, a nuclear power plant shipped one more spent fuel rod
than planned. The licensee discovered the discrepancy in 1991, then
notified NRC and corrected its records. On several occasions, licensees
reported "lost" or "missing" spent fuel but, according to NRC, in each
case, the spent fuel was known to be contained within the facility, either
in the reactor coolant system, the spent fuel pool, or a refueling
pathway. Moreover, information NRC has collected in response to the
unaccounted-for spent fuel at Millstone indicates that spent fuel rods
outside of fuel assemblies are an issue at additional nuclear power sites.
NRC inspectors often could not confirm that containers that were
designated as containing loose fuel rods in fact contained the fuel rods.
The containers, in some cases, were closed or sealed and, in other cases,
the contents were not visible when looking into the spent fuel pool. Thus,
spent fuel may be missing or unaccounted for at still other plants.

Although NRC requires plants to maintain an accurate record of all their
spent fuel and its location, NRC regulations do not specify how licensees
are to conduct physical inventories nor how they are to control and
account for loose spent fuel rods and fragments. NRC regulations require
licensees to perform a physical inventory at least once every 12 months.
However, NRC guidance for material control and accounting does not
characterize what constitutes a physical inventory or how to conduct one.
Consequently, implementation is inconsistent among the licensees. Physical
inventories of spent fuel in spent fuel pools may include anything from
comparing a map with the actual assembly racks in the pool to identify
misplaced fuel assemblies to performing a comprehensive identification of
fuel assemblies according to their serial numbers. Additionally, NRC
regulations do not specifically require licensees to track individual fuel
rods or fragments, and individual rods, fragments, or other controlled
nuclear material may or may not be accounted for in the inventory.
Licensees also employed various methods of storing and accounting for this
material. In 1988, NRC decided to no longer conduct

routine inspections of plants' compliance with material control and
accounting regulations for spent fuel because it considered the potential
risk for spent fuel to be lost or stolen from a plant to be very low.
According to NRC officials, the agency viewed spent fuel assemblies as
"self protecting" because of the extremely high level of radiation they
emit and their large size and weight.

In light of the missing spent fuel rods at Millstone and subsequent
concerns, NRC is re-assessing its decision to no longer conduct routine
inspections of plants' compliance with material control and accounting
regulations for spent fuel. For example, NRC is using a three-phase
approach under which its inspectors are collecting information on the
status of material control and accounting programs at plants. It has also
contracted with the Department of Energy's Oak Ridge National Laboratory
in Tennessee to review NRC's material control and accounting programs for
nuclear materials, including spent fuel. The third phase under which NRC
inspectors will collect more detailed information at selected plants will
not likely be completed until late in 2005, over 5 years after the spent
fuel rods were discovered to be missing at Millstone. However, these
efforts, along with the more recent instances of missing spent fuel at
Vermont Yankee and Humboldt Bay as well as a 2003 NRC Office of the
Inspector General report outlining weaknesses in NRC's oversight of
nuclear materials (including spent fuel), have already provided NRC with
considerable information on nuclear power plant licensees' control and
accounting programs, and NRC officials anticipate that changes in NRC's
regulations and oversight activities will be necessary. According to NRC
officials, this spring they plan to present the results of the Oak Ridge
review and other information to the NRC Commissioners, who will decide
whether the agency will take any action.

We are making recommendations to NRC aimed at improving its regulation and
oversight of spent fuel by defining how licensees are to conduct physical
inventories, specifying control and accounting requirements for loose rods
and rod fragments, and taking timely action to monitor licensees'
compliance with material control and accounting requirements. In
commenting on a draft of this report, NRC generally agreed with the
report's conclusions and said that it will develop guidance concerning
control and accounting of spent fuel rods and pieces and the conduct of
physical inventories. NRC also said that it will revise its existing
procedures for inspecting material control and accounting of spent nuclear
fuel to include instructions on inspecting control and accounting of rods
and pieces. NRC's comment letter is included in appendix III.

Background	NRC is an independent agency established by the Energy
Reorganization Act of 1974 to regulate civilian uses of nuclear materials.
It is responsible for ensuring that those who use radioactive material-in
generating electricity, for experiments at universities, and for other
uses such as in construction and medicine-do so in a manner that protects
the public, the environment, and workers. NRC has issued licenses to the
103 operating nuclear power plants and the 7 facilities that produce fuel
for these plants.3  In addition, NRC, or the 33 states that have
agreements with NRC, regulates about 22,000 other entities that use
nuclear materials. For example, in the medical field, nuclear material
licensees annually perform millions of diagnostic and therapeutic
procedures using radioactive material.

NRC is headed by a five-member commission appointed by the President and
confirmed by the Senate. The President designates one commissioner as
Chairman and official spokesperson. NRC has over 3,000 employees who work
in its headquarters office in Rockville, Maryland, and its four regional
offices. NRC is financed primarily by fees it imposes on commercial users
of the nuclear material that it regulates. For fiscal year 2005, NRC's
appropriated budget of $669 million included approximately $540 million
financed by these fees.

NRC regulates the nation's commercial nuclear power plants by establishing
requirements for plant owners and operators to follow in the design,
construction, and operation of nuclear reactors. NRC also licenses the
reactors and the people who operate them. To ensure that nuclear reactors
are operated within their licensing requirements and technical
specifications, NRC oversees them by inspecting activities at the plants
and assessing plant performance. NRC's inspections consist of both
baseline inspections and supplemental inspections to assess particular
licensee programs or issues that arise at a particular power plant.
Inspections may also occur in response to a specific operational problem
or event that has occurred at a plant. NRC maintains from two to three
inspectors at every operating nuclear power site in the United States and
supplements the inspections conducted by these resident inspectors with
inspections conducted by staff from headquarters and/or its regional
offices. Generally,

3NRC has licensed 104 commercial nuclear power plants to operate. One of
these plants has been shut down since 1985. Other nuclear power plants are
in the decommissioning phase. These decommissioning plants and a wet
storage facility not associated with a nuclear power plant (GE Morris)
also still have spent nuclear fuel and are licensed by NRC for these
purposes.

Spent fuel pools are constructed according to NRC requirements, typically
with 4-to 6-foot thick steel-lined concrete walls and floors. Pools are
typically 30 to 60 feet long, 20 to 40 feet wide, and 40 feet deep. The
location of these pools is dependent on the type of reactor. Essentially,
all commercial nuclear power reactors in the United States are one of two
types, either a boiling water reactor or a pressurized water reactor.4 For
most boiling water reactors, the pools are located close to the reactors,
several stories above ground. For pressurized water reactors, the pools
are located in structures outside the reactor building, on the ground or
partially embedded in the ground. Regardless of reactor type, these pools
are required by NRC to be constructed to protect the public against
radiation exposure, even after a natural disaster, such as an earthquake.
The water in the pool is constantly cooled and circulated, and the fuel
assemblies are generally 20 feet below the surface of the water.

In 1982, under the Nuclear Waste Policy Act, the Congress directed the
Department of Energy (DOE) to construct an underground repository for the
disposal of spent fuel and other high-level radioactive waste. The
Congress amended the act in 1987 and required DOE to only consider Yucca
Mountain, Nevada, as a potential site for the repository. In 2002, the
President recommended to the Congress, and the Congress approved, Yucca
Mountain as a suitable site for the development of a permanent highlevel
waste repository. For a variety of reasons, DOE is unlikely to open the
repository in 2010 as planned.

Lacking a long-term disposal option now, some nuclear utilities must move
a portion of their spent fuel into dry storage or face shutting down their
plants because their spent fuel pools are reaching capacity. The majority
of dry storage facilities are located on site but licensed at a different
time from the power plant. These facilities are known as independent spent
fuel storage installations, or ISFSIs. Once dry storage is approved by
NRC, spent fuel is loaded into dry storage casks, which are steel
containers surrounded by additional steel, concrete, or other material
meant to provide radiation shielding, and are backfilled with inert gas.
The full casks are welded or bolted shut and placed either horizontally or
vertically in

4A boiling water reactor uses radioactive steam that is generated in the
reactor to drive a turbine that generates electricity. The water is
returned to the reactor core where it is reheated to steam, driving the
turbines as the cycle is repeated. Pressurized reactors send slightly
radioactive pressurized water to a steam generator, which creates steam
from nonradioactive water kept separated by tubes. The steam drives the
turbine and the slightly radioactive water returns to the reactor where it
is reheated and the cycle repeated.

concrete vaults or on a concrete pad, depending on the design. Dry storage
casks are very large. According to NRC, a vertical cask may be 20 feet
tall and 9 feet in diameter and could weigh 125 tons fully loaded. Once in
place, the fuel is cooled by air. NRC requires these storage systems to be
capable of protecting against radiation exposure and surviving natural
disasters. Because the move to dry storage is time consuming and
expensive, utilities are, wherever possible, modifying wet pool storage
capacity so they can store larger quantities of spent fuel in these pools.

Figure 2: Example of Dry Cask Storage

Source: Nuclear Regulatory Commission.

To ensure that all spent fuel is accounted for and that unauthorized acts
such as theft or diversion are detected, NRC regulations require each
licensee to (1) establish, maintain, and follow written procedures that
are sufficient to enable the licensee to control and account for the
material in storage; (2) conduct a physical inventory of the spent fuel;
and (3) maintain records of receipt as well as records on the inventory
(including location), disposal, and transfer of the material. The physical
inventory is required to

be performed at intervals not to exceed 12 months. Compliance with these
requirements is a condition of each plant's operating license.

There is a high public perception and fear that spent nuclear fuel, if
lost or stolen, could be used maliciously. According to NRC, the control
of spent fuel is of great importance because of the potential health and
safety implications. However, NRC stated that the very high radiation
level of spent fuel makes its theft difficult, dangerous, and very
unlikely. NRC also explained that individual spent fuel rods contain only
a very small amount of nuclear material, making it unlikely that stolen
rods could be used to manufacture a weapon. Theft of many rods would be
necessary to acquire enough material to manufacture a weapon. To expose a
large number of people to the harmful effects of radiation, the spent fuel
would have to be released from its protective containers and dispersed
over a wide or densely populated area. Unlike many other hazardous
materials, spent fuel is neither explosive nor volatile.5 Putting the
material in a dispersible form would be a difficult and dangerous task
involving extensive preparation using special equipment and radiation
shielding. In the event of a dispersal, the most significant health
effects would involve persons who inhaled very small particles. Such
particles would be absorbed into the body and possibly remain there for
many years.

According to NRC officials, protective systems at nuclear power reactors
are designed using the concept of "defense in depth." The officials
pointed out that it is very unlikely that pieces of spent fuel could be
out in the public domain because power reactors have layers of protection
and controls to detect and prevent spent fuel from leaving the spent fuel
pool. Material control and accounting is one of these layers. Physical
security, another layer, relies on measures such as portal radiation
monitors, fences, guards, locks, and limited access. Additional layers
relate to safety. For example, reactors store spent fuel under at least 20
feet of water because of the heat and radiation. If an item of spent fuel
is raised out of the spent fuel pool, extremely sensitive detectors in the
pool area alarm. The officials said that NRC requires licensees to respond
to these alarms and keep records of them. All parties agree that it is
very important to fully account for this material.

5Spent fuel rods recently discharged from a reactor also contain some
radioactive gases that are a by-product of the nuclear fission
process-these gases account for a small fraction of the total quantity of
radioactive material in spent fuel rods, but because of the short half
lives of the material, the gases decay quickly and may not be present in
older spent fuel.

Nuclear Power Plants Have Had Unaccounted-For Spent Nuclear Fuel

Three nuclear power plants have recently reported the discovery of missing
or unaccounted-for spent nuclear fuel to NRC. These plants were the
Millstone Nuclear Power Station in Connecticut in 2000, the Vermont Yankee
plant in Vermont in 2004, and the Humboldt Bay Power Plant in California
in 2004.6 NRC's actions in response to the missing or unaccounted-for
spent fuel at Millstone led directly to identifying the problems at
Vermont Yankee and help identify the problems at Humboldt Bay. In all
three cases, the missing or unaccounted-for spent fuel was in loose fuel
rods or segments of fuel rods that had been removed from the fuel
assemblies. Other plants have also identified possible instances of lost
or unaccounted-for spent fuel.

Millstone	At Millstone, two nuclear fuel rods were discovered to be
missing when, in November 2000, the licensee, Northeast Utilities, was
involved in a records reconciliation and verification effort to support
preparations to move spent fuel into dry cask storage. The location of the
two full-length fuel rods was not properly reflected in special nuclear
material records. The licensee reported that in 1972, a fuel assembly was
disassembled after it was removed from the reactor during a shutdown. In
1974 when the fuel assembly was reassembled, two rods that were damaged
were not placed back into the assembly. Instead, they were placed in a
container for individual rods and stored in the spent fuel pool. Records
dated 1979 and 1980 show the individual fuel rods in the container in the
spent fuel pool. However, spent fuel pool map records after 1980 do not
show either the fuel rods or the container. Records do not indicate what
happened to these rods. The licensee's investigations of the loss centered
on the significant spent fuel pool activities that occurred between 1980
and 1992, which potentially related to the missing fuel rods. These
activities included two re-racks, which modified the racks to accommodate
more fuel assemblies, and several shipments to facilities licensed to
receive irradiated nonfuel components. The unaccounted-for material from
Millstone was never found; the licensee concluded that the rods were
shipped to a low-level waste disposal facility in Barnwell, South
Carolina. NRC undertook a special inspection to review the licensee's
efforts to locate the missing fuel rods and in February 2002 agreed with
the licensee that the two missing rods were most likely shipped to the
Barnwell facility. In June 2002, NRC

6The Millstone and Vermont Yankee plants are still operating, while the
Humboldt Bay plant has been shut down since 1976.

took enforcement action against the licensee and fined the licensee
$288,000 for failure to adequately account for the special nuclear
material contained in the two fuel rods and for failure to report missing
material to NRC in a timely manner.

Vermont Yankee	Spent fuel at Vermont Yankee was discovered missing in
April 2004, as the NRC resident inspectors at the plant conducted an
inspection required by NRC headquarters in response to the lost spent fuel
rods at Millstone. The resident inspectors found that although the
licensee had been performing an annual physical inventory of the spent
fuel pool, the inventory did not verify that two fuel rod segments
contained in a special container stored on the bottom of the pool were
still present in the container. In responding to the NRC senior resident
inspector's questions, the licensee determined that two spent fuel rod
pieces, the product of a 1979 fuel reconstitution to replace corroded fuel
rods that had failed, were not in the storage location identified in the
inventory records. The two fuel rod pieces were approximately one-half
inch in diameter by approximately 9 inches and 17.75 inches in length.

The Vermont Yankee licensee formed an investigation team to search for the
fuel rod pieces. According to the licensee, the investigation included
inspecting the spent fuel pool, reviewing documents, interviewing past and
present Vermont Yankee employees, and interviewing contractors that had
been associated with spent fuel pool activities and radioactive waste
operations at Vermont Yankee. In July 2004, after identifying an aluminum
cylinder in the spent fuel pool as potentially containing the two fuel rod
pieces, the licensee opened and inspected the cylinder, which in fact
contained the two fuel rod pieces. The licensee concluded that the root
causes of this event were that (1) the special nuclear material account
devices used in inventorying the material had not been properly maintained
and (2) the plant's special nuclear material inventory and accountability
procedures did not provide guidance for controlling pieces of special
nuclear material as they do for whole fuel assemblies. According to a
licensee representative, it cost the licensee several million dollars to
locate the spent fuel rod pieces and review the plant's material control
and accounting procedures and activities to determine the root causes of
this incident. The licensee representative also told us that the plant has
already taken or is in the process of taking various corrective actions.
For example, the plant has revised its material control and accounting
procedures to reflect the findings of the root cause analysis.

NRC conducted a special inspection to review the results of the licensee's
investigation at Vermont Yankee, assess the licensee's determination of
the root cause, determine whether the licensee and its predecessor were in
compliance with applicable regulations, and identify which findings or
observations may have implications for other nuclear power plants. The
inspection was performed from April through August 2004, and a report was
issued to the licensee in December 2004.7 NRC inspectors concluded that
the licensee and its predecessor did not keep adequate special nuclear
material inventory records of the two spent fuel rod pieces, did not
follow the licensee's written procedures when the two spent fuel rod
pieces were moved to a fuel storage container, and did not conduct
adequate periodic physical inventories of the two spent fuel rod pieces.
NRC inspectors also concluded that because the two spent fuel rod pieces
remained in the Vermont Yankee spent fuel pool the entire time the
apparent violation existed, no actual safety consequence resulted from
this apparent violation. Nevertheless, NRC considered the apparent
violation a potentially significant failure of the licensee's material
control and accounting program. Enforcement action against the licensee
for its apparent violation of material control and accounting regulations
is currently under review by NRC management. A decision is expected
sometime in 2005.

Humboldt Bay	In July 2004, Humboldt Bay officials reported to NRC that in
the process of reviewing records and verifying the contents of the spent
fuel pool in preparation for dry storage operations, the licensee
identified a discrepancy in plant records that questioned the location of
three 18-inch fuel rod segments removed from a single spent fuel rod. A
plant record from 1968 indicated that the three fuel rod segments were
stored in the spent fuel pool in a small container. However, licensee
spent fuel shipment records indicated that the entire fuel assembly,
including the rod segments, had been sent off site for reprocessing in
1969. The licensee notified NRC of the record discrepancy in the records
and the apparent loss of accountability records for the special nuclear
material. The licensee implemented a program to search the spent fuel pool
for the fuel rod

7In June 2004, NRC issued Information Notice 2004-12 to all holders of
operating licenses for nuclear power reactors, research and test reactors,
decommissioned sites storing spent fuel in a pool, and wet spent fuel
storage sites. The notice's purpose was to inform these licensees of the
problems at Millstone and Vermont Yankee. Although no specific action or
written response was required, NRC indicated that it expected the
licensees to review the information for its applicability to their
facilities and consider action, as appropriate, to avoid similar problems
with their spent fuel inventories.

segments, review additional plant records, and interview plant personnel
who were on site during the 1968 to 1969 time period.

In November 2004, NRC officials initiated a special inspection that
included a review of the licensee material control and accounting
procedures. According to an NRC official, current material control and
accounting procedures appear to be adequate, but there were some problems
with past accounting practices. The licensee has completed its physical
search of the spent fuel pool and other areas of the plant for the three
rod segments and has not conclusively identified the missing three 18-inch
segments. The licensee is continuing its review of plant records as well
as interviewing plant personnel who may have knowledge of the whereabouts
of the three fuel rod segments. The licensee issued an interim report of
its search results and evaluations at the end of February 2005. NRC plans
to issue an interim inspection report after reviewing the licensee interim
report. A final inspection report will not be issued until the licensee
completes its investigation, currently expected in May 2005.

Other Facilities	Another example of an inaccurately accounted-for fuel rod
occurred at a plant that is being decommissioned. The material from its
spent fuel pool is being moved to dry cask storage. In 1974, a failed fuel
assembly was being disassembled because it was leaking. A fuel rod from
this assembly was found to be completely broken in two. The broken rod was
supposed to have been put in a fuel rod storage basket in the spent fuel
pool. In 1997, an attempt was made to verify the presence of the 16-inch
fuel rod segment before the basket was placed into a dry storage cask. The
attempt failed, and because the basket was too tall, it was not placed
into the dry storage cask at that time. In October 2001, because of the
case of the lost fuel rods at Millstone, the licensee decided to again
inspect the basket to verify the presence of the fuel rod segment. While
the licensee successfully examined the basket, it did not find the fuel
rod segment. The licensee undertook a complete review of the site's spent
fuel records and concluded that the accounting failure resulted from (1)
the poor visual clarity in the spent fuel pool at the time the fuel rod
fragment was being placed in the basket and (2) inadequate care by the
operators performing the task. The licensee also concluded that the fuel
rod segment did not contain any fuel pellets because when the fuel rod
broke, the pellets were ejected into the reactor cooling system and
ultimately ground into powder. In January 2002, when NRC regional
inspectors performed a special inspection at the plant concerning this
issue, the inspectors did not take issue with the licensee's conclusions
concerning the missing fuel rod. However, they did find that-

since the same procedures were being used at the other operating plants on
site-the licensee should examine the fuel assembly and fuel rod storage
baskets at these locations to determine that the fuel rods that are
supposed to be in them are actually present. In February 2004, NRC
inspectors reported that the licensee had inspected the baskets and
determined that the existing inventory sheets were correct. NRC closed
this matter.

NRC is also aware of additional instances of lost or unaccounted-for spent
fuel. In 1990, a nuclear power plant shipped one more spent fuel rod than
planned. The licensee discovered the discrepancy in 1991, then notified
NRC and corrected its records. On several occasions, licensees reported
"lost" or "missing" spent fuel, but, according to NRC, in each case, the
spent fuel was actually known to be contained within the facility, either
in the reactor coolant system, the spent fuel pool, or a refueling
pathway.

The potential exists for missing or unaccounted-for spent fuel rods to be
discovered at additional plants. NRC's inspections at plants in response
to the Millstone incident revealed that many nuclear power sites (a site
may consist of more than one plant) had removed spent fuel rods from fuel
assemblies or had reconstituted fuel assemblies.8 In performing these
inspections, NRC inspectors were to obtain from the licensee a list of all
irradiated or spent fuel rods that have been removed from their parent
assembly. Using the current fuel pool map, the inspectors were to identify
the presumed location of the separated rods. Then, by observing from the
edge of the pool, the inspector was to answer whether there were rods in
all of the locations on the map identified as containing separate rods. At
some of these sites, this was not possible. Some containers where rods
were presumably stored were closed or their contents were not visible.
Even when containers were not closed, some contents were unverifiable
because of poor water clarity and lighting and container design. According
to NRC officials, the agency has preliminarily chosen these sites for
further inspection.

8These 70 sites include 65 operating and 4 decommissioning nuclear reactor
sites and 1 wet storage site.

NRC Regulations and  Although NRC requires nuclear power plants to
maintain an accurate

record of their spent fuel and its location, agency regulations do not
specifyOversight Activities how licensees are to conduct physical
inventories of this material nor how Are Insufficient to they are to
control and account for loose or separated spent fuel rods and Ensure
Control of All fragments. In addition, NRC oversight does not include
routine monitoring

of plants' compliance with its material control and accounting
regulations.

Spent Fuel

NRC Regulations to Control and Account for Special Nuclear Materials Have
Several Shortcomings

Under NRC regulations, reactor licensees are required to maintain and
follow written procedures sufficiently to enable them to control and
account for their special nuclear material. They are to keep records
showing the receipt, inventory (including location), disposal, and
transfer of all special nuclear material. Each record of receipt,
acquisition, or physical inventory of special nuclear material must be
retained as long as the licensee has possession of the material and for 3
years following any transfer of such material. Physical inventories of
special nuclear material must be performed at least annually. However, NRC
guidance for material control and accounting of spent nuclear fuel does
not characterize what constitutes a physical inventory nor how to conduct
one.

NRC regulations define physical inventory as the means to determine on a
measured basis the quantity of special nuclear material on hand at a given
time. The regulations also state that the methods of physical inventory
and associated measurements will vary depending on the material being
inventoried and the processes involved. As a result, licensees implement
the physical inventory requirement in different ways. NRC resident
inspectors found that inventories may include anything from comparing a
map with the assembly racks in the spent fuel pool to performing a
comprehensive identification of fuel assemblies according to their serial
numbers. For example, at one site, the NRC resident inspector reported
that the annual inventory is performed in a "piece counting" manner and
does not specifically verify the bundle serial number and fuel pool
location. At another site, the NRC resident inspector reported that the
annual inventory is only conducted for special nuclear material that has
been moved since the last audit. Further, according to an NRC program
official, no definition of physical inventory is provided in NRC's
regulatory guidance for spent fuel because the concept of physical
inventory is a simple "first course in accounting" term. That is, a
physical identification of items for the purpose of determining the number
of items physically on hand and for comparison with a "book" record, which
is the listing of items

according to the accounting records. This NRC official also stated that
it's what large retailers do at least once a year, it's a well-understood
concept, and it has never been thought to require clarification until now.
An NRC resident inspector at still another site told us that the annual
physical inventory was an office paperwork review to ensure that all the
"i's were dotted and t's were crossed" from past material movements and
transfers. The resident inspector added that the licensee had never
actually opened its storage container to visually verify the accuracy of
the paperwork. In responding to our survey, several resident inspectors
suggested that if licensees sealed their containers-for example, with
tamper-safe sealing- the containers would not have to be opened during the
physical inventory. According to NRC officials, verification of items in
spent fuel pools is difficult and time consuming, raises concerns about
radiation exposure, and can be costly.

Additionally, although NRC regulations state that licensees are to control
and account for all special nuclear material, the regulations do not
specifically require licensees to track individual fuel rods or fragments
that may be stored in their spent fuel pools. Further, individual rods,
fragments, or other controlled special nuclear material may or may not be
specifically accounted for in licensees' inventories.9  As a result,
licensees employed various methods of storing and accounting for this
material. For example, according to an NRC resident inspector, at one
plant the spent fuel rods are in a closed container in a designated area
of the spent fuel pool. According to the licensee's procedures, the
canister is opened every 6 years and the presence of the correct number of
rods is verified. At another plant, the licensee told the resident
inspector that it was not sure how many fuel rod fragments are in two
storage baskets or how the fragments might be divided up between the
baskets. In responding to our survey, several NRC resident inspectors
described current practices and offered suggestions for best practices for
storing and controlling loose rods and segments. Several respondents
described placing loose spent fuel in "dummy" or "skeleton" fuel
assemblies, which are empty of fuel, or only in specially designed and
approved containers placed in designated cells and racks in the spent fuel
pool. In addition, one resident inspector suggested that given that fuel
rod breaks are often the result of reconstitution, a best practice would
be for the reconstitution of fuel assemblies to be done off site.

9Fuel rods may fail for a variety of reasons, such as corrosion or gases
leaking from the tubes that hold the rods.

Licensees of nuclear power plants also control and account for their
inventories of spent fuel to help meet requirements relating to U.S.
treaty obligations for the control of nuclear material. NRC regulations
require power reactor licensees to submit a Nuclear Material Transaction
Report to the Nuclear Materials Management and Safeguards System every
time their facilities receive or transfer special nuclear material or make
corrections to their material balances. At least once a year, licensees
must also submit to the system material balance reports concerning special
nuclear material received, produced, possessed, transferred, consumed,
disposed of, or lost, and inventory composition reports. This system,
which is managed by the DOE and partially supported by NRC, is operated by
a DOE contractor. Because reporting to the system is done in the amount or
weight of the nuclear material, such as plutonium, rather than the number
of items of spent fuel, nuclear power plant licensees use complex computer
programs to provide estimates of the amount of special nuclear material
that these items contain. According to plant officials we spoke with,
their sites send their annual inventory information to their corporate
headquarters to be calculated and reported to the Nuclear Materials
Management and Safeguards System contractor.

NRC Does Not Monitor Plants' Compliance with Its Material Control and
Accounting Regulations

Since 1988, NRC inspections of power reactor licensees' compliance with
material control and accounting requirements have been done on an
exception-only basis-that is, if a particular problem or incident was
reported by the licensee or identified by NRC that warranted
investigating. Since 1988, NRC has not routinely monitored licensee
compliance with material control and accounting regulations or verified
that licensees' inventories are complete and accurate.

In 1984, NRC's overall inspection program for monitoring nuclear power
plants' compliance with their licenses had three parts: (1) a minimum
program to be completed at all operating nuclear facilities without
exception, (2) a basic program to be completed at all operating
facilities, but under some circumstances parts did not have to be
completed because of extraordinary demands on limited inspection
resources, and (3) a supplemental program of additional inspections to be
done on the basis of an assessed need or problems at a facility. According
to NRC, the basic program included material control and accounting
inspections to be conducted once every 3 years. In 1988, according to NRC
officials, this requirement for the periodic inspections of material
control and accounting

was discontinued.10 Officials said that although there is no written
documentation available, these inspections were discontinued because spent
fuel stored in spent fuel pools was considered to be "self protecting;"
that is, the fuel bundles are heavy, highly radioactive, and contained in
40-foot deep pools of water. Spent fuel was viewed as a low-risk danger to
public health and the environment and a low priority for use of NRC's
resources.

NRC substantially revised its nuclear reactor oversight process in 2000,
but did not reinstitute routine material control and accounting
inspections. According to NRC, the new process-called the Reactor
Oversight Process-uses more objective, timely, and safety-significant
criteria in assessing nuclear plant performance. NRC stated that the
revised program includes baseline inspections common to all nuclear plants
and focuses on activities and systems that are risk significant-that is,
those activities and systems that have a potential to trigger an accident,
increase the consequences of an accident, or mitigate the effects of an
accident. The Reactor Oversight Process also allows for inspections beyond
the baseline program if there are operational problems or events that NRC
believes require greater scrutiny. Material control and accounting fall
under this criteria. When the new process was being developed, NRC
officials continued to believe that the material in spent fuel pools was
self protecting and that it was appropriate to perform material control
and accounting inspections on an exception-only basis. NRC officials told
us that there were no indications prior to the discovery of missing fuel
rods at Millstone that routine inspections were needed.

According to NRC officials, a few Reactor Oversight Process inspections
can indirectly involve NRC inspections of licensees' material control and
accounting programs. One of these inspections is of licensee operations
during refueling of the reactor. This inspection includes verifying that
the location of fuel assemblies is being tracked and that discharged fuel
assemblies are placed in permissible locations in the spent fuel pool. To
perform such an inspection, NRC inspectors observe the movement of a
sample of fuel bundles between the reactor core and the spent fuel pool.
NRC officials told us that material control and accounting problems with
spent fuel may also be reviewed under plant status inspections. These
inspections involve a number of activities surrounding NRC resident

10Current NRC officials stated that the 1988 change was made because no
problems with material control and accounting for spent fuel had been
identified at that time.

inspectors' efforts to be aware of emergent plant issues, potential
adverse trends, equipment problems, and other ongoing activities that may
impact the plant's safety risks. These efforts include control room
walkdowns, attending licensee meetings, and weekly plant tours. Inspectors
generally would not learn of material control and accounting problems
during one of these inspectors unless the licensee was aware of them and
raised them during meetings with the inspectors. In addition, a few NRC
resident inspectors that we surveyed mentioned some review of spent fuel
records during the loading of dry storage fuel casks.

NRC Is Studying Spent Fuel Control and Accounting Problems but Has Yet to
Revise Its Regulations or Oversight Policies

In light of the missing or unaccounted-for spent fuel at Millstone and
subsequently at other locations, NRC has various activities under way to
assess the need to revise its regulations and oversight of spent fuel.
While final completion dates for these efforts have not been set, it will
likely be late in 2005 before all of them will be completed. This date
would be over 5 years after the spent fuel rods were first found missing
at Millstone in 2000. We believe that after the more recent instances of
missing spent fuel at Vermont Yankee and Humboldt Bay, the 2003 NRC Office
of the Inspector General report outlining weaknesses in NRC's oversight of
special nuclear materials (including spent fuel), and information
collected during its ongoing efforts, NRC has considerable information
that suggests the need to address nuclear power plants' material control
and accounting problems, including compliance with NRC regulations.
According to NRC officials, they plan to submit the results of these
activities to the NRC Commissioners in the spring of 2005. The
Commissioners will decide what, if any, actions will be taken in response
to the findings.

NRC Is Using a Multifaceted, Phased Approach to Assess the Need to Revise
Its Regulations and Oversight

NRC has three principal activities under way to assess the need to revise
its regulations and oversight of spent fuel. These are (1) a three-phase
project under which NRC inspectors are collecting information on the
status of material control and accounting programs at individual plants;
(2) a comprehensive program review of NRC material control and accounting
programs for special nuclear materials, including spent fuel, through the
contract with DOE's Oak Ridge National Laboratory; and (3) a bulletin
issued on February 11, 2005, to nuclear power plant licensees requesting
information concerning their compliance with NRC material control and
accounting regulations.

In November 2003, NRC issued a temporary instruction (TI) to its
inspection manual.11 NRC's overall objective in issuing the TI was to
gather site-specific information on nuclear power plants' material control
and accounting programs to determine if the issues affecting the missing
spent fuel rods at Millstone were present at other power plants. More
specifically, NRC wanted to obtain enough information to determine if

o 	material control and accounting guidance for nuclear power plants
should be modified to reduce the possibility of a licensee losing spent
fuel rods in the future;

o 	licensees can account for all spent fuel, including any rods that have
been separated from their parent assembly; and

o 	all items of spent fuel listed in the spent fuel inventory, including
rods that have been separated from their parent assembly, can be located
in the spent fuel pool.

The TI also called for obtaining site-specific data for the purposes of
improving the plants' material control and accounting programs. According
to the TI, several inspection activities were aimed at identifying
conditions for future program improvement rather than inspections for
compliance with regulatory requirements.

NRC is carrying out the TI in three phases. Phases I and II have been
completed. In phase I, NRC regional and/or resident inspectors determined
if nuclear power plant licensees had ever removed irradiated (spent) fuel
rods from an assembly or had reconstituted fuel assemblies. For licensees
that had removed rods or reconstituted assemblies, phase II was conducted.
During phase II, inspectors used inspections and interviews to fill out a
questionnaire about the licensees' material control and accounting
programs. Among the questions were the following:

o 	Does the licensee have a program that tracks individual fuel rods from
the point of removal from a fuel assembly to where they are stored in the
spent fuel pool and to their final destination?

11NRC considers this instruction, Spent Fuel Material Control and
Accounting at Nuclear Power Plants (Temporary Instruction 2515/154, Nov.
26. 2003), to be temporary because it provides for a one-time inspection
and has a short-term expiration date, currently scheduled for November
2005.

o 	Are there rods in all of the locations identified on the spent fuel map
(or equivalent) as containing separated rods? (The inspectors were
instructed to obtain from licensees a list of all spent fuel rods that had
been removed from their parent assembly and, to the extent possible,
answer this question by observing from the edge of the spent fuel pool. If
the rods were stored in a closed container, they were to report this under
the "Comments" section of the questionnaire.)

o 	Does the licensee have written material control and accounting
procedures approved by licensee management?

o 	Does the licensee have written procedures for the movement of
individual spent fuel rods within the spent fuel pool?

o 	Does the licensee have procedures for performing oversight of all spent
fuel pool operations?

o 	Does the licensee have records documenting spent fuel pool operations
conducted by contractors or fuel vendors?

o 	Does the licensee perform an annual physical inventory of the spent
fuel pool that includes resolution of all discrepancies?

The TI did not specify an approach to answering the questions but instead
allowed the resident inspectors to use their best judgment and experience.
Our survey of NRC's senior resident inspectors identified some differences
in what the inspectors did to answer the phase II questions. The
inspectors generally interviewed licensee staff and reviewed licensees'
records and written procedures. For the most part, they also used the
licensee's map to verify materials in the spent fuel pool. About half used
visual tools such as binoculars or underwater cameras to verify materials
in the spent fuel pool. About one-fifth observed licensee activities.

Phase III, which has not begun, is to expand on the questions in phase II
with more detailed inspection and review of site documentation to verify
that procedures or controls are implemented and that they are adequate.
For a sample of sites, including those for which "no" was answered to any
of the phase II questions, personnel with material control and accounting
expertise, rather than the regional and on-site inspectors, are to carry
out the activities.

The TI called for phases I and II to be completed within 6 months (by May
2004) and phase III within 18 months (by May 2005). Phases I and II were
carried out from January 2004 to May 2004. The phase I review at 70 sites-
all 103 operating nuclear power plants at 65 sites (a site may contain
more than one nuclear power plant), decommissioning plants at 4 sites, and
1 wet storage facility-identified 65 sites that had removed irradiated
fuel rods from an assembly or had reconstituted fuel assemblies.12 Phase
II was conducted for these sites. On the basis of the phase II results,
NRC officials determined that at least 19 sites were candidates for more
detailed phase III review because NRC inspectors identified that the site
had two or more programmatic issues. As of February 2005, NRC officials
told us that they are in the planning stages for phase III inspections.
Because the TI expires 2 years after its November 2003 issuance, if the
phase III inspection were to be performed before this, it would be late
2005 before the project would be completed.

In September 2001, shortly after the terrorist attacks on the World Trade
Center and the Pentagon, the Chairman of NRC directed the staff to
undertake a comprehensive review of all the agency's safeguards and
security programs. NRC contracted with the Oak Ridge National Laboratory
in August 2003 to review NRC's material control and accounting programs
for special nuclear materials at all NRC licensees. This contract, which
according to an NRC official was for about $500,000, was part of a broader
NRC effort. The Oak Ridge laboratory, which was chosen because of its
expertise in material control and accounting, began the work under the
contract in September 2003. Its four principal tasks were to (1) review
NRC's current material control and accounting requirements, (2) discuss
material control and accounting with current and former employees involved
in these activities, (3) visit selected facilities representing different
types of special nuclear material licensees to explore current material
control and accounting requirements and inspection practices at each site,
and (4) develop a report that offers Oak Ridge's views on NRC's material
control and accounting requirements across the range of NRC-licensed
facilities, discusses any concerns or deficiencies with the current
regulations and inspection practices, and provides specific
recommendations for programmatic changes. Oak Ridge submitted its report
in August 2004 and concluded its work with a management briefing in
October 2004. NRC is currently reviewing the report. According to NRC

12The phase I review also included decommissioned power plants with wet
storage and one wet storage facility.

officials, the staff will complete its review of the report and consider
the results of its review, as well as additional recommendations from the
staff, in developing a paper to the NRC Commissioners. The paper is due to
the Commissioners by spring 2005.

In February 2005, NRC issued a bulletin to holders of operating licenses
for nuclear power plants, decommissioning nuclear power plants storing
spent fuel in a pool, and wet spent fuel storage sites. The bulletin,
which requests information about procedural controls and inventories,
responds to issues involving accounting and control of spent (and other
irradiated) nuclear fuel, which were first identified at Millstone and
then at Vermont Yankee and Humboldt Bay. The purpose of the bulletin is to
gather specific information from the licensees about the status of control
and accounting of special nuclear material at power reactors and other
facilities with wet storage of irradiated fuel. NRC officials told us that
results from the bulletin will contribute to assessing the need to revise
the current NRC material control and accounting regulations and inspection
program. The results from the bulletin will also determine where phase III
inspections will be conducted.

NRC Has Considerable Information Indicating Problems with the Control and
Accounting for Spent Fuel

The data collected by NRC inspectors during phases I and II of the TI
identified material control and accounting problems or shortcomings. Of
the sites that had removed fuel rods from their parent assemblies or had
reconstituted fuel assemblies, the inspectors reported that some sites did
not appear to be in compliance with all of NRC's material control and
accounting requirements or otherwise had questionable material control and
accounting practices involving procedures, physical inventory, accounting
records, or tracking and control.

Additionally, in May 2003, NRC's Office of the Inspector General (OIG)
issued its report, Audit of NRC's Regulatory Oversight of Special Nuclear
Materials.13 In its report, the OIG concluded that NRC's oversight did not
provide adequate assurance that all licensees properly control and account
for special nuclear material. The OIG found that NRC performed limited
inspections of licensees' material control and accounting activities and
could not assure the reliability of the tracking system for special
nuclear material. It stated that NRC managers believed that most spent
fuel is self

13OIG-03-A-15, May 23, 2003.

protecting from a health and safety point of view and that the risk of
undetected loss, theft, or diversion of special nuclear material at power
reactors is low. Therefore, according to the OIG, NRC trusts power reactor
licensees to implement their material control and accounting activities
effectively. The OIG further concluded that without adequate routine
inspections of these activities, NRC cannot reasonably ensure that
licensees are controlling and fully accounting for special nuclear
material. The OIG recommended, among other things, that NRC conduct
periodic inspections to verify that licensees comply with material control
and accounting requirements, including, but not limited to, visual
inspection of licensees' special nuclear material inventories and
validation of report information.

In its October 2003 response to the OIG recommendation, NRC said that its
staff planned to perform a review of the agency's material control and
accounting program (which it did by commissioning the Oak Ridge study) as
part of a comprehensive review of the agency's safeguards and security
program. NRC added that based on the results of the program review, the
staff will determine what changes need to be made to the inspection
program. According to NRC's response, any decision to change the
inspection program would be made during fiscal year 2005, following
completion of the program review. In February 2004, the OIG responded by
stating that delaying any decision to make changes to the material control
and accounting inspection program until fiscal year 2005 was untimely and
did not reflect the importance of ensuring licensee's compliance with
material control and accounting requirements. In March 2004, NRC replied
that the staff considered the program review to be vital to developing and
documenting the regulatory basis for subsequent permanent revisions to the
inspection program. An NRC official told us that once the Oak Ridge study
has been completed and its findings and recommendations have been
addressed, the OIG's recommendation can be closed. The staff currently
anticipates that it will develop specific recommendations and submit them
to the NRC Commissioners during the spring of 2005.

Conclusions	The effectiveness of nuclear power plants' efforts to control
and account for their spent fuel is uneven. A number of plants have
experienced instances of missing or unaccounted-for spent fuel, and NRC
has identified weaknesses in the material control and accounting programs
at various other plants. Contributing to this unevenness is the fact that
NRC regulations do not specifically require plants to control and account
for loose rods or segments of rods. Although loose spent fuel rods do not

appear to have been a concern when NRC developed its regulations, recent
information collected by NRC indicates that most plants have removed rods
from their fuel assemblies or reconstituted fuel assemblies. NRC data
further indicate that plants are treating loose rods and segments
differently under their material control and accounting programs. The
absence of specific guidance in NRC regulations for how licensees should
conduct physical inventories has also resulted in unevenness in licensees'
compliance with these important requirements.

Loose spent fuel rods and rod segments also were not an issue when NRC
stopped inspecting licensees' compliance with material control and
accounting regulations. Spent fuel was generally viewed in terms of fuel
assemblies, which NRC considered to be, in effect, self-protecting because
of their high radioactivity and large size and weight. However, individual
rods, and especially rod segments, are also highly radioactive and are
much smaller and lighter than fuel assemblies. This issue was first raised
in 2000, with the loss of spent fuel rods at Millstone. The occurrences of
missing or unaccounted-for spent fuel rods and the unevenness in
licensees' compliance with material control and accounting requirements
highlight the need for more effective oversight of these programs. In the
aftermath of terrorist attacks on the United States, material control and
accounting of spent nuclear fuel has become more important. Material
control and accounting requirements are of great importance because of the
potential health and safety consequences of failing to effectively account
for and control spent nuclear fuel. While NRC's multifaceted and phased
approach to these issues may have been appropriate in the initial context
of a single incident at Millstone, waiting longer to make a decision on
changes in the agency's regulations and oversight is-as the OIG stated in
February 2004-not timely and does not fully reflect the importance of
ensuring that licensees comply with control and accounting requirements
for spent fuel. We believe that NRC has sufficient information about
problems with material control and accounting at nuclear power plants to
proceed with revising NRC's regulations and oversight.

Recommendations for 	To improve the effectiveness of nuclear reactor
licensees' material control and accounting programs for spent nuclear
fuel, we recommend that the

Executive Action	NRC Commissioners take action, in a timely manner, on the
following two items:

o 	Establish specific requirements for the control and accounting of loose
spent fuel rods and rod segments and nuclear reactor licensees' conduct of
their physical inventories.

o 	Develop and implement appropriate inspection procedures to verify
compliance and assess the effectiveness of licensees' material control and
accounting programs for spent fuel.

Agency Comments	We provided a draft of this report to NRC for review and
comment. In its written comments (see app. III), NRC generally agreed with
the report's conclusions and stated that, overall, the report is well
written and balanced. Regarding our recommendation that NRC establish
specific requirements for the control and accounting of loose spent fuel
rods and rod segments and nuclear reactor licensees' conduct of their
physical inventories, NRC stated that it will develop guidance concerning
control and accounting of rods and pieces of spent nuclear fuel and the
conduct of physical inventories. According to NRC, its current regulations
are clear that licensees are required to keep complete records of and
conduct annual physical inventories of all special nuclear material, but
the implementation guidance does need to be enhanced. Regarding our
recommendation that NRC develop and implement appropriate inspection
procedures to verify compliance and assess the effectiveness of licensees'
material control and accounting programs for spent fuel, NRC said that it
plans to revise its existing procedures for inspecting material control
and accounting for spent nuclear fuel to include instruction on inspecting
control and accounting of rods and pieces.

In addition to comments directly relating to our recommendations, NRC
offered a number of comments concerning the report's context. For example,
NRC said that its development and issuance of its temporary instruction
was postponed by the need to devote NRC's limited resources to areas
requiring more immediate attention, especially the comprehensive security
and radiological protection activities conducted after the September 11,
2001, terrorist attacks. NRC also said that the report needs to provide
balance by giving credit to NRC for making prioritized decisions based on
a variety of factors, including, but not limited to, risk of malevolent
action, attractiveness of the material for potential malevolent
activities, other controls, and available personnel resources. According
to NRC, there is no reason to conclude that any of the missing fuel
segments were removed for any malevolent purpose. NRC further stated that
the report does not make sufficiently clear that the problems at Vermont

Yankee were identified as a direct result of NRC's implementation of its
temporary instruction and that implementation of the temporary instruction
also helped identify the problems at Humboldt Bay. We believe that our
report provides sufficient context for the issues relating to the
instances of unaccounted-for spent nuclear fuel. It also devotes
considerable attention to describing NRC's actions in response to those
instances, including efforts already under way when we began our review.
We have added language to the report to emphasize that NRC's actions in
response to the Millstone incident led directly to identifying the
problems at Vermont Yankee and helped identify the problems at Humboldt
Bay. While we also agree that there is no evidence that any of the missing
fuel segments were removed for malevolent purposes, we note that it is
still not certain what happened to the missing spent fuel at Millstone and
Humboldt Bay.

As agreed with your offices, unless you publicly announce its contents
earlier, we plan no further distribution of this report until 30 days from
the date of its issuance. At that time, we will send copies of this report
to interested congressional committees, the Chairman of NRC, and other
interested parties. We will make copies available to others upon request.
In addition, the report will be available at no charge on the GAO Web site
at http://www.gao.gov.

If you or your staffs have any questions about this report, please call me
at (202) 512-3841 or contact me at [email protected]. Key contributors to
this report are listed in appendix IV.

Jim Wells Director, Natural Resources and Environment

Appendix I

Scope and Methodology

To assess nuclear power plants' performance in controlling and accounting
for their spent nuclear fuel, we reviewed and analyzed relevant documents,
including Nuclear Regulatory Commission (NRC) and nuclear power plant
licensees' event inquiry reports and NRC studies and investigations of
missing spent fuel rods. We also interviewed NRC and nuclear power plant
officials and conducted two site visits to nuclear power plants. In the
context of this report, control and accounting for spent nuclear fuel
refers to plants' tracking of and recordkeeping for the movement and
storage of their spent nuclear fuel. We did not assess plant safety
procedures for handling or storage of spent fuel or plant security and the
vulnerability of spent fuel to theft or terrorist attacks.

To assess NRC's material control and accounting requirements for spent
fuel stored at nuclear power sites, we reviewed and analyzed relevant
legislation, regulations, and NRC orders and policies and we interviewed
NRC and industry officials to identify the key NRC requirements and how
they are implemented.

To determine how NRC performs oversight of nuclear power plants' material
control and accounting activities, we reviewed NRC inspection policies,
instructions, and reports; analyzed relevant NRC Inspector General reports
and internal NRC analyses and studies; and interviewed appropriate NRC
program and regional officials. To determine the status of NRC's actions
and plans in response to licensees' spent fuel control and accounting
problems, we reviewed internal NRC memorandums, instructions, and reports
and interviewed appropriate program officials.

To further explore how NRC performs oversight of control and accounting
activities for spent fuel at nuclear power plants, we conducted an e-mail
survey of all NRC lead/senior inspectors located on site at the plants
about NRC inspection practices, management controls, and the inspectors'
suggestions for improvements, if viewed necessary. There are no sampling
errors because this was not a sample survey; rather, we sent and received
a response from every lead/senior inspector at every site.

Nonetheless, the practical difficulties in developing and administering
any survey may introduce errors, commonly referred to as nonsampling
errors. For example, difficulties may arise in how a particular question
is interpreted or from differences in experiences and information
available to respondents when answering a question. We took steps in the
development of the survey, its administration, and the data editing to
minimize these nonsampling errors. We conducted three pretests of the
survey instrument.

Appendix I Scope and Methodology

The first pretest was with two inspectors at one location by telephone;
the second and third pretests were with expert NRC officials, both by
telephone. We modified the survey instrument to reflect questions,
comments, and concerns received during the pretests. The instrument was
also internally reviewed by one of our survey methodologists. In addition,
we edited all completed surveys for consistency and contacted NRC
inspectors to clarify responses whenever necessary. While our survey
responses reflect the opinions of NRC resident inspectors, to ensure the
reliability that our survey data was accurate and complete and that
spreadsheet calculations were correct, 100 percent of the data entry and
all formulas were internally and independently checked and verified.

Through discussions with appropriate NRC officials, we determined in the
course of developing our survey that although there are 103 plants
currently in operation in the United States, some reactors are colocated
on a total of 65 sites. Because only one of the two or three inspectors
assigned to each site is designated as the lead NRC authority, we sent our
survey to that person. Therefore, we sent our survey to a total of 65
senior/lead NRC inspectors. We expected that given their experience, the
lead/senior inspector would obtain additional views and input from the
other resident inspectors if they felt it was needed. For example, this
additional input would be important if the other inspectors performed the
requirements of the temporary instruction for inspection of material
control and accounting at nuclear power sites, or if the senior resident
was newer to and, therefore, less familiar with the practices and history
of the material control and accounting program at the site. We received 67
responses to our survey. In one case, we received a response from the
senior inspector and an additional resident inspector at the same site. We
kept only the senior inspector's response in our analysis and deleted the
other response from that site. In the second instance where we received
two responses from one site, special circumstances at that site provided
for two senior resident inspectors, but one of those inspectors is
primarily responsible for the recovery effort of one of the units at that
site. We excluded that inspector's response from our analysis, retaining
only the response from the senior inspector with the more general role.
This left us with 65 responses for a 100 percent response rate. The
detailed results of our survey of NRC resident inspectors are presented in
appendix II.

We performed our work primarily in Washington, D.C., between July 2004 and
February 2005, in accordance with generally accepted government auditing
standards.

Appendix II

Summary Results of GAO Survey of NRC Senior/Lead Resident Inspectors

Overall, we received 65 responses to our survey. Our detailed scope and
methodology (Appendix 1) contains particulars regarding the development
and administration of the survey. Not all of the respondents answered all
questions. This may have been a result of either the respondent's choice
or they may have been instructed to skip a question according to their
previous response. Throughout this appendix, we will note the number of
respondents answering each question by noting "n=number of respondents to
this question".

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Introduction:

The Vermont congressional delegation, along with a member from a nearby
Massachusetts district, has asked the U. S. Government Accountability
Office to review the NRC's oversight of licensees' material control and
accounting program for spent nuclear fuel at commercial nuclear power
plants.

As part of our review, we have met with NRC officials in headquarters and
at the regional level. We have spent a day touring a nuclear power plant,
discussing and reviewing licensee procedures. With this survey, we are
gathering information on resident inspectors' activities and views related
to this issue. We are distributing the following survey to all NRC senior
resident inspectors.

Your contribution to our efforts is gratefully appreciated. The
information you provide will assist us in responding to Congressional
interest on this important issue.

Please complete and return this survey by November 24, 2004

Instructions:

Simply reply to this email by selecting "Reply to Sender (include
message)" and then type in your responses by the return date. Although we
are sending this to senior resident inspectors, please feel free to
include other resident inspectors at your site in developing your answers.
If you do include other inspectors, please provide the contact information
of all inspectors contributing to the survey in Question 1.

If you have any questions about this survey or have problems submitting
your response, please contact Melissa A. Roye by phone at (202) 512-6426
or by email at [email protected].

~~~~~~~~~~~~~~~~~~~BEGIN SURVEY~~~~~~~~~~~~~~~~~~~

Appendix II
Summary Results of GAO Survey of NRC
Senior/Lead Resident Inspectors

Background Information:

1. In case we would like to clarify any of your responses, please provide
the following information for ALL persons involved in submitting
information requested in this survey (please copy and paste fields for
Respondent 3+, if necessary):

Respondent 1 (n=65)
Name:
Title:
Phone number:
Site Name/Location:
Months at current site:
Months as SRI or RI at any site:
Months at NRC:

Respondent 2

Name:
Title:
Phone number:
Site Name/Location:
Months at current site:
Months as SRI or RI at any site:
Months at NRC:

Material Control and Accounting Related Activities:

2. What did you do to execute the requirements of "Spent Fuel Material
Control and
Accounting at Nuclear Power Plants," Temporary Instruction (TI) 2515/154?
Please mark all that apply. (n=65)

[ 57 ] Interviews

[ 54 ] Records review

[ 53 ] Review of licensee's written procedures

[ 14 ] Observation of licensee activities

[ 49 ] Verification of materials in the spent fuel pool using a map

[ 30 ] Verification of materials in the spent fuel pool using visual aides
such as binoculars or underwater cameras

[ 12 ] Only Phase I of the TI was completed at this site

[ 22 ] At this site, the TI was conducted by someone else. Name of
Inspector(s): 22 provided a name and some also included an explanation.

[ 10 ] Other? Please explain: 10 provided explanation.

3. Do you routinely inspect or verify the licensee's material control and
accounting program policies, records, or procedures for spent nuclear
fuel? (n=65)

[ 23 ] Yes. Please elaborate below, if you wish.

[ 42 ] No. Please elaborate below, if you wish.

[ 0 ] Don't know (Please go to question 4).

Page 2

Appendix II
Summary Results of GAO Survey of NRC
Senior/Lead Resident Inspectors

Elaboration: 	Overall, 42 respondents provided an elaboration. Of that 42,
23 responded yes and 19 responded no.

4. Do you engage in inspection activities under the Reactor Oversight
Process (ROP) that indirectly involve material control and accounting for
spent fuel? (n=65)

[ 53 ] Yes. Please elaborate below, if you wish.

[ 12 ] No. Please elaborate below, if you wish.

[ 0 ] Don't know (Please go to question 5)

Elaboration: Overall, 53 respondents provided an elaboration. Of that 53,
49 responded yes and 4 responded no.

5. Do you engage in additional oversight activities (beyond the
requirements of the ROP) that aid you in assessing the licensee's
abilities for material control and accounting of spent fuel? (n=65)

[ 14 ] Yes. Please elaborate below, if you wish.

[ 50 ] No. Please elaborate below, if you wish.

[ 1 ] Don't know (Please go to question 6)

Elaboration: Overall, 23 respondents provided an elaboration. Of that 23,
13 responded yes and 10 responded no.

6. Do you think that the NRC should be doing more with regard to the
oversight of material control and accounting for spent fuel? (n=65)

[ 24 ] Yes. Please elaborate below, if you wish, and then go to question
7.

[ 28 ] No. Please elaborate below, if you wish, and then go to question 8.

[ 13 ] Don't know (Please go to question 8)

Elaboration: 	Overall, 38 respondents provided an elaboration. Of that 38,
20 responded yes, 12 responded no, and 6 responded that they did not know.

7. Would you need more training to perform oversight of the licensee's
material control and accounting program? (n=26)

[ 7 ] Yes. Please elaborate below, if you wish.

[ 16 ] No. Please elaborate below, if you wish.

[ 3 ] Don't know (Please go to question 8)

Elaboration: Overall, 13 respondents provided an elaboration. Of that 13,
5 responded yes and 8 responded no. In addition, there were 23 respondents
who should have skipped this question based on their previous response but
chose to answer it anyway. Of that 23, 8 also provided us with further
elaboration; 3 responded yes, 3 responded no, and 2 responded that they
did not know.

Page 3

Appendix II
Summary Results of GAO Survey of NRC
Senior/Lead Resident Inspectors

8. With regard to the material control and accounting of spent fuel, do
you have any best practices or lessons learned to share? For example, the
transferring of fuel pellets from broken pins into new pins, the insertion
of pins into skeleton assemblies, or any recordkeeping improvements.
(n=65)

[ 14 ] Yes. Please elaborate below, if you wish, and then go to question
9.

[ 47 ] No. Please elaborate below, if you wish, and then go to question
10.

[ 4 ] Don't know (Please go to question 10)

Elaboration: Overall, 17 respondents provided an elaboration. Of that 17,
14 responded yes and 3 responded no.

9. Please indicate if these best practices or policies: (n=12; respondents
could check all that could apply)

[ 9 ] Are in place at your current site. Please elaborate below, if you
wish.

[ 1 ] Were learned or practiced elsewhere. Please elaborate below, if you
wish.

[ 5 ] Are just something you believe can improve procedures and the
oversight process.

Please elaborate, if you wish: 3 respondents provided elaboration. Of
those three, all described practices or policies in place at their current
site and one respondent stated that it is something they believe can
improve procedures and the oversight process.

[ 1 ] Other. Please explain: One respondent provided an explanation to
discuss a best practice or policy.

10. Please share with us any additional comments: (n=16)

16 respondents provided an elaboration.

~~~~~~~~~~~~~~~~~~~END SURVEY~~~~~~~~~~~~~~~~~~~

Thank you for your participation.

Page 4

Appendix III

Comments from the Nuclear Regulatory Commission

Appendix III
Comments from the Nuclear Regulatory
Commission

Appendix III
Comments from the Nuclear Regulatory
Commission

Appendix IV

                     GAO Contacts and Staff Acknowledgments

GAO Contacts	Jim Wells, (202) 512-3841 Ray Smith, (202) 512-6551

Staff 	In addition to the individuals named above, Ilene Pollack and
Melissa A. Roye made key contributions to this report. Also contributing
to this report

Acknowledgments	were John W. Delicath, Doreen Feldman, Judy K. Pagano,
Keith A. Rhodes, and Barbara Timmerman.

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