Nuclear Regulatory Commission: Preliminary Observations on Its	 
Oversight to Ensure the Safe Operation of Nuclear Power Plants	 
(15-JUN-06, GAO-06-886T).					 
                                                                 
The Nuclear Regulatory Commission (NRC) has the responsibility to
provide oversight to ensure that the nation's 103 commercial	 
nuclear power plants are operated safely. While the safety of	 
these plants has always been important, since radioactive release
could harm the public and the environment, NRC's oversight has	 
become even more critical as the Congress and the nation consider
the potential resurgence of nuclear power in helping to meet the 
nation's growing energy needs. Prior to 2000, NRC was criticized 
for having a safety oversight process that was not always focused
on the most important safety issues and in some cases, was overly
subjective. To address these and other concerns, NRC implemented 
a new oversight process--the Reactor Oversight Process (ROP). NRC
continues to modify the ROP to incorporate feedback from	 
stakeholders and in response to other external events. This	 
statement summarizes information on (1) how NRC oversees nuclear 
power plants, (2) the results of the ROP over the past several	 
years, and (3) the aspects of the ROP that need improvement and  
the status of NRC's efforts to improve them. This statement	 
discusses preliminary results of GAO's work. GAO will report in  
full at a later date. GAO analyzed program-wide information,	 
inspection results covering 5 years of ROP operations, and	 
detailed findings from a sample of 11 plants.			 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-06-886T					        
    ACCNO:   A55839						        
  TITLE:     Nuclear Regulatory Commission: Preliminary Observations  
on Its Oversight to Ensure the Safe Operation of Nuclear Power	 
Plants								 
     DATE:   06/15/2006 
  SUBJECT:   Inspection 					 
	     Nuclear powerplant safety				 
	     Nuclear powerplants				 
	     Performance measures				 
	     Safety regulation					 
	     Safety standards					 
	     Regulatory agencies				 
	     Stakeholder consultations				 
	     NRC Reactor Oversight Process			 

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GAO-06-886T

     

     * Background
     * NRC Uses Various Tools and Takes a Graded and Risk-Informed
     * NRC Has Continually Identified Problems at Nuclear Power Pla
     * NRC Continues to Make Improvements to its Reactor Oversight
     * GAO Contact and Staff Acknowledgments
     * GAO's Mission
     * Obtaining Copies of GAO Reports and Testimony
          * Order by Mail or Phone
     * To Report Fraud, Waste, and Abuse in Federal Programs
     * Congressional Relations
     * Public Affairs

Testimony

Before the Subcommittee on Clean Air, Climate Change, and Nuclear Safety,
Committee on Environment and Public Works, United States Senate

United States Government Accountability Office

GAO

Not to Be Released

Before 9:30 a.m. EDT

Thursday, June 22, 2006

NUCLEAR REGULATORY COMMISSION

Preliminary Observations on Its Oversight to Ensure the Safe Operation of
Nuclear Power Plants

Statement for the Record by Jim Wells, Director Natural Resources and
Environment

GAO-06-886T

Mr. Chairman and Members of the Subcommittee:

I am pleased to have the opportunity to comment on our ongoing review of
how the Nuclear Regulatory Commission (NRC) oversees the safe operation of
the nation's 103 operating commercial nuclear power plants, which provide
about 20 percent of U.S. electricity. The safety of these plants, which
are located at 65 sites in 31 states, has always been important, as an
accident could result in the release of radioactive material and
potentially harm public health and the environment. NRC is responsible for
issuing regulations, licensing and overseeing plants, and requiring
necessary actions to protect public health and safety, while plant
operators are responsible for safely operating their plants in accordance
with their licenses. NRC's oversight has become even more critical as the
Congress and the nation consider the potential resurgence of nuclear power
in helping to meet the nation's growing energy needs. No new orders for a
plant have been placed since the 1979 accident at the Three Mile Island
plant, but in the face of concerns about aging plants, energy security,
global warming, and the ever increasing need for energy to fuel the
nation's economy, nuclear power is resurfacing as a principal option. An
accident could threaten public confidence in nuclear power just as it
begins to emerge from the shadows of the Three Mile Island accident. It is
critical that NRC be able to ensure that nuclear power plants are operated
safely and that public confidence about their safety is high.

Prior to 2000, NRC was criticized for having a safety oversight process
that was not always focused on the most important safety issues and in
some cases, regulatory activities were redundant, inefficient, and overly
subjective. While its new process-which NRC refers to as the Reactor
Oversight Process (ROP)-is similar to its prior process in that the
oversight activities largely consist of physical plant inspections, the
inspections now focus on more important safety issues and the goal is to
make assessments of plants' safety performance more objective,
predictable, and understandable. The unexpected discovery, in March 2002,
of extensive corrosion and a pineapple-size hole in the reactor vessel
head-a vital barrier preventing a radioactive release-at the Davis-Besse
nuclear power plant in Ohio led NRC to re-examine its safety oversight and
other regulatory processes to determine how such corrosion could be
missed. Based on the lessons learned from the event, NRC made several
changes to the ROP. NRC continues to annually assess the ROP by obtaining
feedback from the industry and other stakeholders such as public interest
groups, and incorporates this feedback and other information into specific
performance metrics to assess its effectiveness.

We are preparing a report to you and other Members of the Congress later
this year on (1) how NRC oversees nuclear power plants to ensure that they
are operated safely, (2) the results of the ROP over the past several
years in terms of the number and types of inspection findings, and (3) the
aspects of the ROP that need improvement and the status of NRC's efforts
to improve them.1 To examine how NRC oversees plants, we reviewed NRC's
regulations, inspection manuals, and other guidance documents; interviewed
NRC headquarters and regional officials and regional and on-site
inspectors; visited the Salem and Hope Creek nuclear power plants; and
attended several public meetings covering various nuclear power plant
oversight topics. To examine the results of the ROP over the past several
years, we analyzed NRC data on nuclear plant safety for 2001 through 2005,
the years since implementation of the ROP for which data were available
for the full year, and discussed our analysis with NRC officials. We
assessed the reliability of this data and determined that the data were
sufficiently reliable for the purposes of our report. To examine areas of
the ROP that need improvement and the status of NRC's efforts to improve
them, we reviewed NRC documents, including annual self-assessment reports;
interviewed officials from NRC and outside stakeholder groups; and
attended several key public meetings covering proposed changes to
oversight procedures. We also reviewed various external evaluations of the
ROP, including our prior reports and those of the NRC Inspector General.
Additionally, we selected a nonprobability sample of 6 nuclear power sites
(totaling 11 plants) that provided coverage of each of NRC's four regional
offices and varying levels of plant performance and NRC oversight since
2000. We reviewed relevant inspection reports and assessment documents and
interviewed NRC and industry officials at each site to examine how NRC
applies the ROP to identify and correct safety problems. We are conducting
this work in accordance with generally accepted government auditing
standards. We performed the work reflected in this statement from July
2005 to June 2006.

To date, our work indicates the following:

           o  NRC uses various tools to oversee the safe operation of nuclear
           power plants, including physical plant inspections of equipment
           and records and quantitative measures or indicators of plant
           performance such as the number of unplanned shutdowns. NRC uses a
           graded and risk-informed approach-that is, one considering safety
           significance in deciding on the equipment or operating procedures
           to be inspected and employing increasing levels of regulatory
           attention to plants based on the severity of identified
           performance problems-to apply these tools. All plants receive
           baseline inspections, which are inspections of plant operations
           that are conducted almost continuously by NRC inspectors usually
           located at each nuclear power plant site. When NRC becomes aware
           of a performance problem at a plant, it conducts supplemental
           inspections, which expand the scope of baseline inspections. NRC
           conducts special inspections to investigate specific safety
           incidents or events that are of particular interest to NRC because
           of their potential significance to safety. The plants also
           self-report on their safety performance using performance measures
           or indicators in quarterly reports submitted to NRC. Plants'
           quarterly reports of performance indicators are verified by NRC's
           on-site inspectors. NRC analyzes each of its inspection findings
           to determine the finding's significance in terms of safety, and
           applies increasing levels of oversight based on the number and
           level of risk of the findings identified.

           o  Since 2001, NRC's ROP has resulted in more than 4,000
           inspection findings concerning nuclear power plant licensees'
           failure to comply with regulations or other safe operating
           procedures. About 97 percent of these findings were for actions or
           failures NRC considered important to correct but of very low
           significance to overall safe operation of the plants. For example,
           a finding of very low risk significance was issued at one plant
           after a worker failed to wear the proper radiation detector and at
           another plant because the operator failed to properly evaluate and
           approve the storage of flammable materials in the vicinity of
           safety-related equipment. In contrast, 12 of the inspection
           findings, or less than 1 percent, were of the highest levels of
           significance to safety. For example, NRC issued a finding of the
           highest risk significance at one plant after a steam generator
           tube failed, causing an increased risk of the release of
           radioactive material. Similarly, there were 156 instances, or less
           than 1 percent, in which data reported for individual performance
           indicators were outside NRC's acceptable category of performance.
           On the basis of its findings and the performance indicators, NRC
           has subjected more than three-quarters of the 103 operating plants
           to oversight beyond the baseline inspections for varying amounts
           of time. Over the past 5 years, 5 plants have been subject to the
           highest level of NRC oversight that still allows continued
           operations. According to NRC officials, the results of its
           oversight process at an industry or summary level serve as an
           indicator of overall industry performance, which to date indicates
           good safety performance.

           o  NRC has improved several key areas of the ROP, largely in
           response to independent reviews and feedback from stakeholders,
           including its regional and on-site inspectors, usually obtained
           during NRC's annual self-assessment of the oversight process.
           These improvements include better focusing its inspections on
           those areas most important to safety, reducing the time needed to
           determine the risk significance of inspection findings, and
           modifying the way that some performance indicators are measured.
           For the most part, NRC considers these efforts to be refinements
           rather than significant changes. One significant shortcoming in
           the ROP that we and others have found is that it is not as
           effective as it could be in identifying and addressing early
           indications of deteriorating safety at nuclear power plants before
           problems develop. In response to this concern, NRC recently
           undertook a major initiative to improve its ability to address
           plants' safety culture-that is, the organizational characteristics
           that ensure that issues affecting nuclear plant safety receive the
           attention their significance warrants. NRC and others have long
           recognized that safety culture attributes, such as attention to
           detail, adherence to procedures, and effective corrective and
           preventative action, have a significant impact on a plant's safety
           performance. NRC is taking action to improve how it incorporates
           safety culture into the ROP by redefining and increasing its focus
           on more qualitative and cross-cutting issues or aspects of plant
           performance-including a safety conscious work environment, human
           performance, and problem identification and resolution-and
           developing new requirements to more directly assess safety culture
           at poorer performing plants. Some of its actions have been
           controversial. Although some industry officials have expressed
           concern that these changes could introduce undue subjectivity to
           NRC's oversight, given the difficulty in measuring these often
           intangible and complex concepts, other stakeholders believe this
           approach will provide NRC better tools to address safety culture
           issues at plants. NRC officials acknowledge that this effort is
           only a step in an incremental approach and that continual
           monitoring, improvements, and oversight will be needed to fully
           detect deteriorating safety conditions before an event occurs.

           NRC is devoting considerable effort to overseeing the safe
           operation of the nation's commercial nuclear power plants, and its
           process for doing so appears logical and well-structured. This
           does not mean that NRC's oversight is perfect. However, NRC is
           also demonstrating that it is aware of this fact and is willing to
           make changes to improve. Its efforts to continuously obtain
           feedback and consider the need for improvement to the ROP are
           important as nuclear power plants age and the nation considers
           building new plants. In this regard, its safety culture initiative
           may be its most important improvement to the ROP. As we complete
           our work, we will be examining whether NRC needs a more formal
           mechanism to assess the effectiveness of this initiative,
           including incorporating stakeholder feedback and developing
           specific measures to assess its performance. It has been more than
           4 years since Davis-Besse, and it appears that NRC is now taking
           concrete actions to begin incorporating safety culture into the
           ROP.

           I would also like to point out that the ROP is a very open process
           in that NRC provides the public and its other stakeholders with
           considerable specific and detailed information on its activities
           and findings with regard to safety at individual plants. However,
           to ensure or foster even greater public confidence in safety
           oversight, as we complete our work, we will be examining whether
           NRC can make this information more meaningful by providing
           industry-wide or summary data for key components of its oversight
           process. This information may provide a useful measure of overall
           industry performance and allow for comparisons between the safety
           performance of a specific plant to that of the industry as a
           whole.

           Background
			  
			  NRC is an independent agency of over 3,200 employees established
           by the Energy Reorganization Act of 1974 to regulate civilian-that
           is, commercial, industrial, academic, and medical-use of nuclear
           materials. NRC is headed by a five-member Commission. The
           President appoints the Commission members, who are confirmed by
           the Senate, and designates one of them to serve as Chairman and
           official spokesperson. The Commission as a whole formulates
           policies and regulations governing nuclear reactor and materials
           safety, issues orders to licensees, and adjudicates legal matters
           brought before it.

           NRC and the licensees of nuclear power plants share the
           responsibility for ensuring that commercial nuclear power reactors
           are operated safely. NRC is responsible for issuing regulations,
           licensing and inspecting plants, and requiring action, as
           necessary, to protect public health and safety. Plant licensees
           have the primary responsibility for safely operating their plants
           in accordance with their licenses and NRC regulations. NRC has the
           authority to take actions, up to and including shutting down a
           plant, if licensing conditions are not being met and the plant
           poses an undue risk to public health and safety.

           Nuclear power plants have many physical structures, systems, and
           components, and licensees have numerous activities under way,
           24-hours a day, to ensure that plants operate safely. NRC relies
           on, among other things, its on-site resident inspectors to assess
           plant conditions and the licensees' quality assurance programs
           such as those required for maintenance and problem identification
           and resolution. With its current resources, NRC can inspect only a
           relatively small sample of the numerous activities going on during
           complex plant operations. According to NRC, its focus on the more
           safety significant activities is made possible by the fact that
           safety performance at plants has improved as a result of more than
           25 years of operating experience.

           Commercial nuclear power plants are designed according to a
           "defense in depth" philosophy revolving around redundant, diverse,
           and reliable safety systems. For example, two or more key
           components are put in place so that if one fails, there is another
           to back it up. Plants have numerous built-in sensors to monitor
           important indicators such as water temperature and pressure.
           Plants also have physical barriers to contain the radiation and
           provide emergency protection. For example, the nuclear fuel is
           contained in a ceramic pellet to lock in the radioactive
           byproducts and then the fuel pellets are sealed inside rods made
           of special material designed to contain fission products, and the
           fuel rods are placed in reactors housed in containment buildings
           made of several feet of concrete and steel.

           Furthermore, the nuclear power industry formed an organization,
           the Institute of Nuclear Power Operations (INPO) with the mission
           to "promote the highest levels of safety and reliability-to
           promote excellence-in the operation of nuclear electric generating
           plants." INPO provides a system of personnel training and
           qualification for all key positions at nuclear power plants and
           workers undergo both periodic training and assessment. INPO also
           conducts periodic evaluations of operating nuclear plants,
           focusing on plant safety and reliability, in the areas of
           operations, maintenance, engineering, radiological protection,
           chemistry, and training. Licensees make these evaluations
           available to the NRC for review, and the NRC staff uses the
           evaluations as a means to determine whether its oversight process
           has missed any performance issues.

           NRC Uses Various Tools and Takes a Graded and Risk-Informed Approach to
           Ensuring the Safety of Nuclear Power Plants

           NRC uses various tools to oversee the safe operation of nuclear
           power plants, generally consisting of physical plant inspections
           of equipment and records and objective indicators of plant
           performance. These tools are risk-informed in that they are
           focused on the issues considered most important to plant safety.
           Based on the results of the information it collects through these
           efforts, NRC takes a graded approach to its oversight, increasing
           the level of regulatory attention to plants based on the severity
           of identified performance issues. NRC bases its regulatory
           oversight process on the principle and requirement that plant
           licensees routinely identify and address performance issues
           without NRC's direct involvement. An important aspect of NRC's
           inspections is ensuring the effectiveness of licensee quality
           assurance programs. NRC assesses overall plant performance and
           communicates these results to licensees on a semi-annual basis.

           During fiscal year 2005, NRC inspectors spent a total of 411,490
           hours on plant inspection activities (an average of 77 hours per
           week at each plant). The majority of these inspection efforts were
           spent on baseline inspections, which all plants receive on an
           almost continuous basis. Baseline inspections, which are mostly
           conducted by the two to three NRC inspectors located at each
           nuclear power plant site, evaluate the safety performance of plant
           operations and review plant effectiveness at identifying and
           resolving its safety problems.2 There are more than 30 baseline
           inspection procedures, conducted at varying intervals, ranging
           from quarterly to triennially, and involving both physical
           observation of plant activities and reviews of plant reports and
           data. The inspection procedures are risk-informed to focus
           inspectors' efforts on the most important areas of plant safety in
           four ways: 1) areas of inspection are included in the set of
           baseline procedures based on, in part, their risk importance, 2)
           risk information is used to help determine the frequency and scope
           of inspections, 3) the selection of activities to inspect within
           each procedure is informed with plant-specific risk information,
           and 4) the inspectors are trained in the use of risk information
           in planning their inspections.

           For inspection findings found to be more than minor,3 NRC uses its
           significance determination process (SDP) to assign each finding
           one of four colors to reflect its risk significance.4 Green
           findings equate to very low risk significance, while white,
           yellow, and red colors represent increasing levels of risk,
           respectively. Throughout its application of the SDP, NRC
           incorporates information from the licensee, and the licensee has
           the opportunity to formally appeal the final determination that is
           made.

           In addition to assigning each finding a color based on its risk
           significance, all findings are evaluated to determine if certain
           aspects of plant performance, referred to as cross-cutting issues,
           were a contributing cause to the performance problem. The
           cross-cutting issues are comprised of (1) problem identification
           and resolution, (2) human performance, and (3) safety
           consciousness in the work environment. To illustrate, in analyzing
           the failure of a valve to operate properly, NRC inspectors
           determined that the plant licensee had not followed the correct
           procedures when performing maintenance on the valve, and thus NRC
           concluded the finding was associated with the human performance
           cross-cutting area. If NRC determines that there are multiple
           findings during the 12-month assessment period with documented
           cross-cutting aspects, more than three findings with the same
           causal theme, and NRC has a concern about the licensee's progress
           in addressing these areas, it may determine that the licensee has
           a "substantive" cross-cutting issue. Opening a substantive
           cross-cutting issue serves as a way for NRC to notify the plant
           licensee that problems have been identified in one of the areas
           and that NRC will focus its inspection efforts in the
           cross-cutting area of concern.

           When NRC becomes aware of one or more performance problems at a
           plant that are assigned a risk color greater-than-green (white,
           yellow, or red), it conducts supplemental inspections.
           Supplemental inspections, which are performed by regional staff,
           expand the scope beyond baseline inspection procedures and are
           designed to focus on diagnosing the cause of the specific
           performance deficiency. NRC increases the scope of its
           supplemental inspection procedures based on the number of
           greater-than-green findings identified, the area where the
           performance problem was identified, and the risk color assigned.
           For example, if one white finding is identified, NRC conducts a
           follow-up inspection directed at assessing the licensee's
           corrective actions to ensure they were sufficient in both
           correcting the specific problem identified and identifying and
           addressing the root and contributing causes to prevent recurrence
           of a similar problem. If multiple yellow findings or a single red
           finding is identified, NRC conducts a much more comprehensive
           inspection which includes obtaining information to determine
           whether continued operation of the plant is acceptable and whether
           additional regulatory actions are necessary to address declining
           plant performance. This type of more extensive inspection is
           usually conducted by a multi-disciplinary team of NRC inspectors
           and may take place over a period of several months. NRC inspectors
           assess the adequacy of the licensee's programs and processes such
           as those for identifying, evaluating, and correcting performance
           issues and the overall root and contributing causes of identified
           performance deficiencies.

           NRC conducts special inspections when specific events occur at
           plants that are of particular interest to NRC because of their
           potential safety significance. Special inspections are conducted
           to determine the cause of the event and assess the licensee's
           response. For special inspections, a team of experts is formed and
           an inspection charter issued that describes the scope of the
           inspection efforts. At one plant we reviewed, for example, a
           special inspection was conducted to investigate the circumstances
           surrounding the discovery of leakage from a spent fuel storage
           pool. Among the objectives of this inspection were to assess the
           adequacy of the plant licensee's determination of the source and
           cause of the leak, the risk significance of the leakage, and the
           proposed strategies to mitigate leakage that had already occurred
           and repair the problem to prevent further leakage.

           In addition to its various inspections, NRC also collects plant
           performance information through a performance indicator program,
           which it maintains in cooperation with the nuclear power industry.
           On a quarterly basis, each plant submits data for 15 separate
           performance indicators. These objective numeric measures of plant
           operations are designed to measure plant performance related to
           safety in various aspects of plant operations. For example, one
           indicator measures the number of unplanned reactor shutdowns
           during the previous four quarters while another measures the
           capability of alert and notification system sirens, which notify
           residents living near the plant in the event of an accident.
           Working with the nuclear power industry, NRC established specific
           criteria for acceptable performance with thresholds set and
           assigned colors to reflect increasing risk according to
           established safety margins for each of the indicators. Green
           indicators reflect performance within the acceptable range while
           white, yellow, and red colors represent decreasing plant
           performance, respectively. NRC inspectors review and verify the
           data submitted for each performance indicator annually through the
           baseline inspection process. If questions arise about how to
           calculate a particular indicator or what the correct value should
           be, there is a formal feedback process in place to resolve the
           issue. When performance indicator thresholds are exceeded, NRC
           responds in a graded fashion by performing supplemental
           inspections that range in scope depending on the significance of
           the performance issue.

           Under the ROP, NRC places each plant into a performance category
           on the agency's action matrix, which corresponds to increasing
           levels of oversight based on the number and risk significance of
           inspection findings and performance indicators. The action matrix
           is NRC's formal method of determining what additional oversight
           procedures-mostly supplemental inspections-are required.5
           Greater-than-green inspection findings are included in the action
           matrix for a minimum of four quarters to allow sufficient time for
           additional findings to accumulate that may indicate more pervasive
           performance problems requiring additional NRC oversight. If a
           licensee fails to correct the performance problems within the
           initial four quarters, the finding may be held open and considered
           for additional oversight for more than the minimum four quarters.

           At the end of each 6-month period, NRC issues an assessment letter
           to each plant licensee. This letter describes what level of
           oversight the plant will receive according to its placement in the
           action matrix performance categories, what actions NRC is
           expecting the plant licensee to take as a result of the
           performance issues identified, and any documented substantive
           cross-cutting issues. NRC also holds an annual public meeting at
           or near each plant site to review performance and address
           questions about the plant's performance from members of the public
           and other interested stakeholders. Most inspection reports,
           assessment letters and other materials related to NRC's oversight
           processes are made publicly available through a NRC website
           devoted to the ROP. The website also includes plant-specific
           quarterly summaries of green or greater inspection findings and
           all the performance indicators.

           NRC Has Continually Identified Problems at Nuclear Power Plants
           but Few Have Been Considered Significant to Safe Operation of the
           Plants

The ROP has identified numerous performance deficiencies as
           inspection findings at nuclear power plants since it was first
           implemented, but most of these were considered to be of very low
           risk to safe plant operations. Similarly, there have been very few
           instances in which performance indicator data exceeded acceptable
           standards. As a result, few plants have been subjected to high
           levels of oversight.

           Of more than 4,000 inspection findings identified between 2001 and
           2005, 97 percent were green. While green findings are considered
           to be of "very low" safety significance, they represent a
           performance deficiency on the part of the plant licensee and thus
           are important to correct. Green findings consist of such things as
           finding that a worker failed to wear the proper radiation detector
           or finding that a licensee did not properly evaluate and approve
           the storage of flammable materials in the vicinity of
           safety-related equipment. NRC does not follow-up on the corrective
           action taken for every green finding identified; rather, it relies
           on the licensee to address and track their resolution through the
           plant's corrective action program. NRC does, however, periodically
           follow-up on some of the actions taken by the licensee to address
           green findings through an inspection specifically designed to
           evaluate the effectiveness of the licensee's corrective action
           program. NRC officials stated that green findings provide useful
           information on plant performance and NRC inspectors use the
           findings to identify performance trends in certain areas and help
           inform their selection of areas to focus on during future
           inspections. In contrast to the many green findings, NRC has
           identified 12 findings of the highest risk significance (7 yellow
           and 5 red), accounting for less than 1 percent of the findings
           since 2001. For example, one plant was issued a red finding-the
           highest risk significance-after a steam generator tube failed,
           causing an increased risk in the release of radioactive material.

           Similar to the inspection findings, most performance indicator
           reports have shown the indicators to be within the acceptable
           levels of performance. Only 156, or less than one percent of over
           30,000 indicator reports from 2001 to 2005, exceeded the
           acceptable performance threshold. Four of the 15 performance
           indicators have always been reported to be within acceptable
           performance levels. In addition, 46 plants have never had a
           performance indicator fall outside of the acceptable level and
           only three plants reported having a yellow indicator for one
           performance measure; no red indicators have ever been reported.

           On the basis of its inspection findings and performance
           indicators, NRC has subjected more than three quarters of the 103
           operating plants to at least some level of increased oversight
           (beyond the baseline inspections) for varying amounts of time.
           Most of these plants received the lowest level of increased
           oversight, consisting of a supplemental inspection, to follow-up
           on the identification of one or two white inspection findings or
           performance indicators. Five plants have received the highest
           level of plant oversight for which NRC allows plants to continue
           operations, due to the identification of multiple white or yellow
           findings and/or the identification of a red finding.6 One plant
           received this level of oversight because NRC determined that the
           licensee failed to address the common causes of two white findings
           and held them open for more than four quarters. One of these
           findings involved the recurrent failure of a service water pump
           because the licensee failed to take adequate corrective action
           after the first failure.

           NRC inspectors at the plants we reviewed indicated that, when
           plant performance declines, it is often the result of ineffective
           corrective action programs, problems related to human performance,
           or complacent management, which often results in deficiencies in
           one or more of the cross-cutting areas. In assessing the results
           of the ROP data, we found that all plants subjected to NRC's
           highest level of oversight also had a substantive cross-cutting
           issue open either prior to or during the time that it was
           subjected to increased oversight inspections.

           Overall, NRC's oversight process shows mostly consistent results
           from 2001 to 2005. For example, the total number of green findings
           at all plants ranged from 657 to 889 per year and the total number
           of other findings ranged from 10 to 30 per year with no strong
           trend (see fig. 1).

           Figure 1: ROP Inspection Findings by Year

           Only in the area of cross-cutting issues-or inspection findings
           for which one or more cross-cutting issues was associated-is an
           increasing trend evident (see fig. 2). According to NRC, the
           reason for this increase is due in part to the development of
           guidance on the identification and documentation of cross-cutting
           issues and its increased emphasis in more recent years.

           Figure 2: Trend of ROP Findings with Cross-Cutting Issues

           According to NRC officials, the results of its oversight process
           at an industry or summary level serve as an indicator of industry
           performance, which to date indicates good safety performance. On
           an annual basis, NRC analyzes the overall results of its
           inspection and performance indicator programs and compares them
           with industry level performance metrics to ensure all metrics are
           consistent and takes action if adverse trends are identified.
           While NRC communicates the results of its oversight process on a
           plant-specific basis to plant managers, members of the public, and
           other government agencies through annual public meetings held at
           or near each site and an internet Web site, it does not publicly
           summarize the overall results of its oversight process, such as
           the total number and types of inspection findings and performance
           indicators falling outside of acceptable performance categories,
           on a regular basis.

           NRC Continues to Make Improvements to its Reactor Oversight Process in
           Key Areas

			  NRC has taken a proactive approach to improving its reactor
           oversight process. It has several mechanisms in place to
           incorporate feedback from both external and internal stakeholders
           and is currently working on improvements in key areas of the
           process, including better focusing inspections on areas most
           important to safety, improving its timeliness in determining the
           risk significance of its inspection findings, and modifying the
           way that it measures some performance indicators. NRC is also
           working to address what we believe is a significant shortcoming in
           its oversight process by improving its ability to address plants'
           safety culture, allowing it to better identify and address early
           indications of deteriorating safety at plants before performance
           problems develop.

           According to NRC officials, the ROP was implemented with the
           understanding that it would be an evolving process and
           improvements would be made as lessons-learned were identified.
           Each fall NRC solicits feedback from external stakeholders,
           including industry organizations, public interest groups, and
           state and local officials, through a survey published in the
           Federal Register. NRC also conducts an internal survey of its
           site, regional, and headquarters program and management staff
           every other year to obtain their opinions on the effectiveness of
           the ROP. Additionally, NRC has in place a formal feedback
           mechanism whereby NRC staff can submit recommendations for
           improving various oversight components and NRC staff meet with
           industry officials on a monthly basis-in addition to various
           meetings, workshops, and conferences-to discuss oversight
           implementation issues and concerns. NRC staff also incorporates
           direction provided by the NRC Commissioners and recommendations
           from independent evaluations such as from GAO and the NRC
           Inspector General. The results of these efforts are pulled
           together in the form of an annual self-assessment report, which
           outlines the overall results of its outreach and the changes it
           intends to make in the year ahead.

           According to NRC officials, the changes made to the ROP since its
           implementation in 2000-including those made in response to the
           Davis-Besse incident-have generally been refinements to the
           existing process rather than significant changes to how it
           conducts its oversight. In the case of Davis-Besse, NRC formed a
           task force to review the agency's regulatory processes. The task
           force's report, issued in September 2002, contained more than 50
           recommendations, many associated with the ROP. Among the more
           significant ROP-related recommendations were those to enhance the
           performance indicator that monitors unidentified leakage to be
           more accurate, develop specific guidance to inspect boric acid
           control programs and vessel head penetration nozzles, modify the
           inspection program to provide for better follow-up of longstanding
           issues, and enhance the guidance for managing plants that are in
           an extended shutdown condition as a result of significant
           performance problems. NRC program officials told us that the task
           force's most significant recommendations were in areas outside of
           the ROP, such as improving the agency's operating experience
           program. According to NRC, it has implemented almost all of the
           task force's recommendations.

           Other modifications that NRC has recently made or is in the
           process of making include the following:

           o  NRC recently revised seven of its baseline inspection
           procedures to better focus the level and scope of its inspection
           efforts on those areas most important to safety. These revisions
           resulted from a detailed analysis in 2005 of its more than 30
           baseline inspection procedures. The effort involved analyzing the
           number of findings resulting from each of its inspection
           procedures and the time spent directly observing plant activities
           or reviewing licensee paperwork, among other things.

           o  NRC has efforts underway to improve what it refers to as its
           significance determination process (SDP). An audit by the NRC
           Inspector General, a review by a special task group formed by NRC,
           and feedback from other stakeholders have pointed to several
           significant weaknesses with the SDP. For example, internal and
           external stakeholders raised concerns about the amount of time,
           level of effort, and knowledge and resources required to determine
           the risk significance of some findings. Industry officials
           commented that because most inspection findings are green, one
           white finding at a plant can place it in the "bottom quartile" of
           plants from a performance perspective. Therefore, industry
           officials explained, licensees try to avoid this placement and
           will expend a great deal of effort and resources to provide
           additional data to NRC to ensure the risk level of a finding is
           appropriately characterized. This can add significant time to the
           process because different technical tools may be used that then
           must be incorporated with NRC's tools and processes. The delay in
           assigning a color to a finding while the new information is being
           considered could also affect a plant's placement on NRC's action
           matrix, essentially delaying the increased oversight called for if
           the finding is determined to be greater-than-green. NRC developed
           a SDP Improvement Plan in order to address these and other
           concerns and track its progress in implementing key changes. For
           example, NRC introduced a new process aimed at improving
           timeliness by engaging decision-makers earlier in the process to
           more quickly identify the scope of the evaluation, the resources
           needed, and the schedule to complete the evaluation.
           o  NRC is also taking actions to improve its performance
           indicators. These actions are partly to address concerns that the
           indicators have not contributed to the early identification of
           poorly performing plants to the degree originally envisioned as
           they are almost always within acceptable performance levels
           (green). There have been several cases where plants reported an
           acceptable performance indicator and performance problems were
           subsequently identified. For example, NRC inspectors at one plant
           noted that while performance indicator data related to its alert
           and notification system in place for emergency preparedness had
           always been reported green, the system had not always been
           verified to be functioning properly. On the other hand, industry
           officials believe that the high percentage of indicators that are
           green is indicative of plants' good performance. Several plant
           managers told us that they closely monitor and manage to the
           acceptable performance thresholds established for each indicator,
           and will often take action to address performance issues well
           before the indicator crosses the acceptable performance threshold.
           Because NRC inspectors verify indicator data once a year, a
           potential disagreement over the data might not surface for up to a
           year after it is reported, and it may take even longer to resolve
           the disagreement with the licensee. Similar to delays with the
           SDP, a delay in assigning a color while the disagreement is
           resolved could affect a plant's placement on NRC's action matrix,
           and delay the increased oversight called for if the indicator is
           determined to be greater-than-green. NRC plans to work with the
           industry to review selected indicator definitions to make
           interpretation more concise and reduce the number of
           discrepancies. To date, NRC has focused significant effort on
           developing a key indicator to address known problems with the
           performance indicators measuring the unavailability of safety
           systems. NRC is also in the process of changing the definition for
           several other indicators, in addition to considering the
           feasibility of new indicators.

           I would now like to discuss what we believe is one of NRC's most
           important efforts to improve its oversight process by increasing
           its ability to identify and address deteriorating safety culture
           at plants. NRC and others have long recognized that safety culture
           and the attributes that make up safety culture, such as attention
           to detail, adherence to procedures, and effective corrective and
           preventative action, have a significant impact on a plant's
           performance. Despite this recognition and several external groups'
           recommendations to better incorporate safety culture aspects into
           its oversight process, it did not include specific measures to
           explicitly address plant safety culture when it developed the ROP
           in 2000. The 2002 Davis-Besse reactor vessel head incident
           highlighted that this was a significant weakness in the ROP. In
           investigating this event, we and others found that NRC did not
           have an effective means to identify and address early indications
           of deteriorating safety at plants before performance problems
           develop.7 Largely as a result of this event, in August 2004, the
           NRC Commission directed the NRC staff to enhance the ROP by more
           fully addressing safety culture.

           In response to the Commission's directive, the NRC staff formed a
           safety culture working group in early 2005. The working group
           incorporated the input of its stakeholders through a series of
           public meetings held in late 2005 and early 2006. In February
           2006, NRC issued its proposed approach to better incorporate
           safety culture into the ROP. NRC officials expect to fully
           implement all changes effective in July 2006.

           NRC's proposed safety culture changes largely consist of two main
           approaches: first, clarifying the identification and treatment of
           cross-cutting issues in its inspection processes and second,
           developing a structured way for NRC to determine the need for a
           safety culture evaluation of plants. NRC has developed new
           definitions for each of its cross-cutting issues to more fully
           address safety culture aspects and additional guidance on their
           treatment once they are identified. For example, the problem
           identification and resolution cross-cutting area is now comprised
           of several components-corrective action program, self and
           independent assessments, and operating experience. NRC inspectors
           are to assess every inspection finding to determine if it is
           associated with one or more of the components that make up each of
           the cross-cutting areas. Inspectors then determine, on a
           semi-annual basis, if a substantive cross-cutting issue exists on
           the basis of the number and areas of cross-cutting components
           identified. If the same substantive cross-cutting issue is
           identified in three consecutive assessment periods, NRC may
           request that the licensee perform an assessment of its safety
           culture. The intent is to provide an opportunity to diagnose a
           potentially declining safety culture before significant safety
           performance problems occur.

           Under its approach, NRC would expect the licensees of plants with
           more than one white color finding or one yellow finding to
           evaluate whether the performance issues were in any way caused by
           any safety culture components, and NRC might request the licensee
           to complete an independent assessment of its safety culture, if
           the licensee did not identify an important safety culture
           component. For plants where more significant or multiple findings
           have been identified, the NRC would not only independently
           evaluate the adequacy of the independent assessment of the
           licensee's safety culture, but it might also conduct its own
           independent assessment of the licensee's safety culture.

           Some of NRC's proposed actions regarding safety culture have been
           controversial, and not all stakeholders completely agree with the
           agency's approach. For example, the nuclear power industry has
           expressed concern that the changes could introduce undue
           subjectivity to NRC's oversight, given the difficulty in measuring
           these often intangible and complex concepts. Several of the
           nuclear power plant managers at the sites we reviewed said that it
           is not always clear why a cross-cutting issue was associated with
           finding, or what it will take to clear themselves once they've
           been identified as having a substantive cross-cutting issue open.
           Some industry officials worry that this initiative will further
           increase the number of findings that have cross-cutting elements
           associated with them and if all of the findings have them they
           will lose their value. Industry officials also warn that if it is
           not implemented carefully, it could divert resources away from
           other important safety issues. Other external stakeholders, on the
           other hand, suggest that this effort is an important step in
           improving NRC's ability to identify performance issues at plants
           before they result in performance problems. Importantly, there
           will be additional tools in place for NRC to use when it
           identifies potential safety culture concerns. NRC officials view
           this effort as the beginning step in an incremental approach and
           acknowledge that continual monitoring, improvements, and oversight
           will be needed in order to better allow inspectors to detect
           deteriorating safety conditions at plants before events occur. NRC
           plans to evaluate stakeholder feedback and make changes based on
           lessons learned from its initial implementation of its changes as
           part of its annual self-assessment process for calendar year 2007.

           GAO Contact and Staff Acknowledgments

			  For further information about this statement for the record,
           please contact me at (202) 512-3841 (or at [email protected]).
           Contact points for our Offices of Congressional Relations and
           Public Affairs may be found on the last page of this statement.
           Raymond H. Smith, Jr. (Assistant Director), Alyssa M. Hundrup,
           Alison O'Neill, and Dave Stikkers made key contributions to this
           statement.

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1Physical security, which is also covered by the ROP, is not included in
this review. For information on NRC's physical security, see GAO, Nuclear
Power Plants: Efforts Made to Upgrade Security, but the Nuclear Regulatory
Commission's Design Basis Threat Process Should Be Improved, GAO-06-388
(Washington, D.C.: Mar. 14, 2006).

2Certain baseline inspections may also be done by regional staff because
of their expertise in particular aspects of plant operations.

3Minor issues are defined by NRC as those that have little actual safety
consequences, little or no potential to impact safety, little impact on
the regulatory process, and no willfulness.

4The SDP essentially evaluates how an inspection finding impacts the
margin of safety of a plant. The impact is largely evaluated through the
use of information on operating experience and risk estimates calculated
using probabilistic risk assessment (PRA).

5NRC officials can also increase or decrease oversight in ways not in
accordance with those specified by the action matrix by requesting a
deviation. This provision is intended for rare instances when the
oversight levels dictated by the action matrix are not appropriate to
address a particular performance problem and a more tailored approach is
required.

6NRC has one additional oversight category for plants with unacceptable
performance. Plants placed into this category are not permitted to
operate.

7GAO, Nuclear Regulation: NRC Needs to More Aggressively and
Comprehensively Resolve Issues Related to the Davis-Besse Nuclear Power
Plant's Shutdown, GAO-04-415 (Washington, D.C.: May 17, 2004).

(360726)

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www.gao.gov/cgi-bin/getrpt? GAO-06-624 .

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For more information, contact Robin Nazzaro at (202) 512-3841 or
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Highlights of GAO-06-624 , a report to congressional requesters

June 2006

WOOD UTILIZATION

Federal Research and Product Development Activities, Support, and
Technology Transfer

More wood is consumed every year in the United States than all metals,
plastics, and masonry cement combined. To maximize their use of wood,
forest product companies rely on research into new methods for using wood.
At least 12 federal agencies have provided support to wood utilization
research and product development activities, including the U.S. Department
of Agriculture's Forest Service and Cooperative State Research, Education,
and Extension Service (CSREES)-funded wood utilization research centers,
which historically have specifically targeted support to these activities.

GAO was asked to identify (1) the types of wood utilization research and
product development activities federal agencies support and how these
activities are coordinated; (2) the level of support federal agencies made
available for these activities in fiscal years 2004 and 2005, and changes
in the level of support at the Forest Service and at the CSREES-funded
wood utilization research centers for fiscal years 1995 through 2005; and
(3) how the federal government transfers the technologies and products
from its wood utilization research and product development activities to
industry.

GAO provided a draft of this report to the 12 federal agencies for review
and comment. Some of the agencies provided technical comments, which were
incorporated as appropriate.

Federal wood utilization research and product development span a broad
spectrum of activities. These activities fall into five categories:
harvesting, wood properties, manufacturing and processing, products and
testing, and economics and marketing. Of the 12 federal agencies that
provided support to wood utilization research and product development,
only the Forest Service and the CSREES-funded wood utilization centers had
activities in all five categories; although all the agencies had
activities in manufacturing and processing. Coordination of these
activities is both informal and formal. Scientists informally coordinate
their activities by conferring with each other and sharing information at
conferences and professional meetings and through publications. In some
cases, coordination occurs through more formal mechanisms, such as
cooperative arrangements and other joint ventures.

During fiscal years 2004 and 2005, the 12 federal agencies made available
at least $54 million annually for wood utilization research and product
development activities, measured either in budget authority or
expenditures. (Dollars are reported in either budget authority or
expenditure data, depending on the availability of agency data.) The
Forest Service made available about half of these funds. In addition, the
Forest Service-the only agency that directly employs scientists and
support staff to conduct wood utilization research and product
development-reported having almost 175 full-time equivalent scientists and
support staff in each of these years. For fiscal years 1995 through 2005,
the Forest Service's budget authority for wood utilization research and
product development activities fluctuated moderately from year-to-year (in
inflation-adjusted dollars). In contrast, overall, CSREES' budget
authority for the wood utilization research centers increased over the
period (in inflation-adjusted dollars), in part because of the addition of
four new wood utilization research centers between fiscal years 1999 and
2004.

To transfer technologies and products to industry, federal agencies
generally rely on scientists and technology transfer specialists, who use
methods such as information sharing, technical assistance, and
demonstration projects. For example, applying research from the Forest
Products Laboratory, Forest Service technology transfer specialists
assisted a small forest products company in producing flooring from small
trees by, among other things, providing solutions to product imperfections
like warping and discoloration.
*** End of document. ***