Major Management Challenges and Program Risks: Nuclear Regulatory
Commission (Letter Report, 01/01/99, GAO/OCG-99-19).
As part of its Performance and Accountability Series, GAO provided
information on the major management challenges and program risks facing
the Nuclear Regulatory Commission (NRC).
GAO noted that: (1) NRC lacks assurance that its current regulatory
approach ensures safety; (2) NRC assumes that plants are safe if they
operate as designed and follow NRC's regulations; (3) however, NRC's
regulations and other guidance do not define, for either a licensee or
the public, the conditions necessary for a plant's safety; (4) NRC's
oversight has been inadequate and slow; (5) although NRC's indicators
show that conditions throughout the nuclear energy industry have
generally improved, they also show that several nuclear plants are
chronically poor performers; (6) NRC's culture and organizational
structure have made the process of addressing concerns with the agency's
regulatory approach slow and ineffective; (7) even before competition
became an issue, NRC and the nuclear utility industry embarked on
initiatives to address long-standing regulatory issues, including the
management challenges described in this report, in a way that would
ensure that NRC carried out its regulatory mission more effectively and
efficiently; (8) in GAO's review of NRC's first annual performance plan,
covering program activities set out in the agency's fiscal year 1999
budget, it noted that the plan could provide a clearer picture of
intended performance across NRC and better discuss the strategies and
resources the agency will use to achieve its performance goals; and (9)
although the plan lists specific strategies NRC will use against
licensees that fail to meet regulatory standards, including halting
operations if performance falls below an acceptable level, NRC has not
developed specific criteria for what is "acceptable."
--------------------------- Indexing Terms -----------------------------
REPORTNUM: OCG-99-19
TITLE: Major Management Challenges and Program Risks: Nuclear
Regulatory Commission
DATE: 01/01/99
SUBJECT: Nuclear powerplants
Nuclear facility safety
Accountability
Strategic planning
Safety regulation
Public utilities
Performance measures
IDENTIFIER: NRC Watch List
Performance and Accountability Series 1999
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Cover
================================================================ COVER
Performance and Accountability Series
January 1999
MAJOR MANAGEMENT CHALLENGES AND
PROGRAM RISKS - NUCLEAR REGULATORY
COMMISSION
GAO/OCG-99-19
NRC Challenges
Abbreviations
=============================================================== ABBREV
NRC -
OIG -
Letter
=============================================================== LETTER
January 1999
The President of the Senate
The Speaker of the House of Representatives
This report addresses the major performance and management challenges
that have limited the Nuclear Regulatory Commission's (NRC)
effectiveness. The report also provides information on actions that
NRC has taken or initiated to address these challenges. For many
years, we have raised concerns about whether NRC is effectively
carrying out its safety mission. The performance and management
challenges identified are the result of NRC not defining the
conditions that are necessary for a nuclear plant's safety, not being
aggressive in requiring utilities to comply with safety regulations,
and not holding utilities accountable for fixing problems more
promptly and addressing management issues more directly.
NRC has undertaken various initiatives to help ensure that it carries
out its regulatory mission more effectively and efficiently. These
efforts show a commitment by NRC to strengthen its oversight and
resolve long-standing challenges. However, given the nature and
extent of the challenges facing NRC, it will take time to implement
and assess the impact of the various initiatives.
This report is part of a special series entitled the Performance and
Accountability Series: Major Management Challenges and Program
Risks. The series contains separate reports on 20 agencies--one on
each of the cabinet departments and on most major independent
agencies as well as the U.S. Postal Service. The series also
includes a governmentwide report that draws from the agency-specific
reports to identify the performance and management challenges
requiring attention across the federal government. As a companion
volume to this series, GAO is issuing an update to those government
operations and programs that its work has identified as "high risk"
because of their greater vulnerabilities to waste, fraud, abuse, and
mismanagement. High-risk government operations are also identified
and discussed in detail in the appropriate performance and
accountability series agency reports.
The performance and accountability series was done at the request of
the Majority Leader of the House of Representatives, Dick Armey; the
Chairman of the House Government Reform Committee, Dan Burton; the
Chairman of the House Budget Committee, John Kasich; the Chairman of
the Senate Committee on Governmental Affairs, Fred Thompson; the
Chairman of the Senate Budget Committee, Pete Domenici; and Senator
Larry Craig. The series was subsequently cosponsored by the Ranking
Minority Member of the House Government Reform Committee, Henry A.
Waxman; the Ranking Minority Member, Subcommittee on Government
Management, Information and Technology, House Government Reform
Committee, Dennis J. Kucinich; Senator Joseph I. Lieberman; and
Senator Carl Levin.
Copies of this report series are being sent to the President, the
congressional leadership, all other Members of the Congress, the
Director of the Office of Management and Budget, the Chairman of the
Nuclear Regulatory Commission, and the heads of other major
departments and agencies.
David M. Walker
Comptroller General of
the United States
OVERVIEW
============================================================ Chapter 0
Today, nuclear energy supplies electricity to about 65 million
households, meeting about 20 percent of the nation's needs. The
Nuclear Regulatory Commission (NRC) is responsible for, among other
things, ensuring that the nation's 103 operating commercial nuclear
power plants pose no undue risk to public health and safety. We, the
Congress, NRC's Office of the Inspector General (OIG), and others
have raised concerns about whether NRC is effectively carrying out
its safety mission. NRC's management challenges have a long history,
and the agency has been assessing the strengths and weaknesses of its
regulatory programs and policies to address them. Now, however, the
entire electric utility industry is faced with an unprecedented,
overarching development: the economic restructuring of the nation's
electric power system, from a regulated industry to one driven by
competition. According to one study, as many as 26 of the nation's
nuclear sites are vulnerable to shutdown because production costs are
higher than the projected market prices of electricity. As the
electric utility industry is deregulated, operating and maintenance
costs will affect the competitiveness of nuclear power plants.
Competition challenges NRC to reduce any unnecessary regulatory
burden while ensuring that safety margins are not compromised by
utilities' cost-cutting measures.
THE CHALLENGES
---------------------------------------------------------- Chapter 0:1
Today, the major management challenges at NRC are as follows:
NRC LACKS ASSURANCE OF
NUCLEAR PLANTS' SAFETY
-------------------------------------------------------- Chapter 0:1.1
NRC lacks assurance that its current regulatory approach ensures
safety. NRC assumes that plants are safe if they operate as designed
and follow NRC's regulations. However, NRC's regulations and other
guidance do not define, for either a licensee or the public, the
conditions necessary for a plant's safety; therefore, determining a
plant's safety is subjective. Furthermore, six major reviews of NRC
since 1979 have pointed out that NRC's regulatory approach is
punitive rather than results oriented, licensees are forced to expend
considerable resources on complying with regulations that may have a
limited impact on safety, and NRC's focus on achieving compliance
with paperwork requirements can divert attention from safety
activities.
NRC IS SLOW TO REQUIRE
CORRECTIVE ACTION
-------------------------------------------------------- Chapter 0:1.2
NRC's oversight has been inadequate and slow. Although NRC's
indicators show that conditions throughout the nuclear energy
industry have generally improved, they also show that several nuclear
plants are chronically poor performers. At three nuclear plants with
long-standing safety problems that we reviewed, NRC did not take
aggressive action to ensure that the utilities corrected the
problems. The problems ranged from failures of equipment to work
properly when tested to weaknesses in licensees' conduct of
maintenance programs. As a result of NRC's inaction, the conditions
at the plants worsened, reducing safety margins.
NRC'S CULTURE AND
ORGANIZATIONAL STRUCTURE
IMPEDE EFFECTIVE ACTIONS
-------------------------------------------------------- Chapter 0:1.3
NRC's culture and organizational structure have made the process of
addressing concerns with the agency's regulatory approach slow and
ineffective. Since 1979, various reviews have concluded that NRC's
organizational structure, inadequate management control, and
inability to oversee itself have impeded its effectiveness.
PROGRESS AND NEXT STEPS
---------------------------------------------------------- Chapter 0:2
Even before competition became an issue, NRC and the nuclear utility
industry embarked on initiatives to address long-standing regulatory
issues, including the management challenges described in this report,
in a way that would ensure that NRC carried out its regulatory
mission more effectively and efficiently. These initiatives are
designed to improve safety decisionmaking through the analysis of
risk, use agency resources more efficiently, and reduce unnecessary
burdens on utilities. In August 1998, NRC identified various
regulatory efforts and milestones for their completion. Although NRC
will implement some initiatives in the near future, it will take some
years to complete its efforts.
A framework within which NRC can accomplish its missions has been
provided by the Government Performance and Results Act of 1993. The
Results Act requires federal agencies to develop goals, objectives,
strategies, and performance measures in the form of strategic and
performance plans. In our review of NRC's first annual performance
plan, covering program activities set out in the agency's fiscal year
1999 budget, we noted that the plan could provide a clearer picture
of intended performance across NRC and better discuss the strategies
and resources the agency will use to achieve its performance goals.
Although the plan lists specific strategies NRC will use against
licensees that fail to meet regulatory standards, including halting
operations if performance falls below an acceptable level, NRC has
not developed specific criteria for what is "acceptable." The
development of strategic and performance plans is a dynamic process.
Until more experience in setting goals and measuring results is
achieved, better information will not be available to evaluate
progress towards improving NRC's performance.
KEY CONTACT
---------------------------------------------------------- Chapter 0:3
Ms. Gary L. Jones, Associate Director
Energy, Resources, and Science Issues
Resources, Community, and Economic Development Division
(202) 512-3841
[email protected]
MAJOR PERFORMANCE AND MANAGEMENT
ISSUES
============================================================ Chapter 1
Commercial nuclear power plants operate in 31 states and provide
about 20 percent of the nation's electricity. Five states
(Connecticut, Illinois, New Jersey, South Carolina, and Vermont) rely
on nuclear power for about half of their electricity. One of NRC's
missions is to ensure that utilities operating nuclear power plants
do so safely. Identifying nuclear plants with safety problems and
making sure that their owners--licensees--
correct these problems promptly are activities essential to NRC's
safety mission. With the restructuring of the nation's electric
power industry and the emergence of competition in the business of
electricity generation, NRC will need to exercise vigilance to ensure
that utilities' decisions related to safety will not be driven
primarily by economic considerations.
We, NRC's OIG, and others have documented problems with NRC's
performance and management and have recommended reforms. This report
summarizes these various findings, including NRC's lack of a
definition of safety and lack of aggressiveness in requiring
utilities to comply with safety regulations, as well as the
impediments to effective oversight presented by NRC's culture and
organization.
NRC LACKS ASSURANCE OF NUCLEAR
PLANTS' SAFETY
---------------------------------------------------------- Chapter 1:1
Six major reviews conducted between 1979 and 1994 concluded that NRC
lacks objective criteria for many of its regulatory actions and that
its focus on achieving compliance on paper can divert attention from
such safety activities as inspection and enforcement.\1
Since that time, NRC has undertaken various actions to improve its
regulatory programs, and industrywide safety indicators have shown
continued and significant improvements. Nevertheless, in 1997, we
found that NRC lacks assurance that its current regulatory approach
ensures safety at all plants. We reported that the Congress and the
public need confidence in NRC's ability to ensure that the nuclear
industry performs to high safety standards. Although we made no
judgments about the safety of nuclear plants or the appropriateness
of NRC's current regulatory structure, the many safety problems
identified at three plants we examined raised questions about whether
NRC's regulatory program was working as it should. Specifically, we
found the following:
-- Determining the safety of nuclear plants is difficult because
NRC does not precisely define safety. Instead, NRC assumes that
plants are safe if they operate as designed (in accordance with
their design bases) and meet NRC's regulations. Yet NRC's
regulations and other guidance focus on procedural and
operational requirements for plants' equipment and utility
practices and do not define, for either licensees or the public,
the conditions necessary for plants' safety. NRC reasons that
the many redundant safety features and systems built into a
plant's design provide an adequate margin of safety, even when
some are not working properly. However, changes made to a plant
over time--for example, replacing components with different
parts and reconfiguring systems--can alter the plant's design,
thus potentially affecting how certain safety systems may work
in an emergency. NRC does not have an effective way to quantify
the safety of plants that deviate from their approved designs.
-- NRC has incomplete knowledge of the extent to which nuclear
plants are operating as designed. In the mid- to late 1980s,
NRC found that some utilities were not documenting changes that
could affect the safe operation of the plants. However, it was
not until October 1996, after problems were discovered with
Millstone Unit 1 in Connecticut, that NRC required utilities to
certify that their plants were operating as designed. To follow
up on utilities' certifications, NRC inspected 21 sites (26
units), all previously targeted for follow-up inspections, to
verify that the plants were operating under the terms and
conditions of their licenses. Generally, NRC found that some
utilities had not maintained current information on their
plants' designs and had not examined the impact of modifications
on the safety of the plants' operations. NRC identified
significant problems during these inspections, including
instances in which utilities had not properly tested
safety-related components and had made errors in their analyses
of how emergency cooling systems would work in case of an
accident. NRC concluded that the majority of the problems
resulted from errors in the original design or from design
modifications, inadequate testing, and discrepancies in
documentation. As of November 1998, NRC had completed all the
planned inspections and was evaluating the results. As a result
of the inspections, NRC initiated escalated enforcement actions
for violations found at five plants. A utility shut down one of
the five plants as a result of an inspection's findings.
-- NRC faces many challenges to make its regulatory program work as
effectively as possible, particularly in light of major changes
taking place in the nuclear industry. As the electric utility
industry is deregulated, safety margins may be compromised when
licensees cut costs to stay competitive. According to one
study, as many as 26 of the nation's nuclear sites are
vulnerable to shutdown because production costs are higher than
the projected market prices of electricity. NRC will be
deciding what constitutes safety and how nuclear plants should
be regulated in the future. NRC also has initiated a major
effort to consider risk in its regulatory decisions and
activities. NRC's regulatory approach needs to be anchored in
goals and objectives that are clearly articulated and
performance measures that hold NRC managers as well as licensees
accountable.
During deliberations on the fiscal year 1999 budget, both the Senate
and House Committees on Appropriations were highly critical of NRC.
Most of the Committees' concerns focused on NRC's oversight of
commercial nuclear power plants in the areas of inspection,
performance assessment, and enforcement; risk-informed,
performance-based regulation; and organizational structure and
resources. Questions from Members of Congress revealed a perception
that NRC's requirements and expectations for utilities that operate
commercial nuclear power plants are not clear and that NRC has
created an atmosphere of regulatory uncertainty. In response to the
criticisms raised, NRC has been assessing the strengths and
weaknesses of its regulatory programs and policies to (1) better
understand their impact on the industries it regulates and (2)
determine whether it responds effectively to changes in the
regulatory environment. Specifically, in August 1998, NRC identified
various areas--including risk-informed regulation, inspection,
enforcement, organizational structure, resources, and other issues,
such as license transfers and decommissioning--
and compiled a catalog of short- and long-term actions and milestones
to address each of the areas. We agree that the actions NRC has
under way are worthwhile steps. Although NRC will implement some
initiatives in the near future, it will take some years to complete
these activities.
--------------------
\1 The six reviews were (1) The Report of the President's Commission
on the Accident at Three Mile Island (1979); (2) Three Mile Island:
A Report to the Commissioners and to the Public (1980); (3) Survey by
Senior Management to Obtain Viewpoints on the Safety Impacts of
Regulatory Activities From Representative Utilities Operating and
Constructing Nuclear Power Plants (1981); (4) a three-part survey:
Industry Perceptions of the Impact of the U.S. Nuclear Regulatory
Commission on Nuclear Power Plant Activities, Results of Industry
Survey on Licensee Management Involvement in Inspections and Audits,
and Survey of Staff Insights on Regulatory Impact (1989); (5) Nuclear
Power - Technical and Institutional Options for the Future, National
Academy of Sciences (1992), and (6) Nuclear Regulatory Review Study
(1994).
NRC IS SLOW TO REQUIRE
CORRECTIVE ACTION
---------------------------------------------------------- Chapter 1:2
NRC did not take aggressive action at three facilities we examined
that had long-standing safety and performance problems. The problems
ranged from failures of equipment to work properly when tested to
weaknesses in how licensees conducted their maintenance programs. As
a result, conditions at the plants worsened, reducing safety margins.
NRC staff repeatedly gave the plants' operators more time to take
corrective actions and were slow to place plants with declining
performance on NRC's "Watch List"--a list of plants with declining
performance trends that require closer regulatory attention.
NRC's programs are designed to ensure that utilities comply with
NRC's regulations, take prompt actions to correct any deficiencies
found, and operate their plants safely. NRC gives utilities
considerable latitude to fix their problems. This strategy works
well when the utilities' managers place priority on maintaining a
strong safety culture. We found, however, that this condition was
not present in the three plants we examined and that the problems
worsened when NRC did not hold the utilities accountable for fixing
them. For example, some of the problems that caused the 1994-95
shutdown of the Cooper Nuclear Station in Nebraska dated back to
1974, when the plant started operations. According to NRC inspectors
with whom we spoke, the utility's management should have addressed
the problems years earlier. In addition, NRC was very slow to impose
fines on the three plants we examined. For example, NRC levied the
first fine on one utility well after its plants had begun to decline.
NRC's OIG reported similar findings, noting that one utility lulled
NRC into allowing an excessive amount of time to institute proposed
corrective actions. NRC is strengthening its processes for assessing
the effectiveness of utilities' corrective action programs and
tracking and verifying utilities' commitments.
We also found that NRC's safety oversight has not focused on the
competency of nuclear plant management, even though the nuclear
industry and NRC officials widely agree that such competency is
perhaps the most critical factor in safe performance. For example,
NRC found safety problems at nuclear plants in Illinois in January
1997 that the agency attributed to weak management processes and a
lack of involvement by management. Although NRC staff had proposed
options to assess the performance and competency of the utilities'
management, the agency rejected the options in June 1998 and directed
its staff to continue inferring competency on the basis of plant
inspections and other routine assessments.
NRC's Chairman has complained about the consequences of NRC's
patience with some problem utilities, adding that the agency is
reviewing its internal processes to strengthen its ability to
identify and act on utilities' corrective action programs. NRC staff
agreed that they need to do a better job of making utilities fix
their problems and bring to management's attention those utilities
that are not responsive. NRC is examining its inspection,
enforcement, and plant performance assessment programs to, in part,
address these issues. These efforts show a commitment by NRC to
strengthen its oversight. In doing so, NRC must hold utilities
accountable for fixing problems more promptly and addressing
management issues more directly.
NRC'S CULTURE AND
ORGANIZATIONAL STRUCTURE IMPEDE
EFFECTIVE ACTIONS
---------------------------------------------------------- Chapter 1:3
At the heart of safe plant operations is NRC's holding utilities
accountable for fixing problems more promptly and addressing
management issues more directly. The need to ensure that NRC's
regulatory programs work as effectively as possible is extremely
important, particularly in light of major changes taking place in the
electric utility industry. Yet changing NRC's culture will not be
easy. Six major reviews conducted since 1979 found chronic and
significant problems with NRC's regulatory culture. The most recent
review, sponsored by the industry and completed in October 1994,
concluded that NRC had been unable or unwilling to address its own
problems. The 1994 review also found that NRC's management did not
adequately control and oversee its own staff, programs, and
operations and that each NRC unit acted somewhat independently,
resulting in decisions that often conflicted with one another. The
review also found that because of significant duplication and
conflict in roles and responsibilities among various NRC offices,
licensees had differing relationships with the offices, leading to
confusion in regulatory interpretations.
Since the 1994 review, NRC has taken various actions to improve its
organization and culture. For example, in August 1995, NRC initiated
the Strategic Assessment and Rebaselining Project to streamline its
operations. This effort was intended to take a new look at NRC,
redefine the basic nature of the work and the means by which that
work is accomplished, and apply the redefined activities to a
rigorous screening to produce a new set of assumptions, goals, and
strategies (rebaseline). The rebaselining project provided the
foundation for NRC to implement the Government Performance and
Results Act and to develop an agencywide planning, budgeting, and
performance management process that builds in accountability and
self-assessment and provides a mechanism for NRC to refocus its
efforts and resources in response to change. In 1996, NRC began to
strengthen its skills in certain key processes and to identify
opportunities for efficiency and effectiveness.
Despite these activities, in the fall of 1997, NRC's OIG surveyed NRC
staff to obtain their views on the agency's safety culture. In its
June 1998 report, the OIG noted that the staff had a strong
commitment to protecting public health and safety but expressed high
levels of uncertainty and confusion about the new directions in
regulatory practices and challenges facing the agency. The employees
said that, in their view, they spend too much time on paperwork that
may not contribute to the safety mission of the organization. From
the results of the survey as a whole, the OIG concluded that without
significant and meaningful improvement in management's leadership,
employees' involvement, and communication, NRC's current climate
could eventually erode the employees' outlook and commitment to doing
their job.
RELATED GAO PRODUCTS
============================================================ Chapter 2
Results Act: NRC's Annual Performance Plan for Fiscal Year 1999
(GAO/RCED-98-195R, May 27, 1998).
Nuclear Regulation: Preventing Problem Plants Requires More
Effective NRC Action (GAO/RCED-97-145, May 30, 1997).
Nuclear Regulatory Commission: Preventing Problem Plants Requires
More Effective Action by NRC (GAO/T-RCED-98-252, July 30, 1998).
PERFORMANCE AND ACCOUNTABILITY
SERIES
============================================================ Chapter 3
Major Management Challenges and Program Risks: A Governmentwide
Perspective (GAO/OCG-99-1)
Major Management Challenges and Program Risks: Department of
Agriculture (GAO/OCG-99-2)
Major Management Challenges and Program Risks: Department of
Commerce (GAO/OCG-99-3)
Major Management Challenges and Program Risks: Department of Defense
(GAO/OCG-99-4)
Major Management Challenges and Program Risks: Department of
Education (GAO/OCG-99-5)
Major Management Challenges and Program Risks: Department of Energy
(GAO/OCG-99-6)
Major Management Challenges and Program Risks: Department of Health
and Human Services (GAO/OCG-99-7)
Major Management Challenges and Program Risks: Department of Housing
and Urban Development (GAO/OCG-99-8)
Major Management Challenges and Program Risks: Department of the
Interior (GAO/OCG-99-9)
Major Management Challenges and Program Risks: Department of Justice
(GAO/OCG-99-10)
Major Management Challenges and Program Risks: Department of Labor
(GAO/OCG-99-11)
Major Management Challenges and Program Risks: Department of State
(GAO/OCG-99-12)
Major Management Challenges and Program Risks: Department of
Transportation (GAO/OCG-99-13)
Major Management Challenges and Program Risks: Department of the
Treasury (GAO/OCG-99-14)
Major Management Challenges and Program Risks: Department of
Veterans Affairs (GAO/OCG-99-15)
Major Management Challenges and Program Risks: Agency for
International Development (GAO/OCG-99-16)
Major Management Challenges and Program Risks: Environmental
Protection Agency (GAO/OCG-99-17)
Major Management Challenges and Program Risks: National Aeronautics
and Space Administration (GAO/OCG-99-18)
Major Management Challenges and Program Risks: Nuclear Regulatory
Commission (GAO/OCG-99-19)
Major Management Challenges and Program Risks: Social Security
Administration (GAO/OCG-99-20)
Major Management Challenges and Program Risks: U.S. Postal Service
(GAO/OCG-99-21)
High-Risk Series: An Update (GAO/HR-99-1)
The entire series of 21 performance and accountability reports and
the high-risk series update can be ordered by using the order number
GAO/OCG-99-22SET.
*** End of document. ***