Nuclear Regulation: Weaknesses in NRC's Inspection Program at a South
Texas Nuclear Power Plant (Chapter Report, 10/03/95, GAO/RCED-96-10).

Pursuant to a congressional request, GAO provided information on the
South Texas Project Electric Generating Station, focusing on: (1) the
circumstances surrounding the shutdown of the plant; (2) whether the
Nuclear Regulatory Commission (NRC) was aware of problems at the plant
before the shut down; and (3) any factors that may have prevented NRC
from having complete and timely information about the licensee's
performance.

GAO found that: (1) malfunctioning pumps caused the South Texas licensee
to shut down the plant's reactors and equipment outages increased the
likelihood that the reactor's core would be damaged in an emergency; (2)
NRC was aware of the problems with the emergency pumps and of
maintenance work taking place on one of the reactor's generators before
the shutdown, but did not realize that one reactor's pump and two of its
generators were simultaneously inoperable for extended periods of time;
(3) NRC relies on licensees to identify and report problems, since it
rarely detects major problems before they do; (4) after NRC completed a
comprehensive evaluation of the plant, it revised its overall assessment
of the licensee's performance from good to poor and included the plant
on its list of plants needing additional oversight; (5) NRC assessment
of its inspection program at the plant showed that NRC did not
adequately integrate information to determine whether the plant's
problems indicated systemic weaknesses in the licensee's operations; and
(6) these and other program weaknesses resulted in missed opportunities
to inform the licensee about the extent of its performance problems.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  RCED-96-10
     TITLE:  Nuclear Regulation: Weaknesses in NRC's Inspection Program 
             at a South Texas Nuclear Power Plant
      DATE:  10/03/95
   SUBJECT:  Contractor performance
             Nuclear powerplants
             Nuclear powerplant safety
             Equipment repairs
             Regulatory agencies
             Nuclear reactors
             Inspection
             Safety regulation
IDENTIFIER:  NRC Nuclear Reactor Inspection Program
             
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Cover
================================================================ COVER


Report to the Ranking Minority Member, Committee on Commerce, House
of Representatives

October 1995

NUCLEAR REGULATION - WEAKNESSES IN
NRC'S INSPECTION PROGRAM AT A
SOUTH TEXAS NUCLEAR POWER PLANT

GAO/RCED-96-10

South Texas Nuclear Power Plant

(302122)


Abbreviations
=============================================================== ABBREV

  GAO - General Accounting Office
  NRC - Nuclear Regulatory Commission
  OI - Office of Investigations

Letter
=============================================================== LETTER


B-262200

October 3, 1995

The Honorable John D.  Dingell
Ranking Minority Member
Committee on Commerce
House of Representatives

Dear Mr.  Dingell: 

This report responds to your request for information about the
circumstances surrounding the shutdown of the South Texas Project
Electric Generating Station, a nuclear plant located in Matagorda
County, Texas, and the effectiveness of the Nuclear Regulatory
Commission's inspection program at the plant.  The two-reactor plant
was off-line for over a year after its shutdown in February 1993. 

Unless you publicly announce its contents earlier, we plan no further
distribution of this report until 15 days after the date of this
letter.  At that time, we will send copies to appropriate
congressional committees, the Chairman of the Nuclear Regulatory
Commission, and other interested parties.  We will also make copies
available to others upon request. 

Please call me at (202) 512-3841 if you or your staff have any
questions.  Major contributors to this report are listed in appendix
III. 

Sincerely yours,

Victor S.  Rezendes
Director, Energy and
 Science Issues


EXECUTIVE SUMMARY
============================================================ Chapter 0


   PURPOSE
---------------------------------------------------------- Chapter 0:1

In February 1993, the operator (licensee) of the South Texas Project
Electric Generating Station--a nuclear power plant--shut down its two
reactors because of continuing malfunctions with a portion of the
reactors' emergency equipment.  The plant, located near Houston,
Texas, was shut down for over a year to correct these and other
problems. 

Citing a long history of problems in the design, construction, and
operation of the plant, the Ranking Minority Member of the House
Committee on Commerce asked GAO to (1) identify the circumstances
surrounding the shutdown of the plant and the seriousness of the
event, (2) determine whether the Nuclear Regulatory Commission (NRC)
was aware of problems at the plant before the shutdown, and (3)
identify any factors that may have prevented NRC from having complete
and timely information about the licensee's performance.  As
requested, this report also contains a chronology of events at the
plant between January 1983 and March 1995. 


   BACKGROUND
---------------------------------------------------------- Chapter 0:2

The two reactors at the South Texas plant have emergency systems,
including (1) pumps for cooling the reactors and (2) generators to
power these pumps and other emergency systems during an electricity
blackout.\1 Licensees are responsible for the safe operation of
nuclear plants, including the proper functioning of a reactor's
equipment.  NRC inspects plants to help ensure that they are being
operated safely and to help prevent "significant events" from
occurring.  A significant event is one that could damage a reactor's
core and possibly result in a release of radioactive material.  If
NRC finds problems at a plant, it can take enforcement actions
against the licensee. 


--------------------
\1 The reactors have numerous pumps and generators that are unrelated
to those discussed in this report.  This report generally refers to
each reactor's turbine-driven auxiliary feedwater pump as "the pump"
and to the standby diesel generators as "the generators."


   RESULTS IN BRIEF
---------------------------------------------------------- Chapter 0:3

Malfunctioning emergency pumps caused the South Texas licensee to
shut down the plant's reactors.  NRC later determined that one
reactor's pump and two of its three generators had been
simultaneously inoperable for extended periods.  These equipment
outages violated several NRC requirements for the safe operation of
the reactor and substantially increased the likelihood that the
reactor's core could be damaged in an emergency.  While the risk
increased, according to NRC there was little chance of an accident at
the site because of multiple safety features in the reactor's design. 
Nevertheless, NRC viewed the equipment problems as indicative of
deeper problems in the licensee's operation of the plant and fined
the licensee $325,000. 

NRC was aware of problems with both reactors' pumps and of
maintenance work taking place on one reactor's generators before the
plant's shutdown, but NRC did not realize that one reactor's pump and
two of its generators were simultaneously inoperable.  In such
situations, NRC requires the reactor to be shut down.  This situation
is not unique.  Because the licensees are ultimately responsible for
the safe operation of their facilities, NRC relies heavily on them to
identify and report problems.  NRC inspects only a small portion of
each licensee's activities to provide independent assurance that the
licensees are operating their facilities safely.  According to NRC,
it rarely detects major problems before its licensees do. 
Furthermore, although NRC was aware of other long-standing management
and technical problems and a decline in the licensee's performance,
it did not know the magnitude of these problems until April 1993,
when NRC completed a comprehensive evaluation of the plant.  As a
result of the evaluation, NRC (1) revised its overall assessment of
the licensee's performance from good to poor and declining and (2)
included the plant on its list of plants requiring additional
oversight.  According to NRC, the problems with one reactor's pump
and generators were but two examples of the licensee's overall poor
performance.  NRC removed the plant from its list of problem
facilities in January 1995.  According to NRC, increased oversight
was no longer needed because the licensee had, among other things,
substantially corrected the weaknesses and underlying root causes
that had led to previous problems at the plant. 

In March 1995, NRC completed a self-assessment that identified
several weaknesses in its inspection program at the plant.  For
example, NRC found that problems at the plant had been identified
repeatedly over a period of years, but the agency had not adequately
integrated this information to determine whether the problems
indicated systemic weaknesses in the licensee's operations. 
Furthermore, according to NRC it did not ensure that the licensee had
corrected identified problems.  NRC reported that these and other
weaknesses in the program resulted in missed opportunities to (1)
provide a clear and early message to the South Texas plant's licensee
about the extent of its performance problems and (2) highlight
continuing problems with the licensee's performance within NRC.  NRC
has taken several actions, and has planned others, to address these
weaknesses. 


   PRINCIPAL FINDINGS
---------------------------------------------------------- Chapter 0:4


      NRC FOUND SEVERAL SAFETY
      VIOLATIONS BUT CONSIDERED AN
      ACCIDENT UNLIKELY
-------------------------------------------------------- Chapter 0:4.1

The licensee shut down both reactors because of continuing problems
with their emergency pumps.  NRC requires the reactor to be shut down
if its pump is inoperable for more than 3 days.  NRC later found that
one reactor's pump had been inoperable for about 40 days.  Two of the
reactor's three generators had also been inoperable during portions
of this period.  One generator was inoperable for 24 days; the other
was inoperable for 61 hours.  The inoperability of the generators,
which violated additional safety requirements, occurred because of
shortcomings in the licensee's operation of the plant.  For example,
the licensee repainted one generator but did not test it to ensure
that it worked before (1) returning it to service or (2) removing the
reactor's second generator from service for routine maintenance. 

The risk of damaging the reactor's core increased from about 1 chance
in 5 million to about 1 chance in 83,000 during the period when two
or more of the reactor's emergency systems were not working. 
However, while the risk increased, NRC considered that an accident
was unlikely because of the reactor's multiple safety features.  For
example, according to NRC it was unlikely that the reactor's
emergency generators would have been needed because the plant has
eight sources of off-site power to avoid an electricity blackout,
while most other nuclear plants have fewer sources.  However,
although NRC considered an accident unlikely, it viewed the equipment
outages as indicating overall "sloppiness" in the licensee's
operation of the plant.  NRC fined the licensee for, among other
things, performing improper tests and maintenance of the equipment
and for having inoperable equipment well beyond the time frames
established for the mandatory shutdown of the reactor. 


   NRC WAS NOT FULLY AWARE OF THE
   LICENSEE'S PERFORMANCE PROBLEMS
   BEFORE THE SHUTDOWN
---------------------------------------------------------- Chapter 0:5

NRC was aware of long-standing malfunctions with the reactors' pumps,
including problems with one reactor's pump in the 3-day period
preceding the shutdown.  However, it was not until after the shutdown
that NRC found, among other things, that the licensee had not
conducted a valid test of the reactor's pump since December 26, 1992. 
NRC also knew that the licensee was performing maintenance on the
reactor's generators.  However, the agency did not know that, in
addition to the problems with the pump, (1) painting had immobilized
one generator for 24 days and (2) the licensee had removed another
generator from service for 61 hours--conditions that substantially
increased the likelihood of a core-damaging event at the plant. 
Although one purpose of NRC's inspection program is to prevent
significant events at plants, in practice NRC rarely detects such
events before its licensees do.  All 16 significant events that NRC
reported for 1993, including the event in South Texas, were initially
identified by the licensees rather than by NRC.  This situation is
unlikely to change because, according to NRC, it has initiatives
under way to rely more heavily on licensees to identify and correct
problems at nuclear plants. 

Similarly, although NRC was aware of other long-standing problems at
the plant, the agency did not know the magnitude of the problems
until about 2 months after the shutdown.  In July 1992, NRC had rated
the licensee as a good performer.  However, in January 1993--a month
before the shutdown--NRC decided to conduct a comprehensive
evaluation of the plant to obtain a better understanding of the
licensee's performance.  This evaluation--completed in April
1993--identified systemic, long-term problems in the licensee's
operations, maintenance and testing, engineering support, and
corrective action programs.  As a result, NRC (1) revised its
assessment of the licensee's overall performance and (2) included the
plant on its list of problem plants.  The licensee restarted the two
reactors in February 1994 and May 1994 after NRC agreed that the
licensee had completed all actions required for restarting the
reactors.  In January 1995, NRC removed the plant from its list of
problem plants.  According to NRC, its increased oversight was no
longer needed because the licensee, among other things, had (1)
substantially corrected the weaknesses and underlying root causes
that had led to the plant's previous problems and (2) upgraded the
reliability of the equipment. 


      RECENT SELF-ASSESSMENT
      IDENTIFIED WEAKNESSES IN
      NRC'S INSPECTION PROGRAM AT
      THE SOUTH TEXAS PLANT
-------------------------------------------------------- Chapter 0:5.1

According to NRC's March 1995 self-assessment, one factor that
prevented the agency from being aware of the licensee's problems in a
timely manner was a lack of integration within the agency of the
available information on the licensee's problems in operating the
plant.  For example, NRC found that most of the systemic concerns
raised in its April 1993 post-shutdown inspection were "either known
or recognizable as issues with roots in previous NRC inspection
findings." However, NRC did not adequately use the findings in
assessing the licensee's overall performance.  Furthermore, NRC found
that it had not ensured that the licensee had corrected identified
problems.  Instead, according to NRC, it relied on the licensee's
programs and commitment to correct recurring problems, which, in
retrospect, were not effective.  As a result, NRC found that it had
missed opportunities to arrive at a fuller and more timely assessment
of the extent and depth of the licensee's overall performance
problems. 

In an effort to address weaknesses in its inspection program, NRC
plans to initiate a new inspection activity--termed an "integrated
performance assessment process"--to improve its information about the
licensees' performance.  According to NRC, the new activity will
assess performance using information such as the facilities'
operational reports and data, inspection results, and the licensees'
self-assessments.  NRC has also taken steps to better focus
inspections on the licensees' efforts to correct identified problems. 
The effectiveness of these and other planned actions will depend, to
a great extent, on NRC's ongoing initiatives to rely more heavily on
the licensees to identify problems at the plants. 


   RECOMMENDATIONS
---------------------------------------------------------- Chapter 0:6

GAO is making no recommendations. 


   AGENCY COMMENTS
---------------------------------------------------------- Chapter 0:7

GAO provided copies of a draft of this report to NRC for its review
and comment.  NRC provided written comments that generally agreed
with the report's findings and conclusions.  However, NRC stated that
GAO had misstated the purpose of its inspection program. 
Specifically, NRC said that the licensees are responsible for the
safe operation of their plants and implied that the intent of its
inspection program is limited to ensuring that the licensees identify
and resolve potential safety issues before they result in significant
problems.  GAO's report clearly indicates that (1) the licensees are
ultimately responsible for the safe operation of their facilities and
(2) NRC's inspection program is intended to obtain independent
assurance that the licensees are operating their facilities safely. 
However, as discussed in GAO's report and NRC's own 1994 annual
report, NRC's inspection program is also "intended to anticipate and
preclude significant events and problems by identifying underlying
safety problems." NRC's comments and GAO's response to them are
included in appendix II and discussed at the end of chapter 3.  NRC
also suggested a number of editorial and technical changes to clarify
information in the report.  These changes have been incorporated, as
appropriate, into the report. 

GAO also met with officials of the licensee, including the Group Vice
President of the Houston Lighting and Power Company, to discuss their
comments on the draft report.  These officials concurred with the
report's findings and conclusions.  They suggested several minor
changes to clarify the report, which have been incorporated where
appropriate. 


INTRODUCTION
============================================================ Chapter 1

The Atomic Energy Act of 1954, as amended, authorizes the Nuclear
Regulatory Commission (NRC) to license, regulate, and inspect the
design, construction, and operation of domestic nuclear power plants. 
NRC has, among other things, established regulations for the safe
operation of the 109 nuclear reactors operating in the United States
as of December 31, 1994.  For example, NRC requires nuclear reactors
to have multiple safety systems to control and contain the
radioactive materials used in each plant's operation.  NRC also
requires its licensees to test and maintain safety equipment to help
ensure that this equipment, such as a reactor's emergency safety
systems, will operate when needed.  The requirements are intended to
protect workers and the public from the harmful effects of radiation. 

Reactors have specific operating requirements (technical
specifications) depending on their design.  These requirements are
intended to provide a high margin of safety under all operating
scenarios.  NRC evaluates a reactor's design and related technical
specifications when it licenses the reactor's operation.  Once
approved, these specifications become the requirements for the
operation of the reactor.  If certain requirements cannot be met, NRC
requires the licensed operator (licensee) of the reactor to promptly
shut it down. 


   NRC'S INSPECTION PROGRAM
---------------------------------------------------------- Chapter 1:1

Because the licensees are ultimately responsible for the safe
operation of their facilities, NRC relies heavily on them to identify
and report problems at their facilities.  However, NRC inspects a
small portion of each licensee's activities to provide independent
assurance that the licensees are operating their facilities safely. 
According to NRC's 1994 annual report, the agency's inspection
program is also intended to identify underlying safety problems at a
plant and, by so doing, to anticipate and prevent "significant
events"--events that could damage a reactor's core and that could
result in a release of radioactive materials.\1 NRC also uses its
inspection results to (1) assess each licensee's performance, (2)
provide feedback to the licensees about their performance, and (3)
allocate its inspection resources among facilities. 

At each nuclear facility, daily inspections are conducted by one to
three resident NRC inspectors.  The resident inspectors observe a
variety of activities, including the licensee's (1) operation of the
plant's control room and (2) testing and maintenance of selected
equipment.  NRC's regional and headquarters inspection staff
supplement the resident inspectors' efforts and conduct more detailed
reviews of selected areas.\2 If NRC finds that a licensee has
violated its requirements for safe operation, it can take enforcement
actions against the licensee.  NRC categorizes violations according
to four levels of severity--level I violations are the most serious
and level IV violations are the least serious.\3 Once NRC finds a
violation and determines the severity, it can issue a notice of
violation and impose a civil penalty (fine) or require the plant to
stop operations.\4


--------------------
\1 We refer to such situations as potential "core-damaging events."

\2 Regional inspectors for the South Texas plant are based in NRC's
Arlington, Texas, office.  (This region is commonly referred to as
the "Dallas Region.") NRC headquarters staff are primarily located in
Rockville, Maryland. 

\3 NRC considers severity level I, II, and III violations "escalated
enforcement actions."

\4 While NRC is authorized to shut down nuclear facilities, it has
only done so once.  NRC ordered the Peach Bottom Plant in
Pennsylvania to shut down in 1987 after finding that personnel in the
control room were sleeping on the job. 


   THE SOUTH TEXAS PROJECT
   ELECTRIC GENERATING PLANT
---------------------------------------------------------- Chapter 1:2

The South Texas Project Electric Generating Station (South Texas
plant) is located 87 miles southwest of Houston, Texas, in Matagorda
County.  The plant is owned by the Houston Lighting and Power
Company, the cities of San Antonio and Austin, and the Central Power
and Light Company.  The Houston Lighting and Power Company is the
licensed operator of the plant. 

The plant has two reactors.  The first reactor (unit 1) was started
up in March 1988 and the second (unit 2) in March 1989. 

Each of the reactors at the South Texas plant has emergency safety
systems, including an auxiliary feedwater (water pumping) system and
standby diesel generators, for cooling the reactors.  Normally idle,
the systems are designed to be activated during any emergency that
disrupts the reactors' primary cooling systems.  The auxiliary
feedwater system for each of the South Texas plant's reactors has
four pumps.  One of the pumps--the turbine-driven auxiliary feedwater
pump--is powered by steam, and the other three pumps are powered by
electric motors that normally receive electricity from the plant's
main generator or from off-site sources of electricity.  As figure
1.1 shows, if electricity cannot be obtained from either of these
sources--a condition called a "loss of off-site power"--each reactor
has three generators for operating its three motor-driven auxiliary
feedwater pumps and other emergency systems.\5

   Figure 1.1:  Emergency Pumps
   and Generators Available for
   Use During a Loss of Off-Site
   Power

   (See figure in printed
   edition.)

On February 4, 1993, the licensee at the South Texas plant informed
NRC that it was shutting down the unit-1 reactor because of
continuing malfunctions with the reactor's turbine-driven auxiliary
pump.  And, although the unit-2 reactor had already been shut down
for other reasons, the licensee decided not to return the reactor to
service because of similar problems with its pump. 


--------------------
\5 The plant has numerous pumps and generators that are unrelated to
those discussed in this report.  To simplify our discussion, this
report generally refers to each reactor's turbine-driven auxiliary
feedwater pump as "the pump." Similarly, we generally refer to the
diesel generators as "the generators."


   OBJECTIVES, SCOPE, AND
   METHODOLOGY
---------------------------------------------------------- Chapter 1:3

The Ranking Minority Member of the House Committee on Commerce asked
us to (1) identify the circumstances surrounding the shutdown of the
South Texas plant and the seriousness of the event, (2) determine
whether NRC was aware of problems at the plant before the shutdown,
and (3) identify any factors that may have prevented NRC from having
complete and timely information about the licensee's performance. 

To identify the circumstances surrounding the plant's shutdown, we
reviewed the licensee's reports on the events and NRC's documentation
of, among other things, the plant's operating requirements; reports
by NRC's resident, regional, and headquarters inspectors; enforcement
actions at the plant; and NRC's information notices describing
problems with pumps and other relevant emergency equipment at nuclear
plants.  To determine the seriousness of the events leading to the
shutdown, we reviewed NRC's assessment of the possible danger to the
public and the environment.  We supplemented this information through
interviews with NRC headquarters officials in the Office of Nuclear
Reactor Regulation and the Office for Analysis and Evaluation of
Operational Data, regional officials, and NRC resident inspectors and
officials of the licensee at the plant. 

To determine whether NRC was aware of problems at the plant before
the shutdown, we examined reports by NRC's resident, regional, and
headquarters inspectors; minutes from senior NRC management meetings
at which the licensee's performance was discussed; NRC's ratings of
the licensee over several years; and special NRC evaluations
conducted at the South Texas plant after the shutdown.  We also
reviewed the licensee's memorandums and other documentation
responding to NRC's findings.  We supplemented this information
through discussions with NRC's resident, regional, and headquarters
staff and officials representing the licensee. 

We used information obtained for the earlier two objectives to
identify the factors that may have prevented NRC from having complete
and timely information about the licensee's performance.  We
supplemented our analysis by reviewing NRC's special
evaluations--including a March 1995 NRC report evaluating the
effectiveness of its inspection program at the plant--to more fully
assess NRC's (1) knowledge about the number and nature of problems at
the plant and (2) actions to both alert the licensee of the problems
and ensure that the problems had been corrected.  In addition, we
used an NRC computerized database, NRC's guidelines on staffing of
inspectors, and interviews with NRC resident inspectors and regional
officials to assess the extent and adequacy of NRC's inspection
presence at the plant.  We did not attempt to verify the accuracy of
NRC's data on the number of hours spent inspecting the plant. 
However, our findings were consistent with testimonial evidence from
cognizant NRC staff and with findings about staffing at the plant
from NRC's special evaluation. 

We conducted our work from May 1994 through September 1995 in
accordance with generally accepted government auditing standards.  We
provided a draft of our report to NRC for its review and comment. 
NRC provided written comments to clarify information in the report. 
NRC's comments are included in appendix II and discussed in chapter 3
of the report.  We also met with officials of the licensee, including
the Group Vice President of the Houston Lighting and Power Company,
to discuss their comments on our draft report.  These officials
provided several minor comments to clarify the report.  We addressed
NRC's and the licensee's comments, as appropriate, in the report. 


MALFUNCTIONING PUMPS CAUSED THE
SHUTDOWN, BUT NRC FOUND SEVERAL
SAFETY VIOLATIONS INDICATING
SYSTEMIC PROBLEMS
============================================================ Chapter 2

The South Texas licensee shut down the plant's two reactors in
February 1993 because of continuing problems with the emergency
pumps.  However, when NRC reviewed the circumstances surrounding the
shutdown, it determined that the unit-1 reactor's pump had been
inoperable for a period of about 40 days--long past the time
requiring shutdown.  In addition, NRC found that two of the reactor's
three standby diesel generators were also inoperable during portions
of this period.  The extended inoperability of the emergency
equipment (1) violated several requirements for the safe operation of
the reactor and (2) substantially increased the risk of an accident
at the site.  According to NRC, an accident was unlikely because of
multiple safety features in the reactor's design.  Nevertheless, NRC
viewed the equipment problems as significant and indicative of
systemic problems in the licensee's operation of the plant.  NRC
issued a notice of violation and fined the licensee for, among other
things, multiple violations related to the testing and maintenance of
the equipment.  The licensee concurred with NRC's findings. 


   MALFUNCTIONING PUMPS CAUSED THE
   LICENSEE TO SHUT DOWN THE SOUTH
   TEXAS PLANT
---------------------------------------------------------- Chapter 2:1

In a routine test of a portion of the unit-1 reactor's auxiliary
feedwater system on February 1, 1993, the licensee found that the
turbine-driven pump was inoperable because of a mechanical failure
with a valve associated with the turbine.  Two days later, the
licensee found similar malfunctions in the unit-2 reactor's
turbine-driven emergency pump.  NRC's requirements for the safe
operation of the South Texas plant's reactors require the licensee to
begin to shut down a reactor if its turbine-driven pump is inoperable
for more than 3 days.  On February 4, 1993, the licensee informed NRC
that it had not been able to restore the unit-1 reactor's pump to
working order; as a result, the licensee shut the reactor down.  In
addition, the licensee decided not to return the unit-2 reactor to
service because of similar problems with its pump.\1


--------------------
\1 The unit-2 reactor had tripped on February 3, 1993, because of
equipment problems unrelated to the reactor's turbine-driven pump. 
The trip automatically removed the reactor from full-power operation. 
The licensee initiated actions to correct the problems and return the
reactor to full operation.  However, in the interim, the reactor's
pump malfunctioned after receiving a signal to start.  According to a
representative of the licensee, the licensee decided to completely
shutdown the unit-2 reactor after finding that both reactors were
experiencing similar problems with their pumps. 


   POST-SHUTDOWN NRC INSPECTION
   DISCLOSED SEVERAL SAFETY
   VIOLATIONS
---------------------------------------------------------- Chapter 2:2

NRC investigated the circumstances surrounding the plant's shutdown
and found that the licensee had violated the agency's requirements
for the safe operation of the unit-1 reactor.  Specifically, although
the licensee shut down this reactor within 3 days of determining that
its pump was inoperable, an NRC inspection team found that the pump
actually had been inoperable from December 26, 1992, until February
4, 1993--or about 37 days beyond the 3-day time frame that requires
the reactor's shutdown.\2

At the same time, NRC's inspectors found that two of the three
standby diesel generators that are intended to supply power to the
unit-1 reactor's emergency systems during a loss of off-site power
were also inoperable during portions of this period.  The fact that
the generators were inoperable violated two additional requirements
for the safe operation of the reactor and, consequently, also should
have caused the licensee to shut the reactor down. 

NRC's requirements for the safe operation of the reactor specify that
the licensee must begin to shut down the reactor if any one of its
three generators is out of service for longer than 3 days.  The
licensee took one of the unit-1 reactor's generators out of service
for painting between December 29, 1992, and December 31, 1992.  The
equipment was returned to service within 3 days.  However, NRC's
inspectors subsequently determined that the licensee did not test the
generator to ensure that it worked until January 20, 1993.  That test
revealed that paint had dripped onto critical parts of the equipment,
rendering the generator inoperable.  The licensee cleaned the
generator and, on January 22, 1993, returned it to service.  NRC's
inspectors concluded that the generator had been inoperable for 24
days between December 29, 1992, and January 22, 1993, or 21 days
beyond the time frame requiring shutdown.  If the unit-1 reactor had
lost off-site power during this period, a maximum of two diesel
generators would have been available to provide power to its
emergency systems. 

An additional violation occurred when, unaware that the painted
generator was not working, the licensee removed another of the
reactor's generators from service for other maintenance.  NRC's
requirements for the safe operation of the reactor specify that the
licensee must begin shutting down the reactor if two generators are
inoperable for over 2 hours.  The second generator was off-line for
61 hours between January 12 and January 14, 1993, overlapping the
period in which the painted generator was inoperable.  Consequently,
the reactor operated for about 59 hours beyond the time frame
requiring its shutdown.  If the reactor had lost off-site power
during this 61-hour period, only one generator would have been
available to provide power to the reactor's emergency systems. 
Figure 2.1 shows when the reactor's emergency equipment was
inoperable. 

   Figure 2.1:  Periods When the
   Reactor's Emergency Equipment
   Was Inoperable

   (See figure in printed
   edition.)


--------------------
\2 According to NRC, the reactor's pump was inoperable "from December
26, 1992, until February 4, 1993, a period of 33 days." There are
between 39 and 41 days in this period, depending on whether the start
and end dates of the period are included.  We discussed this
discrepancy with a member of NRC's inspection team.  He told us that
NRC excluded the 3-day periods following two unsuccessful tests of
the pump (on Jan.  28 and Feb.  1, 1993) because NRC allows the pump
to be inoperable for up to 3 days before shutdown is initiated. 
While this is true, as we discuss later NRC also found that (1)
improper tests had masked problems with the pump and (2) the licensee
had not performed a valid test of the pump since December 26, 1992. 
As a result, the pump appears to have been inoperable for at least 40
days, or 37 days beyond the time requiring the shutdown of the
reactor. 


   THE INOPERABLE EQUIPMENT
   INCREASED RISK, BUT NRC
   CONSIDERED AN ACCIDENT UNLIKELY
---------------------------------------------------------- Chapter 2:3

No emergency occurred in the unit-1 reactor's primary cooling system
between December 26, 1992, and February 4, 1993, when one or more
components of the emergency equipment was inoperable.  Consequently,
the equipment's condition had no adverse affect on the reactor's safe
operation.  However, according to NRC, if an emergency had occurred,
the licensee's ability to respond effectively would have been
impaired because the equipment would not have operated as intended. 
NRC viewed the fact that key components of the reactor's emergency
equipment were simultaneously not working as a significant event that
could have damaged the reactor's core. 

According to NRC, when all of the reactor's equipment is working
properly, the chance that an accident will occur is about 1 in 5
million.  NRC's calculations indicate that the risk of experiencing
an accident increased to about 1 chance in 83,000 during the
approximate 24-day period when two or more of the reactor's emergency
components were inoperable.\3 While the risk of an accident
increased, according to NRC the likelihood of such an event remained
small because of the multiple safety features in the reactor's
design.  For example, even though NRC's requirements for the safe
operation of the reactor specify that the licensee must begin
shutting the reactor down if the pump is inoperable for 3 or more
days, according to NRC--except for the 61-hour period when two
generators were also inoperable--any two of the reactor's three
motor-driven auxiliary pumps could have supplied enough water to cool
the reactor if the plant had lost off-site power.\4 And, if the
licensee had lost off-site power during the 61 hours when only one
generator was available, according to NRC the licensee would have had
sufficient time to connect other equipment for cooling the reactor. 
Finally, although NRC requires the licensee to begin to shut down the
reactor if (1) any one of its three generators is inoperable for 3 or
more days or (2) two generators are inoperable for over 2 hours, NRC
considered it unlikely that the generators would have been needed
because the plant has eight different sources of off-site power.\5


--------------------
\3 We were unable to determine if NRC evaluated the increased risk
associated with the remaining 16-day period when only the pump was
inoperable. 

\4 As discussed earlier, the motor-driven auxiliary feedwater pumps
receive power from the generators during a loss of off-site power. 

\5 According to NRC, nuclear plants typically have two or more
sources of off-site power, which, in NRC's view, provide a sufficient
margin of safety. 


   NRC VIEWED THE EQUIPMENT
   PROBLEMS AS INDICATING DEEPER
   PROBLEMS IN THE PLANT'S
   OPERATIONS
---------------------------------------------------------- Chapter 2:4

Although the risk of an accident may have been low, the equipment
problems were particularly troublesome because NRC had previously
alerted all licensees about the need to test emergency pumps under
normal standby conditions and to ensure that painting would not
immobilize a reactor's emergency generators.  In its April 1993
post-shutdown review of the South Texas plant, NRC found that
improper testing had masked problems with the pumps and improper
painting had immobilized a generator.  These equipment outages, NRC
concluded, indicated systemic problems at the plant.  NRC fined the
licensee for, among other things, multiple violations related to the
testing and maintenance of the emergency equipment. 


      THE LICENSEE DID NOT TEST
      THE PUMPS UNDER CONDITIONS
      THAT WOULD HAVE DETECTED THE
      PROBLEMS
-------------------------------------------------------- Chapter 2:4.1

NRC's requirements for the safe operation of the South Texas plant's
reactors specify that the licensee must test the pumps monthly to
ensure that they will work properly in an emergency.  According to
NRC, the tests must be conducted under "suitable environmental
conditions." In addition, NRC requires that equipment failures,
malfunctions, and other deficiencies be promptly identified and
corrected. 

The licensee tested the unit-1 reactor's pump on numerous occasions
between the end of December 1992 and early February 1993, when it
became aware that problems with the pump warranted shutting the
reactor down.  The first test occurred on December 27, 1992.  The
pump immediately malfunctioned.  The licensee restarted the pump
twice before repeating the test.  The subsequent test was successful,
and the licensee concluded that the pump was functioning properly. 
The licensee conducted its next monthly test of the pump on January
28, 1993.  Once again, the pump malfunctioned immediately.  The
licensee worked on the pump for 3 days and retested it on January 30,
1993.  The test was successful and the licensee declared the pump to
be in working order.  However, in view of the pump's earlier
problems, on February 1, 1993, the plant's operations manager
directed that the pump be tested again.  The pump failed to start. 
Three days later, the malfunction still had not been corrected, so
the licensee shut down the reactor.\6

In analyzing the events leading to the unit-1 reactor's shutdown,
NRC's inspectors determined that condensation--resulting, in part,
from an improperly adjusted valve--had contributed to the pump's
malfunction.  The inspectors determined that the licensee's testing
program had not been sufficiently rigorous to detect the problem. 
Specifically, although an emergency start-up would usually occur when
the pump was idle or cold, the tests were not performed under these
conditions.  While the licensee's tests were initially performed when
the pump was cold, NRC's inspectors found that the licensee had not
returned the pump to its normal standby temperature before retesting
it after the initial tests had failed. 

According to NRC's inspectors, the improper tests masked obvious
problems with the pump.  Specifically, NRC inspectors found that the
licensee's cold starts of the pump between the end of December 1992
and early February 1993 were routinely unsuccessful.  Yet, following
several restart attempts, the pump would start because the heat
produced by earlier restarts had dissipated condensation in the
system.  This finding was meaningful because, in March 1988, NRC had
informed all licensees that condensation resulting from the improper
adjustment of the valves on a reactor's pump had caused similar
malfunctions at another nuclear power plant.  NRC suggested that all
licensees take appropriate action, such as quick starts from cold
conditions, to detect the problem.  At the South Texas plant, NRC
concluded, among other things, that (1) the licensee had not
conducted a valid test of the first reactor's pump since December 26,
1992, and (2) because of inadequate testing and maintenance, the
problems with both reactors' pumps had not been resolved. 

The licensee concurred with NRC's findings about the pumps' problems. 
Specifically, it agreed that, among other things, its (1) work
processes had not ensured the proper adjustment of the valve, (2)
corrective action program had not recognized that the pumps' repeated
malfunctions were evidence of a recurring problem warranting
resolution, and (3) testing program had not been adequate to identify
the pumps' malfunction. 


--------------------
\6 As discussed earlier, the licensee also shut down the second
reactor because of similar malfunctions with that reactor's
turbine-driven pump. 


      THE LICENSEE DID NOT
      ADEQUATELY SUPERVISE
      PAINTING AND DID NOT TEST
      THE GENERATOR TO ENSURE THAT
      IT WORKED
-------------------------------------------------------- Chapter 2:4.2

NRC requires that activities that could affect safety--such as
painting and other maintenance--be conducted in accordance with
documented procedures that, among other things, ensure that the
maintenance is satisfactorily performed.  The licensee's statement of
work for the painting specified that the generator's moving parts
must be protected from paint and that the generator must be tested
after painting to ensure that it worked.  However, NRC's inspectors
found that the licensee did not ensure that the painting had been
satisfactorily accomplished.  For example, NRC found that although
plant personnel pointed out areas, such as moving parts, that were
not to be painted by the contract painters, the licensee did not
adequately oversee the painting to ensure that precautions were being
taken to, among other things, ensure the integrity of the generator's
moving parts.  In addition, NRC found that the licensee did not
conduct a post-maintenance test to ensure that the generator worked
before (1) returning it to service or (2) removing another generator
from service for other maintenance because a plant employee had
mistakenly concluded that the test was not necessary.  NRC concluded
that the painted generator had been inoperable for a total of 24 days
before it was cleaned and returned to service on January 22, 1993. 
NRC's findings about the painted generator were particularly
troublesome because, in July 1991, NRC had informed all licensees
that improper painting had immobilized generators at two other
nuclear plants and recommended that licensees take appropriate action
to avoid the problem. 

The licensee concurred with NRC's findings about the painted
generator.  According to the licensee, it was not aware that the
painted generator was not working when it returned the generator to
service or when it removed the reactor's second generator from
service, in part because of (1) inadequacies in its controls over
work processes at the plant, (2) the inappropriate omission of the
post-maintenance test and, (3) the inadequate implementation of NRC's
warning about the lessons learned by other licensees who had
experienced similar problems. 


      NRC TOOK ENFORCEMENT ACTION
      AGAINST THE SOUTH TEXAS
      LICENSEE
-------------------------------------------------------- Chapter 2:4.3

According to NRC's Director for Inspection and Support Programs,
Office of Nuclear Reactor Regulation, the agency was concerned
because it considered the outages of the pumps and generator
indicative of (1) systemic problems at the plant, including a failure
to adequately test and maintain emergency equipment and (2) an
overall "sloppiness" in the licensee's operation of the plant.  NRC
issued a notice of violation that categorized its concerns as
"significant from a regulatory standpoint"--a severity level III
violation.  NRC also fined the licensee $325,000 for multiple
violations related to the testing and maintenance of both reactors'
pumps and the unit-1 reactor's generators and the lengthy
inoperability of the unit-1 reactor's emergency equipment beyond the
time frames established for the reactor's shutdown. 


NRC WAS NOT FULLY AWARE OF THE
PROBLEMS AT THE SOUTH TEXAS PLANT
============================================================ Chapter 3

While NRC was aware of problems with the reactors' pumps in the
period preceding the plant's shutdown and knew that the licensee was
conducting maintenance on the unit-1 reactor's generators, the agency
did not realize the full extent of the problems.  For example, before
the shutdown, NRC did not know that the licensee's maintenance on two
of the reactor's generators--combined with the reactor's
malfunctioning pump--had resulted in the simultaneous inoperability
of three of the reactor's emergency systems.  This situation is not
unique.  According to NRC, its licensees generally detect major
problems, including problems that it would classify as "significant,"
before the agency does.  Similarly, while NRC knew about
long-standing problems at the plant and had decided to initiate a
comprehensive evaluation at the plant, the agency did not know the
magnitude of the licensee's overall performance problems until months
after the plant's shutdown.  The results of that inspection caused
NRC to downgrade its assessment of the licensee's performance and to
increase regulatory oversight.  According to NRC, the problems with
the unit-1 reactor's pump and generators were but two examples of the
licensee's overall poor performance. 


   NRC WAS NOT FULLY AWARE OF THE
   EQUIPMENT PROBLEMS RELATED TO
   THE PLANT'S SHUTDOWN
---------------------------------------------------------- Chapter 3:1

During the 5-year period between January 1, 1988, and February 4,
1993--the day of the shutdown--NRC spent about 23,000 hours
inspecting the two reactors at the South Texas plant.  The
inspections identified numerous problems at the plant, including
long-standing problems with the reactors' pumps.  Between January
1988 and January 1993, for example, at least six NRC inspection
reports documented problems with the reactors' pumps.  Most of these
problems were documented during the resident inspectors' routine
sampling of the licensee's testing, maintenance, and post-maintenance
activities at the plant.  About a month before the plant was shut
down, a regional inspection team documented problems with the unit-2
reactor's pump. 

According to the former senior resident inspector at the plant, both
he and the other on-site inspector were aware of long-standing
malfunctions with the reactors' pumps, including problems with
unit-1's pump in the 3-day period preceding the plant's complete
shutdown.  NRC also was aware that the licensee's troubleshooting and
repair activities had not been successful in resolving the
malfunction and, consequently, that a shutdown was warranted.  While
NRC was aware of the problems, it was not until after the shutdown
that NRC found that the licensee's improper tests of the pumps had
masked problems with the reactors' pumps and that the licensee had
not conducted a valid test of unit-1's pump since December 26, 1992. 
Furthermore, NRC knew that the licensee was performing maintenance on
the diesel generators and, before the painting, had cautioned the
licensee about the contents of NRC's information notice describing
problems encountered by licensees who had improperly painted their
generators.  However, it was not until after the shutdown that NRC
found that, in addition to the problems with unit-1's pump, (1)
painting had immobilized one generator for a period of 24 days or (2)
the licensee had removed another generator from service during a
portion of that period.  Consequently, before the shutdown, NRC did
not know that three of the reactor's emergency systems were
simultaneously inoperable, a condition that substantially increased
the likelihood of a core-damaging event at the plant. 

According to NRC, it rarely detects major problems--such as problems
that could result in damage to a reactor--before its licensees do. 
NRC routinely evaluates events experienced at nuclear plants to
identify situations that could threaten the public's health and
safety.  NRC's evaluation for 1993 identified 16 "significant
events," including the event at the South Texas plant, that could
have damaged a reactor and possibly resulted in a release of
radiation.\1

Although NRC's inspection program is intended to, among other things,
anticipate and prevent significant events from occurring, none of the
16 events were initially identified by NRC.  According to NRC's
Director for Inspection and Support Programs, Office of Nuclear
Reactor Regulation, it is "reasonably rare" for the agency to detect
such problems before a licensee reports them.  He said that the
purpose of NRC's inspection program is, instead, to ensure that the
licensees identify and correct problems that affect the safe
operation of their plants.  This situation is unlikely to change
because, according to NRC officials, the agency has initiatives under
way to rely even more heavily on licensees to identify and correct
problems at nuclear plants. 


--------------------
\1 According to NRC, each of the 16 events occurred at a different
reactor. 


   NRC WAS NOT AWARE OF THE
   MAGNITUDE OF THE LICENSEE'S
   OVERALL PERFORMANCE PROBLEMS
   UNTIL AFTER SHUTDOWN
---------------------------------------------------------- Chapter 3:2

NRC's rating of the South Texas licensee for the period between
January 1989 and January 1990 indicates that the agency considered
the licensee to be a "superior" performer.  In 1991 and 1992, the
licensee's rating declined in several areas.  According to NRC, this
decline was indicated by, among other things, repeated malfunctions
of equipment.  The decline in performance was discussed by senior NRC
managers at a meeting in 1991.\2 The managers' concerns were relayed
to the licensee, and the licensee initiated programs to correct the
problems.  Nevertheless, the licensee's performance continued to
decline in 1992.  For example, in the rating for the assessment
period immediately preceding the shutdown (between June 1991 and July
1992), NRC noted that the licensee continued to be challenged by
long-standing equipment problems and human errors.  Despite this
decline in performance in 1991 and 1992, NRC rated the licensee's
overall performance as "good" throughout the 2-year period.\3

In late 1992, a new regional administrator raised questions about the
licensee's performance and determined that there was no consensus on
the licensee's performance level within NRC.  NRC managers discussed
the licensee's performance again in January 1993 and concluded that
the licensee's declining performance, while discernible, did not
warrant placing it on NRC's list of problem plants.  However, the
managers decided to conduct a comprehensive inspection--termed a
diagnostic evaluation--to obtain a better understanding of the
licensee's overall performance.  Although this diagnostic evaluation
was planned before the February 4, 1993, shutdown, it was performed
from March 29 through April 30, 1993--about 2 months later. 


--------------------
\2 NRC's senior managers meet semiannually to, among other things,
discuss (1) the safety performance of reactors and (2) plans for
overseeing plants with performance problems. 

\3 While NRC rated the licensee's overall performance as good, NRC's
1992 rating pointed out that this was the second consecutive
assessment period in which performance had declined and that
additional management attention was required to prevent a further
decline in performance. 


      NRC IDENTIFIED SIGNIFICANT,
      LONG-STANDING DEFICIENCIES
-------------------------------------------------------- Chapter 3:2.1

The 16-member evaluation team of regional and headquarters NRC
inspectors and contractor personnel identified significant, long-term
deficiencies in the licensee's operations, maintenance, and testing
activities and in the engineering support at the plant.  According to
NRC, the licensee had been aware of many deficiencies for "some
time," yet the licensee had not corrected them.  For example, NRC's
team found

  insufficient plant staff in areas such as operations and
     engineering,

  some plant equipment in poor material condition,

  deficiencies in employees' skills and training, and

  inadequacies in the licensee's identification and correction of
     some equipment failures. 

Regarding staffing, for example, the evaluation team found that heavy
workloads and inadequate staff support had adversely affected the
safe operation of the plant.  According to the team's report,\4 shift
supervisors were frequently consumed with tasks, such as
administrative duties, that prevented them from maintaining a broad
perspective about the operation of the plant.  In addition, according
to the team, the plant's operators were "significantly affected" by
degraded plant equipment and the administrative burden associated
with frequent equipment outages.  According to NRC, the inadequate
staffing manifested itself in the routine use of overtime and several
events at the plant that occurred, in part, because of staff
shortages and fatigue.  Furthermore, rather than increase staffing,
the licensee had reduced the scope and frequency of training to limit
employees' absences from their regular duties and thus compensate for
the staffing shortages. 

NRC's evaluation team also found that staffing in the plant's
engineering areas was inadequate to support the plant's operations. 
The engineers' backlog of work was large and rapidly increasing at
the time of NRC's evaluation.  According to the team, this backlog
caused the engineers to be (1) slow in identifying deficient
conditions and (2) "hasty" in investigating the root cause of
identified problems.  As a result, engineering solutions often
corrected the symptom--not the cause--of equipment problems. 
Furthermore, according to the team, the engineers did not adequately
apply the operational experience they had gained in both the industry
and at the site, leading to avoidable events and repetitive equipment
failures at the plant.  Finally, the team found that some engineers
at the plant had not been sufficiently trained and lacked the
analytical tools necessary to perform some engineering tasks. 

The licensee, in an August 1993 response to NRC's evaluation report,
indicated that it had already initiated and in several cases
completed actions to address NRC's concerns.  For example, the
licensee stated that it

  had hired senior level managers--with proven track records in the
     nuclear industry--to facilitate improvement efforts,

  had improved staffing at the plant and cancelled work activities
     that could detract from the operation staff's primary functions
     of monitoring and controlling the plant's equipment,

  had improved the plant's material condition and reduced the backlog
     of equipment needing maintenance,

  had improved the effectiveness of its engineering program, and

  was developing (1) a business plan describing its initiatives to
     effect sustained improvement and its plans for accomplishing the
     initiatives and (2) an operational readiness plan to address
     specific issues that needed to be corrected before restarting
     the reactors. 


--------------------
\4 Diagnostic Evaluation Team Report on South Texas Project Electric
Generating Station, NRC (June 8, 1993). 


      NRC REVISED LICENSEE'S
      PERFORMANCE ASSESSMENT AND
      INCREASED OVERSIGHT
-------------------------------------------------------- Chapter 3:2.2

The diagnostic evaluation caused NRC to revise its assessment of the
licensee's performance and add the South Texas plant to its list of
problem facilities.  A May 1993 NRC memo described the licensee's
performance as poor and declining rather than good.  According to
NRC, the problems with the first reactor's pump and generators were
but two examples of the licensee's overall poor performance.  To help
ensure that unsatisfactory conditions at the plant would not result
in a more serious event or accident, in June 1993 NRC placed the
South Texas plant on its list of problem plants requiring increased
regulatory oversight, including additional NRC inspections. 

The South Texas plant remained shut down for over a year to address
issues related to the licensee's operation of the plant.\5 Plant
personnel estimated that the reactors' pumps were functioning
properly within 3 to 4 months of the plant's shutdown and, according
to NRC documentation, the unit-1 reactor's painted generator was
cleaned and returned to service within days of the determination that
it was inoperable.  The remaining time was needed to address NRC's
systemic concerns, including (1) the poor material condition of some
equipment, (2) deficiencies in the skills and training of employees,
and (3) inadequacies in the licensee's identification and correction
of problems at the plant.  The licensee restarted the unit-1 and
unit-2 reactors on February 18, 1994, and May 22, 1994, respectively,
after informing NRC that it had completed all actions required for
starting up the reactors.\6

In August 1994, NRC's Dallas region inspected both reactors and
concluded that the licensee's performance had improved in virtually
all areas.  In its October 1994 rating of the plant, NRC also found
that the licensee's overall performance had improved.  However,
according to the rating, several areas--among them the licensee's
controls over work processes and corrective action
programs--warranted continued management attention.\7


--------------------
\5 The unit-1 reactor was shut down for about 13 months; the unit-2
reactor was shut down for about 16 months. 

\6 After the plant was shut down, NRC issued three letters to the
licensee specifying actions that must be completed before restarting
the reactors.  NRC concurred that the actions had been completed
before the licensee reactivated the reactors. 

\7 The next rating of the licensee's performance will be available
after the current rating cycle ends in early 1996. 


      THE PLANT HAS BEEN REMOVED
      FROM THE LIST OF PROBLEM
      FACILITIES
-------------------------------------------------------- Chapter 3:2.3

NRC removed the South Texas plant from its list of problem facilities
in January 1995.  According to NRC, the agency's increased oversight
was no longer needed because the licensee had (1) substantially
corrected the weaknesses and underlying root causes that had led to
previous problems at the plant, (2) established high standards of
performance, (3) improved its self-assessment and corrective action
programs, and (4) upgraded the material condition of the reactors to
enhance the reliability of both reactors' equipment. 


   AGENCY COMMENTS AND OUR
   EVALUATION
---------------------------------------------------------- Chapter 3:3

In commenting on a draft of this report, NRC said that we had
misstated the purpose of its inspection program.  Specifically, NRC
said that licensees are responsible for safe operation of their
plants and implied that the intent of its inspection program is
limited to ensuring that the licensees identify and resolve potential
safety issues before they result in significant problems. 

Our report clearly indicates that (1) licensees are ultimately
responsible for the safe operation of their facilities and (2) NRC's
inspection program is intended to obtain independent assurance that
licensees are operating their facilities safely.  However, as
discussed in our report and NRC's own 1994 annual report, NRC's
inspection program is also "intended to anticipate and preclude
significant events and problems by identifying underlying safety
problems."


RECENT SELF-ASSESSMENT IDENTIFIED
WEAKNESSES IN NRC'S INSPECTION
PROGRAM AT THE SOUTH TEXAS PLANT
============================================================ Chapter 4

During the course of our review, NRC headquarters initiated a study
to assess the effectiveness of its inspection program at the South
Texas plant.  The study's results are described in a March 1995
report which, among other things, identifies several weaknesses in
the agency's inspection program at the plant.\1

For example, although NRC identified early and repeated problems at
the plant, NRC did not adequately integrate the information it had to
determine whether the problems indicated systemic weaknesses in the
licensee's operations until after the plant's February 1993 shutdown. 
Furthermore, according to NRC it did not ensure that the licensee had
corrected identified problems.  NRC reported that these and other
weaknesses in the agency's inspection program resulted in missed
opportunities to (1) provide a clear and early message to the South
Texas plant's licensee about the extent of its performance problems
and (2) highlight continuing problems with the licensee's performance
within NRC.  NRC has taken several actions, and has planned others,
to address the weaknesses in its inspection program. 


--------------------
\1 Task Force Report Concerning the Effectiveness of Implementation
of the NRC's Inspection Program and Adequacy of the Licensee's
Employee Concerns Program at the South Texas Project, NRC (Mar.  31,
1995). 


   NRC DID NOT ADEQUATELY
   INTEGRATE INFORMATION IN
   ASSESSING THE LICENSEE'S
   OVERALL PERFORMANCE
---------------------------------------------------------- Chapter 4:1

Our analysis of NRC's April 1993 diagnostic evaluation identified
numerous repeated inspection findings.  For example, we found several
problems that had been identified as many as 24 times in earlier NRC
inspection reports.  Although NRC had considerable evidence of
long-standing problems at the plant, NRC did not adequately use or
integrate the information to determine whether the problems indicated
systemic weaknesses in the licensee's operation of the plant. 

In March 1995, NRC issued a report on the effectiveness of its
inspection program at the South Texas plant that confirmed that most
of the concerns raised in the April 1993 diagnostic evaluation "were
either known or recognizable as issues with roots in previous NRC
inspection findings." These issues included (1) deficiencies in the
licensee's procedures for conducting work, (2) the licensee's
inadequate and untimely actions to correct identified problems, and
(3) repeated failures of the plant's components.  In addition,
although the licensee and independent third parties, including the
Institute of Nuclear Power Operations,\2 had identified similar
problems in the years before the plant's shutdown, NRC did not
adequately use the information to assess the licensee's overall
performance.  As a result, according to NRC, it missed opportunities
to arrive at a fuller and more timely assessment of the extent and
depth of the licensee's overall performance problems. 

We agree with NRC's assessment of the timeliness and adequacy of the
agency's use of the available information.  For example, we found
evidence suggesting that the licensee's procedure for testing the
reactors' pumps had not required testing to be conducted under normal
standby conditions since the early days of the plant's
operation--before the reactors' start-up and about 5 years before NRC
fined the licensee for the improper test that contributed to unit-1's
shutdown.  Specifically, in February 1988 NRC's inspectors observed a
preoperational test of the reactor's pump.  According to the April
1988 report on the inspection, the pump malfunctioned because of
excessive condensation in the steam supply line.  The licensee
revised its test procedure and removed the condensation before
restarting the pump after the malfunction. 

In March 1988, NRC had issued an advisory notice to all licensees
describing a similar malfunction during a loss of off-site power at
the Calvert Cliffs Plant in Maryland.  The Maryland licensee
determined that its test procedure was inadequate because the
procedure did not require testing to be performed under normal
standby conditions.  To avoid similar problems, NRC recommended that
all licensees duplicate the conditions that would exist if the
equipment was suddenly called upon to operate (that is, without
warming the pump or removing condensation from the pump's steam
supply lines). 

The licensee at the South Texas plant performed the pump's February
1988 test about 1 month before NRC issued the advisory notice. 
Consequently, NRC's April 1988 report on the inspection could not
have faulted the licensee for repeating the problems encountered at
other plants.\3 The advisory notice, however, could have caused NRC
to question the adequacy of the licensee's test procedures, but NRC
did not do so.  Furthermore, we found no evidence that NRC
subsequently evaluated whether the licensee's improper tests of the
pumps in the years following the advisory notice indicated systemic
weaknesses in the licensee's operation of the plant, such as a
failure to adequately act on information about the operational
problems experienced at other nuclear facilities. 

According to NRC, it is taking action to better integrate information
about its licensees' performance.  Specifically, NRC intends to
initiate a new inspection activity--termed an "integrated performance
assessment process"--that will assess a licensee's strengths and
weaknesses on the basis of a review of available information such as
the facilities' operational reports and data, inspection results, and
the licensees' self-assessments.  According to NRC, the results of
this inspection activity will be used (1) as input for ratings by NRC
of its licensees' performance and (2) to target future inspections on
significant safety-related activities and other areas warranting
increased regulatory attention.  NRC has tested the new inspection
activity at five locations and expects to begin implementing it
elsewhere in the fall of 1995.  As currently planned, the inspections
will be carried out by five-member NRC teams over a 6-week period. 
During 2 of the 6 weeks, on-site reviews will be performed at the
facility being inspected. 


--------------------
\2 The Institute of Nuclear Power Operations is an industry
organization representing operators of nuclear reactors. 

\3 While NRC does not require its licensees to take any specific
actions in response to its information notices, the agency does
expect its licensees to (1) review the information for applicability
to their facilities and (2) consider actions, as appropriate, to
avoid similar problems.  Thus, NRC requires its licensees to
implement programs that identify, resolve, and prevent problems that
affect a plant's operation and safety.  According to NRC, a key
element of these programs is the licensee's effectiveness in
implementing relevant experience encountered by other operators of
nuclear facilities.  Information about such experience is provided in
a variety of sources, including NRC's information notices. 


   NRC DID NOT ENSURE THAT THE
   LICENSEE HAD CORRECTED
   IDENTIFIED PROBLEMS
---------------------------------------------------------- Chapter 4:2

NRC's March 1995 report on the effectiveness of the agency's
inspection program at the plant analyzed nine problem areas at the
plant and found that most of the areas had been discussed in earlier
inspection reports.  For example, according to the report, within the
first year of the plant's operation, NRC had identified problems with
the reactors' pumps and the licensee's procedures and controls for
conducting work and correcting problems at the plant.  While these
and other problems were known, NRC did not ensure that they were
corrected. 

According to NRC's March 1995 report, the agency's failure to pursue
questions about the operability of the reactors' pumps and other
long-standing problems at the plant represented a major weakness in
the inspection program at the South Texas plant.  For example,
according to the report, long-standing problems with the reactors'
pumps should have caused the resident inspectors to question the
licensee about the operability of the pumps.  Furthermore, the report
suggests that the repeated problems should have caused NRC's Dallas
region to identify the pumps as an area warranting further review or
inspection.  According to NRC, its failure to pursue questions about
the operability of the pumps may have delayed actions to ensure that
the problems had been corrected. 

As discussed earlier, we questioned the senior resident inspector
about the resident inspectors' activities regarding the reactors'
pumps.  He said that they were aware of (1) the pumps' long-standing
problems and (2) the existence of NRC information notices discussing
similar problems encountered by other licensees.  However, he said
that he did not realize that the licensee's improper tests had masked
problems with the pumps.  In the days preceding the shutdown, the
senior resident inspector said that he and the other resident
inspector oversaw the licensee's corrective actions to assure
themselves that the licensee was adequately investigating the
problem.  However, he said that because of staffing constraints and
competing inspection priorities, they did not have time to follow up
on every aspect of the licensee's corrective actions.  Even if time
had permitted, he said, the inspection program did not emphasize
inspections to assess the adequacy of the licensee's corrective
actions. 

NRC's March 1995 report identifies additional reasons for the
agency's failure to ensure that the licensee had corrected known
problems at the plant.  According to NRC, weaknesses in its
inspection program occurred largely because, from the time of the
licensing until mid-1992, NRC had mistakenly concluded that the
licensee (1) was a good performer, (2) was responsive to NRC's
concerns, and (3) had implemented strong programs to correct the
problems NRC had identified. 

According to NRC, these factors, together with inadequate inspections
to assess the effectiveness of the licensee's programs, caused NRC to
rely too heavily on the licensee's programs and commitments to
correct recurrent problems at the plant.  Specifically, according to
NRC, the licensee exhibited strengths in developing programs and
conducting critical self-assessments.  And, as issues were brought to
the licensee's attention, the licensee implemented programs that
should have corrected the problems, including programs to (1) reduce
the pumps' malfunctions and (2) improve the licensee's procedures for
performing work at the plant.  However, the programs were not as
effective as the licensee's intentions or commitments suggested.  For
example, because of resource constraints, the licensee's program for
improving work procedures did not include procedures for maintaining
and testing equipment such as the reactors' pumps.  The report
indicates that NRC was not aware of early weaknesses in the
licensee's corrective action programs because NRC's inspection
program, by design, did not emphasize reviews to determine the
effectiveness of the licensee's programs but rather reviews of
program documents.  In addition, NRC's inspection program did not
provide guidance for evaluating the effectiveness of the licensees'
actions to resolve long-standing problems. 

According to the March 1995 report, NRC's follow-up of licensees'
actions to address recurrent weaknesses is now both more deliberate
and focused on results than it was in the past.  For example,
according to the report NRC now requires (1) more intensive
inspections of problems identified by resident inspectors and (2)
performance-based inspections to assess the implementation of
licensees' programs based on observations of activities rather than
reviews of program documents.  In addition, NRC has increased the
time the inspectors are required to spend inspecting its licensees'
corrective action programs from about 40 hours per rating period in
1990 to about 192 hours per rating period in 1995.\4 The additional
time is used to, among other things, assess the adequacy of the
licensees' programs to implement the lessons learned by other
operators of nuclear plants.  Finally, as discussed earlier, NRC
plans to implement a new inspection activity to better integrate
available information about its licensees' performance.  According to
NRC, the performance-based inspections will assess areas such as
operations, engineering, maintenance, plant support, and the
licensee's corrective actions. 

While actions have been taken, the report recommends further steps to
implement the lessons learned from NRC's inspection program at the
South Texas plant.  For example, to ensure that broader problems are
recognized, the report recommends that NRC improve its guidance for
assessing the effectiveness of each licensee's long-term corrective
action programs.  According to the report, the guidance should
address (1) the importance of terminating inspection concerns on the
basis of a licensee's actual--not perceived--performance and (2) ways
to deal with problems that persist despite a licensee's actions to
correct them.  Finally, to help ensure that NRC's understanding of
future problems is not limited, the report recommends that NRC's
regions more effectively monitor each licensee's long-term corrective
action programs. 


--------------------
\4 The length of NRC's rating periods varies between 12 months and 24
months, depending on a licensee's performance.  Licensees with good
performance ratings are inspected less frequently (i.e., the rating
period is longer.)


   AN INADEQUATE INSPECTION
   PRESENCE MAY HAVE CONTRIBUTED
   TO NRC'S UNTIMELY RECOGNITION
   OF PERFORMANCE PROBLEMS
---------------------------------------------------------- Chapter 4:3

An inadequate inspection presence at the plant also may have
contributed to NRC's untimely recognition of the magnitude of the
licensee's overall performance problems.  As discussed earlier,
before the plant's shutdown, NRC had identified a decline in the
licensee's performance.  NRC's guidance for performing inspections
specifies that plants where performance is declining should be
subject to additional NRC inspections.  However, we found that
instead of increasing its inspection hours at the plant, NRC
decreased them steadily throughout the period.  Specifically, during
the three rating cycles completed before the shutdown, the average
inspection hours per month declined from 541 hours to 380 hours and
finally to 351 hours.\5 During the 6 months following the last rating
period and immediately preceding the plant's shutdown, the average
number of hours spent on inspections declined further--to 309 hours
per month. 

Second, in 1989 NRC began implementing a new policy to increase its
on-site staffing at nuclear facilities.  Except for top-performing
plants, the policy specified a minimum of three resident inspectors
for sites with two reactors.  This policy was expected to be fully
implemented by the end of fiscal year 1993.  In the interim, the
policy specified that the licensees with performance problems should
receive additional inspectors before the licensees that were better
performers.  Despite the licensee's declining performance, NRC did
not implement the staffing policy at the South Texas plant until July
1993--about 5 months after the plant's shutdown. 

The senior resident inspector told us that insufficient on-site
inspector staff was a problem at the plant.  In fact, he said that he
had repeatedly requested a third inspector so that the resident
inspectors could perform more detailed inspections and follow up on
the licensee's corrective actions.  However, the requests were
denied.  Compounding this problem, in 1989, shortly after the plant
began operating, NRC reassigned the existing resident inspectors and
assigned two new inspectors.  According to NRC, the new resident
inspectors had little operational experience and a large workload. 

According to NRC's March 1995 report, several factors--including
competing demands for regional inspection resources--may have
distracted the Dallas region from focusing adequately on the extent
of the licensee's declining performance.  In addition, the report
cites a 1988 survey by NRC's former Office of Inspector and Auditor
that had raised concern that smaller regions--such as the Dallas
region--may not have had sufficient resources to adequately inspect
licensees' operations.  Furthermore, according to NRC's March 1995
report, staffing limitations may have been even more pronounced for
the Dallas region because, during the same period, four reactors at
two sites in the region, including the South Texas plant, were
commencing full operation. 

NRC's March 1995 report suggests several actions to address the
staffing issues.  First, because new plants typically experience more
problems during the early years of their operation, the report
recommends that NRC consider assigning additional inspectors to any
new facilities that may be licensed.  Second, the report recommends
that NRC should, among other things, ensure that inspectors have the
proper skills and experience to effectively implement the inspection
program.  Finally, the report recommends that NRC consider developing
guidance on the importance of questioning licensees about (1) the
adequacy of tests that do not demonstrate that a plant's components
will function as intended and (2) the operability of equipment that
does not perform properly after an initial test.  According to NRC,
such questions would help to identify equipment problems such as
those that caused the shutdown of the South Texas plant. 


--------------------
\5 The three rating periods were January 1, 1989, to January 31,
1990; February 1, 1990, to May 31, 1991; and June 1, 1991, to August
1, 1992.  Averages are based on the total number of inspection hours
performed by headquarters, regional, and on-site inspectors.  We used
the average number of inspection hours per month because of
variations in the length of NRC's rating periods. 


   NRC DID NOT CONSISTENTLY PURSUE
   ENFORCEMENT ACTIONS FOR KNOWN
   VIOLATIONS
---------------------------------------------------------- Chapter 4:4

According to NRC's March 1995 report, inconsistent enforcement
actions to address known violations of the regulatory requirements
also contributed to NRC's untimely recognition and correction of
long-standing performance problems at the plant.  As discussed
earlier, NRC can take enforcement actions against licensees that
violate its regulatory requirements for the safe operation of nuclear
facilities.  If timely and appropriate, such actions can help to (1)
highlight declining trends in a licensee's performance and (2) focus
NRC management's attention on licensees that require increased
oversight.  In addition, because the need for enforcement actions
indicates problems at a plant, such actions can harm the licensee's
reputation with the public and the financial community and,
consequently, result in increased costs for borrowing money to the
licensee because of concerns that the licensee may be an increased
financial risk.  As a result, according to NRC, action to enforce
NRC's regulatory requirements--including being placed on the list of
plants requiring additional oversight--often encourages licensees to
promptly correct their performance problems. 

Despite these benefits, NRC's April 1993 post-shutdown diagnostic
evaluation found numerous examples of problems that had been reported
repeatedly in inspection reports yet resulted in few, if any,
enforcement actions.  For example, during one 2-year period, the
resident inspectors identified 10 situations involving the licensee's
failure to document problems in its internal reporting system which,
according to a representative of the licensee, prevented the problems
from receiving proper review and action by the licensee's management. 
Despite the potential seriousness of not ensuring that problems are
properly acted upon, NRC took only two enforcement actions against
the licensee.  Similarly, inadequate licensee staffing was reported
24 times during a 4-year period yet, according to NRC, resulted in
only "some" enforcement actions.\6

Finally, poor work procedures were mentioned over 20 times during a
4-year period without any enforcement action being taken against the
licensee.  As discussed earlier, poor work procedures contributed to
the plant's February 1993 shutdown. 

According to NRC, it did not consistently pursue enforcement actions
against the licensee because it had developed a "practice" of
providing the licensee with "additional latitude" to address known
problem areas.  This practice occurred because NRC mistakenly
considered the licensee to be a good performer that was responsive to
NRC concerns.  In addition, according to NRC, inspectors periodically
did not pursue issues that could have resulted in citations for
violations of regulatory requirements because of a lack of guidance
on how to handle issues that had already been referred to the
licensee's corrective action program for resolution.  According to
NRC's March 1995 report, these factors resulted in missed
opportunities to (1) provide a clearer and earlier message to the
licensee about its performance problems and (2) highlight continuing
problems with the licensee's performance within NRC. 

NRC has taken action to help ensure that all of its licensees will
take early and aggressive actions to improve their performance.  In
May 1993--3 months after the plant's shutdown--NRC decided to issue
letters to the managers of plants whose performance was declining. 
According to NRC, the letters inform the licensee that, unless
performance improves, the licensee's plant may be placed on NRC's
list of problem plants. 


--------------------
\6 In commenting on a draft of our report, NRC noted that it had
considered the license's internal reporting problems and staffing
inadequacies for enforcement, as appropriate.  According to NRC, some
of the problems resulted in escalated (severity level I, II, or III)
enforcement actions and civil penalties.  Others resulted in severity
level IV or V violations (non-escalated enforcement actions).  (NRC's
revised enforcement policy dated June 30, 1995, eliminated severity
level-V violations.) In addition, NRC said that it did not cite the
licensee for some violations because the violations were additional
examples of problems that had already been the subject of enforcement
actions against the licensee. 


   CONCLUSIONS
---------------------------------------------------------- Chapter 4:5

According to NRC, a major purpose of its reactor inspection program
is to identify and resolve underlying problems at nuclear plants and,
by so doing, anticipate and prevent significant safety events--events
with the potential to both damage a reactor's core and release
radioactive material.  In the case of the South Texas plant, this
goal was not achieved. 

Furthermore, NRC did not identify the underlying safety problems that
contributed to the event at the South Texas plant--another stated
purpose of the inspection program--until after the plant's shutdown. 
Specifically, while NRC's inspection program identified long-standing
problems at the plant, NRC did not adequately use its inspection
results to determine if the problems were indicative of systemic, or
underlying, problems in the licensee's operation of the plant.  As a
result, it was not until after the plant's shutdown that the agency
identified the areas as underlying safety concerns at the plant.  By
then, the problems had become so acute that it took the licensee more
than a year to address the concerns. 

NRC's March 1995 report on the effectiveness of its inspection effort
at the South Texas plant presents a candid overview of weaknesses in
the agency's inspection program, including NRC's failure to (1)
assess the significance of identified problems and (2) ensure that
long-standing problems at the plant had been corrected.  NRC has
taken several actions, and planned others, to address the program's
weaknesses.  The effectiveness of NRC's corrective actions will
depend, to a great extent, on NRC's ongoing initiatives to rely more
heavily on licensees to identify problems at nuclear facilities. 


CHRONOLOGY OF EVENTS AT THE SOUTH
TEXAS PLANT
=========================================================== Appendix I

January 1983

The Nuclear Regulatory Commission (NRC) concluded that the South
Texas licensee had adequately resolved over 300 technical problems
related to the design of the plant.  The issues had been reported in
a May 1981 report by the Quadrex Corporation. 

January 1987

The Government Accountability Project, a public organization,
notified NRC that it had begun investigating 700 allegations it
received about problems at the South Texas plant.  The allegations
had been received from former and current employees at the plant. 
The allegations included concerns about the plant's construction, the
licensee's quality assurance and control programs, and harassment and
intimidation at the plant. 

November 1987

NRC began its own review of the 700 allegations.  Of the 700
allegations, NRC subsequently identified 71 for further investigation
because of their potential impact on safety at the plant.  NRC
investigated the 71 allegations and determined that no substantive
safety concerns existed that warranted a delay in NRC's issuance of a
full-power license for the unit-1 reactor. 

March 1988

The unit-1 reactor was started up. 

March 1988

NRC issued an advisory notice to all licensees describing a
malfunction in a reactor's turbine-driven auxiliary feedwater pump
during a loss of off-site power at the Calvert Cliffs Plant in
Maryland.  The Maryland licensee determined that its test procedure
was inadequate because the procedure did not require testing to be
performed under normal standby conditions.  To avoid similar
problems, NRC recommended that all licensees duplicate the conditions
that would exist if the equipment was suddenly called upon to
operate. 

August 1988

The unit-1 reactor began commercial operation. 

February 1989

NRC began implementing a new policy to increase its on-site staffing
at nuclear facilities by the end of fiscal year 1993.  Except for
top-performing sites, the policy specified a minimum of three
resident inspectors for sites with two reactors, such as the South
Texas plant. 

March 1989

The unit-2 reactor was started up. 

June 1989

The unit-2 reactor began commercial operation. 

January 1990

NRC rated the licensee's overall performance for the period between
January 1989 and January 1990 as superior. 

January 1991

NRC senior managers discussed performance problems at the plant,
including repeated equipment failures and errors made by personnel. 

May 1991

NRC's rating of the licensee between February 1990 and May 1991
identified a decline in the licensee's performance.  According to
NRC, the decline was indicated by, among other things, repeated
equipment malfunctions.  NRC rated the licensee's overall performance
as good. 

July 1991

NRC informed all licensees that improper painting had immobilized
standby diesel generators at two other nuclear plants and recommended
that licensees take appropriate action to avoid the problem.\1

August 1992

NRC's rating of the licensee for the period between June 1991 and
August 1992 identified a further decline in the licensee's
performance.  NRC's rating noted that the licensee continued to be
challenged by long-standing equipment problems and human errors.  NRC
rated the licensee's overall performance as good.  However, according
to NRC, additional management attention was required to prevent a
further decline in the licensee's performance. 

January 1993

Senior NRC managers discussed the licensee's performance again and
concluded that the licensee's declining performance, while
discernible, did not warrant its placement on NRC's list of problem
plants.  However, the managers decided to conduct a comprehensive
diagnostic inspection to obtain a better understanding of the
licensee's performance. 

February 1, 1993

The licensee conducted a routine test of a portion of the unit-1
reactor's auxiliary feedwater system.  The licensee found that the
reactor's turbine-driven pump was inoperable because of a mechanical
failure with a valve associated with the turbine.\2

February 4, 1993

The licensee informed NRC that it had not been able to restore the
unit-1 reactor's pump to working order; as a result, the licensee
shut the reactor down.  The licensee also completely shut down the
unit-2 reactor because of similar problems with its pump. 

February and March 1993

NRC investigated the circumstances surrounding the plant's shutdown
and found that the licensee had violated several NRC requirements for
the safe operation of the unit-1 reactor. 

April 1993

NRC completed a comprehensive diagnostic evaluation of the plant. 
The evaluation identified significant, long-term deficiencies in the
licensee's operations, maintenance and testing, and engineering
support at the plant.  According to NRC, the licensee had been aware
of many deficiencies at the plant for "some time," yet had not
corrected them.  (NRC issued its report on this evaluation in June
1993.)

May 1993

NRC fined the licensee $325,000 for, among other things, multiple
violations related to the testing and maintenance of both reactors'
pumps and unit-1's generators and the lengthy inoperability of
unit-1's emergency equipment beyond the time frames established for
shutting down the reactor. 

June 1993

NRC placed the South Texas plant on its list of problem plants
requiring increased regulatory oversight, including additional NRC
inspections. 

July 1993

NRC assigned a third on-site inspector to the South Texas plant. 

February 15, 1994

The licensee informed NRC that it had completed all actions required
for restarting the unit-1 reactor.  (After the plant was shut down,
NRC issued three letters to the licensee specifying actions that the
licensee had to complete before restarting the reactors.)

February 15, 1994

NRC concurred that the licensee had completed all the actions
required for restarting the unit-1 reactor. 

February 18, 1994

The licensee restarted the unit-1 reactor. 

May 17, 1994

The licensee informed NRC that it had completed all the actions
required for restarting the unit-2 reactor.  NRC concurred. 

May 22, 1994

The licensee restarted the unit-2 reactor. 

September 1994

NRC issued a report identifying 16 "significant events" in 1993,
including the event at the South Texas plant.  According to NRC, each
of the events had the potential to damage a reactor's core and result
in a possible release of radioactive material. 

October 1994

NRC's rating of the licensee from August 1992 to September 1994
identified an overall improvement in the licensee's performance. 
However, according to the rating, several areas, including the
licensee's (1) controls over work processes and (2) corrective action
programs, warranted continued attention from management. 

January 1995

NRC removed the South Texas plant from its list of problem plants. 
According to NRC, increased oversight was no longer needed because
the licensee had (1) substantially corrected the weaknesses and
underlying root causes that had led to previous problems at the
plant, (2) established high standards of performance, (3) improved
its self-assessment and corrective action programs, and (4) upgraded
the material condition of the reactors to enhance the reliability of
both reactors' equipment. 

March 1995

NRC's Office of The Inspector General issued a report on its
investigation of NRC's handling of allegations that the agency had
received about problems at the plant.  The report concluded that
NRC's Office of Investigations (OI) did not adequately pursue about
250 allegations of wrongdoing, harassment, and intimidation at the
plant.\3 In commenting on that report, OI stated that it did not
pursue the allegations because it could not obtain additional
information from the organization representing the individuals who
had made the allegations. 

March 1995

NRC issued a report on the effectiveness of its inspection program at
the South Texas plant.  The report identified numerous weaknesses in
NRC's program, including a failure to (1) adequately integrate NRC's
inspection findings to identify systemic weaknesses in the licensee's
performance and (2) ensure that the identified problems had been
corrected. 

March 1995

NRC issued a report on its review of allegations made by employees at
the South Texas plant in response to congressional concerns.  (NRC
conducted the review to obtain and review allegations brought to the
attention of congressional staff by attorneys representing the
employees.) NRC found that nearly all of the concerns had been
previously identified by NRC, the licensee, or in a previous
allegation.  Therefore, according to NRC, it was able to close out
action on most of the allegations on the basis of NRC's inspection
reports, closed allegation files, consultation with NRC technical
staff, and the licensee's corrective actions.  NRC substantiated some
allegations involving technical concerns and isolated examples of
discriminatory practices, including harassment and intimidation, at
the plant.  However, according to NRC, the substantiated allegations
did not affect the safe operation of the plant. 



(See figure in printed edition.)Appendix II

--------------------
\1 Nuclear plants have generators that are unrelated to those
discussed in this report.  To simplify our discussion, we generally
refer to a reactor's standby diesel generators as "the generators."

\2 Nuclear plants have numerous pumps that are unrelated to those
discussed in this report.  To simplify our discussion, we generally
refer to a reactor's turbine-driven auxiliary feedwater pump as "the
pump."

\3 Alleged OI Mishandling of Allegations Pertaining to Wrongdoing and
Harassment and Intimidation at the South Texas Project Nuclear Plant,
Office of The Inspector General, NRC (Mar.  17, 1995). 


COMMENTS FROM THE NUCLEAR
REGULATORY COMMISSION
=========================================================== Appendix I



(See figure in printed edition.)



(See figure in printed edition.)


The following are GAO's comments on the Nuclear Regulatory
Commission's (NRC) letter dated September 11, 1995. 


   GAO'S COMMENTS
--------------------------------------------------------- Appendix I:1

1.  NRC suggested a number of changes to clarify information in the
report.  We incorporated the agency's comments where appropriate. 

2.  Our report clearly states that (1) the licensees are ultimately
responsible for the safe operation of their facilities and (2) NRC
conducts inspections to obtain independent assurance that the
licensees are operating their facilities safely.  However, as
discussed in NRC's 1994 annual report, the inspection program is also
"intended to anticipate and preclude significant events and problems
by identifying underlying safety problems."


MAJOR CONTRIBUTORS TO THIS REPORT
========================================================= Appendix III

RESOURCES, COMMUNITY, AND ECONOMIC
DEVELOPMENT DIVISION, WASHINGTON,
D.C. 

Bernice Steinhardt, Associate Director
Gene Aloise, Assistant Director
Kathleen Turner, Senior Evaluator
Philip A.  Olson, Senior Evaluator
Mario Zavala, Senior Evaluator
Duane G.  Fitzgerald, Nuclear Engineer
Phyllis Turner, Communications Analyst
Lynne L.  Goldfarb, Publishing Adviser

OFFICE OF THE GENERAL COUNSEL

Jackie A.  Goff, Senior Attorney

CHICAGO/DETROIT FIELD OFFICE

Anthony A.  Krukowski, Regional Management Representative
Javier J.  Garza, Senior Evaluator
George W.  Moore, Jr., Senior Evaluator