Nuclear Safety: Department of Energy Should Strengthen Its Enforcement
Program (Testimony, 06/29/1999, GAO/T-RCED-99-228).
The Department of Energy has a vast complex of research and nuclear
facilities that hold large quantities of nuclear materials. Some of the
materials have deteriorated, are not properly packaged for storage, and
may pose a significant risk to workers, the public, and the environment.
DOE uses a system of civil monetary penalties to hold its contractors
accountable for meeting the agency's nuclear safety requirements. DOE
found that, for it to be able to assess civil penalties, existing safety
requirements would have to be reissued as enforceable rules. Since 1988,
however, DOE has issued enforceable rules covering only two of 11 safety
areas originally proposed--radiation protection for workers and quality
assurance issues that define how work is planned and carried out.
Nuclear safety rules are to be enforced at any DOE facility with the
potential to cause radiological harm to workers, the public, or the
environment. Although no problems have been identified with the
application of the occupational radiation protection rule, DOE field
offices have been inconsistent in placing facilities under the quality
assurance rule. DOE began its enforcement program in 1996 and
concentrates its investigations and enforcement actions on the most
significant violations of nulcear safety rules. DOE has taken 33
enforcement actions and assessed more than $1.8 million in penalties
since 1996. Violations have included unnecssarily exposing workers to
radioactivity and not following procedures intended to prevent an
uncontrolled nuclear reaction from occurring. Some nonprofit contractors
were exempted from paying about $600,000 of the $1.8 million in assessed
penalties. DOE has recommended that the statutory exemption be continued
and even expanded. However, GAO notes that contract mechanisms have
fallen short in addressing safety-related problems and that, in contrast
to DOE, other regulatory agencies do collect penalties from nonprofit
organizations. GAO recommends that Congress consider eliminating the
provision that exempts some contractors from paying penalties when they
commit safety violations. GAO also recommends that DOE strengthen its
nuclear safety enforcement program and ensure that field offices apply
it consistently. This testimony summarizes GAO's June 1999 report,
GAO/RCED-99-146.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: T-RCED-99-228
TITLE: Nuclear Safety: Department of Energy Should Strengthen Its
Enforcement Program
DATE: 06/29/1999
SUBJECT: Safety regulation
Safety standards
Accountability
Accident prevention
Nuclear facility safety
Occupational safety
Contractors
Fines (penalties)
Internal controls
Nonprofit organizations
IDENTIFIER: DOE Nuclear Safety Assistance Program
******************************************************************
** This file contains an ASCII representation of the text of a **
** GAO report. This text was extracted from a PDF file. **
** Delineations within the text indicating chapter titles, **
** headings, and bullets have not been preserved, and in some **
** cases heading text has been incorrectly merged into **
** body text in the adjacent column. Graphic images have **
** not been reproduced, but figure captions are included. **
** Tables are included, but column deliniations have not been **
** preserved. **
** **
** Please see the PDF (Portable Document Format) file, when **
** available, for a complete electronic file of the printed **
** document's contents. **
** **
** A printed copy of this report may be obtained from the GAO **
** Document Distribution Center. For further details, please **
** send an e-mail message to: **
** **
** **
** **
** with the message 'info' in the body. **
******************************************************************
United States General Accounting Office GAO
Testimony Before the Subcommittee on Oversight and Investigations,
Committee on Commerce, House of Representatives For Release on
Delivery NUCLEAR SAFETY Expected at 10:00 a.m. EDT
Tuesday June 29, 1999 Department of Energy Should
Strengthen Its Enforcement Program Statement of Ms. Gary L. Jones,
Associate Director, Energy, Resources, and Science Issues,
Resources, Community, and Economic Development Division GAO/T-
RCED-99-228 Mr. Chairman and Members of the Subcommittee: We are
here today to discuss the Department of Energy's (DOE) efforts to
hold its contractors accountable for nuclear safety requirements.
DOE has a widespread complex of research and nuclear facilities
that contain large quantities of nuclear materials. Some of the
materials are in a deteriorated condition, not properly packaged
for storage, and may pose a significant risk to workers, the
public, and the environment. With few exceptions, DOE's facilities
are not inspected or licensed by independent regulators to help
ensure that operations are safe. Instead, since 1946, DOE and the
agencies that preceded it have relied on their own staff to ensure
the safety of these facilities. Most of the work at DOE facilities
is carried out by organizations under contract to DOE. Because of
the risks and the potential liabilities inherent with handling
nuclear materials, the law authorizes DOE to indemnify, or agree
to pay damages for, those contractors that could have an accident
associated with handling nuclear materials, and whose actions
could cause damage. In 1988, the Congress enacted legislation
permitting DOE to hold its contractors accountable for meeting its
nuclear safety requirements through a system of civil monetary
penalties. DOE determined that to be able to assess civil
penalties, existing safety requirements would have to be reissued
as enforceable rules. The legislation also named seven contractors
at research laboratories, that along with their subcontractors and
suppliers, were exempt from having to pay the penalties. In
addition, the legislation gave the Secretary of Energy the
authority to exempt from paying penalties other nonprofit
educational institutions under contract to DOE. On the basis of
the report we prepared for the Committee and are releasing today,1
our testimony will address (1) what enforceable nuclear safety
rules DOE has issued; (2) which DOE facilities and contractors are
covered by these rules; (3) how DOE has enforced the nuclear
safety rules; and (4) whether there is a continued need for
exempting certain contractors from paying penalties for violating
nuclear safety rules. In summary, we found the following: * Since
1988, DOE has issued enforceable rules covering only 2 of 11
safety areas originally proposed-radiation protection for workers
and quality 1Department of Energy: DOE"s Nuclear Safety
Enforcement Program Should Be Strengthened (GAO/RCED-99-146, Jun.
10, 1999). Page 1
GAO/T-RCED-99-228 assurance issues that define how work is planned
and carried out. The other nine safety areas not included in the
rules, such as training and certification of employees performing
vital operations, are still covered in DOE orders, and DOE
generally includes compliance with them as part of its contracts.
However, not elevating safety orders to the status of enforceable
rules has limited the overall effectiveness of the enforcement
program because DOE has fewer options to ensure that contractors
are meeting safety requirements and correcting any deficiencies. *
Nuclear safety rules are to be enforced at any DOE facility with
the potential to cause radiological harm to the public, workers,
or the environment. Although no problems have been identified with
the application of the radiation protection for workers rule to
the activities of DOE's contractors, DOE field offices have been
inconsistent in the degree to which they have placed nuclear
facilities under the quality assurance rule. Not properly
categorizing DOE facilities as subject to the rules could
potentially affect the type of safety oversight carried out by
contractors, as well as the enforcement activity undertaken by
DOE. * DOE began its enforcement program in 1996 and concentrates
its investigations and enforcement actions on those violations of
nuclear safety rules that are the most significant. Between 1996
and 1998, DOE has taken 33 enforcement actions and assessed more
than $1.8 million in penalties. Violations have included such
things as unnecessarily exposing workers to radioactivity and not
following procedures intended to prevent an uncontrolled nuclear
reaction from occurring. DOE has concluded that the enforcement
program is a valuable tool for increasing the emphasis on nuclear
safety. * Although DOE recommended in March 1999 that the
statutory exemption from paying penalties be continued and
expanded to include all nonprofit contractors, subcontractors, and
suppliers, the exemption may no longer be needed. DOE cited three
reasons for continuing the exemption-nonprofit contractors'
unwillingness to put their assets at risk if required to pay civil
penalties, effectiveness of existing contract mechanisms in
obtaining compliance, and consistency with other regulatory
agencies' treatment of nonprofit organizations. However, nonprofit
contractors now have contract-related fees available that could be
used to pay penalties, contract mechanisms have not been
effectively used to address safety-related problems, and, in
contrast to DOE, other regulatory agencies collect penalties and
administrative costs from nonprofit organizations. Mr. Chairman,
our work clearly shows that, although DOE is ultimately
responsible for ensuring nuclear safety at its facilities, the
Department has Page 2
GAO/T-RCED-99-228 not been aggressive in issuing nuclear safety
rules or in holding contractors accountable for complying with the
quality assurance rule. The enforcement program is an important
complement to existing contract-related mechanisms for ensuring
that contractors have safe nuclear practices. Therefore, in the
report we are releasing today, we are recommending that the
Secretary of Energy take steps to strengthen DOE's nuclear safety
enforcement program, and we are suggesting that the Congress
consider eliminating the statutory and administrative exemptions-
that currently apply to certain nonprofit contractors-so that
those contractors would be required to pay the civil penalties
assessed for violating nuclear safety rules. Mr. Chairman, now I
would like to discuss our findings in greater detail. DOE Issued
Fewer DOE's progress in its efforts to re-issue existing
nuclear safety requirements Nuclear Safety Rules as
enforceable rules has fallen far short of its original goal of
converting all requirements into rules. Although DOE issued
proposed rules covering a Than Initially Planned broad range of
safety issues, only two areas of safety requirements have been
addressed with completed rules. DOE largely suspended work on the
nine remaining proposed rules because of work on other safety
issues and internal discussions about how best to ensure nuclear
safety. DOE issued several proposed safety rules beginning in
December 1991.2 These proposed rules included existing DOE orders
on such matters as protecting workers from exposure to radiation,
issuing safety analysis reports, reporting defective items and
services, and reporting safety-related problems. In March 1993,
DOE issued one more proposed rule dealing with the protection of
the public and the environment from radiation. After a public
comment and review process, DOE issued two of the rules as final-
the rule on radiation protection of occupational workers in
December 1993 and the rule on quality assurance requirements in
April 1994. The remaining rules have not been finalized. DOE
received extensive comments from contractors and other interested
parties on the remaining nine safety requirements proposed as
rules. DOE's plan was to issue these remaining rules as final
after it completed the analysis of the comments received. However,
DOE has issued none of the remaining rules as final. DOE officials
said two major factors contributed to 2These proposed rules also
included a procedural rule setting up the process that DOE would
use to investigate potential violations of nuclear safety rules,
issue notices of violation to the contractor, and assess penalties
based on the severity level of the violation. After receiving
comments and making revisions, DOE issued this procedural rule as
a final rule in August 1993. Page 3
GAO/T-RCED-99-228 the delay-work on other safety issues and
discussions within DOE on how best to proceed with safety
regulation. Although the Secretary concluded in a recent report to
the Congress that the enforceable rules have been beneficial in
improving contractors' safety performance,3 the system of
enforceable nuclear safety rules originally envisioned by DOE has
not been fully realized. DOE's inaction in converting the many
other aspects of nuclear safety into final published rules has
limited the overall effectiveness of the enforcement program.
Although DOE officials have said that there is a renewed effort
within DOE to address the need for additional enforceable rules,
there is still no definite schedule for finalizing the remaining
proposed rules. In our report, we recommended that the Secretary
of Energy expeditiously complete the process of issuing
enforceable rules covering important nuclear safety requirements.
In commenting on a draft of our report, DOE agreed that it needed
to complete this process and outlined its strategy for doing so.
Clarification Needed Penalties for violating enforceable
nuclear safety rules apply to any About Facilities to
contractor, subcontractor, or supplier that has been indemnified
from liability for possible damages caused by working with nuclear
materials. Which the Rules However, the two rules issued
to date-occupational radiation protection Apply
and quality assurance-have somewhat different criteria for
determining which facilities should be subject to them, with the
occupational radiation protection rule having broader coverage.
Under the occupational radiation protection rule, DOE facilities
are subject to its provisions if the activities conducted there
have the potential to result in the occupational exposure of an
individual to radiation or radioactive material. The quality
assurance rule adds a second test-a facility must be defined as
"nuclear." To be a nuclear facility, a facility must have either a
nuclear reactor or activities or operations that involve
radioactive and/or fissionable materials in such a form and
quantity that a nuclear hazard potentially exists to employees or
the public. Although there are no apparent problems with the
application of the occupational radiation protection rule, the
number of facilities DOE field offices decided were subject to the
quality assurance rule may be somewhat understated. According to
the 1998 annual report of DOE's Office 3Department of Energy
Report to Congress on the Price-Anderson Act (Mar. 1999). Page 4
GAO/T-RCED-99-228 of Enforcement and Investigation,4 the office
has identified a number of facilities that should have been
included but were not. Our review of DOE's approach to identifying
nuclear facilities confirmed that there are problems in this area.
The nuclear reactors at DOE's Savannah River site in South
Carolina and Hanford site in Washington State are an example. Both
sites have reactors that produced nuclear weapons material between
the 1940s and 1980s. Although none of the reactors are currently
operating, radiation exposure remains a potential problem,
because, for example, all have reactor blocks or vessels in place
that contain residual radioactive material. Nevertheless, Savannah
River categorized its reactors as nuclear facilities, while
Hanford did not. DOE does not know how widespread this problem of
identifying nuclear facilities is so its significance is difficult
to determine. However, incorrectly categorizing facilities could
potentially affect the type of safety oversight being done by
contractors and DOE field offices, as well as the enforcement
activity undertaken by the Office of Enforcement and
Investigation. In our report we recommended that the Secretary of
Energy ensure that field locations are properly following DOE's
guidance in determining which facilities must comply with the
nuclear safety rule on quality assurance. In commenting on a draft
of our report, DOE agreed that the scope of the quality assurance
rule should be clarified and described the steps it has taken and
will take to do so. DOE's Enforcement of DOE established the
enforcement program in 1996, which relies primarily Nuclear Safety
Rules on a system of self-reporting and corrective
actions by its contractors, and concentrates its enforcement
actions on those violations of nuclear safety Has Resulted in
rules that are the most significant, and to situations where the
contractor Penalties Against has not promptly
identified, reported, and corrected the problem. DOE's enforcement
process includes (1) identifying, evaluating, and investigating
Contractors potential violations of the
nuclear safety rules, (2) determining the severity 41998 Annual
Report, Price-Anderson Nuclear Safety Enforcement Program (Jan.
1999). Page 5
GAO/T-RCED-99-228 level of the violation,5 (3) calculating the
civil penalty,6 and (4) notifying the contractors and public of
the results of the enforcement action. As our report states,
between 1996 and 1998, DOE took 33 enforcement actions with
assessed penalties totaling $1.8 million, with the highest penalty
assessed-$165,000-in November 1998. There have been only two
severity level I violations-one against EG&G Inc., at DOE's Mound,
Ohio, site for deficiencies in its radiation dosage monitoring
program, and the other against the University of California at
Lawrence Livermore National Laboratory in California for exposing
workers to unnecessary levels of radiation. So far in 1999, DOE
has taken four enforcement actions with penalties totaling
$357,500. These included a preliminary notice of violation in May
1999 with an assessed penalty of $330,000, the largest to date in
the program, against Fluor Daniel Hanford, Inc., for repeated
violations of the quality assurance rule at its spent nuclear
fuels project.7 In its March 1999 report to the Congress on the
Price-Anderson Act,8 DOE stated that its authority to impose civil
penalties has proven to be a valuable tool for increasing the
emphasis on nuclear safety and enhancing the accountability of its
contractors. On the basis of our analysis, we agree that DOE's
enforcement program appears to be a good mechanism for increasing
both contractor awareness of and accountability for nuclear safety
requirements and complements existing contract mechanisms. We
believe the advantages of the enforcement program include its
independence from the program and field office structure, the
objectivity of its enforcement process, its emphasis on verifying
that corrective action has been taken, and the visibility of its
results. 5The severity levels are: level I, the most significant,
are those violations that involve actual or high potential for an
adverse impact on the safety of the public or workers at DOE
facilities; level II are those violations that show a significant
lack of attention or carelessness towards the responsibilities of
DOE contractors for the protection of the public or worker safety
and that could, if left uncorrected, lead to an adverse impact on
public or worker safety; level III are violations that are less
serious but of more than minor concern and, if left uncorrected,
could lead to a more serious condition. 6DOE calculates the civil
penalty based on the severity level of the violation, with
severity level I penalties set at 100 percent of the base civil
penalty (currently $110,000 per violation per day). DOE may also
consider other factors, including how promptly the contractor
reported a potential violation and initiated corrective action and
whether a pattern of repeated violations exists. 7The May 1999
preliminary notice of violation also included DOE's first use of a
compliance order in the program, which requires the contractor to
complete specific corrective action steps within designated time
periods. 8In the Price-Anderson Amendments Act of 1988, the
Congress required DOE and the Nuclear Regulatory Commission to
report by August 1, 1998, on the need for continuing or modifying
the provisions of the act. Page 6
GAO/T-RCED-99-228 Continuing to Exempt Of the $1.8 million in
civil penalties assessed by DOE from 1996 through Nonprofit
Contractors 1998, certain nonprofit contractors exempted by
statute or under administrative rule did not pay about $605,000,
or 33 percent, of the total From Paying Civil
penalties assessed. One part of DOE's March 1999 report on the
Penalties May Not Be Price-Anderson Act reassessed the
merits of the enforcement program and the need to continue
exempting nonprofit educational institutions from Warranted
civil penalties. Although DOE concluded that the authority to
impose civil penalties has proven to be a valuable tool for
increasing the emphasis on nuclear safety and for enhancing
contractors' responsibility and accountability, DOE also concluded
that the exemption from having to pay the penalties for nonprofit
contractors should be continued. Our analysis of DOE's reasons
raises several questions about the merits of continuing the
exemption: * DOE states that the exemption should be continued
because major universities and other nonprofit contractors would
be unwilling to put their assets at risk for contract-related
expenses such as civil penalties. However, under performance-based
contracting,9 for fiscal year 1999, all but one of the
contractors, including the nonprofits, that manage and operate DOE
facilities have the opportunity to earn a fee.10 This fee, which
is in addition to reimbursed costs, is used by the nonprofit
contractors to cover certain non-reimbursable contract costs, and
to conduct laboratory-directed research activities. The fee could
also be used to pay any civil penalties imposed on the contractor.
In addition, in setting the amount of a civil penalty, the
Secretary has the authority to consider factors such as the
contractor's ability to pay and the effect of the penalty on the
contractor's ability to continue to do business. The Secretary
could limit the amount of the civil penalty assessed to no more
than the amount of the available fee. * DOE states that contract
provisions are a better mechanism than civil penalties for holding
nonprofit contractors accountable for safe nuclear practices.
Although performance-based contracting can be an effective way to
emphasize nuclear safety, DOE has not taken full advantage of this
mechanism. For example, at the Lawrence Livermore National
Laboratory in California, DOE's main contractor-the University of
California-received 96 percent of its $6.4 million available fee
in fiscal year 1998, even though it had significant nuclear safety
deficiencies resulting in enforcement 9Performance-based
contracting, part of DOE's contract reform efforts, links
contractors' incentive fees to the satisfactory accomplishment of
specific tasks and uses objective measures and criteria to measure
contractor performance. 10Stanford University has a no-fee
contract to operate the Stanford Linear Accelerator Center in
California. According to DOE, the contractor wants no fee because
a fee would be inconsistent with its role as a university research
organization. Page 7
GAO/T-RCED-99-228 actions.11 For fiscal year 1999, it will receive
about $1.1 billion to operate the facility and up to $6.4 million
in fees for meeting or exceeding performance goals, including
compliance with health and safety requirements. If the contractor
does not perform satisfactorily in the safety and health area, the
most this fee could be reduced is $252,000, according to the
agreement with DOE, or only about four percent of the fee. DOE
states that its current approach is consistent with the Nuclear
Regulatory Commission's treatment of nonprofit organizations
because DOE issues notices of violation to these nonprofit
organizations without collecting penalties but can apply financial
incentives or disincentives through the contract. However, DOE's
approach generally is not consistent with that of the Commission
or other regulatory agencies. The Commission can and does impose
penalties on any organization it regulates for violating safety
requirements without regard to the profit-making status of the
organization. In doing so, the Commission sets lower penalty
amounts for nonprofit organizations than for the for-profit
organizations. Although this option is also available to the
Secretary, DOE does not currently take this approach. In addition,
both the Commission and other regulatory agencies have assessed
and collected penalties or additional administrative costs for
violating nuclear safety requirements from organizations that DOE
exempts from payment. For example, between 1989 and 1993, the
California State Department of Toxic Substances Control assessed
and collected $88,000 in "administrative costs" from the
University of California for violating state environmental laws at
two DOE national laboratories-Lawrence Livermore and Lawrence
Berkeley. * In our report, we recommended that the Secretary of
Energy eliminate the administrative exemption from paying civil
penalties for violations of nuclear safety rules that DOE granted
to nonprofit educational institutions. In commenting on a draft of
our report, DOE said that the issue of exemption from civil
penalties is ultimately one for the Congress to decide and that,
if the Congress should eliminate the exemption, the Department
would assess penalties against the nonprofit organizations in a
manner similar to that used by the Nuclear Regulatory Commission.
Thank you, Mr. Chairman and members of the Subcommittee. That
concludes my testimony, and I will be happy to respond to any
questions you may have. 11The University of California was
assessed $313,125 in civil penalties in 1998 for severity level I
and II violations of nuclear safety rules at the Lawrence
Livermore National Laboratory in California. The University of
California is statutorily exempt from paying the penalties
assessed. Page 8
GAO/T-RCED-99-228 Contact and For future contacts regarding
this testimony, please contact (Ms.) Gary L. Acknowledgment
Jones at (202) 512-3841. Individuals making key contributions to
this testimony included William R. Swick and Carole J. Blackwell.
(141344) Page 9
GAO/T-RCED-99-228 Ordering Information The first copy of each GAO
report and testimony is free. Additional copies are $2 each.
Orders should be sent to the following address, accompanied by a
check or money order made out to the Superintendent of Documents,
when necessary. VISA and MasterCard credit cards are accepted,
also. Orders for 100 or more copies to be mailed to a single
address are discounted 25 percent. Orders by mail: U.S. General
Accounting Office P.O. Box 37050 Washington, DC 20013 or visit:
Room 1100 700 4th St. NW (corner of 4th and G Sts. NW) U.S.
General Accounting Office Washington, DC Orders may also be placed
by calling (202) 512-6000 or by using fax number (202) 512-6061,
or TDD (202) 512-2537. Each day, GAO issues a list of newly
available reports and testimony. To receive facsimile copies of
the daily list or any list from the past 30 days, please call
(202) 512-6000 using a touchtone phone. A recorded menu will
provide information on how to obtain these lists. For information
on how to access GAO reports on the INTERNET, send an e-mail
message with "info" in the body to: info@www.gao.gov or visit
GAO's World Wide Web Home Page at: http://www.gao.gov PRINTED ON
RECYCLED PAPER United States General Accounting Office
Bulk Rate Washington, D.C. 20548-0001 Postage & Fees Paid GAO
Permit No. G100 Official Business Penalty for Private Use $300
Address Correction Requested
*** End of document. ***