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: [email protected] 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. ***