Department of Energy: Uncertain Future for External Regulation of Worker
and Nuclear Facility Safety (Testimony, 07/22/1999, GAO/T-RCED-99-269).

Pursuant to a congressional request, GAO discussed the Department of
Energy's (DOE) progress toward the external regulation of nuclear and
worker safety at its facilities, focusing on: (1) DOE's changing
positions on the desirability of external regulation for its facilities;
(2) the disagreement between DOE and the Nuclear Regulatory Commission
(NRC) on the potential costs and value added of external regulation; and
(3) the uncertainties for the future of external regulation in DOE.

GAO noted that: (1) despite the time and effort by DOE, NRC, and the
Occupational Safety and Health Administration (OSHA) to test regulatory
approaches and simulate regulation of nuclear and worker safety at three
different DOE sites, uncertainty clouds the future of DOE external
regulation; (2) DOE's leadership has changed over the years and each of
the last three Secretaries has changed the Department's position on
external regulation; (3) the Secretary believes it is no longer a worth
while pursuit because the costs would likely outweigh the value of
external regulation; (4) today's position sharply contrasts with DOE's
previously held positions supporting external regulation and also
conflicts with the Department's own pilot program results as well as the
conclusions reached by NRC and OSHA; (5) the results of the pilot
program and the extensive practical experience gained with NRC and OSHA
show that external regulation improves safety and accountability and is
not likely to be prohibitively expensive; (6) NRC also believes the
potential costs of externally regulating DOE facilities are much less
than DOE projections, and (7) while DOE leadership has decided not to
pursue external regulation, the pilot's results, a decade of reports by
blue ribbon panels and DOE working groups, and the experience with NRC
and OSHA give Congress valuable information with which to make an
informed judgment about the future of external regulation in DOE.

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

 REPORTNUM:  T-RCED-99-269
     TITLE:  Department of Energy: Uncertain Future for External
	     Regulation of Worker and Nuclear Facility Safety
      DATE:  07/22/1999
   SUBJECT:  Atomic energy defense activities
	     Cost analysis
	     Regulatory agencies
	     Safety regulation
	     Nuclear facility safety
	     Occupational safety
	     Federal facilities
	     Accountability
	     Federal agency reorganization

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Cover
================================================================ COVER

Before the Subcommittee on Energy and Environment, Committee on
Science, House of Representatives

For Release
on Delivery
Expected at
10:00 a.  m.  EDT
Thursday
July 22, 1999

DEPARTMENT OF ENERGY - UNCERTAIN
FUTURE FOR EXTERNAL REGULATION OF
WORKER AND NUCLEAR FACILITY SAFETY

Statement of (Ms.) Gary Jones, Associate Director,
Energy, Resources, and Science Issues,
Resources, Community, and Economic
Development Division

GAO/T-RCED-99-269

GAO/RCED-99-269T

(141334)

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

  D&D -
  DOE -
  NRC -
  OSHA -

============================================================ Chapter 0

Mr.  Chairman and Members of the Subcommittee: 

We are here today to testify on the status of the Department of
Energy's (DOE) progress toward the external regulation of nuclear and
worker safety at its facilities.  DOE has recently completed a pilot
program with the Nuclear Regulatory Commission (NRC) and the
Occupational Safety and Health Administration (OSHA) to simulate
external regulation at selected facilities.\1 Our testimony today
discusses (1) DOE's changing positions on the desirability of
external regulation for its facilities, (2) the disagreement between
DOE and NRC on the potential costs and value added of external
regulation, and (3) the uncertainties for the future of external
regulation in DOE.  Our testimony is based on our past and ongoing
work on external regulation.\2

In summary, Mr.  Chairman, despite the time and effort by DOE, NRC
and OSHA to test regulatory approaches and simulate regulation of
nuclear and worker safety at three different DOE sites, uncertainty
clouds the future of DOE external regulation.  DOE's leadership has
changed over the years and each of the last three Secretaries has
changed the Department's position on external regulation.  The
current Secretary believes it is no longer a worthwhile pursuit
because the costs would likely outweigh the value of external
regulation.  Today's position sharply contrasts with the DOE's
previously held positions supporting external regulation and also
conflicts with the Department's own pilot program results as well as
the conclusions reached by NRC and OSHA.  The results of the pilot
program and the extensive practical experience gained with NRC and
OSHA show that external regulation improves safety and accountability
and is not likely to be prohibitively expensive.  NRC also believes
the potential costs of externally regulating DOE facilities are much
less than DOE projections.  While current DOE leadership has decided
not to pursue external regulation, the pilot's results, a decade of
reports by blue ribbon panels and DOE working groups, and the
experience with NRC and OSHA give the Congress valuable information
with which to make an informed judgement about the future of external
regulation in DOE. 

--------------------
\1 These facilities include all or part of the Lawrence Berkeley
National Laboratory in California, the Oak Ridge National Laboratory
in Tennessee, and the Savannah River Site in South Carolina.  OSHA
participated in the California and Tennessee sites and had previously
conducted a pilot program at DOE's Argonne National Laboratory in
Illinois. 

\2 Department of Energy:  Clear Strategy on External Regulation
Needed for Worker and Nuclear Facility Safety (GAO/RCED-98-163, May
21, 1998). 

   BACKGROUND
---------------------------------------------------------- Chapter 0:1

We, along with others, have reported on DOE's weaknesses in its
self-regulation of environment, safety, and health responsibilities
at its facilities.  With few exceptions, worker and nuclear facility
safety has been internally regulated by DOE because of concerns about
national security.  Essentially, all federal facilities except DOE's
are subject to external regulation.  In 1993, then-Secretary of
Energy Hazel O'Leary announced that the Department would seek
external regulation for worker safety.  In 1994, legislation was
proposed and hearings were held to externally regulate DOE nuclear
safety.  Although no laws were enacted, in 1995 DOE created an
advisory committee, which concluded that secrecy had been used as a
shield to deflect public scrutiny.  This committee stated that
"Widespread environmental contamination at DOE facilities and the
immense costs associated with their cleanup provide clear evidence
that self-regulation has failed."\3

In 1996, a subsequent DOE working group concluded that external
regulation could improve safety, eliminate the inherent conflict of
interest from self-regulation, gain consistency with current domestic
and international safety management practices, and improve
credibility and public trust.  In 1997, then-Secretary Frederico Pena
took a more cautious approach by launching a pilot program with NRC
and OSHA.  The purpose of the pilot was to test regulatory approaches
and gain insight about the costs of external regulation based on
actual experience.  The pilot began in January 1998 and was completed
in June 1998.  (OSHA completed an earlier pilot at the Argonne
National Laboratory in Illinois in 1996.) The pilot was limited to
DOE's non-defense sites.  DOE's nuclear weapons sites were not part
of the pilot, but under an earlier strategy would have been
eventually externally regulated. 

The facilities that would be subject to external regulation are
substantial.  DOE maintains 3,500 nuclear facilities at 34 sites in
13 states, covering, in all, more than 85 million square feet of
building space.  Eighty percent of these facilities are funded by
DOE's defense and environmental management programs.  Included in
these figures are DOE's 23 laboratories, whose total annual budget is
about $7.5 billion.  DOE's facilities are currently self-regulated
and cover a complex array of activities from research reactors, fuel
storage, and nuclear weapons dismantlement to accelerators and fusion
energy experiments. 

--------------------
\3 Improving Regulation of Safety at DOE Nuclear Facilities, Advisory
Committee on External Regulation of Department of Energy Nuclear
Safety (Dec.  22, 1995). 

   DOE'S POSITIONS ON EXTERNAL
   REGULATION HAS CHANGED
---------------------------------------------------------- Chapter 0:2

In our May 21, 1998, testimony before this Subcommittee, we cited
DOE's changing positions on external regulation.\4 At that time, we
said that DOE's latest strategy to conduct this pilot was in contrast
to its earlier strong commitment to proceed directly to external
regulation.  At that same hearing, DOE said that it believes there
will be clear benefits from external regulation of worker and nuclear
safety at its facilities.  In a September 11, 1998, letter to us, DOE
again reaffirmed its commitment to external regulation and wrote that
it would submit legislation for externally regulating single-purpose
energy research laboratories as part of its fiscal year 2000 budget
process. 

DOE's position on external regulation has again changed.  In a
February 19, 1999, letter to the Chairman, Subcommittee on Energy and
Water Development, Senate Committee on Appropriations, Energy
Secretary Richardson stated that the Department will not submit
legislation for externally regulating its facilities for worker and
nuclear facility safety.  The Secretary stated that DOE's analysis of
the pilot indicated that ï¿½many of the potential benefits that we
expected to see from external regulation have not been demonstrated,
and appear to be outweighed by associated costs and difficulties
raised in the pilot projects.ï¿½ The Secretary cited a number of
ï¿½significant, unresolved issuesï¿½ including licensing questions, the
extent to which old facilities can be upgraded, and costs.  As a
result, the Secretary wrote that money for external regulation is
better spent on other missions. 

Secretary Richardson elaborated on his position in a March 31, 1999,
letter to the Chairman, Subcommittee on Energy and Water Development,
House Committee on Appropriations.  This time, the Secretary noted
that DOE and NRC failed to reach agreement on the ï¿½conclusions and
ramificationsï¿½ of the pilot program.  The areas of disagreement cited
by the Secretary included the value added by external regulation and
the degree to which regulatory flexibility or exemptions should be
available for DOE's facilities.  The high potential costs and the
uncertainties associated with the transition to NRC's regulation were
cited as DOE's main concerns.  Regarding OSHA's component of the
pilot, the Secretary offered no specific position in either of his
letters. 

--------------------
\4 Department of Energy:  Clear Strategy on External Regulation
Needed for Worker and Nuclear Facility Safety (GAO/T-RCED-98-205, May
21, 1998). 

   DISAGREEMENT ON POTENTIAL COST
   OF EXTERNAL REGULATION
---------------------------------------------------------- Chapter 0:3

DOE estimates that its costs of transitioning to external regulation
by NRC ranges from $7 to $23 million for the three pilot sites,
assuming minimal upgrading of facilities would be required.\5
However, DOE also reports that the costs could be substantially
higherï¿½as much as $75 million higher at the Lawrence Berkeley
Laboratory site--depending on NRC flexibility in enforcing its
regulations.  Secretary Richardson's position that the cost would
outweigh the benefits of external regulation conflicts with the
pilot's results and are inconsistent with the growing experience
between DOE, NRC and OSHA.  NRC concluded from the pilot program that
there would be no major retrofitting of facilities needed to meet its
requirements at the various project sites, and that it could
immediately license Lawrence Berkeley and the Oak Ridge facility. 
Some changes would be needed before licensing the Savannah River
facility, although the NRC found no safety issues requiring prompt
corrective action. 

DOE and NRC disagreements on the cost of transitioning to external
regulation is a major point of controversy between the two agencies. 
Specifically, DOE estimates one-time transition costs of external
regulation would range from $170,000 at Berkeley to between $5.3
million and $12.8 million at the Savannah River facility (transition
costs include training and rulemaking, and costs for upgrading
facilities where needed).  Furthermore, DOE contends that the many
uncertainties associated with having NRC regulate its ï¿½unique
facilitiesï¿½ poses potentially large financial risks that could
greatly increase transition costs.  DOE is particularly concerned
that NRC would not grant waivers on certain regulatory requirements
at its facilities.  According to DOE, waivers are needed to avoid
potentially higher transition costs.  NRC disagrees with DOE's
position and reports that because few changes to DOE facilities or
procedures would be needed under external regulation by NRC, it
believes that DOE's cost estimates for making the transition to
external regulation are considerably higher than NRC believes is
justified.  NRC also noted that the cost to DOE of NRC regulating DOE
nuclear facilities could be minimized, potentially resulting in a net
savings, by reducing the level of DOE oversight to a level consistent
with commercial facilities.  NRC also reports that it has a
demonstrated history of granting waivers and otherwise applying
flexibility to its regulatory processes as conditions warrant. 

According to our review of DOE's pilot reports and subsequent
discussions with laboratory officials who had provided DOE with cost
data, DOE's cost estimates appear inflated and misrepresent actual
conditions.  For example, at the Berkeley site, the major cost
uncertainty cited by DOE is $75 million to decontaminate and
decommission (D&D) 2 out-of-service accelerators at the laboratory. 
DOE said these figures were based on a worst-case scenario in which
the laboratory would be forced to clean up the old accelerators
sooner rather than later under NRC's rules.  According to DOE, taking
more time for D&D would allow the laboratory to obtain certain cost
savings, such as by recycling materials.  However, the $75 million
estimate is what the laboratory had always planned to spend to D&D
the accelerators.  Thus, it is doubtful that DOE's estimate even
relates to the cost of external regulation.  Further, laboratory
officials provided us with data that show the cost to D&D the old
accelerators is expected to be about half of the $75 million DOE had
indicated.  The $75 million figure used by DOE came from a 1992
laboratory report which was not updated or corrected for the pilot,
even though laboratory staff had provided DOE officials with the most
recent data.  The reduced costs result from the fact that since 1994,
the laboratory has been recycling materials from the accelerators to
save money and to recapture the space as quickly as possible for
other scientific use.  Regardless of the actual costs, NRC advised
DOE that it would likely grant a waiver on the D&D of the old
accelerators to allow a more cost-effective strategy because the
accelerators pose little risk to public safety.  DOE officials
acknowledged to us that NRC officials had said they would likely
grant such a waiver. 

Similarly, DOE officials told us that they might be required to
install special alarms for detecting radiation leakage at the
Radiochemical Engineering Development Center in Oak Ridge if NRC were
the regulator, at a cost of about $4 million.  NRC officials advised
DOE that they would likely grant a waiver for these alarms because
the facility is safely operated and properly shielded from radiation
exposure.  DOE nevertheless included the $4 million figure as a
potential transition cost to being externally regulated. 

The potential costs associated with NRC's requirements represent
worst-case scenarios and assumes NRC would not exercise flexibility
in its approach to regulating DOE's unique facilities.  Yet NRC cites
many examples of its flexibility, such as providing waivers of its
requirements when there is no safety consequence.  For example, in
July 1999, NRC granted the former DOE-owned gaseous diffusion plants
a 1-year extension to meet seismic upgrade requirements.  Also, NRC
recently extended all of its materials licenses from 2 to 5 years in
recognition that radioactive materials are becoming more stable and
predicable.  NRC's report on the pilot notes that there is precedent
in NRC policy and practice for resolving many of the issues raised
during the pilot program. 

DOE's concerns about high potential costs posed by the uncertainties
in working with NRC are all the more curious given the extensive
interactions and practical experience the two agencies already share. 
NRC is now licensing, certifying, and reviewing more than 20 of DOE's
projects and activities.  For example, early this year, NRC granted a
license to DOE for operating the TMI-2 Independent Spent Fuel Debris
Facility at the Department's Idaho National Engineering and
Environmental Laboratory.  NRC had previously licensed the
Independent Spent Fuel Storage Facilities for the Fort St.  Vrain,
and is conducting prelicensing consultations with DOE in other areas,
including the high-level waste repository at Yucca Mountain, Nevada,
and a proposed facility for making mixed-oxide fuel.  Additional
issues examined during the pilot program, that is decommissioning,
potential conflicts of interest, and funding, are being addressed by
NRC and DOE in other regulatory and licensing actions.  For example,
many of these issues were addressed in licensing the TMI-2
Independent Fuel Storage Installation.  DOE's report on the pilot
references NRC's flexibility but does not highlight this important
distinction in the executive summary nor in Secretary Richardson's
letters to the Chairman. 

In addition to transition costs of external regulation, DOE estimates
it will incur annual nuclear safety inspection-related expenses from
$2 to $4 million for the three pilot sites.  These costs, however,
could be reduced by reductions in DOE's current oversight costs for
nuclear and worker safety.  NRC estimates its transition costs to be
about $2 million and inspection expenses to be less than $1 million
for the three pilot sites. 

The estimated costs of complying with OSHA's regulations raises fewer
issues.  DOE's own worker safety requirements are often similar to
OSHA's, and the pilot's results indicate that DOE's laboratories
resemble those found in comparable commercial facilities.  OSHA
reports that the costs to comply with its inspection findings are
generally to correct previously identified workplace hazards.  As
with the NRC, OSHA has practical experience in DOE facilities.  For
example, OSHA has had regulatory authority at the gaseous diffusion
plants in Paducah, Kentucky, and Piketon, Ohio since 1993.  These DOE
facilities are leased to the United States Enrichment Corporation. 
OSHA has also accepted regulatory responsibility for two privatized
facilities at DOE's Savannah River site. 

NRC officials told us that their concerns with DOE's cost estimates
contributed to their decision to prepare a separate report on the
pilot's results.  Both agencies had agreed in their 1997 memorandum
of agreement to prepare a joint report on the pilot's results.  OSHA
was not part of the original agreement and was later added to the
pilot in response to congressional direction.\6

--------------------
\5 These estimates exclude transition costs for meeting OSHA
requirements, which were not calculated for all sites. 

\6 Energy and Water Development Appropriations Act, 1999, P.L. 
105-245, Section 311, Oct.  7, 1998. 

   DISAGREEMENT ON THE POTENTIAL
   VALUE ADDED OF EXTERNAL
   REGULATION
---------------------------------------------------------- Chapter 0:4

The second major area of controversy is the value added by external
regulation, about which DOE also disagrees with NRC and OSHA.  DOE
leadership stated, without providing detail, that many of the
potential benefits that were expected from external regulation have
not been demonstrated.  DOE's reports on the pilot results did not
focus on the benefits of external regulation, but rather on the
potential costs and other issues.  However, NRC and OSHA concluded
from the pilots that their presence could improve safety at DOE's
facilities.  While NRC did not find any significant problems in its
visits, the Commission believes its processes improved safety. 
Recent experience supports this.  For example, in February 1999, NRC
issued a safety assessment of the Brookhaven National Laboratory High
Flux Beam Reactor in which NRC staff "identified no
safety-significant issues" but did find "several apparent instances
of noncompliance with DOE and [laboratory] requirements." NRC staff
noted that "the safety programs at the [reactor] were found to
provide adequate protection of the health and safety of the public,
the workers, and the environment." The staff also concluded that "the
design and conditions at the [reactor] do not present any unique
regulatory or technical challenges to regulatory oversight of the
[reactor] by outside regulators, such as NRC." Similarly, OSHA's
presence as an external regulator would, according to OSHA, generally
result in more timely correction of workplace hazards.  OSHA did find
some problems in its pilot visits and prepared simulated fines for
violations:  $75,000 in Oak Ridge, and $58,000 in Berkeley.  Fifty
four of the 75 violations at Oak Ridge were classified as ï¿½serious,ï¿½
with 2 requiring immediate corrective action.  Fewer hazards were
noted at the Berkeley site.  OSHA officials told us that their
findings parallel those expected at similarly sized facilities in the
commercial sector. 

An important value added benefit from external regulation is public
credibility.  As we testified before this subcommittee on July 13,
1999, DOE has resisted independent regulatory oversight of worker and
nuclear safety, which has prompted a perception that it lacks
accountability.\7 Laboratory officials at the Berkeley and Oak Ridge
sites noted the value of gaining credibility from being externally
regulated. 

--------------------
\7 Department of Energy:  Need to Address Long-standing Management
Weaknesses (GAO/T-RCED-99-255, July 13, 1999). 

   DOE'S EFFORTS CLOUD THE FUTURE
   OF EXTERNAL REGULATION
---------------------------------------------------------- Chapter 0:5

DOE's wavering positions and its failure to reach consensus with
participating agencies on the results of the pilot projects have
caused uncertainty about the future of external regulation at its
facilities.  After nearly a decade of reports by blue-ribbon panels
and internal working groups, a 2-year pilot effort, and extensive
practical experience supporting the view that external regulation
works, DOE's leadership has reversed course.  Given these
experiences, we believe that the Congress has an opportunity to make
a decision on whether or not a class of DOE's facilities--as
represented in the pilot --should be externally regulated for worker
safety and nuclear facility safety, a position previously advocated
by DOE officials. 

-------------------------------------------------------- Chapter 0:5.1

Mr.  Chairman, this concludes our statement.  We would be happy to
respond to any questions you or Members of the Subcommittees may
have. 

   CONTACTS AND ACKNOWLEDGEMENTS
---------------------------------------------------------- Chapter 0:6

For future contacts regarding this testimony, please call Gary Jones
at (202) 512-3841.  Individuals making key contributions to this
testimony included Gary R.  Boss, Michael Gilbert, William Lanouette,
and Melissa Francis. 

*** End of document. ***