Nuclear Regulatory Commission: Strategy Needed to Develop a Risk-Informed
Safety Approach (Testimony, 02/04/99, GAO/T-RCED-99-71).

Pursuant to a congressional request, GAO discussed the actions the
Nuclear Regulatory Commission (NRC) has taken to move from its
traditional regulatory approach to an approach that considers risk in
conjunction with engineering analyses and operating experience-termed
risk-informed regulation, focusing on the: (1) issues that NRC needs to
resolve to implement a risk-informed regulatory approach; (2) status of
NRC's efforts to make two of its oversight programs--overall plant
safety assessments and enforcement-risk-informed; and (3) major
management challenges that NRC faces.

GAO noted that: (1) since July 1998, NRC has accelerated some activities
needed to implement a risk-informed regulatory approach and has
established and set milestones for others; (2) however, NRC has not
resolved the most basic of issues; (3) that is, that some utilities do
not have current and accurate design information for their nuclear power
plants, which is needed for a risk-informed approach; (4) also, neither
NRC nor the nuclear utility industry have standards or guidance that
define the quality or adequacy of the risk assessments that utilities
use to identify and measure the risks to public health and the
environment; (5) furthermore, NRC has not determined if compliance with
risk-informed regulations will be voluntary or mandatory for the nuclear
utility industry; (6) more fundamentally, NRC has not developed a
comprehensive strategy that would move its regulation of the safety of
nuclear power plants from its traditional approach to an approach that
considers risk; (7) in January 1999, NRC released for comment a proposed
process to assess the overall safety of nuclear power plants; (8) the
process would establish generic and plant-specific safety thresholds and
indicators to help NRC assess overall plant safety; (9) NRC expects to
phase in the new process over the next 2 years and evaluate it by June
2001, at which time NRC would propose any adjustments or modifications
needed; (10) in addition, NRC has been examining the changes needed to
its enforcement program to make it consistent with, among other things,
the proposed plant safety assessment process; (11) for many years, the
nuclear industry and public interest groups have criticized the
enforcement program as subjective; (12) in the spring of 1999, NRC staff
expect to provide the Commission recommendations for revising the
enforcement program; (13) in January 1999, GAO identified major
management challenges that limit NRC's effectiveness; (14) the
challenges include the lack of a definition of safety and lack of
aggressiveness in requiring utilities to comply with safety regulations;
and (15) NRC's revised plant safety assessment and enforcement
initiatives may ultimately help the agency address these management
challenges and carry out its safety mission more effectively and
efficiently.

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

 REPORTNUM:  T-RCED-99-71
     TITLE:  Nuclear Regulatory Commission: Strategy Needed to Develop a 
             Risk-Informed Safety Approach
      DATE:  02/04/99
   SUBJECT:  Electric utilities
             Nuclear powerplant safety
             Safety standards
             Safety regulation
             Strategic planning
             Inspection
             Nuclear powerplants
IDENTIFIER:  NRC Nuclear Plant Safety Program
             
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Cover
================================================================ COVER


Before the Subcommittee on Clean Air, Wetlands, Private Property, and
Nuclear Safety, Commmittee on Environment and Public Works, U.S. 
Senate

For Release
on Delivery
Expected at
9 a.m.  EST
Thursday
February 4, 1999

NUCLEAR REGULATORY COMMISSION -
STRATEGY NEEDED TO DEVELOP A
RISK-INFORMED SAFETY APPROACH

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

GAO/T-RCED-99-71

GAO/RCED-99-71T


(141286)


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

  NEI -
  NRC -

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

Mr.  Chairman and Members of the Subcommittee: 

We are here to testify about the actions that the Nuclear Regulatory
Commission (NRC) has taken to move from its traditional regulatory
approach to an approach that considers risk in conjunction with
engineering analyses and operating experience--termed risk-informed
regulation.  NRC believes that a risk-informed approach would reduce
unnecessary regulatory burden and costs, without reducing safety. 

Our testimony today is based on ongoing work we are conducting for
Senators Lieberman and Biden.  Specifically, our testimony discusses
the (1) issues that NRC needs to resolve to implement a risk-informed
regulatory approach and (2) status of NRC's efforts to make two of
its oversight programs--overall plant safety assessments and
enforcement--risk-informed.  In addition, in January 1999, we
provided the Congress with our views on the major management
challenges that NRC faces.\1 Our testimony discusses these challenges
and their relationship to NRC's efforts to consider risk in its
regulatory activities. 

In summary, we are finding that: 

  -- Since July 1998, NRC has accelerated some activities needed to
     implement a risk-informed regulatory approach and has
     established and set milestones for others.  However, NRC has not
     resolved the most basic of issues; that is, that some utilities
     do not have current and accurate design information for their
     nuclear power plants, which is needed for a risk-informed
     approach.  Also, neither NRC nor the nuclear utility industry
     have standards or guidance that define the quality or adequacy
     of the risk assessments that utilities use to identify and
     measure the risks to public health and the environment.\2
     Furthermore, NRC has not determined if compliance with
     risk-informed regulations will be voluntary or mandatory for the
     nuclear utility industry.  More fundamentally, NRC has not
     developed a comprehensive strategy that would move its
     regulation of the safety of nuclear power plants from its
     traditional approach to an approach that considers risk. 

  -- In January 1999, NRC released for comment a proposed process to
     assess the overall safety of nuclear power plants.  The process
     would establish generic and plant-specific safety thresholds and
     indicators to help NRC assess overall plant safety.  NRC expects
     to phase in the new process over the next 2 years and evaluate
     it by June 2001, at which time NRC would propose any adjustments
     or modifications needed.  In addition, NRC has been examining
     the changes needed to its enforcement program to make it
     consistent with, among other things, the proposed plant safety
     assessment process.  For many years, the nuclear industry and
     public interest groups have criticized the enforcement program
     as subjective.  In the spring of 1999, NRC staff expect to
     provide the Commission recommendations for revising the
     enforcement program. 

  -- In January 1999, we identified major management challenges that
     limit NRC's effectiveness.  The challenges include the lack of a
     definition of safety and lack of aggressiveness in requiring
     utilities to comply with safety regulations.  NRC's revised
     plant safety assessment and enforcement initiatives may
     ultimately help the agency address these management challenges
     and carry out its safety mission more effectively and
     efficiently. 


--------------------
\1 Performance and Accountability Series:  Major Management
Challenges and Program Risks:  Nuclear Regulatory Commission
(GAO/OCG-99-19, Jan.  1999). 

\2 Risk assessments systematically examine complex technical systems
to attempt to quantify the probabilities that a potential accident
will occur and the resulting consequences.  By their nature, risk
assessments are statements of uncertainty that identify and assign
probabilities to events that rarely occur. 


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

NRC is responsible for ensuring that the nation's 103 operating
commercial nuclear power plants pose no undue risk to public health
and safety.  Now, however, the electric utility industry is faced
with an unprecedented, overarching development:  the economic
restructuring of the nation's electric power system, from a regulated
industry to one driven by competition.  According to one study, as
many as 26 of the nation's nuclear power plant sites are vulnerable
to shutdown because production costs are higher than the projected
market prices of electricity.\3 As the electric utility industry is
deregulated, operating and maintenance costs will affect the
competitiveness of nuclear power plants.  NRC acknowledges that
competition will challenge it to reduce unnecessary regulatory burden
while ensuring that safety margins are not compromised by utilities'
cost-cutting measures. 

Since the early 1980s, NRC has been considering the role of risk in
the regulatory process, and in August 1995, NRC issued a policy
statement that advocated certain changes in the development and
implementation of its regulations through an approach more focused on
risk assessment.  Under such an approach, NRC and the utilities would
give more emphasis to those structures, systems, and components
deemed more significant to safety.  The following example illustrates
the difference between NRC's existing and a risk-informed approach. 
One particular nuclear plant has about 635 valves and 33 pumps that
the utility must operate, maintain, and periodically replace
according to NRC's existing regulations.  Under a risk-informed
approach, the utility found that about 515 valves and 12 pumps
presented a low safety risk.  The utility identified 25 components
that were a high risk but would have been treated the same as other
components under the existing regulations.  If the utility
concentrated on the 120 valves, 21 pumps, and 25 components that have
been identified as having a high safety risk, it could reduce its
regulatory compliance burden and costs. 


--------------------
\3 World Energy Service:  U.S.  Outlook (Standard & Poor's, Apr. 
1998). 


   NRC HAS NOT RESOLVED MANY
   ISSUES NEEDED TO IMPLEMENT A
   RISK-INFORMED REGULATORY
   APPROACH
---------------------------------------------------------- Chapter 0:2

NRC staff estimate that it could take 4 to 8 years to implement a
risk-informed regulatory approach and are working to resolve many
issues to ensure that the new approach does not endanger public
health and safety.  Although NRC has issued guidance for utilities to
use risk assessments to meet regulatory requirements for specific
activities and has undertaken many activities to implement a
risk-informed approach, more is needed to

  -- ensure that utilities have current and accurate documentation on
     the design of the plant and structures, systems, and components
     within it and final safety analysis reports that reflect changes
     to the design and other analyses conducted after NRC issued the
     operating license. 

  -- ensure that utilities make changes to their plants based on
     complete and accurate design and final safety analysis
     information. 

  -- determine whether, how, and what aspects of NRC's regulations to
     change. 

  -- develop standards on the scope and detail of the risk
     assessments needed for utilities to determine that changes to
     their plants' design will not negatively effect safety. 

  -- determine whether compliance with risk-informed regulations
     should be mandatory or voluntary. 

Furthermore, NRC has not developed a comprehensive strategy that
would move its regulation of nuclear plant safety from its
traditional approach to an approach that considers risk. 


      UTILITIES DO NOT HAVE
      ACCURATE AND RELIABLE DESIGN
      INFORMATION FOR SOME PLANTS
-------------------------------------------------------- Chapter 0:2.1

Design information provides one of the basis for NRC's safety
regulation.  Yet, for more than 10 years, NRC has questioned whether
utilities had accurate design information for their plants. 
Inspections of 26 plants that NRC completed early in fiscal year 1999
confirmed that for some plants (1) utilities had not maintained
accurate design documentation, (2) NRC did not have assurance that
safety systems would perform as intended at all times, and (3) NRC
needed to clarify what constitutes design information subject to
NRC's regulations.  As of November 1998, NRC had taken escalated
enforcement actions for violations found at five plants--Three Mile
Island, Perry, H.B.  Robinson, Vermont Yankee, and D.C.  Cook.  NRC
took these actions because it did not have assurance that the plants'
safety systems would perform as intended.  One utility, American
Electric Power, shut down its D.C.  Cook plant as a result of the
inspection findings. 

NRC does not plan additional design team inspections because it
concluded that the industry did not have serious safety problems. 
NRC's Chairman disagreed with this broad conclusion, noting that (1)
the inspection results for the five plants indicate the importance of
maintaining current and accurate design and facility configuration
information, (2) the inspections did not apply to the industry as a
whole but to only certain utilities and plants within the industry,
and (3) other NRC inspections identified design problems at other
such nuclear power plants as Crystal River 3, Millstone, Haddam Neck,
and Maine Yankee.  The Commissioners and staff agreed that NRC would
oversee design information issues using such tools as safety system
engineering inspections. 

The 26 inspections also identified a need for NRC to better define
the elements of a plant's design that are subject to NRC's
regulations.  NRC staff acknowledge that the existing regulation is a
very broad, general statement that has been interpreted differently
among NRC staff and among utility and industry officials.  According
to NRC staff, it is very difficult to develop guidance describing
what constitutes adequate design information.  Therefore, NRC has
agreed that the Nuclear Energy Institute (NEI) would provide explicit
examples of what falls within design parameters.\4 NEI plans to draft
guidance that will include examples of design information and provide
it to NRC in January 1999.  Concurrently, NRC is developing
regulatory guidance on design information.  NRC staff expect to
recommend to the Commission in February 1999 that it endorse either
NRC's or NEI's guidance and seek approval to obtain public comments
in March or April 1999.  NRC staff could not estimate when the agency
would complete this effort. 


--------------------
\4 NEI has members from all utilities licensed to operate commercial
nuclear plants in the United States as well as nuclear plant
designers, major architect/engineering firms, fuel fabrication
facilities, materials licensees, and other organizations and
individuals involved in the nuclear energy industry.  NEI establishes
unified nuclear industry policy on such matters as generic
operational and technical issues. 


      NRC DOES NOT HAVE CONFIDENCE
      THAT SAFETY ANALYSIS REPORTS
      REFLECT CURRENT PLANT
      DESIGNS
-------------------------------------------------------- Chapter 0:2.2

At the time NRC licenses a plant, the utility prepares a safety
analysis report; NRC regulations require the utility to update the
report to reflect changes to the plant design and the results of
analyses that support modifying the plants without prior NRC
approval.  As such, the report provides one of the foundations to
support a risk-informed approach.  Yet, NRC does not have confidence
that utilities make the required updates, which results in poor
documentation of the safety basis for the plants. 

NRC published guidance for the organization and contents of safety
analysis reports in June 1966 and updated the guidance in December
1980.  NRC acknowledges that the guidance is limited, resulting in
poorly articulated staff comments on the quality of the safety
analysis reports and a lack of understanding among utilities about
the specific aspects of the safety analysis reports that should be
updated.  On June 30, 1998, NRC directed its staff to continue
working with NEI to finalize the industry's guidelines on safety
analysis report updates, which NRC could then endorse.  Once the
agency endorses the guidelines, it will obtain public comments and
revise them, if appropriate.  NRC expects to issue final guidelines
in September 1999. 


      ERRONEOUS EVALUATIONS CAN
      ERODE DESIGN AND SAFETY
      MARGINS
-------------------------------------------------------- Chapter 0:2.3

According to NRC documents, if a utility does not have complete and
accurate design information, the evaluations conducted to determine
whether it can modify a plant without prior NRC approval can lead to
erroneous conclusions and jeopardize safety.  For more than 30 years,
NRC's regulations have provided a set of criteria that utilities must
use to determine whether they may change their facilities (as
described in the final safety analysis report) or procedures or
conduct tests and experiments without NRC's prior review and
approval. 

However, in 1993, NRC became aware that Northeast Nuclear Energy
Company had refueled Millstone Unit 1 in a manner contrary to that
allowed in the updated final safety analysis and its operating
license.  This led NRC to question the regulatory framework that
allows licensees to change their facilities without prior NRC
approval.  As a result, NRC staff initiated a review to identify the
short- and long-term actions needed to improve the process.  For
example, in October 1998, NRC published a proposed regulation
regarding plant changes in the Federal Register for comment; the
comment period ended on December 21, 1998.  NRC requested comments on
criteria for identifying changes that require a license amendment and
on a range of options, several of which would allow utilities to make
changes without prior NRC approval despite a potential increase in
the probability or consequences of an accident.  NRC expects to issue
a final regulation in June 1999. 

In addition, in February 1999, NRC staff expect to provide their
views to the Commission on changing the scope of the regulation to
consider risk.  NRC's memorandum that tracks the various tasks
related to a risk-informed approach and other initiatives did not
show when NRC would resolve this issue. 


      MAKING ITS REGULATIONS
      RISK-INFORMED WILL BE A
      CHALLENGE TO NRC AND THE
      INDUSTRY
-------------------------------------------------------- Chapter 0:2.4

Until recently, NRC did not consider whether and to what extent the
agency should revise all its regulations pertaining to commercial
nuclear plants to make them risk-informed.  Revising the regulations
will be a formidable task because, according to NRC staff,
inconsistencies exist among the regulations and because a
risk-informed approach focuses on the potential risk of structures,
systems, or components, regardless of whether they are located in the
plant's primary (radiological) or secondary (electricity-producing)
systems.  With one exception, NRC has not attempted to extend its
regulatory authority to the secondary systems. 

NRC staff and NEI officials agree that the first priority in revising
the regulations will be to define their scope as well as the meaning
of such concepts as "important to safety" and "risk significant" and
integrating the traditional and risk-informed approaches into a
cohesive regulatory context.  In October 1998, NEI proposed a phased
approach to revise the regulations.  Under the proposal, by the end
of 1999, NRC would define "important to safety" and "risk
significant." By the end of 2000, NRC would use the definitions in
proposed rulemakings for such regulations as definition of design
information and environmental qualification for electrical equipment. 
By the end of 2003, NEI proposes that NRC address other regulatory
issues, such as the change process, the content of technical
specifications, and license amendments.  After 2003, NEI proposes
that NRC would address other regulations on a case-by-case basis. 

NRC staff agreed that the agency must take a phased approach when
revising its regulations.  The Director, Office of Nuclear Regulatory
Research, said that, if NRC attempted to revise all provisions of the
regulations simultaneously, it is conceivable that the agency would
accomplish very little.  The Director said that NRC needs to address
one issue at a time while concurrently working on longer-term
actions.  He cautioned, however, that once NRC starts, it should be
committed to completing the process.  At a January 1999 meeting,
NRC's Chairman suggested a more aggressive approach that would entail
risk informing all regulations across the board.  NRC's memorandum
that tracks the various tasks related to a risk-informed approach and
other initiatives did not show when the agency would resolve this
issue. 


      NRC DOES NOT HAVE A STANDARD
      FOR THE CONTENT OF RISK
      ASSESSMENTS
-------------------------------------------------------- Chapter 0:2.5

NRC and the industry view risk assessments as one of the main tools
to be used to identify and focus on those structures, systems, or
components of nuclear plant operations having the greatest risk. 
Yet, neither NRC nor the industry has a standard or guidance that
defines the quality, scope, or adequacy of risk assessments.  NRC
staff are working with the American Society of Mechanical Engineers
to develop such a standard. 

However, this issue is far from being resolved.  The Society is
developing the standard for risk assessments in two phases (internal
events and emergency preparedness).  NRC staff estimate that the
agency would have a final standard on the first phase by June 2000
but could not estimate when the second phase would be complete.  To
ensure consistency with other initiatives, in December 1998, NRC
staff requested the Commission's direction on the quality of risk
assessments needed to implement a risk-informed approach.  Since it
may be several years until NRC has a standard, the Commission should
also consider the effect that the lack of a standard could have on
its efforts to implement a risk-informed regulatory approach. 


      NRC HAS NOT DETERMINED
      WHETHER COMPLIANCE WITH
      RISK-INFORMED REGULATIONS
      WOULD BE MANDATORY OR
      VOLUNTARY
-------------------------------------------------------- Chapter 0:2.6

NRC has not determined whether compliance with revised risk-informed
regulations would be mandatory or voluntary for utilities.  In
December 1998, NRC's staff provided its recommendations to the
Commission.  The staff recommended that implementation be voluntary,
noting that it would be very difficult to show that requiring
mandatory compliance will increase public health and safety and could
create the impression that current plants are less safe.  In its
analysis, the staff did not provide the Commission with information
on the number of plants that would be interested in such an approach. 
In January 1999, the Commissioners expressed concern about a
voluntary approach, believing that it would create two classes of
plants operating under two different sets of regulations. 

Utilities may be reluctant to shift to a risk-informed regulatory
approach for various reasons.  First, the number of years remaining
on a plant's operating license is likely to influence the utility's
views.  NRC acknowledged that if a plant's license is due to expire
in 10 years or less, then the utility may not have anything to gain
by changing from the traditional approach.  Second, the costs to
comply may outweigh the benefits of doing so.  Considering the
investment that will be needed to develop risk-informed procedures
and operations and identify safety-significant structures, systems,
or components, utilities question whether a switch will be worth the
reduction in regulatory burden and cost savings that may result. 
Third, design differences and age disparities among plants make it
difficult for NRC and the industry to determine how, or to what
extent, a standardized risk-informed approach can be implemented
across the industry.  Although utilities built one of two types of
plants--boiling water or pressurized water--each has design and
operational differences.  Thus, each plant is unique, and a
risk-informed approach would require plant-specific tailoring. 


      NRC HAS NOT DEVELOPED A
      STRATEGIC PLAN TO IMPLEMENT
      A RISK-INFORMED APPROACH
-------------------------------------------------------- Chapter 0:2.7

Since the early 1980s, NRC has considered applying risk to the
regulatory process.  NRC staff estimate that it will be at least 4 to
8 years before the agency implements a risk-informed approach. 
However, NRC has not developed a strategic plan that includes
objectives, time lines, and performance measures for such an
approach. 

Rather, NRC has developed an implementation plan, in conjunction with
its policy statement on considering risk, that is a catalog of about
150 separate tasks and milestones for their completion.  It has also
developed guidance for some activities, such as pilot projects in the
four areas where the industry wanted to test the application of a
risk-informed approach.  In one case, NRC approved a pilot project
for Houston Lighting and Power Company at its South Texas plant, and
the utility found that it could not implement it because the pilot
project would conflict with other NRC regulations. 

Given the complexity and interdependence of NRC's requirements, such
as regulations, plant design, and safety documents and the results of
ongoing activities, it is critical that NRC clearly articulate how
the various initiatives will help achieve the goals set out in the
1995 policy statement.  Although NRC's implementation plan sets out
tasks and expected completion dates, it does not ensure that
short-term efforts are building toward NRC's longer-term goals; does
not link the various ongoing initiatives; does not help the agency
determine appropriate staff levels, training, skills, and technology
needed and the timing of those activities to implement a
risk-informed approach; does not provide a link between the
day-to-day activities of program managers and staff and the
objectives set out in the policy statement; and does not address the
manner in which it would establish baseline information about the
plants to assess the safety impact of a risk-informed approach. 

In a December 1998 memorandum, NRC staff said that once the
Commission provides direction on whether and how to risk-inform the
regulations and guidance on the quality of risk assessments to
support their decisions for specific regulations, they would develop
a plan to implement the direction provided.  The staff did not
provide an estimated time frame for completing the plan. 


   THE STATUS OF NRC'S ASSESSMENT
   AND ENFORCEMENT PROCESSES: 
   MANY UNANSWERED ISSUES REMAIN
---------------------------------------------------------- Chapter 0:3

For many years, the nuclear industry and public interest groups have
criticized NRC's plant assessment and enforcement processes because
they lacked objectivity, consistency, and predictability.  In January
1999, NRC proposed a new process to assess overall plant performance
based on generic and plant-specific safety thresholds and performance
indicators.  NRC is also reviewing its enforcement process to ensure
consistency with the staff's recommended direction for the assessment
process and other programs. 


      NRC IS TRYING TO MAKE ITS
      PLANT ASSESSMENT PROCESS
      MORE OBJECTIVE AND
      TRANSPARENT
-------------------------------------------------------- Chapter 0:3.1

In 1997 and 1998, we noted that NRC's process to focus attention on
plants with declining safety performance needed substantial revisions
to achieve its purpose as an early warning tool and that NRC did not
consistently apply the process across the industry.\5

We also noted that this inconsistency has been attributed, in part,
to the lack of specific criteria, the subjective nature of the
process, and the confusion of some NRC managers about their role in
the process.  NRC acknowledged that it should do a better job of
identifying plants deserving increased regulatory attention and said
that it was developing a new process that would be predictable,
nonredundant, efficient, and risk-informed. 

In January 1999, NRC proposed a new plant assessment process that
includes seven "cornerstones."\6 For each cornerstone, NRC will
identify the desired result, important attributes that contribute to
achieving the desired result, areas to be measured, and the various
ways that exist to measure the identified areas.  Three issues cut
across the seven cornerstones:  human performance, safety conscious
work environment, and problem identification and resolution.  As
proposed, NRC's plant assessment process would use performance
indicators, inspection results, other such information as utility
self-assessments, and clearly defined, objective decision thresholds. 
The process is anchored in a number of principles, including that: 
(1) a level of safety performance exists that could warrant decreased
NRC oversight, (2) performance thresholds should be set high enough
to permit NRC to arrest declining performance, (3) NRC must assess
both performance indicators and inspection findings, and (4) NRC will
establish a minimum level of inspections for all plants (regardless
of performance).  Although some performance indicators would be
generic to the industry, others would be plant-specific based, in
part, on the results that utilities derive from their risk
assessments.  However, the quality of risk assessments and number of
staff devoted to maintain them vary considerably among utilities. 

NRC expects to use a phased approach to implement the revised plant
assessment process.  Beginning in June 1999, NRC expects to pilot
test the use of risk-informed performance indicators at eight plants,
by January 2000 to fully implement the process, and by June 2001 to
complete an evaluation and propose any adjustments or modifications
needed.  Between January 1999 and January 2001, NRC expects to work
with the industry and other stakeholders to develop a comprehensive
set of performance indicators to more directly assess plant
performance relative to the cornerstones.  For those cornerstones or
aspects of cornerstones where it is impractical or impossible to
develop performance indicators, NRC would use its inspections and
utilities' self assessments to reach a conclusion about plant
performance.  NRC's proposed process illustrates an effort by the
current Chairman and other Commissioners to improve NRC's ability to
help ensure safe operations of the nation's nuclear plants as well as
address industry concerns regarding excessive regulation.  NRC's
ensuring consistent implementation of the process ultimately
established would further illustrate the Commissioners' commitment. 


--------------------
\5 Nuclear Regulation:  Preventing Problem Plants Requires More
Effective NRC Action (GAO/RCED-97-145, May 30, 1997) and Nuclear
Regulatory Commission:  Preventing Problem Plants Requires More
Effective Action by NRC (GAO/T-RCED-98-252, July 30, 1998). 

\6 The seven cornerstones are:  initiating events, mitigation
systems, barrier integrity, emergency preparedness, and public,
occupational, and physical protection. 


      NRC'S ENFORCEMENT PROCESS
      CONTINUES TO BE IN A STATE
      OF FLUX
-------------------------------------------------------- Chapter 0:3.2

NRC has revised its enforcement policy more than 30 times since its
implementation in 1980.  Although NRC has attempted to make the
policy more equitable, the industry has had longstanding problems
with it.  Specifically, NEI believes that the policy is not
safety-related, timely, or objective.  Among the more contentious
issues are NRC's practice of aggregating lesser violations into an
enforcement action that results in civil penalties and its use of the
term "regulatory significance."

To facilitate a discussion about the enforcement program, including
the use of regulatory significance and the practice of aggregating
lesser violations, at NRC's request, NEI and the Union of Concerned
Scientists reviewed 56 enforcement actions taken by the agency during
fiscal year 1998.  For example, NEI reviewed the escalated
enforcement actions based on specific criteria, such as whether the
violation that resulted in an enforcement action could cause an
offsite release of radiation, onsite or offsite radiation exposures,
or core damage.  From an overall perspective, the Union concluded
that NRC's actions are neither consistent nor repeatable and that the
enforcement actions did not always reflect the severity of the
offense.  According to NRC staff, they plan to meet with various
stakeholders in January and February 1999 to discuss issues related
to the enforcement program. 

Another issue is the use of the term "regulatory significance" by NRC
inspectors.  NRC, according to NEI and the Union of Concerned
Scientists, uses "regulatory significance" when inspectors cannot
define the safety significance of violations.  However, when the use
of regulatory significance results in financial penalties, neither
NRC nor the utility can explain to the public the reasons for the
violation.  As a result, the public cannot determine whether the
violation presented a safety concern. 

NEI has proposed a revised enforcement process.  NRC is reviewing the
proposal as well as other changes to the enforcement process to
ensure consistency with the draft plant safety assessment process and
other changes being proposed as NRC moves to risk-informed
regulation.  NRC's memorandum of tasks shows that the staff expect to
provide recommendations to the Commission in March 1999 that address
the use of the term regulatory significance and in May 1999 on
considering risk in the enforcement process. 


   MAJOR MANAGEMENT CHALLENGES AND
   PROGRAM RISKS
---------------------------------------------------------- Chapter 0:4

In January 1999, we provided the Congress with our views on the major
management challenges that NRC faces.  We believe that the management
challenges we identified have limited NRC's effectiveness.  In
summary, we reported that: 

  -- NRC lacks assurance that its current regulatory approach ensures
     safety.  NRC assumes that plants are safe if they operate as
     designed and follow NRC's regulations.  However, NRC's
     regulations and other guidance do not define, for either a
     licensee or the public, the conditions necessary for a plant's
     safety; therefore, determining a plant's safety is subjective. 

  -- NRC's oversight has been inadequate and slow.  Although NRC's
     indicators show that conditions throughout the nuclear energy
     industry have generally improved, they also show that some
     nuclear plants are chronically poor performers.  At three
     nuclear plants with long-standing safety problems that we
     reviewed, NRC did not take aggressive action to ensure that the
     utilities corrected the problems.  As a result of NRC's
     inaction, the conditions at the plants worsened, reducing safety
     margins. 

  -- NRC's culture and organizational structure have made the process
     of addressing concerns with the agency's regulatory approach
     slow and ineffective.  Since 1979, various reviews have
     concluded that NRC's organizational structure, inadequate
     management control, and inability to oversee itself have impeded
     its effectiveness. 

Some of the initiatives that NRC has underway have the potential to
address the first two management challenges.  However, the need to
ensure that NRC's regulatory programs work as effectively as possible
is extremely important, particularly in light of major changes taking
place in the electric utility industry and in NRC.  Yet changing
NRC's culture will not be easy.  In a June 1998 report, the Office of
the Inspector General noted that NRC's staff had a strong commitment
to protecting public health and safety.  However, the staff expressed
high levels of uncertainty and confusion about the new directions in
regulatory practices and challenges facing the agency.  The employees
said that, in their view, they spend too much time on paperwork that
may not contribute to NRC's safety mission.  The Inspector General
concluded that without significant and meaningful improvement in
management's leadership, employees' involvement, and communication,
NRC's current climate could eventually erode the employees' outlook
and commitment to doing their job.  This climate could also erode
NRC's progress in moving forward with a risk-informed regulatory
approach.  According to staff, NRC recognizes the need to effectively
communicate with its staff and other stakeholders and is developing
plans to do so. 


-------------------------------------------------------- Chapter 0:4.1

Mr.  Chairman and Members of the Subcommittee, this concludes our
statement.  We would be pleased to respond to any questions you may
have. 


*** End of document. ***