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33–280PDF 2007

S. HRG. 109–896

OVERSIGHT ON THE NUCLEAR REGULATORY

COMMISSION

HEARING

BEFORE THE

SUBCOMMITTEE ON CLEAN AIR, CLIMATE CHANGE, 

AND NUCLEAR SAFETY

AND THE

COMMITTEE ON ENVIRONMENT AND 

PUBLIC WORKS 

UNITED STATES SENATE

ONE HUNDRED NINTH CONGRESS

FIRST SESSION

MAY 26, 2005

Printed for the use of the Committee on Environment and Public Works

(

Available via the World Wide Web: http://www.access.gpo.gov/congress.senate 
(II)

COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS

ONE HUNDRED NINTH CONGRESS

FIRST SESSION

JAMES M. INHOFE, Oklahoma, Chairman 

JOHN W. WARNER, Virginia 

CHRISTOPHER S. BOND, Missouri 

GEORGE V. VOINOVICH, Ohio 

LINCOLN CHAFEE, Rhode Island 

LISA MURKOWSKI, Alaska 

JOHN THUNE, South Dakota 

JIM DeMINT, South Carolina 

JOHNNY ISAKSON, Georgia 

DAVID VITTER, Louisiana 

JAMES M. JEFFORDS, Vermont 

MAX BAUCUS, Montana 

JOSEPH I. LIEBERMAN, Connecticut 

BARBARA BOXER, California 

THOMAS R. CARPER, Delaware 

HILLARY RODHAM CLINTON, New York 

FRANK R. LAUTENBERG, New Jersey 

BARACK OBAMA, Illinois 

ANDREW WHEELER, Majority Staff Director 

KEN CONNOLLY, Minority Staff Director

SUBCOMMITTEE ON CLEAN AIR, CLIMATE CHANGE, AND NUCLEAR SAFETY

GEORGE V. VOINOVICH, Ohio, Chairman 

CHRISTOPHER S. BOND 

JIM DeMINT 

JOHNNY ISAKSON 

DAVID VITTER 

THOMAS CARPER 

JOSEPH I. LIEBERMAN 

FRANK R. LAUTENBERG 

BARACK OBAMA 

JAMES M. INHOFE, ex officio 

JAMES M. JEFFORDS, ex officio 
(III)

C O N T E N T S 

Page 

MAY 26, 2005

OPENING STATEMENTS 

Carper, Hon. Thomas R., U.S. Senator from the State of Delaware ................... 3 

Inhofe, Hon. James M., U.S. Senator from the State of Oklahoma .................... 10 

Jeffords, Hon. James M., U.S. Senator from the State of Vermont .................... 4

Lautenberg, Hon. Frank, U.S. Senator from the State of New Jersey ............... 6 

Obama, Hon. Barack, U.S. Senator from the State of Illinois, prepared

statement .............................................................................................................. 40

Voinovich, Hon. George V., U.S. Senator from the State of Ohio ........................ 1

WITNESSES 

Diaz, Nils J., Chairman, U.S. Nuclear Regulatory Commission .......................... 8

Prepared statement .......................................................................................... 40

Responses to additional questions from: 

Senator Inhofe ........................................................................................... 49

Senator Jeffords ......................................................................................... 56

Senator Lautenberg ................................................................................... 58

Senator Voinovich ..................................................................................... 60

Kray, Marilyn C., president, NuStart Energy Development ................................ 30

Prepared statement .......................................................................................... 75

Responses to additional questions from: 

Senator Inhofe ........................................................................................... 78

Senator Voinovich ..................................................................................... 79

Lyman, Dr. Edwin, senior scientist, Global Security Program, Union of

Concerned Scientists ............................................................................................ 31

Prepared statement .......................................................................................... 80

Responses to additional questions from: 

Senator Jeffords ......................................................................................... 87

Senator Lautenberg ................................................................................... 89

Wells, Jim, Director, Natural Resources and the Environment, Government 

Accountability Office ............................................................................................ 28

Prepared statement .......................................................................................... 63

Response to additional question from Senator Lautenberg .......................... 74

ADDITIONAL MATERIAL 

Reports: 

Chernobyl on the Hudson? The Health and Economic Impacts of a Terrorist Attack at the Indian Point Nuclear Plant by Dr. Edwin S. 

Lyman ............................................................................................................ 91

Nuclear Security: Federal and State Action Needed To Improve Security 

of Sealed Radioactive Sources (GAO–03–804, Aug. 2003) ......................... 145

Nuclear Regulatory Commission: Oversight of Security at Commercial 

Nuclear Power Plants Needs To Be Strengthened (GAO–03–752, Sept. 

2003) ............................................................................................................... 269

Nuclear Regulation: NRC Needs More Effective Analysis To Ensure Accumulation of Funds To Decommission Nuclear Power Plants (GAO–

04–32) ............................................................................................................. 308

Nuclear Regulation: NRC’s Liability Insurance Requirements for Nuclear 

Power Plants Owned by Limited Liability Companies (GAO–04–654, 

May 2004) ...................................................................................................... 365
Page

IV

—Continued

Nuclear Regulation: NRC Needs To More Aggressively and Comprehensively Resolve Issues Related to the Davis-Besse Nuclear Power Plant’s 

Shutdown (GAO–04–415) ............................................................................. 390

Nuclear Regulatory Commission: NRC Needs To Do More To Ensure 

That Power Plants Are Effectively Controlling Spent Nuclear Fuel 

(GAO–05–339, April 2005) ........................................................................... 526

Statements: 

Fertel, Marvin S., senior vice president and Chief Nuclear Officer, Nuclear Energy Institute ................................................................................... 568

Wells, Jim, Director, Natural Resources and the Environment, Government Accountability Office: Testimony before the Subcommittee on National Security, Emerging Threats, and International Relations, Committee on Government Reform, House of Representatives ........................ 579 

Summary of: 

The Nuclear Fees Reauthorization Act of 2005 (S. 858) ............................... 597

The Nuclear Safety and Security Act of 2005 (S. 864) .................................. 598

The Price Anderson Admendments Act 2005 (S. 865) as introduced by 

Senators Voinovich and Inhofe .................................................................... 599
(1)

HEARING TO CONDUCT OVERSIGHT ON THE 

NUCLEAR REGULATORY COMMISSION 

THURSDAY, MAY 26, 2005

U.S. SENATE, 

COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS, 

SUBCOMMITTEE ON CLEAN AIR, CLIMATE CHANGE

AND NUCLEAR SAFETY, 

Washington, DC. 

The subcommittee met, pursuant to notice, at 9:00 a.m. in room 

406, Senate Dirksen Office Building, Hon. George V. Voinovich 

(chairman of the subcommittee) presiding. 

Present: Senators Voinovich, Inhofe, Isakson, Jeffords, Carper, 

Lautenberg, and Obama. 

Senator VOINOVICH. The hearing will come to order. 

Good morning, and thank you all for coming. I will give a short 

statement, and would encourage other members to do the same, as 

everyone’s statements will be inserted into the record. 

OPENING STATEMENT OF HON. GEORGE V. VOINOVICH, U.S. 

SENATOR FROM THE STATE OF OHIO 

Today’s hearing continues this committee’s strong oversight of 

the Nuclear Regulatory Commission. This is the seventh in a series 

of oversight hearings that began in 1998, when Senator Inhofe was 

chairman of this subcommittee. This committee is very busy on nuclear issues this year. We held a nominations hearing in April and 

a closed nuclear security session last week. 

I welcome back the commissioners. I understand that Commissioner Merrifield cannot be here today due to a family commitment, 

and I send my thoughts and prayers to Mr. Lyons and his family, 

who also could not be here today because of a family medical situation. 

At last week’s hearing we addressed nuclear security, as well as 

many other issues, and I wish that many of my colleagues had 

been there, because we went beyond the security issues and got 

into some of the things that we are probably going to get into 

today. So you may get some questions on some of the things we already discussed, but it is important that the committee hear from 

you on those issues. 

Although the Commission has made significant progress in the 

area of security, they need help from us in Congress. You need 

help. Chairman Inhofe and I have introduced S. 864, the Nuclear 

Safety and Security Act of 2005, which includes provisions that you 

have requested for many years. Since last week’s hearing focused 
2

solely on security, I encourage members and the witnesses to focus 

on non-security issues as much as possible today. 

Chairman Inhofe and I have also introduced the Nuclear Fees 

Reauthorization of 2005 and the Price-Anderson Amendments of 

2005, S. 865. 

I want to thank you, Senator Carper, for co-sponsoring these 2 

pieces of legislation. 

S. 858 reauthorizes the current fee requirement that expires on 

September 20, 2005. That requirement says that the industry itself 

has to pay 90 percent of the fees, and if we don’t pass this legislation, it slips back to their paying 35 percent of the costs, to my understanding. It also contains several NRC reform and human capital provisions which are very, very important for the Commission 

to get the job done that we are asking you to do. You can’t do it 

unless you have the staff and the team to get the job done, and if 

we don’t get this taken care of, you are not going to be in a position 

to do that. 

The third bill, 865, reauthorizes the Price-Anderson Act—we 

have been doing that now for, what, 3 or 4 years—which for 45 

years has provided a proven framework of liability protection for 

the public should a nuclear accident occur. 

Several staff briefings have occurred on the issues addressed by 

these bills and bipartisan negotiations are occurring on a daily 

basis. I encourage members to let us know of any issues or concerns with these 3 pieces of legislation. As I understand it, the 

Chairman intends to mark them up on June the 8th. 

I thank everyone for attending this very important oversight 

hearing. The NRC and the industry must keep safety at the center 

of all these things that they do, and we are going to continue to 

have these oversight hearings just to kind of touch base with you 

periodically. 

[The prepared statement of Senator Voinovich follows:]

STATEMENT OF HON. GEORGE V. VOINOVICH, U.S. SENATOR FROM

THE STATE OF OHIO

The hearing will come to order. Good morning and thank you all for coming. 

Today’s hearing continues this Committee’s strong oversight of the Nuclear Regulatory Commission. This is the seventh in a series of oversight hearings that began 

in 1998 when Senator Inhofe was chairman of this Subcommittee. I thank the 

Chairman for his leadership on this issue as strong oversight of the NRC is critical 

to the welfare of the American public. 

I am a strong advocate of nuclear power because it plays a critical role in meeting 

our nation’s energy, economic, and environmental needs. Ensuring that our nuclear 

power plants are safe and secure is absolutely essential if we plan to continue and 

hopefully increase our nation’s use of this valuable energy source. 

This Committee is very busy on nuclear issues this year. In April, we held a nominations hearing where the Commission’s two newest members testified. I welcome 

you—Mr. Jaczko—back this morning and send my thoughts and prayers to Mr. 

Lyons and his family who could not be here due to a family medical issue. 

I also welcome back Chairman Diaz and Commissioner McGaffigan who testified 

last week at our closed nuclear security hearing. I found that hearing to be extremely informative because it allowed us to have a frank discussion about nuclear 

security. 

I am pleased with the Commission’s work on security enhancements, strengthened control access, and development of a supplemental design basis threat. These 

actions have increased the number of guards at power plants by 60 percent—from 

around 5,000 to around 8,000 guards—and required the nuclear industry to make 

physical improvements at every plant to a tune of $1.2 billion industry-wide. 
3

We here in Congress now need to do our part. Chairman Inhofe and I have introduced S. 864, the Nuclear Safety and Security Act of 2005, which includes provisions that the NRC has requested for many years on weapons, fingerprinting, and 

Federal crimes. Since last week’s hearing focused solely on security, I encourage 

members and the witnesses to focus on non-security issues today. 

Chairman Inhofe and I have also introduced the Nuclear Fees Reauthorization 

Act of 2005 (S. 858) and the Price-Anderson Amendments Act of 2005 (S. 865). I 

thank Senator Carper for cosponsoring these two pieces of legislation. 

We need to address the current fee requirement, which must be reauthorized by 

September 20, 2005. If this fee requirement expires, the Commission will only be 

allowed to collect 33 percent of their fees from licensees with the remaining amount 

coming from the Treasury. S. 858 allows the Commission to continue to recover 90 

percent of its costs through licensee fees. 

This bill also contains several NRC reform and human capital provisions—many 

of which have passed this Committee and the Senate in the past. As the Commission’s workload increases over the next few years due to the next generation of nuclear power plants, re-licensing, increased security oversight, and Yucca Mountain 

activities, I am increasingly concerned about the availability of qualified personnel. 

Where are we going to find the necessary reactor engineers, shielding engineers, reactor and environmental health physicists, licensing specialists, etc? We learned at 

last week’s hearing that the Commission will be at least 300 personnel short in critical areas by 2007 and this does not even address the yearly attrition of 200 personnel. 

S. 858 contains provisions to attract young technical college students via internships, co-op programs, and fellowships by providing incentives. It also allows the 

Commission to hire retirees as contractors, exempting them from the annuity reductions that would otherwise apply. 

The third bill would reauthorize the Price-Anderson Act, which for 45 years has 

provided a framework of liability protection for the public should a nuclear accident 

occur. Given this proven record, I encourage my colleagues to renew the law as outlined in S. 865. 

Several staff briefings have occurred on the issues addressed by these bills and 

bipartisan negotiations are occurring on a daily basis. I encourage members to let 

us know of any issues or concerns with these three pieces of legislation, as I understand that the Chairman intends to mark them up on June 8. 

Finally, I thank the Commission for their focused scrutiny of the Davis-Besse nuclear plant over the past 3 years. Last week, the NRC terminated its special Oversight Panel which is a sign of the significant progress that the plant has made. I 

commend the NRC, the operator, and its employees for their hard work. However, 

I continue to expect that the lessons-leaned during their special reviews will be fully 

implemented not only at Davis-Besse but throughout the industry. With this in 

mind, I am concerned about recent developments at the Perry nuclear plant and 

look forward to discussing them with you today. 

I thank everyone for attending this very important oversight hearing. The NRC 

and the industry must keep safety as the center of all that they do, and I will continue to conduct strong oversight as Chairman of this Subcommittee to make sure 

that remains the case. I look forward to working with my colleagues to pass needed 

legislation early next month. 

Thank you.

Senator Carper. 

OPENING STATEMENT OF HON. THOMAS R. CARPER, U.S. 

SENATOR FROM THE STATE OF DELAWARE 

Senator CARPER. Thank you, Mr. Chairman. Thanks for holding 

the hearing. 

To our witnesses, thank you for joining us and for your service. 

We gather here today when our dependence on foreign oil continues to grow; it approaches some 60 percent of the oil that we 

consume comes from other sources. We gather at a time when our 

Nation’s trade deficit now exceeds, I think, about $700 billion per 

year. About a quarter of that is related to our dependence on foreign oil. 

We gather here at a time when emissions of sulfur dioxide, nitrogen oxide, mercury are fouling our air and harming our health. 
4

And we gather here at a time when enormous amounts of carbon 

dioxide are being emitted into the air and, I think, threaten the 

warming of our planet, with dire consequences, maybe not for us, 

but for our children and for our grandchildren. 

There is no silver bullet to remedy all of those ills, but one of the 

important arrows in our quiver, if I can mix metaphors, is safe, dependable nuclear energy to generate the electricity that we consume in this country. 

The one sure way to reduce the likelihood that nuclear energy 

can be a growing part of the strategy to meet our electricity needs 

is for a lapse in safety to lead to an incident at one of our nuclear 

power plants. Anything approaching a Three Mile Island would set 

us back another 10, 20, 30 years. One of the best ways to make 

sure that that doesn’t happen is for all of us to be vigilant; for 

those folks who are running the nuclear power plants, for their 

management, obviously for this Commission, and for those of us 

who are in power to oversee the work that you do. 

Chairman Diaz and I, and perhaps other members of the Commission, were present last week at an event hosted by the Nuclear 

Energy Institute, and in my comments, Mr. Chairman and colleagues, I spoke of zero tolerance. I spoke of the absolute commitment to doing everything well. If we take that spirit, go forward 

with that spirit, we will be better, safer as a country and I think 

we will be more secure in more ways than one. 

The last thing I would say, Mr. Chairman, thank you for introducing the legislation that you have. I am pleased to join you as 

a co-sponsor in two of the three bills, and hope to join you as a cosponsor in the third as we work through the remaining differences 

that we have there. I, frankly, very much appreciate the approach 

that is being taken to resolve the remaining differences with the 

third piece of legislation. 

That having been said, I am pleased to be here. We look forward 

to hearing from our witnesses. Thank you. 

Senator VOINOVICH. Thank you, Senator Carper. 

Senator Jeffords. 

OPENING STATEMENT OF HON. JAMES M. JEFFORDS, U.S. 

SENATOR FROM THE STATE OF VERMONT 

Senator JEFFORDS. Thank you, Mr. Chairman. 

Today’s hearing continues our ongoing oversight of the Nuclear 

Regulatory Commission. I believe this is the seventh oversight 

hearing the subcommittee has held in the last 8 years. Chairman 

Voinovich, you and ranking member Carper deserve credit for continuing the commitment to hold these hearings regularly in order 

to review the NRC’s activities. 

Today, I want to discuss the Commission’s follow-up on an incident involving the missing pieces of fuel rods at the Vermont Yankee Nuclear Power Plant in my State. The Government Accountability Office is here today to discuss the results of the study that 

was completed on this issue at my request. I am pleased with their 

work and with their close attention to the concerns of Vermont and 

Massachusetts delegation in drafting it. 

I appreciate too that Chairman Diaz has always been willing to 

discuss my concerns with operational and safety issues at the 
5

Vermont Yankee with me directly. I also want to say to the chairman and all the commissioners present that I am pleased you are 

all here today. Good to see you all. 

The mission of the NRC is one of the most vital missions carried 

out by the Federal Government. Regulating the Nation’s civilian 

use of nuclear materials, ensuring adequate protection of public 

health and safety when these materials are used or disposed of, 

and protecting the environment are all very critical. I want to 

make myself perfectly clear—and I know that the Chairman and 

the Ranking Member of the subcommittee share my view—the top 

priority for the NRC is safety. There is no greater issue than safety. I want my Vermont constituents and people across the country 

to be safe, and it is the NRC’s job to guarantee it. 

As you are all aware, last year there were some serious problems 

at Vermont Yankee, which I discussed at length in the last oversight hearing. Vermont Yankee, operated by Entergy, discovered 

that two pieces of radioactive fuel rods were missing from the 

plant’s storage facility. Either was capable of quickly giving a lethal dose of radiation to an unshielded handler. 

Though the materials were found to have never left the plant, 

and were in the spent fuel pool, the search to locate these materials raises serious questions about whether NRC is conducting the 

appropriate oversight of nuclear materials at individual nuclear 

plants and whether the Federal Government should change its nuclear materials management policies. 

The loss of the fuel rods at Vermont Yankee was the second incident of missing fuel rods at a Northeastern nuclear plant in the 

last 5 years. When the Millstone incident occurred, the NRC said 

that the fuel rods had never before gone missing in the history of 

the commercial nuclear power in the United States. While I know 

that the materials at Vermont Yankee were found to be missing 

due in part to the new inspection procedures that the NRC institutes after Millstone, the sad fact is that the fuel again went missing. We must improve our nuclear materials accounting system. We 

must do it now, and I hope that the GAO’s work is the first step 

in drafting better materials accounting legislation. 

If we are going to be serious about protecting our environment 

while providing safe, reliable, and affordable electricity for all 

Americans, we need to increase our use of renewables, improve 

how we burn fossil fuels, and promote energy efficiency and make 

certain that the nuclear plants operate well and safely. 

Again, I want to thank Chairman Diaz, the rest of the commissioners, and the other witnesses who are coming here to discuss 

these issues today. I look forward to hearing their testimony, Mr. 

Chairman. Thank you. 

[The prepared statement of Senator Jeffords follows:]

STATEMENT OF SENATOR HON. JAMES M. JEFFORDS, U.S. SENATOR FROM

THE STATE OF VERMONT

Thank you Mr. Chairman, today’s hearing continues our ongoing oversight of the 

Nuclear Regulatory Commission. I believe this is the seventh oversight hearing the 

Subcommittee has held in the last 8 years. Chairman Voinovich, you and Ranking 

Member Carper deserve credit for continuing the commitment to hold these hearings regularly in order to review the NRC’s activities. 

Today, I want to discuss the Commission’s follow up to an incident involving missing pieces of fuel rods at the Vermont Yankee nuclear power plant in my state. The 
6

Government Accountability Office is here today to discuss the results of a study they 

completed on this issue at my request. I am pleased with their work, and with their 

close attention to the concerns of the Vermont and Massachusetts delegation in 

drafting it. I appreciate too that Chairman Diaz has always been willing to discuss 

my concerns with operational and safety issues at Vermont Yankee with me directly. I also want to say to the Chairman and all the Commissioners present that 

I am pleased you are here today. 

The mission of the NRC is one of the most vital missions carried out by the Federal Government. Regulating the nation’s civilian use of nuclear materials, ensuring 

adequate protection of public health and safety when these materials are used or 

disposed of, and protecting the environment are all critical. I want to make myself 

perfectly clear, and I know the Chairman and Ranking Member of this Subcommittee share my view: the top priority for the NRC is safety. There is no greater 

issue than safety. I want my Vermont constituents and people across the country 

to be safe and it is the NRC’s job to guarantee it. 

As you are well aware, last year there were some serious problems at Vermont 

Yankee which I discussed at length at our last oversight hearing. Vermont Yankee, 

operated by Entergy, discovered that two pieces of radioactive fuel rods were missing from the plant’s storage facilities. Either was capable of quickly giving a lethal 

dose of radiation to an unshielded handler. Though these materials were found to 

have never left the plant and were in the spent fuel pool, the search to locate these 

materials raises serious questions about whether the NRC is conducting appropriate 

oversight of nuclear materials at individual nuclear plants and whether the Federal 

Government should change its nuclear materials management policies. 

The loss of fuel rods at Vermont Yankee was the second incident of missing nuclear fuel at a Northeastern nuclear plant in 5 years. When the Millstone incident 

occurred, the NRC said that fuel rods had never before gone missing in the history 

of commercial nuclear power in the United States. While I know that the materials 

at Vermont Yankee were found to be missing due in part to the new inspection procedures the NRC instituted after Millstone, the sad fact is that fuel again went 

missing. We must improve our nuclear materials accounting system, we must do it 

now, and I hope the GAO’s work is the first step in crafting better materials accounting legislation. 

If we are going to be serious about protecting our environment while providing 

safe, reliable, and affordable electricity for all Americans, we need to increase our 

use of renewables, improve how we burn fossil fuels, promote energy efficiency, and 

make certain that nuclear plants operate well and safely. 

Again, I thank Chairman Diaz, the rest of the Commissioners, and the other witnesses for coming here to discuss these issues. I look forward to their testimony and 

to working with my colleagues.

Senator VOINOVICH. Thank you, Senator Jeffords. 

Senator Lautenberg. 

OPENING STATEMENT OF HON. FRANK LAUTENBERG, U.S. 

SENATOR FROM THE STATE OF NEW JERSEY 

Senator LAUTENBERG. Mr. Chairman, thanks for convening this 

hearing. 

This is being forced on us by the reality of life, whether or not 

we are going to be blackmailed by those who produce fossil fuels 

that we import, whether it is the assault on the environment, or 

whether or not we can realistically be assured that safety with nuclear plants is obtainable. 

In my home State of New Jersey there is much concern about our 

three nuclear plants. We get more than half of our electric power 

from them, so the mission of the Nuclear Regulatory Commission 

is extremely important to me. It is critical in the economy of our 

region and our country, and I believe that it can make increasing 

contribution to our Nation’s growing energy needs. 

By the way, for those who might hear Frank Lautenberg talking 

now and say you talk on both sides of your mouth, Senator, because there were times in the past when I thought that nuclear energy was a bad idea; we had abandoned two major plants at bil-
7

lions and billions of dollars worth of cost, because of escape route 

limitations. We change as time goes by and recognize that nuclear 

energy is required as one of the alternative sources for energy production, but we also have to be assured that we can do it with safety. Safety doesn’t begin with the production, it begins also with the 

conclusion of a plant’s ability or the fuel that it has to be disposed 

of and stored safely. 

So, Mr. Chairman, I am pleased that you are doing this. 

I mentioned to our commissioners, I thank you for the work you 

do. It is public service, in my view, at the very highest level, and 

it by no means is an easy assignment. We recognize that when we 

have placed new commissioners on the team, and the difficulty it 

had getting assurances, etc. You do good work and we congratulate 

you for it. We only want you to do more good work. The Oyster 

Creek Nuclear Plant in New Jersey is the oldest operating facility 

in the country and I hear regularly from my constituents who live 

near the facility about their safety concerns. There is a question 

about whether Oyster Creek ought to be licensed, so it is absolutely 

essential that we turn to the NRC for factual, unbiased data. There 

have also been concerns about our other plants, Salem and Hope 

Creek Nuclear Power Plants, and we all depend, again, on the NRC 

to enforce a culture of safety at every nuclear facility. 

Lastly, we must come up with a safe, feasible solution to the 

problem of nuclear waste. Not an easy problem to solve, obviously. 

Dry cast storage may be the best we have at this time, but we have 

to continue to look pass what we have at this time and look for new 

ways to do it. 

Mr. Chairman, I am sorry that I can’t stay for this hearing. I 

consider it important, but, unfortunately, I have 3 important hearings at the same time. So I wish our witnesses well, and I know 

that they will be energetically reviewed by my colleague from Delaware, as well as Vermont, and the Chairman. Thank you. 

[The prepared statement of Senator Lautenberg follows:]

STATEMENT OF HON. FRANK LAUTENBERG, U.S. SENATOR FROM

THE STATE OF NEW JERSEY

Mr. Chairman, thank you for holding this hearing and giving us the opportunity 

to learn about the energy project permitting process. I look forward to hearing from 

all of our witnesses. Former President Richard Nixon was a man who made a lot 

of political enemies. In fact, I was on his official ‘enemies list’ during the time when 

I was CEO of a major company. 

As we look back today, I think we all acknowledge that despite his many enemies, 

Richard Nixon was in many ways a friend of the environment. It was during his 

presidency that our nation made a commitment to cleaning up our air and water, 

with the landmark Clean Air Act and Clean Water Act. 

It was during his Republican Administration that we created the Environmental 

Protection Agency. And it was President Nixon who signed the National Environmental Policy Act (NEPA) which required Environmental Impact Statements for 

major projects like roads and drilling for natural gas. Since then, five presidents of 

both parties have continued the legacy of protecting our environment, and honoring 

the right of citizens and states to have a voice in the process. 

Unfortunately, the current Administration has chosen not to follow that path. 

This Administration seems especially sympathetic to complaints about regulatory 

processes that were put in place to protect our environment and health. 

While, I am always willing to look for ways to improve efficiency, effectiveness 

and fairness in our rules and laws, I see no reason to backtrack from our commitment to ensure that citizens have a strong voice in matters that affect our environment. 
8

NEPA—and the role it gives to citizens—is one of the best manifestations of democracy in our country. We must not erode NEPA’s protections or silence the voice 

of Americans, especially in projects that affect their own communities. 

Yes, environmental reviews cost money—and energy companies can afford it. To 

take just one example, ExxonMobil’s profits increased by 44 percent in the last 

quarter! 

We can—and we should—look for ways to improve and perhaps streamline our 

processes for granting permits for vital projects. But we must never allow the convenience of corporations to trample the rights and the health of the American people.

Senator VOINOVICH. Thank you, Senator Lautenberg. You have 

been very diligent about your attendance at our hearings, and we 

appreciate it. 

I am going to ask permission to have my entire opening statement inserted in the record. Without objection, it will be put in the 

record. 

Chairman Diaz, Commissioner McGaffigan, and Commissioner 

Jaczko, it is nice to see you again. I greatly appreciate your coming 

here today for our annual NRC oversight hearing, and I really appreciate your candor and straightforwardness at the closed session 

that we had. 

Due to time constraints this morning, I am going to ask only 

Chairman Diaz to give an opening statement. Of course, if someone 

wants to chime in after Chairman Diaz about something, I would 

welcome that. But we will ask you for an opening statement, and 

if you could keep it to 5 minutes, we would be most grateful. As 

you know, the tradition is that your entire statement will be put 

in the record. 

Chairman Diaz. 

STATEMENT OF NILS J. DIAZ, CHAIRMAN, U.S. NUCLEAR 

REGULATORY COMMISSION 

Mr. DIAZ. Thank you, Mr. Chairman and members of the subcommittee. It is a pleasure to appear before you today with my fellow commissioners to discuss the U.S. Nuclear Regulatory Commission programs. 

The NRC continues to take an integrated approach to safety, security, and emergency preparedness in carrying out the mission 

chartered by the Congress. I will highlight our key ongoing oversight and licensing activities today. 

The Reactor Oversight Process is being implemented with increasing effectiveness. Nuclear power plants continue to operate in 

a safe and secure manner. We have resolved most of the issues of 

manpower and communications related to oversight that the committee was concerned with last year. The Davis-Besse nuclear 

power plant has received attention and resources commensurate to 

the problems found and to the resolution. The plant has been operating safely and the NRC staff recently determined that plant performance warranted termination of the special panel that was created specifically for Davis–Besse oversight. 

Reactor licensing program, coupled with a strong oversight program, ensures protection of public health and safety throughout a 

plant’s operating life. I know that the NRC has, to date, renewed 

a total of 32 reactor licenses, has 16 under review, and has approved 105 power upgrades. 
9

The industry has expressed interest in new construction of nuclear power plants. The NRC is prepared to discharge this responsibility if applications for new power plants are filed. We anticipate 

that applicants will utilize the licensing processes which were developed to provide a more stable, timely, and predictable licensing 

process. This includes the sign certification and early site permits 

which can be referenced in an application for a combined construction permit and operating license. 

The Commission continues to conduct assessments and to impose 

new requirements, when appropriate, to enhance security of nuclear facilities and materials. The NRC is currently developing a 

proposed rule and supporting guidance to codify supplemental requirements, including the design basis threat. We are continuing to 

perform detailed nuclear power plant and spent fuel pool site-specific studies to further enhance our understanding of appropriate 

mitigative culpabilities and to ensure effective implementation of 

these culpabilities, including consideration of those recommended 

by the National Academy of Sciences. Thus far, the results of these 

assessments have validated the actions NRC has taken to enhance 

security. 

The NRC, in partnership with 33 agreement States, conducts 

comprehensive programs to ensure the safe use of radiological materials in a variety of medical, industrial, and research settings. 

With regards to material security, the NRC has thoroughly re-evaluated its safeguards and security programs, and we are confident 

that appropriate measures are being implemented. 

The NRC continues to ensure that the agency is prepared to review a potential application by DOE to construct a deep geologic 

high-level waste repository at Yucca Mountain, NV, and NRC 

stands ready to amend the regulations consistent with any forthcoming changes to the EPA standards. Also, storage and transport 

cask designs continue to be reviewed and certified. 

The NRC carries out an active international program of corporation and assistance involving 38 countries with which it exchanges 

nuclear safety information. We just approved an export and import 

rule which will enable the United States to meet its goal with the 

G–8 to implement the IAEA Code of Conduct provisions by December of this year. 

The NRC is very dependent on a highly skilled and experienced 

work force for the effective execution of its activities. NRC has developed an agency-wide set of strategic capital management strategies to mitigate and close gaps between available staffing resources 

and anticipated staffing needs. We greatly appreciate your support 

for NRC human capital and all the legislative proposals. 

Mr. Chairman, we can assure you that the Commission continues 

to be committed to fulfilling its statutory role. We appreciate the 

support we have received from the committee and the subcommittee as a whole, and we will need your support in the days 

to come. 

I would be pleased to respond to your questions. 

Senator VOINOVICH. Thank you, Chairman Diaz. 

Mr. Jaczko or Mr. McGaffigan, anything to add? 

Thank you. 
10

We are very fortunate that the chairman of this committee, the 

Senator who started this aggressive oversight, is here with us this 

morning. Senator Inhofe, we are interested in hearing from you in 

terms of a statement or questions or whatever it is that you would 

like to do this morning. 

Senator INHOFE. First of all, I appreciate that, and I would like 

to go ahead and have a very brief opening statement. I have some 

very strong feelings about this and, of course, as the Chairman 

knows and as you know, Senator Voinovich, when I had the chairmanship of this subcommittee, we hadn’t had an oversight hearing 

in 10 years or so, and we have come a long way. So if I could just 

make a couple of comments. 

OPENING STATEMENT OF HON. JAMES M. INHOFE, U.S. 

SENATOR FROM THE STATE OF OKLAHOMA 

Well, I think I already said this. Since I became chairman of the 

subcommittee, we had not had an NRC oversight hearing in over 

a decade. The re-licensing process was estimated to take over 5 

years per unit, if it could be completed at all. The NRC was more 

concerned about paperwork violations than real risk issues, and no 

one was even considering building a new nuclear unit. 

Today, we have regular oversight hearings. The re-licensing process is being completed on time. I commend you for that. The NRC 

has moved to a risk-based climate and people are actually talking 

about new nuclear generation. 

In addition, the industry has responded well to the security climate since 9/11. The nuclear industry operates some of the most 

secure, if not the most secure, sites anywhere in the country. In 

fact, most other industries could learn something from what you 

folks have been doing. 

I want to thank the Commission and the Commission staff for 

the work they have done. They have turned then NRC into both 

an effective and efficient agency. I do appreciate their efforts, and 

we will continue to work with them to ensure that these efforts and 

positive results continue. 

But today, we are kind of facing a crossroads. The next few 

months and years will determine whether or not nuclear energy 

will thrive in the 21st century. Nuclear power has a good story to 

tell: it is safe, low-cost, environmentally friendly, and, at 20 percent, an important part of our fuel mix. In fact, there is no reason 

why we don’t, in the longrun, look at nuclear power, and there 

can’t be a greater influence. 

I have said this so often, Mr. Chairman, we have a crisis a lot 

of people don’t want to admit is there. We have an energy crisis 

in this country, and I look at nuclear energy as a very important 

part of the solution of this problem that we have; fossil fuels, oil, 

gas, coal, nuclear, renewable and all of the above. 

But I think as far as the potential that is out there, nuclear is 

it. I really believe, Mr. Chairman, that we can continue the 

progress that we have made and we can ensure that we are going 

to be able to resolve this crisis that we are faced in the nuclear energy, and its expansion will be a very important part of it. 
11

I would ask unanimous consent to put the remainder of my statement in the record and look forward to the questions and the 

progress that you have made. 

[The prepared statement of Senator Inhofe follows:]

STATEMENT OF HON. JAMES M. INHOFE, U.S. SENATOR FROM

THE STATE OF OKAHOMA

Good morning and welcome to our witnesses today. I first want to thank Chairman Voinovich for holding this oversight hearing and for his continued commitment 

to oversight of the NRC. I believe we are at a cross roads for nuclear energy, but 

before I discuss where we are today, I just want to review briefly where we were 

in 1997 when I became Chairman of this Subcommittee. 

• We hadn’t had an NRC oversight hearing in over a decade, 

• The relicensing process was estimated to take over 5 years per unit, if it could 

be completed at all, 

• The NRC was more concerned about paperwork violations than real risk issues, 

and 

• No one was even considering building new nuclear units. 

Today, we have regular NRC oversight, the relicensing process is being completed 

on time, the NRC has moved to a risk-based climate, and people are actually talking 

about new nuclear generation. 

In addition, the industry has responded well to the security climate since 9/11. 

The nuclear industry operates some of the most secure, if not the most secure, sites 

anywhere in the country. In fact, most other industries could learn something from 

the nuclear facilities. 

I want thank the Commission, and the Commission staff, for the work they have 

done. They have turned the NRC into both an effective and efficient agency. I do 

appreciate their efforts and will continue to work with them to ensure that these 

efforts and positive results continue. 

But today we face a cross roads. The next few months and years will determine 

whether or not nuclear energy will thrive in the 21st century. Nuclear power has 

a good story to tell. It is safe, low-cost, environmentally friendly, and at 20 percent, 

an important part of our fuel mix. In fact, there is no reason why in the long term, 

nuclear power can’t or shouldn’t increase its percent usage. 

But there is work to do to ensure that there is the regulatory climate for new generation, enhanced security, and the long-term resources in order for the NRC to 

carry out its mission of ensuring the safety and security of our commercial nuclear 

fleet. We on this committee have an obligation to continue our oversight in order 

to help keep NRC on track and to understand what they need in order to carry out 

their mission. 

This Congress, Senator Voinovich and I have introduced 3 bills to address many 

of the needs of the NRC: an NRC Fees bill; a nuclear security bill; and a bill to 

reathorized Price-Anderson. It is my hope that we can move all three of these bill 

shortly after Memorial Day recess. 

This year marks the expiration of the NRC Fees law. In 2000, I authored that 

bill that brought fairness to the fees that NRC collects from its licensees, while providing that 90 percent of the NRC budget is paid for by those fees. That bill also 

ensured that NRC could not seek reimbursement for those items, such as their 

international programs, which don’t provide direct benefit to those who pay the fees. 

Absent Congressional action reauthorizing the fees law, the NRC fee base would 

drop to almost 30 percent of its budgets leaving it in a terrible financial position. 

This time Senator Voinovich and I are including in the Fees bill additional language to help with the human capital crisis at the NRC and a number of regulatory 

reforms such as eliminating the NRC antitrust reviews and streamlining the hearing process. Senator Voinovich has been a leader in addressing the human capital 

needs of the Federal Government, and NRC is an agency that headed toward crisis 

if we do not act. Much of the reforms in this bill were included in our 2000 legislation that passed both the Committee and full Senate by Unanimous Consent, but 

unfortunately were not included in what was signed into law. 

We have also introduced a nuclear security bill. I want to thank Senator 

Voinovich for holding a classified hearing last week on this topic. This committee 

has twice reported out security bills, but they have unfortunately fallen victim to 

the fate of the Energy bills that they were attached to. It is my hope that we can 

once again pass a security bill and keep it separate from the energy bill and get 

it signed into law in the near future. Much of what we have included in past security bills has been implemented administratively by the NRC—and I applaud them 
12

for those actions. But it is well past time that we provide them the additional authorities that can only be realized through legislation. The bill that I have introduced reflects those additional needs and I hope that we can get strong bipartisan 

agreement on moving those provisions very soon. NRC has done a tremendous job 

since the attacks of 9/11 and there is very little doubt that, because of the deterrent 

that these robust security measures provide, these facilities are not attractive targets for any terrorist who hopes to carry out a successful attack. 

And finally, Senator Voinovich and I have introduced legislation to reauthorize 

Price-Anderson. Without this bill, and the certainty that it provides, the long-term 

future of nuclear power would be in jeopardy. 

Because of oversight hearings like this one, we can talk about successes. Thank 

you for making sure that NRC is a priority to the Congress and I look forward from 

hearing from our witnesses today.

Senator VOINOVICH. Thank you. 

Mr. Diaz, at last May’s oversight hearing we discussed GAO’s 

Davis-Besse report, which I requested. One of GAO’s criticisms was 

that several of the issues that led NRC to not prevent Davis-Besse 

were identified in past GAO reports, the Commission lessons 

learned task force recommendations, and the inspector general reports. The GAO stated in their report that the NRC was reviewing 

‘‘the effectiveness of its response to past NRC lessons learned task 

force reports.’’ This is of great concern to me because I want to 

make sure that the Davis-Besse recommendations are fully and 

comprehensively implemented. 

In a follow-up question at that hearing, I asked the Commission 

about the status of the report. This is the response: ‘‘The task force 

recommendations to conduct a more detailed effectiveness review of 

the actions taken, response to past learned lessons has been completed. The results of the review are being considered by the NRC 

senior management and the Commission to identify and take corrective actions as necessary.’’

However, it is my understanding that NRC is yet to complete the 

evaluation of this review or take an appropriate corrective action. 

Although I know you have taken them at Davis-Besse, which is 

more than 21⁄2 years since the completion of the task force report 

and more than a year since our last hearing when it was discussed. 

Can you tell me when are we going to have a report on lessons 

learned and, as a result of lessons learned, what things the Commission is doing differently that are going to make a difference? 

Mr. DIAZ. Yes, sir. Reality is that we are very well on our way 

to finishing every one of the recommendations of the task force that 

actually go to fix the problems that contributed to the Davis-Besse 

issue. We have presently 44 of the 49 issues have been completed. 

Four more will be completed in the next 2 or 3 months, and one 

issue, which is a lone, lead issue, which deals with modification 

Senator VOINOVICH. Chairman Diaz, I am appreciative of that. 

The real issue here is we have had past reports and we have had 

a GAO review again, and we have all these lessons that we should 

have learned. As a result of all the past things that have gone on, 

all of the recommendations, we need to know specifically what the 

Commission is doing differently as a result of those reports that 

are applicable not only to Davis-Besse, but throughout the whole 

system, the 102 or 103 facilities that we have. 

Mr. DIAZ. Yes, sir. What we have done is once we realized that 

we have not used all the things we knew during the Davis-Besse 

process, the Commission tasked the staff to come up with a process 
13

that will ensure that the knowledge that existed in the agency, and 

specifically all those issues that have relationship to safety that 

were learned, will continue to be applied. We have knowledge management transfer that is taking place in the agency 

Senator VOINOVICH. OK, all I can say is I want the report. OK? 

This is it. We learned this; here is what we are doing differently; 

here is how it is applied, so that we know that in fact the lessons 

learned are being applied. Because prior to Davis-Besse there were 

lots of recommendations from task forces about what to do, and the 

fact of the matter is that those recommendations weren’t being followed by the Commission and, as a result of that, we had DavisBesse. 

Mr. DIAZ. We will get you the report and we will get you the results of the implementations of those actions. 

Senator VOINOVICH. I would be grateful. 

Last week, the NRC terminated its oversight panel, which is a 

sign, again, of the significant progress that has been made, and I 

congratulate you for that. You have been on them like hot sauce, 

and I commend the NRC, the operator and its employees for their 

hard work. At the same time that has occurred, the Perry Nuclear 

Plant in Ohio has received increased oversight. Can you please describe the recent developments at that plant and what the NRC is 

doing in response to that? 

These are my two nuclear plants, and I am real interested in 

them, and I would like to know. 

Mr. DIAZ. Yes, sir. We have been trying to see if we can relocate 

them, but we have not been able to do that. The reality is that 

Perry Nuclear Power Plant started having a series of problems in 

2 areas that are of great interest to our safety programs: One is 

the human factors area and how people actually conduct their 

work, how they follow procedures; and in the corrective action program. 

This program is where you actually put things that you need to 

have fixed, need to be corrected, they need to be properly 

dispositioned. The staff, during their normal inspections, and then 

in the inspections that actually lead to what we finished yesterday, 

which was our AARM, where we actually do the annual review of 

the plants, the Perry plant stands out as not being where it should 

be. We immediately notified them. 

Tonight, there is going to be a public meeting at the plant site 

or outside the plant to discuss this finding. We are putting them 

on an increased oversight, and it will remain there until they take 

care of these issues that have been identified. 

Senator VOINOVICH. Thank you. 

Senator Carper. 

Mr. MCGAFFIGAN. Mr. Chairman, could I just add one thing? 

Senator VOINOVICH. Certainly, Commissioner McGaffigan. 

Mr. MCGAFFIGAN. Perry has been very high on our screen for a 

couple of years now. It got into column 4 of the action matrix, 

which is the bad column—not the worst, but one you don’t want 

to be, the one that gets you close attention—sometime last spring 

or summer. 

We put in a plug for our monthly report to you, sir, that we have 

been trying to keep you up to date not just on Davis-Besse, but on 
14

Perry. We give very aggressive attention to plants that are in trouble or give signs that they are going to be getting into trouble. We 

don’t have very good leading indicators, I don’t want to imply 

that—we had a discussion yesterday—but we have some leading 

indicators that seem to be leading, and we follow the plants. 

Perry has, unfortunately, gotten very close attention from us, 

and even at Beaver Valley, which is Region I, not far from your 

State, in Pennsylvania, we had to return a license renewal application a couple of months ago. So we continue to give First Energy, 

as a whole, very close attention. Those are the three plants that 

they run, and they deserve our attention and they get our attention. 

Senator VOINOVICH. Thank you. 

Senator Carper. 

Senator CARPER. Thanks, Mr. Chairman. 

Gentlemen, what do we need to be doing in this committee and 

in the Senate and the Congress to enable you, to empower you to 

be as vigilant as you need to be to ensure the safety of nuclear 

power plants across the country? Give us a short to-do list and a 

time line, as well, for those tasks. 

Mr. DIAZ. Sir, I appreciate the question and the support. I believe that in the area of legislation the committee and both Senator 

Inhofe and Senator Voinovich and yourself have already put on the 

table the type of actions that we need to both ensure the additional 

security that we need at power plants, including giving the right 

guns to the guards, being able to fingerprint the people when we 

need it. So all of those provisions and the human capital provisions 

are in there. 

So we appreciate that support. We hope that this year we will 

see those things taking place, because they will help us a long way 

in making sure that we can respond in the security arena. 

In the area of safety, which is our paramount focus, and in the 

area of new power plants, we find ourselves in the uncomfortable 

position of not having the resources to respond to what we believe 

are the new demands. We really have a very disciplined process in 

the budget. When we look at what we thought we were needing, 

we were acting, if I may use the word, in a fiscally responsible 

manner and tried to put in the budget just those things that we 

thought were absolutely indispensable. 

At the present time we have a shortfall in the area of security. 

The House Appropriations Committee looked at our shortfall and 

added $21 million to our 2006 appropriation. We believe that we 

also will have a shortfall in the area of the new reactor licensing. 

We need to hire new people. We need to have the space. We need 

to be able to really prepare our inspection infrastructure. It is a totally different way of what we are doing now, which is really operational-based. 

The support of the committee and the subcommittee in these 

areas will allow us to do our job. 

Senator CARPER. What do we need to be doing with respect to 

Yucca Mountain to allow us to go forward and to prepare for a safe 

depository for nuclear waste for the near term? 

Mr. DIAZ. Well, sir, we continue to observe——
15

Senator CARPER. When I say we, not just us in the Senate, but 

within the Administration as well. 

Mr. DIAZ. Yes, I know. There is the fact that we are waiting for 

EPA and DOE to come up to us with a solution to a new standard. 

As you know, the 10,000-year standard was essentially considered 

not acceptable by the courts. EPA and DOE have responsibility to 

come with a standard that then we can proceed and put our rule 

into it. We are ready to do that; we have the manpower, we have 

the structure. 

We continue to be ready to do whatever is needed for making a 

potential application of Yucca Mountain an effective process. Our 

adjudication system is ready; we have a licensing support network, 

which is probably the largest support network that has ever been 

assembled in this country with information technology, being able 

to address the issue. But in our case right now, we are in a holding 

pattern. We are actually looking at what they are doing, and we 

are ready to come in as soon as there is a resolution to this issue 

and go to work. 

Senator CARPER. One other question. I would appreciate hearing 

from Mr. Jaczko as well. Let me just ask one other related question. Other countries—I think among them France and Japan—

have acted to reduce the volume of nuclear wastes that are either 

created or produced at their reactors. What are the pros and cons 

of doing that? And are there any encouraging new technologies on 

the horizon that we might want to emulate? 

That is for Mr. Jaczko and whoever would like to respond. 

Mr. JACZKO. Well, I think if you are referring to the issue of reprocessing, that is certainly a very complicated policy decision. I 

think this is something that involves the entire Administration, 

and there are issues related to national security, our non-proliferation goals, that are intimately related to how we deal with decisions about reprocessing. 

So certainly as a Commission there are issues that would come 

before us, if there were licensing actions, things of that nature, we 

would certainly be prepared to deal with those in the future, but 

at this time these are, in many ways, decisions that are for other 

policy organizations to make, and we then would potentially have 

regulatory activities related to those. 

Senator CARPER. Do you want to add anything to that, Mr. 

Chairman? 

Mr. DIAZ. Well, I do believe that what you said was totally correct, Senator. Reprocessing offers the capability of reducing the 

amount of long-lived radionucleides that would have to be stored. 

It is a complicated matter, like Commissioner Jaczko says, because 

of the issues of proliferation, if you really take those into account. 

But the thing that complicates it in the United States is the economics of it. Fundamentally, at the present time, with the price 

that uranium ore has been having for years, there was no economic 

incentive to reprocessing the spent fuel pool. As uranium has become more expensive, then maybe it is not a bad idea to technically 

analyze the possibilities with reprocessing, as well as trying to resolve in the Congress and the Administration the issues that are 

attached to the security of the materials and to actually the benefits that will come with it regarding disposition of the waste. 
16

Senator CARPER. Mr. Chairman and to my colleagues, I will just 

share with you that Senator Coburn and I serve as chairman and 

ranking member of another subcommittee, this one on Government 

Affairs and Homeland Security, whose responsibilities include nuclear proliferation, and the thought that comes to me here is the 

idea of perhaps a joint hearing with this Subcommittee and that 

subcommittee to look, maybe later this year, at the issue of reprocessing once again, and to hear about its timeliness and the appropriateness of us revising that. 

Mr. MCGAFFIGAN. Sir, could I add one response? President 

Reagan, in October of 1981, ended any prohibition on reprocessing 

that had been initiated by Presidents Ford and Carter. It has been 

economics primarily, and non-proliferation, that have precluded reprocessing. 

The old Purex reprocessing process that is used in the United 

Kingdom and France, and the Japanese have spent tens of billions 

of dollars getting ready to reprocess, is very, very expensive, and 

President Reagan was only willing to—the subsidy in his October 

1981 memo was he was willing to consider Federal purchase of plutonium for the then-planned Clinch River breeder reactor as the 

only incentive that he was willing to have as a fiscal conservative 

to enhance reprocessing. So the existing reprocessing technologies 

I think our industry, over a 24-year period, has made a decision 

that isn’t economical. 

Our role would be to hold the hearing. The reprocessing plant 

would be subject to a prior hearing, whichever private sector entity 

came forward. In the late 1970s, that hearing was probably the 

most—prior to Three Mile Island—the most resource-intensive activity that the Commission was engaged in. Then it stopped. 

Senator VOINOVICH. Thank you. 

Senator Inhofe. 

Senator INHOFE. Thank you, Mr. Chairman. 

Chairman Diaz, last year—or maybe longer than a year ago—I 

asked a question about the potential increase in efficiencies and resource allocation, if you were to consolidate the 4 regional offices 

into the headquarters, in addition to the employees at the NRC 

headquarters and the resident inspectors, we have the 4 regions, 

which have been in place since the 1970s—which is a totally different environment than we have now. 

I asked the question, would the NRC function more efficiently if 

we consolidated all the staff to the headquarters, keeping the resident inspectors in place? I think that would be important. 

Now, in answering that question, what I don’t want in an answer 

is, yes, we are looking at that and we are considering that, and this 

might be something worthwhile in the future. I would like to ask 

what have been the results of the review so far. What is the answer, are you going to do it? 

Mr. DIAZ. Yes, sir. 

Senator INHOFE. OK, that answers that question. Very good. 

Mr. DIAZ. No, no, no, no, no. I just said yes, sir, I am going to 

answer. 

Senator INHOFE. So the answer is no. 

Mr. DIAZ. Yes. I have to be careful how I say yes, sir. 
17

We have been considering this issue. The last time we looked at 

it, what we did is we consolidated into Region II in Atlanta all of 

the functions related to the fuel cycle facilities. So we actually went 

and did a certain amount of consolidation to resolve some of these 

problems that different regions have, different type of technical 

personnel. We further made a distinct effort in consolidating the 

materials issues. 

We have actually provided an additional consolidation of materials issues in Region III. We asked the staff what else can be done, 

and the very, very thorough analysis came and said that at this 

time there is no significant advantage in consolidating the regions 

into headquarters or further consolidation. 

Senator INHOFE. The staff that you asked that question, who 

gave you that answer, is that the staff in the headquarters here or 

is that the staff in the regionals? 

Mr. DIAZ. No, we asked the question from the staff in headquarters. They do consult with the staff in the regions. There is obviously interest in the regions—and I realize that it is true—for 

them to maintain the operations, because they are close to the licensees; many of them are a couple of hours, 3 hours away from 

where the power plants are, they are where the manufacturers of 

radioactive sources are. 

Senator INHOFE. So you have looked at this and now the staff 

has made this recommendation that it would not be a good idea. 

Do you agree with that recommendation? 

Mr. DIAZ. I agree with the recommendation at the present time. 

I do believe that there are changes that are taking place in the way 

we do business, changes that are taking place in the way that information technology is allowing us to do the work and inspection 

and so forth, and I do believe that this is a question that the Commission will have to reconsider 

Senator INHOFE. OK, that is fine. 

Commissioner Jaczko, you are the new guy on the block, so you 

don’t come already carrying the baggage of the past. You have 

looked at this with fresh insight. I would like to know what you 

think about this. 

Mr. JACZKO. Well, I think——

Senator INHOFE. Business as usual or do you want to try something new? 

Mr. JACZKO. I have had an opportunity, since I have been on the 

Commission, to actually visit 3 of our regional offices, and I found 

that—well, I think there are 2 examples. One, through my visits 

there, I found that the regions play a very unique role for the agency. 

As the Chairman mentioned, they are in very close proximity to 

the licensees, so they are able to visit the facilities on a much more 

regular basis, in a way that is cost-efficient for the agency. That 

proximity and that access is extremely important as we pursue our 

safety mission. 

Senator INHOFE. So you agree with the Chairman from your 

fresh outlook? 

Mr. JACZKO. Absolutely. 

Senator INHOFE. OK, that is fine. 
18

Mr. MCGAFFIGAN. Sir, could I mention that it is unanimous? We 

did send a report to Congress, I believe last year, and I would say, 

in light of housing prices in this area, it looked cost-prohibitive for 

any benefit that we might get. 

Senator INHOFE. OK, that is fine. 

Mr. MCGAFFIGAN. In light of housing prices today, it would be 

even more cost-prohibitive, and we would lose a lot of good people. 

Senator INHOFE. That is good. 

Mr. Chairman, my time is about to expire, but I want to ask one 

more question and just get some responses here. 

I am sure you have read the GAO’s testimony in which they raise 

a number of issues. Would you like to respond to any of those specific questions that they raised? 

Mr. DIAZ. Well, sir, we worked very seriously with the GAO 

when they were making this report. We take very seriously their 

recommendations. We do have disagreements with them, and some 

of the recommendations, for example, in today’s statement or testimony, are a little bit outdated. However, some of them are very 

good recommendations, and we have actually acted on those ones 

that we consider have significant merit. 

Senator INHOFE. OK, then just for the record, then, I would like 

for the 3 of you and for the Commission to respond to these things. 

Some of them may be outdated, some may not, but there are a lot 

of them out there. None of these comments are made in a critical 

vein, because I like what you are doing. A few years ago we started 

working together, and we have seen, in licensing and permitting, 

just a lot more efficiencies than we had in the past, so I think you 

are doing a great job. 

Thank you. 

But for the record, I would like to have those responses. 

Mr. DIAZ. We will. 

Senator INHOFE. Thank you, Mr. Chairman. 

Senator VOINOVICH. Thank you. 

Senator Jeffords. 

Senator JEFFORDS. The Government Accounting Office released a 

report that I requested, along with a Vermont delegation and Congressman Oliver of Massachusetts, on tracking of spent fuel stored 

at the nuclear power plant. They will testify about it here today. 

You wrote to me last week that you were looking at the report’s 

recommendations. One recommendation in this report is that the 

NRC must develop specific requirements for the control and accounting of loose spent fuel rods and segments. 

Would you support action to require changes to the guidance that 

licensees receive regarding the records that they keep with respect 

to spent fuel? 

Mr. DIAZ. Sir, we have already taken serious actions in that direction. The fact is that the finding of the missing spent fuel pieces 

in Vermont Yankee were initiated by the new inspection processes 

that the NRC has in place. However, we do consider a facile material control and accountability, whether it is fresh fuel or whether 

it is fuel that has already irradiated, a very serious issue. So we 

will consider very seriously whether we need to take any additional 

actions to enhance our processes to make sure that we have the 
19

best material accountability program that has to be in there to be 

responsive to what we have seen in the licenses. 

Senator JEFFORDS. Also, the GAO report suggests that inspection 

procedures for spent fuel need to be updated. In part, current inspection guidance developed in response to the Millstone incident 

led to the discovery of spent fuel missing at Vermont Yankee. Do 

you believe that the NRC has sufficient information about the problems with material control and accounting to proceed with revising 

the inspection system? 

Mr. DIAZ. I believe we do. I believe that our revised inspection 

procedures give us a higher level of oversight. I do believe that we 

have communicated to our licensees the necessity that they have 

to maintain control and accountability of their materials. However, 

sir, the proof is in the pudding; we are continuing to look at a series of licensees that we believe might not be where they should be, 

and if they are not, then we will take appropriate actions. We will 

continue to exercise strict oversight over this area. 

Senator JEFFORDS. I am pleased to hear that. The NRC’s public 

document system, the ADAMS computer database system, is an important public information tool. It is the primary way that facilities, State regulators, and the general public, even this committee 

and its staff, have access to the NRC’s documents. Frankly, lately 

it seems that it is not working as often as it is working. 

Mr. DIAZ. I must admit that we all have had a little bit of a problem with ADAMS, but ADAMS is getting better. It is now becoming 

a Web site-based system. The bottom line was to make it more usable, more user-friendly, more powerful, more capable to be used. I 

believe we are getting there, and our staff has been very clearly 

given the task to ensure that ADAMS becomes what it should be, 

a premier tool to communicate with the public and with the Congress and all the stakeholders. I have been told, to look at it, that 

before this year ends we will have a fully equipped Web-based system capable of doing what ADAMS should be able to do. 

Senator JEFFORDS. I believe you have answered this, but do you 

believe that the Commission has sufficient authority and resources 

to ensure that ADAMS is working properly over the long run? 

Mr. DIAZ. We do. 

Mr. JACZKO. Senator, if I could add. 

Senator JEFFORDS. Yes. 

Mr. JACZKO. One of the challenges that we are facing with 

ADAMS right now is that, as an agency, we have strived very hard 

to be very open and very accessible, and I think in many ways the 

NRC has been a real leader in that role. One of the challenges that 

we face and one of the reasons, sometimes, for some of these problems with ADAMS recently has been part of our process to review 

documents on the ADAMS system, to make sure that there aren’t 

any documents that would provide information that could be used 

by terrorists or by other people whose intention is to do harm. 

So that is one of the challenges that we have been faced with and 

one of the things that has led to some of the problems right now 

with ADAMS. So that is something we are working through and 

working to get that process completed. 

Senator JEFFORDS. I am not sure if you answered this or not, but 

on April 6, 2005, the National Research Council, part of the Na-
20

tional Academy of Sciences, released a report on the safety and security of the commercial spent fuel storage. It has been reported 

that the Commission disagreed with some of the NAS recommendations and technical recommendations. I want to ask some specific 

questions regarding this report, its recommendations, and the Commission’s follow-up. 

The National Academy recommended earlier movement of spent 

fuel into dry cask storage to reduce the potential consequences of 

a terrorist attack. The NRC has disagreed with this recommendation. Would you comment? 

Mr. DIAZ. Yes, Senator. We find that with the upgrades that 

have been done to both safety and security in nuclear power plants 

since 9/11, that storage of fuel in spent fuel pools is adequate, that 

there is really no additional risk to public health and safety from 

when these plants were designed or when they were evaluated. 

There is a slight advantage on putting the fuel in dry cask, but the 

cost of doing it, plus the significant risks that are associated with 

moving the fuel to dry cask do not justify to the Commission to undertake this movement. 

We do believe that we have been responsive to several key recommendations from the National Academy, including the fact that 

spent fuel can be put in better positions in the pool or that additional cooling strategies should be put in place, and we agree with 

those and we are pursuing those very, very rapidly. But with regard to movement to dry cask, we believe that it definitely is something that can be done, but it is not justifiable in terms of the safety of the spent fuel pools. 

Mr. MCGAFFIGAN. Mr. Chairman, if I could just add very briefly 

I am not sure that the Academy recommended. I am pretty sure 

that the Academy got mad at us at one point for saying that they 

had recommended early movement of the spent fuel. They recommended we look at it, but they were not recommending a specific course of action. 

They specifically said that this was pretty tough stuff, it is very 

hard to do the cost-benefit analysis, it is very hard to make even 

qualitative judgments about benefits, but it wasn’t a recommendation for early movement from spent fuels to dry cask storage, it 

was a much more nuanced Academy recommendation. 

The other thing, the chairman did submit a report to Congress, 

in classified and unclassified form, in March that outlined our specific judgments about these things. We have not been passive. Last 

July we issued an advisory. In February of this year we had a conference with all licensees who have spent fuel pools, a secure conference, and then we issued an additional set of instructions on 

February 25th, with responses due by May 31st. 

There are lots of other things we could tell you about in this area 

that we are doing. We got the report last July. So we have been 

acting on it since last July. 

Senator JEFFORDS. I am pleased to hear that. Thank you. 

Senator VOINOVICH. Thank you. 

We are going to have another short round of questions for you. 

It is my understanding that the House provided an additional $21 million to the NRC. It is also my understanding that that is 

not adequate, that in addition to that $21 million, the Commission 
21

wants another $20 million to get the job done. I am very concerned 

about that because my original understanding was that the $21 

million was going to take care of it. So I think that we need to get 

back from you a real good documentation about what it is that you 

would do with this additional money and how relevant it is to your 

being able to move forward with some of the things that you have 

to do and we are asking you to do. 

Mr. DIAZ. Well, we would be pleased to do that, sir. They are 2 

totally different things. The House was concerned with how do we 

actually close out this issue in security, especially the so-called 

plan specific assessments for spent fuel pools, series of issues regarding materials protection. So we put together a package that responded to the concerns of the House. 

At the same time, the Senate was concerned, and we testified in 

a meeting with Senator Domenici and Bingaman on the issue of 

what do you need to really get the structure for new plant licenses, 

and that is where the other $20 million happens to come from. 

So they are two different pieces, and I am sorry for the confusion 

if we did not make that clear. But they are actually 2 totally separate issues, and we would be pleased to——

Senator VOINOVICH. I would like a breakdown of it. Is the $21 

million too much for security? Could some of that money be reduced so it would go for something else? This is pretty important. 

The other quick question is when we had the closed session you 

talked about your training facility in Tennessee, and I would like 

to see some cost benefit analysis. They send everybody down to 

Tennessee to get trained. How much does that cost? If that were 

moved to Washington, how much money would be saved? 

I am also asking, and I am sure my committee members share 

this—when I was governor, I talked about harder and smarter, and 

more with less. At the same time you submit your information to 

us, I would like to know what steps, if any, you have taken to try 

and figure out how you can save money at the Commission. That 

is going to be very important in terms of my consideration of urging the additional money that you are asking for. I want to be satisfied about that. 

Mr. DIAZ. Sir, we will be pleased to send you an additional report 

that clearly marks out the steps the Commission has taken to be 

as fiscally conservative as we can be, but at the same time being 

able to discharge our functions. I think your staff received, this 

week, a series of answers on these issues, but we are going to review it and make sure they are thorough, complete, and resubmit 

them to you. 

Senator VOINOVICH. Thank you. 

Mr. MCGAFFIGAN. Sir, could I add one thing just to give you perspective on this matter? We talked a little bit last week about it. 

We face 4 major challenges in the years ahead. One is security; and 

that doesn’t seem to be going away, and we have a lot of 

rulemakings to do, we have a lot of national source tracking system 

to put in place, etc. 

The second is this generational change. We talked about the need 

to hire 800, 900 people—I think it was documented in the letters 

we sent you—over the next 3 years. That is, a quarter of our staff 

will be 3 years or less with the agency. So there is just a bow wave 
22

of generational change occurring, which drives our infrastructure. 

We need to rent out the space and all that. We have Yucca Mountain and we have advanced reactors. 

The first 2 of those things are absolutely going to happen, the security and the generational change, and we have to manage it. We 

face great uncertainty with regard to how many applications we 

are going to get for advanced reactors. We, as the chairman said, 

underestimated in last year’s budget. The industry has been playing its cards close to the table until recently. Then Yucca Mountain, I can’t predict when DOE will file an application, but it will 

be the largest administrative proceeding in the history of mankind 

when it does happen. 

So we have those 4 challenges. I didn’t even mention Chairman 

Inhofe’s favorite, which is license renewal. We are going to continue 

to have license renewal applications. We are going to continue to 

have enrichment plant applications. We are going to continue to 

have mock plant applications from DOE. Those are not in my top 

4. Those are very important to many members, but the top 4 are 

enormously resource-intensive, and we try to frugally use the resources the Congress gives us. 

Senator VOINOVICH. Senator Carper. 

Senator CARPER. Thanks, Mr. Chairman. I have 1 question and 

a request. Let me just make the request first. I have a note here 

that Senator Clinton regrets not being able to attend the hearing, 

and she asks if we would simply tell the panel she regrets her absence and looks forward to working on security legislation that we 

have talked about here earlier today. 

My last question, if I could, is a question regarding Senator 

Voinovich’s bill that I have co-sponsored to reauthorize the NRC’s 

ability to collect fees from licenses. In the bill there is language 

that proposes to limit the scope of environmental review under 

NEPA, and specifically it requires that only the facility to be licensed be evaluated, and eliminates the requirement to include any 

consideration of the need for or, in the alternative, to the proposed 

facility. 

This may have been touched on earlier, but I want to come back 

to it again. NRC has completed license extensions, I think, at about 

a dozen plants, and has several applications that are pending. I 

presume you have done NEPA reviews at those facilities. Let me 

just ask again. How many alternatives are you considering now 

and have you been forced to look at non-nuclear alternatives in 

these cases? Finally, is this a significant area of concern as the 

NRC prepares to review these new license applications? 

Mr. DIAZ. I really do not understand the question. You went from 

no nuclear alternatives to nuclear alternatives. Are you talking 

about sites? 

Senator CARPER. I think what I am going to do is, I am going 

to submit this question in writing, and we will ask for you to just 

respond to it, if you will. 

Mr. DIAZ. I would be pleased to do that. 

Senator CARPER. Thanks so much. 

That is it, Mr. Chairman. 

Senator VOINOVICH. Thank you. 

Senator Jeffords. 
23

Senator JEFFORDS. No further questions. 

Senator VOINOVICH. Senator Obama. 

Senator JEFFORDS. I am sorry? 

Senator VOINOVICH. I was just going to say, do you have any 

other questions? 

Senator JEFFORDS. No. 

Senator VOINOVICH. OK. 

Senator Obama, welcome. We are glad that you are here. 

Senator OBAMA. Thank you very much, Mr. Chairman. I appreciate it. 

You know, I had the opportunity to be in the closed hearing and 

addressed some of the most pressing questions that I had, so I 

don’t know how broad the scope of this session is. I would just 

want to reiterate my general view that, given the ongoing energy 

demands that we have, we are, I think, out of necessity going to 

be taking a look at the possibility of nuclear power plant expansion. 

There seems to be a number of areas of concern. One is a mechanism to standardize design, something that I think I addressed last 

time. My understanding at least was that we are trying to move 

in that direction, which presumably would not only help us secure 

sites, but would also reduce some of the potential regulatory lag involved in approving facilities. The second aspect was fuel storage. 

I know you have addressed that a little bit before I arrived. 

Can we just talk about your staffing levels and whether, if in fact 

we started to see a willingness on the part of the industry to try 

to start building more plants, whether you guys currently have sufficient staffing levels and budget levels to keep up, or whether you 

anticipate a need to increase your budget to do what needs to be 

done? 

Mr. DIAZ. Thank you, Senator, for the question. These are the 

kind of questions we really like, because fundamentally the answer 

is no, we do not have the staffing levels that could be needed if we 

receive the number of applications for design certification, for early 

site permits, and for combined construction and operating licenses 

that are now sounding around which we are getting letters and expressions of interest. 

In this regard, we have come up with a plan that we believe is 

adequate to allow us to maintain our safety oversight over the operating fleet, which we cannot slack off. We need to maintain the 

level of activities that are ongoing. We need to maintain the levels 

of activities over licensing activities. 

We disposition about 1800 licensing activities every year. Every 

single one of them is important. Some of them are considered more 

important than others. For example, Senator Inhofe has at the top 

of his list license renewal and power upgrade, and for very good 

reasons. They are all important activities. 

To be able to actually conduct the high technical work and prepare for all of the interactions that will be taken, including potential adjudications on these issues, we have come up with a new 

staffing program that increases about 145 technical persons in this 

coming year 

Senator OBAMA. What percentage increase would that represent? 
24

Mr. DIAZ. Well, if you look at what we call the NRR licensing 

staff, that is approximately, I would say, about 10 percent increase 

from where we are. 

Senator OBAMA. Would there be a sort of commensurate increase 

in your budget, then, about a 10 percent increase, or slightly more? 

Mr. DIAZ. Actually, for that it would be just about $20 million, 

and that licensing activities is a little bit over $200 million. So it 

is approximately that. 

Senator OBAMA. Is that sort of phased in over a certain period 

of time? 

Mr. DIAZ. No, this is on top. This is in addition of what we already have programmed. Then, the following year, year 2007, there 

would be a $25 million increase to where we have programmed to 

be able to keep putting the right infrastructure, both personnel, 

space, work stations, training, protractors. A lot of those things 

need to be in place by the time we actually receive these applications. 

Mr. MCGAFFIGAN. Senator Obama, as I said in response to Senator Carper, we are facing the need to net hire 300 or 400 people, 

and we lose about 5 percent of our 3,200 person work force each 

year to retirement and whatever, so that is an extra 150 per year. 

So you are talking about 800 people the first 3 years. 

If the full nuclear renaissance occurs, I just want to put you on 

notice in 2010—this is the leading edge. If we have multiple applications at multiple sites, our agency is going to have to grow additional hundreds of people while we are also losing 150, 160, 180 

people a year because we have a bow wave of retirements. It is a 

very difficult thing to manage; not just for us, it is hard for the industry. They are facing the same generational change that we are 

facing. 

So this is coming along at a time, the potential nuclear renaissance, that we are dealing with security; we are potentially dealing 

with Yucca Mountain, which is the largest administrative proceeding, in my view, in the history of mankind, 40 million pages 

of documents in discovery; and managing the generational change. 

This is the leading edge. I don’t want to be in front of Senator 

Voinovich 4 years from now, or you, Senator Obama, and you say, 

where are all these hundreds of additional people? It all is dependent on decisions made by the private sector that are uncertain decisions. We want to be able to meet the need without wasting resources. 

Senator OBAMA. Right. So I guess what I am trying to figure out 

is what the ramp up schedule on something like this is, given that, 

to some degree, it is contingent on what private industry does. If 

you suddenly got 10 applications for new plants next year or over 

the next 2 or 3 years, are you able to hire quickly enough to accommodate that? 

Mr. DIAZ. No, sir. 

Senator OBAMA. You cannot. 

Mr. DIAZ. No, sir. This is why we keep telling the industry that 

they need to give us early warning. The number of people with the 

skills are just not there, nor are they trained into our work processes and the way of doing things. So we need to have some heads-
25

up. So the earlier the notice, the better the service that we can do 

this Nation. 

Senator OBAMA. Is this all premised on sort of a static model of 

how staffing takes place? Have you evaluated whether we are getting the most bang for the buck right now; whether we are sufficiently productive in terms of how staff operates, updating lines of 

authority and organizational structures and changes that may be 

made in terms of design, so forth? 

Mr. DIAZ. It is a very dynamic model, but it has some fundamental assumptions. We started with 3 fundamental assumptions 

that we could only do like 3 major licensing decisions a year, and 

that was fundamentally, and that was what was worked out with 

OMB. OMB says this is a level that you can work with, so we went 

at that level. 

Once we are at that level, we actually are able to put a dynamic 

structure into place where people that were working and doing design certification actually can then move to the other arena. So 

there is a plan, and staff has been working very hard not only at 

that plan, but how to train the people to be able to do the different 

jobs. 

Senator VOINOVICH. Senator Obama, you know, one of the things 

that I think that we ought to do—because this is a big deal in 

terms of this thing—I am going to suggest that this committee 

have a hearing just on the budget and what the future looks like, 

and ask you to brief our staffs first and come back and talk about 

the future, and what are some of the conditions and so on, and 

your projections and what you need and so on, because this is going 

to have a lot of relevance on how hard we encourage members of 

Energy and Water to come up with some more money so that you 

can do your job. The better informed we are, the more relevant and 

more attention they will pay to our recommendations. 

Senator OBAMA. I am open to that, Mr. Chairman, and happy to 

yield back. 

Mr. MCGAFFIGAN. Sir, could I mention one successful model? 

That is license renewal. And I hope the industry is going to follow 

it with new reactors. We had 2 plants come in, Calvert Cliffs and 

Aconi, as sort of trials of our system, and our system succeeded. We 

are much more efficient today, as we process, I believe, 10 different 

additional applications. We have re-licensed 32 plants; we have another 16 or 18 that are currently in the process; and we have become more efficient. 

But what we did was we issued guidance as to how to do it, the 

staff followed it with the first couple applicants, then we issued a 

generic aging and lessons learned report that made it easier—

standardized applications, standardized our process—and it has 

worked very, very efficiently. 

I would predict that a future Commission will try to follow the 

license renewal model. I think the industry wants us to follow the 

license renewal model. I think we are likely to get a limited number of applications early on. Those are going to be resource intensive. We will not resource-load 5 years after that at the same rate 

that the first 2 are, because the history of license renewal has been 

that we are much more efficient today. 
26

So long as we and the industry are on the same page, there are 

lots of guidance documents that haven’t been written yet and are 

best informed by an actual application. So we have a successful 

model. 

I know when Chairman Diaz and I sat in front of this committee 

in 1998 for the first of the oversight hearings, there was great, 

great skepticism that we were going to be able to deal with the bow 

wave of license renewal applications that were on the horizon. I 

think it is a success that the bipartisan commission has handled 

those applications. It is very hard; it is reading tea leaves to sort 

of figure out what our needs are. We will be more efficient, but if 

there are 12 applications, it is going to take more than 2. 

Mr. DIAZ. Mr. Chairman, we welcome the opportunity to come 

and put this thing in a manner that the committee can see the options and the decisions. We will be ready. 

Senator VOINOVICH. The first thing we are going to do is get the 

staff involved immediately so that when we do have a meeting, it 

is as productive as it can be. 

Thank you very much. 

Senator Isakson is here, and before we go to the next panel, Senator, would you like to——

Senator ISAKSON. First of all, I want to apologize to the panelists 

and you, Mr. Chairman, for being late. 

Second of all, I want to thank Chairman Diaz and Chairman 

Voinovich for the secured briefing about 10 days ago, which was extremely informative. For the record, my impression of your attention, sir, and the other Commissioners to the security of present 

and future nuclear facilities is absolute, and I appreciate your attention to that and your commitment to that. 

I really have one question, since I probably would be redundant 

in anything else that I ask. You have how many current applications for new licenses? 

Mr. DIAZ. We have no current applications for new licenses. We 

have 3 applications for early site permits in which the site is going 

to be analyzed from the environmental viewpoint, so we actually do 

an environmental impact statement. Those 3 early site permits are 

presently on track and they are also presently being adjudicated. 

Senator ISAKSON.With satisfactory environmental analysis, they 

would move to the second step? 

Mr. DIAZ. That is the expectation, that with the satisfactory environmental impact and the site being cleared, that gives them 1 of 

the 3 legs of this process. The second leg is a design that has been 

certified by the NRC. We have several designs that have been certified, but the industry is now working to get 2 new designs certified, which are what we call Generation 3 Plus, they are beyond 

the advanced generation, they have additional features, and the industry is very interested in these 2 designs. We also have a French 

design. The EPR has already expressed a strong interest in being 

certified in the United States. So that is the second leg. 

If you have a site permit and you can pull off the shelf a certified 

design, you have now two-thirds of what you want. Then an applicant can come and say now I want to apply for a combined construction and operating license. That is the last step. That is a 
27

major licensing activity; it is actually the one that we consider we 

have an applicant for a plant. 

We have no applicants for COL presently, but what we have 

been discussing is what we hear from the industry is that we could 

have three, four, or five in the 2007, 2008, 2009 period. So what 

the Commission is trying to do is make sure that we will be responsive to the needs of the Nation at that time, when those things 

come in. 

Senator ISAKSON. So the three legs of that stool are site, design 

and final COL, is that correct? 

Mr. DIAZ. That is correct. 

Senator ISAKSON. I know it may vary because of things that come 

out, but what is a reasonable time from the first leg of the stool 

to the last leg of the stool? 

Mr. DIAZ. They can go in parallel, they don’t have to be one after 

the other. The early site permits are going on, the design certifications are also going on. 

Senator ISAKSON. At the same time. OK. 

Mr. DIAZ. At the same time. So they can go in parallel. They can 

reference each other or not. So there are all sorts of combinations 

that can take place. The most economical and streamlined combination is somebody comes and says I want to apply for a COL 

and I am going to use this site that I already have and I am going 

to use this certified design. 

By the way, that also costs a lot less money. From our viewpoint, 

it is about half the process, because you already have two-thirds of 

your three legs. They can also do a combination of those things, 

and, as you know, utilities have the capability of being selective; 

they may want to do certain types of things. 

There is no doubt that an existing site has an advantage over 

other sites, because I believe the community is already familiar 

with the technology, with the benefits, with the way the plants operate. They already have infrastructure with both water, railroads, 

electrical grid, so there are a series of advantages. And I would be 

surprised if the first few applicants would not be using an already 

existing site which has a site permit, and they will pick off the 

shelf a certified design. 

Senator ISAKSON. Thank you very much, Mr. Chairman. 

Thank you, Mr. Chairman. 

Senator VOINOVICH. Thank you. 

I would like to thank the members of the Commission for being 

here today. We will continue to work with you to try and make 

your life easier. 

Mr. DIAZ. Thank you. 

Senator VOINOVICH. Our next panel is Mr. Jim Wells, who is the 

Director of Natural Resources and the Environment at GAO; 

Marilyn Kray, who is president of NuStart Energy Development; 

and Dr. Edwin Lyman, who is the Senior Staff Scientist for the 

Global Security Program at the Union of Concerned Scientists. 

Before we get started, I want to remind the witnesses that their 

entire statements will be submitted into the record, and I would 

urge them, to the best of their ability, to limit their presentations 

to 5 minutes. 

Mr. Wells, if you are ready, we will start with you. 
28

STATEMENT OF JIM WELLS, DIRECTOR, NATURAL RESOURCES 

AND THE ENVIRONMENT, GOVERNMENT ACCOUNTABILITY 

OFFICE 

Mr. WELLS. Yes, sir, I am ready. 

GAO is pleased to be here to discuss NRC. As I listened to the 

NRC commissioners earlier, they clearly have a right to be proud 

about what they have accomplished, and optimistic about what 

they are achieving. But I think we at GAO also have a right to suggest that they do it faster, and I will talk about that and some of 

our recommendations. 

Clearly, the world for NRC has changed since 9/11, and the future of nuclear power depends heavily on how well NRC does its 

job. While the safety and security record has been good, things 

have and will happen that will challenge NRC’s credibility for 

guaranteeing the safety of the Nation’s aging fleet of plants. 

Over the past 2 years, we have had the fortunate opportunity to 

issue 15 reports on NRC operations. While our reports have focused 

on identifying ways to strengthen NRC’s activities, I think it is fair 

to say that we have documented very positive steps that have been 

taken by the agency. One example is the substantial effort that 

NRC has made in working with the industry to enhance security. 

They still have a way to go, however. 

Another example is NRC’s considerable effort to analyze what 

went wrong with Davis-Besse and to incorporate lessons learned. 

Again, we think they could perhaps do some things faster. 

I want to just briefly summarize what we think NRC still needs 

to do and highlight for you some challenges that we think NRC is 

going to face in the future if it is truly going to be a credible regulator of the industry. 

In summary, of all the reports, I will just quickly say that we 

found that NRC has not developed adequate security measures for 

sealed sources of radioactive materials, the stuff they use in medicine, industry, and research which could be used to make a dirty 

bomb. We found that the oversight of physical security at the 

plants could be strengthened. We found that NRC’s analysis of 

plant owners’ contribution of funds for decommissioning may not be 

completely accurate. 

We found that issues surrounding the shutdown of Davis–Besse 

revealed important weaknesses in the NRC oversight of its safety. 

We found that controlling and accounting for the location of spent 

fuel needs to improve. The chairman of the NRC commented this 

morning that true these issues are in the past; the past 2003, 2004. 

We would prefer to be here not next year or the year after raising 

the same type issues. 

Turning a minute to the future in terms of what we think NRC 

faces as challenges, if you want to keep and enhance the credibility 

as a regulator for our commercial nuclear power plants, in response 

to the agency’s limited resources and the desire to reduce the regulatory burden and cost on the plants, as we see it, NRC is trying 

to accomplish two major things, and these are presenting some 

challenges. On the one hand, NRC is trying to implement a risk 

informed regulatory strategy that targets the industry’s most important safety-related activities. We would agree with that because 
29

it gives them an opportunity to prioritize their limited resources in 

terms of what they can pay attention to. 

On the other hand, they are trying to strike a balance between 

verifying what the plant’s compliance with its own inspection by 

having the NRC look at what the plant is doing; they are trying 

to balance that level of activity. At the same time they are trying 

to afford the licensees the opportunity to demonstrate on their own 

that they are operating the plants safely and they are policing their 

own activities. So that is the balancing act that NRC faces in the 

future. 

Accomplishing these tasks will not be easy. We believe that NRC 

must develop the ability to identify emerging technical issues and 

they need to adjust a little faster than what they have done in the 

past in terms of regulatory requirements before safety problems develop. We believe that NRC clearly faces challenges in balancing 

this oversight and the industry compliance so that it can identify 

diminishing performance in the industry at individual plants before 

they become a problem. 

I use as an example Davis-Besse. Clearly, that plant stayed in 

a green condition right up until the event. Yet, the problem that 

occurred, that cause had been developing for many years. 

Finally, as the chairman of the committee talked about today, 

NRC is facing challenges regarding managing of its resources while 

meeting the increasing regulatory and oversight demands. There is 

no doubt that the existing resources have been stretched at the 

NRC to enhance security. Its pressure on its resources is going to 

continue as the Nation’s fleet of plants age—these nuclear power 

plants are getting older—and the industry’s interest in expansion 

grows. 

Are we going to build new plants? Are we going to license new 

plants? Are we going to re-license? And are we going to increase 

the power output from the existing ones? All this is going to take 

time and effort by the NRC. 

In closing, I just want to recognize and say that GAO, in the activities we performed, we appreciate the complexities of the NRC 

in terms of what they need to do to be a good regulator and to continue strong oversight efforts. Clearly, NRC is doing a lot of things 

right, but we are here today, and have been as we continue to provide oversight, that it still has important things and important 

work that they need to do. 

Whether NRC, in the future, carries out this regulatory and oversight responsibilities in an effective and creditable manner will 

clearly have a significant impact on the future and the direction of 

whether or not we have an increased use of nuclear power. 

If I have one minute left, I want to respond, Mr. Chairman and 

Senator Carper, you asked the question what does NRC need. 

Senator VOINOVICH. Could we save that maybe for the questions, 

because you have gone over your time. 

Mr. WELLS. I would be glad to stop here and wait and answer 

any questions you might have. 

Senator VOINOVICH. That would be great if you could do that. 

That would be swell. Thank you. 

Senator VOINOVICH. Ms. Kray. 
30

STATEMENT OF MARILYN C. KRAY, PRESIDENT, NUSTART 

ENERGY DEVELOPMENT 

Ms. KRAY. Good morning, Chairman Voinovich, Senator Carper, 

and members of the subcommittee. My name is Marilyn Kray. I am 

the vice president of Exelon Nuclear. But I am here today in my 

role as President of NuStart Energy Development. 

The NuStart consortium is comprised of nine power companies 

and two reactor vendors. The power companies are Constellation, 

Duke, Entergy, EDF North America, Exelon, Florida Power & 

Light, Progress Energy, Southern Company, and TVA. The reactor 

vendors are Westinghouse and General Electric. 

As individual companies, we recognize the importance of nuclear 

power to our country’s environment, electricity reliability, and the 

energy independence. We further recognize that there are certain 

challenges facing a new nuclear investment. If left alone, these 

challenges would inhibit the viability of the nuclear option for the 

future. 

My testimony identifies seven preconditions to the construction 

of new power plants in the United States. These are: The demonstrated need for base load power; confidence in the long-term solution to the spent fuel storage issue; regulatory process certainty; 

completed advanced designs; re-establishment of the nuclear infrastructure; public confidence in nuclear power; and, lastly, acceptable financial returns. 

We noted that there were two challenges in the list above that 

were not being addressed by ongoing initiatives, yet required 

prompt attention. These were the need for regulatory certainty and 

the need for completed advanced designs. Given the nature of these 

challenges, in that they were both generic as well as one-time, we 

decided that the best strategy was for the industry to address them 

as a unified effort. Accordingly, the NuStart consortium was 

formed. 

The consortium power companies adopted or endorsed the two 

technologies, the Westinghouse AP–1000 and the General Electric 

Economic Simplified Boiling Water Reactor. Last spring, NuStart 

submitted a proposal to the Department of Energy. Our plan is to 

work with the rector vendors to complete the design engineering 

necessary to deploy these technologies. Additionally, we plan to 

submit two Combined Operating License, COL, applications, to the 

NRC, one for each technology. Our current plan is to submit these 

to the NRC in early 2008 with the NRC to review to be concluding 

in the 2010–2011 timeframe. 

I had the opportunity last year to appear before this subcommittee, and since then significant progress has been made. 

Highlights include the following: The NuStart proposal has been 

accepted by the Department of Energy and a cooperative agreement is in place; legal documents, governance, structure, and 

project management controls have been established to ensure that 

the NuStart entity will function efficiently; Westinghouse received 

its final design approval for the AP–1000 from the NRC, which is 

a milestone in the design certification process. It expects to receive 

final design certification in December of this year. General Electric 

has been engaged in meaningful discussions with the NRC staff as 
31

part of their pre-application phase of design certification. They expect to submit their application to the NRC this summer. 

NuStart most recently selected six finalist sites from a population of over 40, and these will be the subject of our COL applications. The finalist sites are Bellefonte in Alabama, Calvert Cliffs in 

Maryland, Grand Gulf in Mississippi, Nine Mile in New York, 

River Bend in Louisiana, and Savannah River in South Carolina. 

The next step is for NuStart to further analyze these six sites and 

select one to be the subject for each of the two applications. 

By meeting the objectives as outlined in our agreement with the 

DOE, we believe that we will be taking meaningful steps in not 

only assuring that the nuclear option is available, but also in obtaining additional confidence around certain vital investment assumptions. The alternative to the NuStart approach is to do nothing and hope for the best. We see this as synonymous with phasing 

out the nuclear industry in the U.S. 

I recognize that NuStart was not the only one busy, and that the 

Senate staff has been working on legislation resulting in three 

pieces that are before the committee. We find these three pieces of 

legislation to be important in setting the stage for new plants, and 

we urge the committee to approve them. The provisions as outlined 

in the Price-Anderson, the fees restructuring of the nuclear safety 

and security are all very important to the growth of nuclear power. 

I thank you for your interest and the opportunity to appear before you this morning. 

Senator OBAMA. Mr. Chairman, I just want to suggest for Ms. 

Kray that she not use the phrase nuclear option during her testimony. 

Ms. KRAY. Well taken. 

Senator VOINOVICH. Thank you. 

Dr. Lyman. 

STATEMENT OF DR. EDWIN LYMAN, SENIOR STAFF SCIENTIST, 

GLOBAL SECURITY PROGRAM, UNION OF CONCERNED

SCIENTISTS 

Dr. LYMAN. Mr. Chairman and members of the subcommittee, on 

behalf of the Union of Concerned Scientists, I appreciate the opportunity to present some of our views today on the security and safety of nuclear power plants in the United States. I think I will deviate slightly from my written remarks to address some of the things 

we have already heard this morning. 

First, I would like to thank the Chairman for raising the issue 

of the Perry plant and its increasingly degraded safety performance. Obviously, the issue of safety culture was one of the lessons 

that should have been learned at Davis-Besse, and it appears from 

the fact that even under increased oversight of First Energy’s performance, the Perry plant’s own attention to detail and performance and procedures, according to strict guidelines, is deteriorating 

indicates that maybe First Energy has not learned the lessons of 

Davis-Besse, and this of great concern. 

Another issue of concern to me with regard to the safety of the 

Perry plant is that it is one of the 13 nuclear power plants in this 

country that suffer from a containment design flaw that the NRC 

has known about for a long time but is dragging its feet in actually 
32

addressing, and this is the fact that Perry and the other 12 plants 

in this category have containment structures that are significantly 

weaker and smaller than most of the nuclear power plants in this 

country. 

The NRC has known for a long time that if a station blackout 

occurs at one of these plants, that is, if both offsite power and onsite power is lost, the potential for a hydrogen explosion could lead 

to failure of a containment like Perry’s with near certainty. This 

could be addressed quite simply by adding additional backup power 

capacity so that, in the event of a station blackout, there will be 

a way to power the hydrogen ignitors, which would burn off hydrogen safely before a detonation could occur. The solution to this is 

not expensive, and the NRC actually decided, through its risk inform process, that such additions were warranted. 

However, more than 5 years after starting to address this issue, 

nothing has happened, and I am concerned about the potential at 

Perry and other plants. I would urge the committee to look at this 

issue, because it is an example of how the NRC appears to be more 

interested in relaxing regulatory burden than strengthening it 

when warranted. 

We also have great concerns about the security of nuclear power 

plants and nuclear materials in NRC-regulated facilities. I am testifying today in an unusual position in that I have been part of a 

hearing at NRC involving the security of plutonium-bearing MOX 

fuel at a nuclear power plant in South Carolina, and I have had 

access to safeguards information, both site-specific and relating to 

general NRC security policies. I can’t discuss any of that information today, unfortunately, but I can say that the information I have 

seen does not make me feel any better about the state of security 

at nuclear power plants. 

Senator Jeffords has raised the issue of the material control and 

accounting of spent fuel at Vermont Yankee. We are also concerned 

about material control and accounting and security of materials 

that could be used to actually make nuclear explosive devised, as 

opposed to dirty bombs. The NRC does regulate the security of several facilities in this country that have enough material onsite that, 

if stolen, could be used to make a nuclear weapon. These include 

poorly protected university research reactors, which have highly 

enriched uranium, and now the Catawba plant in South Carolina, 

which became a Category I plutonium facility by virtue of receiving 

80 kilograms of weapons-grade plutonium in the form of MOX fuel 

at that plant. 

The NRC should be increasing its attention to strengthening the 

security that terrorist groups like Al Qaeda would not be able to 

steal this material to make a nuclear weapon. The NRC also has 

a responsibility to show the rest of the world how to protect nuclear 

materials like plutonium. In fact, it is supposed to be working with 

Russian regulators to strengthen their security on these types of 

materials, but the NRC is actually backtracking by weakening 

standards in some cases on securing plutonium from theft, and this 

is something of considerable concern to us. 

We are also greatly concerned about the sabotage threat to nuclear reactors. Just to state what the stakes are, if a terrorist group 

was able to gain forced access to a nuclear power plant, I am con-
33

vinced that within a matter of minutes they could start the process 

to cause a meltdown of the fuel and a significant radiological release to the environment. 

The NRC itself has been evasive about what the consequences of 

that type of event would be, so I undertook the opportunity to do 

that analysis myself, using NRC’s own consequence assessment 

computer codes, and the result of that was a report that is focused 

on the Indian Point nuclear power plant. 

Just to discuss some of those results, I found that a terrorist attack in the worst case I looked at could cause up to 44,000 deaths 

from acute radiation sickness; 5,000 deaths in the long term from 

cancer; and economic damages that would exceed $2 trillion. These 

are the stakes and these are why security must be strengthened at 

nuclear power plants. 

Just to review some of the problems that I continue to see with 

security at power plants, one is the design basis threat level. When 

it was set in 2003, the standard was not what is the threat faced 

by nuclear power plants today by our adversaries, it was what is 

the greatest threat that we should expect utilities to be able to protect against themselves. Those threats may not be the same and, 

in fact, they aren’t the same, because when that threat was reviewed by other Federal agencies, most of them recommended additional capabilities be added to the design basis threat. However, 

NRC apparently did not adopt those recommendations. The threat 

must be reviewed by other agencies, intelligence agencies, and 

their recommendations must be taken seriously. 

Another important aspect is force-on-force tests. Force-on-force 

tests are an important component of security because the best security plan on paper may have problems that will not be revealed 

until they are actually tested. There are significant weaknesses 

with the force-on-force testing program which I have outlined in my 

testimony, and I recommend that you read those. 

Guard fatigue is another issue. 

Senator VOINOVICH. Dr. Lyman, could you kind of wrap it up? 

Dr. LYMAN. Security guards have a hard job, and they really 

need enough rest to be able to perform that job. NRC has taken 

steps to control the work hours of security guards, but we understand those rules are being violated, are not strictly adhered to in 

some cases. That is a serious issue. 

In our view, legislation is needed to address the design basis 

threat issues, force-on-force, and the others I have mentioned. 

Thank you for your attention. 

Senator VOINOVICH. Thank you very much. 

Ms. Kray, you have expressed support for the human capital provisions in S. 858, the Nuclear Fees Reauthorization Act, which 

Chairman Inhofe and I have introduced. As your coalition looks to 

construct new nuclear power plants, I am wondering how much 

consideration is given to ensuring that the industry itself has the 

skill and knowledgeable work force it needs to get the job done. 

Does this bill help at all the industry’s human capital needs? 

And is the industry doing anything to address this issue? You were 

here for the testimony before. 

Ms. KRAY. Right. Yes, I was. 
34

Senator VOINOVICH. We have a real human capital challenge out 

there for the NRC to have the people that they need to get their 

job done. Then the question is do you have the people that you 

need to get the job done? You are both going to be drawing probably from the same pool, and what are we doing about expanding 

that pool? And does any of this stuff help you? 

Ms. KRAY. The short answer is no, we don’t have the human capital yet. The reason that we certainly endorse the legislation supporting the NRC resources is because we can empathize with that 

situation in that we are in the same one. We have very similar demographics with respect to an aging work force, and we also see 

a horizon of additional exciting, but, nevertheless, additional work 

for us. 

We have, over the past year, perhaps been in somewhat of a dilemma: not wanting to get too far ahead of ourselves, but at the 

same time wanting to be able to plan appropriately. We have begun 

discussions with a number of the architect and engineering firms—

Stone & Webster; Sargent, Lundy and Shaw—who would provide 

the personnel to actually construct the crafts and the trades that 

would be constructing these plants, looking at what the time lag 

would be to get a qualified work force up and running. 

The good news is that considering the lag time associated with 

building a new plant, we do think that we can plan for that. Essentially, the thought is, on the work side, the craft and trades, if you 

want to build it, they will come. 

The other issue is looking into the universities. We have seen increased enrollment in the nuclear area, in part, we believe, based 

on feedback from the universities, that is the optimism and perhaps renaissance of the industry that is attracting more professionals. We are also comforted a bit by a resurgence, particularly 

groups such as the North American Young Generation of Nuclear 

Engineers, which has become very active. 

So, again, in short, the answer today, we do not have that. It is 

a challenge for us going forward, and we are optimistic that we can 

meet it. 

Senator VOINOVICH. And you agree that, in terms of manpower, 

they really have a challenge not only for what you are suggesting—

and if you heard the testimony, they need some more help from 

you, but given some is this for real, are you going forward, and so 

forth, so that they can plan for that? 

Ms. KRAY. That is right. In December of 2004, NuStart submitted a letter to the NRC indicating our plans for submittal of the 

two COL applications. We do recognize the ramp-up time that they 

have in responding to these, and, again, we share the NRC concern 

for their staffing their own agency as far as us having to staff our 

own next generation. 

Senator VOINOVICH. We are appreciative also that the industry 

wants to continue the percentages in terms of the cost. I wonder 

would you like to comment, if you feel like you are qualified to comment, about the information that we had the House pass $21 billion more and the Commission said today they need another $20 

million? How do you look at those numbers? 

Ms. KRAY. I am probably not the best qualified to respond to 

that. Mr. Marfurtel of NEI, I know, had provided some testimony 
35

for the record addressing some of the bills, and that is based on the 

collective industry perspective. Anything beyond that, I would be 

happy to submit as follow-up for you. 

Senator VOINOVICH. I wish, Dr. Lyman, you had been able to be 

in that closed session, because some of the issues you raised were 

brought up at that session. 

Ms. Kray, do you feel confident that the Commission is doing everything possible to transfer knowledge about current safety and 

security environment to the new facilities? In other words, we have 

learned some lessons about security. We have increased security efforts underway. Some day I would like to really measure all of the 

additional costs that we have incurred because of a guy named 

Osama bin Laden and 9/11. It is just incredible what is happening. 

But the question I have is because of those increased security 

concerns, do you believe that in the designs of these that you are 

going to incorporate the best information that we have available 

today in terms of security? 

Ms. KRAY. The power companies are working with the two reactor vendors, General Electric and Westinghouse, to ensure certainly 

that the enhanced security guidelines that have come out post–September 11th are incorporated into their designs. 

What is still remaining out there is if there are going to be any 

future changes to design basis threat or any additional requirements that might be imposed on new plants. The reason that I say 

that is because now is the time, when the designs are still on the 

drawing board, that it is easiest to incorporate any further 

changes. So if there are any additional changes beyond those 

known, the earlier we have those available, then the easier they 

can be incorporated into the evolving designs. 

Senator VOINOVICH. Senator Carper. 

Senator CARPER. Ms. Kray, I am going to come to you second for 

a question, but I want you to be thinking about the question, then 

I am going to ask Mr. Wells to respond to my first question. I 

would like for you to revisit the issue I raised with the NRC commissioners, and that was the issue of disposal of nuclear waste. 

Going forward, if we are going to see a renaissance of nuclear energy and the next generation of power plants be built, how can we 

reduce the amount of waste to dispose of? How can we do that safely? If you would be thinking about that, I would appreciate it. 

Mr. Wells, I said in my opening statement that a great deal of 

responsibility rests with the NRC and on their need to be vigilant. 

Last year, in testimony, I think, before the House Government Reform Committee, the GAO highlighted a number of concerns with 

NRC’s oversight of security measures. I don’t know how familiar 

you are with that, but, specifically, GAO said a number of things. 

I just want to read briefly a couple of those. 

GAO stated at the time that, ‘‘NRC is not yet in a position to provide an independent determination that each plant has taken reasonable and appropriate steps to protect against the new design 

basis threat.’’ GAO went on to say, ‘‘NRC’s review of each facility’s 

new security plans, which are not available to the general public 

for security reasons, has primarily been a paper review; it is not 

detailed enough for NRC to determine if the plans would protect 

the facility against the threat presented in the design basis threat.’’
36

GAO went on to say, ‘‘In addition, NRC officials are generally not 

visiting the facilities to obtain site-specific information and assess 

the security plans in terms of each facility’s layout. NRC is largely 

relying on force-on-force exercises it conducts to test the plants, but 

these exercises will not be conducted at all three facilities for 3 

years.’’

In conclusion, GAO said, ‘‘NRC’s oversight of plant securities 

could also be improved. NRC is not following up to verify that all 

violations of security requirements have been corrected or taking 

steps to make lessons learned from inspections available to other 

NRC regional offices and nuclear power plants.’’ That is the end of 

the quote. 

Mr. Wells, what I would simply like to do today is to ask if you 

would like to let us know if you believe that these concerns, stated 

about a year ago, have been addressed, are being addressed. And 

if not, do you have any recommendations for us to ensure that they 

are addressed? 

Mr. WELLS. Yes, sir. I can say with fairly high confidence that 

those were the words that I said at that testimony; they sounded 

accurate. That was the status that we were finding at the NRC at 

the time we did that audit. We still stand by those findings. We 

are in the process of doing a much more comprehensive assessment 

of where the NRC is today related to those very significant findings. 

We are looking at the postulated threat that is out there. We are 

looking at the design based threat that has been established by the 

NRC and comparing that, as well as an objective we are visiting 

individual plants, looking at the actual brick and mortar that is 

being put in place to defend against that design basis threat. We 

hope to have that report available at the end of this year. We assume it will be in both the public and a classified version. 

I can say that, as we are doing our work, we are very vigilant 

in watching the force-on-force type program that NRC is putting in 

place. They are conducting these at a pace of approximately two a 

month. It is true that until you actually test what has been put in 

place, you do not have that answer with great certainty as to 

whether they can be protected. They are 3 years away from getting 

that type of answer. We are looking at the actual program and 

techniques that they are using. 

They have some growing pains; I will admit that. They are evolving and changing their inspection and their process as they go and 

as they learn ways in which they can be. 

So, yes, NRC is proceeding to have a better confidence 3 years 

from now that they can make a much more confident public statement than they could in October of 2004, when we looked at that 

process. 

Senator CARPER. Thank you. Thanks very much. 

Ms. Kray, can we return to your earlier question? Again, we are 

going to have a new generation of nuclear power; the issue of 

waste, what to do with it. Feel free to comment on Yucca Mountain, but any other new technology that other countries may be 

using, that may be under development. I welcome your thoughts. 

Ms. KRAY. Sure. I stated in the testimony understanding the 

long-term solution for spent fuel storage is a precondition for going 
37

forward and actually investing, that is, signing a purchase order. 

But, at the same time, we don’t want to stand still on the other 

challenges while this one is being addressed. And the industry fully 

endorses the science behind Yucca Mountain. Yet, at the same 

time, we are facing the reality of the political challenges associated 

with it. That then suggests, at least today, two possible alternatives. 

The first one, with respect to Yucca Mountain, is to look at it as 

more of a monitoring and retrievable facility, as opposed to just the 

long-term storage. That is, you would exchange the burden of having additional commitments with respect to retrieval and monitoring in exchange for relieving some of the uncertainty as far as 

trying to analyze well out into years that might be beyond the capability of computer modeling. It is expected that that would certainly help the DOE in their analysis, and then the NRC in their 

review of it. 

In addition to the Yucca Mountain piece is revisiting and reprocessing. Essentially, the United States has not been active in this 

area, so reprocessing as it stands today, from a utility perspective, 

is not attractive from a cost perspective. But we also know that 

perhaps if given the appropriate attention, the reprocessing could 

satisfy both certainly the safety proliferation concerns, and then 

also the cost-effectiveness. So reopening or re-examining the possibility of reprocessing would certainly be warranted. 

Senator CARPER. All right, thanks very much. Our thanks to 

each of you for being with us today and for your testimony. Thank 

you. 

Senator VOINOVICH. Senator Isakson. 

Senator ISAKSON. Thank you, Mr. Chairman. 

Mr. Wells, you were talking about force-on-force evaluation. I 

read Dr. Lyman’s printed testimony with regard to some questions 

he raised. How does GAO monitor that process, onsite or by reading reports? 

Mr. WELLS. I am sorry? 

Senator ISAKSON. Do you monitor by physically observing one of 

the force-on-force tests? 

Mr. WELLS. Absolutely. That is the value of GAO in terms of 

having resources available to do original audit work. We made a 

request and NRC accepted and invited us to attend a force-on-force 

that was conducted in New Jersey at a nuclear power plant, and 

we were observers. We participated in the exercise into the wee 

hours of the morning and watched the process; took a lot of notes 

about how things went. 

Senator ISAKSON. I thought I heard you say—and I am asking if 

I heard wrong—that in your evaluation they had identified technique problems and improved them. I think something to that effect. So that process is improving on the force-on-force evaluation? 

Mr. WELLS. Our observations are that NRC is working very diligent toward—we had pointed out previously a lot of faulty techniques in the force-on-force weaknesses that exist. They went 

through a pilot exercise program; they worked with NEI and they 

actually developed a new program that they have started within 

this 2005 year. 
38

They are in that process. They have probably done about a dozen 

force-on-forces, and it is a process that is evolving and they continue making improvements. But our initial observation, until we 

finish, is greatly improved over the old process. 

Senator ISAKSON. Ms. Kray, when you talk about siting needs, 

needs base is a tremendous part of your final siting decision. That 

is future needs more than existing needs, or is it existing needs? 

Ms. KRAY. Are you referring, sir, to the need for power in the 

area? 

Senator ISAKSON. Yes. 

Ms. KRAY. It primarily is in the future, because we recognize 

that even if we were to start today to prepare an application, the 

earliest we would think that it would come online would be 2015. 

So we are looking at a longer horizon. 

Senator ISAKSON. On that basis, let me put in a plug for the Savannah River site. Having seen it, known what it is used for in the 

past, and the Regulatory Commission’s comments that previous 

uses are excellent sites, that is a good one. We have a growing need 

in the State of Georgia. 

My only other question, Mr. Chairman, also in your nine items 

of concern that NuStart had—I think it was nine or seven——

Ms. KRAY. Seven, but that is OK. 

Senator ISAKSON [continuing]. One of them was financial concerns. Now, I know how Georgia operates in terms of the Public 

Service Commission, and I was a part of the legislation when Plant 

Vogel was approved, financed, and everything. Are you talking 

about the capital financing to build the facility or are you talking 

about the rate-making process and how the future revenue comes 

in? 

Ms. KRAY. Primarily the financing to build it. And that needs to 

be looked at depending upon whether a new facility will be in a 

regulated environment or deregulated environment, because that 

certainly imposes different conditions on the investor. But essentially, we see that incentives will be needed to address the additional investment hurdles that will be facing just the first wave of 

the new nuclear plants, and we need to review any that are considered in context certainly of incentives offered to other fuel alternatives as well. 

As utilities, we are not predisposed to any form of generation, 

and that is, if convinced, that we need to build something, we will 

build whatever is certainly in compliance with all regulations and 

standards, but also one that has the best benefit for our shareholders. And we see with nuclear, at least for the uncertainties associated with that, are facing some challenges that are unique to 

that, especially compared to the other base-load alternatives. 

Senator ISAKSON. Well, real quickly—because I know my time is 

running out—in the 1970s, construction while in progress type financing mechanisms, CWIP, were the desire obviously, but one of 

the big problems that happened was the tremendous overruns that 

took place in the construction for these facilities. My question is 

will CWIP still be the ideal mechanism for a company for financing 

construction? And if it were, do you feel now that construction of 

nuclear plants, the problems that we had in the 1970s with the 
39

cost overruns, and the tremendous overruns in some cases, is highly less likely because of the technology and the past experience? 

Ms. KRAY. We are optimistic that there have been lessons 

learned from that. I mean, there is not a good track record in the 

United States for having built plants on time and on budget. We 

can look to some success in the Asian markets, and we are also 

comforted by the fact that the plants we are adopting now are 

somewhat more simpler, that is, less components to actually build 

and construct. 

There have also been advances in modular construction which we 

would intend to use. So we would expect certainly a more commitment and sense of urgency around the construction, and also a 

more ease because of the design. 

With respect to the financing structure, we are open to some 

more innovative approaches, and that is looking for the vendors to 

engage with us in turnkey type of financing, and, again, models 

that we have seen similar to the Finland reactor that was recently 

commissioned. So we would be looking to that, and certainly one 

of the concerns is the financing during construction, the impact on 

the dilution of earnings. That remains a hurdle for the investment 

of a large capital- intense project. 

Senator ISAKSON. Thank you. 

Senator VOINOVICH. Senator Jeffords. 

Senator JEFFORDS. Mr. Wells, based upon your study, does GAO 

believe that the NRC has sufficient information about the problems 

with material control and accounting to proceed with revising the 

inspection system? 

Mr. WELLS. Yes. We agree that there is a problem between us 

and NRC. We disagree at the speed at which they are implementing the corrective action. We suggested they already had 

enough. They are 5 years into this problem. They suggested to us 

that they weren’t quite ready yet, they wanted to continue to study 

it. 

Senator JEFFORDS. What could Congress do to improve the materials tracking at power plants? 

Mr. WELLS. Excuse me? 

Senator JEFFORDS. What could we do, as Congress, to improve 

materials tracking at the power plants? 

Mr. WELLS. You have a regulatory agency that has a regulatory 

requirement that the licensee knows exactly where all this material is. The difficulty we encountered in terms of figuring out what 

caused this material to be missing was the lack of specificity in 

those recommendations. 

I believe you need to hold NRC accountable to write that specificity in there so that every licensee knows what type of inventory 

they need to use, how it is to be inspected, and how it is to be recorded, especially as it relates to missing and spent fuel pieces that 

are currently not addressed in the regulation. NRC agrees with 

that, yet they continue to want to look further to see if it is more 

prevalent elsewhere. 

Senator JEFFORDS. Thank you for that answer. 

Thank you, Mr. Chairman. 

Senator VOINOVICH. I would like to thank the witnesses for coming here this morning. If you have any comments that you would 
40

like to make in writing to the committee, we would be more than 

happy to receive them. Thank you very much. 

The meeting is adjourned. 

[Whereupon, at 11:00 a.m., the subcommittee was adjourned.] 

[Additional statements submitted for the record follow:]

STATEMENT OF HON. BARACK OBAMA, U.S. SENATOR FROM THE STATE OF ILLINOIS

Mr. Chairman, thank you for holding this hearing. 

As electricity demand throughout the Nation increases in the coming decades, we 

will be challenged in how best to meet these consumption demands without sacrificing the environment. That means creating jobs, protecting water and air quality, 

establishing energy independence, and using all of our energy resources fully and 

wisely. 

I strongly support greater energy conservation and greater Federal investment in 

renewable technologies such as wind and solar, which ought to receive greater attention in our national energy policy than they likely will this year. 

However, as Congress considers policies to address air quality and the deleterious 

effects of carbon emissions on the global ecosystem, it is reasonable—and realistic—

for nuclear power to remain on the table for consideration. Illinois has 11 nuclear 

power plants—the most of any State in the country—and nuclear power provides 

more than half of Illinois’ electricity needs. 

But keeping nuclear power on the table—and indeed planning for the construction 

of new plants—is only possible if the Nuclear Regulatory Commission is vigilant in 

its mission. We need better long-term strategies for storing and securing nuclear 

waste and for ensuring the safe operation of nuclear power plants. How we develop 

these strategies is a major priority for me. 

I look forward to hearing the testimony of the witnesses, and I thank the Chair 

for holding this hearing. 

STATEMENT OF NILS J. DIAZ, CHAIRMAN, U.S. NUCLEAR REGULATORY COMMISSION

INTRODUCTION

Mr. Chairman and members of the Subcommittee, it is a pleasure to appear before you today with my fellow Commissioners to discuss the U.S. Nuclear Regulatory Commission’s programs. We appreciate the past support that we have received from the Subcommittee and the Committee as a whole, and we look forward 

to working with you in the future. I request that my written testimony, on behalf 

of the Commission, be submitted for the record. 

The NRC is dedicated to the mission mandated by Congress—to ensure adequate 

protection of public health and safety, promote the common defense and security, 

and protect the environment—in the application of nuclear technology for civilian 

use. We have taken an integrated approach to safety, security, and emergency preparedness in carrying out this mission. Many of the Commission’s initiatives over 

the past several years have focused on enhancing safety, security and emergency 

preparedness, while improving the effectiveness, efficiency, and openness of our regulatory system. I will highlight our key ongoing oversight and licensing activities, 

including pertinent initiatives. 

REACTOR OVERSIGHT PROGRAMS

The Reactor Oversight Process has now been implemented for 5 years, with increasing effectiveness and maturity. We believe that this program is a significant 

improvement over the former inspection, enforcement, and assessment processes, 

and has brought a more disciplined and objective approach to oversight of nuclear 

power plants. Performance indicators and inspection findings for every power reactor can be found on NRC’s public web site, as well as our current assessment of each 

reactor’s overall performance. We continue to strive to make further enhancements 

to the program, and specifically to improve the predictability of performance degradation with Performance Indicators. 

As you know, the NRC staff has devoted significant resources over the past 3 

years to oversight of the Davis-Besse nuclear power plant in Ohio. We took these 

actions following the discovery of significant degradation of a portion of the reactor 

vessel head. The NRC authorized the plant to restart in March 2004 only after an 

extensive plant recovery program and comprehensive corrective actions by the licensee, and considerable NRC inspection and assessment. With the restart decision, 
41

the NRC issued a Confirmatory Order requiring independent assessments and inspections at Davis-Besse to ensure that long-term corrective actions remain effective. Overall, the plant has been operating safely, and the NRC staff recently determined that plant performance warrants termination of the special panel that was 

created specifically for the oversight of Davis-Besse. However, the NRC is continuing increased regulatory oversight under the reactor oversight process, including 

continued oversight of the independent assessments required by the Confirmatory 

Order. 

In April 2005, NRC proposed a $5.45 million fine against the licensee, 

FirstEnergy for violations of NRC requirements associated with the significant reactor vessel head damage discovered in March 2002 at Davis-Besse. This is the largest 

single fine ever proposed by the NRC. This substantial fine emphasizes the high 

safety significance of FirstEnergy’s failure to comply with NRC requirements, and 

the company’s willful failure to provide the NRC with complete and accurate information. Matters related to Davis-Bessie have also been referred to the Department 

of Justice. 

As previously reported, we have undertaken a critical review of our programmatic 

and oversight activities to evaluate our own actions associated with the reactor vessel head degradation at Davis-Besse. This review includes NRC’s internal DavisBesse Lessons Learned Task Force Report together with reports from NRC’s Office 

of Inspector General and the Government Accountability Office. Our corrective actions and program improvement efforts resulted in 49 significant recommendations. 

Currently, staff has completed addressing 44 of the 49 recommendations. Four of 

the remaining items will be completed within the next few months. The one remaining action, which requires development of an engineering code, has a long lead time. 

NRC recognizes that communication failures were an underlying cause for issues 

discovered at Davis-Besse. The corrective actions outlined in the lessons-learned 

task force action plans specifically address communications. There has been a significant improvement in the communications among NRC regional, headquarters, 

and site offices, resulting in improved oversight activities. 

In response to the Commission directive issued in August 2004, the NRC staff is 

currently developing a list of safety culture attributes, indicators, and objective 

measures and identifying gaps relative to the evaluation of safety culture. The 

staff’s activities will take into account the ongoing industry initiatives and the experience of foreign regulators. In October 2004, a guidance document outlining NRC’s 

expectations for establishing and maintaining a safety conscious work environment, 

a key attribute of safety culture, was published for comment. The staff expects to 

issue the final document this summer. The next step is to modify the Reactor Oversight Process to more fully address the management of safety and safety culture 

issues by licensees, and to develop better methods, tools, and training for the NRC’s 

inspection staff. 

REACTOR LICENSINQ PROGRAMS

The reactor licensing program, coupled with a strong oversight program, ensures 

that operating nuclear power plants maintain adequate protection of public health 

and safety throughout the plant’s operating life. NRC licensing activities include 

using state-of-the-art science, engineering and risk assessment methods and information from operating experience to establish reactor safety standards, to promulgate the related rules, regulations, orders and generic communications as appropriate, and to review applications consistent with these requirements. In Fiscal Year 

(FY) 2004, NRC staff completed 1,741 licensing actions involving all 104 licensed reactors. 

• License Renewal 

One of the most significant types of licensing actions for existing reactors involves 

license renewals. These reviews are focused on plant aging issues, including a thorough determination of the plant’s passive components. In 2004, seven reactors had 

their licenses renewed for an additional 20 years and two reactor licenses were renewed thus far in 2005. That brings the total number of renewed reactor licenses 

to thirty-two. In every instance, the staff has met its timeliness goals in carrying 

out the safety and environmental reviews required by our regulations. Sixteen additional license renewal applications are currently under review. The agency recently 

returned a license renewal application covering two reactors to a licensee because 

the staff’s initial review determined that the application was not acceptable for 

docketing. The Agency also held significant discussions with another licensee about 

the adequacy of its license renewal application. We expect that almost all of the 104 

reactors licensed to operate will apply for renewal of their licenses, and the staff 

will continue to face a significant workload in this area for the next 7 to 10 years. 
42

• Power Uprates 

Another significant type of licensing action, called a power uprate, involves a request to raise the maximum power level at which a plant may operate. Improvement of instrument accuracy and plant hardware modifications, in addition to improvements in computational tools and engineering models enabling more accurate 

engineering analyses, have allowed licensees to propose power uprates from the 

level initially authorized while maintaining appropriate safety margins. The focus 

of our review of these applications has been and will continue to be on safety. 

To date, the NRC ias approved 105 power uprates which have safely added capacity equivalent to more than four large nuclear power plants. Currently, the NRC 

has 11 power uprate applications under review and expects to receive an additional 

16 applications through calendar year 2006. 

The NRC closely monitors operating experience at plants that have implemented 

power uprates. The NRC has observed cases of steam dryer cracking and flow-induced vibration damage affecting components and supports for the main steam and 

feedwater lines in Boiling Water Reactors with extended power uprates. We conducted inspections to identify the causes of several of these issues and evaluated 

many of the repairs performed by the licensees. We continue to closely monitor the 

industry’s response to these issues. We have factored this experience into our review 

of pending applications and plan to do the same for future applications. 

• New Reactor Licensing 

Improved safety and reliability performance have resulted in significant overall 

improvements in nuclear power plants, including electrical generation output and 

production costs. The strong performance, increased electrical demand, and inclusion of nuclear energy in our nation’s energy mix appear to be conducive to industry 

interest in new construction of nuclear power plants. 

The NRC is prepared to discharge its responsibilities if applications for new power 

plants are filed. We anticipate that applicants for new nuclear power plants will utilize the licensing processes promulgated in 10 CFR Part 52, which was developed 

to provide a more stable, timely and predictable licensing process. This process is 

designed to resolve safety and environmental issues, including emergency preparedness and security, prior to the physical construction of a new nuclear power plant. 

Under 10 CFR Part 52, the design certification process resolves the fundamental 

technical and safety issues related to the plant design, while the early site permit 

process resolves safety and environmental issues related to a specific potential site. 

Use of the design certification and early site permit processes can significantly increase regulatory certainty because the issues resolved through these two processes 

can be referenced in an application for a combined construction permit and operating license. This is referred to as a combined license. This license would specify 

inspections, tests, and analyses which the licensee must perform, and the acceptance criteria that will be used to verify conformance with the regulations before the 

facility can commence operation. The NRC considers Part 52 to be a strong and viable approach for review of future reactor applications and is working to incorporate 

recent experience gained from design certification reviews, current early site permit 

reviews, discussions with nuclear industry representatives, and input from the public to further enhance this process. 

The NRC has already certified three new reactor designs and codified them in the 

regulations, making them available for new plant orders. These designs include 

General Electric’s Advanced Boiling Water Reactor and Westinghouse’s AP600 and 

System 80+ designs. In addition, the NRC issued the Final Design Approval for the 

AP1000, and its proposed design certification rule was recently published for public 

comment. The NRC encourages early communication with potential applicants to 

identify unique design features or challenging licensing issues through the pre-application process. Currently, the NRC is engaged in conducting preliminary discussions on six additional reactor designs. These discussions indicate that we could receive several design certification applications in the near future. 

The NRC received three early site permit applications in late 2003 for sites at 

which operating reactors already exist in Virginia, Illinois, and Mississippi. Schedules are in place to complete the safety reviews and environmental impact statements in approximately 2 years from the date of an application. In fact, the NRC 

staff has already issued draft safety evaluation reports and draft environmental impact statements on all three early site permit applications for public comment. The 

mandatory adjudicatory hearings associated with the early site permits are currently ongoing. 

Finally, Part 52 provides for a combined construction/operating license process 

which allows applicants to seek, in a single application, a license authorizing both 

construction and operation prior to construction. This leads to combining adjudica-
43

tion of licensing issues in one hearing, instead of the two hearings utilized previously. Furthermore, the efficiency of NRC’s safety-focused reviews would be substantially increased if applicants utilize an early site permit and certified design in 

their combined license applications. Although specific plans from the industry are 

not yet available, the NRC may receive up to five combined license applications beginning in 2007–2008. 

The Commission is fully committed to ensuring that our agency is ready to meet 

the expected demand for new reactor licensing through maintaining a strong regulatory framework and adequate staffing and funds for handling multiple combined 

license applications. We will continue to work with stakeholders to address issues 

associated with implementation of our licensing process and Congress to ensure that 

our resource needs are identified. 

SECURITY

The Commission continues to impose new requirements, when appropriate, to enhance security of nuclear facilities and materials and communicate these requirements to our licensees. Our efforts also include close communication and coordination with the Department of Homeland Security (DHS) and other agencies in the 

intelligence and law enforcement communities. 

• Nuclear Power Plant Security 

On February 25, 2002, the NRC required additional protective measures and 

strategies by each power plant licensee to protect against land-based and waterborne attacks and to provide additional mitigative capabilities for large explosions 

or fires at nuclear power plants, including those that could be caused by aircraft 

attack. Furthermore, increased coordination with local, state and national authorities was implemented to strengthen both prevention and mitigation. NRC power 

plant licensees were required to implement responsive measures by August 29, 

2002. The NRC conducted inspections of each facility, required action to address 

noted deficiencies, and is in the process of further confirming implementation of best 

practices across the industry. 

Additional Orders were issued from January 2003 through April 2003. This set 

of Orders addressed access control, physical barriers, training and qualification programs—as well as work-hour limits—or security personnel, capabilities to defend 

against more challenging threats, and spent fuel storage and transportation. For the 

requirements relating to the supplemental threat characteristics, additional site-specific analyses were required. NRC licensees implemented these orders by October 

29, 2004. Licensee measures to address supplemental threat characteristics were 

evaluated immediately upon submission, and implementation continues to be inspected by a variety of means. 

The NRC is currently developing a proposed rule and supporting guidance to codify supplemental requirements related to the Design Basis Threat (DBT). The proposed rule, due to the Commission in June 2005, is expected to be issued later this 

year for public comment, and the final rule is scheduled for completion in 2006. 

Also, we have redefined our baseline inspection program for physical protection and 

are phasing in the new inspection program consistent with the new requirements 

at power reactors. As a complement to licensee security measures, NRC is working 

with DHS and the Homeland Security Council, as well as other partners to enhance 

the integrated Federal, State, and local response planning for threats and attacks 

on nuclear facilities. We are also supporting DHS’s comprehensive review of security 

and emergency preparedness of nuclear power plant sites under the National Infrastructure Protection Plan. 

The NRC has completed a set of security assessments and identified mitigation 

strategies for NRC-licensed nuclear facilities. Thus far, the results of these assessments have validated the actions NRC has taken to enhance security as well as 

areas needing further improvements. These efforts have continued to affirm the 

robustness of these facilities, the effectiveness of redundant systems and defensein-depth design principles, the value of existing programs for operator training in 

severe accident management strategies, and emergency preparedness. Assessments 

performed to date confirm the low likelihood of damaging the reactor core and releasing radioactivity that could affect public health and safety. 

Further, these assessments confirm that even in the unlikely event of a radiological release due to terrorist activities, the NRC’s emergency planning basis remains valid. These assessments also indicate that significant damage to a spent fuel 

pool is improbable, that it is highly unlikely that the impact on a dry spent fuel 

storage cask would cause a significant release of radioactivity, and that the impact 

of a large aircraft on a transportation cask would not likely result in a release of 

radioactive material. Thus, we believe that measures implemented with respect to 
44

nuclear power plant safety, security, and emergency planning programs continue to 

provide reasonable assurance of adequate protection of the public health and safety. 

We are continuing to perform detailed plant-specific studies to further enhance our 

understanding of appropriate mitigative capabilities and to ensure effective implementation of these capabilities. 

We continue to implement the force-on-force exercise inspection program to evaluate licensees’ defensive capabilities and identify areas for improvement. In late 

2004, NRC began full implementation of a triennial force-on-force exercise program 

for power reactors following a pilot force-on-force exercise program. The triennial 

force-on-force exercise program applied lessons learned from the pilot program and 

additional enhancements including the use of Multiple Integrated Laser Enhancement System (MILES) equipment, Composite Adversary Force (CAF) standards, improved controller training, and other enhancements to improve the realism of the 

exercises while maintaining safety of both the plant and personnel. 

We have reviewed the Wackenhut Corporation’s program for the CAF for forceon-force exercises, including the hiring and training of new members in accordance 

with the CAF standard established by the NRC. The review found that the 

Wackenhut Corporation’s program meets the NRC’s CAF standard, confirmed that 

appropriate management and administrative controls were in place within the 

Wackenhut organization to provide adequate independence between the CAF and 

nuclear guard force, and that some CAF members are selected from sites where security is provided by Wackenhut’s competitors. Experience with recent force-onforce 

exercises has proven the existing CAF to be a significant improvement in ensuring 

a uniform high quality for mock-terrorist attack exercises. 

In relation to the study conducted by the National Academy of Sciences (NAS), 

the U.S. Congress directed the NRC to take the necessary steps to improve the analyses related to spent nuclear fuel storage at commercial reactor sites, including the 

preparation of site-specific modals, and to ensure timely application of this information by the utilities to mitigate risks. The NRC has taken numerous actions to enhance the security-of spent nuclear fuel. The results of security assessments completed to date show that storage of spent fuel continues to be safe and secure. Nonetheless, the Commission agrees with the NAS recommendation that plant-specific 

analyses are needed and the NRC is conducting them and continuing to improve its 

analyses related to spent nuclear fuel. 

• Material Security 

Since September 11, 2001, the NRC has thoroughly re-evaluated its safeguards 

and security programs. To date, has issued over 16 different categories of Orders 

and Confirmatory Action Letters covering hundreds of licensees and actions involving radioactive materials of greatest concern. The NRC continues to devote considerable effort to determining what additional actions should be used to enhance the security of these materials in use, in storage, or in transport. The emphasis of this 

effort is on preventing the use of radioactive materials that have the potential to 

pose a risk to public health and safety if used in a radiological dispersal device or 

a radiological exposure device (RDD/RED). 

The Commission, in coordination with our Department of Energy (DOE) colleagues, has taken the following actions to improve the security of radioactive 

sources of greatest concern: (1) issued advisories to licensees to enhance security 

measures; (2) issued the DOE/NRC Interagency Working Group Report on RDD/

REDs, which defined threshold quantities for radioactive materials that are the 

highest risk and have a potential for malevolent use; (3) worked with the Departments of Energy and State and the international community to reach agreement on 

which radioactive materials and sources are of the greatest concern, consistent with 

the International Atomic Energy Agency (IAEA) Code of Conduct on the Safety and 

Security of Radioactive Sources; (4) approved a final rule amending its export and 

import regulations, in coordination with the Departments of State, Energy, and 

Homeland Security, to impose more stringent controls over the Category I and Category II materials defined by the IAEA Code of Conduct; (5) is developing a National Source Tracking System to track radioactive materials of greatest concern 

specified in the IAEA Code of Conduct on a permanent basis; and (6) developed an 

interim data base of Category I and II radioactive sources for both NRC and Agreement State licensees which will be maintained until the National Source Tracking 

System is complete. 

EMERQENCY PREPAREDNESS AND RESPONSE

NRC recognizes the importance of the integration of safety, security, and emergency preparedness and response to fulfill the primary NRC mission of protecting 

public health and safety. Since September 11, 2001, the NRC has increased its focus 
45

on potential terrorist scenarios as initiating events. As part of the Orders issued in 

February 2002, the NRC required nuclear power plant operators to make enhancements in several areas of emergency preparedness, including emergency response facilities, emergency response organizations, classification of and response to credible 

threats, and evaluation of a broader range of hazards. Nuclear industry groups and 

Federal, State, and local government agencies have taken an active role in the 

prompt implementation of these measures and have participated in drills and exercises to test new planning and response elements. 

The NRC conducted a formal evaluation of the emergency preparedness planning 

basis in view of the current threat environment and determined that emergency preparedness at nuclear power plants remains strong. Improvements have been made 

in the areas of communications, resource management, emergency exercise programs, and NRC guidance documents used by licensees. These improvements are reviewed and inspected. Recently, the Commission directed the staff to issue a generic 

communication to licensees to further enhance emergency preparedness in the post 

9/11 environment. The NRC intends to conduct outreach activities with external 

stakeholders, especially state and local government agencies, to describe the enhancements and solicit feedback on these changes and other emergency preparedness and response issues of mutual interest. 

The NRC has also implemented the National Response Plan on schedule. Between 

October 2004 and January 2005, NRC staff briefed over 400 industry and government stakeholders in all four NRC regions on the implementation of the National 

Response Plan and the National Incident Management System. 

MATERIALS PROGRAM

The NRC, in partnership with the 33 Agreement States, conducts comprehensive 

programs to ensure the safe use of radiological materials in a variety of medical, 

industrial and research settings. As some of NRC’s responsibilities, including inspection and licensing actions, have been assumed by Agreement States, our success depends in part on their success, and we closely coordinate our activities with the 

States. 

The NRC is developing a web-based materials licensing system that is expected 

to provide a secure method for licensees to request licensing actions and to view the 

status of licensing actions. In addition, the NRC, with assistance from other Federal 

agencies and the States, is establishing a National Source Tracking System that will 

be used to monitor radioactive sources that warrant the greatest control. The implementation of the National Source Tracking System continues to be a high-priority 

effort, and this project remains on schedule to be operational in 2007. 

The Commission has also implemented a major rule change related to large fuel 

cycle facilities which requires licensees and applicants to perform an integrated 

safety analysis that applies risk-based insights to the regulation of their facilities. 

Major licensing reviews currently underway use the requirements of the new rule. 

These licensing reviews include two proposed commercial gas centrifuge uranium 

enrichment facilities. 

The first of these proposed enrichment facilities would be located in New Mexico 

and the second in Ohio. Louisiana Energy Services submitted an application for its 

facility in Eunice, New Mexico, to the NRC in December 2003. USEC then submitted its application to the NRC for its site in Piketon, Ohio, in August 2004. The 

NRC staff expects to complete its review of the Louisiana Energy Services’ application and issue both the Final Environmental Impact Statement and the Safety Evaluation Report next month. The NRC staff review of USEC’s application is well underway, and the staff is working to meet the established thirty-month schedule. 

In March 2005, NRC staff authorized construction of a mixed oxide (MOX) fuel 

fabrication facility at the Savannah River site in South Carolina as part of the 

DOE’s program to dispose of excess weapons grade plutonium. At present, an adjudicatory proceeding concerning construction authorization for the facility is before 

the Commission’s Atomic Safety and Licensing Board. The NRC staff is also providing support to its Russian counterparts regarding the licensing of a Russian 

MOX facility that will have a design similar to the U.S. facility. 

In addition to the new facilities discussed above, the NRC regulates 7 fuel facilities in California, North Carolina, South Carolina, Tennessee, Virginia, and Washington. NRC’s oversight of these facilities includes licensing actions, inspection, enforcement, and assessment of licensee performance. 

NRC also authorized Duke Energy Corp. to use four MOX fuel assemblies, containing uranium and plutonium, as part of the nuclear fuel at its Catawba nuclear 

power plant in South Carolina. The MOX fuel assemblies designed for use in the 

Catawba reactor were produced by combining surplus plutonium from dismantled 
46

U.S. nuclear weapons with uranium into a form that can be used by commercial nuclear power plants. This usage of the MOX fuel assemblies at Catawba is the first 

use of MOX fuel in a commercial power reactor as part of the ongoing U.S.-Russian 

plutonium disposition program being implemented by the DOE. 

NUCLEAR WASTE PROGRAM

The NRC has made significant progress on activities related to protecting public 

health and safety in relation to disposal of nuclear waste. A major focus of these 

activities has been, and continues to be, ensuring that the agency is prepared to review a potential application by DOE to construct a deep, geologic, high-level radioactive waste repository at Yucca Mountain, Nevada. The Nuclear Waste Policy Act 

requires the NRC to complete its safety review of a license application, conduct a 

public hearing before an independent licensing board, and issue a decision on construction authorization in 3 years after submittal, with a possible extension to 4 

years. 

In July of 2004, the D.C. Circuit Court of Appeals vacated the 10,000-year compliance period established by the Environmental Protection Agency (EPA) and incorporated in NRC’s regulations for Yucca Mountain. As required by the Nuclear Waste 

Policy Act, the NRC stands ready to amend its regulations consistent with any 

forthcoming changes to the EPA standards for Yucca Mountain. 

In anticipation of a DOE license application for Yucca Mountain, the NRC has 

prepared an electronic hearing system to conduct potential public hearings related 

to potential construction of a high-level radioactive waste repository at Yucca Mountain. An electronic information technology system data base has been developed to 

catalogue and allow public access to the vast array of complex documents involved. 

A hearing facility has been constructed near Las Vegas, Nevada. 

The NRC staff also has a substantial effort underway in the area of dry cask storage of spent reactor fuel. Storage and transport cask designs continue to be reviewed and certified. Independent Spent Fuel Storage Installations (ISFSIs) continue to be licensed and inspected. The proposed Private Fuel Storage ISFSI in 

Utah is the subject of an ongoing adjudicatory proceeding. Indeed, our workload related to ISFSIs and dry cask storage will require continued technical review and licensing and inspection resources as the number of licensed ISFSIs will increase 

from 34 currently to approximately 50 by 2008. The NRC also began development 

of the Package Performance Study to confirm the suitability of spent nuclear fuel 

transportation casks. The study will involve testing the integrity of a full-scale 

transportation rail cask. In addition, NRC is supporting a study by the National 

Academies’ Board on Radioactive Waste Management that is examining radioactive 

material transportation, with a primary focus on the technical and societal risk of 

spent fuel transportation. 

NRC staff is also continuing to make significant progress in ensuring the safe decommissioning of contaminated sites. During fiscal year 2004, the staff identified 

several policy issues requiring Commission direction that will help expedite safe decommissioning under NRC’s License Termination Rule. The Commission has provided the necessary guidance to the staff for regulatory actions to be taken during 

fiscal year 2005–2007 under the staff’s Integrated Decommissioning Improvement 

Plan. These regulatory improvements will facilitate decommissioning at existing 

sites and should reduce problems at future decommissioning sites. 

Program management changes will also be completed this year that will improve 

the efficiency and effectiveness of the program. Finally, we are completing the oversight of the decommissioning of a number of reactor and complex materials sites 

this year. 

INTERNATIONAL PROGRAM

The NRC also carries out an active international program of cooperation and assistance involving thirty-eight countries with which it exchanges nuclear safety information. This program provides health and safety information and assistance to 

other countries to develop and improve regulatory organizations and overall nuclear 

safety and security worldwide. The NRC continues to strongly support multilateral 

programs for enhancing the level of nuclear safety worldwide, and serves in leadership roles on the technical committees that develop and monitor best practices, and 

in implementing certain treaties and conventions that encourage the wider adoption 

of basic standards and practices. It is worth noting that we just released the Export 

and Import Rulemaking, which will enable the U.S. to meet its goal with the G–

8 to implement the export-import provisions of the IAEA Code of Conduct by December 2005. 
47

HUMAN CAPITAL

As you know, the NRC is very dependent on a highly skilled and experienced 

work force for the effective execution of its activities. The Commission has developed 

and implemented a strategic workforce planning system to identify and monitor its 

human capital assets and potential critical skills shortages, and to promote employee development, succession planning, and retention. The agency has also implemented two leadership competency development programs to select high-performing 

individuals and train them for future mid-level and senior-level leadership positions. 

In addition, the agency has continued to support a fellowship and scholarship program and identify a significant number of diverse, highly qualified entry-level candidates through participation in recruitment events and career fairs. 

NRC has developed an agency wide set of strategic human capital management 

strategies to mitigate and close gaps between available staffing resources and anticipated staffing needs. NRC is utilizing a variety of recruitment and retention incentives and offers a wide range of technical and professional training to attract and 

retain staff to remain competitive with the private sector. 

Additionally, planning for and developing the agency’s future leaders is a critical 

part of our approach for managing human capital. The NRC’s strategic long-range 

human capital planning includes: succession planning (both managerial and technical); partnerships/cooperative ventures with other stakeholders (e.g., academia, 

other agencies, national laboratories, private groups) to develop talent supply; continuous improvements to recruitment and training processes, such as the NRC legislative proposals submitted to the Congress on Marcn 30, 2005; a robust Knowledge 

Management Program; and organizational infrastructure improvements that include 

the rental of office space, workstation configuration and equipment, security clearances, and associated information system needs. 

The Commission is very much encouraged by S. 858, the bill recently introduced 

in the Senate which contains the provisions that would help the NRC to expand the 

pool of prospective employees who have the skills to carry out the agency’s tasks, 

employ former Federal employees who have the skills that are critical to the performance of the Commission’s duties, and encourage institutions of higher education 

to train their students in the skills needed to carry out NRC’s work. We believe 

these provisions would significantly contribute to assuring the necessary regulatory 

expertise required by the NRC to accomplish its regulatory mission. We strongly 

urge the Congress to enact the human capital provisions in S. 858 into legislation. 

BUDGET

The NRC proposed a fiscal year 2006 budget of $702 million, which is a budget increase of approximately 5 percent ($32 million) over the fiscal year 2005 budget 

for essential activities. This budget proposal will allow the NRC to continue to protect the public health and safety, promote the common defense and security, and 

protect the environment, while providing sufficient resources to address increasing 

personnel costs and new work. Approximately 55 percent ($17.7 million) of the increase is for the nuclear reactor safety program to strengthen reactor inspection activities and keep pace with licensing needs of existing nuclear reactor facilities. An 

increase of $2.5 million supports our responsibilities for oversight of certain DOE 

wasteincidental-to-reprocessing, as required by Section 3116 of the Ronald W. 

Reagan National Defense Authorization Act of fiscal year 2005. The remaining increase is to fund Federal pay raises and other non-discretionary compensation mid 

benefit increase. 

The NRC’s fiscal year 2006 budget includes approximately $69.1 million to support high-level waste activities. These activities include license application review, 

hearings, and inspection and performance confirmation oversight activities, reflecting DOE’s anticipated license application for the Yucca Mountain waste repository 

in December 2005. The Package Performance Study, to confirm the suitability of 

spent nuclear fuel transportation casks, is also included. 

The NRC’s proposed fiscal year 2006 budget request includes $37 million for the 

NRC’s continuing work on new reactor licensing, including review of the three early 

site permit applications, review of two standard design certification applications, 

and development and updating of the agency’s regulatory structure to accommodate 

new, advanced reactor designs. The demand for new reactor licensing is now expected to grow more rapidly than previously anticipated and budgeted. As stated 

previously, the NRC may be faced with a significant increase in its workload for 

new reactor licensing, including receipt of up to five combined license applications 

beginning in 2007–2008, which creates additional demands on the NRC. The Commission notes that the House Appropriations Committee provided an increase of $21 

million over the agency’s budget request to address the increased security workload. 
48

On March 17, 2005, the NRC submitted proposed legislation which would authorize appropriations for fiscal year 2006. The proposed legislation included two provisions related to financing the budget. One would make permanent the NRC’s 90 percent fee recovery requirement beginning in fiscal year 2006. Absent this legislation 

the NRC would only be authorized to collect 33 percent of its budget authority in 

fees after fiscal year 2005. Another provision would permit the NRC to assess and 

collect fees from other Federal agencies for licensing and inspection services rather 

than recovering those costs through annual fees assessed to private sector licensees. 

We are pleased that both are incorporated in the provisions of S. 858. 

LEGISLATIVE NEEDS

The NRC urges the enactment of key legislative provisions needed to augment its 

oversight of such facilities and materials, and to enhance NRC’s effectiveness and 

efficiency. As indicated earlier, the Commission strongly supports legislation that 

would contribute to the maintenance of the regulatory expertise required by the 

NRC to accomplish its regulatory mission. Most of the provisions in question have 

already been incorporated into legislation introduced in the Senate this year. 

Several provisions contained in S. 864, the Nuclear Safety and Security Act of 

2005, are particularly important to further enhance the nuclear safety and security 

of facilities and materials that are regulated by the NRC. They are: (1) authorization of the Commission to allow security personnel engaged in the protection of designated nuclear facifties, radioactive material, and other property owned or possessed by an NRC licensee or certificate holder to possess and use more robust 

weapons for carrying out their official responsibilities, (2) amendment of the Atomic 

Energy Act to expand the requirements for fingerprinting, for criminal history 

record checks, (3) making unauthorized introduction of weapons into NRC-regulated 

facilities a Federal crime, and (4) making it a Federal crime to sabotage commercial 

nuclear facilities, fuel, or Commission-designated material or property not previously covered by the sabotage section of the Atomic Energy Act (section 236), and 

extending coverage to the construction period of all facilities addressed by that section. 

In addition, the Commission believes that public health and safety and the promotion of the common defense and security would be enhanced by NRC regulatory 

jurisdiction over accelerator-produced and certain other radioactive material. Such 

a provision was included in an omnibus bill that the Commission submitted to the 

Congress at the end of March of this year, but it has not been incorporated into 

any of the bills whose provisions are discussed here. 

Various provisions that would enhance NRC effectiveness and efficiency are contained in Title II of S. 858, the Nuclear Fees Reauthorization Act of 2005. These 

include the following: (1) clarification of the period of the license in the case of a 

combined construction and operating license for a nuclear power plant, (2) elimination of NRC’s antitrust review authority with respect to pending or future applications for a license to construct or operate a commercial utilization or production 

facility, (3) permanent extension of NRC’s authority to collect approximately 90 percent of its budget authority in fees, as noted earlier, (4) authorization of NRC to 

assess and collect fees from other Federal agencies for services provided to them, 

as noted earlier, and (5) clarification that the existence of an organizational conflict 

of interest does not bar NRC from entering into a contract or other arrangement 

for work to be performed at a DOE laboratory, if the Commission determines that 

the conflict of interest cannot be mitigated and that adequate justification exists to 

proceed with the arrangement. The NRC strongly supports these provisions. 

Key provisions relating to maintaining and improving the NRC’s regulatory expertise are contained in Title III of S. 858, as noted earlier. Prominent among these 

are provisions that would help the NRC to expand the pool of prospective employees 

who have the skills to carry out the agency’s tasks, by enabling the agency to employ former Federal employees who have skills that are critical to the performance 

of the Commission’s responsibilities, and encouraging institutions of higher education to train their students in the skills needed to carry out NRC’s work. The 

Commission strongly supports all the provisions of Title III of S. 858. 

S. 858 also contains provisions that would enhance NRC’s ability to recruit appropriate individuals for NRC employment. These provisions would permit NRC to purchase promotional items of nominal value; provide transportation, lodging, and subsistence allowances to student interns hired by the NRC; and establish a scholarship and fellowship program to enable undergraduate and graduate students, respectively, to pursue education in science, engineering, or another field of study that 

the Commission determines to be critical to the NRC’s regulatory mission. The Commission also supports the enactment of these provisions. 
49

In addition, the Commission supports the enactment of S. 865, extending the 

Price-Anderson Act as it applies to NRC licensees. 

CONCLUSION

The Commission continues to be committed to ensuring the adequate protection 

of public health and safety, promoting common defense and security, and protecting 

the environment in the application of nuclear technology for civilian use. We will 

continue to address existing and emergency activities within our mandate from Congress in a pro-active and thorough manner. 

RESPONSES OF NILS J. DIAZ TO ADDITIONAL QUESTIONS FROM SENATOR INHOFE

Question 1. Last year I asked a question about the potential increase in efficiencies and resource allocation if the NRC were to consolidate the regional offices’ 

functions into the NRC headquarters. Would the NRC function more efficiently if 

we consolidated the regional functions, keeping the resident inspectors in place? 

This could eliminate some redundancy in overhead and help provide Headquarters 

with the experienced staff they need. What have been the results been of that review? 

Response. The NRC has considered consolidating the employees at the 4 regions 

to headquarters. The most recent Commission review on the subject of regional consolidation was conducted in response to the fiscal year 2003 Energy and Water Development Appropriations Act, (House Report 108–10 and Senate Report 107–220), 

which directed the NRC to report to the Congress on regulatory efficiencies that 

would be gained by consolidating or eliminating regional offices. The Commission 

provided a response on June 26, 2003. The NRC’s response to the report noted that 

the Commission believes that, in the context of its mission, a strong regional presence is essential for the effective implementation of the agency’s health, safety, and 

security programs. Reviews were also conducted during the 1994–1995 timeframe, 

which resulted in the closure of NRC’s Region V office in California, and in 1998 

and 2002. 

The Commission continues to believe that public health and safety are better 

served with critical NRC expertise located closer to the geographical area where our 

licensed activities occur. Whether overseeing routine licensed activities or reacting 

to unforseen circumstances, a regional office can rapidly muster critical resources 

to a facility when a situation needs immediate attention and time is of the essence. 

Each of the four regional offices oversee 21 to 32 operating reactors, which enables 

the NRC to rapidly deploy its personnel in response to incidents and emergencies 

in four different geographical locations. Homeland security initiatives and objectives 

provide additional compelling reasons for maintaining the agency’s current regional 

structure. All the regional offices are involved in heightened security, safeguards, 

and emergency preparedness activities in light of the current threat environment. 

Region-based inspectors are an essential complement to the resident inspector corps. 

Members of this group possess specialized expertise to perform more in-depth inspections and assessments in individual program areas, including a licensee’s security-related facilities, equipment, procedures, training, and exercises. 

The NRC’s regional structure aligns well with the Administration’s emphasis on 

close communication with constituents and stakeholders. Regional offices bring NRC 

closer to the public it serves, giving stakeholders access to NRC officials in their 

own region of the country, thereby enhancing relationships with local and state officials and helping to ensure openness in its regulatory process. As a result of these 

interactions with local and state officials, as well as the public, regional staff become 

more sensitive to specific issues and concerns of interest to those stakeholders. With 

new reactor siting and construction expected in a few years, the regional offices will 

play an important role in the inspection of the construction activities, interacting 

with the local and state governments, and responding to local citizens’ concerns. 

Finally, although our most recent review is 2 years’ old, the Commission is aware 

of no information that would be contrary to the 2003 report to Congress. The only 

substantial change is the apparent large increase in housing costs in the Washington, DC, area which would drive up costs and probably result in the loss of many 

staff at a time when NRC can least afford to lose staff. 

The Commission continues to look for efficiencies in other aspects of the operation 

of its regional offices. For example, the Commission recently consolidated the NRC’s 

inspection and oversight responsibility for all major fuel cycle facilities in its Region 

II office in Atlanta, while consolidating responsibility for the inspection and licensing of the materials licensees located in Regions I and II in its King of Prussia, 

Pennsylvania, office.
50

Question 2. Some witnesses today will express concern with NRC’s oversight and 

enforcement of security requirements at nuclear facilities—what assurances can you 

provide this committee that not only are you taking the steps to ensure that security standards are robust, but also that the Commission is taking the necessary 

steps to ensure that these standards that you have set are being met by the licensees? 

Response. Nuclear power facilities have long been and continue to be among the 

most robust and best protected commercial structures in this country. The NRC regulations require that the licensees be able to protect their facilities with high assurance against acts of radiological sabotage or theft of nuclear material by a determined adversary. The Design Basis Threat or DBT provides a reasonable characterization of the threat against which physical security programs are developed. The 

DBT is based on an extensive analysis of current and projected terrorist capabilities 

and was arrived at in coordination with the Intelligence Community, law enforcement agencies, and State and local governments. We continuously monitor threats 

in the United States and abroad and can and will revise the DBT as necessary and 

appropriate. After the terrorist attacks of 9–11, NRC issued Orders to supplement 

the DBTs for nuclear power facilities and Category I fuel cycle facilities and will 

shortly initiate rulemaking to more formally revise the DBTs to reflect the post 9–

11 environment. 

There are many Federal agencies working on preventing and protecting against 

terrorist attacks. The significant increase in aviation security since 9–11 goes a long 

way toward protecting the United States, including nuclear facilities, from an aerial 

attack. In February 2002, the NRC directed nuclear power plant licensees to develop 

specific plans and strategies to respond to a wide range of threats, including the impact of an aircraft. 

The NRC conducts regular inspections to ensure that reactor licensees are in compliance with NRC security requirements. The agency also has expanded its Forceon-Force exercise program in which it tests the ability of the licensees to defend 

their facilities against commando-type terrorist attacks. In 2003 and 2004, the NRC 

completed inspections of licensees’ implementation of the power reactor security, access authorization, and fatigue Orders to verify that licensees were complying with 

these requirements. Beginning in late 2004 and continuing through 2005, the NRC 

is inspecting licensees’ implementation of the DBT and security guard training Orders. 

The NRC has permanently assigned resident inspectors at operating power reactor sites who inspect and assess all areas of a licensee’s programmatic performance. 

The NRC also has, at its four regional offices and headquarters office, additional inspectors who possess specialized expertise to perform more in-depth inspections and 

assessments in individual program areas, including a licensee’s security-related facilities, equipment, procedures, training, and exercises. The results of inspections 

and licensee performance indicators are integrated and evaluated against performance metrics under the NRC’s Reactor Oversight Program. 

In the area of nuclear materials security, the NRC has thoroughly reevaluated its 

safeguards and security programs since 9–11. To date, the NRC has issued over 16 

different categories of Orders and Confirmatory Action Letters covering hundreds of 

licensees and actions involving radioactive materials of greatest concern. The emphasis of this effort has been on preventing the use of radioactive materials that 

have the potential to pose a risk to public health and safety in a radiological dispersal device or a radiological exposure device (RDD/RED). The Commission, in coordination with our Department of Energy (DOE) colleagues, has taken the following actions to improve the security of radioactive sources of greatest concern: 

• Issued advisories to licensees to enhance security measures; 

• Issued the DOE/NRC Interagency Working Group Report on RDD/REDs, which 

defined threshold quantities for radioactive materials that are the highest risk and 

have a potential for malevolent use; 

• Worked with the Departments of Energy and State and the international community to reach agreement on which radioactive materials and sources are of the 

greatest concern, consistent with the International Atomic Energy Agency (IAEA) 

Code of Conduct on the Safety and Security of Radioactive Sources; 

• Approved a final rule amending its export and import regulations, in coordination with the Departments of State, Energy, and Homeland Security, to impose 

more stringent controls over the Category I and Category II materials defined by 

the IAEA Code of Conduct; 

• Begun development of a National Source Tracking System to track radioactive 

materials of greatest concern specified in the IAEA Code of Conduct on a permanent 

basis; and 
51

• Developed an interim data base of Category I and II radioactive sources for both 

NRC and Agreement State licensees which will be maintained until the National 

Source Tracking System is complete.

Question 3. The NRC has taken a number of steps to increase security at power 

plants. With this latest upgrade of the DBT, is it correct to say that you have asked 

all that should be asked of licensees under the current threat condition? It is vital 

that we provide certainty to the licensees so that they can implement the requirements and train for these conditions. Can you assure me that we are at a stage 

where that certainty exists? 

Response. The NRC has required that its licensees be able to protect nuclear 

power plants with high assurance against acts of radiological sabotage by a determined adversary. The Design Basis Threat or DBT provides a reasonable characterization of the threat against which physical security programs are developed. The 

DBT is based on an extensive analysis of current and projected terrorist capabilities 

and was arrived at in coordination with the Intelligence Community, law enforcement agencies, and State and local governments. We continuously monitor threats 

in the United States and abroad and can and will revise the DBT as necessary and 

appropriate. After the terrorist attacks of 9–11, NRC issued Orders to supplement 

the DBTs. 

With the comprehensive actions to enhance security since September 2001, the 

Commission believes it has now achieved a level of greater certainty and stability 

in expectations for licensees as well as high assurance of protection of nuclear power 

plants. Accordingly, the Commission is proceeding to codify DBT enhancements for 

current and future licensees by rulemaking. 

The NRC took a multi-pronged approach to enhance security at nuclear power 

plants, including: 

• Ordered plant owners to sharply increase physical security programs to defend 

against a more challenging adversarial threat; 

• Required more restrictive site access controls for all personnel; Enhanced communication and liaison with the Intelligence Community; 

• Ordered plant owners to improve their capability to respond to events involving 

explosions or fires; 

• Enhanced readiness of security organizations by strengthening training and 

qualifications programs for plant security forces; 

• Required vehicle checks at greater stand-off distances; 

• Enhanced Force-on-Force exercises to provide a more realistic test of plant capabilities to defend against an adversary force; and 

• Improved liaison with Federal, State, and local agencies responsible for protection of the national critical infrastructure through integrated response training. 

The major requirements were implemented by licensees on October 29, 2004. 

Those requirements include physical security improvements necessitated by the supplemented DBT and Orders. The NRC routinely inspects the licensee’s physical security measures as part of its baseline inspection program and conducts Force-onForce exercises to assess the effectiveness of licensee’s security programs. In addition, the NRC has initiated an oversight program to confirm that the measures implemented and pertinent mitigative strategies are in place. The program consists of 

3 phases: inspection of the February 25, 2002 Orders, site-specific assessment of 

spent fuel pools, and site-specific assessments of reactors. The final phase will be 

completed in June 2006.

Question 4. It is my understanding that the NRC has been moving ahead with 

its plan to change its regulatory process to one that is risk-informed and performance-based. This is a process that is strongly supported by industry as well as by 

some of your critics. Would you explain to me where the NRC is at regarding this 

process and are you moving quickly on fully implementing this process change? 

Response. The NRC is making significant strides toward its objectives of fully integrating risk-informed regulation into its safety decisionmaking framework, most 

notably through efforts to risk-inform its Reactor Oversight Process and reactor and 

materials regulations. By providing more safety-focused regulations and more objective processes, which the NRC initiated in the mid-1990s through the probabilistic 

risk assessment (PRA) Implementation Plan and PRA Policy Statement, the NRC 

can and is achieving significant improvements in safety. 

Recent examples include: 

(1) In June 2004, the NRC amended its fire protection requirements for nuclear 

power plants to allow licensees to adopt a new set of requirements that incorporates 

risk insights. The rule endorses the National Fire Protection Association Standard 

No. 805, ‘‘Performance-Based Standard for Fire Protection for Light Water Reactor 
52

Electric Generating Plants, 2001 Edition.’’ The new rule maintains safety and provides flexibility to existing requirements. 

(2) In November 2004, the NRC amended the regulations to provide an alternative 

approach to establishing requirements for treatment of structures, systems, and 

components (SSCs) for nuclear power reactors using a risk-informed method for categorizing SSCs according to their safety significance. The categorization process 

uses a blend of deterministic and risk insights to develop an integrated assessment 

of the safety significance of particular SSCs and then specifies requirements commensurate with the significance. 

(3) Currently, the Commission is considering the merits of a proposed amendment 

to the regulations that would provide a risk-informed alternative to the current requirements associated with the maximum reactor coolant system pipe break size 

that must be considered within the design basis of the plant under 10 CFR 50.46 

(Emergency Core Cooling System Acceptance Criteria). The amendment is structured to allow and encourage operational as well as design safety improvements. 

(4) In the nuclear material and waste arenas, the NRC has developed a generic 

framework for risk-informed regulation which facilitates identifying areas where 

risk-informed regulatory changes would be beneficial. This approach was designed 

to focus agency and licensee resources on areas commensurate with their importance to safety. 

(5) In the area of decommissioning, guidance is being developed to use a graded 

approach to institutional controls, more realistic exposure scenarios, and risk-ranking of facilities for inspections. 

(6) In the area of high-level waste, the NRC has produced the Yucca Mountain 

Review Plan to provide guidance for performing a risk-informed review of a license 

application and a Risk Insights Baseline Report as a common reference for risk-informed issue resolution. 

(7) The risk-informed and performance-based revision of Subpart H, ‘‘Additional 

Requirements for Certain Licensees Authorized to Possess a Critical Mass of Special 

Nuclear Material,’’ to 10 CFR Part 70, ‘‘Domestic Licensing of Special Nuclear Material,’’ requires existing fuel cycle licensees to perform Integrated Safety Analyses of 

their facilities. 

(8) A multi-phased risk-informed review of nuclear byproduct materials regulatory 

programs has resulted in revision of the inspection program to concentrate on higher risk activities; and revisions to regulations and licensing guidance are underway. 

(9) The Commission, realizing the regulatory experience gained and utilizing the 

extensive body of existing know how, instructed the staff, under Staff Requirements 

Memorandum of May 9, 2005, to proceed with risk-informing 10 CFR Part 50, ‘‘Domestic Licensing of Production and Utilization Facilities.’’

Question 5. During the hearing, I asked you to comment on GAO recommendations and what the NRC has done in response. 

Response. At the Senate Environment and Public Works Committee oversight 

hearing held on May 26, 2005, GAO testified that based on its analyses, it believes 

NRC has improved its operations in recent years in a number of ways. Nevertheless, 

GAO’s testimony indicated that NRC needs to take additional actions to better fulfill 

its mission, and that it had made associated recommendations for improvement in 

seven reports issued during the past 2 years. 

NRC generally agrees with GAO that some improvements are appropriate, and we 

did disagree with some of GAO’s findings and recommendations for various reasons. 

In each case, NRC’s rationale is documented in written comments on the draft reports, and in the written statements to Congress submitted in accordance with 31 

U.S.C. 720 on final report recommendations. In addition, NRC has described the 

progress made in addressing recommendations in its annual reports to Congress as 

required by Section 236 of Public Law 91–510, the ‘‘Legislative Reorganization Act 

of 1970.’’

The enclosure and its attachments summarize NRC’s comments on specific report 

recommendations from the seven reports mentioned in GAO’s testimony on May 26, 

2005, NRC comments on the draft reports where applicable, and what NRC has 

done in response to the report recommendations.

Enclosure: GAO Reports and NRC Responses to Recommendations 

GAO REPORTS AND NRC RESPONSES TO RECOMMENDATIONS

GAO–03–804, NUCLEAR SECURITY: FEDERAL AND STATE ACTION NEEDED TO IMPROVE

SECURITY OF SEALED RADIOACTIVE SOURCES, AUGUST 6, 2003

Draft Report: NRC provided comments to GAO in a letter from William D. 

Travers, NRC, to Robert A. Robinson, GAO, dated June 26, 2003 (Attachment 1). 
53

In this letter, we informed GAO that the draft report did not fully present either 

the current status of NRC efforts to improve the security of high-risk radioactive 

sources or the large effort that NRC had devoted to this issue over the prior 18 

months. We also informed GAO that the draft report reflected a limited outline of 

NRC’s existing statutory framework and did not recognize that several recommendations would require statutory changes at both Federal and State levels. Our letter 

provided specific detail on the Commission’s accomplishments and plans to improve 

the security of high-risk radioactive sources. 

Final Report: NRC’s written response required by 31 U.S.C. 720 was provided to 

Rep. Tom Davis, et al., on February 4, 2004 (Attachment 2). In this letter, we informed Congress that NRC agreed with several of the recommendations and that 

we had already taken steps to implement those recommendations (and in several 

cases, implementation occurred before the GAO performed its review) as improvements in our regulatory programs. However, as stated in our June 26, 2003 comments on the draft report, we reiterated that the final report did not fully present 

either the current status of NRC efforts to improve the security of high-risk radioactive sources or the large effort we devoted to this issue prior to GAO publishing 

the report. We stated our continued belief that the level of health risk posed by the 

various sources should be the determining factor for application of security measures, and that other factors, such as psychological, social, and economic costs, can 

vary from region to region and over time and, thus, provide a less stable measure 

for establishing necessary security measures. The letter’s enclosure provided our responses to the specific recommendations of the report. 

Annual Reports to Congress: Since providing our written statement to Congress 

on the final report, NRC’s has reported twice to Congress on the progress of our 

actions in response to the report recommendations, as required by Section 236 of 

Public Law 91–510. Please refer to our CY 2003 report (Attachment 13) and CY 

2004 report (Attachment 14). 

GAO–03–752, NUCLEAR REGULATORY COMMISSION: OVERSIGHT OF SECURITY AT COMMERCIAL NUCLEAR POWER PLANTS NEEDS TO BE STRENGTHENED, SEPTEMBER 4, 2003

Draft Report: NRC provided comments to GAO in a letter from Nils J. Diaz , NRC 

to James Wells, GAO dated August 7, 2003 (Attachment 3). In this letter, the Commission informed GAO of its concern that the draft report did not provide an appropriately balanced or very useful perspective of the NRC’s role in ensuring nuclear 

power plant security. The Commission recognized that the report accurately described some of the legal challenges that exist, but pointed out that it failed to fully 

recognize the significant effort the NRC has made in the post-September 11, 2001 

environment to strengthen what was already a very robust security program. The 

Commission also commented that the draft report’s emphasis on non-cited violations 

as ‘‘minimizing’’ the significance of security problems was a serious misrepresentation and that the individual anecdotal issues noted in the report were appropriately 

treated within NRC’s enforcement process. This letter also noted that the key issues 

identified in GAO’s draft report were relatively minor, that the issues had already 

been identified by the NRC before the review was initiated, and that corrective actions for these issues either had been completed or were nearly complete. On August 

15, 2003, NRC provided more detailed comments on the draft report to address 

issues of correctness, currentness, and clarity (Attachment 4). 

Final Report: NRC’s written response required by 31 U.S.C. 720 was provided to 

Rep. Edward Markey, et al., on October 23, 2003 (Attachment 5). In this letter, we 

informed Congress that the GAO report misrepresented the high level of security 

at these nuclear power plants by mischaracterizing NRC’s inspection program and 

has not recognized the substantial enhancements of security at NRC-licensed facilities, and that it did not adequately acknowledge the extensive actions taken to enhance security and the role NRC’s oversight program played in achieving these substantial enhancements since the events of September 11, 2001. We also informed 

Congress that despite considerable NRC effort to support GAO in the performance 

of its study, we were concerned that the report did not provide a balanced perspective and did not recognize the breadth and effectiveness of NRC’s security oversight 

program. 

Annual Reports to Congress: Since providing our written statement to Congress 

on the final report, NRC’s has reported twice to Congress on the progress of our 

actions in response to the report recommendations, as required by Section 236 of 

Public Law 91–510. Please refer to our CY 2003 report (Attachment 13) and CY 

2004 report (Attachment 14). 
54

GAO–05–1064T, NUCLEAR REGULATORY COMMISSION: PRELIMINARY OBSERVATIONS ON

EFFORTS TO IMPROVE SECURITY AT NUCLEAR POWER PLANTS, SEPTEMBER 14, 2004

On September 14, 2004, GAO and NRC staff testified at a House Subcommittee 

on National Security, Emerging Threats, and International Relations hearing on its 

preliminary observations regarding NRC’s efforts improve security at nuclear power 

plants, particularly with respect to capabilities to defend against a terrorist attack. 

At that time, NRC testified that even prior to the terrorist attacks, NRC had required nuclear power plants to have security programs that included sophisticated 

surveillance equipment and armed response forces, and that these already robust 

security measures had since been supplemented with increased security patrols, additional security posts, increased vehicle standoff distances, improved coordination 

with law enforcement, and other measures. NRC also informed Congress that it had 

completed an extensive set of vulnerability assessments and strengthened safety-related mitigation procedures and strategies for NRC-licensed activities involving radioactive materials and nuclear facilities and that it had also revamped its forceon force mock-attack program to test licensees’ defense against new terrorist realities. While this GAO testimony required no specific response from NRC, in a letter 

dated October 14, 2004, from NRC Chairman, NRC, to Rep. Christopher Shays, et 

al. (Attachment 6), NRC addressed some of the Subcommittee Members’ concerns 

discussed at the hearing on the security of NRC-regulated nuclear facilities and radioactive materials. 

GAO–04–32, NUCLEAR REGULATION: NRC NEEDS MORE EFFECTIVE ANALYSIS TO ENSURE

ACCUMULATION OF FUNDS TO DECOMMISSION NUCLEAR POWER PLANTS OCTOBER 30, 

2003

Draft Report: NRC provided comments to GAO in a letter from William Travers, 

NRC, to James Wells, GAO, dated October 3, 2003 (Attachment 7). In this letter, 

we informed GAO that we did not agree with its recommendations and provided detailed rationale: (1) NRC’s practice with respect to analyzing decommissioning funds 

where nuclear power plants have co-owners is consistent with its internal guidance; 

(2) the NRC has a methodology that is different from GAO’s for assessing whether 

funds are being accumulated appropriately; and (3) the NRC’s practice is to review 

licensees who have not accumulated sufficient funds on a case-by-case basis. 

Final Report: NRC’s written response required by 31 U.S.C. 720 was provided to 

Sen. Susan Collins, et al. on February 10, 2004 (Attachment 8). In this letter, we 

informed Congress that NRC has had established a method that was effective in 

analyzing whether owners are accumulating sufficient funds for decommissioning. 

Moreover, we reported that if NRC determined, based on available information, that 

an owner did not appear to be on track to accumulate sufficient funds for decommissioning, or that an owner’s present decommissioning fund balance did not appear 

to be adequate, NRC had a procedural framework it would use to require licensees 

to take appropriate corrective actions. We advised Congress that contrary to GAO’s 

recommendation, NRC did not believe it was necessary to establish specific criteria 

for responding to unacceptable levels of decommissioning funding assurance, considering the complexity and range of circumstances that may arise with any given 

owner, particularly those who are subject to the jurisdiction of State regulatory authorities and the Federal Energy Regulatory Commission. In addition, we indicated 

that the implementation of specific criteria was not necessary to protect public 

health and safety. 

Annual Report to Congress: Since providing our written statement to Congress on 

the final report recommendations, to which we did not agree, NRC has not taken 

additional action. Therefore, this report’s recommendations were not addressed in 

our last report (CY 2004, Attachment 14) to Congress on the progress of our actions 

in response to the report recommendations. 

GAO–04–654, NUCLEAR REGULATION: NRC’S LIABILITY INSURANCE REQUIREMENTS FOR

NUCLEAR POWER PLANTS OWNED BY LIMITED LIABILITY COMPANIES, MAY 28, 2004

Draft Report: NRC provided comments to GAO in a letter from William Travers, 

NRC, to James Wells, GAO, dated April 29, 2004 (Attachment 9). In this letter, we 

informed GAO that the draft report accurately reflected the insurance system for 

nuclear power plants. GAO determined that of the 103 operating nuclear power 

plants, 31 were owned by 11 limited liability companies and found that NRC requires all licensees for nuclear power plants to show proof that they have the primary and secondary insurance coverage mandated by the Price-Anderson Act. In addition, GAO found that NRC does not treat limited liability companies differently 
55

than other licensees with respect to the Price-Anderson Act’s insurance requirements. 

Final Report: This report had no recommendations for NRC action, therefore, a 

written response from NRC was not required by 31 U.S.C. 720. 

Annual Report to Congress: This report had no recommendations for NRC action. 

Therefore, it is not addressed in our last report (CY 2004, Attachment 14) to Congress on the progress of our actions in response to GAO report recommendations. 

GAO–04–415, NUCLEAR REGULATION: NRC NEEDS TO MORE AGGRESSIVELY AND COM- PREHENSIVELY RESOLVE ISSUES RELATED TO THE DAVIS-BESSE NUCLEAR POWER

PLANT’S SHUTDOWN, MAY 17, 2004

Draft Report: NRC provided comments to GAO in a letter from William Travers, 

NRC, to James Wells, GAO, dated May 5, 2004 (Attachment 10). In this letter, we 

informed GAO that the draft report did not appropriately characterize, or provide 

a balanced perspective on, NRC’s actions surrounding the discovery of the DavisBesse reactor vessel head condition or NRC’s actions to incorporate the lessons 

learned from that experience into our processes. We also told GAO that NRC also 

does not agree with two of the report’s recommendations, and we provided detailed 

explanations. Our letter also stated that while there were a number of factual errors 

in the draft report, we had agreed with many of the findings, most of which we believed were similar to the findings of NRC’s Davis-Besse Lessons-Learned Task 

Force (LLTF). We also indicated that NRC had made significant progress in implementing actions recommended by the LLTF and expected to complete implementation of more than 70 percent of them, on a prioritized basis, by the end of CY 2004. 

Further, we stated that semiannual reports tracking the status of these were and 

would continue to be provided to the Commission until all items were completed, 

and then a final summary report would be issued. 

Final Report: NRC’s written response required by 31 U.S.C. 720 was provided to 

Rep. Tom Davis, et al., on September 2, 2004 (Attachment 11). In this letter, we 

informed of Congress of actions we had taken to address the report’s recommendations, indicating that we believed that actions we had already taken with respect 

to two of the recommendations relating to determining the resource implications of 

the LLTF’s and long-term tracking of implementation of the LLTF’s recommendations and those of future task forces. 

Annual Reports to Congress: Since providing our written statement to Congress 

on the final report, NRC’s has reported once to Congress on the progress of our actions in response to the report recommendations, as required by Section 236 of Public Law 91–510. Please refer to our CY 2004 report (Attachment 14). 

GAO–05–339, NUCLEAR REGULATORY COMMISSION: NRC NEEDS TO DO MORE TO ENSURE

THAT POWER PLANTS ARE EFFECTIVELY CONTROLLING SPENT NUCLEAR FUEL, APRIL

8, 2005

Draft Report: NRC provided comments to GAO in a letter from Luis Reyes, NRC, 

to James Wells, GAO, dated March 25, 2005 (Attachment 12). In this letter, we informed GAO that NRC had found the draft report to be well written and balanced, 

and that NRC had generally agreed with the conclusions reached by GAO. However, 

we stated that the report did not sufficiently acknowledge NRC actions in the material control and accounting (MC&A) area that were already ongoing prior to the 

commencement of the GAO review. In addition, we commented that the report did 

not make clear that the problems at Vermont Yankee were identified as a direct 

result of NRC inspection activities. 

Our letter emphasized that we believed the likelihood that an adversary could 

steal spent fuel from a spent fuel pool or storage cask was extremely low, given the 

security and radiation protection measures in place and the ease of ‘‘detect-ability’’ 

and intense, physically disabling radiation from spent fuel. We agreed with the conclusion that licensees’ efforts to account for and control spent fuel were uneven; 

however, we pointed out that this knowledge also came from the NRC inspections 

and responses to a temporary inspection effort, as did the knowledge that the biggest problem was accounting for and controlling pieces of spent nuclear fuel, as opposed to assemblies. We stated that performance-based approaches were often more 

effective and efficient at achieving the desired outcomes than prescriptive approaches. Consequently, we believe that dictating how licensees were to meet the 

MC&A requirements was not necessarily the most effective and efficient approach. 

With respect to GAO’s findings related to the timeliness of NRC actions, we commented that in the broader context of all NRC activities that needed to occur since 

the events of September 11, 2001, work in this area had been postponed by the need 

to devote NRC’s limited resources to security and radiological protection areas re-
56

quiring more immediate attention and that the report should balance its discussions 

by crediting NRC for making prioritized decisions based on a variety of identified 

factors. Although the report identifies an important accounting issue for fuel rod 

segments, it did not, in our view, identify a security or safety issue because there 

is no reason to conclude that any of the missing fuel segments were removed for 

any malevolent purposes. 

Final Report: NRC’s written response required by 31 U.S.C. 720 has been developed and is under the Commission’s review. We expect to issue it to Congress in 

June 2005. 

Annual Reports to Congress: After providing our written statement to Congress on 

the final report, NRC will update Congress annually on the progress of our actions 

in response to the report recommendations, as required by Section 236 of Public 

Law 91–510.

Attachments:

Attachment 1: Ltr W. Travers, NRC, to R. Robinson, GAO, dtd 6/26/03 

Attachment 2: Ltr N. Diaz, NRC, to Rep. T. Davis, et al., dtd 2/4/04 

Attachment 3: Ltr N. Diaz, NRC, to J. Wells, GAO, dtd 8/7/03 

Attachment 4: Ltr W. Travers, NRC, to J. Wells, GAO, dtd 8/15/03 

Attachment 5: Ltr N. Diaz, NRC, to Rep. E. Markey, et al., dtd 10/23/03 

Attachment 6: Ltr N. Diaz, NRC, to Rep. C. Shays, et al., dtd 10/14/04 

Attachment 7: Ltr W. Travers, NRC, to J. Wells, GAO, dtd 10/03/03 

Attachment 8: Ltr N. Diaz, NRC, to Sen. S. Collins, et al., dtd 2/10/04 

Attachment 9: Ltr W. Travers, NRC, to J. Wells, GAO, dtd 4/29/04 

Attachment 10: Ltr W. Travers, NRC, to J. Wells, GAO, dtd 5/5/04 

Attachment 11: Ltr N. Diaz, NRC, to Rep. T. Davis, et al., dtd 9/2/04 

Attachment 12: Ltr L. Reyes, NRC, to J. Wells, GAO, dtd 3/25/05 

Attachment 13: Ltr N. Diaz, NRC, to Sen. Voinovich, et al., dtd 4/6/04 

Attachment 14: Ltr N. Diaz, NRC, to Sen. Voinovich, et al., dtd 4/27/05

RESPONSES BY NILS J. DIAZ TO ADDITIONAL QUESTIONS FROM SENATOR JEFFORDS

Question 1. The National Research Council report also highlights the continuing 

security concerns presented by spent nuclear fuel pools. About a third of the nuclear 

facilities are designed with the spent fuel pool above ground, including the Vermont 

Yankee facility in my state. Though the Commission will certainly have to discuss 

these issues further, what immediate steps has the Commission taken [to] address 

the risks identified in the report posed by above ground pool storage? 

Response. After 9–11, the NRC conducted detailed site-specific security assessments at four selected sites. While those studies were underway, the NRC took direct regulatory action to enhance safety and security at nuclear power plants and 

spent fuel pools. In February 2002, the NRC ordered the nuclear power industry to 

develop and implement mitigation strategies to deal with structural or fire damage 

to a facility. Furthermore, the NRC also decided that additional site-specific inspections and site-specific studies of mitigation capabilities should be conducted at all 

sites, including all spent fuel pools to enhance protection capabilities further. All 

site-specific spent fuel pool assessments are scheduled to be completed by the end 

of this calendar year. 

In conducting the detailed site-specific security assessments studies, the NRC 

drew on national experts from several U.S. Department of Energy (DOE) laboratories using state-of-the-art structural and fire analyses. The NRC also enhanced its 

ability to predict realistically accident progression due to the loss of large areas of 

reactor sites from fires and explosions and consequent releases of radiation to the 

environment. These studies confirm that it is very unlikely that there would be a 

significant release of radioactivity from a deliberate attack of a large commercial 

aircraft on a spent fuel pool at a nuclear reactor site. 

In addition, these Orders addressed both in-ground and above-ground spent fuel 

pools. The NRC issued a letter on July 29, 2004, with a sensitive unclassified Safeguards Information enclosure specifying certain mitigative measures for licensees to 

take to enhance their ability to restore and maintain effective fuel cooling if the pool 

or the overlying structure were severely damaged. The NRC met with power reactor 

licensees in February 2005 on the NRC’s spent fuel pool mitigation measures. At 

the end of February 2005, power reactor licensees were given until May 2005 to respond to the additional specific recommendations. The NRC staff is currently evaluating these responses to ensure they meet our expectations. The staff will conduct 

inspections in September and October of this year. A final report is due to the Commission in December. The NRC continues to evaluate power reactor security, including spent fuel pool security, in Force-on-Force exercises, which the NRC will carry 
57

out at least once every 3 years at each of the power reactor sites. Licensee actions 

to address those measures will be inspected by the NRC staff later this year.

Question 2. The last chapter of the National Research Council report suggests 

that the Commission’s controls on information may be inhibiting security improvements. It states that representatives of the study team, and even of industry were 

frustrated by the Commission’s restrictions on sharing data that could help with 

‘‘early actions to address identified vulnerabilities.’’ The panel stated it was ‘‘ unable 

to examine several important issues’’ related to the security of spent fuel, in part 

‘‘because it was unable to obtain needed information from the Nuclear Regulatory 

Commission.’’ I know the real need to protect classified security information, but 

would you describe for the Committee your general view about the types information that must be shielded from the companies charged with the security of nuclear 

material and what information should be given to them. 

Response. The Commission carefully weighs all instances where authorized stakeholders with a need-to-know request access to sensitive information. The Commission’s policy is to ensure that the NRC is striking the right balance between making 

information publicly available and withholding information for security reasons. As 

a result, the Commission established an internal task force to review information 

security and protection, including classified information, sensitive unclassified Safeguards Information, and other information that should be withheld from public disclosure. Representatives of this task force interacted with appropriate members of 

the executive branch in conducting its review and has made recommendations for 

Commission consideration. 

The NRC agrees that maintaining this balance is vital to maintaining public confidence while ensuring the appropriate levels of security for licensees. The Commission has taken prompt action since the events of September 11, 2001, in increasing 

the availability of classified and Safeguards Information with persons who have a 

need-to-know, are authorized access, and can protect the information. Although 

there was some difficulty in obtaining security clearances for industry personnel to 

the right level, the NRC now has in place security clearances for a limited number 

of individuals at each power plant site to enhance prompt communication of classified information. To date, each site has an average of three individuals cleared for 

this purpose. Where the Commission has independent authority over dissemination 

of sensitive information (e.g., Safeguards Information), the NRC has moved forward 

expeditiously. In other areas (e.g., National Security Information), the NRC has 

worked carefully with industry and other Federal agencies to provide greater access 

to this information.

Question 3. The Congressional request for the recent National Academy study was 

prompted by conflicting claims about the safety and security of spent nuclear fuel 

at power plants done by researchers at Princeton in 2003. Do you support NAS’s 

call for the development of ‘‘maximum credible threat scenarios’’ that incorporate 

the use of outside expert judgment? 

Response. While the NRC is in broad agreement with the principal findings of the 

NAS study, the NRC holds a different view regarding the NAS recommendation of 

‘‘maximum credible scenarios’’ as the preferred basis for assessing safety and security. The NRC considers that the use of maximum-credible scenarios, particularly 

as described in the NAS study, would not be an effective approach. This method 

would direct analyses at an overly large scope of scenarios, including some unrealistic scenarios. Rather, the NRC believes it should focus its resources, as well as 

those of its regulated licensees, on a realistic spectrum of credible scenarios. Additionally, the NRC considers that analysis of ‘‘bounding’’ or unrealistic scenarios can 

lead to a misinterpretation of the actual risk and that this can cause confusion 

among the public and other stakeholders. 

With respect to using outside expert judgment, NRC works closely with the Department of Homeland Security, FBI, and other intelligence agencies to continually 

evaluate information from experts in the homeland security, law enforcement and 

intelligence communities to determine the threat to facilities licensed by the NRC, 

including those storing spent nuclear fuel, and evaluating potential risks and 

vulnerabilities associated with these facilities. The NRC has also involved outside 

experts from national laboratories onsite-specific studies associated with spent fuel 

pool protection capabilities.

Question 4. For NRC Chairman Nils Diaz—I would like to give you an opportunity, Chairman Diaz, to address the April 7, 2005 Matthew Wald New York Times 

story. In that story, you are quoted as having said that spent fuel pools are ‘‘not 

easily breached structures,’’ and that after an attack they would be easy to cool with 

‘‘a couple of fire hoses.’’ These statements caused concern in my state both among 

the public and among some technical experts regarding whether the cooling system 
58

you describe would be sufficient or able to be deployed in the event of an attack. 

Do you still stand by this statement? Do you believe that additional analysis is warranted to determine appropriate methods for fuel pool fire response? Is the Commission considering additional guidance or regulations regarding cooling systems? 

Response. Yes. In a publicly released version of the National Academy of Sciences 

(NAS) report on the safety and security of commercial spent nuclear fuel storage, 

the NAS panel references a calculation which suggested that 50–60 gallons per 

minute of water sprayed over an entire pool would likely be adequate to prevent 

a zirconium cladding fire in a loss-of-pool coolant event. The capacity of ‘‘a couple 

of fire hoses’’ would easily provide much more than that amount of water, with redundancy. 

The NRC recognizes the concern regarding the environment in which such strategies would have to be implemented. Therefore, we have advised our licensees to consider the potential for hostile environments, including large fires, extreme radiation 

environments, and the presence of armed adversaries, in developing procedures to 

implement such strategies. The NRC has provided guidance to licensees on spent 

fuel management techniques in July 2004 and February 2005. Furthermore, additional plant-specific assessments and analyses will be completed for all U.S. nuclear 

power plants by November 30, 2005. These analyses are intended to confirm the effectiveness of previously required mitigation capabilities and are expected to identify other appropriate and redundant methods to effectively cool the spent fuel pool. 

RESPONSES BY NILS J. DIAZ TO ADDITIONAL QUESTIONS FROM SENATOR LAUTENBERG

Question 1. Though the NRC has improved its oversight of the industry in recent 

years, why is it that the Inspector General, the GAO, interest groups and whistleblowers, continue to highlight safety issues? Is the NRC really committed to a ‘‘Safety Conscious Work Environment?’’

Reponses. Yes, the NRC is fully committed to ensuring a Safety Conscious Work 

Environment (SCWE) at all of our licensed facilities. Safety issues do arise at nuclear power plants, although the frequency and radiological significance of these 

issues have decreased over the years. Many of these issues are found through NRC’s 

strict oversight, and others are identified by licensees. We take each one seriously, 

and take measures to prevent recurrence. We expect our licensees to do the same. 

The NRC and its nuclear power plant licensees continue to maintain a record of performance without injury to a member of the public from a radioactivity release from 

a nuclear power plant. 

Highlighting safety issues to the NRC is consistent with the agency’s 1996 Policy 

Statement definition of SCWE as a work environment where ‘‘employees feel free 

to raise safety concerns, both to their management and to the NRC, without fear 

of retaliation.’’ Employees are also encouraged to raise their concerns to their employers either prior to or contemporaneously with coming to the NRC. The NRC encourages employees to come to the NRC at any time they believe the Commission 

should be aware of their concerns. The agency is in the process of developing both 

guidance to the industry concerning establishing and maintaining a SCWE, as well 

as guidance to NRC inspection staff to monitor and assess the SCWE better, as one 

attribute of Safety Culture. An example of the agency’s efforts in this area is the 

recent focus of the NRC on the work environment at Salem and Hope Creek. 

The NRC staff conducted in-depth interviews between October 2003 and June 

2004 of over 60 current and former Salem/Hope Creek employees from various levels 

of the organization. The review also considered the inspection and assessment 

records over the past several years, as well as allegations involving Salem and Hope 

Creek. Although no serious safety violations were identified, the NRC found weaknesses in the licensee’s corrective action program and management efforts to establish an environment where employees are consistently willing to raise safety concerns. The NRC is continuing to provide close oversight of the Salem and Hope 

Creek stations to monitor and assess SCWE.

Question 2. The Government Accountability Office has found that the NRC has 

‘‘no plans to address the systemic weaknesses that allowed’’ the near disaster at 

Davis-Besse to occur in 2002. What is being done within the NRC to prevent the 

lax oversight which occurred at Davis-Besse from occurring again? 

Response. The NRC has addressed the issues that allowed the significant vessel 

head degradation at the Davis-Besse power plant. Among other things, the NRC required inspection of reactor vessel heads at all pressurized-water reactors. The 

measures implemented will prevent recurrence of reactor vessel and vessel head 

degradation from all nuclear power plants in the U.S. 
59

In response to the Davis-Besse reactor vessel head degradation and subsequent 

Davis-Besse Lessons Learned Task Force (LLTF) recommendations, the NRC has 

implemented numerous changes to our regulatory processes and programs, and we 

plan to take additional actions. The changes to the inspection and operating experience programs will have the most systematic impact. Examples of some significant 

changes are provided below. 

The implementation of the Davis-Besse LLTF recommendations included improved Reactor Oversight Process (ROP) management guidelines, revisions and additions to inspection procedures, and inspector training and qualification enhancements. The changes to the program management aspects of the ROP include new 

guidance for managing NRC resources devoted to plants that are in an extended 

shutdown as a result of performance issues to ensure there will be less impact on 

routine oversight at other plants. Also, to ensure continuity of regulatory oversight 

by certified inspectors, the staff developed and issued a site staffing metric to monitor permanent resident and senior resident staffing at reactor sites, and established 

the criterion of maintaining a minimum of 90-percent coverage. The Regional staffs 

have conducted benchmarking reviews based on Davis-Besse LLTF recommendations to identify ‘‘best practices’’ that can be consistently applied in ROP activities. 

The NRC has made several changes to the ROP to enhance the NRC’s ability to 

detect declining plant performance, including the specific issues identified at DavisBesse. The NRC inspection program procedures have been revised to increase evaluation of licensee programs and actions relating to long-standing unresolved problems. Several inspection procedure changes were made to address the reactor vessel 

head and boric acid inspections. The procedures for monitoring inspection activities 

during refueling outages have been updated, as have procedures that evaluate licensees’ programs and processes to detect, monitor, and take corrective actions for 

adverse trends in reactor coolant system leakage. 

The NRC inspector training program has been enhanced by a Web-based system 

that provides more timely dissemination of information to the inspection staff, and 

a method for individual study. New training modules were developed to address lessons learned from the Davis-Besse event such as the effects of boric acid corrosion 

and the importance of maintaining a questioning attitude toward potential safety 

issues. The latter training module used the case of the Columbia space shuttle accident to reinforce this message. There have been several recent examples of an improved questioning attitude. At other plants, resident inspectors have identified a 

peeling paint condition inside containment, a turbine building flooding issue, and a 

previously unanalyzed condition regarding a crane used to move the reactor vessel 

head at their respective sites. 

In a related effort responding to the Davis-Besse LLTF recommendations, the 

NRC launched a revised operating experience program in January 2005. The new 

program systematically collects, communicates, and evaluates operating experience 

and has substantially advanced the use of information technology in making operating experience information available. There is a new powerful data base for managing all reported events and a new operating experience information gateway that 

consolidates a large collection of individual data bases and Web sources of information onto a single Web access page. Ready access to this information will be a valuable help to NRC inspectors in planning and conducting their inspections, and to 

other NRC staff in conducting licensing reviews and rulemaking. 

Additionally, as a result of the Davis-Besse experience, the NRC has improved internal communications. To ensure effective communication among inspectors and 

NRC management, important elements of communication activities as well as regional communications best practices were identified and shared throughout the 

agency. These elements and best practices are being reviewed and adopted, as appropriate, by the regional offices.

Question 3. What is the NRC doing to encourage people with safety concerns to 

speak up and how are ‘‘whistleblowers’’ being protected and supported by the agency? Were any ‘‘whistleblowers’’ invited to speak at today’s hearing? What message 

does it send that they were/were not? 

Response. The NRC encourages its employees to raise concerns through its Open 

Door Policy, Generic Safety Issues program, non-concurrence process, the Differing 

Professional Opinion (DPO) program, and the Office of Inspector General (OIG) Hotline. The NRC recently initiated a revised DPO program which further encourages 

employees to speak up and make differing views known. The position of a DPO Program Manager was established to improve implementation, administration, communication, and assessment of the program. The DPO program encourages employees 

to raise issues or concerns involving technical, legal or policy issues to their management. The revised program reemphasizes the importance of two-way communication between staff and management as an important element in the informal resolu-
60

tion of concerns before a concern reaches the DPO threshold. The DPO program also 

emphasizes employee confidentiality, protection from retaliation in any form for expressing a differing opinion, and recognition and awards for employees who raise 

concerns through the DPO program. 

The NRC constructed an internal Employee Concerns web site, which highlights 

the various programs where employees can voice their concerns on a variety of areas 

and includes contact names and numbers of those to whom concerns may be addressed. The agency also improved its leadership training, which sets expectations 

for managers and institutionalizes the concept that leadership training and skills 

will be an ongoing agency focus. Additional management training on the DPO program is being developed. 

Consistent with the Notification and Federal Employee Anti-Discrimination and 

Retaliation Act of 2002 (No Fear Act), the NRC provides information to all employees about their rights, protections, and remedies under whistleblower and anti-discrimination and protection laws, as well as NRC’s policies about appropriate disciplinary action for engaging in prohibited personnel activities. Employees are encouraged to familiarize themselves with this information on the Whistleblower and 

Anti-Discrimination Rights internal web page. All supervisors are required to receive training on whistleblower protections and the prevention of prohibited practices. 

Finally, the NRC has invited employees who have dissenting views to speak at 

various forums, including Commission meetings, to ensure that their views are encouraged and heard. We believe this sends a positive message that employees are 

encouraged to raise their concerns in an open and candid environment.

Question 4. My constituents are deeply concerned about a repeat of a September 

11th style attack—in which nearly 700 New Jerseyans lost their lives. If a large 

passenger jet can bring down the World Trade Center, can the NRC really be sure 

that nuclear reactor containment systems would withstand such a direct, high-speed 

hit? 

Response. After 9–11, the NRC conducted detailed site-specific security assessments at four selected sites. While those studies were underway, the NRC took direct regulatory action to enhance safety and security at nuclear power plants and 

spent fuel pools. In February 2002, the NRC ordered the nuclear power industry to 

develop and implement mitigation strategies based on a general understanding that 

terrorist activities could result in some level of structural or fire damage to a facility. Furthermore, the NRC also decided that additional site-specific inspections (of 

the items ordered in 2002) and site-specific studies of mitigation capabilities should 

be conducted at all sites, including all spent fuel pools, to further enhance protection 

capabilities. Guidance for those activities has been developed and pilot programs 

have been conducted. All site-specific spent fuel pool assessments are scheduled to 

be completed by November 30, 2005. 

In conducting these studies, the NRC drew on national experts from several U.S. 

Department of Energy (DOE) laboratories using state-of-the-art structural and fire 

analyses. The agency also enhanced its ability to predict realistically accident progression due to the loss of large areas of reactor sites due to fires and explosions 

and any consequent releases of radiation to the environment. For the facilities analyzed, the studies confirm that the likelihood of both damaging the reactor core and 

releasing radioactivity from an aircraft crash event that could affect public health 

and safety is low. 

RESPONSES BY NIL J. DIAZ TO ADDITIONAL QUESTIONS FROM SENATOR VOINOVICH

Question 1. NRC’s testimony indicates that the Commission is taking action to address safety culture by identifying appropriate measures and developing guidance 

for licensees—leading up to the modification of the Reactor Oversight Process. 

Please go into greater detail for the Committee on what the Commission has discovered and what actions the NRC has and will take. 

Response. In response to direction provided by the Commission in August 2004, 

the NRC staff is currently conducting activities to enhance the Reactor Oversight 

Process treatment of cross cutting issues to address safety culture more fully. These 

activities include new tools and training for the inspection staff. The staff’s activities 

will take into account the ongoing industry initiatives and information from the 

international community. 

One element of a safety culture is maintaining a safety conscious work environment. In October 2004, NRC issued a draft guidance document entitled, ‘‘Guidance 

for Establishing and Maintaining a Safety Conscious Work Environment’’ in the 

Federal Register for public comment. This guidance document was developed to pro-
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vide supplementary guidance on fulfilling the expectation to ensure safe operation 

of facilities, in part, by establishing and maintaining a safety conscious work environment. It provides guidance on (1) encouraging employees to raise safety concerns, 

including recognition initiatives and communication tools, (2) Safety Conscious Work 

Environment training content, (3) alternative processes for addressing concerns, 

such as employee concerns and ombudsman programs, (4) tools to assess the Safety 

Conscious Work Environment, including performance indicators, behavioral observations, and surveys, (5) contractor awareness of Safety Conscious Work Environment 

principles and expectations, and (6) processes that help detect and prevent discrimination, and avoid the appearance of discrimination. NRC staff has been evaluating 

comments received on the draft document, and the final version of this guidance 

document is expected to be issued in August 2005. 

The NRC staff continues to monitor closely the licensees’ corrective actions associated with safety culture and Safety Conscious Work Environment issues at both the 

Davis-Besse Nuclear Plant and Salem/Hope Creek Nuclear Plants. In addition, the 

Institute of Nuclear Power Operations, a nuclear industry organization which routinely performs peer evaluations at member nuclear facilities, has agreed to having 

an NRC observer on its plant evaluation team. This will be supportive of the Commission direction to monitor industry efforts to assess safety culture. 

The existing regulatory infrastructure provides a framework for monitoring the 

impact of licensee safety culture on performance. This includes the following items: 

(1) direct, daily observation of licensee operation of the facilities by Resident Inspectors at each site; (2) periodic inspections focusing on Problem Identification and Resolution at each site by Region-based inspection team; (3) followup of individual Allegations and trending for Safety Conscious Work Environment Assessments; (4) enforcement of employee protection regulations which prohibit adverse action against 

employees who raise safety concerns; (5) the Reactor Oversight Process—management evaluation of insights gained from inspections and allegations to determine 

regulatory action; (6) early and aggressive action where potential safety performance or safety culture issues are observed (e.g., Salem and Hope Creek); and (7) implementation of corrective actions, such as those included in the Davis-Besse Lessons Learned Task Force recommendations, to improve the assessment capability. 

These are in addition to our continuing oversight of safety management.

Question 2. In its 1998 report to Congress, the Commission concluded that the 

Price-Anderson Act has proven to be ‘‘remarkably successful’’ and is ‘‘prudent public 

policy.’’ The report’s specific recommendation was: ‘‘Because the Act has benefited 

from extensive public discussion and legislative modifications over the years, only 

modest changes, if any, need be contemplated in connection with its renewal.’’ Does 

NRC still support the conclusion of your 1998 report to Congress that the Price-Anderson Act should be extended with only modest—or perhaps no—changes? 

Response. Yes. As stated in our written testimony submitted for the May 26, 2005 

hearing, the Commission supports the enactment of S. 865, extending the Price-Anderson Act as it applies to NRC authority to indemnify certain classes of licensees. 

The provisions of the Price-Anderson Act applicable to NRC’s authority to indemnify 

expired on December 31, 2003, having previously been extended for only 1 year as 

an interim measure. Until the Act is renewed, the Commission lacks the authority 

to enter into new indemnity agreements with licensees for new facilities. Expiration 

of the Price-Anderson Act does not affect the currently licensed facilities since the 

indemnification agreements, which are required by the Act for certain facilities and 

implement the Act, remain in force for the life of the facility.

Question 3. NRC has requested increased funding. What steps has the Commission taken to save money? 

Response. The NRC has long been committed to the goal of being effective and 

efficient. The Commission emphasized this commitment by making effectiveness and 

efficiency one of the five goals in its FY 2004–FY 2009 Strategic Plan, along with 

safety, security, openness, and management excellence. This commitment to efficiency is also reflected in the Commission’s annual budget request for resources to 

conduct an effective regulatory program that enables the Nation to use nuclear energy and nuclear materials safely for civilian purposes. This budget is developed 

using the agency’s Planning, Budgeting, and Performance Management (PBPM) 

process. This disciplined process, including the Commission review and decisions, 

ensures that only those programs that are effective in meeting the agency’s mission 

and goals continue. Additionally, efficiencies which reduce program and support 

costs are identified and incorporated in the resource estimates. These efficiencies 

are highlighted by the following actions that have been taken to save money. 

The Commission has modified its programs and processes to make them more efficient, effective, and predictable. This includes consolidating programs where it has 
62

made sense to do so. For example, the Commission recently consolidated oversight 

responsibility for all major fuel cycle facilities in its Region II office. The Commission also recently consolidated responsibility for the inspection and licensing of materials users for two of its regions in its Region I office. The Reactor Oversight Process was implemented several years ago to streamline the inspection process by using 

a risk-informed approach. The Commission has made continuous improvement to its 

reactor license renewal process. This has resulted in reducing the time to review an 

application from 30 months to 22 months without a hearing, while realizing a reduction in the resources necessary for the review. More discipline has also been applied 

to managing the NRC’s adjudicatory hearing process, which has made it more efficient. The Commission also leverages its resources by developing collaborative arrangements with industry, foreign governments, and international organizations to 

share the costs of research and other technical evaluations in areas such as material 

degradation, human factors, and fuel behavior. 

The Commission has also taken actions to save operating costs. For example, the 

Commission has used available information technology to reduce the cost of its safety analysis by moving scientific computer codes from the relatively high cost 

mainframes at the DOE national laboratories to a much lower cost in-house computing environment. The Commission has been able to significantly reduce the operating and maintenance costs for agency financial systems by cross servicing such 

services with other Federal agencies. The Commission has recently reconfigured existing headquarter offices to avoid having to obtain additional space to accommodate 

its increased workload. 

The above examples have all been implemented during over a period of increased 

workload and inflation. These examples demonstrate the Commission’s recognition 

of the importance of being an efficient regulator. The Commission remains committed to maximizing the effectiveness, efficiency and predictability of its programs 

and supporting systems.

Question 4. NRC has proposed to move their Technical Training Center (TTC) in 

Chattanooga, Tennessee to a location near its headquarters in Rockville, Maryland. 

Please provide the cost-benefit analysis on moving this Center. 

Response. The agency performed a cost-benefit analysis of moving the TTC to a 

location near Rockville, Maryland, in 1999. The study indicated that over a 10-year 

period the costs of operating the TTC in either Rockville or Chattanooga, including 

the cost of the move, would be roughly equal. The Commission continues to look for 

opportunities to enhance the efficiency and effectiveness of our technical training 

program for staff. A new study would be necessary to reflect the current environment (i.e., staffing increases, skill needs, space cost, etc.).
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Mr. Chairman and Members of the Subcommittee: 

I am pleased to be here today to participate in the Subcommittee’s oversight hearing on the Nuclear Regulatory Commission (NRC). NRC has the regulatory responsibility to ensure that the nation’s 103 operating commercial nuclear power plants 

are operated in a safe and secure manner. These plants provide about 20 percent 

of the country’s electricity, but safety of their operations is paramount, given the 

potentially devastating effects of a nuclear accident. While the nuclear power industry’s overall safety record has been good, safety issues periodically arise that raise 

questions about NRC’s regulation and oversight of the industry and challenge its 

credibility for guaranteeing the safety of the nation’s aging fleet of nuclear power 

plants. NRC plays an important role in protecting public health and the environment through its regulation of the nuclear power industry and other civilian use of 

nuclear material, and we commend the Subcommittee for holding this hearing. 

NRC was formed in 1975, to regulate the various commercial and institutional 

uses of nuclear energy, including nuclear power plants. NRC’s mission is to regulate 

the nation’s civilian use of nuclear material to ensure adequate protection of public 

health and safety, to promote the common defense and security, and to protect the 

environment. NRC’s activities include, among other things, licensing nuclear reactors (including license transfers and operating experience evaluation), reviewing 

plant safety procedures, imposing enforcement sanctions for violations of NRC requirements, and participating in homeland security efforts (including threat assessment, emergency response, mitigating strategies, security inspections, and force-onforce exercises). NRC also has regulatory oversight for the decommissioning of nuclear reactors, including accumulating sufficient funds to carry out decommissioning, and for the interim storage of spent nuclear fuel—the used fuel periodically 

removed from reactors in nuclear power plants. 

The importance of NRC’s regulatory and oversight responsibilities is made readily 

apparent by recent events. The terrorist attacks on September 11, 2001, and the 

subsequent discovery of nuclear power plants on a list of possible terrorist targets 

have focused attention on the security of the nation’s commercial nuclear power 

plants. Safety concerns were heightened by the discovery of a pineapple-sized cavity 

in the carbon steel reactor vessel head, and subsequent 2–year shutdown, of the 

Davis-Besse nuclear power plant in Ohio in 2002. Additional safety concerns were 

raised by the discovery of missing or unaccounted for spent nuclear fuel at three 

nuclear power plants. Further, the decommissioning of some of the nations’ aging 

nuclear power plants raises the issue of whether NRC is ensuring that plant owners 

are accumulating sufficient funds for decommissioning plants in a way that best 

protects public health, safety, and the environment. 

Over the past 2 years, we have issued a total of 15 reports and testimonies on 

a wide range of NRC activities. (These reports are listed in Appendix I). While our 

work has primarily focused on identifying ways that NRC can strengthen its regulation and oversight of the nuclear power industry, we have documented a number 

of productive steps NRC has taken to improve its mission-related activities. One example is the substantial effort that NRC has made in working with the industry 

to enhance security at nuclear power plants since the September 11, 2001, terrorist 

attacks. Another example is NRC’s considerable effort to analyze what went wrong 

at the Davis-Besse plant in 2002, and to incorporate the lessons learned into its 

processes. Today, my testimony will briefly summarize our recently completed NRC 

work. Specifically, this testimony (1) summarizes GAO’s findings and associated recommendations for improving NRC mission-related activities and (2) provides some 

observations on cross-cutting challenges that NRC faces in being an effective and 

credible regulator of the nuclear power industry. 

This testimony is based on seven of our recently issued reports. The other eight 

reports either address issues for which NRC is not the primary Federal agency—

such as radioactive waste disposal and nuclear nonproliferation—or concern internal 

NRC administrative matters—such as fee recovery and information technology management. We did not perform additional audit work in preparing this testimony. The 

work for our previously issued reports was conducted in accordance with generally 

accepted government auditing standards. 

SUMMARY

While NRC has improved its operations in a number of ways in recent years, GAO 

believes that the agency needs to take a number of additional actions to better fulfill 

its mission of ensuring that the nation’s nuclear power plants and other civilian 

users of nuclear material operate in a safe and secure manner. First, operations related to NRC’s security mission need to be improved. Specifically, we found that 

NRC has not developed adequate security measures for sealed sources of radioactive 
66

1GAO: Nuclear Security Federal and State Action Needed to Improve Security of Sealed Radioactive Sources, GAO–03–804 Washington, D.C.: Aug. 6, 2003. 

materials—radioactive material encapsulated in stainless steel or other metal used 

in medicine, industry, and research—which could be used to make a ‘‘dirty bomb.’’ 

We also found that despite taking numerous actions to respond to the heightened 

risks of a terrorist attack, NRC’s oversight of physical security at the nation’s commercial nuclear power plants could be strengthened. Second, operations related to 

NRC’s public health and safety, and environmental missions need to be improved. 

Specifically, we found that NRC’s analyses of plant owners’ contributions of funds 

for the decommissioning of nuclear power plants, and its processes for acting on reports that show insufficient funds, do not ensure that the significant radioactive 

waste hazards that exist following the permanent closure of a nuclear power plant 

will be properly addressed. Further, we found that the issues surrounding the shutdown of the Davis-Besse power plant reveal important weaknesses in NRC’s oversight of the safety of nuclear power plant operations. Finally, we found that NRC 

has not taken adequate steps to ensure that power plants are effectively controlling 

spent nuclear fuel, including developing and implementing appropriate inspection 

procedures to verify plants’ compliance with NRC requirements. 

NRC faces several cross-cutting challenges in being an effective and credible regulator of the nuclear power industry. In response to the agency’s limited resources 

and its desire to reduce the regulatory burden and cost on plants, NRC is taking 

two overarching approaches to meeting its regulatory and oversight responsibilities: 

(1) developing and implementing a risk-informed regulatory strategy that targets industry’s most important safety-related or safety-significant activities, and (2) striking a balance between verifying plants’ compliance with requirements through inspections and affording licensees the opportunity to demonstrate that they are operating their plants safely. We believe that NRC must overcome significant obstacles 

in implementing its risk-informed regulatory strategy across the agency, especially 

with regards to developing the ability to identify emerging technical issues and adjust regulatory requirements before safety problems develop. We also believe that 

NRC faces inherent challenges in balancing oversight and industry self-compliance, 

especially with regards to positioning the agency so it is able to identify diminishing 

performance at individual plants before they become a problem. Incidents such as 

the 2002 shutdown of the Davis-Besse plant and the unaccounted for spent nuclear 

fuel at several plants raise questions about whether NRC has the risk information 

that it needs and whether it is appropriately balancing agency involvement and licensee self-monitoring. Finally, we believe that NRC will face challenges managing 

its resources while meeting increasing regulatory and oversight demands. NRC’s resources have already been stretched by the extensive effort to enhance security at 

plants in the wake of the September 11, 2001, terrorist attacks. Pressure on NRC’s 

resources will continue as the nation’s fleet of plants age and the industry’s interest 

in expansion grows, both in licensing and constructing new plants, and re-licensing 

and increasing the power output of existing ones. 

REGULATORY AND OVERSIGHT FUNCTIONS VITAL TO NRC’S MISSION

NEED TO BE IMPROVED

Our recent analyses of NRC programs identified several areas where NRC needs 

to take action to better fulfill its mission and made associated recommendations for 

improvement. With respect to NRC’s security mission, we found that the security 

of sealed radioactive sources and the physical security at nuclear power plants need 

to be strengthened. With respect to its public health and safety, and environmental 

missions, we found several shortcomings that need to be addressed. NRC’s analyses 

of plant owners’ contributions could be improved to better ensure that adequate 

funds are accumulating for the decommissioning of nuclear power plants. By contrast, we found that NRC is ensuring that requirements for liability insurance for 

nuclear power plants owned by limited liability companies are being met. Further, 

to ensure the safety of nuclear power plants NRC must more aggressively and comprehensively resolve oversight issues related to the shutdown of the Davis-Besse 

plant. Finally, NRC’s methods of ensuring that power plants are effectively controlling spent nuclear fuel need to be improved. 

Operations Related to NRC’s Security Mission Could Be Improved 

In August 2003, we reported on Federal and state actions needed to improve security of sealed radioactive sources.1 Sealed radioactive sources, radioactive material 

encapsulated in stainless steel or other metal, are used worldwide in medicine, industry, and research. These sealed sources could be a threat to national security be-
67

2 Agreement states are the 33 states that have entered into an agreement with the NRC under 

subsection 274(b) of the Atomic Energy Act (AEA) under which NRC relinquishes to the states 

portions of its regulatory authority to license and regulate source, byproduct, and certain quantities of special nuclear material. 3GAO: Nuclear Regulatory Commission: Oversight of Security at Commercial Nuclear Power 

Plants Needs to Be Strengthened, GAO–03–752 (Washington, D.C.: Sept. 4, 2003). 

cause terrorists could use them to make ‘‘dirty bombs.’’ We were asked among other 

things to determine the number of sealed sources in the United States. We found 

that the number of sealed sources in use today in the United States is unknown 

primarily because no state or Federal agency tracks individual sealed sources. Instead, NRC and the agreement states2 track numbers of specific licensees. NEC and 

the Department of Energy (DOE) have begun to examine options for developing a 

national tracking system, but to date, this effort has had limited involvement by the 

agreement states. NRC had difficulty locating owners of certain generally licensed 

devices it began tracking in April 2001, and has hired a private investigation firm 

to help locate them. Twenty-five of the 31 agreement states that responded to our 

survey indicated that they track some or all general licensees or generally licensed 

devices, and 17 were able to provide data on the number of generally licensed devices in their jurisdictions, totaling approximately 17,000 devices. GAO recommended that NRC (1) collaborate with states to determine the availability of the 

highest risk sealed sources, (2) determine if owners of certain devices should apply 

for licenses, (3) modify NRC’s licensing process so sealed sources cannot be purchased until NRC verifies their intended use, (4) ensure that NRC’s evaluation of 

Federal and state programs assesses the security of sealed sources, and (5) determine how states can participate in implementing additional security measures. NRC 

disagreed with some of our findings. 

In September 2003, we reported that NRC’s oversight of security at commercial 

nuclear power plants needed to be strengthened.3 The September 11, 2001, terrorist 

attacks intensified the nation’s focus on national preparedness and homeland security. Among possible terrorist targets are the nation’s nuclear power plants which 

contain radioactive fuel and waste. NRC oversees plant security through an inspection program designed to verify the plants’ compliance with security requirements. 

As part of that program, NRC conducted annual security inspections of plants and 

force-on-force exercises to test plant security against a simulated terrorist attack. 

GAO was asked to review (1) the effectiveness of NRC’s security inspection program 

and (2) legal challenges affecting power plant security. At the time of our review, 

NRC was reevaluating its inspection program. We did not assess the adequacy of 

security at the individual plants; rather, our focus was on NRC’s oversight and regulation of plant security. 

We found that NRC had taken numerous actions to respond to the heightened 

risk of terrorist attack, including interacting with the Department of Homeland Security and issuing orders designed to increase security and improve defensive barriers at plants. However, three aspects of NRC’s security inspection program reduced the agency’s effectiveness in overseeing security at commercial nuclear power 

plants. First, NRC inspectors often used a process that minimized the significance 

of security problems found in annual inspections by classifying them as ‘‘non-cited 

violations’’ if the problem had not been identified frequently in the past or if the 

problem had no direct, immediate, adverse consequences at the time it was identified. Non-cited violations do not require a written response from the licensee and 

do not require NRC inspectors to verify that the problem has been corrected. For 

example, guards at one plant failed to physically search several individuals for 

metal objects after a walk-through detector and a hand-held scanner detected metal 

objects in their clothing. These individuals were then allowed unescorted access 

throughout the plant’s protected area. By extensively using non-cited violations for 

serious problems, NRC may overstate the level of security at a power plant and reduce the likelihood that needed improvements are made. Second, NRC did not have 

a routine, centralized process for collecting, analyzing, and disseminating security 

inspections data to identify problems that may be common to plants or to provide 

lessons learned in resolving security problems. Such a mechanism may help plants 

improve their security. Third, although NRC’s force-on-force exercises can demonstrate how well a nuclear plant might defend against a real-life threat, several 

weaknesses in how NRC conducted these exercises limited their usefulness. Weaknesses included (1) using more personnel to defend the plant during these exercises 

than during normal operations, (2) using attacking forces that are not trained in terrorist tactics, and (3) using unrealistic weapons (rubber guns) that do not simulate 

actual gunfire. Furthermore, at the time, NRC has made only limited use of some 
68

4GAO, Nuclear Regulatory Commission: Preliminary Observations on Efforts to Improve Security at NuclearPower Plants, GAO–04–1064T (Washington, D.C.: Sept. 14, 2004). 5GAO: Nuclear Regulation: NRC Needs More Effective Analysis to Ensure Accumulation of 

Funds to Decommission Nuclear Power Plants, GAO–04–32 (Washington, D.C.: Oct. 30, 2003). 

available improvements that would make force-on-force exercises more realistic and 

provide a more useful learning experience. 

Finally, we also found that even if NRC strengthens its inspection program, commercial nuclear power plants face legal challenges in ensuring plant security. First, 

Federal law generally prohibits guards at these plants from using automatic weapons, although terrorists are likely to have them. As a result, guards at commercial 

nuclear power plants could be at a disadvantage in firepower, if attacked. Second, 

state laws regarding the permissible use of deadly force and the authority to arrest 

and detain intruders vary, and guards were unsure about the extent of their authorities and may hesitate or fail to act if the plant is attacked. GAO made recommendations to promptly restore annual security inspections and revise force-onforce exercises. NRC disagreed with many of GAO’s findings, but did not comment 

on GAO’s recommendations. 

In September 2004, we testified on our preliminary observations regarding NBC’s 

efforts to improve security at nuclear power plants.4 The events of September 11, 

2001, and the subsequent discovery of commercial nuclear power plants on a list of 

possible terrorist targets have focused considerable attention on plants’ capabilities 

to defend against a terrorist attack. NRC is responsible for regulating and overseeing security at commercial nuclear power plants. We were asked to review (1) 

NRC’s efforts since September 11, 2001, to improve security at nuclear power 

plants, including actions NRC had taken to implement some of GAO’s September 

2003 recommendations to improve security oversight, and (2) the extent to which 

NRC is in a position to assure itself and the public that the plants are protected 

against terrorist attacks. The testimony reflected the preliminary results of GAO’s 

review. We are currently performing a more comprehensive review in which we are 

examining (1) NRC’s development of its 2003 design basis threat (DBT), which establishes the maximum terrorist threat that commercial nuclear power plants must 

defend against, and (2) the security enhancements that plants have put in place in 

response to the design basis threat and related NRC requirements. We expect to 

issue a report on our findings later this year. 

In the earlier work, we found that NRC responded quickly and decisively to the 

September 11, 2001, terrorist attacks with multiple steps to enhance security at 

commercial nuclear power plants. NRC immediately advised plants to go to the 

highest level of security using the system in place at the time, and issued advisories 

and orders for plants to make certain enhancements, such as installing more physical barriers and augmenting security forces, which could be quickly completed to 

shore up security. According to NRC officials, their inspections found that plants 

complied with these advisories and orders. Later, in April 2003, NRC issued a new 

DBT and required the plants to develop and implement new security plans to address the new threat by October 2004. NRC is also improving its force-on-force exercises, as GAO recommended in its September 2003 report. While its efforts had enhanced security, NRC was not yet in a position to provide an independent determination that each plant has taken reasonable and appropriate steps to protect 

against the new DBT. According to NRC officials, the facilities’ new security plans 

were on schedule to be implemented by October 2004. However, NRC’s review of the 

plans, which are not available to the general public for security reasons, had primarily been a paper review and was not detailed enough for NRC to determine if 

the plans would protect the facility against the threat presented in the DBT. In addition, NRC officials generally were not visiting the facilities to obtain site-specific 

information and assess the plans in terms of each facility’s design. NRC is largely 

relying on the force-on-force exercises it conducts to test the plans, but these exercises will not be conducted at all facilities for 3 years. We also found that NRC did 

not plan to make some improvements in its inspection program that GAO previously 

recommended. For example, NRC was not following up to verify that all violations 

of security requirements had been corrected, nor was the agency taking steps to 

make ‘‘lessons learned’’ from inspections available to other NRC regional offices and 

nuclear power plants. 

Operations Related to NRC’s Public Health and Safety and Environmental Missions 

Can Be Improved 

In October 2003, we reported that NRC needs to more effectively analyze whether 

nuclear power plant owners are adequately accumulating funds for decommissioning 

plants.5 Following the closure of a nuclear power plant, a significant radioactive 
69

6GAO, Nuclear Regulation: NRC’s Liability Insurance Requirements for Nuclear Power Plants 

Owned by Limited Liability Companies, GAO–04–654 (Washington, D.C.: May 28, 2004). 

waste hazard remains until the waste is removed and the plant site is decommissioned. In 1988, NRC began requiring owners to (1) certify that sufficient financial 

resources would be available when needed to decommission their nuclear power 

plants and (2) require them to make specific financial provisions for decommissioning. In 1999, GAO reported that the combined value of the owners’ decommissioning funds was insufficient to ensure enough funds would be available for decommissioning. GAO was asked to update its 1999 report, and to evaluate NRC’s analysis of the owners’ funds and the agency’s process for acting on reports that show 

insufficient funds. 

We found that although the collective status of the owners’ decommissioning fund 

accounts has improved considerably since GAO’s last report, some individual owners 

were not on track to accumulate sufficient funds for decommissioning. Based on our 

analysis and using the most likely economic assumptions, we concluded that the 

combined value of nuclear power plant owners’ decommissioning fund accounts in 

2000—about $26.9 billion—was about 47 percent greater than needed at that point 

to ensure that sufficient funds would be available to cover the approximately $33 

billion in estimated decommissioning costs when the plants are permanently closed. 

This value contrasts with GAO’s prior finding that 1997 account balances were collectively 3 percent below what was needed. However, overall industry results can 

be misleading. Because funds are generally not transferable from funds that have 

more than sufficient reserves to those with insufficient reserves, each individual 

owner must ensure that enough funds are available for decommissioning their particular plants. We found that 33 owners with ownership interests in a total of 42 

plants had accumulated fewer funds than needed through 2000, to be on track to 

pay for eventual decommissioning. In addition, 20 owners with ownership interests 

in a total of 31 plants recently contributed less to their trust funds than we estimated they needed in order to put them on track to meet their decommissioning 

obligations. 

NRC’s analysis of the owners’ 2001 biennial reports was not effective in identifying owners that might not be accumulating sufficient funds to cover their eventual 

decommissioning costs. In reviewing the 2001 reports, NRC reported that all owners 

appeared to be on track to have sufficient funds for decommissioning. In reaching 

this conclusion, NRC relied on the owners’ future plans for fully funding their decommissioning obligations. However, based on the owners’ actual recent contributions, and using a different method, GAO found that several owners could be at risk 

of not meeting their financial obligations for decommissioning when these plants 

stop operating. In addition, for plants with more than one owner, NRC did not separately assess the status of each co-owner’s trust funds against each co-owner’s contractual obligation to fund decommissioning. Instead, NRC assessed whether the 

combined value of the trust funds for the plant as a whole were reasonable. Such 

an assessment for determining whether owners are accumulating sufficient funds 

can produce misleading results because owners with more than sufficient funds can 

appear to balance out owners with less than sufficient funds, even though funds are 

generally not transferable among owners. Furthermore, we found that NRC had not 

established criteria for taking action when it determines that an owner is not accumulating sufficient decommissioning funds. 

We recommended that NRC (1) develop an effective method for determining 

whether owners are accumulating decommissioning funds at sufficient rates and (2) 

establish criteria for taking action when it is determined that an owner is not accumulating sufficient funds. NRC disagreed with these recommendations, suggesting 

that its method is effective and that it is better to deal with unacceptable levels of 

financial assurance on a case-by-case basis. GAO continues to believe that limitations in NRC’s method reduce its effectiveness and that, without criteria, NRC 

might not be able to ensure owners are accumulating decommissioning funds at sufficient rates. 

In May 2004, we issued a report on NRC’s liability insurance requirements for 

nuclear power plants owned by limited liability companies.6 An accident at one the 

nation’s commercial nuclear power plants could result in personal injury and property damage. To ensure that funds would be available to settle liability claims in 

such cases, the Price-Anderson Act requires licensees of these plants to have primary insurance—currently $300 million per site. The act also requires secondary 

coverage in the form of retrospective premiums to be contributed by all licensees of 

nuclear power plants to cover claims that exceed primary insurance. If these premiums are needed, each licensee’s payments are limited to $10 million per year and 

$95.8 million in total for each of its plants. In recent years, limited liability compa-
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7GAO, Nuclear Regulation: NRC Needs to More Aggressively and Comprehensively Resolve 

Issues Related to the Davis Besse Nuclear Power Plant’s Shutdown, GAO–04–415 (Washington, 

D.C.: May 17,2004). 

nies have increasingly become licensees of nuclear power plants, raising concerns 

about whether these companies—which shield their parent corporations’ assets—

will have the financial resources to pay their retrospective premiums. We were 

asked to determine (1) the extent to which limited liability companies are the licensees for U.S. commercial nuclear power plants, (2) NRC’s requirements and procedures for ensuring that licensees of nuclear power plants comply with the Price-Anderson Act’s liability requirements, and (3) whether and how these procedures differ 

for licensees that are limited liability companies. 

We found that of the 103 operating nuclear power plants, 31 were owned by 11 

limited liability companies. Three energy corporations—Exelon, Entergy, and the 

Constellation Energy Group—were the parent companies for 8 of these limited liability companies. These 8 subsidiaries were the licensees or co-licensees for 27 of 

the 31 plants. We also found that NRC requires all licensees for nuclear power 

plants to show proof that they have the primary and secondary insurance coverage 

mandated by the Price-Anderson Act. Licensees sign an agreement with NRC that 

requires the licensee to keep the insurance in effect. American Nuclear Insurers also 

has a contractual agreement with each of the licensees that obligates the licensee 

to pay the retrospective premiums to American Nuclear Insurers if these payments 

become necessary. A certified copy of this agreement, which is called a bond for payment of retrospective premiums, is provided to NRC as proof of secondary insurance. 

Finally, we found that NRC does not treat limited liability companies differently 

than other licensees with respect to the Price-Anderson Act’s insurance requirements. Like other licensees, limited liability companies must show proof of both primary and secondary insurance coverage. American Nuclear Insurers also requires 

limited liability companies to provide a letter of guarantee from their parent or 

other affiliated companies with sufficient assets to pay the retrospective premiums. 

These letters state that the parent or affiliated companies are responsible for paying 

the retrospective premiums if the limited liability company does not. American Nuclear Insurers informs NRC that it has received these letters. 

In May 2004, we also issued a report documenting the need for NRC to more aggressively and comprehensively resolve issues related to the shutdown of the DavisBesse nuclear power plant.7 The most serious safety issue confronting the nation’s 

commercial nuclear power industry since Three Mile Island in 1979, was identified 

at the Davis-Besse plant in Ohio in March of 2002. After NRC allowed Davis-Besse 

to delay shutting down to inspect its reactor vessel for cracked tubing, the plant 

found that leakage from these tubes had caused extensive corrosion on the vessel 

head—a vital barrier in preventing a radioactive release. GAO determined (1) why 

NRC did not identify and prevent the corrosion, (2) whether the process NRC used 

in deciding to delay the shutdown was credible, and (3) whether NRC is taking sufficient action in the wake of the incident to prevent similar problems from developing at other plants. 

We found that NRC should have, but did not identify or prevent the corrosion at 

Davis-Besse because agency oversight did not produce accurate information on plant 

conditions. NRC inspectors were aware of indications of leaking tubes and corrosion; 

however, the inspectors did not recognize the importance of the indications and did 

not fully communicate information about them to other NRC staff. NRC also considered FirstEnergy—Davis-Besse’s owner—a good performer, which resulted in fewer 

NRC inspections and questions about plant conditions. NRC was aware of the potential for cracked tubes and corrosion at plants like Davis-Besse but did not view them 

as an immediate concern. Thus, despite being aware of the development of potential 

problems, NRC did not modify its inspection activities to identify such conditions. 

Additionally, NRC’s process for deciding to allow Davis-Besse to delay its shutdown 

lacked credibility. Because NRC had no guidance for making the specific decision 

of whether a plant should shut down, it instead used guidance for deciding whether 

a plant should be allowed to modify its operating license. However, NRC did not always follow this guidance and generally did not document how it applied the guidance. Furthermore, the risk estimate NRC used to help decide whether the plant 

should shut down was also flawed and underestimated the risk that Davis-Besse 

posed. Finally, even though it underestimated the risk posed by Davis-Besse, the 

risk estimate applied to the plant still exceeded levels generally accepted by the 

agency. Nevertheless, Davis-Besse was allowed to delay the plant’s shutdown. 

After this incident, NRC took several significant actions to help prevent reactor 

vessel corrosion from recurring at nuclear power plants. For example, NRC has required more extensive vessel examinations and augmented inspector training. I 
71

8GAO, Nuclear Regulatory Commission: NRC Needs to Do More to Ensure that Power Plants 

Are Effectively Controlling Spent Nuclear Fuel, GAO–05–339 (Washington, D.C.: Apr. 8, 2005). 

would also like to note that, in April 2005, NRC proposed a $5.45 million fine 

against the licensee of the Davis-Besse plant. The principal violation was that the 

utility restarted and operated the plant in May 2000, without fully characterizing 

and eliminating leakage from the reactor vessel head. Additional violations included 

providing incomplete and inaccurate information to NRC on the extent of cleaning 

and inspecting the reactor vessel head in 2000. 

While NRC has not yet completed all of its planned actions, we remain concerned 

that NRC has no plans to address three systemic weaknesses underscored by the 

incident at Davis-Besse. Specifically, NRC has proposed no actions to help it better 

(1) identify early indications of deteriorating safety conditions at plants, (2) decide 

whether to shut down a plant, or (3) monitor actions taken in response to incidents 

at plants. Both NRC and GAO had previously identified problems in NRC programs 

that contributed to the Davis-Besse incident, yet these problems continued to persist. Because the nation’s nuclear power plants are aging, GAO recommended that 

NRC take more aggressive actions to mitigate the risk of serious safety problems 

occurring at Davis-Besse and other nuclear power plants. 

In April 2005, we issued a report outlining the need for NRC to do more to ensure 

that power plants are effectively controlling spent nuclear fuel.8 Spent nuclear 

fuel—the used fuel periodically removed from reactors in nuclear power plants—is 

too inefficient to power a nuclear reaction, but is intensely radioactive and continues 

to generate heat for thousands of years. Potential health and safety implications 

make the control of spent nuclear fuel of great importance. The discovery, in 2004, 

that spent fuel rods were missing at the Vermont Yankee plant in Vermont generated public concern and questions about NRC’s regulation and oversight of this 

material. GAO reviewed (1) plants’ performance in controlling and accounting for 

their spent nuclear fuel, (2) the effectiveness of NRC’s regulations and oversight of 

plants’ performance, and (3) NRC’s actions to respond to plants’ problems controlling 

their spent fuel. 

We found that nuclear power plants’ performance in controlling and accounting 

for their spent fuel has been uneven. Most recently, three plants—Vermont Yankee 

and Humboldt Bay (California) in 2004, and Millstone (Connecticut) in 2000—have 

reported missing spent fuel. Earlier, several other plants also had missing or unaccounted for spent fuel rods or rod fragments. NRC regulations require plants to 

maintain accurate records of their spent nuclear fuel and to conduct a physical inventory of the material at least once a year. The regulations, however, do not specify 

how physical inventories are to be conducted. As a result, plants differ in the regulations’ implementation. For example, physical inventories at plants varied from a 

comprehensive verification of the spent fuel to an office review of the records and 

paperwork for consistency. Additionally, NRC regulations do not specify how individual fuel rods or segments are to be tracked. As a result, plants employ various 

methods for storing and accounting for this material. Further, NRC stopped inspecting plants’ material control and accounting programs in 1988. According to NRC officials, there was no indication that inspections of these programs were needed until 

the event at Millstone. At the time of our review, NRC was collecting information 

on plants’ spent fuel programs to decide if it needs to revise its regulations and/or 

oversight. It had its inspectors collect basic information on all facilities’ programs. 

It also contracted with the Department of Energy’s Oak Ridge National Laboratory 

in Tennessee to review NRC’s material control and accounting programs for nuclear 

material. NRC is planning to request information from plants and plans to visit over 

a dozen plants for more detailed inspection. The results of these efforts may not be 

completed until late 2005, over 5 years after the incident at Millstone that initiated 

NRC’s efforts. However, we believed NRC has already collected considerable information indicating problems or weaknesses in plants’ material control and accounting programs for spent fuel. 

GAO recommended that NRC (1) establish specific requirements for the way 

plants control and account for loose rods and fragments as well as conduct their 

physical inventories, and (2) develop and implement appropriate inspection procedures to verify plants’ compliance with the requirements. 

NRC FACES SEVERAL BROAD CHALLENGES IN EFFECTIVELY REGULATING AND

OVERSEEING NUCLEAR POWER PLANTS

Based on our recent work at NRC, we have identified several cross-cutting challenges that NRC faces as it works to effectively regulate and oversee the nuclear 

power industry. First, NRC must manage the implementation of its risk-informed 
72

regulatory strategy across the agency’s operations. Second, and relatedly, NRC must 

strive to achieve the appropriate balance between more direct involvement in the 

operations of nuclear power plants and self-reliance and self-reporting on the part 

of plant operators to do the right things to ensure safety. Third, and finally, NRC 

must ensure that the agency effectively manages resources to implement its riskinformed strategy and achieve the appropriate regulatory balance in the current 

context of increasing regulatory and oversight demands as the industry’s interest in 

expansion grows. 

NRC Must Manage the Implementation of Its Risk-Informed Regulatory Strategy 

Nuclear power plants have many physical structures, systems, and components, 

and licensees have numerous activities under way, 24 hours a day, to ensure that 

plants operate safely. NRC relies on, among other things, the agency’s onsite resident inspectors to assess plant conditions and oversee quality assurance programs, 

such as maintenance and operations, established by operators to ensure safety at 

the plants. Monitoring, maintenance, and inspection programs are used to ensure 

quality assurance and safe operations. To carry out these programs, licensees typically prepare numerous reports describing conditions at plants that need to be addressed to ensure continued safe operations. Because of the significant number of 

activities and physical structures, systems, and components, NRC adopted a riskinformed strategy to focus inspections on those activities and pieces of equipment 

that are considered to be the most significant for protecting public health and safety. Under the risk-informed approach, some systems and activities that NRC considers to have relatively less safety significance receive little agency oversight. With 

its current resources, NRC can inspect only a relatively small sample of the numerous activities going on during complex plant operations. NRC has adopted a riskinformed approach because it believes that it can focus its regulatory resources on 

those areas of the plant that the agency considers the most important to safety. 

NRC has stated the adoption of this approach was made possible by the fact that 

safety performance at plants has improved as a result of more than 25 years of operating experience. 

Nevertheless, we believe that NRC faces a significant challenge in effectively implementing its risk-informed strategy, especially with regards to improving the quality of its risk information and identifying emerging technical issues and adjusting 

regulatory requirements before safety problems develop. The 2002 shutdown of the 

Davis-Besse plant illustrates this challenge, notably the shortcomings in NRC’s risk 

estimate and failure to sufficiently address the boric acid corrosion and nozzle cracking issues. We also note that NRC’s Inspector General considers the development 

and implementation of a risk-informed regulatory oversight strategy to be one of the 

most serious management challenges facing NRC. 

NRC Must Balance Oversight and Industry Self-Compliance 

Under the Atomic Energy Act of 1954, as amended, and the Energy Reorganization Act of 1974, as amended, NRC and the operators of nuclear power plants share 

the responsibility for ensuring that nuclear reactors are operated safely. NRC is responsible for issuing regulations, licensing and inspecting plants, and requiring action, as necessary, to protect public health and safety. Plant operators have the primary responsibility for safely operating their plants in accordance with their licenses. NRC has the authority to take actions, up to and including shutting down 

a plant, if licensing conditions are not being met and the plant poses an undue risk 

to public health and safety. 

NRC has sought to strike a balance between verifying plants’ compliance with requirements through inspections and affording licensees the opportunity to demonstrate that they are operating their plants safely. While NRC oversees processes, 

such as the use of performance measures and indicators, and requirements that licensees maintain their own quality assurance programs, NRC, in effect, relies on 

licensees and trusts them to a large extent to make sure their plants are operated 

safely. While this approach has generally worked, we believe that NRC still has 

work to do to effectively position itself so that it can identify problems with diminishing performance at individual plants before they become serious. For example, 

incidents such as the 2002 discovery of the extensive reactor vessel head corrosion 

at the Davis-Besse plant and the unaccounted for spent nuclear fuel at several 

plants across the country, raise questions about whether NRC is appropriately balancing agency involvement and self-monitoring by licensees. An important aspect of 

NRC’s ability to rely on licensees to maintain their own quality assurance programs 

is a mechanism to identify deteriorating performance at a plant before the plant becomes a problem. At Davis-Besse, NRC inspectors viewed the licensee as a good performer based on its past performance and did not ask the questions that should 
73

have been asked about plant conditions. Consequently, the inspectors did not make 

sure that the licensee adequately investigated the indications of the problem and 

did not fully communicate the indications to the regional office and NRC headquarters. 

NRC Must Manage Agency Resources to Meet Increasing Regulatory and Oversight 

Demands 

Finally, Mr. Chairman, I would also like to comment briefly on NRC’s resources. 

While we have not assessed the adequacy of NRC’s resources, we have noted instances, such the shutdown of the Davis-Besse plant, where resource constraints affected the agency’s oversight or delayed certain activities. NRC’s resources have 

been challenged by the need to enhance security at nuclear power plants after the 

September 11, 2001, terrorist attacks, and they will continue to be challenged as 

the nation’s fleet of nuclear power plants age and the industry’s interest grows in 

both licensing and constructing newplants, and re-licensing and increasing the output of existing plants. Resource demands will also increase when the Department 

of Energy submits for NRC review, an application to construct and operate a national depository for high-level radioactive waste currently planned for Yucca Mountain, Nevada. We believe that it is important for NRC and the Congress to monitor 

agency resources as these demands arise in order to ensure that NRC can meet all 

of its regulatory and oversight responsibilities and fulfill its mission to ensure adequate protection of public health, safety, and the environment. 

CONCLUSION

In closing, we recognize and appreciate the complexities of NRC’s regulatory and 

oversight efforts required to ensure the safe and secure operation of the nation’s 

commercial nuclear power plants. As GAO’s recent work has demonstrated, NRC 

does a lot right but it still has important work to do. Whether NRC carries out its 

regulatory and oversight responsibilities in an effective and credible manner will 

have a significant impact on the future direction of our nation’s use of nuclear 

power. 

Finally, we note that NRC has generally been responsive to our report findings. 

Although the agency does not always agree with our specific recommendations, it 

has continued to work to improve in the areas we have identified. It has implemented many of our recommendations and is working on others. For example, with 

respect to nuclear power plant security, NRC has restored its security inspection 

program and resumed its forceon-force exercises with a much higher level of intensity. It is also strengthening these exercises by conducting them at individual plants 

every 3 years rather than every 8 years, and is using laser equipment to reduce the 

exercises’ artificiality. Another example involves sealed radioactive sources. NRC is 

working with agreement states to develop a process for ensuring that high-risk radioactive sources cannot be obtained before verification that the materials will be 

used as intended. NRC anticipates that an NRC-agreement state working group will 

deliver a recommended approach to NRC senior management later this year. In addition, NRC continues to work on its broader challenges. For example, the agency 

intends to develop additional regulatory guidance to expand the application of riskinformed decisionmaking, including addressing the need to establish quality requirements for risk information and specific instructions for documenting the decisionmaking process and its conclusions. 

We will continue to track NRC’s progress in implementing our recommendations. 

In addition, as members of this subcommittee are aware, GAO has been asked to 

review the effectiveness of NRC’s activities for overseeing nuclear power plants, that 

is, its reactor oversight process. An important part of that work would be to review 

the agency’s risk-informed regulatory strategy and its effectiveness in identifying 

deteriorating plant performance as well as whether NRC is making progress toward 

effectively balancing agency inspections and self-monitoring by licensees. 

Mr. Chairman, this completes my prepared statement. I would be pleased to respond to any questions that you or other Members of the subcommittee may have. 

GAO CONTACTS AND STAFF ACKNOWLEDGEMENTS

For further information about this testimony, please contact me at (202) 512–3841 

(or at wellsj@gao.gov). John W. Delicath, Ilene Pollack, and Raymond H. Smith, Jr. 

made key contributions to this testimony. 
74

APPENDIX I

Related GAO Products 

Nuclear Waste: Preliminary Observations on the QualityAssurance Program at the 

Yucca Mountain Repository. GAO–03–826T. Washington, D.C.: May 28, 2003. 

Nuclear Regulatory Commission: Revision of Fee Schedules; Fee Recovery for fiscal 

year 2003 GAO–03–934R. Washington, D.C.: June 30, 2003. 

Spent Nuclear Fuel: Options Exist to Further Enhance Security. GAO–03–426. 

Washington, D.C.: July 15, 2003. 

Nuclear Security: Federal and State Action Needed to Improve Security of Sealed 

Radioactive Sources. GAO–03–804. Washington, D.C.: August 6, 2003. 

Nuclear Regulatory Commission: Oversight of Security at Commercial Nuclear 

Power Plants Needs to Be Strengthened GAO–03–752. Washington, D.C.: September 4, 2003. 

Nuclear Regulation: NRC Needs More Effective Analysis to Ensure Accumulation of 

Funds to Decommission Nuclear Power Plants GAO–04–32. Washington, D.C.: October 30, 2003. 

Information Technology Management: Governmentwide Strategic Planning, Performance Measurement, and Investment Management Can Be Further Improved 

GAO–04–49. Washington, D.C.: January 12, 2004. 

Yucca Mountain: Persistent Quality Assurance Problems Could Delay Repository Licensing and Operation. GAO–04460. Washington, D.C.: April 30, 2004. 

Nuclear Regulation: NRC Needs to More Aggressively and Comprehensively Resolve 

Issues Related to the Davis Besse Nuclear Power Plants Shutdown. GAO–04–415. 

Washington, D.C.: May 17, 2004. 

Nuclear Regulation: NRC’S Liability Insurance Requirements for Nuclear Power 

Plants Owned by Limited Liability Companies. GAO–04–654. Washington, D.C.: 

May 28, 2004. 

Low-Level Radioactive Waste: Disposal Availability Adequate in the Short Term, 

but Oversight Needed to Identify Any Future Shortfalls. GAO–04–604. Washington, D.C.: June 10, 2004. 

Nuclear Nonproliferation: DOE Needs to Take Action to Further Reduce the Use of 

Weapons-Usable Uranium in Civilian Research Reactors GAO–04–807. Washington, D.C.: July 30, 2004. 

Nuclear Regulatory Commission: Preliminary Observations on Efforts to Improve 

Security at Nuclear Power Plants. GAO–04–1064T. Washington, D.C.: September 

14, 2004. 

Low-Level Radioactive Waste: Future Waste Volumes and Disposal Options Are Uncertain. GAO–04–1097T. Washington, D.C.: September 30, 2004. 

Nuclear Regulatory Commission: NRC Needs to Do More to Ensure that Power 

Plants Are Effectively Controlling Spent Nuclear Fuel GAO–05–339. Washington, 

D.C.: April 8, 2005. 

RESPONSE BY JIM WELLS TO ADDITIONAL QUESTION FROM SENATOR LAUTENBERG

Question. You raise questions about whether the NRC adequately balances oversight with the industry’s self-monitoring. In today’s increasingly competitive electricity markets would you agree that industry executives might feel compelled to 

place profits over consumer safety? Could this be one reason that needed plant shutdowns are sometimes delayed? 

Response. No doubt nuclear power plants must sell the electricity they generate 

in markets that are increasingly competitive, and keeping costs down is an important aspect of being successful in these markets. During plant shutdown, costs are 

incurred but no electricity is being generated, which only adds to the costs that need 

to be recovered from electricity sales when the plant is operating. These costs include the cost of purchasing likely more-expensive electricity from other sources to 

meet a plant’s electricity commitments to customers during shutdown. Thus, a decision to shut down a plant can have substantial financial impacts. During our review 

of the issues surrounding the 2002 shutdown of the Davis-Besse plant in Ohio, we 

heard some concerns expressed that plant performance had deteriorated as plant 

management tried to keep expenses down and that financial considerations may 

have played too large a role in some of the decisions that plant management made. 

However, our review of the Davis-Besse incident focused on NRC’s oversight, and 

we found no evidence that the owner placed profits over safety. 
75

1Power companies include: Constellation Energy, Duke Energy, EDF International North 

America, Entergy Nuclear, Exelon Generation, Florida Power and Light, Progress Energy, 

Southern Company and Tennessee Valley Authority. Reactor vendors include General Electric 

and Westinghouse. 

STATEMENT OF MARILYN C. KRAY, VICE PRESIDENT, EXELON NUCLEAR AND

PRESIDENT, NUSTART ENERGY DEVELOPMENT

Chairman Voinovich, Senator Carper, Members of the Subcommittee: 

Thank you for the opportunity to appear before you today to discuss NuStart Energy Development’s activities. I am Marilyn Kray, Vice President of Project Development for Exelon Nuclear and President of NuStart Energy Development. 

NuStart is a consortium of nine U.S. power companies and two reactor vendors1

that was formed last year with two purposes: first, to demonstrate the Nuclear Regulatory Commission’s never-before-used licensing process to obtain a combined Construction and Operating License (COL) for an advanced nuclear power plant; and 

second, to complete the design engineering for two advanced reactor technologies, 

General Electric’s Economic Simplified Boiling Water Reactor (ESBWR) and Westinghouse’s Advanced Passive AP–1000. NuStart activities are being funded by the 

Department of Energy on a 50/50 cost sharing arrangement under the Nuclear 

Power 2010 Program. 

Demonstrating the NRC licensing process and completing the engineering for new 

reactor designs are critical first steps toward the construction of a new generation 

of reactors in the United States, and the NRC will play a central role in both efforts. 

NuStart plans to submit two COL applications to the NRC in 2008, and we anticipate that the Commission will complete its review of the applications by 2011. COL 

approval would allow a company or consortium of companies to begin construction 

of a new reactor with the hope of having a plant begin operation by 2015. 

In general, the nuclear industry has identified seven preconditions to the construction of new nuclear plants. In addition to the NuStart objectives of demonstrating the regulatory process and completing reactor designs for passive technologies, these include: • A demonstrated need for new base load power • Confidence in a long-term solution for used fuel disposal • Public confidence in nuclear power • A sound nuclear power infrastructure • Acceptable financial returns 

I would like to touch briefly on each of these issues and to discuss the important 

role that the NRC and this Committee play in many of these areas. 

DEMONSTRATION OF REGULATORY PROCESS

As noted above, one of NuStart’s primary objectives is to demonstrate the Nuclear 

Regulatory Commission’s never-before-used licensing process to obtain a combined 

Construction and Operating License (COL) for an advanced nuclear power plant. 

Obtaining a COL is a critical step in a potential renaissance of the nuclear power 

industry in the United States. By achieving this, NuStart hopes to demonstrate that 

the COL can be obtained on schedule and within budget, and that advanced plant 

designs can be approved. Further, NuStart’s efforts will provide a realistic time and 

cost estimate for building and operating a new nuclear plant in today’s environment. 

During the 1980s, nuclear plants were plagued with significant cost overruns due 

in large part to the regulatory uncertainty inherent in the NRC licensing process. 

Many major issues were argued and litigated only after plants had been constructed, in some cases delaying plant operations for years. 

Congress took an important step to reform the licensing process as part of the Energy Policy Act of 1992 with the codification of the NRC’s combined Construction 

and Operating License regulations under 10 CFR Part 52. The COL process is designed to provide all parties with an opportunity to raise issues related to siting and 

plant design before a license is granted. Once a plant is built, the only question before the Commission is whether the licensee has constructed the plant in conformance with its license. On paper the process appears to be sound; however, investor 

confidence will not be established until the process is demonstrated, as proposed 

under the NuStart project. 

The new licensing process also gives potential licensees an opportunity to have 

sites pre-approved by the Commission. The Early Site Permit (ESP) process allows 

a potential licensee to apply to the Commission for approval of a site for a new nuclear plant. Companies provide the NRC with extensive data on the proposed site, 

as well as information about the reactor design that could be built on the site. If 

a site is approved, a company can ‘‘bank’’ the site for as long as 20 years. 
76

Also under the Department of Energy’s Nuclear Power 2010 program, three companies have received matching funds to develop and submit Early Site Permit applications to the NRC: Dominion’s North Anna site in Virginia, Entergy’s Grand Gulf 

site in Mississippi, and Exelon’s Clinton Power Station in Illinois. All three applications are currently under review by the NRC, and we expect the Commission to 

issue the resultant permits starting in second half of 2006. 

Other issues related to a stable regulatory environment include NRC management 

and security regulations for licensees. 

The Commission’s Regulatory Oversight Process, which seeks to focus NRC activities on those issues which carry the highest level of safety significance, has provided 

objective, measurable, safety-significant performance indicators that can be used as 

a basis for the assessment of licensee performance. 

S. 864, the Nuclear Safety and Security Act, makes important reforms to the 

Atomic Energy Act to grant the NRC additional authority related to plant safety 

and security. The bill authorizes the use of firearms by security personnel and requires fingerprinting and criminal background checks for key personnel. 

What remains, however, is the identification of any additional security requirements that may be imposed on new plants. Incorporation of these further enhancements into the ongoing design development will be easier the earlier they are identified. 

COMPLETION OF REACTOR DESIGNS FOR PASSIVE TECHNOLOGIES

Another aspect of the revised NRC licensing regulations allows reactor vendors 

to submit designs to the NRC for Design Certification. This process allows the NRC 

to evaluate potential designs and allows for public participation in the certification 

process. Once a design is certified by the Commission, it can be paired with an 

Early Site Permit and used in the submission of a Construction and Operating License. NuStart plans to complete the design engineering for two advanced reactor technologies, General Electric’s ESBWR and Westinghouse’s AP–1000. NuStart selected 

these technologies because they represent the optimization of operational confidence 

and innovation. They are natural evolutions of the designs currently in operation, 

yet both of these technologies adopt simplified design features and technology improvements that rely on inherent, passive safety systems. In this context, ‘‘passive’’ 

refers to design principles wherein laws of nature such as gravity feed, convective 

heat transfer and natural circulation are used in place of complex systems comprised of numerous pumps, valves and actuation devices. The result is an enhancement to safety because there is less reliance on equipment performance and operator action, and a reduction in cost because there is less equipment to construct and 

maintain. 

NuStart’s work with the reactor vendors to complete the one-time generic engineering work necessary for the standardized plant designs will position these technologies for deployment when needed, thereby significantly reducing the time to 

market for a new nuclear plant. 

We are working closely with the Commission to assure that adequate staff resources will be in place to review the designs in a thorough and timely manner. 

NEED FOR BASE LOAD POWER

Before any company commits to new generation, there must be confidence that 

there will be a need for new base load power. In some regions of the country, new 

base load power will be needed in the near future; in others, however, electric capacity is estimated to be sufficient to meet demand for the next 10 years or more. The 

market, not the energy industry nor the Federal Government, will dictate when new 

base load power is needed. 

A LONG-TERM SOLUTION FOR USED FUEL DISPOSAL

While nuclear energy has a proven track record in the United States as a clean, 

economic and reliable source of energy, used fuel from nuclear plants must be managed to permanently isolate it from the environment. 

Before new plants can be built, energy companies, investors and the public must 

be confident that there is a long-term solution for the disposal of used nuclear fuel. 

While individual companies may have different views on what constitutes an acceptable solution, it is essential that the Federal Government continue to make progress 

on meeting its statutory and contractual obligation to begin removing used fuel from 

reactor sites. 

In 1982, the Federal Government codified its obligation to assure for the permanent disposal of high-level radioactive waste and used nuclear fuel. In 2002, Con-
77

gress upheld President George W. Bush’s designation of Yucca Mountain, Nevada, 

as the site for the nation’s permanent, deep geologic repository. While the Yucca 

Mountain project faces a number of challenges, the industry is confident that it will 

prove to be a scientifically suitable site for the permanent disposal of nuclear material. 

The NRC will play a critical role in reviewing the license application for the proposed repository, and it is essential that the Commission have the resources necessary to complete its review. 

PUBLIC CONFIDENCE IN NUCLEAR POWER

New nuclear power plants cannot be built without a high degree of public confidence in the safety of the technology, the competence and commitment of reactor 

operators, and the dedication of regulators. The industry recognizes that public confidence is based on the performance of our current fleet of plants. We must remain 

ever vigilant to the safety responsibility entrusted to us. 

Public awareness of nuclear energy’s positive contribution to energy independence, 

clean air, and a reliable, low-cost energy supply, has led to greater support in recent 

years. The nuclear industry’s commitment to safe operations and its proven track 

record over the last 25 years have also reinforced public support for nuclear technology. In fact, recent surveys conducted on behalf of the Nuclear Energy Institute 

indicates that support for nuclear energy is at an all-time high, with 67 percent of 

Americans favoring the use of nuclear energy. 

Public confidence in nuclear energy is also reinforced by the Price-Anderson Act, 

which assures that the public will be compensated quickly in the unlikely event of 

a nuclear incident. The Price-Anderson Act serves as a no-fault insurance policy, 

similar to that approved by Congress in the aftermath of the 9/11 attacks. Under 

Price-Anderson, the nuclear industry provides over $9 billion in coverage for a nuclear incident. Should claims exceed that amount, Congress is authorized to provide 

for additional compensation, including additional contributions from reactor owners. 

It is important to note that no taxpayer funds have been paid as a result of the 

Price-Anderson Act. 

Both the Department of Energy and the Nuclear Regulatory Commission support 

Price-Anderson extension. While S. 865, the Price-Anderson Amendments Act of 

2005, calls for a 20-year extension of the Act, the nuclear industry strong supports 

an indefinite extension of the Act. 

The formation of NuStart resulted in significant public attention and led community leaders in Port Gibson, Mississippi; Oswego, New York; and Aiken, South Carolina to contact the consortium to express interest in having a new plant built in 

their area. 

Last week, NuStart reached a major milestone with the announcement of six candidate sites for new reactors. These sites will be evaluated over the next several 

months, and two sites will be chosen for inclusion in NuStart’s COL applications. 

The sites named last week are: 

• Bellefonte Nuclear Plant, Hollywood, Alabama, owned by the Tennessee Valley 

Authority 

• Grand Gulf Nuclear Station, Port Gibson, Mississippi, owned by Entergy Nuclear 

• River Bend Nuclear Station, St. Francisville, Louisiana, also owned by Entergy 

• Savannah River Site, a Department of Energy facility near Aiken, South Carolina 

• Calvert Cliffs Nuclear Power Plant, Lusby, Maryland, owned by Constellation 

Energy 

• Nine Mile Point Nuclear Station in Scriba, New York, owned by Constellation 

Energy 

NUCLEAR POWER INFRASTRUCTURE

A critical challenge for the nuclear industry is the continued presence of a strong 

nuclear power infrastructure. This infrastructure includes the engineering expertise 

to design, construct, and operate plants; the existence of a strong educational network at the nation’s colleges and universities; and the presence of knowledgeable 

and dedicated personnel to staff the Nuclear Regulatory Commission. 

The lull in the construction of new nuclear power plants in the 1990s led to a decrease in the number of nuclear engineering students in American universities. As 

with many other businesses, the nuclear industry faces an aging workforce. If the 

commercial nuclear power industry in the United States is to expand, it is imperative that the Nation has a skilled workforce that is ready to construct, operate, and 

support new plants. 
78

S. 858, the Nuclear Fees Reauthorization Act, includes provisions to addresses the 

human capital issue by authorizing the Commission to support institutions of higher 

learning to support courses related to nuclear safety, security or environmental protection; establishing an NRC scholarship and fellowship program; and authorizing 

the Commission to establish a partnership program with institutions of higher 

learning to promote education and research in relevant fields of study. 

ACCEPTABLE FINANCIAL RETURNS

As a final prerequisite for new plant construction, companies will have to be confident that they can provide their shareholders with an acceptable financial return 

on their investment. Any investment in nuclear power must look attractive not only 

on an absolute basis, but superior to other fuel alternatives. 

While the industry is optimistic that nuclear generation can be competitive to the 

other alternatives, it does expect that the ‘‘first mover’’ investors will face significant 

hurdles unique to a nuclear investment. Accordingly, financial incentives to stimulate construction of new nuclear plants will be needed. These incentives should address factors such as the licensing risk, investments risks and the issues that make 

it difficult for companies to undertake capital-intensive projects (i.e. earnings dilution during construction and long period for recovery of capital investment under 

existing tax depreciation rules). Such a cooperative industry /government financing 

program for the first plants is a necessary and appropriate investment in U.S. energy security. 

CONCLUSION

Nuclear power is a critical component to our nation’s overall energy portfolio and 

our pursuit of energy independence. Our interest in nuclear power is not to the exclusion of other energy sources. To date, nuclear power has managed to uphold its 

20 percent contribution level despite the growing demand. This was possible because 

of the improvement opportunities to uprate the units and improve capacity factor. 

These opportunities are close to being exhausted. As a result, the percentage contribution level of nuclear will begin to decrease absent the construction of new 

plants. 

One of the foundations of the nuclear industry is the commitment to planning. 

Although there is no immediate need for base load power, we recognize that action 

is needed now in order to preserve the nuclear option for the future. By identifying 

the preconditions for new plants we are able to develop action plans to address 

them. NuStart was formed to serve as the unified industry mechanism for addressing certain of these preconditions. 

Thank you for the opportunity to appear before you today. 

RESPONSES BY MARILYN C. KRAY TO ADDITIONAL QUESTIONS FROM SENATROR

INHOFE

Question 1. With the announcement of the sites this week, you have reached an 

important milestone, what are the next milestones and timelines for NuStart—in 

other words, what is the next announcement that we should anticipate and when 

do you expect that to occur? What obstacles must (be) cleared to achieve that next 

milestone? 

Response. The announcement of the six finalist sites was a significant milestone 

for the NuStart project. This announcement was the result of establishing a methodical approach for identifying candidate sites and performing initial evaluations. For 

the remainder of the calendar year, the NuStart milestones are as follows:

Third Quarter, 2005: Submittal of the General Electric Design Certification application to the NRC for the Economic Simplified Boiling Water Reactor (ESBWR) 

October 1, 2005: Selection the two sites for the Combined Operating License (COL) 

applications 

December 31, 2005: Westinghouse receipt of Design Certification from the NRC for 

the Advanced Passive (AP) 1000

With a Cooperative Agreement in place between NuStart Energy Development 

and the Department of Energy under the Nuclear Power 2010 Program, NuStart is 

well positioned to meet these near-term project milestones. For the remainder of the 

NuStart project, however, the ability of NuStart to meet its intended milestones is 

contingent upon continued funding of the Nuclear Power 2010 Program. These future milestones include the submittal of the two COL applications to the NRC and 

the NRC’s subsequent review and approval. For 2006, we estimate that $74M is 

needed to fund the NuStart project as well as other Nuclear Power 2010 programs. 
79

The $74M estimate is $18M above that suggested in the DOE 2006 budget. This 

increase is primarily a result of a proposed revision to the NuStart project to enable 

two sites to be selected and a separate COL application prepared and submitted for 

each. Additionally, NuStart has worked with each reactor vendor to accelerate the 

schedule for submittal of the COLS to the NRC. Both of these changes were made 

in response to interactions with the Department of Energy and the President’s call 

for more new nuclear power plants.

Question 2. We often hear the argument that Price-Anderson was necessary 50 

years ago to help an industry that had yet to be established, and that now that we 

have a mature nuclear industry, Price-Anderson is no longer necessary. Is Price-Anderson necessary for new nuclear units? 

Response. Yes. Renewing the Act is an important step for new nuclear plant construction and for the public. The need for the provisions afforded by Price-Anderson 

is not necessarily linked to the maturity of the industry. The Price-Anderson Act 

provides prompt compensation to any persons harmed by a severe accident at a nuclear power plant in the U.S., even though the probability of such an accident is 

extremely remote. The law has served as a model for legislation in other areas ranging from vaccine compensation and medical malpractice to chemical waste cleanup. 

The act provides substantial protection to the American public and eliminates any 

litigation regarding fault in the event of a severe accident at a nuclear power plant, 

which the U.S. Nuclear Regulatory Commission determines to be an ‘‘extraordinary 

nuclear occurrence.’’ No other industry or insurance mechanism provides this degree 

of protection, up to $10 billion. 

The costs of the Price-Anderson protection, like all the costs of nuclear-generated 

electricity, are borne by the industry, unlike the corresponding costs of some major 

power alternatives. Risks from hydropower (dam failure and resultant flooding), for 

example, are borne directly by the public. The 1977 failure of the Teton Dam in 

Idaho caused $500 million in property damage and the only compensation for individuals and businesses damaged by this event was about $200 million in low-cost 

government loans. 

RESPONSES BY MARILYN C. KRAY TO ADDITIONAL QUESTIONS

FROM SENATOR VOINOVICH

Question 1. How well do you think the NRC is prepared to handle the several important licensing issues—re-licensing for existing plants, potential applications to 

build new facilities, and Yucca Mountain—that are all occurring at the same time? 

Response. The NRC is facing a resource challenge similar to that of the rest of 

the nuclear industry. According to a Nuclear Energy Institute (NEI) staffing survey 

published in 2004, nuclear power generation companies may lose an estimated 

16,000 workers over the next 5 years, representing 28 percent of all jobs in the sector. The survey further found that nearly half of industry employees are over 47 

years old, and less than 7 percent of employees are younger than 32 years old. This 

imbalance suggests a potentially inadequate supply of trained employees to replace 

departing personnel. 

The industry has a major workforce activity for ensuring that qualified personnel 

will be available to support extended operating lifetimes for existing plants and new 

plant design, construction and operations. While this challenge is far from being resolved, specific interactions and partnerships are being established with labor organizations, universities, community colleges, high schools and middle schools to increase interest in the nuclear industry and associated engineering technologies. 

We recognize that the NRC challenge is amplified by the need to staff for concurrent activities associated with new plants, the Yucca Mountain repository and relicensing of existing plants. To date, the NRC has reviewed and approved approximately 30 license renewal applications. The process for re-licensing has evolved into 

one that is both stable and consistent. 

Similar NRC readiness will be needed to address the new plant activities. NRC 

management has expressed doubts on being able to manage more than three new 

plant licensing reviews at a given time: for example, a Design Certification review 

plus a Combined Operating License (COL) application review plus an Early Site 

Permit review, or a review of three parallel COL applications. This emerging NRC 

resource issue could become a barrier to new plant deployment, a critical element 

in the President and Congress’s energy initiatives. 

In the last 9 months, as the pace of industry-NRC interactions has increased, the 

resource estimates for NRC new plant licensing review activities has grown more 

uncertain. The NRC resource estimate for the review of a COL application, which 

references an Early Site Permit and a Design Certification has risen from 33 Full-
80

Time-Equivalents (FTEs) to over 60 FTEs, with a corresponding increase in estimated contractor costs. This uncertainty increases generating company anxiety over 

the new licensing process. 

To ease the new plant licensing resource burden, we encourage the NRC to incorporate lessons learned from the Design Certifications and Early Site Permit demonstration projects into the licensing process, emulating the successful improvements in license renewal review efficiencies. 

NuStart recognizes the role that the industry plays as potential applicants for 

these upcoming licensing actions. That is, we will continue to advise the NRC of our 

plans well in advance so as to allow the agency ample time to prepare.

Question 2. While S. 865, the Price-Anderson Act of 2005, reauthorizes the program for 20 years, you have asked for an indefinite extension. What are the advantages of a longer—or indefinite—extension? 

Response. The Price-Anderson Act provides substantial benefit in its comprehensive protection to the American public. Nuclear power plants provide up to a total of $10 billion in insurance coverage 

to compensate the public in the event of an extremely unlikely severe nuclear accident and the Federal Government pays nothing for this basic coverage. The act provides substantial protection to the American public and eliminates any litigation regarding fault in the event of a severe accident at a nuclear power plant, which the 

U.S. Nuclear Regulatory Commission determines to be an ‘‘extraordinary nuclear occurrence.’’ No other industry or insurance mechanism provides this degree of protection, up to $10 billion. 

The costs of the Price-Anderson protection, like all the costs of nuclear-generated 

electricity, are borne by the industry, unlike the corresponding costs of some major 

power alternatives. Risks from hydropower (dam failure and resultant flooding), for 

example, are borne directly by the public. The 1977 failure of the Teton Dam in 

Idaho caused $500 million in property damage and the only compensation for individuals and businesses damaged by this event was about $200 million in low-cost 

government loans. 

The periodic renewal of Price-Anderson casts doubt and uncertainty on whether 

the coverage will be available in the future and that could impact the long-term 

planning strategies and decisionmaking process of U.S. generating companies. In 

addition, continued periodic renewal of Price-Anderson unnecessarily increases the 

Congressional workload and staffing burden, when an indefinite or 50-year renewal 

can be justified based on the benefit provided to the American public. 

STATEMENT OF DR. EDWIN S. LYMAN, SENIOR SCIENTIST, GLOBAL SECURITY

PROGRAM, UNION OF CONCERNED SCIENTISTS

Mr. Chairman and members of the Subcommittee, on behalf of the Union of Concerned Scientists, I would like to thank you for the opportunity to present our views 

on the effectiveness of the Nuclear Regulatory Commission (NRC) in overseeing the 

security and safety of nuclear power plants in the United States. 

My name is Edwin Lyman. I have been a Senior Scientist with the Global Security Program at the Union of Concerned Scientists (UCS) since May 2003, focusing 

on ways to prevent nuclear proliferation, nuclear terrorism and radiological terrorism. I have been working on these issues for 14 years. Prior to my current position, I was with the Nuclear Control Institute for 7 years, and served as its president from 2002–2003. I received a PhD in physics from Cornell University in 1992, 

after which I did 3 years of postdoctoral work at Princeton, analyzing issues at the 

intersection of nuclear nonproliferation, nuclear safety and environmental protection. 

I am testifying today as a public interest advocate in an unusual position. As the 

resultof my participation in an NRC hearing on security issues at a nuclear power 

plant in South Carolina, I have had access both to site-specific security information 

and to general information pertaining to the NRC’s post-9/11 security policies. I cannot discuss that information here in open session, although I would welcome the opportunity to do so at some future time in a closed forum. However, I am able to 

say that my long-standing concerns about security at NRC-regulated facilities have 

by no means been alleviated by what I have learned. 

As I will discuss, UCS has two basic concerns about security at U.S. nuclear facilities in the post-9/11 world. First, some of these facilities possess highly enriched 

uranium or plutonium, which can be used to make nuclear weapons, and this material is potentially vulnerable to theft by terrorists. Second, nuclear power plants remain vulnerable to terrorist attacks that could result in the release of significant 

radiation—far more deadly than any ‘‘dirty bomb.’’
81

What I find most troubling is that I see little evidence of ‘‘outside-the-box’’ thinking going on in the NRC or in the industry in response to emerging threats or safety 

concerns. They do not want to question the assumptions they have made because 

they are afraid of the answers they might get, especially if those answers end up 

costing the industry more money. But I doubt that America’s adversaries put similar constraints on themselves when plotting attacks. 

The NRC has become too self-satisfied with the way it does business, too evasive 

about potential hazards, too unresponsive to external criticism, and too close to the 

industry that it regulates. Stringent oversight of the NRC by Congress and independent non-governmental groups is essential to counterbalance the lax regulation 

and enforcement that can result from complacency and to ensure that the NRC can 

effectively protect public health and safety. Congressional action in the security area 

is especially important, because the American public cannot directly participate in 

the discussion and has little other recourse for ensuring that the government is 

doing everything it can to protect it from nuclear and radiological terrorism. To this 

end, legislation is needed to ensure that there is independent review of NRC policy 

decisions pertaining to the protection of America’s commercial nuclear facilities 

against both radiological sabotage’ and theft of weapon-usable materials. 

THEFT OF WEAPON-USABLE MATERIALS

Only a relatively small number of NRC-licensed facilities possess significant quantities of highly enriched uranium or plutonium, which if stolen could be used to 

make nuclear explosive devices. These include a couple of fuel fabrication plants and 

a number of research reactors. But the NRC’s responsibilities for regulation of the 

protection of nuclear materials against theft are growing in two key respects. 

First, in the post-9/11 world there is greater concern about the potential for theft 

of weapon-usable fissile materials, in light of revelations that al Qaeda and other 

terrorist groups are intent on acquiring nuclear weapons. This calls into question, 

for example, the relatively lax security requirements that the NRC imposes on university research reactors that possess substantial quantities of highly enriched uranium. 

Second, the number of NRC-licensed facilities that possess significant quantities 

of plutonium will increase if there is further action in the U.S. Department of Energy’s troubled program to dispose of excess weapon-grade plutonium by converting 

it to mixed-oxide fuel (MOX) and irradiating it in commercial reactors. Only last 

month, Duke Energy’s Catawba plant in South Carolina became the first U.S. nuclear power plant in decades to qualify as a ‘‘Category I’’ plutonium facility by virtue 

of its receipt of 80 kilograms of plutonium contained in four MOX lead test assemblies—enough to make a dozen Nagasaki-type nuclear bombs. If the test is successful, at least one other site, Duke’s McGuire plant in North Carolina, will take part 

in the program, and much larger quantities of plutonium-bearing MOX fuel will be 

shipped to both sites for years. 

The NRC’s approach to ensuring the security of materials at these facilities 

against theft should be evolving to keep pace with the growing threat, but in our 

judgment, it is not. Instead, the NRC is weakening the standards. This is a problem 

because, at the same time, the U.S. is trying to teach Russia to better protect its 

own weapon-usable material. We would urge the Congress to take a closer look at 

these issues. 

TERRORIST ATTACKS ON NUCLEAR POWER PLANTS AND THEIR CONSEQUENCES

More than 3 years after the 9/11 attacks, UCS continues to have serious concerns 

about the adequacy of NRC efforts to reduce the vulnerability of nuclear power 

plants to radiological sabotage attacks. If a team of well-trained terrorists were to 

succeed in gaining forced entry to a nuclear power plant, within a matter of minutes 

it could do enough damage to cause a meltdown of the core and a failure of the containment structure. Such an attack would have a devastating and long-lasting impact on public health, the environment, and the economy. A groundswell of public 

opposition to nuclear power would likely result, making it difficult for utilities to 

continue to operate existing nuclear plants, much less to construct new ones. 

The public has a right to know about the dangers that they may face from plants 

in their vicinity, and the NRC has a responsibility to ensure that emergency planning is based on the most accurate information and is conservative enough to provide ample protection. But the NRC is doing a disservice to the public by making 

misleading and confusing statements about the potential consequences of terrorist 

attacks or severe accidents at nuclear plants. It has backed away from its own publicly available pre-9/11 radiological assessments, and claims that more recent anal-
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1Statement submitted by Luis Reyes, U.S. Nuclear Regulatory Commission, to the Subcommittee on National Security, Emerging Threats and International Relations, Committee on 

Government Reform, U.S. House of Representatives, September 14, 2004, p. 8. 2 Edwin S. Lyman, ‘‘Chernobyl-on-the-Hudson? The Health and Economic Impacts of a Terrorist Attack at the Indian Point Nuclear Plant,’’ commissioned by Riverkeeper, Inc., September 

2004. 3 E. Cardis et al., ‘‘Risk of Thyroid Cancer After Exposure to 131I in Childhood,’’ Journal of 

the National Cancer Institute 97 (2005) 724–32. 

yses show that there is much less cause for concern. But the public must take these 

claims on faith, because the new assessments are all classified. 

After the 9/11 attacks, the NRC repeatedly asserted that the public had little to 

fear from a jumbo jet attack on a nuclear plant, because of the plants’ redundant 

safety systems, highly trained operators, robust structures, and emergency procedures. But the NRC admitted that it had never analyzed such attacks, so it commissioned classified vulnerability assessments from the national laboratories to determine what could actually happen. 

After these studies were completed, the NRC then conceded that there was a 

small chance that such an attack could cause a radiological release, but maintained 

that the NRC’s ‘‘emergency planning basis’’ would remain valid.1 However, the 

NBC’s emergency planning basis already includes, in principle, consideration of severe, Chernobyl-type accidents involving core melt and containment failure. So all 

the NRC’s statement actually says is that a 9/11-style attack on a nuclear plant 

wouldn’t cause an event worse than Chernobyl, which is not very reassuring. And, 

as I discuss below, in the event that such a calamity occurs, NRC’s emergency planning procedures may help to limit the near-term deaths from acute exposure to radiation, but would have little impact on the large numbers of cancer fatalities that 

could result from lower but still significant exposures to the radioactive plume. 

The effects of such attacks would be particularly severe for nuclear plants situated in densely populated metropolitan areas and near nerve centers of our economy, such as Indian Point, only 25 miles north of New York City. A study that I 

prepared last year for the environmental group Riverkeeper found that the consequences of a terrorist attack at one of the reactors at Indian Point could be catastrophic, with up to 44,000 deaths in the near-term from acute radiation poisoning, 

500,000 deaths in the long-term from cancer, and economic damages that could exceed $2 trillion.2 It is hard to conceive of a ‘‘dirty bomb’’ that could do as much damage. This study was performed using the same computer codes and radiological releases (‘‘source terms’’) that NRC itself uses for conducting radiological assessments. 

Another notable finding of the Indian Point study is the widespread extent of the 

contamination that can result from a nuclear plant attack. The calculations clearly 

showed that severe health consequences can occur at locations far downwind of the 

affected plant, with near-term fatalities occurring up to 60 miles away. An attack 

on Indian Point could be catastrophic not only for New York City but also for densely populated parts of New Jersey and Connecticut. 

Perhaps the most troubling result of the study involved the doses to children from 

radioactive iodine exposure. Radioactive iodine can concentrate in the thyroid, delivering very high radiation doses to thyroid tissue and posing an elevated risk of thyroid cancer, particularly in children. One of the terrible legacies of the 1986 

Chernobyl accident is the epidemic of thyroid cancer among children exposed to radioactive iodine, a causal relationship that has now been conclusively established.3

Potassium iodide (KI), if administered within a few hours of exposure to radioactive iodine, can be very effective in reducing the radiological impact. NRC’s policy 

is to provide funds for purchase of KI, in states that request it, for individuals within the roughly circular, 10-mile-radius ‘‘plume exposure’’ emergency planning zone 

(EPZ). However, the results of the Indian Point study indicate that children hundreds of miles away from a nuclear power plant attack could receive exposures to 

the thyroid in excess of 5 rem, the dose that would trigger administration of KI 

under FDA guidelines. The current NRC policy appears to leave many children at 

serious risk in the event of a severe accident or terrorist attack at a nuclear plant. 

The NRC’s position is that there is no need for KI distribution more than ten 

miles away from any nuclear plant. But although the NRC doesn’t like to point this 

out, this assessment is appropriate only for accidents in which the containment 

building remains intact and significantly reduces radiological releases to the environment. In the post-9/11 era, such an assumption should no longer form the basis 

for emergency planning decisions, given that terrorists capable of attacking a plant 

and causing a meltdown would also likely be able to breach the containment as well. 

A more prudent KI policy should be based on a more realistic radiological assessment that considers containment breach events and uses plume mapping, based on-
83

4 Board on Radioactive Waste Management, National Research Council, ‘‘Safety and Security 

of Commercial Nuclear Fuel Storage,’’ Public Report, National Academies Press, Washington, 

D.C., 2005, Executive Summary, p. 6. 5 J. Beyea, E. Lyman, F. von Hippel, ‘‘Damages from a Major Release of 137Cs into the Atmosphere of the United States,’’ Science and Global Security 12 (2004) 125–136. 6 NRC Commissioner Edward McGaffigan, personal communication, May 16, 2003.

site-specific meteorological conditions, to determine the regions where KI is likely 

to be needed. 

These dangers are not exclusive to plants in urban areas like Indian Point. Over 

the last fifteen years, suburban sprawl has led to substantial population growth in 

rural areas, some of them near formerly remote nuclear power plants. Preliminary 

UCS data based on U.S. Census figures indicate that between 1990 and 2000, the 

number of people living within the 10–mile emergency planning zones of many nuclear plants, including Calvert Cliffs in Maryland, Catawba in South Carolina, 

North Anna in Virginia, Shearon Harris in North Carolina and Comanche Peak in 

Texas, increased by 35 percent or more from 1990–2000—nearly three times the average population growth of the Nation during that period. 

Moreover, the attack scenario evaluated in the Indian Point report was far from 

the worst case. For instance, the study assumed that the attack only caused damage 

to the reactor itself and not to the spent fuel pools, which remained fully functional 

after the attack. However, the spent fuel pools themselves contain enormous quantities of long-lived radionuclides, are not protected by containment buildings like the 

reactors themselves, and are vulnerable to zirconium cladding fires and fuel melting 

in the event of an extended interruption to their active cooling systems. As the recent National Academy of Sciences study on spent fuel pool risks has made clear, 

a terrorist attack on a spent fuel pool could, under some conditions, lead to the release of large quantities of radioactive materials to the environment.4 Calculations 

that I performed for an article published last year in the Princeton-based journal 

Science and Global Security showed that a terrorist attack on a spent fuel pool alone 

could result in thousands of cancer deaths and economic damages in the range of 

hundreds of billions of dollars.5

PREVENTING TERRORIST SABOTAGE ATTACKS AND THEFTS OF NUCLEAR MATERIALS

There are several ways in which the NRC can strengthen its regulations for protecting the public from the threats of sabotage attacks on nuclear power plants and 

thefts of nuclear weapon-usable materials from Category I nuclear facilities. These 

include: (1) insuring that the ‘‘design basis threats’’ that facilities are required to 

protect against adequately represent the terrorist threats that those facilities actually face; (2) ensuring that force-on-force tests used to assess the adequacy of security measures at nuclear facilities are realistic and credible; (3) addressing the continuing problem of guard fatigue at nuclear plants; (4) reforming the implementation of ‘‘risk-informed regulation’’ to allow an increase in regulatory burdens when 

warranted; and (5) imposing the same standards for safety culture at the NRC as 

the NRC does for nuclear plants. I discuss each of these in turn below. 

Design Basis Threat (DBT) 

The DBT is a description of the size and other characteristics of the adversary 

group that certain nuclear facility licensees are required to design their security systems to protect against. There are different DBTs for the threat of radiological sabotage and for the threat of theft of ‘‘Category I’’ quantities of weapon-usable materials (2 kilograms or more of plutonium, 5 kilograms or more of highly enriched uranium). In April 2003, after a long deliberative process, the NRC issued revised 

DBTs to take into account the increased threat environment after the 9/11 attacks. 

Nuclear power plant licensees and Nuclear Energy Institute officials were allowed 

to review and comment on the proposed radiological sabotage DBT, but members 

of the public were not. The NRC argues that the interests of the public were represented because it sought comment on the DBT from other agencies. In fact, most 

other agencies apparently were not very happy with the proposal. As Commissioner 

Edward McGaffigan wrote in 2003:

‘‘. . . every other Federal agency that reviewed the staff’s proposed DBT, 

other than the FBI, felt there could be additional attributes in the DBT, but 

all of them declined to help us on where the line should be drawn between the 

primary responsibility of a regulated private sector guard force and the primary 

responsibility of government . . . the agencies instead answered what the overall threat might be, and in my personal view covered their bets so that they 

could never be accused of underestimating terrorists . . .’’ 6
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7 NRC Approves Changes to the Design Basis Threat and Issues Orders for Nuclear Power 

Plants to Further Enhance Security,’’ press release, April 29, 2003. 8Michael Wallace, President, Constellation Group, Chairman of NEI Security Working Group 

and Chairman of the Nuclear Sector Coordinating Council, ‘‘Achieving Stability in a Post-9/11 

Environment,’’ NRC Regulatory Information Conference, Rockville, MD, March 8, 2005. 

Ultimately, the NRC did not base the post-9/11 DBT on the maximum credible 

threat against U.S. critical infrastructure, as this comment suggests was the recommendation of most other agencies, but instead defined it as ‘‘the largest reasonable threat against which a regulated private guard force should be expected to defend under existing law.’’ 7 Although the DBT is ‘‘safeguards information’’ and is not 

publicly available, one can infer from public statements by NRC officials that it is 

not commensurate with the 9/11 attack threat—that is, a large group of attackers, 

capable of acting in four coordinated teams, that is assisted by several insiders and 

may have multiple large aircraft at its disposal. 

This means that even today, more than 3 years after 9/11, private nuclear plant 

security forces would not be able to repel an attack on the magnitude of 9/11 on 

their own, but would require the assistance of additional forces (e.g. local law enforcement, National Guard) at public expense. Yet there is still no systematic mechanism in place to evaluate these vulnerabilities and quickly ensure that sufficient 

resources are provided to remedy them. Attempts to address these security gaps, 

like the Department of Homeland Security’s National Infrastructure Protection 

Plan, which was issued in interim form in February of this year, are a long way 

from being implemented. 

While it is reasonable not to include members of the public in deliberations regarding sensitive details of the DBT, public confidence is hard to sustain when the 

public knows that industry representatives are full partners at the table, and the 

table is behind closed doors. There should be some way to give taxpayers a say in 

deciding where to draw the line between private and public obligations, since they 

will be responsible for paying for the public resources needed to supplement the security of private nuclear facilities. Moreover, this taxpayer subsidy will only continue to increase if, as some industry representatives want, the DBT will remain 

frozen from now on, with the government paying to provide the additional security 

needed if the threat level increases in the future.8

The NRC’s current plan to revise its physical protection regulations through a 

rulemaking presents an opportunity to increase the transparency of its security decisionmaking, but only if the NRC makes every effort to maximize opportunities for 

public involvement and to minimize the amount of relevant information that is 

withheld from the public. 

Congress should mandate an independent review of the methodology used by the 

NRC to develop the DBT and the adequacy of the DBT itself, in light of intelligence 

on known and emerging threats. The views of all other agencies should be seriously 

considered. An approach similar to that proposed in the House and Senate energy 

bills, which would require an interagency review of threats and assignments of responsibility for addressing them, would be a good start. 

Force-on-Force Tests 

A key aspect of a robust security program is force-on-force (FOF) testing. Security 

plans that look great on paper can have weaknesses that only become apparent during testing. UCS commends the NRC for instituting a mandatory FOF testing program, through its post-9/11 security orders, that will test the security of each plant 

site every 3 years. The credibility of this testing program is essential for public confidence. While the NRC has taken steps to make these tests more realistic, there 

are other issues that it must address to ensure the credibility of this program. Congress should consider legislation that would impose strict guidelines on the FOF 

testing program to ensure that these concerns and others are resolved. 

The public must be able to trust the FOF tests. The public cannot have confidence 

in the outcomes of these tests unless their integrity is beyond reproach. NRC’s 

award of the contract for the mock adversary team to be used in all FOF tests to 

Wackenhut, the same contractor that supplies the security officers for nearly half 

of US nuclear power plants, obviously presents the potential for conflicts of interest. 

While NRC asserts that it is rigorously guarding against the possibility that the 

tests could be compromised, the public has no choice but to take NRC at its word. 

In this regard, appearance is everything. 

The FOF tests must be challenging. The NRC must ensure that the attack scenarios chosen for the FOF tests are sufficiently challenging to provide high assurance that the licensees’ security programs are robust. In particular, they should 
85

probe vulnerabilities in a licensee’s protective strategy that are likely to be known 

by an insider in a top security position and could be exploited by real adversaries. 

Also, FOF tests should not only test the ability of security forces to protect against 

the DBT, but should also evaluate the margin to failure of the security strategy with 

respect to increases in the threat beyond the DBT. Safety systems are typically designed with a margin to failure, so that they can continue to provide some protection 

even if design-basis accident conditions are exceeded. However, it is unclear if there 

is a comparable margin to failure with respect to security systems. The only way 

to determine this is to actually test the system with mock adversaries whose characteristics exceed the DBT in some respects. 

Finally, the amount of time that licensees are given to prepare for FOF tests remains an issue. In a real attack, the element of surprise is one of the greatest advantages of the attacking force, but for practical reasons the NRC must give some 

advance warning of an impending test. This diminishes the usefulness of the test 

as an accurate measure of the state of security during day-to-day operations. Prior 

to 9/11, the NRC would inform licensees 6 to 10 months in advance. Recently, the 

Commission was informed in a public meeting that the NRC staff has reduced the 

period of advance warning to 2 months. However, this still allows far too much time 

for licensees to prepare for and rehearse for the test. 

The FOF tests must not unreasonably restrict the capabilities of insiders. The regulatory DBT specifies that the external adversary force is assisted by an insider that 

can participate in an active role, a passive role, or both. However, in the FOF tests 

conducted before 9/11, the role of the insider was limited to passive activities such 

as providing plant information to the external adversary team. But an active insider, who might be anyone from a control room operator to an armed responder, 

could give an enormous advantage to an adversary, and the serious threat such an 

insider could pose should not be ignored. Protective strategies should be developed 

with due consideration to the damage that could be caused by an active insider in 

any capacity, and those strategies should be fully tested in the FOF program. 

The grading process for the FOF tests must be clear, understandable, and sensible. 

When NRC does a safety inspection and finds a problem, it uses a ‘‘significance determination process’’ (SDP) to evaluate the severity of the finding. For the most serious problems, such as those, that have a high probability of leading to a core meltdown if left uncorrected, the process would generate a ‘‘RED’’ finding, which triggers 

a predetermined set of enforcement actions. For instance, for allowing the hole in 

the reactor vessel head to develop at Davis-Besse, First Energy clearly deserved, 

and got, a RED finding. 

However, when the NRC tried to apply the same logic to evaluating the findings 

of FOF tests back in 2000, it ran into problems. For example, since the adversaries 

were considered to have achieved their goal in a FOF if they could have done 

enough damage to safety systems to cause a meltdown, the licensee would get a 

RED finding any time the adversaries ‘‘won’’ a FOF. Since the licensees were losing 

FOF drills about 50 percent of the time, they were not happy about this result. Consequently, the NRC suspended application of the process to FOF tests and went 

back to the drawing board. 

Shortly before the 9/11 attacks, when this issue was still being discussed in public, the Nuclear Energy Institute made a proposal for an SDP process in which a 

FOF test could never result in a RED finding, no matter how badly a licensee’s security force performed. The public never found out if the NRC adopted this proposal, 

since the 9/11 attacks intervened and the security SDP methodology was designated 

as ‘‘safeguards information.’’ However, there was a public discussion of the SDP 

issue during a Commission briefing in March, and it appeared that the NRC is still 

experiencing problems with implementation of the security SDP, including disagreements with licensees over the results. 

The public cannot have confidence in the FOF program if it does not have assurance that NRC is administering the most serious penalties when the most serious 

security violations occur. 

GUARD FATIGUE

Another critical issue is guard fatigue. The job of security personnel at nuclear 

plants is a demanding and stressful one. They must be poised to respond to an attack with little or no warning during their entire shift. And if an attack comes, they 

must respond consistently at the highest level of performance. Strong safeguards 

must be in place to ensure that security officers get enough rest to do their job effectively. In 2003, after numerous reports that security officers around the country 

were being compelled by management to work unreasonably long hours, such as six 

consecutive twelve-hour shifts per week, the NRC imposed an order putting modest 
86

9Presentation by David Lochbaum at the NRC Nuclear Safety Research Conference, October 

30, 2002. 10 U.S. NRC, ‘‘Director’s Status Report on Generic Activities,’’ April 2005, p. 90. 

restrictions on their work hours. But UCS and other watchdog groups continue to 

hear complaints that licensees are not fully complying with the order or are exploiting loopholes in it, and that the NRC is not aggressively enforcing the order. If 

these complaints have merit, this state of affairs needs to be immediately addressed. 

RISK-INFORMED REGULATION: STILL A SINGLE-EDGED SWORD

One of the most glaring examples of the NRC’s slant toward the interests of licensees can be found in its selective implementation of ‘‘risk-informed regulation.’’ 

This is a process in which safety regulations are reviewed, using probabilistic risk 

assessment techniques, to evaluate their impact on radiological risk to the public. 

Those regulations that are determined not to have a significant impact on reducing 

risk can then be scrapped. 

The NRC has said that risk-informed regulation should be a ‘‘double-edged 

sword’’—that is, the process should be used not only to eliminate regulations and 

reduce regulatory burden, but also to strengthen regulations when gaps in protection are found that have high risk significance. But, as UCS Reactor Safety Engineer David Lochbaum has said, the NRC’s ‘‘two-edged risk-informed sword’’ is 

‘‘razor-sharp on one side, NERF-like on the other.’’ 9 In other words, it is much more 

effective in reducing regulatory burdens than in imposing new requirements. 

When confronted with this criticism, the NRC has offered a counterexample: its 

revision of regulation 10 C.F.R. 50.44, which concerns the control of combustible 

gases (such as hydrogen) during accidents to prevent an explosion that could breach 

containment. However, a look at the specifics of this case demonstrates otherwise. 

The NRC’s analysis found that most of the requirements for controlling hydrogen 

generation have little impact on the risk of containment failure. But it also found 

that there was one case in which the regulations did not adequately limit the risk 

of containment failure for certain types of plants during station blackouts, in which 

both offsite and onsite power is lost. Of the plants in this category, nine are pressurized-water reactors with ice-condenser containments, such as Catawba I and II in 

South Carolina, and four are boiling-water reactors with Mark III containments, 

such as Perry in Ohio. These plants have significantly smaller and weaker 

containments than other U.S. plants, and in the event of a hydrogen explosion, studies show that there would be a near certainty of containment failure,10 resulting in 

a catastrophic radiological release. For this reason, NRC requires that these plants 

be provided with hydrogen igniters to burn off hydrogen generated during an accident before it can reach an explosive concentration. However, these igniters require 

AC power to operate, so in the event of a station blackout, they would not be available, and operators would be helpless to prevent a containment failure. 

The NRC revised 10 CFR 50.44 by throwing out all the provisions that it determined were unnecessary. However, it also decided to evaluate whether it would be 

cost-effective to require that ice-condenser and Mark III plants be equipped with additional backup power supplies to ensure that the igniters would be available during 

a blackout. After several years of detailed analyses, the NRC decided that this problem could be fixed inexpensively and that the reduction in risk was well worth the 

cost. This seemed to be a win-win-win situation: the public would win because a serious risk would be mitigated; licensees would win because the fix was quick and 

not prohibitively expensive, and the NRC would win by being able to show 

naysayers that it wasn’t afraid to impose additional requirements when necessary. 

However, 4 years later, virtually nothing has happened. Boiling-water reactor operators insisted on imposing strict design criteria on replacement power systems 

that drove up their projected cost until they no longer looked justifiable. And not 

only has the NRC abandoned plans to fix the problem through a rulemaking, it has 

even declined to issue a generic letter requiring licensees to make the necessary 

changes. It is now relying on voluntary commitments, but some licensees may not 

even follow through with those, claiming that they are too expensive. Meanwhile, 

people living near those plants remain at an unnecessarily high risk of being victims 

of a Chernobyl-type accident. If uncorrected, this problem will pose an even greater 

risk if the Catawba and McGuire ice-condenser plants begin to utilize large quantities of plutonium-bearing MOX fuel, which can increase both the probability and 

consequences of a severe accident or a successful radiological sabotage attack. The 

second edge of NRC’s risk-informed sword has yet again proved to be a dull blade. 
87

11GAO on NRC: United States General Accounting Office, ‘‘Nuclear Regulation: NRC Staff 

Have Not Fully Accepted Planned Changes,’’ GAO/RCED–00–29, January 2000. 

IG on NRC: United States Nuclear Regulatory Commission Inspector General, ‘‘Special Evaluation: OIG 2002 Survey of NRC’s Safety Culture and Climate,’ OIG–03–A–03, December 11, 

2002. 

Millstone: Presentation by Little Harbor Consultants to Nuclear Regulatory Commission, ‘‘Update on LHC Oversight Activities at Millstone,’’ July 22, 1997. 

Davis-Besse: Letter from FirstEnergy Nuclear Operating Company to Nuclear Regulatory 

Commission, ‘‘Submittal of the Report Titled ’Safety Culture Evaluation of the Davis-Besse Nuclear Power Station,’ dated April 14, 2003,’’ April 23, 2003. 12Letter from David Lochbaum, to NRC Chairman Nils Diaz, ‘‘Kudos and Mea Culpa on Safety Conscious Work Environment,’’ February 2, 2004. 

SAFETY CULTURE AT THE NRC

My colleague at UCS, David Lochbaum, who is an expert in safety issues, was 

not able to be here today. Here I would like to outline his views on the need for 

an improved safety culture at the NRC. 

According to the NRC, a safety culture ‘‘can be characterized by a willingness on 

the part of licensee staff to raise and document safety issues to resolve risk-significant 

equipment and process deficiencies promptly, adhere to written procedures, conduct 

effective training, make conservative decisions, and conduct probing self-assessments.’’

In recent years, the NRC did not allow the Millstone and Davis-Besse reactors 

to restart until their safety cultures had been restored to acceptable levels. However, independent assessments performed by the General Accounting Office and the 

NRC Inspector General of the safety culture within NRC conclude it is as bad as, 

if not worse, than that at Millstone or Davis-Besse.11 For example, nearly 50 percent of NRC staffers in a recent survey reported feeling unable to raise safety concerns without fear of retaliation and nearly one-third of NRC staffers who had 

raised safety concerns felt they had suffered harassment and/or intimidation as a 

result. 

These assessments of the NRC safety culture are consistent with reports UCS has 

received from NRC staffers who have called with accounts of NRC inspectors being 

instructed by their managers not to find any violations, of NRC managers telling 

inspectors not to write up safety problems they found at nuclear plants, and of NRC 

managers ignoring the written objections of the agency’s subject matter experts 

when making decisions about safety. Such behavior is unacceptable and must be 

corrected.12

Thus far, the NRC has failed to do anything to remedy its own safety culture 

problems. The NRC will not allow a nuclear reactor to operate if it feels the work 

force labors under a poor safety culture. By the same token, the NRC’s own staff 

must function in a good safety culture if we are to have confidence in its oversight 

of the entire reactor fleet. The safety culture within the NRC must be monitored 

and restored to at least the level that the NRC deems minimally acceptable for operating nuclear plants. 

SUMMARY

The NRC has repeatedly testified since 9/11 that it opposes many of the legislative initiatives proposed in both houses of Congress to strengthen nuclear plant security on the grounds that they are unnecessary. UCS believes that legislative reform is necessary and appropriate to ensure that design basis threats are realistic 

and conservative; that required resources are made available for protection against 

beyond-design-basis threats; that security testing is effective and credible; that 

emergency planning procedures are designed to protect all individuals at risk from 

a nuclear plant sabotage attack; and that protections against theft of nuclear weapon-usable materials are strengthened, not weakened. We look forward to working 

with you to ensure that operating nuclear power plants remain as safe and secure 

as possible. 

RESPONSE BY DR. EDWIN LYMAN TO ADDITIONAL QUESTION FROM SENATOR JEFFORDS

Question.Since our last oversight hearing, a number of concerns have been raised 

about the content, scope and frequency of force on force testing. These commando 

style drills are an important part of the training for our security forces at nuclear 

plants. 

Your testimony alluded to this, but would you describe in greater detail how you 

think the requirements for the performance of these tests should be modified to en-
88

sure that guards are not ‘‘tipped off’ about the content of these drills and that they 

are true attack simulations? What do you think NRC’s role should be in ensuring 

that nuclear plants aren’t conducting a self assessment? 

Response. Without rigorous regulatory supervision and a strict ‘‘firewall’’ between 

mock adversaries and site defense forces, performance tests can be easily manipulated. The Department of Energy Inspector General’s report of January 2004, ‘‘Protective Force Performance Test Improprieties,’’ documents the many ways in which 

Wackenhut, which has been the security contractor at the Oak Ridge National Laboratory (ORNL) since January 2000, as well its predecessors, engaged in practices 

at ORNL during security performance tests to give unfair advantages to the defending force, thereby compromising the tests and rendering their results ‘‘tainted and 

unreliable.’’

While it will never be possible to completely eliminate the possibility of collusion 

of mock adversaries with site security officers, the NRC could do a number of things 

to reduce it. First, the NRC should reverse its decision to accept the Nuclear Energy 

Institute’s award to Wackenhut for the contract for establishing the Composite Adversary Force (CAF) and should instead oversee the formation, management and 

training of a mock adversary force that is completely independent of site security 

forces. The NRC continues to retain independent ‘‘subject matter expert’’ contractors 

with considerable experience in paramilitary operations who advise the mock adversary forces and choose the exercise scenarios. The adversary force itself could be 

drawn from the same community that provides the subject matter experts or from 

the pool of former military and Special Forces personnel who now work for private 

security firms such as Blackwater USA. The NRC also must provide more stringent 

oversight over the ‘‘controllers’’ who act as referees during the tests, to ensure that 

they are making fair calls. 

Second, NRC regulations should be revised to make clear that the force-on-force 

tests are enforceable inspections and that any attempt to compromise them would 

be regarded as a serious violation that could result in both civil and criminal penalties. The Department of Energy requires personnel who have access to test scenario information before a test to execute ‘‘trusted agent’’ agreements that place restrictions on their ability to communicate that information. We do not know whether 

the NRC now requires similar agreements. 

In addition, the NRC must remain vigilant to ensure that force-on-force exercises 

do not become stage plays put on for the NRC’s benefit. The test scenarios should 

not be rote repetitions of often-rehearsed drills. To this end, it is essential that the 

scenarios chosen for the force-on-force tests by the NRC subject matter expert contractors be challenging and probe vulnerabilities in the protective strategy. The contractors’ ability to choose challenging scenarios depends on the amount of information about licensees’ protective strategies that is provided to them prior to the forceon-force tests. 

The NRC design basis threat regulations specify that the external attacking force 

must be assisted by an insider who is a ‘‘knowledgeable individual.’’ The regulations 

place no restrictions on what position this insider may occupy. In particular, the insider could be someone with a high position in the security organization, such as 

the armed response force commander. This individual would know sensitive details 

of the armed response procedures, such as how responders might be redeployed from 

their normal positions during an attack. 

In accordance with this regulation, the NRC’s subject matter expert contractors 

should be aware of the licensee’s protective strategy when choosing the scenarios for 

the force-on-force tests. In the Operational Safeguards Response Evaluation (OSRE) 

program that ended in 2001, it is my understanding that this knowledge was obtained by allowing the NRC contractors to participate in tabletop exercises conducted prior to the full-scale exercises. This approach enabled the contractors to 

search for weaknesses in the protective strategy that would be known to well-placed 

insiders. 

However, industry representatives complained at the time that this approach gave 

an unfair advantage to the mock adversaries by giving them access to more detailed 

information than real terrorists would be likely to have. The Nuclear Energy Institute’s 2000 guidelines for a proposed security ‘‘self-assessment’’ program placed 

strict limitations on the information that would be provided to the NRC contractors 

prior to force-on-force tests. For instance, the contractors would be allowed to observe the fixed positions of the armed responders but would not be given information about how the armed responders would be redeployed during an attack. Such 

artificial limitations would impair the ability of the contractors to detect weaknesses 

in the protective strategy, and they should not have a part in a realistic force-onforce test program. 
89

One issue raised in the DOE Inspector General’s report on the ORNL test improprieties was the practice of having ‘‘stand-by’’ protective force personnel available 

during performance tests who would not normally have been available for armed response during a shift. The participation of such auxiliary personnel can cause confusion about the outcome of a force-on-force test. While the NRC no longer allows licensees to augment their security forces above security plan commitments solely in 

preparation for a test, the NRC must also ensure that only personnel that are wholly committed to armed response be allowed to participate in exercises that test protection against the design basis threat. 

At ORNL, the security contractor would also assign the most capable personnel 

to the shifts when performance tests would be conducted. To prevent this from occurring, the NRC should reduce the time of advance warning of performance tests 

to the extent that attempts by licensees to rearrange work schedules prior to the 

test would be easily detectable. 

RESPONSE BY DR. EDWIN LYMAN TO ADDITIONAL QUESTION FROM

SENATOR LAUTENBERG

Question. The Oyster Creek nuclear facility in my state will turn 40 years old in 

2009, and as you’re aware the re-licensing decision is a very controversial issue in 

my state. The operators claim they have already replaced most of the plant’s parts 

so that it is not actually 40 years old. Would you give me your view on the future 

of Oyster Creek? 

Response. The following response was submitted by Dave Lochbaum, UCS Nuclear Safety Engineer. 

While the owner of the Oyster Creek nuclear plant has replaced some of the 

plant’s equipment (such as valve gaskets, electrical fuses, etc.), most of the structures and components within the scope of the Nuclear Regulatory Commission’s license renewal regulation date back to original construction (e.g., reactor pressure 

vessel, reactor containment building, etc.). 

There is nothing magical about the 40-year operating license initially granted for 

Oyster Creek. It does not guarantee that the facility is safe up to age 40 and unsafe 

afterwards. But countless engineering, maintenance, and regulatory decisions were 

made in the past under the assumption that Oyster Creek would only operate for 

40 years. 

The NRC’s license renewal rule attempts to verify past assumptions regarding 

equipment condition. This rule requires Oyster Creek’s owner to have aging management programs for important systems, structures, and components. The aging 

management programs are supposed to monitor equipment conditions so as to allow 

replacements and/or repairs prior to safety margins being compromised. 

Unfortunately, many events at U.S. nuclear plants, including Oyster Creek, demonstrate that these aging management programs are inadequate. In some cases, 

such as the February 2000 steam generator tube rupture at Indian Point and the 

October 2000 coolant leak at Summer, the events are caused by aging management 

programs that look for potential damage using the wrong detection methods. Damage that is present and detectable has been overlooked. In other cases, such as the 

jet pump failure at Quad Cities and the March 2001 coolant leak at Oconee, the 

events are caused by aging management programs that look for potential damage 

in the wrong locations. By looking in the right places with the wrong detectors and 

looking in the wrong places with the right detectors, the aging management programs are not preventing safety margins from being compromised. To remedy this 

shortfall, the NRC must require inspections to be performed using diverse monitoring techniques to increase their reliability and must require the scope of the inspections to be broadened to reduce the frequency of ‘‘misses.’’

The NRC’s license renewal rule utterly fails to verify past regulatory assumptions. 

Oyster Creek does not comply with today’s nuclear safety standards. Instead, it is 

supposed to comply with an array of standards spanning four decades. Oyster Creek 

was initially licensed in the 1960s by NRC’s predecessor, the Atomic Energy Commission (AEC). As the AEC and then the NRC subsequently adopted new regulations, Oyster Creek was sometimes grandfathered from them, sometimes exempted 

from them, and sometimes required to meet them. Each of these regulatory decisions was made in isolation and based on the assumption Oyster Creek would only 

operate for 40 years. The NRC’s license renewal rule must formally compare Oyster 

Creek’s applicable regulatory requirements to today’s safety standards to either 

verify equivalent protection of public health or identify shortfalls that must be remedied before the facility operates for two more decades. 
90

Collectively, these two measures would provide reasonable assurance that Oyster 

Creek was sufficiently safe today and would not decline from this safety level during 

the license renewal period. Absent these measures, there is little confidence that 

Oyster Creek is safe enough today or will remain safe enough during the next 20 

years.
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1 Bisconti Research Inc./NOP World, May 2005, 1,000 U.S. adults. 

STATEMENT OF MARVIN S. FERTEL, SENIOR VICE PRESIDENT AND CHIEF NUCLEAR

OFFICER, NUCLEAR ENERGY INSTITUTE

The Nuclear Energy Institute (NEI), on behalf of the nuclear technologies industry, appreciates the opportunity to provide this testimony for the record on the role 

of nuclear energy in U.S. energy policy, on the value of our 103 operating nuclear 

power plants, and on the strategic importance of building new nuclear power plants 

in the years ahead. 

NEI is responsible for developing policy for the U.S. nuclear industry. Our organization’s 250 member companies represent a broad spectrum of interests, including 

every U.S. energy company that operates a nuclear power plant. NEI’s membership 

also includes nuclear fuel cycle companies, suppliers, engineering and consulting 

firms, national research laboratories, manufacturers of radiopharmaceuticals, universities, labor unions and law firms. 

America’s nuclear power plants are the most efficient and reliable in the world. 

Nuclear energy is the largest source of emission-free electricity in the United States 

and our nation’s second largest source of electricity after coal. Nuclear power plants 

in 31 states provide electricity for one of every five U.S. homes and businesses. More 

than 8 out of 10 Americans believe nuclear energy should play an important role 

in the country’s energy future.1

Given these facts and the strategic importance of nuclear energy to our nation’s 

energy security and economic growth, NEI encourages Congress to maintain policies 

that ensure continued operation of our nation’s nuclear plants, and to provide the 

impetus required to expand emission-free nuclear energy as a vital part of our nation’s diverse energy mix. 

NEI’s testimony for the record will address two major areas: 

• The strategic value of America’s nuclear power plants as a source of safe, reliable, clean electricity at stable prices, and industry initiatives to ensure continued 

operation of today’s nuclear plants at sustained, high levels of performance, and to 

prepare for construction of new nuclear power plants. 

• The critical importance of stable and efficient regulation of the industry in sustaining safe operation of today’s nuclear plant fleet and in building the investor confidence needed to support the next generation of nuclear power plants. 

I. THE STRATEGIC VALUE OF NUCLEAR ENERGY

The United States has 103 nuclear reactors operating today. Nuclear power represented 20 percent of U.S. electricity supply 10 years ago, and it represents 20 percent of our electricity supply today, even though we have 6 fewer reactors than a 

decade ago and total U.S. electricity supply has increased by 25 percent in the period. 

Nuclear power has maintained its market share thanks to dramatic improvements 

in plant reliability, safety, productivity and management. Today’s reactors routinely 

operate at a 90 percent average capacity factor. Improved productivity at U.S. nuclear plants satisfied 20 percent of the growth in electricity demand over the last 

decade. 

Increased output from U.S. nuclear plants in the past 10 years—from 640 billion 

kilowatt-hours in 1994 to 789 billion kilowatt-hours in 2004—is approximately 

equivalent to bringing 18 new 1,000-megawatt power plants into service. 

Nuclear energy provides several important national benefits. 

First, nuclear power plants contribute to the fuel and technology diversity that 

is the core strength of the U.S. electric supply system. This diversity is at risk because today’s business environment and electricity sector market conditions make 

investment in large, capital-intensive technologies difficult, particularly in advanced 

nuclear power plants and advanced coal-fired power plants best-suited to supply 

baseload electricity. More than 90 percent of all new electric generating capacity 

added over the past 5 years is fueled with natural gas. Natural gas has many desirable characteristics and should be part of our fuel mix, but over-reliance on any one 

fuel source leaves consumers vulnerable to price spikes and supply disruptions. 

Second, nuclear power plants provide price stability that is not available from 

electric generating plants fueled with natural gas. Intense volatility in natural gas 

prices over the last several years is likely to continue, largely because of 

unsustainable demand for natural gas from the electric sector. Such price volatility 

also subjects the U.S. economy to potential damage. The operating costs of nuclear 

power plants are stable and can dampen volatility of consumer costs in the electricity market. 
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2 ‘‘EPA Acid Rain Program: 2001 Progress Report,’’ U.S. Environmental Protection Agency, November 2002. 3 Bisconti Research Inc./NOP World, May 2005, 1,000 U.S. adults. 

Third, nuclear plants reduce pressure on natural gas supply, thereby reducing 

costs for other users of natural gas that have no alternative fuel source. 

Fourth, nuclear power plants play a strategic role in meeting U.S. clean-air goals 

and the nation’s goal of reducing greenhouse gas emissions. Nuclear power plants 

produce electricity that otherwise would be supplied by gas- or coal-fired generating 

capacity. They therefore prevent the emissions that fossil-fuel fired plants would 

otherwise produce. 

The emissions prevented by U.S. nuclear power plants are essential in meeting 

clean-air regulations. In 2003, they prevented the emission of about 3.4 million tons 

of sulfur dioxide (SO2) and about 1.2 million tons of nitrogen oxide (NOx). To put 

these numbers in perspective, requirements imposed by the 1990 Clean Air Act 

amendments reduced SO2 emissions from the electric power sector between 1990 

and 2001 by about 5 million tons per year and NOx emissions by about 2 million 

tons year.2 Thus, in a single year, nuclear power plants avoid emissions nearly 

equivalent to those reduced over an 11-year period by other sources. 

The NOx emissions prevented by U.S. nuclear plants are equivalent to eliminating NOx emissions from 6 out of 10 passenger cars in the United States. The 

carbon emissions prevented by nuclear power plants are equivalent to eliminating 

the carbon emissions from 9 out of 10 passenger cars in the United States. Without 

nuclear energy, greenhouse gas emissions from the electric power sector would be 

approximately 30 percent higher. This is significant, since the electricity sector is 

responsible for approximately one-third of U.S. greenhouse gas emissions. 

Finally, nuclear energy is a secure source of energy, and the United States is not 

alone in recognizing nuclear energy’s importance to its energy security, and therefore, national security. The decision to use nuclear power as a major energy source 

in countries such as France and Japan was based on energy security. The governments of both countries recognized in the 1970s that nuclear energy protects their 

nations’ energy supplies from disruptions caused by political instability and protects 

consumers from price fluctuations caused by market volatility. France depends on 

59 reactors to meet more than three-quarters of its electricity demand, while onequarter of Japan’s comes from its 54 reactors. 

Despite strong international commitment to nuclear power, evidenced by the 26 

nuclear reactors under construction today around the world, the U.S. nuclear energy 

sector remains by far the world’s largest in terms of electricity production—larger 

than the nuclear sectors of France and Japan combined. 

In summary, nuclear energy represents a unique value proposition. Nuclear power 

plants provide a tremendous supply of baseload electricity—cleanly, reliably and 

safely. They provide low-cost electricity for consumers and business today, and serve 

as a hedge against price and supply volatility. Nuclear plants have valuable environmental attributes, and they help preserve our nation’s energy security. These 

characteristics demonstrate why nuclear energy has strategic importance in U.S. energy policy. 

Public support for nuclear energy is at an all-time high due in part to excellent 

plant safety and performance and growing awareness of nuclear energy’s benefits, 

The industry has monitored public opinion closely since the early 1980s, and two 

key trends are clear: First, public favorability to nuclear energy has never been 

higher. Second, there is a 3 to 1 ratio between those who strongly support the use 

of nuclear energy and those strongly opposed, and that ratio is widening. 

A May 2005 survey revealed that 70 percent of Americans favor the use of nuclear 

energy—the highest level to date. More than 8 in 10 Americans think nuclear power 

is important for our energy future. Nearly three-quarters of the respondents favor 

keeping the option to build more nuclear power plants. More than three-quarters 

said that ‘‘electric utilities should prepare now so that new nuclear power plants 

could be built if needed in the next decade.’’ Six in 10 agree that the United States 

should definitely build more nuclear plants.3

INDUSTRY INITIATIVES TO INCREASE NUCLEAR ENERGY PRODUCTION AND PREPARE FOR

NEW NUCLEAR POWER PLANT CONSTRUCTION

Nuclear plants are such valuable electric generating assets that virtually all companies are planning to apply to the Nuclear Regulatory Commission for 20-year extensions to their operating licenses. Companies have renewed the licenses for 32 reactors, formally applied for extensions at 16 reactors and have indicated their intension to file for license renewal at 28 additional reactors. The industry believes that 
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4 ‘‘Annual Energy Outlook 2005,’’ Energy Information Administration. 

virtually all U.S. nuclear plants will renew their licenses and operate for an additional 20 years. 

In order to maintain safety and reliability, and to prepare the plants for an additional 20 years of operation, the industry is investing in large capital improvement 

projects, including the installation of new steam generators, new reactor vessel 

heads and other modifications to increase plant generating capacity. 

These capital improvement projects position the plants for many years of operation and demonstrate the industry’s commitment to making the capital investments necessary to maintain safety and reliability. 

Although it has not yet started to build new nuclear plants, the industry continues to achieve small but steady increases in generating capacity—either through 

power uprates or refurbishing nuclear capacity that has been shut down. An uprate 

increases the flow of steam from the nuclear reactor to the turbine-generator so that 

the plant can produce more electricity. Uprates can increase a plant’s capacity up 

to 20 percent, depending on plant design and how much capital a company is prepared to invest. 

Over the past several years, the NRC has authorized power uprates that represent approximately 2,000 megawatts (MW) of additional generating capacity. Over 

the next 5 years, the NRC anticipates that companies will apply for approximately 

30 power uprates, which could add an additional 2,000 MW of new capacity. 

In addition, the Tennessee Valley Authority is refurbishing a reactor at its 

Browns Ferry site in northern Alabama. This is a very complex project—fully as 

challenging as building a new nuclear plant and it is on schedule and within budget 

at the midpoint of the project. 

However, there are obviously limits on how much additional electricity output the 

existing nuclear power plants can produce. The Department of Energy projects that 

by 2025 U.S. electricity demand will increase by 50 percent.4 Meeting this rising demand will require construction of many new nuclear power plants in the years 

ahead. 

The factors that make operating nuclear power plants a strategic national asset 

also justify a systematic, disciplined program to build new nuclear power plants in 

the years ahead to help meet growth in electricity demand, particularly the need 

for new baseload power plants. In addition to nuclear energy’s other benefits, new 

nuclear plant construction would create thousands of skilled, high-tech jobs—to design and build the plants, manufacture the equipment and fuel, and operate the 

plants when built. A program of new nuclear plant construction would maintain 

U.S. technological leadership in this high-tech field. 

The nuclear energy industry and DOE launched the Nuclear Power 2010 program 

several years ago that will aid the industry in building new nuclear capacity when 

needed, by creating the business conditions under which companies can order new 

nuclear plants. This is a comprehensive program designed to address the business 

issues—including licensing and regulatory issues, development of new plant designs, 

and financing—that could be roadblocks to new nuclear plant construction. 

The NRC has developed a new licensing process created as a result the 1992 Energy Policy Act. Under this process, a company or other entity can obtain all necessary regulatory approvals from the NRC before it commits significant capital to 

a new nuclear power plant. The process allows for advanced site approval, as well 

as early reactor design approval. And new nuclear plants will receive a single license for construction and operation—not the separate proceedings that created excessive delay in the period between construction and operation of many of today’s 

plants. 

This approach should help limit the regulatory risks that delayed construction 

and licensing in the past. This process also allows meaningful input from the public 

and other stakeholders, before plant construction, at a time when such input can 

influence plant design and licensing issues. This should also avoid the costly delays 

common to the old way of licensing a nuclear plant. Because the old licensing process was a two-step process and did not require all the design and engineering to 

be complete when the construction permit was issued, it often resulted in lengthy 

and costly hearings after the plant was built and before it was allowed to operate. 

The industry is validating this new licensing process. In 2003, Dominion, Exelon 

and Entergy initiated a 3-year effort to obtain NRC approval for early site permits. 

If approved, the permits will allow the companies to ‘‘bank’’ those sites for possible 

future use, deferring their decision to build reactors until later. 

Three industry consortia, consisting of 16 leading energy companies, construction 

firms, architect/engineers, fuel companies and equipment suppliers, have announced 

they will demonstrate the process for obtaining a combined construction/operating 
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license (COL). The companies, in partnership with DOE, will test the COL process, 

which will provide a more effective and efficient means of licensing a new nuclear 

power plant. DOE will share the demonstration costs—obtaining a COL will require 

a substantial investment of design and engineering work on new nuclear reactor designs. The NuStart Energy consortium last week announced the following locations 

from which it will select two sites where it will demonstrate the COL licensing process: 

• Bellefonte Nuclear Plant in Northeast Alabama, owned by the Tennessee Valley 

Authority 

• Grand Gulf Nuclear Station, Port Gibson, Miss., owned by Entergy Nuclear 

• River Bend Nuclear Station, St. Francisville, La., also owned by Entergy 

• Savannah River Site, a Department of Energy facility near Aiken, S.C. 

• Calvert Cliffs Nuclear Power Plant in Lusby, Md., owned by Constellation Energy 

• Nine Mile Point Nuclear Station in Scriba, N.Y., owned by Constellation Energy 

The design, engineering and licensing work required before a company orders or 

builds new nuclear plants represents a substantial investment. Projected costs to 

complete the licensing demonstrations and the first-of-a-kind design and engineering for one reactor design range from $400 million to $500 million. The industry 

would expect to share that cost with the Federal Government under DOE’s Nuclear 

Power 2010 program. The private sector would therefore commit the equivalent of 

$200 million to $250 million to the effort. To carry two new designs forward would 

require twice that amount from the private sector. Government funding for the DOE 

Nuclear Power 2010 program is therefore critically important. 

The Environment and Public Works Committee has a critical role to play in ensuring that the NRC manages the new licensing processes in a disciplined and efficient manner. This committee can also verify that the NRC provides appropriate 

guidance to its licensing boards so that any hearing after issuance of the COL but 

before commercial operation meet the high threshold included in the agency’s underlying statute. 

The overall objective for this industry initiative is to ensure new nuclear plants 

can be operational between 2010 and 2020. This will require an aggressive program 

to complete design, engineering and licensing work before companies can place orders and invest in construction. 

At that time, three factors—growth in electricity demand, increasingly stringent 

environmental controls on coal-fired and gas-fired generating capacity, and continued pressure on natural gas supply and prices—will make construction of new nuclear generation an imperative. 

II. THE IMPORTANCE OF A STABLE AND EFFICIENT REGULATORY ENVIRONMENT

Only through a sustained focus on the necessary programs and policies will the 

industry meet the demand for new emission-free baseload nuclear plants in the 

2010 to 2020 timeframe. 

As it has in the past, strong congressional oversight will be necessary to ensure 

certainty and efficiency in the Nuclear Regulatory Commission regulations, ensure 

effective and efficient implementation of the Federal Government’s nuclear energy 

programs, and maintain America’s leadership in nuclear technology development 

and its influence over important diplomatic initiatives like nonproliferation. 

Continued progress toward a Federal used nuclear fuel repository at Yucca Mountain, Nev., is necessary to support nuclear energy’s vital role in a comprehensive national energy policy and to support the remediation of DOE defense sites. Since enactment of the 1982 Nuclear Waste Policy Act, DOE’s Federal repository program 

has repeatedly overcome challenges, and challenges remain before the Yucca Mountain facility can begin operation. But as DOE addresses these issues, it is important 

to keep the overall progress of the program in context. 

The consensus of the international scientific community is that a deep geologic repository as envisioned at Yucca Mountain is the best solution for long-term disposition of used military and commercial nuclear power plant fuel and high-level radioactive byproducts. The Bush administration and Congress, with bipartisan support, 

affirmed the suitability of Yucca Mountain in 2002. Over the past 3 years, the Energy Department and its contractors have made considerable progress toward providing yet greater confirmation that this Federal approach is correct and that Yucca 

Mountain is an appropriate site for a national repository. 

During the past year, Federal courts have rejected significant legal challenges by 

the state of Nevada and others to the Nuclear Waste Policy Act and the 2002 Yucca 

Mountain site suitability determination. These challenges questioned the constitutionality of the Yucca Mountain Development Act and DOE’s repository system, 
572

which incorporates both natural and engineered barriers to safely contain radioactive material. 

In the coming year, Congress will play an essential role in keeping this program 

on schedule, by taking the steps necessary to provide increased funding for the 

project in fiscal 2006 and in future years. Meeting DOE’s schedule for initial repository operation requires certainty in program funding. This is particularly critical in 

view of projected annual expenditures that will exceed $1 billion beginning in fiscal 

2007. 

The industry also believes that it is appropriate and necessary to consider an alternative perspective on the Yucca Mountain project. This alternative would include 

an extended period for monitoring operation of the repository for up to 300 years 

after used fuel is first placed underground. The industry believes that this enhanced 

repository concept would provide ongoing safety assurance and greater confidence 

that the repository is performing as designed, and it would ensure the protection 

of the public and the environment. It would also allow DOE to apply evolving innovative technologies at the repository. 

Through this approach, a scientific monitoring program would identify additional 

scientific information to apply in repository performance models. DOE then could 

update the repository models, and modify design and operations as appropriate. 

The industry fully supports the fundamental need for a repository so that used 

nuclear fuel and the byproducts of the nation’s nuclear weapons program are securely managed in an underground, specially designed facility. World-class science 

by some 3,000 scientists and engineers has demonstrated that Yucca Mountain is 

the best site for that facility. A public works project of this magnitude will inevitably face challenges. Yet, none is insurmountable. DOE and its contractors have 

made significant progress on the project as it enters the licensing phase. 

The process of licensing the Yucca Mountain facility will require discipline. We 

encourage the Committee to exercise its oversight responsibility to ensure that the 

NRC is appropriately staffed and organized, and to ensure that the commission is 

providing appropriate policy guidance to its staff and hearing boards to conduct an 

effective and disciplined licensing review. 

The radiation standard for the Yucca Mountain project is critical to moving forward. The Environmental Protection Agency’s standard was remanded last year by 

a court ruling. Oversight of EPA by the Committee on Environment and Public 

Works will be important to ensure that EPA addresses the issues raised by the 

Court in a responsible manner, consistent with the way our nation regulates other 

hazardous materials. 

If EPA’s standard-setting process becomes unduly protracted and threatens significant delays in progress on the Yucca Mountain project, Congress may need to 

step in to provide guidance and resolve the issue through legislation. 

THE NRC REACTOR OVERSIGHT PROCESS HAS PROVEN SUCCESSFUL

Congressional oversight performs an important role in maintaining and encouraging the certainty of the NRC’s regulatory process. Such certainty is essential for 

today’s nuclear power facilities and equally critical in licensing new nuclear power 

facilities. Several years ago, the committee helped encourage the NRC to move toward a new reactor oversight process for the nation’s nuclear plants, a process based 

on quantitative performance indicators and safety significance. Today’s reactor oversight process is designed to focus industry and NRC resources on equipment, components and operational issues that have the greatest importance to, and impact on, 

safety. 

The NRC now has 5 years of experience with this revised reactor oversight process. The new approach is successful in improving the transparency, objectivity and 

efficiency of regulatory oversight. It is an enormous improvement over the agency’s 

previous approach to evaluating nuclear plant safety. 

The reactor oversight process combines the results of performance indicators in 

18 key areas and findings from about 2,500 hours of NRC inspections per reactor 

to determine the appropriate allocation of inspection resources across all operating 

plants. The most recent results, after the fourth quarter of 2004, are as follows: 

• 78 reactors had all green (best level) performance indicators and inspection 

findings and will receive the baseline level of NRC inspection (approximately 2,500 

hours per year). 

• 21 reactors had a single white (second best level) performance indicator or inspection finding and will receive supplemental inspection beyond the baseline effort. 

• 3 reactors had more than one single white indicator or finding in a performance 

area or had white indicators or findings in different performance areas and will receive more in-depth inspection. 
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Although an internal NRC report expressed concern about the declining number 

of ‘‘non-green’’ performance indicators, the industry views this trend as achieving 

success and a strong example of the soundness of a safety-focused performancebased approach to regulation. 

We believe the NRC, the industry and other stakeholders would benefit if the intent of the Reactor Oversight Process were codified through an NRC Policy Statement, drafted by commissioners who provided the policy guidance that established 

the process. This will be particularly important as changes occur within the NRC 

staff over the next several years. 

THE NEED FOR CONTINUED PROGRESS TOWARD SAFETY-FOCUSED, PERFORMANCE-BASED REGULATION

The industry needs greater certainty both in regulatory processes for today’s 

plants and in licensing. When the NRC first implemented its new reactor oversight 

process, few believed that safety-focused regulatory concepts would work. Today, not 

only do these concepts work, but our plants are safer and more efficient than ever. 

During the past 2 years, NRC Chairman Nils Diaz has articulated a sound approach to the future regulatory structure of our industry. He said, ‘‘21st century nuclear regulation needs to be anchored in realistic conservatism or conservative realism if we are to avoid the twin pitfalls of underregulation and overregulation.’’ Such 

an approach would recognize conservative defense-in-depth regulation informed by 

science, engineering and nearly 10,000 reactor years of experience worldwide. But 

achieving a fair, predictable regulatory environment requires the same predictability 

and realism in plant security and emergency preparedness. 

The NRC has begun to incorporate safety-focused insights into Federal regulation. 

In November 2004, the agency issued 10 CFR 50.69, a new rule that will allow the 

use of probabilistic risk assessment insights to determine a safety-focused scope of 

plant components governed by NRC requirements (e.g., quality assurance, monitoring, environmental qualification). In March, a proposed rule was forwarded to the 

commission that would redefine the limiting pipe-break size used in plant design 

analyses, based on industry operating experience. When final, this rule would provide both safety and operational benefits. 

The commission should be commended for its progress with these initiatives. 

These rulemakings will not only improve the safety focus of regulations. They will 

also aid in making the agency’s reactor oversight process more consistent with the 

regulations, resulting in a more efficient and effective regulatory process. 

As the NRC moves to ensure that its regulations are safety-focused and performance-based, the industry sees an urgent need for the NRC to develop an integrated 

rulemaking plan that shows the committee, and other stakeholders, its plan to 

transform the existing deterministic regulations into a more effective, safety-focused 

regime. Such an integrated plan would avoid unnecessary near-term actions that 

would not be required in a more safety-focused process. 

CONGRESS SHOULD REVIEW NRC BUDGET AND STAFFING LEVELS

The NRC’s budget continues to increase significantly. Its fiscal 2006 budget request of $702 million is the highest ever for this agency—a 44 percent increase from 

its $488 million budget just 5 years ago. The number of full-time-equivalent (FTE) 

positions at the NRC has increased by more than 13 percent, from 2,785 to 3,154 

during the same period. The vast expansion of the agency’s security division and 

increased staffing for license renewal is largely responsible for this increase. 

The NRC’s security division has increased from approximately 30 FTEs to approximately 180 FTEs in just a few years. That increase, in part, was required by 

a full review of security at nuclear power plants after Sept. 11, 2001, and the subsequent review of plant security plans. Most of those efforts have been completed. In 

addition, the industry is concerned that the NRC is performing threat analysis and 

other functions that are duplicative of those funded at the Department of Homeland 

Security. 

The nuclear energy industry acknowledges that budget and staffing increases may 

be necessary for certain functions at the NRC, as well as to addressing impending 

work force issues. However, the industry believes that the NRC can be both an effective and efficient regulator, while increasing public safety. For example, the performance demonstrated in the reactor oversight process should provide an opportunity for the NRC to reallocate existing resources. The NRC also should continue 

to review its regional structure to determine if changes are needed to respond to 

the continued consolidation in the nuclear industry. 

As such, we urge that the committee review the NRC’s structure and management. The industry believes that the NRC would benefit from an independent man-
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agement assessment of the agency’s needs and plans to meet its organizational and 

work force challenges. 

The NRC’s budget request also included a proposal to extend the agency’s authority to collect user fees from licensees to fund 90 percent of its annual budget. As 

the committee is aware, that proposal is an extension of current law. In 2000, this 

committee passed legislation (S. 1627) that removed up to 12 percent of the NRC’s 

budget from the user fee base to address the fair and equitable assessment of the 

NRC’s fee structure. 

As was the case 5 years ago, the NRC continues to provide governmental functions that are related only indirectly to services that are provided to its licensees. 

As such, it is appropriate that the agency fund a portion of its budget from general 

revenues. The industry urges the committee to review the appropriate percentage 

to be recovered from user fees. Also, the industry appreciates the committee’s efforts 

to allow some of the NRC’s security functions to be supported by general funds. 

Functions that are for the common defense of our nation should be funded through 

general revenues, not a user fee on a specific industry. 

The industry further urges the committee to review the current fee structure and 

identify improvements to be implemented by the NRC. For example, the industry 

believes that the NRC should directly link activities to fees. We believe it is inappropriate to categorize about 75 percent of the agency’s budget in one ‘‘general’’ account, as is the case today. 

Finally, the NRC’s budget needs to be more transparent and needs to provide 

more accessible and understandable data. This year’s NRC budget, for example, 

does not provide historical data on overall funding or the number of positions at the 

NRC. Also, although the NRC budget measures the amount of resources allocated 

for security, it fails to provide budgetary details on its security division. Without 

greater transparency and additional data, it is difficult for Congress and stakeholders to analyze how the agency is utilizing its resources. 

THE INDUSTRY RECOMMENDS CHANGES TO THE ATOMIC ENERGY ACT

As in previous years, the industry supports changes to the Atomic Energy Act 

that will facilitate reform of the NRC and its regulatory processes to ensure the effective and efficient regulation of the industry. 

If the committee reauthorizes the NRC to recover user fees to offset a portion of 

its budget, it should remove an appropriate amount for NRC functions that should 

be supported with general revenues. Those functions, as noted above, should include 

services that do not directly regulate industry licensees as well as security functions 

that are the responsibility of the government in providing for the common defense 

of our nation. 

The industry also recommends the following changes to the Atomic Energy Act: 

• Congress should repeal Sections 203, 204 and 205 of the Atomic Energy Act to 

provide the commission with the flexibility and discretion to manage and organize 

the NRC in the most appropriate manner. 

• Congress should remove the restriction on foreign ownership of commercial nuclear facilities. 

• When the NRC issues a combined construction and operating license is issued 

by the NRC for a new nuclear power plant, Congress should clarify that the license 

term begins when the plant commences operation rather than when the license is 

issued. 

• Congress should remove the requirement that the NRC conduct antitrust reviews as other Federal agencies—notably the Securities and Exchange Commission, 

the Federal Trade Commission, the Justice Department, and the Federal Energy 

Regulatory Commission—conduct such reviews. 

Noting our reservations regarding the proper offset for the user fee, NEI endorses 

and supports the provisions included in S. 858, as introduced by Chairman James 

Inhofe and Sen. George Voinovich. Some of those provisions overlap the above suggestions made on behalf of the nuclear energy industry. 

In addition, the industry supports S. 865, also introduced by Chairman Inhofe and 

Sen. Voinovich. The industry fully supports the 20-year extension of the Price-Anderson Act included in that bill, but given almost 50 years of experience with the 

Act, and the ongoing oversight authority of the committee, we believe the act should 

be renewed indefinitely. In addition, we urge the committee to clarify that punitive 

damages are not available in liability actions covered by the Price-Anderson Act. 

The Price-Anderson Act guarantees immediate insurance coverage of more than 

$10 billion for the public in the case of an extraordinary nuclear occurrence, and 

this insurance is fully funded by the industry. Taxpayers and the Federal Govern-
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ment pay nothing for this coverage. The Price-Anderson Act has provided effective 

coverage since 1957, and it has been extended by Congress four times. 

The Price-Anderson Act has served as a model for legislation in other areas, ranging from vaccine compensation and medical malpractice to chemical waste cleanup. 

In addition, DOE and the NRC both support extending the Price-Anderson Act. 

Without extension of the law, no new nuclear power plants could be built to meet 

growing electricity demand while protecting the nation’s air quality. 

RADIATION PROTECTION POLICY MUST BE SCIENCE-BASED AND CONSISTENT

As the industry works to increase energy production, it remains committed to 

maintaining the highest priority on safety. To achieve this goal, it is necessary for 

the Federal Government to have a uniform radiation protection policy. The policy 

should be based on the best available science and should be applied equitably and 

consistently by all Federal agencies. 

Duplicative and conflicting regulation by different Federal agencies, using different criteria, must be eliminated. In this area, Federal radiation protection policy 

falls short. Sen. Pete Domenici requested in 2000 that what is now the Government 

Accountability Office (GAO) produce a report on this issue. The report, ‘‘Radiation 

Standards: Scientific Basis Inconclusive, and the EPA and NRC Disagreement Continues’’ (GAO/RCED–00–152), concluded that U.S. radiation protection standards 

‘‘lack a conclusively verified scientific basis,’’ involve ‘‘differing exposure limits’’ because of policy disagreements between Federal agencies, and ‘‘raise questions of inefficient, conflicting dual regulation.’’ A troubling conclusion of the GAO report is 

that the costs related to complying with such standards ‘‘will be immense, likely in 

the hundreds of billions of dollars’’ of private and public funds. 

This situation has persisted for years, without substantial resolution. For example, former Sen. John Glenn, as chairman of the Senate Governmental Affairs Committee, asked the GAO to report on this issue in 1994. The GAO report, ‘‘Nuclear 

Health and Safety: Consensus on Acceptable Radiation Risk to the Public Is Lacking’’ (GAO/RCED–94–190), concluded that ‘‘differences exist in the limits on human 

exposure to radiation set by Federal agencies, raising questions about the precision, 

credibility and overall effectiveness of Federal radiation standards and guidelines 

affecting public health.’’

What is particularly troubling is that the 2000 GAO report found that the situation remained essentially unchanged in the 6 years since GAO reported on the issue 

to Sen. Glenn. Now, 5 years later, the nuclear energy industry notes little substantive progress in resolving the issue of duplicative and conflicting radiation 

standards. 

This situation undermines public confidence in regulatory activities related to radiation and also creates significant uncertainties in projecting costs and schedules 

of licensing and building new plants, decommissioning of facilities that have closed, 

and disposal of used nuclear fuel and low-level radioactive byproducts. 

Federal radiation protection policy must provide a foundation to protect public 

health and safety, make the best use of public funding and resources, and help build 

public trust and confidence in Federal decisions. The current conflicting radiation 

standards and duplicative regulation work against those principles. 

The NRC and Environmental Protection Agency have pursued initiatives to help 

resolve duplication and conflict in their regulatory programs for radiation safety. 

The NRC and EPA have agreed on a communication process that addresses their 

conflicting standards for decommissioning site cleanups. Also, the agencies are coordinating efforts to create a more integrated framework for regulating the safe disposition of low-activity radioactive material and mixed (radiological and chemical) 

waste. 

However, the greatest impediment to resolving issues of duplicative authority and 

conflicting standards are the various laws that mandate the respective agencies’ regulatory programs. Continued oversight will be necessary to ensure that the agencies 

are achieving consistent radiation protection policy. Ultimately, Congress may be required to resolve through legislation the policy issues that the agencies cannot resolve on their own. 

U.S. NUCLEAR POWER PLANTS WERE THE MOST SECURE INDUSTRIAL FACILITIES BEFORE

9/11 AND ARE EVEN MORE SECURE TODAY

The need for regulatory stability in nuclear plant security is particularly important. The NRC and the industry have significantly enhanced security at nuclear 

power plants. In the three-anda-half years since the Sept. 11 terrorist attacks, the 

NRC has issued a series of requirements to increase security and enhance training 

for security programs. The industry has complied—fully and rapidly. 
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Even prior to September 2001, nuclear power plants were the most secure industrial facilities in the United States. They were built to withstand extreme natural 

events, such as earthquakes and hurricanes, and the NRC has for more than 20 

years required that private security forces defend against an attacking force of saboteurs intent on causing a release of radiation. The facilities are even more secure 

today, with voluntary and NRC-required security and emergency response enhancements implemented since 2001. 

A copy of an NEI fact sheet entitled ‘‘Post-Sept. 11 Improvements in Nuclear 

Plant Security Set U.S. Industry Standard’’ is attached. It provides additional detail 

regarding the many security changes that have been made at our plants since September 2001. 

In analyzing this changing global environment, the nuclear industry started with 

the firm knowledge that nuclear power plants—although strongly built, heavily 

guarded and extremely difficult targets to penetrate—nonetheless are considered by 

some to be potential terrorist targets. However, as former NRC Chairman Richard 

Meserve said in 2002:

It should be recognized that nuclear power plants are massive structures with 

thick exterior walls and interior barriers of reinforced concrete. The plants are 

designed to withstand tornadoes, hurricanes, fires, floods and earthquakes. As 

a result, the structures inherently afford a measure of protection against deliberate aircraft impacts. In addition, the defense-in-depth philosophy used in nuclear facility design means that plants have redundant and separated systems 

in order to ensure safety. That is, active components, such as pumps, have 

backups as part of the basic design philosophy. This provides a capability to respond to a variety of events, including aircraft attack.

Meserve noted that the industry’s defense-in-depth philosophy includes protection 

by well-trained, heavily armed security officers; fortified perimeters; and sophisticated intruder detection systems. The industry also assumes that potential 

attackers may attempt to achieve the help of a sympathetic ‘‘insider,’’ so the companies that operate nuclear plants conduct extensive background checks before hiring 

employees. Even then, to be conservative, our security plans assume that attackers 

are successful in obtaining insider help. 

The nuclear industry has cooperated with the NRC to review nuclear plant security completely, and many improvements have been implemented as a result. 

Changes include measures to provide additional protection against vehicle bombs, 

as well as additional protective measures against water- and land-based assaults. 

The industry has increased security patrols, augmented security forces, added more 

security posts, increased vehicle standoff distances, tightened access controls and 

enhanced coordination with state and local law enforcement. The industry is also 

cooperating fully with the Depaitalent of Homeland Security in its efforts to better 

protect our critical infrastructure. 

In April 2003, the NRC issued new security requirements that revised the agency’s ‘‘design basis threat,’’ which defines the characteristics of the threat against 

which the industry must defend and is the foundation for the industry’s security 

programs. Every nuclear power plant submitted a new security plan to comply with 

the new design basis threat and was required to demonstrate compliance with that 

plan last October. 

In response to considerable congressional concern, the industry has worked with 

the NRC to develop a revised program to test security at our facilities. This program 

includes ‘‘force-onforce’’ drills using advanced equipment. Although the tests were 

suspended for several months after Sept. 11, they are now being conducted at plants 

nationwide. The NRC observes and evaluates approximately two sets of force-onforce drills per month. At this rate, every plant will conduct NRC-evaluated forceon-force exercises at least once every 3 years, in addition to security exercises conducted by nuclear plants multiple times each year. 

The industry has reviewed the recently released study by the National Academy 

of Sciences (NAS), ‘‘Safety and Security of Spent Nuclear Fuel Storage.’’ In response 

to the NRC actions and the NAS report, nuclear plants are systematically assessing 

potential augmentation of already redundant safety systems for used fuel pools. The 

intent is to provide yet greater assurance in the ability to cool used fuel in pools. 

While the NRC’s response to the study indicated that the NRC considers the likelihood of releasing large amounts of radiation to the environment from a spent fuel 

pool to be ‘‘extremely low,’’ the NRC is initiating an independent, site-specific assessment of used fuel pools. 

Today, the industry is at the practical limit of what private industry can do to 

secure our facilities against the terrorist threat. NRC Chairman Nils Diaz and other 

commissioners have said that the industry has achieved just about everything that 
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5 NRC Chairman Nils Diaz, National Press Club briefing as reported by Agence France-Presse 

news agency, March 14, 2005. 

can be reasonably achieved by a civilian force. On March 14, Diaz said ‘‘both nuclear 

security and safety are better than they have ever been and both are getting better. 

What we have done in the last three and a half years is to make it very difficult 

for anyone to find ways to attempt acts of radiological sabotage, even more difficult 

to succeed in doing real harm, and to be very prepared to protect our people in the 

very unlikely event of radiological release.’’ 5

The industry believes that the focus of security enhancements should be on those 

that increase our coordination with DHS and state and local response entities. Security enhancements should also focus on the effective implementation of onsite 

changes to our security infrastructure and ensure we fully integrate our new security procedures into plant operations. We must ensure they are not interfering with 

our commitment to safety—our highest priority. 

THE INDUSTRY SUPPORTS THE NUCLEAR SAFETY AND SECURITY ACT OF 2005, S. 864

The Nuclear Safety and Security Act of 2005 (S. 864), introduced by Chairman 

Inhofe and Sen. Voinovich, includes several provisions regarding nuclear plant security. NEI supports those proposals and urges the committee to move the bill to the 

full Senate for further consideration. 

Section 4 of S. 864 is particularly important because it will allow some companies 

to utilize weaponry that may not be allowed by various state laws. The industry 

asks that the committee include language to clarify the use of deadly force by nuclear power plant security officers if necessary to protect the plant against terrorist 

threats. In addition, the industry urges the committee to review and consider legislation that will allow the industry, or the NRC, to have greater access to various 

Federal data bases. 

CONCLUSION

America’s nuclear power plants are a critical element of our energy portfolio and 

a driver of economic growth. Nuclear energy also is vital to our energy security, environmental protection and clean-air goals. The industry continues to operate nuclear plants at exceptional levels of safety and efficiency, and nuclear power plants 

also are the most secure industrial facilities in the country. 

The nuclear industry has significantly increased the amount of electricity that it 

generates over the past two decades through efficiency improvements and power 

uprates. But for the nuclear industry to continue generating three-quarters of our 

nation’s emission-free electricity, new nuclear plants must be built. The industry 

has made great strides to set the stage for new nuclear plant construction and is 

committed to achieving this objective in the near term. 

Nothing is more important to the industry than ensuring that the NRC is an effective and credible regulator. In this regard, the NRC plays an important role in 

the nuclear energy sector. Achieving the goal of new plant construction depends on 

a stable regulatory environment, one that assures the safe operation of today’s 

plants and the efficient licensing of new facilities. The NRC has made significant 

progress toward this end, yet more must be done. Continued oversight by this committee to ensure that the NRC has the appropriate resources, priorities and focus 

will be critical to achieving these ends.
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Fact Sheet: Post-Sept. 11 Improvements in Nuclear Plant Security Set U.S. 

Industry Standard 

November 2004

KEY FACTS

• Nuclear plants are the most secure facilities in the U.S. industrial infrastructure. 

• The nuclear energy industry, working with the Nuclear Regulatory Commission, 

has implemented additional security measures at nuclear facilities since Sept. 11, 

2001. 

• Recent studies and exercises have confirmed that nuclear facilities are well defended and difficult for terrorists to penetrate. 

SETTING THE STANDARD FOR INDUSTRIAL SECURITY

The nuclear industry responded quickly and effectively to the events of Sept. 11. 

Security at nuclear plants, already the most secure facilities in the U.S. industrial 

infrastructure, was bolstered and has remained at a heightened level of alert. 

Security forces at nuclear plants have increased by 60 percent to approximately 

8,000 officers at 64 sites. In addition, the industry has spent an additional $1 billion 

in security-related improvements since September 2001. 

The industry, working with the NRC, instituted additional security measures 

since Sept. 11, such as: 

• extending and fortifying security perimeters 

• increasing patrols within security zones 

• installing new barriers to protect against vehicle bombs 

• installing additional high-tech surveillance equipment 

• strengthening coordination of security efforts with local, state and Federal agencies to integrate approaches among the entities—a position the industry continues 

to support. 

Since Sept. 11, the NRC has twice significantly increased the definition of the 

threat against which nuclear plants must provide protection. As a result, nuclear 

plants now are able to defend against a greater number of attackers, armed with 

more weapons than ever before. 

In February 2002, the NRC formalized many of the security enhancements that 

the industry had implemented since Sept. 11. In addition, the orders further restricted access at nuclear plants. 

In April 2003, the NRC issued new orders that limit the hours security personnel 

may work each week. In addition, the NRC increased the training requirements for 

nuclear plant security officers, including training in weapons proficiency. All U.S. 

commercial nuclear plants have met these requirements. 

Working with the NRC, the industry continues to examine ways to improve security at all U.S. nuclear facilities at every level. 

STUDIES CONFIRM STRENGTH OF NUCLEAR PLANT SECURITY

A 2-day national security exercise conducted by the Center for Strategic and 

International Studies (CSIS) in 2002 found that nuclear plants would be less attractive than other potential targets to terrorist organizations because of the industry’s 

robust security programs. The exercise was designed to explore difficulties and reveal vulnerabilities that might arise in the event of a credible, but ambiguous, 

threat of a terrorist attack on American soil. 

At the conclusion of the exercise, CSIS President John Hamre said that nuclear 

power plants ‘‘are probably our best-defended targets. There is more security around 

nuclear power plants than anything else we’ve got.’’

Peer-reviewed analyses conducted by EPRI, a Palo Alto, Calif.-based research 

firm, revealed that structures that house the reactor and nuclear fuel facilities 

would be protected against a release of radiation even if struck by a large commercial jetliner. 

State-of-the-art computer modeling techniques determined that typical nuclear 

plant containment structures used fuel storage pools, fuel storage containers and 

used fuel transportation containers would withstand a potential impact despite 

some concrete crushing and bent steel. In all cases, public security would be protected. 

More information on NRC security initiatives since Sept. 11 is available at 

www.nrc.gov. 

This fact sheet is also available at www.nei.org, where it is updated periodically.
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SUMMARY OF THE NUCLEAR FEES REAUTHORIZATION ACT OF 2005 (S. 858) 

As Introduced by Senators Voinovich and Inhofe on April 20, 2005

FEE REAUTHORIZATION

Nuclear Regulatory Commission User Fees and Annual Charges 

A statutory requirement that the NRC recover 90 percent of its costs (minus certain exceptions) through licensee fees would be made permanent. The current fee 

requirement, imposed by the Omnibus Budget Reconciliation Act of 1990 (42 U.S.C. 

2214), is set to expire September 20, 2005. NRC’s costs in regulating residual defense radioactive waste under Section 3116 of the Ronald W. Reagan National Defense Authorization Act for Fiscal Year 2005 (50 U.S.C. 2601 note) would be excluded from costs subject to the 90 percent cost recovery requirement. 

NRC REFORMS

Treatment of Nuclear Reactor Financial Obligations 

Funds held to pay for decontamination and decommissioning of nuclear power 

plants could not be used to satisfy the claim of any creditor under this title until 

decommissioning was complete. Decommissioning obligations could not be avoided 

or reduced by any liquidation, reorganization, or other legal proceeding. Nuclear liability insurance premiums held and maintained under the Price-Anderson Act (42 

U.S.C. 2210) could not be used to satisfy the claim of any creditor under this title. 

Period of Combined License 

The initial 40–year period for a commercial nuclear reactor license would begin 

when NRC authorized the reactor to commence operation after construction had 

been completed. Currently, under Atomic Energy Act Section 185 b. (added by the 

Energy Policy Act of 1992, P.L. 102–486), the 40–year initial license period may 

begin when a ‘‘combined construction and operating license’’ is issued several years 

before the reactor is to start operating. All previous reactor operating licenses had 

been issued only after construction was complete, but any future licenses are expected to use the combined license option which was added in 1992. 

Elimination of NRC Antitrust Reviews 

NRC would no longer have to submit nuclear reactor license applications to the 

Attorney General for antitrust reviews, as currently required by Atomic Energy Act 

Section 105 c. 

Scope of Environmental Review 

In conducting environmental reviews in connection with nuclear power plant license applications, NRC would not have to consider the need for the nuclear plant 

or potential alternatives. 

Medical Isotope Production 

Highly enriched uranium (HEU) could be exported to Canada, Belgium, France, 

Germany, and the Netherlands for production of medical isotopes in nuclear reactors. Those countries would be exempt from existing requirements (under Section 

134 of the Atomic Energy Act) that they agree to switch to low-enriched uranium 

(LEU) as soon as possible and that LEU fuel for their reactors be under active development. Instead, those countries would have to agree to convert to suitable LEU 

fuel when it became available. NRC would have to review current security requirements for HEU used for medical isotope production and impose additional requirements if necessary. The National Academy of Sciences (NAS) would study the potential availability and cost of medical isotopes produced in LEU reactors. This study 

would be used by the Department of Energy (DOE) to help determine whether U.S. 

medical isotope demand could be reliably and economically met with production facilities that do not use HEU. If the Secretary of Energy certified that such demand 

could be met, the export exemption would be terminated. The current HEU export 

restrictions are intended to spur foreign cooperation with U.S. efforts to convert all 

HEU reactors to LEU, but supporters of the exemption contend that the restrictions 

could disrupt the supply of medical isotopes produced in foreign HEU reactors. 

Cost Recovery from Government Agencies 

NRC would be authorized to charge cost-based fees for all services rendered to 

other Federal agencies. Such authority is limited under current law (Atomic Energy 

Act, Section 161 w.). 
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Conflicts of Interest Relating to Contracts and Other Arrangements 

NRC could enter into contracts with DOE or operators of DOE facilities despite 

the presence of a conflict of interest if NRC determined that the conflict could not 

be mitigated and that there was adequate justification for the contract without mitigation. 

Hearing Procedures 

NRC hearings for nuclear power plant licenses and other purposes would be required to use informal adjudicatory procedures unless NRC determined that formal 

procedures were necessary to develop a sufficient record or to achieve fairness. 

Authorization of Appropriations 

Such sums as necessary would be authorized to carry out this title. 

HUMAN CAPITAL PROVISIONS

Provision of Support to University Nuclear Safety, Security, and Environmental Protection Programs 

NRC would be authorized to provide grants and other assistance to institutions 

of higher education to support nuclear safety and other fields critical to the NRC 

mission. 

Promotional Items 

NRC could purchase promotional items of nominal value to help recruit new employees. 

Expenses Authorized to be Paid by NRC 

NRC would be authorized to pay transportation, lodging, and subsistence expenses of employees who assist NRC scientific and other staff and are taking higher 

education courses related to their employment. NRC could also pay health and medical costs of employees and dependents serving in foreign countries. 

NRC Scholarship and Fellowship Program 

NRC would be authorized to provide scholarships and fellowships for students in 

fields critical to the NRC mission. Recipients would have to work for NRC for at 

least as long as the scholarship or fellowship assistance had been provided, unless 

NRC granted a waiver. 

Partnership Program with Institutions of Higher Education 

NRC would be authorized to conduct partnership programs to strengthen the ability of historically minority-serving institutions of higher education to teach students 

and conduct research in fields important to NRC’s mission. 

Elimination of Pension Offset for Certain Rehired Federal Retirees 

When NRC has an emergency need for the skills of a retired employee, NRC could 

hire the retiree as a contractor and exempt him or her from the annuity reductions 

that would otherwise apply. 

Authorization of Appropriations 

Such sums as necessary to carry out this title would be authorized. 

SUMMARY OF THE NUCLEAR SAFETY AND SECURITY ACT OF 2005 (S. 864) 

As Introduced by Senators Inhofe and Voinovich on April 20, 2005

USE OF FIREARMS BY SECURITY PERSONNEL

Authorizes NRC to allow security guards to possess more powerful weapons (machinegun, semiautomatic assault rifles, etc.) when they are engaged in the protection of NRC-licensed or NRC-certified facilities. 

FINGERPRINTING AND CRIMINAL HISTORY RECORD CHECKS

Expands requirements for fingerprinting for criminal history record checks to any 

individual who is permitted access to safeguards information or unescorted access 

to an NRC-licensed utilization facility or property subject to NRC regulation. 

UNAUTHORIZED INTRODUCTION OF DANGEROUS WEAPONS

Makes unauthorized introduction of weapons into NRC-regulated facilities a Federal crime. 
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SABOTAGE OF NUCLEAR FACILITIES, FUEL, OR DESIGNATED MATERIAL

Makes it a Federal crime to sabotage commercial nuclear facilities, fuel, and Commission-designated material or property not previously covered by the sabotage section of the Atomic Energy Act. 

SUMMARY OF THE PRICE ANDERSON AMENDMENTS ACT 2005 (S. 865) 

As Introduced by Senators Voinovich and Inhofe on April 20, 2005

EXTENSION OF INDEMNIFICATION AUTHORITY

Extends Price Anderson liability coverage for an additional 20 years (until 2025).

Æ