Testimony

Before the Subcommittee on Clean Air, Wetlands,

Private Property, and Nuclear Safety, Committee on

Environment and Public Works, U.S. Senate

United States General Accounting Office

GAO

For Release on Delivery

Expected at

9:30 a.m.,

Tuesday,

May 8, 2001

NUCLEAR REGULATION

Challenges Confronting

NRC in a Changing

Regulatory Environment

Statement of Ms. Gary L. Jones, Director Natural Resources

and Environment

GAO-01-707T
Page 1 GAO-01-707T NRC Challenges

Mr. Chairman and Members of the Subcommittee:

We are pleased to be here today to discuss the challenges that the Nuclear

Regulatory Commission (NRC) faces as it moves from its traditional

regulatory approach, which was largely developed without the benefit of

quantitative estimates of risk, to a risk-informed, performance-based

approach. Under this approach, NRC will use risk assessment findings,

engineering analysis, and performance history to focus attention on the

most important safety-related activities, establish objective criteria to

evaluate performance, develop measures to assess licensee performance,

and focus on results as the primary basis for making regulatory decisions.

NRC is responsible for ensuring that those who use radioactive material—

in generating electricity, for experiments in universities, and for such

medical uses as treating cancer—do so in a manner that protects the

public, the environment, and workers. NRC has issued licenses to 103

operating commercial nuclear power plants and 10 facilities that produce

fuel for these plants. In addition, NRC, or the 32 states that have

agreements with NRC, regulate almost 21,000 entities that use nuclear

materials (nuclear material licensees).1

 In the medical field alone,

licensees annually perform an estimated 10 to 12 million diagnostic and

therapeutic procedures involving radioactive material.

Our testimony discusses the challenges that NRC faces to (1) implement a

risk-informed regulatory approach for commercial nuclear power plants,

(2) overcome the inherent difficulties in applying a risk-informed

regulatory approach to nuclear material licensees, (3) ensure that the

public is confident that safety will be maintained under NRC’s riskinformed approach, and (4) hire and retain staff. NRC is aware of the

complexities involved and the long-term nature of these types of

challenges and has initiated a number of activities to address them. Its

performance in addressing them will significantly shape its ability to

ensure that commercial nuclear power plants and other licensees operate

safely and ultimately that workers, the public, and the environment are

adequately protected.

 1

Currently, NRC has agreements with 32 states that they, rather than NRC, regulate such

entities as universities and hospitals that handle nuclear material.
Page 2 GAO-01-707T NRC Challenges

In summary, we found the following:

• NRC’s implementation of a risk-informed approach for commercial

nuclear power plants is a complex, multiyear undertaking that requires

basic changes to the regulations and processes it uses to ensure the safe

operation of these plants. NRC faces a number of challenges to develop

and implement this new approach. For example, just developing a

“roadmap” to guide the agency through this complex process is a

challenge. We recommended such a “roadmap” in March 1999. We

suggested that a clearly defined strategy that would describe the

regulatory activities NRC planned to change to a risk-informed approach,

the actions needed to accomplish this transformation, and the schedule

and resources needed to make these changes would help guide the

regulatory transformation. While NRC developed the Risk-Informed

Regulation Implementation Plan to address our recommendation, we

believe the plan could be more comprehensive to cover such areas as

activities that cut across the agency, resources, performance measures, or

how various activities are interrelated.

• NRC needs to overcome a number of inherent difficulties as it seeks to

apply a risk-informed regulatory approach to nuclear material licensees.

Of most importance, the sheer number of licensees—almost 21,000—and

the diversity of activities they conduct—converting uranium, transporting

radioactive material, and using radioactive material for industrial, medical,

or academic purposes—increase the complexity of developing a riskinformed regulatory approach for material licensees. In addition, NRC will

be challenged to define its role as an increasing number of states assume

responsibility for regulating nuclear material users within their borders.

The decisions that NRC ultimately makes on these fronts could have

budgetary and other implications for the agency.

• Another challenge for NRC will be to demonstrate that it is meeting one of

its performance goals under the Government Performance and Results

Act—increasing public confidence in NRC as an effective regulator. This is

because NRC has not defined the “public” that it is targeting and does not

have a baseline by which to measure the “increase”. To address this

performance goal, NRC instituted an 18-month pilot effort to use feedback

forms at the conclusion of public meetings. The feedback forms will

provide information on the extent that the public was aware of the

meeting and the clarity, completeness, and thoroughness of the

information that NRC provided at the meetings. It is not clear, however,

how NRC will use this type of information to demonstrate that public

confidence in NRC as a regulator has increased.

• Like other federal agencies, NRC faces challenges in human capital

management, such as replacing a large percentage of its technical staff and
Page 3 GAO-01-707T NRC Challenges

senior managers who are eligible to retire. The loss of its staff is

compounded by the tight labor market for experienced professionals, the

workload projected by the industry to extend the operating licenses of

existing plants and transfer the ownership of others, and the declining

university enrollment in nuclear engineering studies and other fields

related to nuclear safety. NRC has developed a 5-year plan to identify and

maintain the core competencies it needs and has identified legislative

options, such as allowing the rehire of retired staff without jeopardizing

their pension payments, to help resolve its aging staff issue. To assess how

existing human capital approaches support an agency’s mission, goals, and

other organizational needs, we developed a human capital framework,

which identified a number of elements and underlying values that are

common to high-performing organizations.2

 NRC’s 5-year plan generally

includes the human capital elements that we suggested.

NRC’s implementation of a risk-informed, performance-based regulatory

approach for commercial nuclear power plants is complex and will require

many years to fully implement. It requires basic changes to the regulations

and NRC’s processes to ensure the safe operation of these plants. NRC

faces a number of challenges to develop and to implement this process.

For example, because of the complexity of this change, the agency needs a

strategy to guide its development and implementation. We recommended

such a strategy in March 1999. We suggested that a clearly defined strategy

would help guide the regulatory transformation if it described the

regulatory activities NRC planned to change to a risk-informed approach,

the actions needed to accomplish this transformation, and the schedule

and resources needed to make these changes.3

 NRC initially agreed that it

needed a comprehensive strategy, but it has not developed one. As one

NRC Commissioner said in March 2000, “we really are . . . inventing this as

we go along [and] given how much things are changing, it’s very hard to

plan even 4 months from now, let alone years from now.” NRC did develop

the Risk-Informed Regulation Implementation Plan, which includes

guidelines to identify, set priorities for, and implement risk-informed

changes to regulatory processes. The plan also identifies specific tasks and

projected milestones.

 2

Human Capital: A Self-Assessment Checklist for Agency Leaders (GAO/OCG-00-14G,

Sept. 2000).

3

Nuclear Regulation: Strategy Needed to Regulate Safety Using Information on Risk

(GAO/RCED-99-95, Mar. 19, 1999).

NRC Faces

Challenges to

Implement a

Risk-Informed

Regulatory Approach

for Commercial

Nuclear Power Plants
Page 4 GAO-01-707T NRC Challenges

The Risk-Informed Regulation Implementation Plan is not as

comprehensive as it needs to be, because it does not identify performance

measures, the items that are critical to achieving its objectives, activities

that cut across its major offices, resources, or the relationships among the

more than 40 separate activities (25 of which pertain to nuclear plants).

For example, risk-informing NRC’s regulations will be a formidable task

because they are interrelated. Amending one regulation can potentially

affect other regulations governing other aspects of nuclear plant

operations. NRC found this to be the case when it identified over 20

regulations that would need to be made consistent as it developed a riskinformed approach for one regulation. NRC expects that its efforts to

change its regulations applicable to nuclear power plants to focus more on

relative risk will take 5 to 8 years.

NRC has compounded the complexity of moving to a new regulatory

approach by deciding that compliance with such an approach will be

voluntary. As a result, NRC will be regulating with two different systems—

one for those utilities that choose to comply with a risk-informed

approach and another for those that choose to stay with the existing

regulatory approach. It is not clear how this dual system will be

implemented.

One part of the new risk-informed approach that has been implemented is

a new safety oversight process for nuclear power plants. It was

implemented in April 2000; and since then, NRC’s challenge has been to

demonstrate that the new approach meets its goal of maintaining the same

level of safety as the old approach, while being more predictable and

consistent. The nuclear industry, states, public interest groups, and NRC

staff have raised questions about various aspects of the process. For

example, the industry has expressed concern about some of the

performance indicators selected. Some NRC staff are concerned that that

the process does not track all inspections issues and NRC will not have the

information available, should the public later demand accountability from

the agency. Furthermore, it is very difficult under the new process to

assess those activities that cut across all aspects of plant operations—

problem identification and resolution, human performance, and safety

conscious work environment. In June 2001, NRC staff expect to report to

the Commission on the first year of implementation of the new process

and recommend changes, where warranted.
Page 5 GAO-01-707T NRC Challenges

NRC is facing a number of difficulties inherent in applying a risk-informed

regulatory approach for nuclear material licensees. The sheer number of

licensees—almost 21,000—and the diversity of the activities they

conduct—converting uranium, decommissioning nuclear plants,

transporting radioactive materials, and using radioactive material for

industrial, medical, or academic purposes—increase the complexity of

developing a risk-informed approach that would adequately cover all types

of licensees. For example, the diversity of licensees results in varying

levels of analytical sophistication; different experience in using riskinformed methods, such as risk assessments and other methods; and

uneven knowledge about the analytical methods that would be useful to

them. Because material licensees will be using different risk-informed

methods, NRC has grouped them by the type of material used and the

regulatory requirements for that material. For example, licensees that

manufacture casks to store spent reactor fuel could be required to use

formal analytical methods, such as a risk assessment. Other licensees,

such as those that use nuclear material in industrial and medical

applications, would not be expected to conduct risk assessments. In these

cases, NRC staff said that they would use other methods to determine

those aspects of the licensees’ operations that have significant risk, using

an approach that considers the hazards (type, form, and quantity of

material) and the barriers or physical and administrative controls that

prevent or reduce exposure to these hazards.

Another challenge associated with applying a risk-informed approach to

material licensees is how NRC will implement a new risk-informed safety

and safeguards oversight process for fuel cycle facilities. Unlike

commercial nuclear power plants, which have a number of design

similarities, most of the 10 facilities that prepare fuel for nuclear reactors

perform separate and unique functions. For example, one facility converts

uranium to a gas for use in the enrichment process, two facilities enrich or

increase the amount of uranium-235 in the gas, and five facilities fabricate

the uranium into fuel for commercial nuclear power plants. These facilities

possess large quantities of materials that are potentially hazardous (i.e.,

explosive, radioactive, toxic, and/or combustible) to workers. The

facilities’ diverse activities makes it particularly challenging for NRC to

design a “one size fits all” safety oversight process and to develop

indicators and thresholds of performance. In its recently proposed new

risk-informed safety oversight process for material licensees, NRC has yet

to resolve such issues as the structure of the problem identification,

resolution, and corrective action program; the mechanics of the risksignificance determination process; and the regulatory responses that NRC

would take when changes in performance occur. NRC had planned to pilot

NRC Needs to

Overcome Inherent

Difficulties to Apply a

Risk-Informed

Approach to Nuclear

Material Licensees
Page 6 GAO-01-707T NRC Challenges

test the new fuel cycle facility safety oversight process in fiscal year 2001,

but staff told us that this schedule could slip.

NRC also faces challenges in redefining its role in a changing regulatory

environment. As the number of agreement states increases beyond the

existing 32, NRC must continue to ensure the adequacy and consistency of

the states’ programs as well as its own effectiveness and efficiency in

overseeing licensees that are not regulated by the agreement states. NRC

has been working with the Conference of Radiation Control Program

Directors (primarily state officials) and the Organization of Agreement

States to address these challenges. However, NRC has yet to address the

following questions: (1) Would NRC continue to need staff in all four of its

regional offices as the number of agreement states increases? (2) What are

the appropriate number, type, and skills for headquarters staff? and

(3) What should NRC’s role be in the future? Later this month, a NRC/state

working group expects to provide the Commission with its recommended

options for the materials program of the future. NRC wants to be in a

position to plan for needed changes because in 2003, it anticipates that

35 states will have agreements with NRC and that the states will oversee

more than 85 percent of all material licensees.

Another challenge NRC faces is to demonstrate that it is meeting one of its

performance goals under the Government Performance and Results Act—

increasing public confidence in NRC as an effective regulator. 4

 There are

three reasons why this will be difficult. First, to ensure its independence,

NRC cannot promote nuclear power, and it must walk a fine line when

communicating with the public. Second, NRC has not defined the “public”

that it wants to target in achieving this goal. Third, NRC has not

established a baseline to measure the “increase” in its performance goal. In

March 2000, the Commission rejected a staff proposal to conduct a survey

to establish a baseline. Instead, in October 2000, NRC began an 18-month

pilot effort to use feedback forms at the conclusion of public meetings.

Twice a year, NRC expects to evaluate the information received on the

forms to enhance its public outreach efforts. The feedback forms that NRC

currently plans to use will provide information on the extent to which the

public was aware of the meeting and the clarity, completeness, and

 4

NRC’s four performance goals are to maintain safety, increase public confidence, reduce

unnecessary regulatory burden, and enhance the effectiveness and efficiency of its

activities and decisions.

NRC Faces

Challenges in

Demonstrating

Increased Levels of

Public Confidence—

One of Its Goals

Under the

Government

Performance and

Results Act
Page 7 GAO-01-707T NRC Challenges

thoroughness of the information provided by NRC at the meetings. Over

time, the information from the forms may show that the public better

understands the issues of concern or interest for a particular plant. It is

not clear, however, how this information will show that public confidence

in NRC as a regulator has increased. This performance measure is

particularly important to bolster public confidence as the industry decides

whether to submit a license application for one or more new nuclear

power plants. The public has a long history with the traditional regulatory

approach and may not fully understand the reasons for implementing a

risk-informed approach and the relationship of that approach to

maintaining plant safety.

In a highly technical and complex industry, NRC is facing the loss of a

significant percentage of its senior managers and technical staff. For

example, in fiscal year 2001, about 16 percent of NRC staff are eligible to

retire, and by the end of fiscal year 2005, about 33 percent will be eligible.

The problem is more acute at the individual office level. For example,

within the Office of Nuclear Reactor Regulation, about 42 percent of the

technical staff and 77 percent of senior executive service staff are eligible

for retirement.5

 During this period of potentially very high attrition, NRC

will need to rely on that staff to address the nuclear industry’s increasing

demands to extend the operating licenses of existing plants and transfer

the ownership of others. Likewise, in the Office of Nuclear Regulatory

Research, 49 percent of the staff are eligible to retire at the same time that

the nuclear industry is considering building new plants. Since that Office

plays a key role in reviewing any new plants, if that Office looses some of

its highly-skilled, well-recognized research specialists to retirement, NRC

will be challenged to make decisions about new plants in a timely way,

particularly if the plant is an untested design.

In its fiscal year 2000 performance plan, NRC identified the need to

maintain core competencies and staff as an issue that could affect its

ability to achieve its performance goals. NRC noted that maintaining the

correct balance of knowledge, skills, and abilities is critical to

accomplishing its mission and is affected by various factors. These factors

include the tight labor market for experienced professionals, the workload

as projected by the nuclear industry to transfer and extend the licenses of

 5

The Office of Nuclear Reactor Regulation is responsible for ensuring that commercial

nuclear power plants operate safely and do not endanger the public or the environment.

NRC Faces Human

Capital Difficulties
Page 8 GAO-01-707T NRC Challenges

existing plants, and the declining university enrollment in nuclear

engineering studies and other fields related to nuclear safety. In October

2000, NRC’s Chairman requested the staff to develop a plan to assess the

scientific, engineering, and technical core competencies that NRC needs

and propose specific strategies to ensure that the agency maintains that

competency. The Chairman noted that maintaining technical competency

may be the biggest challenge confronting NRC.

In January 2001, NRC staff provided a suggested action plan for

maintaining core competencies to the Commission. The staff proposed to

begin the 5-year effort in February 2001 at an estimated cost of

$2.4 million, including the costs to purchase software that will be used to

identify the knowledge and skills needed by NRC. To assess how existing

human capital approaches support an agency’s mission, goals, and other

organizational needs, we developed a human capital framework, which

identified a number of elements and underlying values that are common to

high-performing organizations. NRC’s 5-year plan appears to generally

include the human capital elements that we suggested. In this regard, NRC

has taken the initiative and identified options to attract new employees

with critical skills, developed training programs to meets its changing

needs, and identified legislative options to help resolve its aging staff

issue. The options include allowing NRC to rehire retired staff without

jeopardizing their pension payments and to provide salaries comparable to

those paid in the private sector. In addition, for nuclear reactor and

nuclear material safety, NRC expects to implement an intern program in

fiscal year 2002 to attract and retain individuals with scientific,

engineering, and other technical competencies. It has established a tuition

assistance program, relocation bonuses, and other inducements to

encourage qualified individuals not only to accept but also to continue

their employment with the agency. NRC staff say that the agency is doing

the best that it can with the tools available to hire and retain staff.

Continued oversight of NRC’s multiyear effort is needed to ensure that it is

being properly implemented and is effective in achieving its goals.

Mr. Chairman and Members of the Subcommittee, this concludes our

statement. We would be pleased to respond to any questions you may

have.
Page 9 GAO-01-707T NRC Challenges

Contacts and Acknowledgements

For further information regarding this testimony, please contact Ms. Gary

L. Jones, Director, Natural Resources and Environment, at (202) 512-3841.

Individuals making a key contribution to this testimony include Mary Ann

Kruslicky and Philip Olson.

(360083)