NRC’s Office of Nuclear Reactor Regulation provides overall direction for the oversight process and the Office of Enforcement is responsible for ensuring that appropriate enforcement actions are taken when performance issues are identified. NRC’s regional offices are responsible for implementing the ROP, along with the inspectors who work directly at each of the nuclear power facilities. NRC relies on on-site resident inspectors to assess conditions and the licensees’ quality assurance programs, such as those required for maintenance and problem identification and resolution. With its current resources, NRC can inspect only a relatively small sample of the numerous activities going on during complex operations. NRC noted that nuclear power facilities’ improved operating experience over more than 25 years allows it to focus its inspections more on safety significant activities. One key ROP goal is to make safety performance assessments more objective, predictable, and understandable. The unexpected discovery, in March 2002, of extensive corrosion and a pineapple-size hole in the reactor vessel head—a vital barrier preventing a radioactive release—at the Davis- Besse nuclear power facility in Ohio led NRC to re-examine its safety oversight and other regulatory processes to determine how such corrosion could be missed. Based on the lessons learned from that event, NRC made several changes to the ROP. NRC continues to annually assess the ROP by obtaining feedback from the industry and other stakeholders such as public interest groups, and incorporates this feedback and other information into specific performance metrics to assess its effectiveness. In anticipation of licensing new reactors, NRC has accelerated its efforts to build up its new reactor workforce. NRC’s workforce has grown from about 3,100 employees in 2004 to about 3,500 employees as of August 2007, and NRC projects that its total workforce size needs will grow to about 4,000 employees by 2010. NRC estimates that the first few COL applications will require about 100,000 hours of staff review and identified around 2,500 associated review activities related to each application’s detailed safety, environmental, operational, security, and financial information, which may total several thousand pages. NRC anticipates that for each application, the review process will take 42 months—including 30 months for its staff review, followed by approximately 12 months for a public hearing. In addition to the COL, NRC has established (1) the design certification, which standardizes the design of a given reactor for all power companies using it, with modifications limited to site-specific needs, and (2) an early site permit, which allows a potential applicant to resolve many preliminary siting issues before filing a COL application. Electric power companies plan to use five different reactor designs in their COL applications. In implementing its ROP, NRC oversees the safe operation of nuclear power facilities through physical inspections of the various complex plant equipment and operations, reviews of reactor operator records, and quantitative measures or indicators of each reactor’s performance. (See table 1 for a more expansive treatment of these tools.) These tools are risk-informed in that they focus on the aspects of operations considered most important to safety. NRC bases its oversight process on the principle and requirement that licensees have programs in place to routinely identify and address performance issues without NRC’s direct involvement. Thus, an important aspect of NRC’s inspection process is ensuring the effectiveness of licensee programs designed to identify and correct problems. On the basis of the number and risk significance of inspection findings and performance indicators, NRC places each reactor unit into one of five performance categories on its action matrix, which corresponds to graded, or increasing, levels of oversight. NRC assesses overall facility performance and communicates the results to licensees and the public on a semiannual basis. From 2001 through 2005, the ROP identified performance deficiencies through more than 4,000 inspection findings at nuclear power facilities. Ninety-seven percent of these findings were designated green—very low risk to safe facility operations, but important to correct. Two percent (86) were white findings that were considered to be of low to moderate risk significance. Twelve findings were of the highest levels of risk significance—7 yellow and 5 red. More recently, from January 2006 through June 2007, NRC identified an additional 1,174 green findings, 27 white findings, 1 yellow finding, and no red findings. NRC also reviews performance indicators data—used to monitor different aspects of operational safety—that facility operators report to categorize the level of reactor unit performance for each indicator. From 2001 through June 2007, NRC reported that less than 1 percent of over 39,000 indicator reports exceeded acceptable performance thresholds and nearly half of all reactor units have never had a performance indicator fall outside of the acceptable level. Through June 2007, 3 of the 16 performance indicators have always been reported to be within acceptable performance levels—measuring the amount of time that the residual heat removal safety system is unavailable, monitoring the integrity of a radiation barrier, and monitoring radiological releases. Since 2001, three reactor units have reported a yellow indicator for one performance indicator. No red indicators have ever been reported. For varying periods from 2001 through 2005, on the combined basis of inspection findings and performance indicators, NRC has subjected more than 75 percent of the reactor units to oversight beyond the baseline inspections. While most reactors received the lowest level of increased oversight through a supplemental inspection, five reactors were subjected to NRC’s highest level of oversight. Reactor units in this category were generally subjected to this higher oversight for long periods due to the more systemic nature of their performance problems. Currently, 1 unit is receiving the highest level of oversight by NRC, and 10 units at 6 facilities are receiving the second level of oversight. NRC inspectors at the facilities we reviewed indicated that when a reactor unit’s performance declines it is often the result of deficiencies or ineffectiveness in one or more of the three cross-cutting areas—problem identification and resolution, human performance, and a safety-conscious work environment. NRC inspectors cited examples of possible cross- cutting issues: (1) a facility does not have an effective corrective action program that appropriately identified and resolved problems early; (2) a facility employee has not followed correct maintenance procedures, and NRC made a finding associated with the human performance area; and (3) facility management is complacent by not paying attention to detail or adhering to procedures. Our examination of ROP data found that all reactor units that NRC subjected to its highest level of oversight had findings related to one or more of these substantive cross-cutting issues. In addition, recent NRC inspections have found more problems associated with these cross-cutting issues, in part because of new guidance for identifying and documenting them. Our 2006 report found that NRC has generally taken a proactive approach to continuously improving its oversight process, in response to recommendations that grew out of the Davis-Besse incident; independent reviews; and feedback that is usually obtained during NRC’s annual self- assessment of its oversight process from stakeholders, including its regional and on-site inspectors. Continued efforts will be needed to address other shortcomings or opportunities for improvement, however, particularly in improving its ability to identify and address early indications of declining safety performance at nuclear power facilities. For the most part, NRC considers these efforts to be refinements to its oversight process, rather than significant changes. Specific areas that NRC is addressing include the following: To better focus efforts on the areas most important to safety, NRC has formalized its process for periodically revising its inspection procedures. In particular, NRC completed substantive changes to its inspection and assessment program documents—including those currently guiding the highest level of NRC inspections—to more fully incorporate safety culture. To address concerns about the amount of time, level of effort, and knowledge and resources required to determine the risk significance of some inspection findings, NRC has modified its significance determination process, which, according to NRC’s 2006 self-assessment, has significantly improved timeliness. To address concerns that performance indicators did not facilitate the early identification of poor performance, NRC has modified several indicators to make them more risk-informed for identifying the risks associated with changes in the availability and reliability of important safety systems. In addition, NRC revised an indicator to more accurately reflect the frequency of events that upset reactor unit stability and challenge critical safety functions. NRC is considering options for revising indicators for emergency preparedness and reactor cooling systems. Both NRC’s 2006 self-assessment and internal staff survey cited the need to further improve the performance indicators and their associated guidance. Although NRC and others have long recognized the effects of a facility’s safety culture on performance, NRC did not undertake efforts to better incorporate safety culture into the ROP until 2005, when it formed a working group to lead the agency’s efforts. To date, the group has completed guidance for identifying, addressing, and evaluating cross- cutting issues specific to safety culture. Our 2006 report concluded that NRC’s efforts to incorporate safety culture into the ROP may be its most critical future change to the ROP and recommended that NRC aggressively monitor; evaluate; and, if needed, implement additional measures to increase the effectiveness of its initial safety culture changes. We also recommended that NRC consider developing specific indicators to measure important aspects of safety culture through its performance indicator program. While NRC has largely implemented initial safety culture enhancements to the ROP that primarily address cross-cutting issues, it does not plan to take any additional actions to further implement either recommendation before it completes its assessment of an 18-month implementation phase at the end of this year. This assessment will include lessons learned that NRC managers have compiled since July 2006, including insights from internal and external stakeholders about the effectiveness of ROP enhancements. In addition, we recommended that NRC, in line with its desire to make the ROP an open process, make available additional information on the safety culture at nuclear power facilities to the public and its other stakeholders to provide a more comprehensive picture of performance.