Nuclear Safety: Department of Energy Should Strengthen Its Enforcement Program

Published by the Government Accountability Office on 1999-06-29.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                   United States General Accounting Office              S [ 6'   3   5
 GAO               Testimony
                   Before the Subcommittee
                                         on Oversight and Investigations,
                   Committee on Commerce, House of Representatives

For Release
on Delivery
Expected at
                   NUCLEAR SAFETY
10:00 am. EDT

June 29,199        Department of Energy
                   Should Strengthen Its
                   Enforcement Program
                   Statement of Ms. Gary L. Jones, Associate Director,
                   Energy, Resources, and Science Issues,
                   Resources, Community, and Economic
                   Development Division

                   ..   ,J~   mkccountablity * Intgrlty * Reliability
 Mr. Chairman and Members of the Subcommittee:

 We are here today to discuss the Department of Energy's (DOE) efforts to
 hold its contractors accountable for nuclear safety requirements. DOE has a
 widespread complex of research and nuclear facilities that contain large
 quantities of nuclear materials. Some of the materials are in a deteriorated
 condition, not properly packaged for storage, and may pose a significant
 risk to workers, the public, and the environment. With few exceptions,
 DOE'S facilities are not inspected or licensed by independent regulators to
 help ensure that operations are safe. Instead, since 1946, DOE and the
 agencies that preceded it have relied on their own staff to ensure the
 safety of these facilities.

 Most of the work at DOE facilities is carried out by organizations under
 contract to DOE. Because of the risks and the potential liabilities inherent
 with handling nuclear materials, the law authorizes DOE to indemnify, or
 agree to pay damages for, those contractors that could have an accident
associated with handling nuclear materials, and whose actions could
cause damage. In 1988, the Congress enacted legislation permitting DOE to
hold its contractors accountable for meeting its nuclear safety
requirements through a system of civil monetary penalties. DOE determined
that to be able to assess civil penalties, existing safety requirements would
have to be reissued as enforceable rules. The legislation also named seven
contractors at research laboratories, that along with their subcontractors
and suppliers, were exempt from having to pay the penalties. In addition,
the legislation gave the Secretary of Energy the authority to exempt from
paying penalties other nonprofit educational institutions under contract to

On the basis of the report we prepared for the Committee and are
releasing today,' our testimony will address (1) what enforceable nuclear
safety rules DOE has issued; (2) which DOE facilities and contractors are
covered by these rules; (3) how DOE has enforced the nuclear safety rules;
and (4) whether there is a continued need for exempting certain
contractors from paying penalties for violating nuclear safety rules.

In summary, we found the following:

Since 1988, DOE has issued enforceable nirules covering only 2 of 11 safety
areas originally proposed-radiation protection for workers and quality

'Depaunent of Energ: DOE"s Nuclear Safety Enforcement Program Should Be Strengened
(GAO/RCED-99-146, Jun. 10, 1999).

Page 1                                                                GAO/Tr-RCED.99-Z28
  assurance issues that define how work is planned and carried out. The
  other nine safety areas not included in the rules, such as training and
  certification of employees performing vital operations, are still covered in
  DOE orders, and DOE generally includes compliance with them as part of its
  contracts. However, not elevating safety orders to the status of
  enforceable rules has limited the overall effectiveness of the enforcement
  program because DOE has fewer options to ensure that contractors are
  meeting safety requirements and correcting any deficiencies.
* Nuclear safety rules are to be enforced at any DOE facility w'th the
  potential to cause radiological harm to the public, workers, or the
  environment. Although no problems have been identified with the
  application of the radiation protection for workers rule to the activities of
  DOE'S contractors, DOE field offices have been inconsistent in the degree to
  which they have placed nuclear facilities under the quality assurance rule.
  Not properly categorizing DOE facilities as subject to the rules could
  potentially affect the type of safety oversight carried out by contractors, as
  well as the enforcement activity undertaken by DOE.
* DOE began its enforcement program in 1996 and concentrates its
  investigations and enforcement actions on those violations of nuclear
  safety rules that are the most significant. Between 1996 and 1998, DOE has
  taken 33 enforcement actions and assessed more than $1.8 million in
  penalties. Violations have included such things as unnecessarily exposing
  workers to radioactivity and-not following procedures intended to prevent
  an uncontrolled nuclear reaction from occurring. DOE has concluded that
  the enforcement program is a valuable tool for increasing the enlphasis on
  nuclear safety.
* Although DOE recommended in March 1999 that the statutory exemption
  from paying penalties be continued and expanded to include all nonprofit
  contractors, subcontractors, and suppliers, the exemption may no longer
  be needed. DOE cited three reasons for continuing the
  exemption-nonprofit contractors' unwillingness to put their assets at risk
  if required to pay civil penalties, effectiveness of existing contract
  mechanisms in obtaining compliance, and consistency with other
  regulatory agencies' treatment of nonprofit organizations. However,
  nonprofit contractors now have contract-related fees available that could
  be used to pay penalties, contract mechanisms have not been effectively
  used to address safety-related problems, and, in contrast to DOE, other
  regulatory agencies collect penalties and administrative costs from
  nonprofit organizations.

  Mr. Chairman, our work clearly shows that, although DOE is ultimately
  responsible for ensuring nuclear safety at its facilities, the Department has

  Page 2                                                       GAOrT-RCED-99-228
                          not been aggressive in issuing nuclear safety rules or in holding
                          contractors accountable for complying with the quality assurance rule.
                          The enforcement program is an important complement to existing
                          contract-related mechanisms for ensuring that contractors have safe
                          nuclear practices. Therefore, in the report we are releasing today, we are
                          recommending that the Secretary of Energy take steps to strengthen DOE'S
                          nuclear safety enforcement program, and we are suggesting that the
                          Congress consider eliminating the statutory and administrative
                          exemptions-that currently apply to certain nonprofit contractors-so that
                          those contractors would be required to pay the civil penalties assessed for
                          violating nuclear safety rules.

                          Mr. Chairman, now I would like to discuss our findings in greater detail.

DOE Issued Fewer          DOE'S progress in its efforts to re-issue existing nuclear safety requirements
                          as enforceable rules has fallen far short of its original goal of converting all
Nuclear Safety Rules      requirements into rules. Although DOE issued proposed rules covering a
Than Initially Planned    broad range of safety issues, only two areas of safety requirements have
                          been addressed with completed rules. DOE largely suspended work on the
                          nine remaining proposed rules because of work on other safety issues and
                          internal discussions about how best to ensure nuclear safety.

                          DOE issued several proposed safety rules beginning in December 1991.2
                         These proposed rules included existing DOE orders on such matters as
                         protecting workers from exposure to radiation, issuing safety analysis
                         reports, reporting defective items and services, and reporting
                         safety-related problems. In March 1993, DOE issued one more proposed
                         rule dealing with the protection of the public and the environment from
                         radiation. After a public comment and review process, DOE issued two of
                         the rules as final-the rule on radiation protection of occupational
                         workers in December 1993 and the rule on quality assurance requirements
                         in April 1994. The remaining rules have not been finalized,

                         DOE received extensive comments from contractors and other interested
                         parties on the remaining nine safety requirements proposed as rules. DOE's
                         plan was to issue these remaining rules as final after it completed the
                         analysis of the comments received. However, DOE has issued none of the
                         remaining rules as final. DOE officials said two major factors contributed to

                         aThese proposed rules also included a procedural rule setting up the process that DOE would use to
                         investigate potential violations of nuclear safety rules, issue notices of violation to the contractor, and
                         assess penalties based on the severity level of the violation. After receiving comments and making
                         revisions, DOE issued this procedural rule as a final Iule in August 1993.

                         Page 3                                                                              GAO/T-RCED-99-228
                       the delay-work on other safety issues and discussions within DOE on how
                       best to proceed with safety regulation.

                       Although the Secretary concluded in a recent report to the Congress that
                       the enforceable rules have been beneficial in improving contractors' safety
                       performance, 3 the system of enforceable nuclear safety rules originally
                       envisioned by DOE has not been fully realized. DOE'S inaction in converting
                       the many other aspects of nuclear safety into final published ruies has
                       limited the overall effectiveness of the enforcement program. Although
                       DOE officials have said that there is a renewed effort within. DOE to address
                       the need for additional enforceable rules, there is still no definite schedule
                       for finalizing the remaining proposed rules.

                       In our report, we recommended that the Secretary of Energy expeditiously
                       complete the process of issuing enforceable rules covering important
                       nuclear safety requirements. In commenting or. a draft of our report, DOE
                       agreed that it needed to complete this process and outlined its strategy for
                       doing so.

Clarification Needed   Penalties for violating enforceable nuclear safety rules apply to any
                       contractor, subcontractor, or supplier that has been indemnified from
About Facilities to    liability for possible damages caused by, working with nuclear materials.
Which the Rules        However, the two rules issued to date-occupational radiation protection
                       and quality assurance-have somewhat different criteria for determining
Apply                  which facilities should be subject to them, with the occupational radiation
                       protection rule having broader coverage. Under the occupational radiation
                       protection rule, DOE facilities are subject to its provisions if the activities
                       conducted there have the potential to result in the occupational exposure
                       of an individual to radiation or radioactive material. The quality assurance
                       rule adds a second test-a facility must be defined as "nuclear." To be a
                       nuclear facility, a facility must have either a nuclear reactor or activities or
                       operations that involve radioactive and/or fissionable materials in such a
                       form and quantity that a nuclear hazard potentially exists to employees or
                       the public.

                       Although there are no apparent problems with the application of the
                       occupational radiation protection rule, the number of facilities DOE field
                       offices decided were subject to the quality assurance rule may be
                       somewhat understated. According to the 1998 annual report of DOE'S Office

                       Department of Energy Report to Congress on the Price-Anderson Act (Mar. 1999).

                       Page 4                                                                      GAOdr-RCEI-99-228
                          of Enforcement and Investigation, 4 the office has identified a number of
                          facilities that should Ihave been included but were not. Our review of DOE's
                          approach to identifying nuclear facilities confirmed that there are
                         problems in this area. The nuclear rl actors at DOE'S Savannah River site in
                          South Carolina and Hanford site in Washington State are an example. Both
                         sites have reactors that produced nuclear weapons material between the
                          1940s and 1980s. Although none of the reactors are currently operating,
                         radiation exposure remains a potential problem, because, for example, all
                         have reactor blocks or vessels in place that contain residual radioactive
                         material. Nevertheless, Savannah River categorized its reactors as nuclear
                         facilities, while Hanford did not.

                         DOE  does not know how widespread this problem of identifying nuclear
                         facilities is so its significance is difficult to determine. However,
                         incorrectly categorizing facilities could potentially affect the type of safety
                         oversight being done by contractors and DOE field offices, as well as the
                         enforcement activity undertaken by the Office of Enforcement and

                         In our report we recommended that the Secretary of Energy ensure that
                         field locations are properly following DOE's guidance in determining which
                         facilities must comply with the nuclear safety rule on quality assurance. In
                         commenting on a draft of our report, DOE agreed that the scope of the
                         quality assurance rule should be clarified and described the steps it has
                         taken and will take to do so.

           _ll      I
DOE's Enforcement of    DOE    established the enforcement program in 1996, which relies primarily
                        on a system of self-reporting and corrective actions by its contractors, and
Nuclear Safety Rules    concentrates its enforcement actions on those violations of nuclear safety
Has Resulted in         rules that are the most significant, and to situations where the contractor
Penalties Against       has not promptly identified, reported, and corrected the problem. DOE'S
                        enforcement process includes (1) identifying, evaluating, and investigating
Contractors             potential violations of the nuclear safety rules, (2) determining the severity

                        '1998 Annual Report, Price-Anderson Nuclear Safety Enforcement Pr(am (Jan. 1999).

                        Page 5                                                                    GAOtf-RCED-99-228
levei of the violation,5 (3) calculating the civil penalty,6 and (4) notifying
the contractors and public of the results of the enforcement action. As our
report states, between 1996 and 1.998, DOE took 33 enforcement actions
with assessed penalties totaling $1.8 million, with the highest penalty
assessed-$165,000)-in November 1998. There have been only two
severity level I violations-one against EG&G Inc., at DOE's Mound, Ohio,
site for deficiencies in its radiation dosage monitoring program, and the
otner against the University of California at Lawrence Livermore National
Laboratory in California for exposing workers to unnecessary levels of
radiation. So far in 1999, DOE has taken four enforcement actions with
penalties totaling $357,500 These included a preliminary notice of
violation in May 1999 with an assessed penalty of $330,000, the largest to
date in the program, against Fluor Daniel Hanford, Inc., for repeated
violations of the quality assurance rule at its spent nuclear fuels project.7

In its March 1999 report to the Congress on the Price-Anderson Act, 8 DOE
stated that its authority to impose civil penalties has proven to be a
valuable tool for increasing the emphasis on nuclear safety and enhancing
the accountability of its contractors. On the basis of our analysis, we agree
that DOE'S enforcement program appears to be a good mechanism for
increasing both contractor awareness of and accountability for nuclear
safety requirements and complements existing contract mechanisms. We
believe the advantages of the enforcement program include its
independence from the program and field office structure, the objectivity
of its enforcement process, its emphasis on verifying that corrective action
has been taken, and the visibility of its results.

 Mhe severity levels are: level 1,the must significant, are those violations that involve actual or high
potential for an adverse impact on the safety of the public or workers at DOE facilities, level II are
those violations that show a significant lack of attention or crelessnes towards the responsibilities of
DOE contractors for the protection of the public or worker safety and that could, if left uncorrected,
lead to an adverse impact on public or worker safety; level 1l are violations that are less serious but of
more than minor concern and, if left uncorrected, cocd lead to a more serious condition.

'DOE calculates the civil penalty based on the severity level of the violation, with severity level I
penalties set at 100 percent of the base civil penalty (currently $110,000 per violation per day). DOE
may also consider other factors, including how promptly the contractor reported a potential violation
and initiated corrective action and whether a pattern of repeated violations exists.

'The May 1999 preliminary notice of violation also included DOE's first use of a compliance order in
the program, which requires the contractor to complete specific corrective action steps within
designated time periods.

81n the rrice-Anderson Amendments Act of 1988, the Congress required DOE and the Nuclear
Regulatory Commission to report by August 1, 1998, on the need for continuing or modifying the
provisions of the act.
Page 6                                                                            GAOTr-RCED-99-228
Continuing to Exempt         Of the $1.8 million in civil penalties assessed by DOE from 1996 through
                             1998, certain nonprofit contractors exempted by statute or under
Nonprofit Contractors        administrative rule did not pay about $605,000, or 33 percent, of the total
From Paying Civil            penalties assessed. One part of DOE'S March 1999 report on the
Penalties May Not Be         Price-Anderson Act reassessed the merits of the enforcement program and
                             the need to continue exempting nonprofit educational institutions from
Warranted                    civil penalties. Although DOE concluded that the authority to impose civil
                             penalties has proven to be a valuable tool for increasing the emphasis on
                             nuclear safety and for enhancing contractors' responsibility and
                             accountability, DOE also concluded that the exemption from having to pay
                             the penalties for nonprofit contractors should be continued. Our analysis
                             of DOE's reasons raises several questions about the merits of Lontinuing the

                        *   DOE states that the exemption should be continued because major
                            universities and other nonprofit contractors would be unwilling to put
                           their assets at risk for contract-related expenses such as civil penalties.
                           However, under performance-based contracting,9 for fiscal year 1999, all
                           but one of the contractors, including the nonprofits, that nanage and
                           operate DOE facilities have the opportunity to earn a fee. 0 This fee, which
                           is in addition to reimbursed costs, is used by the nonprofit contractors to
                           cover certain non-reimbursable contract costs, and to conduct
                           laboratory-directed research activities. The fee could also be used to pay
                           any civil penalties imposed on the contractor. In addition, in setting the
                           amount of a civil penalty, the Secretary has the authority to consider
                           factors such as the contractor's _ability to pay and the effect of the penalty
                           on the contractor's ability to continue to do business. The Secretary could
                           limit the amount of the civil penalty assessed to no more than the amount
                           of the available fee.
                        ┬Ě DOE states that contract provisions are a better mechanism than civil
                          penalties for holding nonprofit contractors accountable for safe nuclear
                          practices. Although performance-based contracting, can be are effective
                          way to emphasize nuclear safety, DOE has not taken, full advantage of this
                          mechanism. For example, at the Lawrence Livermore National Laboratory
                          in California, DOE's main contractor-the University of California-received
                          96 percent of its $6.4 million available fee in fiscal year 1998, even though
                          it had significant nuclear safety deficiencies resulting in enforcement

                            9Performance-based contracting, part of DOE's contract reform efforts, links contractors' incentive
                            fees to the satisfactory accomplishment of specific tasks and uses objective measures and criteria to
                            measure contractor performance.

                            '┬░Stanford University has a no-fee contract to operate the Stanford Linear Accelerator Center in
                            California. According to DOE, the contractor wants no fee because a fee would be inconsistent with its
                            role as a university research organization.

                            Page 7                                                                          GAO/T-RCED-99-.228
actions." For fiscal year 1999, it will receive about $1.1 billion to operate
the facility and up to $6.4 million in fees for meeting or exceeding
performance goals, including compliance with health and safety
requirements. If the contractor does not perform satisfactorily in the
safety and health area, the most this fee could be reduced is $252,000,
according to the agreement with DOE, or only about four percent of the fee.

DOE states that its current approach is consistent with the Nuclear
Regulatory Commission's treatment of nonprofit organizations because
DOE issues notices of violation to these nonprofit organizations without
collecting penalties but can apply financial incentives or disincentives
through the contract. However, DOE'S approach generally is not consistent
with that of the Commission or other regulatory agencies. The
Commission can and does impose penalties on any organization it
regulates for violating safety requirements without regard to the
profit-maklng status of the organization. In doing so, the Commission sets
lower penalty amounts for nonprofit organizations than for the for-profit
organizations. Although this option is also available to the Secretary, DOE
does not currently take this approach. In addition, both the Commission
and other regulatory agencies have assessed and collected penalties or
additional administrative costs for violating nuclear safety requirements
from organizations that DOE exempts from payment. For example, between
1989 and 1993, the California State Department of Toxic Substances
Control assessed and collected $88,000 in "administrative costs" from the
University of California for violating state environmental laws at two DOE
national laboratories-Lawrence Livermore and Lawrence Berkeley.

In our report, we recommended that the Secretary of Energy eliminate the
adnministrative exemption from paying civil penalties for violations of
nuclear safety rules that DOE granted to nonprofit educational institutions.
In commenting on a draft of our report, DOE said that the issue of
exemption from civil penalties is ultimately one for the Congress to decide
and that, if the Congress should eliminate the exemption, the Department
would assess penalties against the nonprofit organizations in a manner
similar to that used by the Nuclear Regulatory Commission.

Thank you, Mr. Chairman and members of the Subcommittee. That
concludes my testimony, and I will be happy to respond to any questions
you may have.

"The University of California was assessed $313,125 in civil penalties in i998 for severity levl I and [H
violations of nuclear safety rules at the Lawrence Livermore National Laboratory in California. The
University of California is statutorily exempt from paying the penalties assessed.

Page 8                                                                           GAO/I-RCED-99-228
     q   a;nd      For future contacts regarding this testimony, please contact (Ms.) Gary L.
                   Jones at (202) 512-3841. Individuals making key contributions to this
 Acknowledgment    testimony included William R. Swick and Carole J. Blackwell.

(14144)           Page 9                                                    GAO/T-RCED-99-228
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