Department of Energy: Uncertain Future for External Regulation of Worker and Nuclear Facility Safety

Published by the Government Accountability Office on 1999-07-22.

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

                    United States General Accounting Office

GAO                 Testimony
                    Before the Subcommittee on Energy and Environment,
                    Committee on Science, House of Representatives

For Release
on Delivery
Expected at
                    DEPARTMENT OF
10:00 a. m. EDT
Thursday            ENERGY
July 22, 1999

                    Uncertain Future for
                    External Regulation of
                    Worker and Nuclear Facility
                    Statement of (Ms.) Gary Jones, Associate Director,
                    Energy, Resources, and Science Issues,
                    Resources, Community, and Economic
                    Development Division

Mr. Chairman and Members of the Subcommittee:

We are here today to testify on the status of the Department of Energy’s
(DOE) progress toward the external regulation of nuclear and worker
safety at its facilities. DOE has recently completed a pilot program with the
Nuclear Regulatory Commission (NRC) and the Occupational Safety and
Health Administration (OSHA) to simulate external regulation at selected
facilities.1 Our testimony today discusses (1) DOE’s changing positions on
the desirability of external regulation for its facilities, (2) the disagreement
between DOE and NRC on the potential costs and value added of external
regulation, and (3) the uncertainties for the future of external regulation in
DOE. Our testimony is based on our past and ongoing work on external

In summary, Mr. Chairman, despite the time and effort by DOE, NRC and
OSHA to test regulatory approaches and simulate regulation of nuclear and
worker safety at three different DOE sites, uncertainty clouds the future of
DOE external regulation. DOE’s leadership has changed over the years and
each of the last three Secretaries has changed the Department’s position
on external regulation. The current Secretary believes it is no longer a
worthwhile pursuit because the costs would likely outweigh the value of
external regulation. Today’s position sharply contrasts with the DOE’s
previously held positions supporting external regulation and also conflicts
with the Department’s own pilot program results as well as the
conclusions reached by NRC and OSHA. The results of the pilot program and
the extensive practical experience gained with NRC and OSHA show that
external regulation improves safety and accountability and is not likely to
be prohibitively expensive. NRC also believes the potential costs of
externally regulating DOE facilities are much less than DOE projections.
While current DOE leadership has decided not to pursue external
regulation, the pilot’s results, a decade of reports by blue ribbon panels
and DOE working groups, and the experience with NRC and OSHA give the
Congress valuable information with which to make an informed judgement
about the future of external regulation in DOE.

 These facilities include all or part of the Lawrence Berkeley National Laboratory in California, the
Oak Ridge National Laboratory in Tennessee, and the Savannah River Site in South Carolina. OSHA
participated in the California and Tennessee sites and had previously conducted a pilot program at
DOE’s Argonne National Laboratory in Illinois.
 Department of Energy: Clear Strategy on External Regulation Needed for Worker and Nuclear Facility
Safety (GAO/RCED-98-163, May 21, 1998).

Page 1                                                                           GAO/T-RCED-99-269
             We, along with others, have reported on DOE’s weaknesses in its
Background   self-regulation of environment, safety, and health responsibilities at its
             facilities. With few exceptions, worker and nuclear facility safety has been
             internally regulated by DOE because of concerns about national security.
             Essentially, all federal facilities except DOE’s are subject to external
             regulation. In 1993, then-Secretary of Energy Hazel O’Leary announced
             that the Department would seek external regulation for worker safety. In
             1994, legislation was proposed and hearings were held to externally
             regulate DOE nuclear safety. Although no laws were enacted, in 1995 DOE
             created an advisory committee, which concluded that secrecy had been
             used as a shield to deflect public scrutiny. This committee stated that
             “Widespread environmental contamination at DOE facilities and the
             immense costs associated with their cleanup provide clear evidence that
             self-regulation has failed.”3

             In 1996, a subsequent DOE working group concluded that external
             regulation could improve safety, eliminate the inherent conflict of interest
             from self-regulation, gain consistency with current domestic and
             international safety management practices, and improve credibility and
             public trust. In 1997, then-Secretary Frederico Pena took a more cautious
             approach by launching a pilot program with NRC and OSHA. The purpose of
             the pilot was to test regulatory approaches and gain insight about the costs
             of external regulation based on actual experience. The pilot began in
             January 1998 and was completed in June 1998. (OSHA completed an earlier
             pilot at the Argonne National Laboratory in Illinois in 1996.) The pilot was
             limited to DOE’s non-defense sites. DOE’s nuclear weapons sites were not
             part of the pilot, but under an earlier strategy would have been eventually
             externally regulated.

             The facilities that would be subject to external regulation are substantial.
             DOE maintains 3,500 nuclear facilities at 34 sites in 13 states, covering, in
             all, more than 85 million square feet of building space. Eighty percent of
             these facilities are funded by DOE’s defense and environmental
             management programs. Included in these figures are DOE’s 23 laboratories,
             whose total annual budget is about $7.5 billion. DOE’s facilities are
             currently self-regulated and cover a complex array of activities from
             research reactors, fuel storage, and nuclear weapons dismantlement to
             accelerators and fusion energy experiments.

               Improving Regulation of Safety at DOE Nuclear Facilities, Advisory Committee on External
             Regulation of Department of Energy Nuclear Safety (Dec. 22, 1995).

             Page 2                                                                        GAO/T-RCED-99-269
                      In our May 21, 1998, testimony before this Subcommittee, we cited DOE’s
DOE’s Positions on    changing positions on external regulation.4 At that time, we said that DOE’s
External Regulation   latest strategy to conduct this pilot was in contrast to its earlier strong
Has Changed           commitment to proceed directly to external regulation. At that same
                      hearing, DOE said that it believes there will be clear benefits from external
                      regulation of worker and nuclear safety at its facilities. In a September 11,
                      1998, letter to us, DOE again reaffirmed its commitment to external
                      regulation and wrote that it would submit legislation for externally
                      regulating single-purpose energy research laboratories as part of its fiscal
                      year 2000 budget process.

                      DOE’s position on external regulation has again changed. In a February 19,
                      1999, letter to the Chairman, Subcommittee on Energy and Water
                      Development, Senate Committee on Appropriations, Energy Secretary
                      Richardson stated that the Department will not submit legislation for
                      externally regulating its facilities for worker and nuclear facility safety.
                      The Secretary stated that DOE’s analysis of the pilot indicated that “many
                      of the potential benefits that we expected to see from external regulation
                      have not been demonstrated, and appear to be outweighed by associated
                      costs and difficulties raised in the pilot projects.” The Secretary cited a
                      number of “significant, unresolved issues” including licensing questions,
                      the extent to which old facilities can be upgraded, and costs. As a result,
                      the Secretary wrote that money for external regulation is better spent on
                      other missions.

                      Secretary Richardson elaborated on his position in a March 31, 1999, letter
                      to the Chairman, Subcommittee on Energy and Water Development, House
                      Committee on Appropriations. This time, the Secretary noted that DOE and
                      NRC failed to reach agreement on the “conclusions and ramifications” of
                      the pilot program. The areas of disagreement cited by the Secretary
                      included the value added by external regulation and the degree to which
                      regulatory flexibility or exemptions should be available for DOE’s facilities.
                      The high potential costs and the uncertainties associated with the
                      transition to NRC’s regulation were cited as DOE’s main concerns. Regarding
                      OSHA’s component of the pilot, the Secretary offered no specific position in
                      either of his letters.

                       Department of Energy: Clear Strategy on External Regulation Needed for Worker and Nuclear Facility
                      Safety (GAO/T-RCED-98-205, May 21, 1998).

                      Page 3                                                                       GAO/T-RCED-99-269
                      DOE estimates that its costs of transitioning to external regulation by NRC
Disagreement on       ranges from $7 to $23 million for the three pilot sites, assuming minimal
Potential Cost of     upgrading of facilities would be required.5 However, DOE also reports that
External Regulation   the costs could be substantially higher—as much as $75 million higher at
                      the Lawrence Berkeley Laboratory site—depending on NRC flexibility in
                      enforcing its regulations. Secretary Richardson’s position that the cost
                      would outweigh the benefits of external regulation conflicts with the
                      pilot’s results and are inconsistent with the growing experience between
                      DOE, NRC and OSHA. NRC concluded from the pilot program that there would
                      be no major retrofitting of facilities needed to meet its requirements at the
                      various project sites, and that it could immediately license Lawrence
                      Berkeley and the Oak Ridge facility. Some changes would be needed
                      before licensing the Savannah River facility, although the NRC found no
                      safety issues requiring prompt corrective action.

                      DOE  and NRC disagreements on the cost of transitioning to external
                      regulation is a major point of controversy between the two agencies.
                      Specifically, DOE estimates one-time transition costs of external regulation
                      would range from $170,000 at Berkeley to between $5.3 million and
                      $12.8 million at the Savannah River facility (transition costs include
                      training and rulemaking, and costs for upgrading facilities where needed).
                      Furthermore, DOE contends that the many uncertainties associated with
                      having NRC regulate its “unique facilities” poses potentially large financial
                      risks that could greatly increase transition costs. DOE is particularly
                      concerned that NRC would not grant waivers on certain regulatory
                      requirements at its facilities. According to DOE, waivers are needed to
                      avoid potentially higher transition costs. NRC disagrees with DOE’s position
                      and reports that because few changes to DOE facilities or procedures
                      would be needed under external regulation by NRC, it believes that DOE’s
                      cost estimates for making the transition to external regulation are
                      considerably higher than NRC believes is justified. NRC also noted that the
                      cost to DOE of NRC regulating DOE nuclear facilities could be minimized,
                      potentially resulting in a net savings, by reducing the level of DOE oversight
                      to a level consistent with commercial facilities. NRC also reports that it has
                      a demonstrated history of granting waivers and otherwise applying
                      flexibility to its regulatory processes as conditions warrant.

                      According to our review of DOE’s pilot reports and subsequent discussions
                      with laboratory officials who had provided DOE with cost data, DOE’s cost
                      estimates appear inflated and misrepresent actual conditions. For

                       These estimates exclude transition costs for meeting OSHA requirements, which were not calculated
                      for all sites.

                      Page 4                                                                       GAO/T-RCED-99-269
example, at the Berkeley site, the major cost uncertainty cited by DOE is
$75 million to decontaminate and decommission (D&D) 2 out-of-service
accelerators at the laboratory. DOE said these figures were based on a
worst-case scenario in which the laboratory would be forced to clean up
the old accelerators sooner rather than later under NRC’s rules. According
to DOE, taking more time for D&D would allow the laboratory to obtain
certain cost savings, such as by recycling materials. However, the
$75 million estimate is what the laboratory had always planned to spend to
D&D the accelerators. Thus, it is doubtful that DOE’s estimate even relates to
the cost of external regulation. Further, laboratory officials provided us
with data that show the cost to D&D the old accelerators is expected to be
about half of the $75 million DOE had indicated. The $75 million figure used
by DOE came from a 1992 laboratory report which was not updated or
corrected for the pilot, even though laboratory staff had provided DOE
officials with the most recent data. The reduced costs result from the fact
that since 1994, the laboratory has been recycling materials from the
accelerators to save money and to recapture the space as quickly as
possible for other scientific use. Regardless of the actual costs, NRC
advised DOE that it would likely grant a waiver on the D&D of the old
accelerators to allow a more cost-effective strategy because the
accelerators pose little risk to public safety. DOE officials acknowledged to
us that NRC officials had said they would likely grant such a waiver.

Similarly, DOE officials told us that they might be required to install special
alarms for detecting radiation leakage at the Radiochemical Engineering
Development Center in Oak Ridge if NRC were the regulator, at a cost of
about $4 million. NRC officials advised DOE that they would likely grant a
waiver for these alarms because the facility is safely operated and properly
shielded from radiation exposure. DOE nevertheless included the $4 million
figure as a potential transition cost to being externally regulated.

The potential costs associated with NRC’s requirements represent
worst-case scenarios and assumes NRC would not exercise flexibility in its
approach to regulating DOE’s unique facilities. Yet NRC cites many examples
of its flexibility, such as providing waivers of its requirements when there
is no safety consequence. For example, in July 1999, NRC granted the
former DOE-owned gaseous diffusion plants a 1-year extension to meet
seismic upgrade requirements. Also, NRC recently extended all of its
materials licenses from 2 to 5 years in recognition that radioactive
materials are becoming more stable and predicable. NRC’s report on the
pilot notes that there is precedent in NRC policy and practice for resolving
many of the issues raised during the pilot program.

Page 5                                                       GAO/T-RCED-99-269
DOE’s concerns about high potential costs posed by the uncertainties in
working with NRC are all the more curious given the extensive interactions
and practical experience the two agencies already share. NRC is now
licensing, certifying, and reviewing more than 20 of DOE’s projects and
activities. For example, early this year, NRC granted a license to DOE for
operating the TMI-2 Independent Spent Fuel Debris Facility at the
Department’s Idaho National Engineering and Environmental Laboratory.
NRC had previously licensed the Independent Spent Fuel Storage Facilities
for the Fort St. Vrain, and is conducting prelicensing consultations with
DOE in other areas, including the high-level waste repository at Yucca
Mountain, Nevada, and a proposed facility for making mixed-oxide fuel.
Additional issues examined during the pilot program, that is
decommissioning, potential conflicts of interest, and funding, are being
addressed by NRC and DOE in other regulatory and licensing actions. For
example, many of these issues were addressed in licensing the TMI-2
Independent Fuel Storage Installation. DOE’s report on the pilot references
NRC’s flexibility but does not highlight this important distinction in the
executive summary nor in Secretary Richardson’s letters to the Chairman.

In addition to transition costs of external regulation, DOE estimates it will
incur annual nuclear safety inspection-related expenses from $2 to
$4 million for the three pilot sites. These costs, however, could be reduced
by reductions in DOE’s current oversight costs for nuclear and worker
safety. NRC estimates its transition costs to be about $2 million and
inspection expenses to be less than $1 million for the three pilot sites.

The estimated costs of complying with OSHA’s regulations raises fewer
issues. DOE’s own worker safety requirements are often similar to OSHA’s,
and the pilot’s results indicate that DOE’s laboratories resemble those
found in comparable commercial facilities. OSHA reports that the costs to
comply with its inspection findings are generally to correct previously
identified workplace hazards. As with the NRC, OSHA has practical
experience in DOE facilities. For example, OSHA has had regulatory
authority at the gaseous diffusion plants in Paducah, Kentucky, and
Piketon, Ohio since 1993. These DOE facilities are leased to the United
States Enrichment Corporation. OSHA has also accepted regulatory
responsibility for two privatized facilities at DOE’s Savannah River site.

NRC officials told us that their concerns with DOE’s cost estimates
contributed to their decision to prepare a separate report on the pilot’s
results. Both agencies had agreed in their 1997 memorandum of agreement
to prepare a joint report on the pilot’s results. OSHA was not part of the

Page 6                                                      GAO/T-RCED-99-269
                        original agreement and was later added to the pilot in response to
                        congressional direction.6

                        The second major area of controversy is the value added by external
Disagreement on the     regulation, about which DOE also disagrees with NRC and OSHA. DOE
Potential Value Added   leadership stated, without providing detail, that many of the potential
of External             benefits that were expected from external regulation have not been
                        demonstrated. DOE’s reports on the pilot results did not focus on the
Regulation              benefits of external regulation, but rather on the potential costs and other
                        issues. However, NRC and OSHA concluded from the pilots that their
                        presence could improve safety at DOE’s facilities. While NRC did not find
                        any significant problems in its visits, the Commission believes its
                        processes improved safety. Recent experience supports this. For example,
                        in February 1999, NRC issued a safety assessment of the Brookhaven
                        National Laboratory High Flux Beam Reactor in which NRC staff “identified
                        no safety-significant issues” but did find “several apparent instances of
                        noncompliance with DOE and [laboratory] requirements.” NRC staff noted
                        that “the safety programs at the [reactor] were found to provide adequate
                        protection of the health and safety of the public, the workers, and the
                        environment.” The staff also concluded that “the design and conditions at
                        the [reactor] do not present any unique regulatory or technical challenges
                        to regulatory oversight of the [reactor] by outside regulators, such as NRC.”
                        Similarly, OSHA’s presence as an external regulator would, according to
                        OSHA, generally result in more timely correction of workplace hazards.
                        OSHA did find some problems in its pilot visits and prepared simulated fines
                        for violations: $75,000 in Oak Ridge, and $58,000 in Berkeley. Fifty four of
                        the 75 violations at Oak Ridge were classified as “serious,” with 2
                        requiring immediate corrective action. Fewer hazards were noted at the
                        Berkeley site. OSHA officials told us that their findings parallel those
                        expected at similarly sized facilities in the commercial sector.

                        An important value added benefit from external regulation is public
                        credibility. As we testified before this subcommittee on July 13, 1999, DOE
                        has resisted independent regulatory oversight of worker and nuclear
                        safety, which has prompted a perception that it lacks accountability.7
                        Laboratory officials at the Berkeley and Oak Ridge sites noted the value of
                        gaining credibility from being externally regulated.

                         Energy and Water Development Appropriations Act, 1999, P.L. 105-245, Section 311, Oct. 7, 1998.
                         Department of Energy: Need to Address Long-standing Management Weaknesses
                        (GAO/T-RCED-99-255, July 13, 1999).

                        Page 7                                                                         GAO/T-RCED-99-269
                         DOE’s  wavering positions and its failure to reach consensus with
DOE’s Efforts Cloud      participating agencies on the results of the pilot projects have caused
the Future of External   uncertainty about the future of external regulation at its facilities. After
Regulation               nearly a decade of reports by blue-ribbon panels and internal working
                         groups, a 2-year pilot effort, and extensive practical experience supporting
                         the view that external regulation works, DOE’s leadership has reversed
                         course. Given these experiences, we believe that the Congress has an
                         opportunity to make a decision on whether or not a class of DOE’s
                         facilities—as represented in the pilot —should be externally regulated for
                         worker safety and nuclear facility safety, a position previously advocated
                         by DOE officials.

                         Mr. Chairman, this concludes our statement. We would be happy to
                         respond to any questions you or Members of the Subcommittees may have.

                         For future contacts regarding this testimony, please call Gary Jones at
Contacts and             (202) 512-3841. Individuals making key contributions to this testimony
Acknowledgements         included Gary R. Boss, Michael Gilbert, William Lanouette, and Melissa

(141334)                 Page 8                                                     GAO/T-RCED-99-269
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