Nuclear Regulatory Commission: Strategy Needed to Develop a Risk-Informed Safety Approach

Published by the Government Accountability Office on 1999-02-04.

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

                   United States General Accounting Office

GAO                Testimony
                   Before the Subcommittee on Clean Air, Wetlands, Private
                   Property, and Nuclear Safety, Commmittee on
                   Environment and Public Works, U.S. Senate

For Release
on Delivery
Expected at
                   NUCLEAR REGULATORY
9 a.m. EST
Thursday           COMMISSION
February 4, 1999

                   Strategy Needed to Develop
                   a Risk-Informed Safety
                   Statement of Ms. Gary L. Jones, Associate Director,
                   Energy, Resources, and Science Issues,
                   Resources, Community, and Economic
                   Development Division

    Mr. Chairman and Members of the Subcommittee:

    We are here to testify about the actions that the Nuclear Regulatory
    Commission (NRC) has taken to move from its traditional regulatory
    approach to an approach that considers risk in conjunction with
    engineering analyses and operating experience—termed risk-informed
    regulation. NRC believes that a risk-informed approach would reduce
    unnecessary regulatory burden and costs, without reducing safety.

    Our testimony today is based on ongoing work we are conducting for
    Senators Lieberman and Biden. Specifically, our testimony discusses the
    (1) issues that NRC needs to resolve to implement a risk-informed
    regulatory approach and (2) status of NRC’s efforts to make two of its
    oversight programs—overall plant safety assessments and
    enforcement—risk-informed. In addition, in January 1999, we provided the
    Congress with our views on the major management challenges that NRC
    faces.1 Our testimony discusses these challenges and their relationship to
    NRC’s efforts to consider risk in its regulatory activities.

    In summary, we are finding that:

•   Since July 1998, NRC has accelerated some activities needed to implement
    a risk-informed regulatory approach and has established and set
    milestones for others. However, NRC has not resolved the most basic of
    issues; that is, that some utilities do not have current and accurate design
    information for their nuclear power plants, which is needed for a
    risk-informed approach. Also, neither NRC nor the nuclear utility industry
    have standards or guidance that define the quality or adequacy of the risk
    assessments that utilities use to identify and measure the risks to public
    health and the environment.2 Furthermore, NRC has not determined if
    compliance with risk-informed regulations will be voluntary or mandatory
    for the nuclear utility industry. More fundamentally, NRC has not developed
    a comprehensive strategy that would move its regulation of the safety of
    nuclear power plants from its traditional approach to an approach that
    considers risk.
•   In January 1999, NRC released for comment a proposed process to assess
    the overall safety of nuclear power plants. The process would establish

    Performance and Accountability Series: Major Management Challenges and Program Risks: Nuclear
    Regulatory Commission (GAO/OCG-99-19, Jan. 1999).
     Risk assessments systematically examine complex technical systems to attempt to quantify the
    probabilities that a potential accident will occur and the resulting consequences. By their nature, risk
    assessments are statements of uncertainty that identify and assign probabilities to events that rarely

    Page 1                                                                             GAO/T-RCED-99-71
                 generic and plant-specific safety thresholds and indicators to help NRC
                 assess overall plant safety. NRC expects to phase in the new process over
                 the next 2 years and evaluate it by June 2001, at which time NRC would
                 propose any adjustments or modifications needed. In addition, NRC has
                 been examining the changes needed to its enforcement program to make it
                 consistent with, among other things, the proposed plant safety assessment
                 process. For many years, the nuclear industry and public interest groups
                 have criticized the enforcement program as subjective. In the spring of
                 1999, NRC staff expect to provide the Commission recommendations for
                 revising the enforcement program.
             •   In January 1999, we identified major management challenges that limit
                 NRC’s effectiveness. The challenges include the lack of a definition of
                 safety and lack of aggressiveness in requiring utilities to comply with
                 safety regulations. NRC’s revised plant safety assessment and enforcement
                 initiatives may ultimately help the agency address these management
                 challenges and carry out its safety mission more effectively and efficiently.

                 NRC  is responsible for ensuring that the nation’s 103 operating commercial
Background       nuclear power plants pose no undue risk to public health and safety. Now,
                 however, the electric utility industry is faced with an unprecedented,
                 overarching development: the economic restructuring of the nation’s
                 electric power system, from a regulated industry to one driven by
                 competition. According to one study, as many as 26 of the nation’s nuclear
                 power plant sites are vulnerable to shutdown because production costs
                 are higher than the projected market prices of electricity.3 As the electric
                 utility industry is deregulated, operating and maintenance costs will affect
                 the competitiveness of nuclear power plants. NRC acknowledges that
                 competition will challenge it to reduce unnecessary regulatory burden
                 while ensuring that safety margins are not compromised by utilities’
                 cost-cutting measures.

                 Since the early 1980s, NRC has been considering the role of risk in the
                 regulatory process, and in August 1995, NRC issued a policy statement that
                 advocated certain changes in the development and implementation of its
                 regulations through an approach more focused on risk assessment. Under
                 such an approach, NRC and the utilities would give more emphasis to those
                 structures, systems, and components deemed more significant to safety.
                 The following example illustrates the difference between NRC’s existing
                 and a risk-informed approach. One particular nuclear plant has about 635
                 valves and 33 pumps that the utility must operate, maintain, and

                  World Energy Service: U.S. Outlook (Standard & Poor’s, Apr. 1998).

                 Page 2                                                                GAO/T-RCED-99-71
                             periodically replace according to NRC’s existing regulations. Under a
                             risk-informed approach, the utility found that about 515 valves and 12
                             pumps presented a low safety risk. The utility identified 25 components
                             that were a high risk but would have been treated the same as other
                             components under the existing regulations. If the utility concentrated on
                             the 120 valves, 21 pumps, and 25 components that have been identified as
                             having a high safety risk, it could reduce its regulatory compliance burden
                             and costs.

                             NRC staff estimate that it could take 4 to 8 years to implement a
NRC Has Not                  risk-informed regulatory approach and are working to resolve many issues
Resolved Many Issues         to ensure that the new approach does not endanger public health and
Needed to Implement          safety. Although NRC has issued guidance for utilities to use risk
                             assessments to meet regulatory requirements for specific activities and
a Risk-Informed              has undertaken many activities to implement a risk-informed approach,
Regulatory Approach          more is needed to

                         •   ensure that utilities have current and accurate documentation on the
                             design of the plant and structures, systems, and components within it and
                             final safety analysis reports that reflect changes to the design and other
                             analyses conducted after NRC issued the operating license.
                         •   ensure that utilities make changes to their plants based on complete and
                             accurate design and final safety analysis information.
                         •   determine whether, how, and what aspects of NRC’s regulations to change.
                         •   develop standards on the scope and detail of the risk assessments needed
                             for utilities to determine that changes to their plants’ design will not
                             negatively effect safety.
                         •   determine whether compliance with risk-informed regulations should be
                             mandatory or voluntary.

                             Furthermore, NRC has not developed a comprehensive strategy that would
                             move its regulation of nuclear plant safety from its traditional approach to
                             an approach that considers risk.

Utilities Do Not Have        Design information provides one of the basis for NRC’s safety regulation.
Accurate and Reliable        Yet, for more than 10 years, NRC has questioned whether utilities had
Design Information for       accurate design information for their plants. Inspections of 26 plants that
                             NRC completed early in fiscal year 1999 confirmed that for some plants
Some Plants                  (1) utilities had not maintained accurate design documentation, (2) NRC did
                             not have assurance that safety systems would perform as intended at all

                             Page 3                                                      GAO/T-RCED-99-71
times, and (3) NRC needed to clarify what constitutes design information
subject to NRC’s regulations. As of November 1998, NRC had taken escalated
enforcement actions for violations found at five plants—Three Mile Island,
Perry, H.B. Robinson, Vermont Yankee, and D.C. Cook. NRC took these
actions because it did not have assurance that the plants’ safety systems
would perform as intended. One utility, American Electric Power, shut
down its D.C. Cook plant as a result of the inspection findings.

NRC  does not plan additional design team inspections because it concluded
that the industry did not have serious safety problems. NRC’s Chairman
disagreed with this broad conclusion, noting that (1) the inspection results
for the five plants indicate the importance of maintaining current and
accurate design and facility configuration information, (2) the inspections
did not apply to the industry as a whole but to only certain utilities and
plants within the industry, and (3) other NRC inspections identified design
problems at other such nuclear power plants as Crystal River 3, Millstone,
Haddam Neck, and Maine Yankee. The Commissioners and staff agreed
that NRC would oversee design information issues using such tools as
safety system engineering inspections.

The 26 inspections also identified a need for NRC to better define the
elements of a plant’s design that are subject to NRC’s regulations. NRC staff
acknowledge that the existing regulation is a very broad, general
statement that has been interpreted differently among NRC staff and among
utility and industry officials. According to NRC staff, it is very difficult to
develop guidance describing what constitutes adequate design
information. Therefore, NRC has agreed that the Nuclear Energy Institute
(NEI) would provide explicit examples of what falls within design
parameters.4 NEI plans to draft guidance that will include examples of
design information and provide it to NRC in January 1999. Concurrently,
NRC is developing regulatory guidance on design information. NRC staff
expect to recommend to the Commission in February 1999 that it endorse
either NRC’s or NEI’s guidance and seek approval to obtain public
comments in March or April 1999. NRC staff could not estimate when the
agency would complete this effort.

 NEI has members from all utilities licensed to operate commercial nuclear plants in the United States
as well as nuclear plant designers, major architect/engineering firms, fuel fabrication facilities,
materials licensees, and other organizations and individuals involved in the nuclear energy industry.
NEI establishes unified nuclear industry policy on such matters as generic operational and technical

Page 4                                                                           GAO/T-RCED-99-71
NRC Does Not Have          At the time NRC licenses a plant, the utility prepares a safety analysis
Confidence That Safety     report; NRC regulations require the utility to update the report to reflect
Analysis Reports Reflect   changes to the plant design and the results of analyses that support
                           modifying the plants without prior NRC approval. As such, the report
Current Plant Designs      provides one of the foundations to support a risk-informed approach. Yet,
                           NRC does not have confidence that utilities make the required updates,
                           which results in poor documentation of the safety basis for the plants.

                           NRC  published guidance for the organization and contents of safety
                           analysis reports in June 1966 and updated the guidance in December 1980.
                           NRC acknowledges that the guidance is limited, resulting in poorly
                           articulated staff comments on the quality of the safety analysis reports and
                           a lack of understanding among utilities about the specific aspects of the
                           safety analysis reports that should be updated. On June 30, 1998, NRC
                           directed its staff to continue working with NEI to finalize the industry’s
                           guidelines on safety analysis report updates, which NRC could then
                           endorse. Once the agency endorses the guidelines, it will obtain public
                           comments and revise them, if appropriate. NRC expects to issue final
                           guidelines in September 1999.

Erroneous Evaluations      According to NRC documents, if a utility does not have complete and
Can Erode Design and       accurate design information, the evaluations conducted to determine
Safety Margins             whether it can modify a plant without prior NRC approval can lead to
                           erroneous conclusions and jeopardize safety. For more than 30 years,
                           NRC’s regulations have provided a set of criteria that utilities must use to
                           determine whether they may change their facilities (as described in the
                           final safety analysis report) or procedures or conduct tests and
                           experiments without NRC’s prior review and approval.

                           However, in 1993, NRC became aware that Northeast Nuclear Energy
                           Company had refueled Millstone Unit 1 in a manner contrary to that
                           allowed in the updated final safety analysis and its operating license. This
                           led NRC to question the regulatory framework that allows licensees to
                           change their facilities without prior NRC approval. As a result, NRC staff
                           initiated a review to identify the short- and long-term actions needed to
                           improve the process. For example, in October 1998, NRC published a
                           proposed regulation regarding plant changes in the Federal Register for
                           comment; the comment period ended on December 21, 1998. NRC
                           requested comments on criteria for identifying changes that require a
                           license amendment and on a range of options, several of which would
                           allow utilities to make changes without prior NRC approval despite a

                           Page 5                                                        GAO/T-RCED-99-71
                           potential increase in the probability or consequences of an accident. NRC
                           expects to issue a final regulation in June 1999.

                           In addition, in February 1999, NRC staff expect to provide their views to the
                           Commission on changing the scope of the regulation to consider risk. NRC’s
                           memorandum that tracks the various tasks related to a risk-informed
                           approach and other initiatives did not show when NRC would resolve this

Making Its Regulations     Until recently, NRC did not consider whether and to what extent the agency
Risk-Informed Will Be a    should revise all its regulations pertaining to commercial nuclear plants to
Challenge to NRC and the   make them risk-informed. Revising the regulations will be a formidable
                           task because, according to NRC staff, inconsistencies exist among the
Industry                   regulations and because a risk-informed approach focuses on the potential
                           risk of structures, systems, or components, regardless of whether they are
                           located in the plant’s primary (radiological) or secondary
                           (electricity-producing) systems. With one exception, NRC has not
                           attempted to extend its regulatory authority to the secondary systems.

                           NRC staff and NEI officials agree that the first priority in revising the
                           regulations will be to define their scope as well as the meaning of such
                           concepts as “important to safety” and “risk significant” and integrating the
                           traditional and risk-informed approaches into a cohesive regulatory
                           context. In October 1998, NEI proposed a phased approach to revise the
                           regulations. Under the proposal, by the end of 1999, NRC would define
                           “important to safety” and “risk significant.” By the end of 2000, NRC would
                           use the definitions in proposed rulemakings for such regulations as
                           definition of design information and environmental qualification for
                           electrical equipment. By the end of 2003, NEI proposes that NRC address
                           other regulatory issues, such as the change process, the content of
                           technical specifications, and license amendments. After 2003, NEI proposes
                           that NRC would address other regulations on a case-by-case basis.

                           NRC staff agreed that the agency must take a phased approach when
                           revising its regulations. The Director, Office of Nuclear Regulatory
                           Research, said that, if NRC attempted to revise all provisions of the
                           regulations simultaneously, it is conceivable that the agency would
                           accomplish very little. The Director said that NRC needs to address one
                           issue at a time while concurrently working on longer-term actions. He
                           cautioned, however, that once NRC starts, it should be committed to
                           completing the process. At a January 1999 meeting, NRC’s Chairman

                           Page 6                                                      GAO/T-RCED-99-71
                            suggested a more aggressive approach that would entail risk informing all
                            regulations across the board. NRC’s memorandum that tracks the various
                            tasks related to a risk-informed approach and other initiatives did not
                            show when the agency would resolve this issue.

NRC Does Not Have a         NRC and the industry view risk assessments as one of the main tools to be
Standard for the Content    used to identify and focus on those structures, systems, or components of
of Risk Assessments         nuclear plant operations having the greatest risk. Yet, neither NRC nor the
                            industry has a standard or guidance that defines the quality, scope, or
                            adequacy of risk assessments. NRC staff are working with the American
                            Society of Mechanical Engineers to develop such a standard.

                            However, this issue is far from being resolved. The Society is developing
                            the standard for risk assessments in two phases (internal events and
                            emergency preparedness). NRC staff estimate that the agency would have a
                            final standard on the first phase by June 2000 but could not estimate when
                            the second phase would be complete. To ensure consistency with other
                            initiatives, in December 1998, NRC staff requested the Commission’s
                            direction on the quality of risk assessments needed to implement a
                            risk-informed approach. Since it may be several years until NRC has a
                            standard, the Commission should also consider the effect that the lack of a
                            standard could have on its efforts to implement a risk-informed regulatory

NRC Has Not Determined      NRC  has not determined whether compliance with revised risk-informed
Whether Compliance With     regulations would be mandatory or voluntary for utilities. In December
Risk-Informed Regulations   1998, NRC’s staff provided its recommendations to the Commission. The
                            staff recommended that implementation be voluntary, noting that it would
Would Be Mandatory or       be very difficult to show that requiring mandatory compliance will
Voluntary                   increase public health and safety and could create the impression that
                            current plants are less safe. In its analysis, the staff did not provide the
                            Commission with information on the number of plants that would be
                            interested in such an approach. In January 1999, the Commissioners
                            expressed concern about a voluntary approach, believing that it would
                            create two classes of plants operating under two different sets of

                            Utilities may be reluctant to shift to a risk-informed regulatory approach
                            for various reasons. First, the number of years remaining on a plant’s
                            operating license is likely to influence the utility’s views. NRC

                            Page 7                                                      GAO/T-RCED-99-71
                          acknowledged that if a plant’s license is due to expire in 10 years or less,
                          then the utility may not have anything to gain by changing from the
                          traditional approach. Second, the costs to comply may outweigh the
                          benefits of doing so. Considering the investment that will be needed to
                          develop risk-informed procedures and operations and identify
                          safety-significant structures, systems, or components, utilities question
                          whether a switch will be worth the reduction in regulatory burden and
                          cost savings that may result. Third, design differences and age disparities
                          among plants make it difficult for NRC and the industry to determine how,
                          or to what extent, a standardized risk-informed approach can be
                          implemented across the industry. Although utilities built one of two types
                          of plants—boiling water or pressurized water—each has design and
                          operational differences. Thus, each plant is unique, and a risk-informed
                          approach would require plant-specific tailoring.

NRC Has Not Developed a   Since the early 1980s, NRC has considered applying risk to the regulatory
Strategic Plan to         process. NRC staff estimate that it will be at least 4 to 8 years before the
Implement a               agency implements a risk-informed approach. However, NRC has not
                          developed a strategic plan that includes objectives, time lines, and
Risk-Informed Approach    performance measures for such an approach.

                          Rather, NRC has developed an implementation plan, in conjunction with its
                          policy statement on considering risk, that is a catalog of about 150
                          separate tasks and milestones for their completion. It has also developed
                          guidance for some activities, such as pilot projects in the four areas where
                          the industry wanted to test the application of a risk-informed approach. In
                          one case, NRC approved a pilot project for Houston Lighting and Power
                          Company at its South Texas plant, and the utility found that it could not
                          implement it because the pilot project would conflict with other NRC

                          Given the complexity and interdependence of NRC’s requirements, such as
                          regulations, plant design, and safety documents and the results of ongoing
                          activities, it is critical that NRC clearly articulate how the various initiatives
                          will help achieve the goals set out in the 1995 policy statement. Although
                          NRC’s implementation plan sets out tasks and expected completion dates, it
                          does not ensure that short-term efforts are building toward NRC’s
                          longer-term goals; does not link the various ongoing initiatives; does not
                          help the agency determine appropriate staff levels, training, skills, and
                          technology needed and the timing of those activities to implement a
                          risk-informed approach; does not provide a link between the day-to-day

                          Page 8                                                          GAO/T-RCED-99-71
                            activities of program managers and staff and the objectives set out in the
                            policy statement; and does not address the manner in which it would
                            establish baseline information about the plants to assess the safety impact
                            of a risk-informed approach.

                            In a December 1998 memorandum, NRC staff said that once the
                            Commission provides direction on whether and how to risk-inform the
                            regulations and guidance on the quality of risk assessments to support
                            their decisions for specific regulations, they would develop a plan to
                            implement the direction provided. The staff did not provide an estimated
                            time frame for completing the plan.

                            For many years, the nuclear industry and public interest groups have
The Status of NRC’s         criticized NRC’s plant assessment and enforcement processes because they
Assessment and              lacked objectivity, consistency, and predictability. In January 1999, NRC
Enforcement                 proposed a new process to assess overall plant performance based on
                            generic and plant-specific safety thresholds and performance indicators.
Processes: Many             NRC is also reviewing its enforcement process to ensure consistency with
Unanswered Issues           the staff’s recommended direction for the assessment process and other
NRC Is Trying to Make Its   In 1997 and 1998, we noted that NRC’s process to focus attention on plants
Plant Assessment Process    with declining safety performance needed substantial revisions to achieve
More Objective and          its purpose as an early warning tool and that NRC did not consistently apply
                            the process across the industry.5 We also noted that this inconsistency has
Transparent                 been attributed, in part, to the lack of specific criteria, the subjective
                            nature of the process, and the confusion of some NRC managers about their
                            role in the process. NRC acknowledged that it should do a better job of
                            identifying plants deserving increased regulatory attention and said that it
                            was developing a new process that would be predictable, nonredundant,
                            efficient, and risk-informed.

                            In January 1999, NRC proposed a new plant assessment process that
                            includes seven “cornerstones.”6 For each cornerstone, NRC will identify the
                            desired result, important attributes that contribute to achieving the desired
                            result, areas to be measured, and the various ways that exist to measure

                             Nuclear Regulation: Preventing Problem Plants Requires More Effective NRC Action
                            (GAO/RCED-97-145, May 30, 1997) and Nuclear Regulatory Commission: Preventing Problem Plants
                            Requires More Effective Action by NRC (GAO/T-RCED-98-252, July 30, 1998).
                             The seven cornerstones are: initiating events, mitigation systems, barrier integrity, emergency
                            preparedness, and public, occupational, and physical protection.

                            Page 9                                                                            GAO/T-RCED-99-71
                             the identified areas. Three issues cut across the seven cornerstones:
                             human performance, safety conscious work environment, and problem
                             identification and resolution. As proposed, NRC’s plant assessment process
                             would use performance indicators, inspection results, other such
                             information as utility self-assessments, and clearly defined, objective
                             decision thresholds. The process is anchored in a number of principles,
                             including that: (1) a level of safety performance exists that could warrant
                             decreased NRC oversight, (2) performance thresholds should be set high
                             enough to permit NRC to arrest declining performance, (3) NRC must assess
                             both performance indicators and inspection findings, and (4) NRC will
                             establish a minimum level of inspections for all plants (regardless of
                             performance). Although some performance indicators would be generic to
                             the industry, others would be plant-specific based, in part, on the results
                             that utilities derive from their risk assessments. However, the quality of
                             risk assessments and number of staff devoted to maintain them vary
                             considerably among utilities.

                             NRC  expects to use a phased approach to implement the revised plant
                             assessment process. Beginning in June 1999, NRC expects to pilot test the
                             use of risk-informed performance indicators at eight plants, by
                             January 2000 to fully implement the process, and by June 2001 to complete
                             an evaluation and propose any adjustments or modifications needed.
                             Between January 1999 and January 2001, NRC expects to work with the
                             industry and other stakeholders to develop a comprehensive set of
                             performance indicators to more directly assess plant performance relative
                             to the cornerstones. For those cornerstones or aspects of cornerstones
                             where it is impractical or impossible to develop performance indicators,
                             NRC would use its inspections and utilities’ self assessments to reach a
                             conclusion about plant performance. NRC’s proposed process illustrates an
                             effort by the current Chairman and other Commissioners to improve NRC’s
                             ability to help ensure safe operations of the nation’s nuclear plants as well
                             as address industry concerns regarding excessive regulation. NRC’s
                             ensuring consistent implementation of the process ultimately established
                             would further illustrate the Commissioners’ commitment.

NRC’s Enforcement            NRC has revised its enforcement policy more than 30 times since its
Process Continues to Be in   implementation in 1980. Although NRC has attempted to make the policy
a State of Flux              more equitable, the industry has had longstanding problems with it.
                             Specifically, NEI believes that the policy is not safety-related, timely, or
                             objective. Among the more contentious issues are NRC’s practice of

                             Page 10                                                       GAO/T-RCED-99-71
                       aggregating lesser violations into an enforcement action that results in
                       civil penalties and its use of the term “regulatory significance.”

                       To facilitate a discussion about the enforcement program, including the
                       use of regulatory significance and the practice of aggregating lesser
                       violations, at NRC’s request, NEI and the Union of Concerned Scientists
                       reviewed 56 enforcement actions taken by the agency during fiscal year
                       1998. For example, NEI reviewed the escalated enforcement actions based
                       on specific criteria, such as whether the violation that resulted in an
                       enforcement action could cause an offsite release of radiation, onsite or
                       offsite radiation exposures, or core damage. From an overall perspective,
                       the Union concluded that NRC’s actions are neither consistent nor
                       repeatable and that the enforcement actions did not always reflect the
                       severity of the offense. According to NRC staff, they plan to meet with
                       various stakeholders in January and February 1999 to discuss issues
                       related to the enforcement program.

                       Another issue is the use of the term “regulatory significance” by NRC
                       inspectors. NRC, according to NEI and the Union of Concerned Scientists,
                       uses “regulatory significance” when inspectors cannot define the safety
                       significance of violations. However, when the use of regulatory
                       significance results in financial penalties, neither NRC nor the utility can
                       explain to the public the reasons for the violation. As a result, the public
                       cannot determine whether the violation presented a safety concern.

                       NEI has proposed a revised enforcement process. NRC is reviewing the
                       proposal as well as other changes to the enforcement process to ensure
                       consistency with the draft plant safety assessment process and other
                       changes being proposed as NRC moves to risk-informed regulation. NRC’s
                       memorandum of tasks shows that the staff expect to provide
                       recommendations to the Commission in March 1999 that address the use
                       of the term regulatory significance and in May 1999 on considering risk in
                       the enforcement process.

                       In January 1999, we provided the Congress with our views on the major
Major Management       management challenges that NRC faces. We believe that the management
Challenges and         challenges we identified have limited NRC’s effectiveness. In summary, we
Program Risks          reported that:

                   •   NRC   lacks assurance that its current regulatory approach ensures safety.
                       NRC   assumes that plants are safe if they operate as designed and follow

                       Page 11                                                       GAO/T-RCED-99-71
               NRC’s regulations. However, NRC’s regulations and other guidance do not
               define, for either a licensee or the public, the conditions necessary for a
               plant’s safety; therefore, determining a plant’s safety is subjective.
           •   NRC’s oversight has been inadequate and slow. Although NRC’s indicators
               show that conditions throughout the nuclear energy industry have
               generally improved, they also show that some nuclear plants are
               chronically poor performers. At three nuclear plants with long-standing
               safety problems that we reviewed, NRC did not take aggressive action to
               ensure that the utilities corrected the problems. As a result of NRC’s
               inaction, the conditions at the plants worsened, reducing safety margins.
           •   NRC’s culture and organizational structure have made the process of
               addressing concerns with the agency’s regulatory approach slow and
               ineffective. Since 1979, various reviews have concluded that NRC’s
               organizational structure, inadequate management control, and inability to
               oversee itself have impeded its effectiveness.

               Some of the initiatives that NRC has underway have the potential to address
               the first two management challenges. However, the need to ensure that
               NRC’s regulatory programs work as effectively as possible is extremely
               important, particularly in light of major changes taking place in the
               electric utility industry and in NRC. Yet changing NRC’s culture will not be
               easy. In a June 1998 report, the Office of the Inspector General noted that
               NRC’s staff had a strong commitment to protecting public health and safety.
               However, the staff expressed high levels of uncertainty and confusion
               about the new directions in regulatory practices and challenges facing the
               agency. The employees said that, in their view, they spend too much time
               on paperwork that may not contribute to NRC’s safety mission. The
               Inspector General concluded that without significant and meaningful
               improvement in management’s leadership, employees’ involvement, and
               communication, NRC’s current climate could eventually erode the
               employees’ outlook and commitment to doing their job. This climate could
               also erode NRC’s progress in moving forward with a risk-informed
               regulatory approach. According to staff, NRC recognizes the need to
               effectively communicate with its staff and other stakeholders and is
               developing plans to do so.

               Mr. Chairman and Members of the Subcommittee, this concludes our
               statement. We would be pleased to respond to any questions you may

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