ML20056C062
| ML20056C062 | |
| Person / Time | |
|---|---|
| Issue date: | 02/22/1993 |
| From: | Taylor J NRC OFFICE OF THE EXECUTIVE DIRECTOR FOR OPERATIONS (EDO) |
| To: | |
| References | |
| SECY-93-043, SECY-93-43, NUDOCS 9302250276 | |
| Download: ML20056C062 (91) | |
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POLICY ISSUE (Notation Vote)
February 22, 1993 SECY-93-043 For:
The Commissioners From:
James M. Taylor l
Executive Director for Operations Sub.iect:
REGULATORY ANALYSIS GUIDELINES OF THE U.S. NUCLEAR REGULATORY COMMISSION
Purpose:
To seek Commission approval to publish a Federal Register Notice (Enclosure 1) announcing the availability of the proposed Regulatory Analysis Guidelines for public comment.
Summary:
This paper describes a proposed revision to the Nuclear Regulatory Commission's Guidelines for preparing regulatory analyses and discusses the major issues which need to be resolved in order to finalize thesa Guidelines. This paper also responds to parts of three Staff Requirements Memoranda (SRM).
Item 3 of the first SRM, dated June 15, 1990, concerns the establishment of a fornal mechanism to routinely consider safety goals in /uture regulatory initiatives.
Item 1 of the second SRM, dated December 20, 1991, concerns the treatment of averted onsite costs in NRC regulatory analyses.
In the last item of the third SRM, dated February 21, 1992, Commissioner Remick asked about the staff's reexamination of the $1000 value of person-rem averted and the implications on current regulations and past regulatory decisions of revising that value. This latter item is not addressed herein since the dollar per person-rem valuation is still under staff review and evaluation.
Backaround:
By memorandum dated May 1, 1991, SECY-91-Il4, the staff informed the Commission on the status and plans for
Contact:
NOTE:
TO BE MADE PUBLICLY AVAILABLE Brian Richter, RES WHEN THE FINAL SRM IS MADE 301-492-3763 3y373g333 17002'1 qp p -(0 F9%
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i improving regulatory analysis guidance.
One of the tasks referred to in that document was the revision of the Regulatory Analysis Guidelines of the U.S. Nuclear Regulatory Commission (Guidelines), Draft NUREG/BR-0058, Rev. 2 (Enclosure 2). This revision reflects: (1) the NRC's accumulated experience with implementing the previous Guidelines; (2) changes in NRC regulations and procedures l
since 1984, especially the backfit rule (10 CFR 50.109) and the Policy Statement on Safety Goals for the Operation of
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Nuclear Power Plants (51 FR 30028, August 21, 1986);
(3) advances and refinements in regulatory analysis techniques; (4) regulatory guidance for Federal agencies issued by the Administrative Conference of the United States and the Office of Management and Budget (OMB); and j
(5) procedural changes designed to enhance NRC's regulatory effectiveness.
a Review comments on early versions of the proposed Guidelines were provided by an ad-hoc group of NRC regulatory analysis i
practitioners. The Regulatory Analysis Steering Group l
(RASG), a group comprised of senior-level management from the various NRC program offices, reviewed subsequent versions of the proposed Guidelines, and recommended policy direction on a number of controversial issues. This document has also been reviewed by the Committee to Review Generic Requirements (CRGR) and the Advisory Committee on Reactor Safeguards (ACRS). Subject to Commission approval, i
the proposed Guidelines will be published for public 4
comment, revised as necessary, and revisited by the RASG, 1
relevant NRC offices, CRGR, ACRS, the PRA Working Group, and i
the Commission prior to being published as final.
In many respects, this process is consistent with the development of an NRC rule or policy statement. The staff is also involved in the revision of a Handbook to replace A Handbook for Value Iracact Assessment, (NUREG/CR-3568). The new Handbook will set forth systematic procedures for performing value impact assessments. The development of the Handbook has.
i purposely lagged the Guidelines because it is largely dependent on the policy positions adopted in the Guidelines.
f i
l Discussion:
The proposed Guidelines (Enclosure 2) represents the NRC's policy-setting document with respect to regulatory analyses.
A regulatory analysis is performed by the NRC to support numerous NRC actions affecting power reactor and non-power reactor licensees alike. As such, the document contains a a
number of policy decisions that have broad implications for the NRC and its licensees. There are a range of views 4
within the staff on these policy issues.
It is hoped that issuance of this draft will allow the Commission an i
opportunity to hear from the public and industry on some of these key issues.
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Some of the positions taken in the proposed Guidelines i
j either represent departures from current practice, have never been formalized before, or differ from positions l
j recommended by industry.
In this regard, the staff has
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identified the following issues for specific attention:
(1)
Guidance."or addressing safety goal considerations in the regulatory analysis. The position taken in the proposed Guidelines is consistent with the approach described in SECY-91-270. The guidance responds to l
the Commission's request, in the SRM dated June 15, 1990, for a formal mechanism to routinely consider the safety goals for future regulatory initiatives affecting power reactors.
In a June 12, 1992, letter from the ACRS to the Chairman concerning the staff's proposed procedure to account for safety goal considerations, the ACRS continued to express concern that there is not an overall safety goal implementation strategy. There is no argument with the ACRS that these Guidelines do not present an overall NRC safety goal implementation strategy (they were intended to implement the safety goals in a practical manner in accord with our traditional rulemaking and generic requirements development process). However, this fact should not preclude issuing the proposed Guidelines with its treatment of 2
safety goal considerations.
The staff recognizes that this implementation procedure may be subject to j
revision due to a number of considerations, including for example, a final conclusion on the large release definition.
(2)
Quantification of values (benefits) in the regulatory analysis. The document provides additional guidance on the quantification of values, particularly for *Sose regulatory actions in which PRAs are not available to estimate averted person-rem.
(3)
The treatment of voluntary actions in NRC regulatory analyses. Voluntary licensee actions or programs may already be in-place which, to some degree, already achieve some of the objectives sought by the proposed l'
regulatory initiative.
The approach taken in the proposed Guidelines is to encourage industry voluntary j
initiatives, but to recognize that there may be cases i
.i where good cause exists to consider codification of
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such safety practices.
For the purpose of performing the regulatory analysis weighing of values and impacts for such actions, the proposed Guidelines include the position that, with J
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The Commissioners 5
(6)
The treatment of averted onsite costs in NRC regulatory analyses.
Industry has challenged the inclusion of averted onsite costs and has argued that it can distort the validity of the value-impact ratio.
i The position taken in the draft Guidelines is that i
averted onsite costs should be included in the value-i impact analysis as a positive attribute in a net value formulation (value minus impact), or as a cost offset when results are displayed as a ratio. The staff l
believes this position is consistent with Commission policy as stated in item (7) of the SRM dated June 15, 1990. The position taken in the proposed Guidelines is to express the result on a net value basis which is consistent with an OMB recommendation.
In the past, industry has had difficulty with inclusion of averted onsite costs, believing that utility economics should not be NRC's concern.
The i
staff believes such an approach would be inconsistent with current backfit rule determinations which include the consideration of all costs, including utility costs, by NRC in appropriate circumstances.
9 In an SRM dated December 20, 1991, the Commission directed that the staff evaluate the various arguments j
for how averted onsite costs should be treated in cost-benefit analyses. has been prepared in response to this request and contains the detailed underpinnings for the position adopted in the proposed i
Guidelines.
1 i
(7)
The present worth valuation of future health and safety effects in NRC regulatory analyses. The position taken in the proposed Guidelines is that i
future health and safety effects should be subject to present worth considerations in the same manner and at
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the same rate as impacts. The objective is to determine the amount of money needed today that is equivalent (taking account of return on investment) to j
the dollar value of future health and safety effects su;h that all such effects, regardless of when they occur, are equally valued throughout the regulatory analysis.
In recognition that this is contrary to NRC's historic practice and is a subject of some i
controversy, Enclosure 4 elaborates on this staff position.
(8)
The dollar / person-rem value to be used in NRC regulatory analyses. A recommendation on the
$/ person-rem value has not yet been developed and further review and analysis is necessary.
In the interim, the position taken in the proposed Guidelines
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The Commissioners 3
Some of the positions taken in the proposed Guidelines either represent departures from current practice, have never been formalized before, or differ from positions recommended by industry.
In this regard, the staff has 2
identified the following issues for specific attention:
2 (1)
Guidance for addressing safety goal considerations in the regulatory analysis. The position taken in the proposed Guidelines is consistent with the approach described in SECY-91-270. The guidance responds to the Commission's request, in the SRM dated June 15, 1990, for a formal mechanism to routinely consider the safety goals for future regulatory initiatives affecting power reactors.
In a June 12, 1992, letter from the ACRS to the Chairman concerning the staff's proposed procedura to account for safety goal considerations, the ACRS continued to express concern that there is not an overall safety goal implementation strategy. There is no argument with the ACRS that these Guidelines do not present an overall NRC safety goal implementation strategy (they were intended to implement the safety goals in a practical manner in accord with our traditional rulemaking and generic requirements development process). However, this fact should not preclude issuing the proposed Guidelines with its treatment of i
safety goal considerations.
The staff recognizes that i
I this implementation procedure may be subject to l
revision due to a number of considerations, including for example, a final conclusion on the large release l
definition.
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l (2)
Quantification of values (benefits) in the regulatory analysis. The document provides additional guidance on the quantification of values, particularly for those regulatory actions in which PRAs are not available to estimate averted person-rem.
2 i
i (3)
The treatment of voluntary actions in NRC regulatory analyses. Voluntary licensee actions or programs may i
already be in-place which, to some degree, already i
achieve some of the objectives sought by the proposed regulatory initiative. The approach taken in the proposed Guidelines is to encourage industry voluntary initiatives, but to recognize that there may be cases where good cause exists to consider codification of such safety practices.
For the purpose of performing the regulatory analysis i
weighing of values and impacts for such actions, the proposed Guidelines include the position that, with
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certain exceptions, no credit should be glven for the voluntary actions taken by licensees. The intent of this position is that the regulatory policy should not inhibit regulatory requirements to be establisbed when voluntary programs are non-uniform across all licensees or when such programs could easily dissipate-by licensee action alone, perhaps without NRC's knowledge.
Furthermore, if credit is provided for voluntary initiatives and thus values and impacts associated with the proposed regulatory action are reduced, meaningful health and safety improvements could remain uncodified and voluntary in nature.
Absent a significant safety concern, these initiatives would not be subject to enforcement on the part of the NRC. When the base case value-impact results take no credit for voluntary actions, a sensitivity analysis
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is to be performed and the value-impact results also displayed with credit for voluntary actions. The staff recognizes voluntary actions that are a part of an overall industry commitment with appropriate
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follow-up evaluations could be subject to special treatment on a case by case basis.
(4)
The interest rate (or discount rate) to be used in i
present worth calculations.
The position taken in the proposed Guidelines is that under most circumstances the discount rate specified in the latest version of OMB Circular A-94 should be used in NRC regulatory analyses. This circular was most recently updated on November 10, 1992 and specifies the use of a 7 percent real (i.e., inflation adjusted) discount rate. The staff recommends the use of a 3 percent real rate for sensitivity analysis purposes.
Finally, in unique circumstances where the regulatory analysis considers consequences that occur over a timeframe in excess of 100 years, the staff recommends that a 7 percent interest rate not be used.
In these instances, the NRC regulatory analysis should display results to the decision maker in two ways.
First, on a present worth basis using a 3 percent real rate, and second, by i
displaying the values and impacts at the time in which they are incurred with no present worth conversion.
t (5)
Analyses and information necessary to satisfy the backfit rule and/or CRGR review. The position taken
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in the proposed Guidelines is that a regulatory analysis prepared in conformance with the Guidelines meets the needs of the backfit rule and provisions of the CRGR charter without a need to prepare separate submissions.
The Commissioners 5
(6)
The treatment of averted onsite costs in NRC regulatory analyses.
Industry has challenged the inclusion of averted onsite costs and has argued that it can distort the validity of the value-impact ratio.
The position taken in the draft Guidelines is that i
averted onsite costs should be included in the value-impact analysis as a positive attribute in a net value formulation (value minus impact), or as a cost offset i
I when results are displayed as a ratio. The staff believes this position is consistent with Commission policy as stated in item (7) of the SRM dated June 15, 1990. The position taken in the proposed Guidelines is to express the result on a net value basis which is consistent with an OMB recommendation.
In the past, industry has had difficulty with inclusion of averted onsite costs, believing that utility economics should not be NRC's concern. The i
staff believes such an approach would be inconsistent with current backfit rule determinations which include the consideration of all costs, including utility i
costs, by NRC in appropriate circumstances.
In an SRM dated December 20, 1991, the Commission directed that the staff evaluate the various arguments for how averted onsite costs should be treated in cost-benefit analyses. has been prepared in response to this request and contains the detailed underpinnings for the position adopted in the proposed Guidelines.
(7)
The present worth valuation of future health and safety effects in NRC regulatory analyses. The position taken in the proposed Guidelines is that future health and safety effects should be subject to present worth considerations in the same manner and at the same rate as impacts. The objective is to i
determine the amount of money needed today that is equivalent (taking account of return on invedment) to the dollar value of future health and safety effects such that all such effects, regardless of when they i
occur, are equally valued throughout the regulatory analysis.
In recognition that this is contrary to NRC's historic practice and is a subject of some i
controversy, Enclosure 4 elaborates on this staff j
position.
l (8)
The dollar / person-rem value to be used in NRC regulatory analyses. A recommendation on the
$/ person-rem value has not yet been developed and further review and analysis is necessary.
In the interim, the position taken in the proposed Guidelines 1
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The Commissioners 6
h is that continued use of $1000/ person-rem (1993 dollars) is acceptable as a conversion factor for all offsite consequences of severe power reactor accidents, and as a reference point or baseline in applications where offsite consequences are not involved such as for occupational exposure, non-power reactor accidents, and in ALARA determinations associated with cleanup of contaminated sites.
In the document the staff recommends that alternative values i
can also be used to portray the range of values which reasonably could be selected as the $/ person-rem conversion factor.
In an SRM of February 21, 1992, Commissioner Remick requested that, the staff consider the potential impact on current regulations and past regulatory decisions of their reevaluation of the $/ person value.
Given that the $1000 evaluation has been retained as an interim value and the staff's review and evaluation is still on-going, a response to Commissioner Remick's question has been deferred until this issue is finally resolved.
Coordination:
The Office of the General Counsel (0GC) has reviewed this paper and has found no legal objection to the staff's proposal. The Advisory Committee on Reactor Safeguards also reviewed the Guidelines package.
In a November 12, 1992 4
letter to the EDO (Enclosure 5), the ACRS identified a number of specific issues and concerns. The staff generally agrees with the ACRS' comments and has revised the Guidelines in response to their concerns.
The ACRS recommended that the proposed Guidelines be reviewed again by ACRS prior to issuance for public comment. However, in view of the policy nature of the Guidelines, the staff believes that the development of the document can best be served by early review by the Commission and the public.
The staff plans to resubmit the Guidelines to the CRGR and ACRS for review and comment before final consideration by the Commission.
Recommendation:
That the Commission:
1.
Approve publication of the announcement of the l
4 proposed Regulatory Analysis Guidelines of the U.S.
Nuclear Regulatory Commission, Draft NUREG/BR-0058, Revision 2 for public comment along with Enclosures 3 and 4.
2.
Note that:
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The Commissioners 7
(a)
The Federal Register Notice (Enclosure 1) will be published in the Federal Reaister, for a 90-day public comment period; (b)
A public announcement (Enclosure 6) will be issued when the Federal Register Notice is filed with the Office of the Federal Reaister for publication; (c)
The supporting (draft) Handbook providing additional detailed implementation guidance mtinues under development.
It will be available upon request after April 30, 1992, during the public comment period, and will reflect positions established in the proposed Guidelines. A copy will be provided to the Commission for information when available.
(d)
The staff believes that portions of the framework outlined in Chapter 3 of the proposed Regulatory Analysis Guidelines, such as those related to the " substantial additional protection" criterion, have potential to be useful in reaching plant specific backfitting decisions. T.e staff plans to explcre the feasibility of this option on a trial use basis but in doing so, will be attentive to the Commission's June 15, 1990 SRM guidance on safety goals.
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[ExecutiveDirector for Operations
Enclosures:
1.
Federal Register Notice 2.
Proposed Regulatory Analysis Guidelines 3.
Averted Onsite Costs 4.
Present Worth Valuation of Future Health and Safety Effects 5.
ACRS Ltr., November 12, 1992 6.
Public Announcement RECORD NOTE: A draft copy of this package was sent to 0IG for information on February 5. 1993.
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Commissioners' comments or consent should be provided directly to the Otfice of the Secretary by COB Monday, March 8, 1993.
[
t Commission Staff Office comments, if any, should be submitted to the Commissioners NLT Monday, March 1, 1993, with an infor-l t
mation copy to the Office of the Secretary.
If the paper is of such a nature that it requires additional review and comment, the Commissioners and the Secretariat should be apprised of when comments may be expected.
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i NUCLEAR REGULATORY COMMISSION Regulatory Analysis Guidelines AGENCY:
Nuclear Regulatory Commission.
ACTION:
Notice i
SUMMARY
- The Nuclear Regulatory Commission is making available for public comment its proposed " Regulatory Analysis Guidelines of the U.S. Nuclear Regulatory Commission," NUREG/BR-0058, Revision 2 (Guidelines). This i
document, last issued in 1984, is the Commission's policy-setting document with respect to regulatory analyses. The objectives of the Guidelines are to incorporate:
7 (1) the NRC's accumulated experience with implementing the previous Guidelines;
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(2) changes in NRC regulations and procedures since 1984, especially the backfit rule (10 CFR 50.109) and the Policy Statement on. Safety Goals for a
f the Operation of Nuclear Power Plants (51 FR 30028, August 21,1986);
(3) advances and refinements in regulatory analysis techniques; (4) regulatory guidance for Federal agencies issued by the Administrative Conference of the United States and the Office.of Management f
f and Budget (OMB); and-(5) procedural changes designed to enhance NRC's regulatory i
effectiveness.
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i DATES: The comment period expires on [ insert a date to allow 90 days for public comment), 1993.
Comments received after this time will be considered if it is practical to do so, but assurance of consideration cannot be given i
except for comments received on or before this date.
i ADDRESSES:
To receive a copy of the proposed, " Regulatory Analysis Guidelines of the U.S. Nuclear Regulatory Commission", NUREG/BR-0058, Revision 2, contact Brian Richter, Office of Nuclear Regulatory Research, Mail Stop NLS-129, U. S. Nuclear Regulatory Commission, Washington, DC 20555, telephone:
(301) 492-3763.
A copy is also available for inspection and/or copying at the
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NRC Public Document Room, 2120 L Street, N.W., (Lower Level), Washington, DC.
Mail written comments to the Secretary, U.S. Nuclear Regulatory 8
Commission, Washington, DC 20555, Attention:
Docketing and Service Branch.
Deliver comments to One White Flint North, 11555 Rockville Pike, Rockville, 1
Maryland, between 7:30 am and 4: 15 pm on Federal workdays.
Comments may also be delivered to the NRC Public Document Room, 2120 L Street, NW (Lower Level),
Washington, DC between 7:45 am and 4:15 pm on Federal workdays.
4 FOR FURTHER INFORMATION CONTACT:
Brian Richter, Office of Nuclear Regulatory Research, Mail Stop NLS-129, U.S. Nuclear Regulatory Commission, Washington, DC 20555, telephone:
(301) 492-3763.
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1 SUPPLEMENTARY INFORMATION:
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Background
The reissuance of the Guidelines is meant to fulfill the objectives identified above. The NRC plans to publish the Guidelines in both proposed and final form, in many respects employing a process consistent with the development of a rule or policy statement. Since this is the NRC's policy-setting document with respect to regulatory analyses, it contains a number of policy decisions that have broad implications. As a result, issuance of this
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draft will allow the Commission a chance to hear from the public on these t
implications and issues.
i Discussion Some of the positions taken in the proposed Guidelines either represent departures from current practice, have never been formalized, or differ from positions industry has taken.
In recognition of this, the NRC has identified j
the following issues for specific attention and would welcome public comment l
i on each of these issues:
l (1)
Guidance for addressino safety coal considerations in the regulatory analysis. The position taken in the proposed Guidelines is consistent with the approach described in SECY-91-270, " Interim Guidance on Staff Implementation of the Commission's Safety Goal Policy," of August 27, j
i 1991.
The proposed procedure is based on the use of a change in core damage j
probability rather than an absolute number and involves certain criteria for staff action'.
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(2) The treatment of voluntary actions in NRC reaulatory analyses.
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Voluntary licensee actions or programs may already be in place which, to some degree, already achieve some of the objectives sought by the proposed l
regulatory change. The approach taken in the proposed Guidelines is to encourage industry voluntary initiatives, but to recognize that there may be cases where good cause exists to consider codification of such safety practices.
s For the purpose of performing the regulatory analysis weighing of values and impacts for such actions, the proposed Guidelines include the position that with certain exceptions, no credit should be given for the voluntary actions l
taken by licensees. The intent of this position is that the regulatory policy should not inhibit regulatory requirements to be established when voluntary
]
programs are non-uniform across all licensees or when such programs could j
easily dissipate by licensee action alone, perhaps without NRC's knowledge.
f Furthermore, if credit is provided for voluntary initiatives and thus values j
and impacts associated with the proposed regulatory action are reduced, l
meaningful health and safety improvements could remain uncodified and I
r voluntary in nature. Absent a serious safety concern, these initiatives would f
not be subject to enforcement on the part of the NRC. When the base case j
value-impact results take no credit for voluntary actions, a sensitivity j
analysis is to be performed and value-impact results also displayed with 9
credit for voluntary actions. The staff recognizes voluntary actions that are a part of an overall industry commitment with appropriate follow-up
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evaluations could be subject to special treatment on a case by case basis.
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l (3) The interest rate (or discount rate) to be used in present worth calculations. The position taken in the proposed Guidelines is that under l
most circumstances the discount rate specified in the latest version of OMB Circular A-94 should be used in NRC regulatory analyses. This circular was 1
most recently updated on November 10, 1992 and specifies the use of a 7 percent real (i.e., inflation adjusted) discount rate. The NRC recommends the use of a 3 percent real rate for sensitivity analysis purposes.
- Finally, in unique circumstances where the regulatory analysis considers consequences l
that occur over a timeframe in excess of 100 years, the NRC recommends that a 7 percent interest rate not be used.
In these instances, the NRC regulatory i
analysis should display results to the decision maker in two ways.
First, on a present worth basis using a 3 percent real rate, and second, by displaying the values and impacts at the time in which they are incurred with no present worth conversion.
(4) Analyses and information necessary to satisfy the backfit rule and/or CRGR review.
The position taken in the proposed Guidelines is that preparation of a regulatory analysis in conformance with the Guidelines meets the needs of the backfit rule and the provisions of the CRGR charter without a need to prepare separate submissions.
(5) The treatment of averted onsite costs in NRC reculatory analyses.
In the past, industry has challenged the inclusion of averted onsite costs and i
has argued that it can distort the meaning of the value-impact ratio. The j
position taken in the proposed Guidelines is that averted onsite costs should l
be included in the value-impact analysis as a positive attribute in a net l
value formulation (value minus impact), or as a cost offset when results are l
displayed as a ratio.
i
(6) The oresent worth valuation of future health and safety effects in NRC reculatory analyses. The position taken in the proposed Guidelines is that future health and safety effects should be subject to present worth considerations in the same manner and at the same rate as impacts.
The objective is to determine the amount of money needed today that is equivalent (taking account of return on investment) to the dollar value of future health and safety effects such that all such effects, regardless of when they occur, are equally valued throughout the regulatory analysis.
(7) The dollar /Derson-rem value to be used in NRC regulatory analyses.
A recommendation on the S/ person-rem value has not yet been developed and further review and analysis is necessary.
In the interim, the position taken in the proposed Guidelines is that continued use of SIOOO/ person-rem (1993 dollars) is acceptable as a conversion factor for all offsite consequences of severe power reactor accidents, and as a reference point or baseline in applications where offsite consequences are not involved such as for occupational exposure, non-power reactor accidents, and in ALARA determinations associated with cleanup of contaminated sites.
In the document the staff recommends that alternative values can also be used to portray the range of values which reasonably could be selected as the S/ person-rem conversion factor.
Public Comment NRC is interested in receiving public comment on any aspect of the i
proposed Guidelines. To facilitate the public comment process, the staff has also prepared the following supplemental documents which will be provided along with copies of the proposed Guidelines.
The first is a paper which
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v discusses the various arguments for the treatment of averted onsite costs, and
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the second discusses the present worth valuation of health and safety effects.
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A draft of the " Regulatory Analysis Technical Evaluation Handbook" (Handbook), a replacement for "A Handbook for Value-Impact Assessment,"
NUREG/CR-3558, will also be made available upon request after April 30, 1993.
I The Handbook provides detailed guidance on performing regulatory analyses and j
should be useful in better understanding how NRC policy will be applied in regulatory analyses.
The Handbook, which will reflect positions established in the proposed Guidelines, is in an earlier developmental stage and will be l
finalized upon receiving public comments on the proposed Guidelines.
Dated at Rockville, Maryland, this day of 1993.
i For the Nuclear Regulatory Commission.
Samuel J. Chilk, Secretary of the Commission. -.
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NUREG/BR-0058 Revision 2 United States Nuclear Regulatory Commission REGULATORY ANALYSIS GUIDELINES OF THE U.S. NUCLEAR REGULATORY COMMISSION 4
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, 1992 Office of the Executive Director for Operations
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l TABLE OF CONTENTS
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i ACRONYMS i
1.1 1.
INTRODUCTION 2.1 2.
DISCUSSION 2.1 Purpose of Reaulatory Analysis 2.1 2.2 2.2 General Coveraae 2.3 ProDosed Actions Subiect to the Backfit Rule and CRGR Review 2.3 j
3.1 i
3.
SAFETY GOAL CONSIDERATIONS 3.1 3.1 Criteria..............................
3.2 3.2 Procedure...........................
3.3 Interim Guidance for implementation...
3.3 3.3.1 Prevention of Core Damaae Accidents--Comparison With Subsidiary Goal for Core Damaae "Mean" Freauency of 10-
- / Reactor Year 3.6 3.3.2 Mitiaation of Core Damaae Accidents--Determine the Potential for Early Containment Failure or for Bvoassina Containment...
3.9 3.3.4 Val ue-Impact Anal ysi s................
3.13 j
4.
REOUIRED ELEMENTS FOR PREPARING A REGULATORY ANALYSIS........
4.1 4.1 Statement of the Problem and Ob.iective 4.3 4.1.1 Backfit Rul e Concerns.................
4.5 4.2 Identification and Preliminary Analysis of Alternative 4.5 Approaches 4.3 Estimation and Evaluation of Values and Impacts........ 4.8 4.3.1 Estimation of Values 4.12
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4.3.2 Estimation of impacts....................
4.15 4.3.3 Evaluation of Values and Impacts 4.16 4.4 Presentation of Resul t s...................
4.20 4.5 Decision Rationale for Selection of the Proposed Action...
- 4. 22' i
4.6 Implementation 4.23 5.
RELATIONSHIP TO OTHER PROCEDURAL RE0UIREMENTS............
5.1 5.1 Paperwork Reduction Act....................
5.1 5.2 Reaulatorv Flexibility Act 5.2 I
5.3 National Environmental Policy Act...............
5.4 i
5.4 Information Reauests Under 10 CFR 50.54(f) 5.4 5.5 Supportina Analysis for Compliance and Adeauate Protection 5.5 BIBLIOGRAPHY i
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ACRONYMS l
ACRS Advisory Committee on Reactor Safeguards l
ACNW Advisory Committee on Nuclear Waste BWR Boiling water reactor l
C/B Cost / Benefit l
CCFP Conditional containment failure probability 1
CDF Core damage frequency l
CFR Code of Federal Regulations CRGR Committee to Review Generic Requirements EDO Executive Director for Operations EIS Environmental Impact Statement j
E0 Executive Order FR Federal Register l
FSAR Final Safety Analysis Report INP0 Institute of Nuclear Power Operations NRC U.S. Nuclear Regulatory Commission NUMARC Nuclear Management and Resources Council j
OMB Office of Management and Budget l
PRA Probabilistic risk analysis
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PWR Pressurized water reactor i
RA Regulatory Analysis i
U.S.C.
United States Code V/1 Value/ Impact
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l.
INTRODUCTION I
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The Regulatory Analysis Guidelines (" Guidelines") will be used in the J
evaluation of proposed actions by the Nuclear Regulatory Commission (NRC) that j
may be needed to protect public health and safety.
The evaluation is intended I
to aid the staff and the Commission in determining whether the proposed actions are needed, to provide adequate justification, and to provide a clear 2
and well-documented explanation of why a particular action was recommended.
These Guidelines establish a framework for:
(1) analyzing the need for and l
consequences of a proposed regulatory action, (2) selecting a preferred alternative, and (3) documenting the analysis in an organized and j
understandable format. The resulting document is referred to as a Regulatory l
Analysis.
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Although the NRC does not have a statutory mandate to conduct regulatory 3
analyses, it voluntarily began performing these types of analyses in 1976.
The intent in conducting regulatory analyses is to ensure that the NRC's decisions which impose regulatory burdens on licensees are based on adequate information regarding the extent of these burdens and the resulting values (benefits), and that a systematic and disciplined process is followed which is also open and transparent. The ultimate objective of this regulatory process is to ensure that all regulatory burdens are needed, justified, and minimal to achieve the regulatory objectives.
The regulatory analyses prepared before 1983 were termed value-impact analyses I
and were prepared according to value-impact guidelines issued in final form in i
December 1977 (SECY-77-388A).
In February 1981, President Reagan issued l
l Executive Order 12291 which directs all executive agencies to prepare a Regulatory Impact Analysis for all major rules and states that regulatory 5
actions are to be based on adequate information concerning the need for and consequences of proposed actions. Moreover, the Executive Order directs that actions are not to be undertaken unless there is a positive net value to society.
NRC, as an independent agency, is not required to comply with the Order. However, the Commission noted that its established procedures for the review of its regulations included an evaluation of proposed and existing
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1.1
. i i
i rules in a manner consistent with the Regulatory Impact Analysis provisions of the Executive Order. The Commission determined that the clarification and 4
formalization of the NRC value-impact procedures then in place for analysis of i
l regulatory actions would enhance the effectiveness of NRC regulatory actions and further meet the spirit of E0 12291.
In performing a regulatory analysis, as in all Federal activities relating to the protection of the public's health and safety, the NRC adheres to the Principles of Good Regulation as delineated f
by former Chairman Carr in his January 17, 1991, announcement to NRC i
employees.' These principles, which serve to guide the agency's decision l
making process, are Independence, Openness, Efficiency, Clarity, and j
i Reliability.
l l
The original version of these Guidelines (NUREG/BR-0058) was issued in January 1983.
In December 1983 NRC issued A Handbook for Value-Impact Assessment, NUREG/CR-3568.* The basic purpose of the 1983 Handbook was to set out l
i systematic procedures for performing value-impact assessments.
Revision I to NUREG/BR-0058 was issued in May 1984 to include appropriate references to NUREG/CR-3568.
This revision (Revision 2) is being issued to reflect:
t (1) the NRC's accumulated experience with implementing the previous l
Guidelines; (2) changes in NRC regulations and procedures since 1984, j
especially the backfit rule (10 CFR 50.109) and the Policy Statement on Safety i
Goals for the Operation of Nuclear Power Plants (51 FR 30028, August '21, i
1986); (3) advances and refinements in regulatory analysis techniques, j
(4) regulatory guidance for Federal agencies issued by the Administrative l
Conference of the United States and the Office of Management and Budget (OMB);
f l
and (5) procedural changes designed to enhance NRC's regulatory l
1
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effectiveness.'
'The principles are set out at p. 3 in the 1990 NRC Annual Reoort, NUREG.
1145, Vol. 7, July 1991.
i
'This document is currently undergoing revision and will tentatively be i
titled the Reaulatory Analysis Technical Evaluation Handbook. The revised l
document is referred to as the " Handbook."
'Certain regulatory actions are subject to the backfit rule and to the I
analysis and information requirements of the Committee to Review Generic l
I Requirements (CRGR).
It is the NRC's intent that, for these actions, the 1.2 I
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i Subsequent to publication of fMREG/CR-3568 and revision of fNREG/BR-0058, the Commission issued its Policy Statement on Safety Goals for the Operation of fluclear Power Plants. This policy statement presents a risk-based philosophy j
to be used by the f4RC staff as part of their regulatory analysis process for i
proposed actions that may have an impact on commercial nuclear power reactors.
The Commission's safety goal policy provides a " safety first" test that gives added strength to the regulatory decision making process for new requirements j
that are considered and justified as safety enhancements applicable to more j
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than one nuclear power reactor.
Specifically, application of this philosophy will minimize the number of occasions that resources are spent on conducting extensive regulatory analyses that later determine a proposed action is not justified because the incremental safety benefits would not substantially l
improve upon the existing level of plant safety. By defining a clear level of l
incremental safety for nuclear power plants, the safety goal evaluation to be included in the regulatory analysis provides the staff with direction in deciding where no further backfits are warranted. Thus, the safety goal evaluation can truncate the need for further analysis. Therefore, the safety f
goal analysis discussed in Chapter 3 of this document is to be addressed as early as possible in the regulatory analysis process for safety enhancement t
initiatives.
l l
This document is comprised of five chapters which are further subdivided into l
several sections.
Chapter 2 of this document discusses the purpose and coverage of the Guidelines. The discussion includes information on when a i
regulatory analysis must be prepared for a proposed regulatory action, the role of regulatory analysis in NRC decision making, and special requirements l
l for proposed regulatory actions involving backfits.
Chapter 3 discusses the
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relationship of fiRC's safety goals for nuclear power plant operations to regulatory analyses. Chapter 4 discusses the format that should be followed in preparing a regulatory analysis document. This chapter includes summary l
guidance on estimating and evaluating the values and impacts of alternative j
j analysis performed in accordance with the Guidelines meets the needs of the backfit rule and the provisions of the CRGR charter without a need to prepare separate submissions.
i 1.3 1
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2
regulatory actions and selection of the proposed action.
Information is also included in Chapter 4 on regulatory analysis content requirements for proposed generic backfits and for actions subject to review by the Committee to Review Generic Requirements (CRGR).
Chapter 5 discusses certain procedural requirements that relate to the regulatory analysis process including the impact of the Paperwork Reduction Act of 1980 and the Regulatory Flexibility Act of 1980.
1.4 r,-c
2.
DISCUSSION 1
2.1 Purpose of Reaulatory Analysis The statutory mission of the NRC is to ensure that civilian uses of nuclear materials in the United States--in the ' operation of nuclear power plants and related fuel cycle facilities or in medical, industrial, or research applications--are carried out with proper regard and provision for the protection of the public health and safety, property, environmental quality, common defense and security, and in accordance with applicable antitrust laws.
Accordingly, the principal purposes of a regulatory analysis are to help ensure that:
NRC's regulatory decisions made in support of its statutory l
responsibilities are based on adequate information concerning the j
need for and consequences of proposed actions.
1 i
Appropriate alternative approaches to regulatory objectives are 1
identified and analyzed.
There is no clearly preferable alternative to the proposed action.
Proposed actions subject to the backfit rule (10 CFR 50.109) [and l
not within the exceptions at 10 CFR 50.109(a)(4)] provide a substantial increase in the overall protection of the public health and safety or the common defense and security and that the direct and indirect costs of implementation are justified in view of this substantial increase in protection.
The regulatory analysis is intended to be an integral part of NRC i
decision making that will systematically provide complete disclosure of the relevant information supporting a regulatory degision.' The process should I
begin when it becomes apparent that some type of action to address an f
identified problem may be needed.
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'The conclusions and recommendations included in a regulatory analysis document are neither final nor binding, but rather are intended to enhance the soundness of decision making by NRC management and the Commission.
2.1 I
f The regulatory analysis process is not to be used to produce after the-fact
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I rationalizations to justify decisions already made, nor sh3uld it be used to unnecessarily delay regulatory actions.
Initial efforts 5,hould be focused on i
the nature, extent, and magnitude of the problem being aodressed, why HRC action is required, and identification of alternative solutions.
Detailed i
information gathering and analysis activities should be focused on the most f
promising alternatives.
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2.2 General Coveraoe l
Regulatory Analyses are performed by the NRC to support numerous NRC actions l
affecting reactor and materials licensees.
The " Regulatory impact Analysis Guidelines" of Executive Order 12291 require that a regulatory analysis be prepared for all major proposed and final rules.' NRC policy requires regulatory analyses for a broader range of regulatory actions than for those that would be covered by E012291.
In general, each NRC Office should ensure that all mechanisms used by NRC staff to establish or communicate generic requirements, guidance, requests, or staff positions, which would result in l
the use of resources by licensees and staff of the NRC or an Agreement State, include an accompanying regulatory analysis. These mechanisms include rules, l
bulletins, generic letters, regulatory guides, orders, standard review plans, branch technical positions, and standard technical specifications.
Regulatory analysis requirements for a given action may be eliminated at the discretion of the Commission, the ED0 or a Deputy Executive Director, or the responsible NRC Office Director. A factor that could influence this decision for example is the degree of urgency associated with the regulatory action.
for example, urgent NRC bulletins and orders may need to be issued without l
regulatory analyses.
In addition, in other regulatory applications, case E0 12291 defines a major rule as any regulation that is likely to result in:
(1) An annual effect on the economy of $100 million or more;
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(2) A major increase in costs or prices for consumers, individual industries, l'
Federal, State, or local government agencies or geographic regions; or (3) Significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of United States-based enterprises to compete with foreign-based enterprises in domestic or export markets.
2.2 L
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specific circumstances could justify the preparation of a more limited
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regulatory analysis. A regulatory analysis should be limited only in terms of depth of discussion and analysis, not in reduction of the scope of the 1
regulatory analysis nor in the need to justify the proposed action.
Generic actions' that may not need a regulatory analysis include notices, policy statements, and generic letters that only forward information and do not present new or revised staff positions, impose requirements, or recommend action.
Generic information requests issued under 10 CFR 50.54(f) require a specific justification statement and are reviewed by the CRGR, but do not require the type of regulatory analysis discussed in this document. The content of such a justification statement is available in NRC Management f
Directive 8.4.
New requirements affecting certified plant designs would be justified through the notice and comment rulemaking process. Also, regulatory l
analyses are not required for requirements arising out of litigation, such as j
discovery in a licensing proceeding.
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2.3 Prooosed Actions Subject to the Backfit Rule and CRGR Review i
Regulatory actions that are subject to the backfit rule and/or CRGR review require that specific questions and issues be addressed. These Guidelines have been developed so that the preparation of a regulatory analysis in l
conformance with these Guidelines will meet the requirements of the backfit rule and provisions of the CRGR Charter (Revision 5, April 1991). However, it
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should be noted that relaxations of requirements are not subject to the f
backfit rule nor to the safety goal analysis process and criteria contained in l
Section 3.
Relaxations do need to have presentations of effects on values and cost savings, but no balance is required. With respect to the values, l
that side of the equation does not need to be shown. What needs to be shown is that the relaxation does not adversely affect the public health and safety and that the protection continues to be adequate.
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'In these Guidelines, the term generic actions refers to those actions i
that affect all, several, or a class of licensees.
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2.3 i
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The CRGR has the responsibility to review and recommend to the EDO approval or disapproval of requirements or staff positions to be imposed by NRC on one or
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more classes of power reactors.
Section IV of the CRGR Charter specifies the information to be submitted to the CRGR as part of its review process. This information is incorporated in Chapter 4 of these Suidelines.
Additionally, the Regulatory Analysis Technical Evaluation Handbook, NUREG-XXXX, provides a standard table of contents for a regu'.rtory analysis
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and indicates where each item of information required by the CRGP, Charter may be found in a regulatory analysis.
When a regulatory analysis has been prepared in accordance with these Guidelines and the associated Handbook, it will not be necessary to prepare a j
separate document to address the information required for CRGR review, except ll for the CRGR requirement relating to the concurrence of affected program offices, or an explanation of any nonconcurrences. This exception may be
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addressed in the transmittal memorandum forwarding the matter to the CRGR for review.
Af ter a regulatory analysis has been prepared and printed, it may become necessary to revise or supplement some of the material.
It may be appropriate i
to address the supplement or revision in the transmittal memorandum to the CRGR (and include as an enclosure) rather than reprinting the regulatory analysis.
Special requirements apply to regulatory analyses prepared in conjunction with proposed backfitting of production or utilization facilities.'^'
f
'The backfit rule [cf.10 CFR 50.109(a)(2)] prescribes the preparation of
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an analysis for both proposed plant-specific and generic backfits. The required analysis for generic backfits is to be considered a regulatory analysis and should be prepared according to these Guidelines.
In addition, plant specific backfits require justification statements similar in nature to a regulatory analysis. To the extent to which the Guidelines are applicable to plant-specific requirements, it should be applied in these circumstances as well.
i "The term "backfitting" is defined at 10 CFR 50.109(a)(1).
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Backfitting can apply to one facility (" plant-specific backfitting") or to multiple facilities (" generic backfitting"). These Guidelines are intended for both generic and plant specific backfits.
Proposed plant-specific backfits are subject to the requirements in NRC Management Directive 8.4 (Manual Chapter 0514-043). This Directive contains plant-specific regulatory j
i analysis requirements that must be adhered to, and as a result, when preparing a plant-specific analysis this Directive should be consulted.
Backfitting can arise through a variety of mechanisms including rulemakings, bulletins, generic letters, and regulatory guides.
Further description of the backfitting process is in Backfittina Guidelines, NUREG-1409. NRC Management Directive 8.4 is included as Appendix B in NUREG-1409.
A regulatory analysis involving a value-impact determination is necessary for all proposed plant-specific and generic backfits except when one of the three j
l conditions identified at 10 CFR 50.109(a)(4) applies, i.e.,
i.
That a modification is necessary to bring a facility into compliance with a license, a Commission requirement, or a written commitment by the licensee; or l
ii.
That regulatory action is necessary to ensure that the facility l
provides adcquate protection'* to the health and safety of the j
r,uMic and is in accord with the common defense and security;.
or iii. That the regulatory action involves defining or redefining what level of protection to the public health and safety or common
'The terms " production facility" and " utilization facility" are defined l
at 10 CFR 50.2.
A nuclear power reactor is a utilization facility.
i Production facilities include reactors designed or used for the formation of j
plutonium or uranium-233, uranium enrichment facilities, and nuclear material reprocessing facilities.
"The level of protection constituting " adequate protection" is to be determined on a case-by-case basis. The determination should be based on plant and site-specific considerations and the body of NRC's regulatory requirements.
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defense and security is regarded as necessary for adequate protection.
i For backfits meeting one of these exception criteria, costs are not to be considered in-justifying the proposed action.
A documented evaluation is prepared which includes the objectives of and reasons for the backfit, and the l
reasons for invoking the particular exception [10 CFR 50.109(a)(6)].
Procedural requirements for preparation and processing of the documented evaluation are in NRC Management Directive 8.4 for plant-specific backfits and Section IV(B)(ix) of the CRGR Charter for generic backfits.
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A regulatory analysis may also be prepared in these instances as a management j
decision.
In particular, if there are two or more ways to achieve compliance or reach a level of adequate protection, and should it be necessary or appropriate for the Commission to specify a way, then costs may be a factor in that decision. A regulatory analysis that explores the cost effectiveness of the various alternatives under consideration could therefore be valuable to a l
decision maker.
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l 3.
SAFETY GOAL CONSIDERATIONS
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Assessing the risk or potential changes to public safety has always been a fundamental part of regulatory decision making.
In the early development of regulations, this assessment was based on qualitative analysis, simple reliability principles and practices (such as worst case analysis), defense-l in-depth and the single failure criterion. The likelihood or probability of the hazard was an explicit factor, primarily because the overall state-of-the-art of probabilistic risk assessment (PRA) technology was not sufficiently j
advanced and accepted.
Currently, due to the advancements made and an increased confidence in PRA, regulatory activities have progressively relied l
more on the insights and results from probabilistic assessment. The safety goals, which are e g ressed in an August 1986 Commission policy statement, are a clear example of t'1is change and established a guide for regulatory decision j
making.
l The safety goal analysis is designed to answer the threshold backfit question i
as to when a regulation or regulatory decision should not be imposed because the risk is already acceptable and a lower risk should not be required whether f
or not justified on a value-impact (V/I) basis.
L The following discussion provides guidance on:
(1) when a regulatory analysis j
must include a safety goal evaluation, (2) criteria for judging conformance to the safety goals, and (3) the sequence for performing the analysis.
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3.1 Criteria i
NRC's safety goal policy addresses a level of acceptable residual individual risk from operation of power reactors judged to be lower than that associated l
with adequate protection, that is the risk level above which continued i
operation would not be allowed. As a result, the safety goal analysis as discussed in this section, is applicable only to regulatory initiatives considered to be generic safety enhancement backfits as defined in the backfit l
t rule (50.109).
If the proposed safety goal criteria are satisfied, it is to j
3.1 r
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be presumed that the substantial additional protection standard of 10 CFR 50.109(a)(3) is met for the proposed action.
l As discussed in Section 2.3, relaxations of requirements are not backfits and thus do not fall within the scope of the backfit rule. As a result, j
relaxations or the elimination of requirements are not subject to the analysis f
or criteria of this section. Additionally, it should be noted that the Commission's safety goals reflect a "mean" value for a class or all U.S.
reactors as a whole.
In this regard, the Commission specified in an SRM dated l
I i
June 15, 1990, that " Safety goals are to be used in a more generic sense and not to make specific licensing decisions."
in justifying a proposed backfit under the backfit rule, the burden is on the j
staff to make a cositive showing that a generic safety problem actually exists, and that the proposed backfit will both address the problem effectively and provide a substantial safety improvement in a cost beneficial 1
manner.
t 3.2 Procedure i
The staff must first determine whether the subject regulatory action needs to consider safety goals. The discussion in Section 3.1 provides guidance for j
making this determination.
If safety goal considerations are required, the results of the safety goal evaluation will establish whether a regulatory analysis should be done (Figure 3.1).
If the proposed regulatory action meets the specified criteria, the regulatory analysis should include the results of the safety goal evaluation, as well as the follow-on value-impact analysis.
I Figure 3.1 depicts all steps performed in a regulatory analysis that is subject to a safety goal evaluation. Depending on the results of steps C and/or D, the regulatory analysis can be terminated.
In performing steps C and D, a PRA should be relied upon to quantify both the risk redyction and i
i corresponding values of the proposed action. However, it is rec y nized that j
not all regulatory actions are amenable to a quantitative PRA type assessment, and thus certain evaluations may require reliance on expert opinion, engineering / regulatory judgement, or qualitative analysis. Additional 3.2 J
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insights are available in the Handbook beyond the implementation guidance which follows.
j 3.3 Interim Guidance for Implementation j
i This interin guidance is to allow the staff to gain experience in the application of the safety goals and to permit consideration of the goals to the extent practical, pending availability of additional data and decisions to permit more structured decision making. This guidance will be revised as j
experience and new information dictates.
Factors that will be considered l
include:
(1) availability of PRA's reflecting both internally and externally initiated accidents and the current design of all U.S. plants, and i
(2) approval of a large release definition.
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t FIGURE 3.1-REGULATORY ANALYSIS FOR REACTOR SAFETY ENHANCEMENTS 5
A.
STATEMENT OF PROBLEM t
B.
ALTERNATIVES I
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C.
SAFETY G0AL EVALUATION:
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-N0 SUBSTANTIAL ADDITIONAL PROTECTION?
SAFETY GOAL CRITERIA MET?
YES l
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D. -VALUE-IMPACT ANALYSIS
---N0 l
VALUES EXCEED IMPACTS j
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YES E.
PRESENTATION OF RESULTS l
i F.
DECISION RATIONALE 5
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N0 G.
METHOD AND SCHEDULE REGULATORY FOR IMPLEMENTATION ACTION l
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l In summary, the approach to safety goal considerations is based upon the l
e following broad guidelines:
Safety goal objectives are to be applied only to safety enhancements and evaluated for the affected class of plants.
Safety goals are to be used as a reference point in ascertaining the need for safety enhancements.
(Note:
Consideration of uncertainties is important in order not to overlook or dismiss potentially risk significant issues prematurely.) However, the safety goals are not requirements f
and, with the Commission's approval, safety enhancements that l
otherwise comply with the Commission's rules may be implemented without strict adherence to the Commission's safety goal policy statement.
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The approach is to be implemented in conjunction with the
" substantial additional protection" criterion contained in the 1
1 backfit rule [10 CFR 50.109(a)(3)] and applies to s 50.109 analyses l
1 associated with safety enhancements for nuclear power plants.
The analysis should take into consideration that there are a number of limitations and uncertainties involved with estimating risk at i
i operating plants. These uncertainties relate to the quantitative i
measurement of certain types of human actions (e.g., errors of commission and heroic recovery actions); variations in licensees' l
i organization / management safety commitments; failure rates of equipment, especially to common-cause effects such as maintenance, environment, design and construction errors, or from aging, and j
external events such as seismic and tornado effects, and incomplete ti understanding of the physical progression and consequences of severe accidents.
I Evaluation of proposed regulatory initiatives for consistency with
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4 safety goals should identify and integrate related issues under study.
Such integration is essential to the efficient application I
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of staff and industry resources. The overall objective is to avoid piecemeal evaluation of issues.
i The regulatory philosophy involves the concept of defense-in-depth and a j
balance between prevention and mitigation. This traditional defense-in-depth l
approach and the accident mitigation philosophy require reliable performance j
of containment systems. The following guidance was developed to establish l
consistency between new regulatory initiatives and the overall "mean" frequency of a large release of radioactive materials to the environment from a reactor accident of less than 1 in 1,000,000 per year of reactor operation.
A "mean" core damage frequency of 1 i-10,000 per reactor year has been used as a subsidiary benchmark.
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3.3.1 Prevention of Core Damaae Accidents--Comparison With Subsidiary Goal for Core Damaae "Mean" Frecuency of 10"/ Reactor Year j
l For proposed regulatory actions to prevent or reduce the likelihood of sequences that can lead to core damage events, the change in the estimated Core Damage Frequency" (CDF) per reactor year needs to be evaluated and addressed in the regulatory analysis. The objective is to assure that emphasis is placed on preventing core damage accidents.
i This calculation should be computed on a generic basis for the class of affected plants. The resulting change in CDF should be representative for the affected class of plants. The selection of the PRA model (or models) and the associated data base must be identified and justified as representative of the class.
For example, if the class of affected plants is exclusively " older BWRs," one or more PRAs from IPE submittals or that have been conducted for 5
older BWRs should be selected (see for example NUREG 1150]. The Handbook j
which complements these Guidelines includes a table listing all currently available PRAs e'ong with some basic attributes of each (e.g., plant type and t
t L
" Core Damage Frequency is defined as the likelihood of an accident involving the loss of adequate cooling to reactor fuel elements up to and including major damage to a reactor core with consequent release of fission j
l products, but not necessarily involving a breach of the reactor vessel.
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year of commercial operation).
As a minimum. the merit of the proposed actions should be explored and displayed using best available PRA and actual data for multiple plants within the class. This will result in identification and assessment of the range of reduction in CDF as well as an estimation of the representative change for the class. Uncertainties and limitations should be addressed qualitatively and, to the extent practical, quantitatively in the supporting documentation for the proposed regulatory action. This would include, for example, plant-to-plant variabilities within a class of plants i
and the use of point estimates for PRAs that do not have an uncertainty analysis.
(In this latter case, sensitivity analyses, whereby individual
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parameter values are increased / decreased one at a time, may be used in lieu of uncertainty analysis.)
In comparing the estimated resulting change in CDF for the affected class of plants, contributions from both internal and external events should be considered to the extent that information is available and pertinent to the f
issue.
However, the uncertainties associated with external event risk l
contributions (especially seismic) can be relatively large. Therefore, to supplement any available quantitative information, qualitative insights should be used for issues involving external events.
For the purpose of evaluating regulatory initiatives against safety goal l
objectives, the magnitude of the change in CDF should be considered in concert l
with the determination of whether the substantial additional protection criterion of the backfit rule is met.
Specifically, a single, common j
criterion is to be used for determining whether a regulatory initiative involving a reduction in CDF (1) meets the " substantial additional protection" standard identified in the backfit rule, and (2) is appropriate from the subsidiary safety goal perspective on CDF of 10"/ reactor year.
l in light of the inherent uncertainties of current PRA analysis, and during the j
initial period of trial use, a reduction in CDF will be considered to be I
" substantial" if the reduction is 10 percent or more of the subsidiary safety goal CDF objective of 10"/ reactor year. As discussed below and as illustrated in Figure 3.2, this means that, with certain exceptions, as j
3.7 j
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i discussed later, regulatory initiatives involving actions to prevent core
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damage should result in a reduction of at least 1 x 10" in the estimated mean j
value or best estimate CDF (i.e., the CDF prior to the proposed regulatory y
change should exceed the CDF after the change by at least 1 x 10") in order j
to justify proceeding with further analyses. This screening criterion was selected to provide some assurance that the PRA and data limitations and uncertainties, as well as the variabilities among plants, will not eliminate issues warranting regulatory attention.
In this regard, the effect of j
uncertainties should be considered and discussed.
Because full scope PRAs are f
not available for all plants, the evaluation of change in CDF may be based on the best availabie information from those PRAs which include estimates of CDF.
This allows a specific focus on the sequence (s) of concern and allows t
considerable savings in staff re:ources.
e After the risk significance has been determined as measured by the estimated i
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reduction in CDF of the proposed action for the affected class of plants, a
i guidance on further staff action is as follows:
i Estimated Reduction In CDF Staff Action Proceed directly to V/I portion
> 10" (approximately) of the regulatory analysis on high priority basis.
l 10"-10" The decision whether to proceed
+o '/I portion of the regulatory i
anal" sis is to be made by the l
rt:4onsible Division Director.
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(see Figure 3.2).
Terminate further analysis unless
< 10" (approximately) the Office Director directs otherwise based upon strong engineering or qualitative
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justification (see Figure 3.2).
1 The evaluation of CDF reduction provides a calibration on the significance of the proposed regulatory action.
If the initiative results in a small change in CDF (less than 1 x 10"/ reactor year), the regulatory analysis should in general proceed only if an alternative justification for the proposed action i
I 3.8 L
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can be formulated. One class of accident sequencing which should receive further consideration even if the reduction in CDF is less than 1 x 10"/ reactor year is that involving the potential for early containment failure or containment bypass (see Section 3.3.2, below).
However, there may be other special circumstances which should be analyzed. The staff should forward the issue (and include sufficient supporting information) for Office Director review.
If it is not possible to develop quantitative supporting information with.
acceptably small uncertainties for the proposed action, a qualitative analysis and perspective should be provided. To the extent practical, these points and insights should be related to the proposed criteria provided above.
For example, how does the proposed initiative affect the CDF and to what extent?
How should a measure or estimation of the risk and the expected improvement be done?
The safety goal objectives are in terms of a "mean" for the class of plants.
However, the range within the class of the risk reduction is also important.
Consequently, when performing safety goal analyses, if specific plants are identified as " outliers," this situation should be flagged for specific regulatory follow-up, (e.g., for evaluations regarding potential plant-specific backfits).
3.3.2 Mitication of Core Damaae Accidents--Determine the Potential for Early Containment Failure or for Bypassino Containment The NRC's regulatory philosophy involves the concept of defense-in-depth including the requirement of a capable and reliable containment.
Consequently, the potential for early failure or bypass of containment needs to be assessed given the conditions that may be present in the event of a core damage accident.
Further, potential modifications or improvements to the -
containment system may be proposed as a regulatory initiative which also may need to be assessed.
3.9
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l 1
(
The potential for failure or bypass of containment should be determined, if practical, by estimating the conditional containment failure probability j
(CCFP)." This calculation should be computed on a generic basis as representative for the affected class of plants using models ano data from previous analysis such as IPE evaluations or from NUREG 1150 studies.
If such j
an analysis cannot be performed with reasonable levels of certainty, then a
[
qualitative assessment should be made.
For example, if the CCFP or the change l
in CCFP given a postulated change in containment design cannot be reasonably j
estimated, then engineering judgement of relevant factors affecting the potential for early containment failure or bypa'ss sequence would be an adequate basis for proceedino further.
l The mitigation of core damage accidents needs to be assessed in comparison with the large release frequency guideline of 10"/ reactor year.
Such i
mitigation initiatives would normally fall within the following three categories-1.
The assessment of the potential for early failure or bypass of the containment given the conditior.s of a specific core damage accident j
sequence.
2.
Accident management programs including activities to prevent or minimize the probability of sequences that result in large-scale l
fuel melting and breach of the eactor vessel (given a core damage i
5 accident), or i
3.
Postulated modification to the containment system that would prevent i
or minimize the probability of sequences that could lead to an early l
failure or bypass of containment.
i i
i "CCFP in this context is a probability of early containment failure or j
bypass given core melt.
In NUREG-1150, early containment failure is defined i
as:
"Those containment failures c urring before or within a few minutes of reactor vessel breach for PWRs nd those failures occurring before or within 2 hours2.314815e-5 days <br />5.555556e-4 hours <br />3.306878e-6 weeks <br />7.61e-7 months <br /> of vessel breach for BWRs. Containment bypass failures (e.g. interfacing-system loss-of-coolant accidents) are categorized separately from early f tilures."
3.10 6
L
m When considering sequences which may bypass containment, the following three types should be included in the evaluation:
(a) a failure resulting in a direct pathway to the environment such as in an interfacing system; (b) pre-existing opening in, or failure to isolate, the containment; and (c) bypassing of the mitigative function of the containment, such as loss of suppression pool scrubbing, coupled with a release path to the environment.
Following evaluations of the potential for bypass of the containment, the following criteria listed below should be used regarding subsequent staff i
action.
Estimated Reduction in Likelihood
{
l of Containment Bypass with Core Damage Accidents Staff Action j
Proceed to V/I portion of the i
> 10" regulatory analysis.
Division Director decides if 10"(approximately) further regulatory analysis is j
justified.
j
\\
Terminate further analysis
< 10" unless the Office Director directs otherwise based upon strong engineering or qualitative justification.
l 3.11
After the potential for bypass of containment has been determined, guidance on further staff action with regard to early containment failure is as follows:
Estimated ACDF and CCFP Staff Action I
Proceed to V/I portion of the ACDF i s 10"-10" and regulatory analysis.
CCFP is > 10" Division Director decides if aCDF i s 10"-10" and further regulatory analysis is CCFP is 10-2-10-8 justified.
Division Director decides if 6CDF i s 10"-10" and further regulatory analysis is CCFP is > 10-2 justified.
Terminate further analysis aCDF i s 10"-10" and unless the Office Director CCFP is < 10" directs otherwise based upon strong engineering or qualitative justification.
3.3.3 Summary of Implementation Guideline i
I The detailed staff action criteria discussed in the previous sections has been summarized in Figure 3.2. which graphically illustrates the above criteria and provides guidance as to when staff should proceed to the value-impact portion of the regulatory analysis, and when a management decision is needed.
3.12
i l
4 h
FIGURE 3.2 SAFETY G0AL IMPLEMENTATION GUIDANCE i
1E-o3 l
PROCEED TO V/I PORTION PROCEED TO V/I PORTION OF OF REGULATORY ANALYSIS REGULATORY ANALYSIS
- 3E (PRIORITY)
$2 1E-o4 mo oO KANAGEMENT DECISION PROCEED TO V/I PORTION U
WHETHER TO PROCEED OF REGULATORY ANALYSIS p
zo WITH V/I PORTION OF REGULATORY ANALYSIS l
IE-o5 zw$$
MANAGEMENT DECISION u
NO ACTION WHETHER TO PROCEED WITH go V/I PORTION OF REGULATORY ANALYSIS i
1E-o6 a
i 1E-o2 1E-01 1
j ESTIMATED CONDITIONAL CONTAINMENT F'AILURE PROBABILITY **
- A determination is needed regarding adequate protection or I
compliance; as a result a value-impact analysis may not be l
appropriate.
- Conditional upon core damage accident which releases radionuclides l
into the containment (see Section 3.3.2).
l Responsible management should review the results and the overall uncertainty and sensitivity of these estimates. A judgment should be cade whether
)
substantial additional protection would be provided and whether continuation of the regulatory analysis is therefore warranted.
Such judgments should I
consider the merits of either further reductions in the estimated CDF or I
potential actions to reduce the CCFP.
j i
3.3.4 Value-Impact Analysis j
l If the safety goal evaluation of the proposed regulatory action results in a favorable determination, the analyst may presume that the substantial additional protection standard of 6 50.109 has been met. The initiative should then be assessed in accordance with Section 4.3 (Estimation and l
Evaluation of Values and Impacts) of these Guidelines.
Should the impacts not 3.13 j
r A
I g
i i
[
be ' justified, further activities and analyses should be' terminated unless
[
+
i there is a strong qualitative justification for proceeding further.
[
i l
)
i i
r i
it i
- i i
i h
i l
i t
i 4
l
-i i
I i
t i
1 1
1 i
i f
s i
J t
I a
4 l
-i 2
i t
+
1 1
4
'i 3.14 t
i I
i i
i
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4.
RE0VIRED ELEMENTS FOR PREPARING A REGULA'5RY ANALYSIS i
This section discusses the specific elements to be included in a regulatory analysis document. These elements include:
l (1) A statement of the problem and NRC objectives for the proposed regulatory f
action.
(2)
Identification and preliminary analysis of alternative approaches to the probl em.
l l
(3)
Estimation and evaluation of the values and impacts for selected i
alternatives including consideration of the uncertainties affecting the j
f estimates.
1
-( 4) The conclusions of the value-impact analysis, and when appropriate, the safety goal evaluation.
(5)
The decision rationale for selection of the proposed regulatory action.
f (6) A tentative implementation schedule for the proposed regulatory action.
A regulatory analysis should be organized to address each of these elements and should also include an executive summary, a list of acronyms, and identification of the references used. More detailed guidance for the preparation of regulatory analysis documents is available in the Handbook.
The Handbook includes methodological tools and generic estimates for the quantification of selected attributes that are typically included in the NRC value-impact analyses.
Regulatory analyses are reviewed within the NRC and made publicly available.
Reviewers include NRC technical staff and management and formal groups such as the CRGR and the Advisory Committee on Reactor Safeguards, and the Advisory Committee on Nuclear Waste.
Reviewers typically focus on the appropriateness of assumptions, the selection and elimination of alternatives, estimation 4.1
techniques, evaluation methods, any limitations in the data used, and the decision rationale. To facilitate this review, as well as review by those outside the NRC, staff should carefully document both the assumptions made and the sources of information used in preparing the regulatory analysis.
Information obtained from outside the NRC, including any from interested parties to a proposed regulatory action, may be used in the preparation of the regulatory analysis after the staff has assured itself of the reasonableness of such information.
It is the intent of this guide to ensure uniformity in the scope or elements to be included in a regulatory analysis.
But, the appropriate level of detail that the staff should include in a regulatory analysis can vary depending on the particular circumstances.
Factors that staff should consider in determining the appropriate level of detail should include:
The complexity and policy significance of the particular problem being addressed The magnitude and likelihood of values and impacts The relative amount by which projected values exceed impacts" The immediacy of the need for a regulatory action and time constraints imposed by legislation or court decisions Any supplemental direction provided by the Commission, the Office of the EDO, or an NRC Office Director.
The emphasis in implementation of the Guidelines should be on simplicity, flexibility, and common sense, in terms of the type of information supplied and in the level of detail provided. The level of treatment given to a particular issue in a regulatory analysis should reflect how crucial that issue is to the bottom line recommendation of the regulatory analysis.
In all cases, regulatory analyses must be sufficiently clear and contain sufficient Proposed actions where values and impacts are estimated to differ by a relatively small amount should normally be analyzed in greater detail than actions where values and impacts differ by a substantial amount.
4.2
I i
detail to enable NRC decision makers and other interested parties to easily
{
recognize:
The problem defined within the context of the existing regulatory framework The proposed regulatory action The conclusions reached and the associated bases
[
The specific data and analytical methods used and the logic followed that led to the conclusion that the proposed action was appropriate i
and justified The sources and magnitude of uncertainties which might affect the conclusions and the proposed action The sensitivity of the conclusions to changes in underlying assumptions and considerations.
4.1 Statement of the Problem and Obiective The statement of the problem should be a concise summary of the problems or concerns that need to be remedied, defined within the context of the existing i
regulatory framework. The statement should provide the reader with a clear l
understanding of exactly what the problem is and why it exists, the extent of
[
the problem and where it exists, and why it requires action.
In this context, a measure of its safety importance needs to be presented on either a qualitative or quantitative basis. The focus of this section is to clearly j
demonstrate that the problem requires action, and the implications of taking no action.
For certain regulatory issues there may be existing regulatory requirements or guidance, industry programs, or voluntary efforts directed at the same or similar problem. These activities, and any variations in industry practice l
and commitments among licensees, must be identified and discussed. The need for regulatory action must be justified within the context of what would t
prevail if the proposed action were not adopted which requires assumptions as to whether, and to what degree, voluntary practices may change in the future.
4.3 t
l i
t l
In general, the no action alternative or base case is central to the estimation of incremental values and impacts. Additional guidance is l
available in Section 4.3.
j l
The problem statement should identify the specific class or classes of l
licensees, reactors, or other facilities affected by the problem, as appropriate.
Any distinctions between impacted licensees (e.g., NRC and Agreement State, BWR and PWR) should be noted, as well as any differences in facility type, age, design, or other relevant considerations.
A background discussion of the problem should be included. The background discussion should cover, as applicable:
f I
(1)
A brief history of the problem and the outcome of past' efforts (if any) i to alleviate it.
l (2)
Any legislation or litigation" that directly or indirectly addresses j
the problem.
(3)
The extent (if any) to which the immediate problem is part of a larger probl em.
(4) The relationship of the problem to other ongoing studies or actions,
[
(Note, it is important this action be reviewed in the proper context of f
other regulatory requirements that apply to the same problem, such as to l
NRC's prioritized generic safety issues (NUREG-0933) or other identified j
safety issues meriting NRC's attention).
j (5) The objective (s) of the proposed action and the relationship of the j
objective (s) to NRC's legislative mandates, safety goals for the j
operation of nuclear power plants, and policy and planning guidance i
(e.g., NRC's Five-Year Plan).
(6)
Identification of any existing or proposed NRC (or Agreement State) regulatory actions that address the problem and their estimated r
effectiveness.
"Could come from court cases, decisions by an Atomic Safety and Licensing or Appeal Board, or Commission decisions in cases under litigation.
4.4 1
T r
7, 1-----
m-
(7)
Constraints or other cumulative impacts which work against solutions to the problem.
(8) Draft papers or other underlying staff documents supporting the requirements or staff positions.
s 4.1.1 Backfit Rule Concerns a
for problems or concerns within the scope of the backfit rule (10 CFR 50.109),
the type of backfit needs to be identified Necifically, depending on whether the action is being initiated for quate protection or compliance and not as a safety enhancement, the need for a regulatory analysis may not exist, or at a minimum, its scope or focus should be markedly different (see Section 2.3).
Thus, it is important for the preparer of the regulatory i
analysis to address this issue early in the regulatory analysis process.
Further, for any single action, more than one type of backfit may be involved.
I Under these circumstances, the population of plants should be separately identified and assessed for each type of backfit.
4.2 Identification and Preliminary Analysis of Alternative Accroaches i
Once the need for action has been identified, the regulatory analysis should l
t focus on identifying reasonable alternatives that have a high likelihood of j
i resolving the problems and concerns, and meeting the objectives identified under Section 4.1.
The initial list of alternatives should be identified and I
analyzed as early in the analysis process as possible.
For certain j
i rulemakings, an options paper may be needed to identify and delineate f
substantive issues and to facilitate early consensus on the resolution of those issues. This analysis forces early consideration and documentation of alternatives, and identifies an initially preferred option.
The list of alternatives should be reasonably comprehensive to ensure that the i
w range of all potentially reasonable and practical approaches to the problem I
are considered.
The no-action alternative will normally serve as the base case for analysis.
In essence, it functions as a default approach which will occur if none of the action alternatives is justified.
Its primary value is l
4.5
+
I i
.i
[
[
to establish the baseline condition from which all incremental values and impacts can be calculated.
Alternatives generally focus on or explore alternatives to a series of hypothetical questions: What, who, how, and when.
t Accordingly, in defining alternatives, when applicable, consideration should j
be given to the following types of issues:
What action should be taken? - It may be appropriate to identify l
alternative ways to resolve the problem. This would typically i
account for viable alternatives based on variability in the physical P
and technical requirements needed to address the problem at-hand.
1 This could also include varying the scope of requirements and number of licensees affected.
l r
Whose responsibility should it be to take action? - Different t
entities may be capable, and, therefore, can assume responsibility for resolving the problem.
For example, initiatives by licensees and industry support groups may constitute a viable alternative to some NRC initiativt How should it be done? - It may be appr9priate to consider the j
various mechanisms (e.g. generic letter, rule, policy statement) available to the NRC to accomplish the change.
i When should it become effective? - It may be appropriate to consider -
alternative implementation schedules and compliance dates.
The selection of alternatives for any given regulatory analysis will largely depend on the specific circumstances at-hand.
For some regulatory analyses, alternatives covering the full range of considerations may be appropriate.
For others, circumstances may dictate that the alternatives be confined to only one of the categories identified above.
For example, Congressional or court rulings could prescribe an NRC action with such specificity that the f
i only alternatives open to the NRC are implementation mechanisms.
4.6 t
Where the objective or intended result of a proposed generic requirement or staff position can be achieved by setting a readily quantifiable standard that has an unambiguous relationship to a readily measurable quantity and is enforceable, the proposed requirement should merely specify the objective or result to be attained, rather than prescribing to the licensee how the objective or result is to be attained.
In other words, requirements should be performance based, and highly prescriptive rules and requirements should be avoided absent good cause to the contrary.
After the initial list of alternatives is identified, a preliminary analysis of the feasibility, values, and impacts of each alternative usually eliminates some alternative approaches.
The elimination of alternatives from further analysis can be based on such factors as (1) clearly exorbitant impacts in relation to values, (2) technological impracticality, or (3) severe implementation difficulties. As information is generated as part of the preliminary analysis of alternatives, the initial set of alternatives should be refined.
For each alternative that survives the preliminary screening, a general description of the activities required of licensees and the NRC to implement the alternative should be provided." In certain circumstances this preliminary screening of alternatives may eliminate most of the alternatives und.
onsideration.
In such cases, the subsequent value-impact assessment need only address the limited set of remaining alternatives.
The alternatives section of the regulatory analysis document should list all significant alternatives considered by the staff. A brief explanation of the reason for elimination should be included for alternatives not selected for further study.
" Inclusion of this information will satisfy the requirements of 10 CFR 50.109(c)(2) for proposed generic backfits, NRC Management Directive 8.4 for proposed plant-specific backfits, and section IV(B)(vii)(b) of the CRGR Charter for proposed actions subject to CRGR review.
4.7
- =_
4.3 Estimation and Evaluation of Values and Impacts l
i The section of the regulatory analysis document covering the estimation and evaluation of values and impacts needs to analyze the alternatives that survive the screening process of Section 4.2.
The level of detail need not be equivalent for all alternatives.
For example, loss detail is needed when one i
alternative can be shown to be clearly superior to the others.
Nevertheless, this section will often be the longest and most complex portion of the document.
For the purpose of these Guidelines the following definitions are j
adopted:
Values The public values that NRC is directed to seek by Congress l
(e q., The Atomic Energy Act of 1954 as amended) as interpreted by the Federal courts and the NRC Office of the j
General Couisel are as follows:
(1) protection of the l
public health and safety, including protection of workers in the licensed nuclear industry, against the hazards of l
radiation, (2) protection of offsite property (i.e.,
I f
property not owned or leased by a licensee), (3) assurance l
of the common defense and security, and (4) upholding and l
supporting the laws and agreements of the United States i
including antitrust and environmental laws and international agreements.
I Impacts The consequences of a proposed regulatory action that are
~
not values.
Staff should consult the Handbook and any relevant NRC reports or documents issued subsequently to the preceding document for additional guidance on f
estimating and evaluating values and impacts.
General principles to be 4
followed are discussed in this section.
j i
Categories of groups affected by the proposed regulatory action should be identified.
Groups may include (but are not limited to) the general public, units of state and local government, licensees, employees of licensees, j
4.8
l j
contractors and vendors, and the NRC. Within each affected group further
^
j l
differentiation, i.e., licensee suppliers or contractors, may be necessary if l
the proposed action affects segments of the group differently. Under these circumstances, separate estimates and evaluations of values and impacts should be made for each distinct category. The categorization of licensees may be l
appropriate for a variety of reasons.
For example, the effects of a new j
requirement can be markedly different between newer facilities which may have j
had safety features installed during construction that were not included in l
older facilities.
J For each affected group, the attributes that can be used to characterize the consequences of the proposed action should be identified. The Guidelines and j
j l
Handbook should be reviewed before selecting appropriate attributes.
For each
)
identified attribute, values and impacts are to be estimated on a net I
basis."
Value and impact estimates are to be incremental, best estimates relative to the baseline case, which is normally the no action alternative." When possible, best estimates should be made in terms of the "mean", or " expected-value." However, other acceptable estimates could include median and point i
estimates depending upon the level of detail available from the data sources employed in the value-impact analysis. However, the rationale for use of l
estimates other than "mean" values should be provided.
The definition of the baseline case requires specific attent.'n to ensure against double counting of either the values or impacts in the regulatory analysis.
For example, in evaluating a new requirement for existing plants, the staff should assume that all existing NRC and Agreement State requirements and written licensee commitments have been implemented, and consequently, the values and impacts associated with these requirements and commitments are not part of the "Both value and impact attributes may have positive or negative aspects (e.g., occupational exposure may increase due to implementation of a new requirement, and at the same time risk of occupational and public exposure may decrease due to a reduced risk of an accident).
" Procedures for making best estimates are discussed in the Handbook.
4.9 I
l
i j
incremental values or impacts associated with the regulatory action under l
consideration. Similarly, insofar as new regulatory requirements may affect future plants, the reference point for these plants should also be the
{
t existing regulatory requirements. To ensure against double counting of either the values or impacts in the regulatory analysis, the staff should be aware of f
values and impacts associated with other formally proposed regulatory actions that are likely to be implemented in close proximity to the subject action.
The NRC encourages voluntary actions which enhance safety, and when such i
actions are being implemented on an industry-wide basis with no evident safety problem, great weight and due consideration should be given to these l
initiatives before imposing requirements to codify them in the regulations.
I In those situations however, when voluntary initiatives are in-place over only a portion of the industry, or which achieve only part of the safety objectives
{
associated with a regulatory change under consideration, it may be necessary to codify the practice. The tandlir,. f these voluntary practices has
{
important implications on tFs baseline case and consequently on the quantification of incremer.tal va'aes and impacts.
For the purpose of the regulatory analysis, with certain m:ceptions noted below, no credit should be given for the voluntary actions taken by licensees.
This means that when calculating the values and impacts of a proposed regulatory requirement and its alternatives, those consequences should not be reduced by the extent to which they may already be realized due to voluntary activities.
Impacts
\\
already incurred by licensees or applicants in conjunction with these voluntary actions can be excluded from the incremental impact estimates if l
they are irreversible, i.e., cost recovery is not possible.
l t
Most voluntary actions are discretionary in nature, and their impacts are j
primarily on-going and future-oriented.
Such programs might typically be i
l
'haracterized as adopting very vague requirements, lacking in NRC
[
+
enforceability, and resulting in a non-uniformity of programs across all licensees.
It is the NRC's intent to be able to impose regulatory j
l requirements in lieu of voluntary progrrms that, for any number of reasons, l
are not providing the level of safety assurance deemed necessary by the NRC.
This would be the case, for example, when voluntary programs are non-uniform
[
4.10
.. ~
across all licensees and as a result some licensees may not have such programs, or established programs could easily dissipate by licensee action f
alone, perhaps without NRC's knowledge.
Furthermore, if credit is provided j
for voluntary initiatives and thus values and impacts associated with the j
proposed regulatory action are reduced, meaningful health and safety improvements could not be assumed in the future because they would remain F
4 uncodified and voluntary in nature, and not subject to enforcement on the part of the NRC. When the base case value-impact results take no credit for voluntary actions, a sensitivity analysis is to be performed and the value-impact results also displayed with credit for voluntary actions.
In general, if the NRC could ensure, with some high or reasonable assurance, I
that the voluntary program would continue and effectively accomplish its objectives, then the values and impacts attributable to the regulatory initiative should be reduced accordingly Thus, for example, voluntary actions that are a part of an overall industry commitment with appropriate follow-up evaluations, would be subject to special treatment on a case by case l
i basis.
In addition, credit should typically be given to a voluntary action whose dominant impacts have already been incurred, such as the addition of a capital intensive safety system, because there is little financial incentive f
to eliminate it.
Similarly, a voluntary program that involves a written commitment or one that affords the NRC some degree of enforceability is not easily abandoned.
i l
Uncertainties are an important element to consider explicitly in the
{
4 development of a regulatory analysis. The sources and magnitudes of l
l uncertainties in value and impact estimates and the methods used to quantify l
uncertainty estimates should be discussed in all regulatory analyses.
Hypothetical best and worst case values and impacts can be estimated for sensitivity analysis purposes. Sensitivity analysis can be used in addition l
to or in lieu of formal uncertainty analysis, the latter option being
]
4 exercised when uncertainty analysis is impractical or exceedingly complicated j
and costly. Additional information on incorporation of uncertainties and/or 8
~
4.11 a
i 2
l l-
)
l
)
t I
f sensitivities in a regulatory analysis is in the Handbook. The Handbook also discusses the distinction between them.
Values and impacts should be estimated by year and for the entire time period that groups will be affected by the proposed regulatory action. For licensed j
facilitics, estimates typically should be made for the remainder of the operating license or projected useful life of the facility.
For power reactor requirements, separate estimates for a license renewal term should be made if l
the analyst judges that the results of the regulatory anslysis could be significantly affected by the inclusion of such a renewal term.
If nct, for future reference, state the basis for the judgement or conclusion that there
[
would not be a significant effect.
Estimated values and impacts will generally be expressed in monetary terms I
whenever possible, and expressed in constant dollars from the most recent year 3
for which price adjustment data are available. Consequences that cannot be
[
expressed in monetary terms should be described and quantified in appropriate units to the extent possible.
In this regard, it is recognized that many l
i regulatory actions, such as those affecting non-power reactor and materials licensees, may not be supported by available PRA analysis and that for some j
actions, probabilistic analysis techniques may not be practical. However, the l
staff needs to make every effort to apply alternative tools that can provide a j
quantitative perspective and useful trends concerning the value of the proposed action.
Even inexact quantification with large uncertainties is e
often preferable to no quantification provided the uncertainties are i
appropriately considered.
Staff should use care to verify that neither valuer nor impacts are double counted.
Values and impacts that are determined to be unquantifiable, should be identified and discussed qualitatively. An attribute should not be omitted from a regulatory analysis document simply because it is determined to be
(
unquantifiable.
i I
4.12 i
j i
?
j.
4.3.1 Estimation of Values, i
Relevant value attributes should be identified and assessed for each f
alternative. These assessments should reflect best estimates, preferably mean values, which would account for differences in the likelihood and effectiveness of each alternative's ability to solve the problem. To the I
extent applicable, possible value attributes to be assessed include changes in:
(1) public radiation exposure health risk, (2) projected offsite damage 1
to property or the environment, (3) occupational radiation exposure health j
l risk, (4) antitrust practices, (5) safeguards risks, and (6) mitigation of
{
environmental damage. Changes in public health and safety due to radiation l
exposure and offsite property impacts should be examined over a 50-mile f
I distance from the plant site. Care must be taken to insure that the change in f
risk accounts for potential changes in plant or operational complexity, l
including the relationship to proposed and existing regulatory requirements.
All changes in risk to the public and to workers should be estimated and f
l discussed. When appropriate, health risks should be estimated for both routine operations and accidents.
I Changes to any of these value attributes may be either positive or negative.
l Any individual attribute may have both positive and negative components.
For i
example, a requirement for new equipment within areas where radiation is present will result in increased occupational exposure during installation of the equipment.
However, this requirement may reduce occupational exposure during routine operation and in the event of an accident. The net change in l
occupational exposure must consider all these positive and negative components l
in exposure in deriving a net value for occupational exposure.
The ability to assess the risk can vary dramatically depending on the data and information available which is directly pertinent to the particular regulatory l
action under consideration.
Generally, the extent of any supporting detailed information will allow one of three types of regulatory analyses to be developed:
l 4.13 l
L
k i
(1) Detailed PRA or statistically based analyses are available or can be l
developed to support the quantification of values (benefits).
(2)
Some factual information or data is available which can provide a quantitative perspective, but may involve considerable extrapolation of i
data and thus, the resulting analysis may be quite uncertain and lack completeness and/or precision.
i (3)
Extremely little data or accepted models exist to support a quantitative
)
type analysis, and as a result, the analysis niust be qualitative.
Once this situation is understood, and the nature or type of the analysis is determined, then the analyst should proceed as outlined below.
For a more detailed discussion, including examples of actual assessments, the analyst is referred to the Handbook.
t Typically, the most detailed and specific value assessment will involve j
regulatory initiatives impacting nuclear power reactors for which PRA type analyses can be applied. The PRA can be used to generate a fairly detailed and comprehensive quantification of the expected risk reduction expressed in changes in core melt frequency or in person-rem averted.
This value is then quantified in dollars based on a dollar per person-rem conversion factor.
[
The next level of quantification supporting regulatory initiatives concerns situations where PRAs are not available and other data and analysis must be used to justify the anticipated regulatory burden. Although no unique formula or algorithm can be postulated, the generally recommended approach is to utilize whatever data may be available within a simplified model in order to j
l provide some quantitative perspective or insight on the nature and absolute or relative magnitude of the risk, and any discernable trends in the data.
Typically, this approach will generate results that are subject to significant levels of uncertainty. The uncertainties will, in turn, require explicit j
disclosure of the simplifying assumptions embedded in the model as well as the 1
data limitations.
A sensitivity analysis that shows the variability in the i
derived risk as a function of key assumptions should typically be developed.
i The level of effort in terms of model development and data collection is dictated by the same factors utilized by the staff in determining the level of detail for the overall regulatory analysis (see Section 4.0).
4.14 l
The third level or type of regulatory analysis involves regulatory initiatives that for one reason or another cannot be quantified with meaningful limits on uncertainty. Certain power reactor issues, such as those involving emergency preparedness, security, and personnel requirements tend to fall into this category.
In these instances, the analyst must provide a qualitative basis and a clear description of how the regulatory action is justified. The analyst is cautioned that this type of value-impact assessment is subject to a higher level of scrutiny by the decision maker because of the need to ensure that additional burdens on licensees are justified.
Reliance on the qualitative approach should be a last resort to be used only after intensive efforts to develop pertinent data or factual information hr.s proven l
unsuccessful.
4.3.2 Estimation of Impacts The number of potential impact attributes is very large. What constitutes an appropriate impact is highly dependent on the specific circumstances of the
]
alternative under consideration. To the extent applicable, impacts to be assessed include:
)
Direct costs / savings to licensees Costs / savings to the NRC Costs / savings to state and local government agencies
]
Non-radiation risk related costs / savings to the general public j
Averted onsite impacts **
Changes in regulatory efficiency and/or scientific knowledge needed for regulatory purposes i
Conformance with formal positions adopted by national and international standards organizations.
I
The Commission has previously directed the staff to treat averted on-site costs as an offset against other licensee costs and not as a value (benefit) in regulatory analyses.
Staff Requirements Memorandum to the EDO on "SECY-89-102 - Implementation of the Safety Goals," June 15, 1990.
The basis 4
for this direction is in a memorandum from William Parler, NRC General Counsel, to Commissioner Frederick Bernthal, June 4,1987.
4.15 i
I i
j
~
F Impact estimates should be included for incremental impacts associated with each alternative. When applicable, the estimation of impacts should include information on both installation and continuing costs, including the cost of facility downtime or the cost of construction delay.
Sunk costs may be l
identified, but should not be included in the evaluation of impacts or the presentation of the results of the evaluation.
Impacts should be estimated from society's perspective. Transfer payments such as insurance payments and taxes should not be included as impacts.
In addition, depreciation is an accounting concept that should not be included as an impact.
The analysis of impacts also has to be sensitive to the true impact (cost) to licensees.
For example, the practice of allocating no replacement energy.
costs by claiming that the requirement can be accomplished during a regularly scheduled outage is not always practical or reasonable.
In reality the cumulative effect of all ne" requirements can add incremental downtime, and j
therefore analysts should at'.
bute appropriate replacement energy cost penalties to their respective regulatory actions if practical. Further, for new requirements having extremely high implementatich costs or which will greatly increase operating costs, the analyst needs to consider the possibility that the imposition of such impacts may result in some facilities i
no longer being economic and thus may have to terminate operations.
4.3.3 Evaluation of Values and imoacts The evaluation of quantified estimates of the values and impacts associated with a proposed regulatory action involving NRC licensees generally involves j
expressing values and impacts on a common basis, i.e., constant dollars from a reference year.
Since the values and impacts need to be estimated for the entire time period that members of society will be effected by the proposed regulatory action, a l
present worth basis is normally used in order to allow meaningful summations and comparisons. This approach provides a rational basis for evaluating health and safety effects as well as the associated impacts, yet-this approach has a number of complexities and controversies.
4.16 l
l v.
e n...,.,...,
1
?
i In order to provide for placing all values and impacts on a common basis, it is necessary to have a conversion or coefficient reflecting the monetary worth of a unit of radiation exposure.
In this regard, in accordance with past NRC i
practice, unless otherwise justified, 51000/ person-rem in 1993 dollars is to serve as the dollar conversion factor for all offsite consequences (health related impacts and dollar values for offsite cleanup, contamination, and l
property damage values) of severe power reactor accidents, and as a reference j
point or baseline where offsite consequences are not involved such as for I
occupational exposure, non-power reactor accidents, and ALARA determinations associated with cleanup of contaminated sites.
It should be noted that the 5
dollar evaluation of radiation exposure is a highly sensitive issue because it f
indirectif attaches a value on human life.
Various methodological approaches
{
provide varying degrees of justification for a wide range of 5/ person-rem f
values. A review and analysis of this issue is ongoing, and the $1000 value j
is to be used pending completion of the current reassessment. This j
reassessment may also address a periodic inflationary adjustment for the j
5/ person-rem value.
i In other than severe power reactor applications, alternative values to.the 51000/ person-rem may be considered and evaluated.
In this regard, there may be a range of applicable values based on willingness-to-pay analyses, j
occupational exposure surveys, health consequence models such as (HECOM),
adjustments for inflation and alternative fatality coefficients, and other l
case-specific data, as available. The Handbook contains a discussion of these estimating methodologies as well as representative values.
If alternative l
values are explored, dollar values applicable to the situation should be l
discussed and the value-impact results clearly displayed for the decision j
maker in order to show the sensitivities of the proposed action to this I
consideration.
As noted previously, in order to provide meaningful summations, a present worth basis is normally used for evaluating all values and impacts. Applying present worth techniques to health and safety consequences has been controversial because it suggests a " discounting of benefits" and the implication that a lower value is being placed on future lives and illnesses.
4.17 i
.f However, the principle for regulatory analysis is that future health effects should be valued the same as current effects and present worth techniques f
achieve this.
For example, based on the current conversion factor, health and 4
safety consequences are to be consistently valued at $1000 per person-rem.
r Thus, for example, a person-rem averted in the year 1995 or 2010 or 2050 will be assigned a value of $1000 (in constant dollars). The present worth calculation is simply determining how much society would need to invest today l
t to assure that 51000 is available in a given year in the future to avert a person-rem. By using present worth, health and safety effects, i.e., person-rem, regardless of when averted in time, are valued equally.
i Based on DMB guidance, all values and impacts should be expressed on a present worth basis using the recommended discount rate specified in the latest version of OMB Circular A-94.
This circular was most recently updated on November 10, 1992 and specifies the use of a 7 percent real (i.e., inflation adjusted) discount rate.
OMB's 7 percent rate approximates the marginal pre-tax real rate of return on an average investment in the private sector in recent years.
J The NRC also recommends that an alternative analysis using a 3 percent real discount rate be prepared for sensitivity analysis purposes.
The base case, l
using for example OMB's currently recommended 7 percent rate, reflects recent j
economic conditions, yet typically NRC actions involve a 30 to 60 year time horizon.
Given that uncertainties expand as one attempts to project further into the future it is considered prudent to examine the result of assuming a lower rate as part of a sensitivity analysis. There are also theoretical
{
arguments in the economics literature ' hat support the use of lower rates."
l A 3 percent rate is recommended for the alternate case because it approximates the long-term risk-free real rate of return on investment based on historical l
data.
If the alternative rate does not alter the bottom-line result, simply indicating this conclusion is sufficient.
If there is a different conclusion i
See for example, Paananen, 0.H., Hendrickson, P.L., Selection of a i
Discount Rate for Use in Reculatory Analyses PreDared by the U.S. Nuclear I
Reaulatory Commission and Application of Discount Rates to Future Averted Health Affects Pacific Northwest Laboratory, January 1993.
4.18 r
i 1
q or if the value-ir,,act determination is significantly altered, this result should be discussed and placed in perspective for the decision maker.
Further, for certain regulatory actions, such as those involving decommissioning and waste disposal issues, the value-impact analysis may have to consider consequences that can occur over hundreds or even thousands of For the reasons listed above, and based on the technical years.
literature", extended time horizons bring into question the appropriateness I
of using a relatively high interest rate for present worth calculations.
Under those unique circumstances where the timeframe exceeds 100 years, the analyst should avoid the use of a 7 percent real interest rate.
In these instances, the NRC regulatory analysis should display results to the decision maker in two ways.
First, on a present worth basis using a 3 percent real rate, and second, by displaying the values and impacts at the time in which they are incurred with no present worth conversion.
In this latter case, no
]
calculation of the resulting net value or value-impact ratio should be made.
l i
Finally, as a general principle, sensitivity and/or uncertainty analysis i
f should be performed whenever the values of key attributes can range widely.
A sensitivity analysis would consider the effect of varying the values of the
{
attribu+es one at a time to measure each attribute's effect upon the overall result.
Uncertainty analysis would typically require computer simulations while sensitivity analysis could be performed in an analytic manner.
Should the sensitivity / uncertainty analysis indicate that the preference among
}
alternatives depends significantly on the variation in one or more key attributes, additional investigation to reduce this dependence may be appropriate.
The extent to which sensitivity / uncertainty analysis is performed should reflect the magnitude and likelihood of values and impacts and their associated variability.
j t
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Ibid.
4.19 i
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t 4.4 Presentation of Results i
i For each alternative considered, a net value calculation (values / benefits i
minus impacts / costs), as prescribed by OMB," should be computed and displayed.
In addition, the analyst may choose to display the results based on the ratio of values to impacts.
Both presentation procedures may be used j
4 to clarify the results, and a comparison of the two presentation methods is included in the Handbook. Tabular and/or graphic displays of results and associated uncertainties should be included if their use will facilitate comparison of alternatives. The values and impacts of attributes that are quantified in other than monetary terms should be displayed in a manner that facilitates comparison of alternatives. Values and impacts not quantified in the regulatory analysis should be discussed and compared among alternatives.
t For alternatives projected to result in significantly different values and impacts for different categories of licensees, separate evaluations of values and impacts should be made for each such distinct category.
In addition, if significant differences exist between recipients of values and those who incur impacts, the distribution of values and impacts on various groups should be presented and discussed.
For certain propused regulatory actions, the value-impact analysis may consist l
of only a cost effectiveness analysis.
For example, the NRC may be required l
to initiate a requirement and achieve a certain level of value based on court 9
or Congressional mandates, or to achieve compliance or adequate protection.
Under these circumstances, the issue is not to determine whether the impacts of the new requirement are justified but rather to ensure that the requirement achieves the necessary level of value in an efficient and cost effective manner given the other implementing mechanisms available.
Similarly, there may be proposed actions where important values cannot be assigned monetary i
values or where uncertainties are substantial.
If the alternatives yield 1
"Of fice of Management and Budget, " Regulatory Impact Analysis Guidance,"
Reaulatorv Proaram of the United States Government April 1.1990 - March 31.
1991, Appendix V.
t t
4.20 i
5-t
similar values, cost effectiveness analysis can be used to choose the most afficient alternative.
The effect of each alternative on other NRC programs and requirements should
+
be discussed.
Effects on programs of other Federal agencies or agencies of state and local government should also be discussed. The extent to which the effects are discussed should be in proportion to their significance.
For those proposed regulatory actions subject to a safety goal evaluation (see Section 3.0), this section of the regulatory analysis should include the results of that analysis. - A satisfactory finding relative to the proposed safety goal criteria is judged as a prerequisite for achieving the substantial additional protection criteria of the backfit standard in 10 CFR 50.109.
Proposed actions subject to the backfit rule (except for backfits falling within the three exception categories of 10 CFR 50.109(a)(4) (see Section 2.3)), are also required to show that the direct and indirect costs of implementation are commensurate with the substantial increase in safety. A clearly positive finding with respect to the net value or value-impact ratio would normally satisfy this standard.
s For proposed regulatory actions that would relax or reduce current requirements, the backfit rule and the safety goal analysis process and f
I criteria contained in Section 3 are not applicable. However, for relaxations, supporting documentation should be prepared which contains the basis for concluding that the following conditions will be satisfied.
t The public health and safety and the common defense and security would continue to be adequately protected if the f
proposed reduction in requirements or positions were implemented The crat savings attributed to the action would be substantial l
a enough to justify taking the action, and clearly out-weight any I
reduction in benefits.
4.21 i
i
i In general, actions which would relax or reduce requirements should leave it up to licensees whether to take advantage of the change and should not be mandatory.
However the cost savings should be based upon the assumption that
' all licensees will take advantage of the change. This is consistent with the i
I NRC's position on voluntary practices as described in Section i.3.
4.5 Decision Rationale for Selection of the Proposed Action This section of the regulatory analysis document should explain why the proposed action is recommended over the other alternatives considered. Taking no action should be considered as an alternative except in cases where action has been mandated by legislation or a court decision. The decision criteria for the selection of the proposed action should be identified. The ct;teria should include (but are not necessarily limited to):
i The net value and/or value-impact computations The relative importance of attributes that are quantified in other than monetary terms j
The relative importance of nonquantifiable attributes The relationship and consistency of the proposed alternative with the NRC's legislative mandates, safety goals, and policy and planning guidance which are in effect at the time the j
proposed alternative is recommended The impact of the proposed action on existing or planned NRC j
programs and requirements.
This section of the regulatory analysis document should also include:
A statement of the proposed generic requirement or staff i
position as it is proposed to be sent out to licensees 1
A statement of the sponsoring office's position as to whether the proposed action would increase or relax (or reduce) existing requirements or staff positions 4
4.22 y-,-.
---w-e r
t A statement on whether the proposed action is interim or final and, if interim, the justification for imposing the proposed backfit on an interim basis.
i 4.6 1molementation The regulatory analysis should identify how and when the proposed action is to be implemented. The proposed NRC instrument for implementing the proposed action should be identified (e.g., rule, regulatory guide, etc.) and the
+
reasons for selecting the proposed instrument discussed. A specific date for l
i implementation should also be identified and discussed, i
A schedule should be prepared showing the steps needed to implement the proposed action. The action should be prioritized and scheduled in view of j
other ongoing regulatory activities affecting the facilities.
If possible, a summary of the current backlog of existing related requirements awaiting I
implementation should be included.
An assessment of whether implementation of existing requirements should be deferred as a result and any other information that may be considered appropriate with regard to priority, schedule, or cumulative impact should be included. The schedule should be realistic and allow sufficient time for such factors as needed analyses, approvals, procurement, installation and testing, training, and resources needed by licensees to implement other NRC and Agreement State requirements.
Regul atory analyses are required to identify related regulatory and industry actions, j
even though it may be very difficult to properly characterize and account for j
all actions.
Although regulatory actions generally are to be implemented in a timely manner, implementation schedules should be sufficiently flexible to minimize the cumulative burdens imposed on licensees by multiple regulatory requirements.
When appropriate, alternative schedules should be prepared.
NRC staff actions as well as actions that will be needed by others (e.g.,
Agreement States and licensees) should be identified.
In this regard, this section should describe the magnitude and availability of NRC resources to facilitate implementation of the proposed action.
4.23
.I
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i 5.
RELATIONSHIP TO OTHER PROCEDURAL RE0VIREMENTS This section discusses the relationship of the development of a regulatory i
analysis to certain statutory procedural requirements applicable to the NRC and to information requests directed to licensees. The Paperwork Reduction r
(5.1) and Regulatory Flexibility (5.2) Statements, are typically included as appendices to the Regulatory Analysis, and are documented here for completeness. The other information requests and procedural requests (5.3 thru 5.5) typically consider similar issues to the Regulatory Analysis, and consequently, the Guidelines can provide useful guidance in their development as well.
5.1 Paperwork Reduction Act The Paperwork Reduction Act (Public Law 96-511) contains procedural f
requirements designed to minimize and control the burdens associated with collections of information by Federal agencies from individuals, businesses l
and other private entities, and state and local governments. The NRC's internal procedures for complying with the Paperwork Reduction Act and preparing justifications for OMB approval of information collections are contained in NRC Management Directive 3.19, " Collections of Information and Reports Management".
Whenever a proposed regulatory action identified under Section 4.5 of these Guidelines will likely involve information collection (s) subject to OMB approval, a draft OMB clearance package shall be included as a stand-alone appendix to the regulatory analysis.
Agencies are required to obtain OMB approval for collections of information under any of the following conditions (5 CFR 1320.4(a),1320.7(c)):
(1) the j
information collection involves 10 or more persons by means of identical questions or reporting or recordkeeping requirements, (2) the information j
' collection is contained in a rule of general applicaoility, (3) the collection t
is addressed to all or a substantial majority of an industry, even if that majority involves fewer than 10 persons.
5.1 a--
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OMB's criteria for approval of information collections are contained in 5 CFR 1320.4(b) and (c). To obtain OMB approval for information collections, an agency must demonstrate that the collection of information:
(1) is the least burdensome necessary for the proper performance of the agency's functions,
[
I (2) is not duplicative of information otherwise available to the agency, and (3) has practical utility. The agency should minimize its cost of collecting, processing and using the information, but not by shifting disproportionate costs or burdens onto the public.
Agencies should consult with interested agencies and members of the public in an effort to minimize the burden of the l
information collection to the public.
OMB clearance packages are to identify
[
any significant burdens placed on a substantial number of small businesses or entities (5 CFR 1320.ll(a)).
In the event that OMB disapproves an information collection, independent regulatory agencies such as NRC may override the disapproval or stay of I
effectiveness of approval of a collection of information by a majority vote of the Commissioners (5 CFR 1320.20).
Procedures for Commission override of an l
OMB disapproval are contained in NRC Management Directive 3.19, " Collections of Information and Reports Management" (formerly NRC Manual Chapter 0230).
i d
5.2 Reaulatory Flexibility Act l
The Regulatory Flexibility Act (Public Law 96-354) requires Federal agencies to prepare a regulatory flexibility analysis if a proposed rule will have a significant econcgic impact on a substantial number of small entities. The analysis is to describe the impact of the proposed rule on small entities (5 U.S.C. 603).
On December 9, 1985 (50 FR 50241), the NRC aaopted size standards it would use to determine whether an NRC licensee would be considered a small entity for the purpose of implementing requirements of the Regulatory Flexibility Act.
On November 6, 1991 (56 FR 56671), the NRC published a general notice that restated its size standards to clearly identify the different classes of licensees affected and the standard that is applied to each class of licensee.
Specifically, the NRC added the Regulatory flexibility Act's definition of small governmental jurisdiction adopted by the NRC but not included in the 1985 notice announcing the adoption of the size 5.2
6 standards. The size standards used by the NRC to qualify a licensee as a small entity are as follows:
A small business is a business with annual receipts of $3.5 millinn or less except private practice physicians for which the standard is l
annual receipts of 51 million or less.
A small organization is a not-for-profit organization which is l
independently owned and operated and has annual receipts of $3.5 million or less.
Small governmental jurisdictions are governments of cities, counties, towns, townships, villages, school districts, or special l
districts with a population of less than 50,000.
t
~
A small educational institution is one that is (1) supported by a caalifying small governmental jurisdiction, or (2) one that is not state or publi-ly supported and has 500 or fewer employees.
NRC has established procedural requirements for preparation of regulatory flexibility analyses.
These requirements are presented in the NRC Reaulations Handbook, NUREG/BR-0053.
If a proposed rule is likely to have a significant economic impact on a substantial number of small entities, a draft regulatory l
flexibility analysis, consistent with the NRC procedural requirements, must be
~
prepared.
The regulatory flexibility analysis is normally included as an appendix to the regulatory analysis document and as an insert to the proposed rule.
The regulatory flexibility analysis need not repeat information discussed in the body of the regulatory analysis; such information may be referenced.
If the NRC determines that the proposed rule would not have a significant economic impact on a substantial number of small entities, the NRC is required to include a certification to this effect in the proposed rule.
The regulatory analysis must contain sufficient information concerning the potential impact of the proposed rule on small entities to support this certification.
5.3
5.3 National Environmental Policy Act
~
I
. The National Environmental Policy Act (NEPA) requires Federal agencies to prepare an environmental impact statement (EIS) for major Federal actions significantly affecting the quality of the human environment [42 U.S.C.
4332(2)(C)].
NRC's procedures for implementing NEPA are at 10 CFR Part 51 and the NRC Reaulations Handbook, NUREG/BR-0053, contains preparatory information.
When a generic or programmatic EIS has been prepared which forms the basis for the proposed regulatory action, a brief summary of the EIS will be an acceptable substitute for the information and analysis requirements identified in Sections 4.1-4.3 of'these Guidelines. The EIS may be referenced at other i
appropriate points in the regulatory analysis document to avoid duplicating existing written material.
When a regulatory analysis and an EIS or environmental assessment (EA) are being prepared for a proposed regulatory action, preparation of the two documents should be coordinated as much as possible. For example, the alternatives examined in the regulatory analysis should correspond as much as possible to the alternatives examined in the EIS or EA.
5.4 Information Reauests Under 10 CFR 50.54(f)
Procedures for NRC information requests directed to production and utilization facility licensees appear at 10 CFR 50.54(f). The regulation requires NRC to prepare a written statement justifying the reasons for thd information request except when the information is needed to verify licensee compliance with the current licensing basis for the facility. The written statement is to establish that the burden imposed on the licensee is justified in view of the potential safety significance of the issue. All justification statements must i
be approved by the cognizant Office Director or Regional Administrator before issuance of the information request.
Section IV(B)(xi) of the CRGR Charter contains additional guidance for information requests affecting multiple plants. The CRGR Charter specifies 5.4 i
i that when a written justification is required, the written statement is to include:
A problem statement that describes the need for the information in terms of the potential safety benefit The licensee actions required and the estimated cost to develop a response to the information request An anticipated schedule for NRC use of the information A statement affirming that the request does not impose new requirements on the licensee.
l Written statements prepared according to the preceding requirements to justify information requests are not regulatory analyses within the scope of these Guidelines.
Nevertheless, the written justification will have many of the elements of a regulatory analysis. The elements of a regulatory analysis discussed in Section 4 can appropriately be included in an information request justification.
An information request justification will normally be a more concise document than a regulatory analysis.
t 5.5 Supportina Analysis for Compliance and Adeauate Protection As documented in 10 CFR 50.109 and in NUREG-1409, a regulatory action does not require a backfit analysis if the resulting safety benefit is required for purposes of compliance or adequate protection under Section 50.109(a)(4).
In these cases of exceptions to the backfit standard and analysis, a documented evaluation should be prepared, including a statement of the objectives of and the reasons for the action along with the basis for invoking the exception.
Guidance is provided in 10 CFR 50.109(a)(6) and the Supplementary Information portions of the Federal Register Notices for the final backfit rule (see 53 i
F.R. 20603 (June 6, 1988) and 50 F.R. 38097 (September 20,1985)).
In this connection, the concept of what constitutes adequate protection is determined case by case.
It is expected that this determination may change to reflect new information pertinent to whether improvements are needed to ensure i
adequate protection.
5.5
l V
For either the compliance case or the adequate protection case, if immediately 1
effective regulatory action is needed, the required documented evaluation may follow the issuance of the regulatory action.
I J
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5.6 t
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l BIBLIOGRAPHY Administrative Conference of the United States, " Agency Procedures for Performing Regulatory Analysis of Rules" (Recommendation No. 85-2,1 CFR 305.85-2) and " Valuation of Human Life in Regulatory Decisionmaking" (Recommendation No. 88-7, 1 CFR 305.88-7).
Allison, D.P., J.M. Conran, and C. A. Trottier, Backfittina Guidelines, NUREG-1409, July 1990.
Finkel, A.M., Confrontina Uncertainty in Risk Manaaement:
A Guide for Decision-Makers, Resources for the Future, Washington, D.C., 1990.
i Gillette, C.P., and T.D. Hopkins, Federal Acency Valuations of Human Life, i
prepared for the Administrative Conference of the United States, July 1988.
- Hammond, P.B., and R. Coppock, eds., National Research Council, Valuina Health Risks. Costs and Benefits for Environmental Decision Makina, National Academy Press, Washington, D.C.,
1990.
McGarity, T.O., " Regulatory Analysis and Regulatory Reform," Texas Law Review, 65:1243-1333, June 1987.
National Research Council, Risk Assessment in the Federal Government:
Manaaina the Process, National Academy Press, Washington, D.C., March 1983.
Office of Management and Budget, " Regulatory impact Analysis Guidance,"
Appendix V in Reaulatory Procram of the United States Government:
April 1.
1990 - March 31. 1991.
Taylor, J.M., Executive Director for Operations, NRC, Memorandum to Office Directors, " Revised Charter - Committee to Review Generic Requirements,"
April 18, 1991.
W. Reuland and H. Wyckoff, Nuclear Safety Analysis Center, Electric Power Research Institute, 0uestionable Technioues Used in Cost-Benefit Analyses of Nuclear Safety Enhancements, NSAC-143, November 1989.
U.S. Code of Federal Regulations, Title 10, Part 50.109,1991.
U.S. Department of Transportation, Guidance for Reaulatorv Evaluations:
i A Handbook for DOT Benefit-Cost Analysis, April 1984.
l i
U.S. Environmental Protection Agency, Guidelines for Performina Reaulatory impact Analysis, EPA-230-01-84-003, December 1983.
U.S. General Accounting Office, " Cost-Benefit Analysis Can Be Useful in Assessing Environmental Regulations, Despite Limitations," GA0/RCED-84-62, April 1984.
USNRC, " Regulatory Analysis Guidelines," Rev.1, NUREG/BR-0058, May 1984.
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- h'i Averted Onsite Costs
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2 AVERTED ONSITE COSTS:
As follow-up to SECY-91-172 (Regulatory Impact Survey Report - Final), the 4
Commission, by memorandum of December 20, 1991, directed that the staff pursue j
the following action:
"In view of the staff's ongoing effort to modify the Regulatory Analysis Guidelines and the recent commentary on the issue of averted on-site i
costs (see EPRI/NSAC Report NSAC-143, transmitted to the Commission on I
L March 27, 1991), the staff should evaluate the various arguments for how i
averted on-site costs should be treated in cost-benefit analyses.
The i
proposed revisions to the Regulatory Analysis Guidelines, including a e
thorough discussion of the issue of averted on-site costs, should then be submitted to the Commission for review and approval."
In section 4.3.2 (Estimation of Impacts) of the proposed Regulatory Analysis j
Guidelines, the staf f's proposed policy concerning onsite averted costs is i
identified. This paper provides the underpinnings for that position.
l included here is relevant background, the basis for the staff's position, alternative treatments, and the concerns raised by industry.
i AVERTED ONE N COSTS (AOSC) i BACKGROUND Averted onsite costs (AOSC) are meant to capture accident-related consequences that are viewed as the financial responsibility of the licensee. Typical cost elements include the cost of replacement output and or capacity; plant l
cleanup, decontamination, and repairs; early decommissioning; and potential onsite litigation and other financial-based licensee / industry impacts. The i
appropriateness or relative importance of these individual elements to the l
overall AOSC estimate is ultimately a function of the severity of the accident j
under consideration, and guidance in quantifying onsite averted costs, including representative dollar estimates of AOSC for power reactors, is available in NUREG/CR-3568, "A Handbook for Value Impact Analysis."
i The inclusion of AOSC in NRC value-impact analyses has been the subject of considerable controversy since it originally surfaced in the early 1980s.
The issue was first raised by the ACRS in commenting on the Commission's proposed l
safety goals.
In its 1982 safety goal deliberations, the Commission considered whether the averted reactor damage should be counted as a benefit.
Industry commenters strongly opposed any inclusion of averted plant damage j
because they believed that the NRC should restrict itself to public health and j
safety matters and not take into consideration the financial investment of the utility and its shareholders.
The Commission agreed with the utilities and I
decided not to include onsite property damage factors.
j In the subsequent evaluation of its safety goals, the Commission instructed the staff to develop any revisions which were shown to be necessary as a result of the evaluation. With respect to AOSC, the Safety Goals Steering i
J Group concluded that the definition of benefits should be comprehensive and should include AOSC.
Several arguments were offered in support of this position.
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First, as the TMI experience demonstrates, in the event of a core melt accident, even one that involves minimal offsite exposure, the financial risk is not borne exclusively by the utility.
A substantial fraction of such funding for TMl 2 cleanup has come from the public, either via customer revenues or State and Federal government contributions.
In addition, the loss of a reactor can result in decreased electric utility system reliability, higher customer rates, and replacement energy by fossil fuels with negative impact on the environment and ultimately, on public health. This implies that AOSC has very clear implications for the general public.
Second, even if a l
core melt accident resulted in minimal offsite exposure, not only would its j
i consequences include significant onsite economic impacts, but also could result in significant onsite radiological exposures.
In fact, for various core melt accident scenarios, the Steering Group concluded that onsite consequences are larger than the estimated offsite consequences for all but the largest and least probable releases.
Third, there is too much uncertainty in the risk analyses to permit making a distinction between accidents which i
threaten only the utilities' investment as opposed to public, or offsite, risks.
Fourth, as with all NEPA-type assessments, value-impact evaluations by their very nature should include all relevant impacts from a societal perspective so that decision makers have a complete picture of the consequences of their actions.
i In May,1987, Commissioner Bernthal requested the views of the Office of the l
General Counsel on whether excluding averted onsite costs in backfit analyses l
is legally defensible. The response from William Parler, General Counsel concluded that...
"under no defensible view of cost-benefit analysis can the agency i
exclude outright any consideration of averted on-site costs.
- However, given the agency's mission to protect the health, safety, and property of the public, averted on-site costs should be considered...not as i
benefits but rather as reductions in the costs associated with the proposed backfits."
Section 161 b. of the Atomic Energy Act gives the Commission authority to take actions to minimize danger to " property" and does not on its face distinguish i
between licensee's property and other property. However the reason for i
i considering averted on-site costs is not protection of the licensee's property, but rather full and accurate accounting of the real net cost of the action to the utility so that the public is not deprived of additional safety l
because utility savings were not contained in the value-impact analysis.
l I
In a Staff Requirements Memorandum to the EDO on "SECY-89-102, " Implementation of the Safety Goals," June 15, 1990, the Commission supported the use of A05C as an offset against other licensee costs (and not as a benefit) in cost-4 benefit analyses. This constituted a full endorsement of the OGC position as l
expressed in 1987.
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INCLUSION OF A05C IN VALVE-lMPACT ANALYSIS j
In NSAC/143," Questionable Techniques Used in Cost-Benefit Analyses of Nuclear Safety Enhancements," industry continues to argue that AOSC should not be i
considered in NRC's regulatory supported value-impact analyses. Their view is that the NRC's sole responsibility is for public health and safety, and that j
safety enhancements should not be influenced by financial benefits to utilities.
However, industry supports the backfit rule which provides for consideration of financial costs to utilities.
It seems inconsistent to say l
that NRC can consider financial costs which would tend against imposing a backfit but not financial benefits which would tend in favor of the backfit.
i Industry offers no reason to draw this distinction.
In either case, NRC is
" influenced" by utility financial or economic considerations.
In what appears to be a compromising mode, industry suggests that the analyst consider separately the benefit to public health and safety, and the financial benefit to the utility. This would require the development of two value-impact ratios in order to provide the decision-maker with all pertinent information.
I For the reasons enumerated by the Safety Goal Steering Group, the staff believes that a comprehensive value-impact framework that includes AOSC is appropriate for NRC regulatory decisions.
In the staff's view, the key determinant is the NRC's need to display ALL meaningful consequences from.a societal perspective. Ultimately, the NRC is deciding whether to commit scarce societal resources, and that decision must be weighed against the values that accrue to all segments of society.
From a societal perspective, values that accrue to any specific segment of society should be given equal weight to the general public.
The utilities would prefer for the NRC to perform two partial analyses.
First, justify the burden based on the public health and safety benefit, and l
second, based on the utilities' financial benefit. The implications of this are troublesome because it effectively results !n double-counting the costs, 2
i.e., in each instance, total cost would be compared to only a portion of the benefit.
In addition, the decision-maker would also now be faced with two decision criteria which could likely conflict. This would require the NRC to attach weights and consider tradeoffs between the two which effectively would involve making interpersonal comparisons between different segments of l
society.
Furthermore, based on its views concerning A0SC, industry argues that other cost savings to the industry, in addition to ADSC, are not to be included in the regulatory supported value-impact analysis.
For example, if a new regulatory requirement results in an absolute reduction in overall burden, or produces partial savings in other areas of the plant, industry argues that.
t these should be totally ignored in the regulatory based analysis.
In l
practice, the NRC has consistently taken into account all cost savings to the 3
f
industry in order to derive a net impact. Thus, adopting the same industry f
1 logic that would justify denial of AOSC would also necessitate a reevaluation 2
in this area.
In one respect, the staff is sensitive to the industry's position. The staff acknowledges that it is appropriate and customary for a firm such as a utility to base its decisions solely on the financial benefits it derives, and thus, l
from the utilities' perspective, it seems logical that the NRC should be subject to a similar standard.
However, this position misses one of the most fundamental principles underlying value-impact methodology, i.e., the private vs. social perspective. Whereas the industry's proper decision criterion and perspective is private and consequently, narrowly focused, the NRC's is more broadly based and can reasonably include societal considerations.
l TREATING AOSC AS A COST OFFSET In NSAC/143, industry identifies two fundamental weaknesses associated with the treatment of AOSC as a cost offset.
Industry argues that it is poor value-impact practice to co-mingle values and impacts and that it does not yield internally consistent economic results.
1.
Averted costs such as AOSC are values (benefits) and as such cannot be l
netted with positive costs and entered in the denominator.
An important i
distinction between values and impacts is that the impacts tend to be i
near term and are relatively certain, whereas values are probabilistic in nature, much more uncertain, and tend to occur over a span of future
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decades.
In their view, these distinctions are worth preserving in the j
value-impact analysis in order to give it greater clarity and meaning.
further, if AOSC equals or exceeds the direct industry cost, the denominator becomes zero or negative, producing, in industry's eyes, illogical results.
2.
The choice as to where to place an attribute should not produce internally inconsistent results. However, this is exactly the case.
For example, if the person-rem averted is $400, AOSC is 5200, and the impacts are $300, the value-impact ratio is 2.0 when A0SC is included in the numerator as a value (benefit), and 4.0 when AOSC is treated as cost offset.
r With respect to industry's first concern, the co-mingling of values and
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impacts, the staff acknowledges that inclusion of AOSC as a cost offset is less than optimum because of many of the issues raised by industry.
- However, in the staff's view, industry tends to overstate the case. Although it would be desirable to contrast highly certain near term impacts against highly i
uncertain probabilistic values that are future oriented, there is no definition of values and impacts, including the one proposed by industry, that i
would always produce such a desired result.
The reality is that values and impacts will frequently contain shadings that cloud such absolute characteristics.
For example, impacts can be probabilistic, highly uncertain, and continue to weigh heavily in the future, whereas health and safety values can also be important in the near term.
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i Furthermore, rather than accept industry's contention that a negative or zero denominator produces illogical results, the staff's view is that it is simply subject to a different interpretation (i.e., health and safety values can be achieved with either no impact or cost savings to industry).
With respect to industry's second concern, internally inconsistent results, the staff has proposed to revise its Guidelines. The proposed NRC Guidelines now recommend that all value-impact results be displayed on a net value basis (all consequences are assigned positive and negative values and arithmetically summed).
This effectively leaves moot the question of whether AOSC appears in the denominator or numerator, and constitutes a complete co-mingling of values
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and impacts. Nevertheless, the staff does not see anything inherently incorrect in such an approach.
It has been adopted here because it is the preferred and recommended display in OMB's latest regulatory analysis guidance
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and, its use effectively eliminates the inconsistencies noted by industry in the ratio formulation.
However, the proposed Guidelines still permit the NRC analyst to also display ratio results in recognition that they also provide an important perspective to the decision maker.
In the staff's view, the use of i
the ratio and the extent to which internally inconsistent results might mislead the decision maker is significantly mitigated by the fact that all i
alternatives and all regulatory actions are being assessed on the same basis.
RELATED ISSUES Onsite Property Insurance:
+
In a prior evaluation of A05C, four arguments were identified against the cost
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offset approach. None of them were considered persuasive, although the conclusion was made that estimates of A05C should take into account the property insurance the agency requires of licensees. This position says that l
since the NRC requires licensees to take out insurance against onsite property l
l damage, consideration of AOSC in regulatory analyses amounts to a kind of double-counting, because costs which would be covered by insurers in the event of an accident would nonetheless be treated as licensee costs in regulatory analyses.
It was therefore recommended that A0SC estimates used in regulatory analyses need to exclude costs that would be borne by insurers.
l Clearly, it is correct that only a portion of the total estimated AOSC is 4
borne by the licensee.
However, a technically correct rigorous value-impact framework should include the respective portions of the total A05C that are i
borne by the licensee and the insurer and should not be limited to only those impacts that are actually incurred by the licensee. The regulatory analysis is ultimately concerned with the societal burden that accrues as a result of the accident, and from a societal perspective, it makes little difference who i
ultimately bears the cost as long as the total cost is accurately reflected.
l l
The concern that this would constitute double-counting because the licensee i
already paid for that coverage ignores the fact that, from a societal perspective, insurance represents a redistribution of resources with no real 4
loss for society.
Insurance premiums, like taxes. are a transfer payment i
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l between different segments of society and, in and of themself, constitute no real consumptive use of resources.
(The only exception is relatively minor transaction costs and costs of managing and administering the insurance fund).
The staff recognizes that insurance is a real cost to the licensee and a real f
benefit to the insurance companies, but from a societal perspective they are a j
wash with no real resource implications and should in no way diminish the AOSC l
estimate that is to be included in the regulatory analysis.
3 Other=0nsite Costs:
Another aspect of A0SC relates to other site costs that could be averted as a direct result of regulatory actions. A recent notable example in this regard was the maintenanca rulemaking (50.65) where _ ;.9st offset was included in the regulatory analysis for the expected increasec.-. ant availability. Similarly, regulatory action associated with the operability of motor operated valves was justified in part on expected increased plant availability reflected as a cost offset in the regulatory analysis.
STAFF'S CURRENT POSITION In the NRC's proposed Regulatory Analysis Guidelines, the staff views AOSC as an integral part of the value-impact analysis and, in deference to OGC's legal interpretations, supports its use as a cost offset when value-impact results 4
are presented as a ratio.
However, the Guidelines recommend that value-impact results be displayed on a net value basis in order to eliminate certain i
criticisms raised by industry.
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Present Worth of Future Health' and Safety Effects j
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PRESENT WORTH VALUATION OF FUTURE HEALTH AND SAFETY EFFECTS i
In the past, the Agency has been criticized' for inconsistency because of its practice of applying a " discount rate"* only to future costs when performing value-impact (benefit-cost) analyses. Hence, the staff tasked Pacific Northwest Laboratories (PNL) to prepare a report addressing this issue.
Specifically, PNL was asked to prepare a paper which examines: current J
literature on the subject of present worth valuation, current guidance on the part of the Office of Management and Budget (OMB), and related practices on the part of other Federal regulatory agencies.
In general, the findings presented in the PNL report' have been incorporated in the proposed Guidelines.
Perhaps the most significant change in NRC policy prompted by the findings in the report is that health and safety effects should be subject to present worth valuation. Previous staff practice was to present worth all monetized values and impacts with the exception of health and safety effects. Health and safety remained "undiscounted" to avoid even the appearance that NRC would value future lives less then present lives.
Further, NRC regulatory analyses typically evaluated consequences over relatively short time periods (e.g on the order of 30 years in power reactor applications), and hence, the results were tolerable given the large uncertainties and error bands already inherent in the estimates of both accident probabilities and the dollar valuation of health effects. However, upon further reflection the staff now believes that the more sophisticated and realistic approach of a uniform present worth treatment of all values and impacts is appropriate to ensure a proper and consistent analysis of the merits and costs of a proposed regulatory action.
Given that this is a significant departure from earlier staff practice, the reasoning for this new staff position is elaborated below.
The ultimate objective of a value-impact assessment is to determine whether the proposed resource commitment is justified based on the expected values (benefits) to be derived.
Ideally, to best accomplish this, all consequences of the action should be put on the same basis and at the same point in time so that a meaningful comparison between values and impacts can be made.
d
' Nuclear Safety Analysis Center, 0uestionable Technioues Used in Cost-Benefit Analyses of Nuclear Safety Enhancements, NSAC-143, Electric Power Research Institute, November 1989.
2The application of present worth techniques to effects of one period so they may be compared with those of another period is commonly referred to as
" discounting." While this word is widely used by economists and throughout the government, such as in OMB
- guidance, its use has been subject to misinterpretation.
t
'Paananen, 0.H., and Hendrickson, P.L., Selection of a Discount Rate for Use in Reculatory Analyses Prepared by the U.S. Nuclear Reoulatory Commission and Application of Discount Rates to Future Averted Heath Effects, Pacific Northwest i
Laboratory, January 1993, 5
6
- 1 l
Consequently, the presentation of all effects of the action (both values and impacts) in monetary terms, relative to the time the decision is to be made, is a key element in such analyses. Creating this common base is the process of "present worth valuation." The interest rate used in present worth calculations reflects the fact that dollars invested in regulation could have been invested elsewhere in productive ventures with a positive rate of return.
It also reflects the fact that because of the earning power of money, a benefit which may be worth x dollars today, can be obtained in the future by investing a sum less than x dollars today. Many argue that failure to present-worth any individual attribute in the overall equation distorts the utility and meaning of the overall value-impact result.
In NSAC/143,' industry sets forth a number of arguments for applying present worth techniques to health effects.
Their first argument is as follows:
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At first glance it might seem that present valuing health effects treats a person-rem that occurs in the future as being less important than a person-rem that occurs today. This incorrect j
impression can occur because arithmetically, present valuing results in smaller numbers. However, the fact is that time i
valuing is needed to make a person-rem equally important regardless of when it occurs. When one equates a person-rem to some dollar value, such as $1000, there is a tacit underlyi';
i assumption that the person-rem will in some manner result i. a
$1000 cost.
This cost can occur no sooner than when the person-rem is incurred. Time valuing determines how many dollars must be set aside in the present value base year, so that with interest, i
the person-rem equivalent cost (for example, $1000) can be paid in the year the person-rem is incurred.
Industry also argues that consequences need not be expressed in monetary units to apply present worth principles (OMB regulatory analysis guidance adopts the l
same position.)
j All costs and benefits, including health effects, whether or not monetized, must be time valued to the chosen base year. While it can aid insight to monetize items such as person-rem before time valuing them, the conversion is not necessary. Person-rem can be time valued directly.
This step is essential for assuring that a person-rem is equally important regardless of when it occurs.
Lastly, industry argues that the non-discounting of health effects distorts the value-impact result and effectively produces an internally inconsistent economic analysis.
The objective of converting to a present worth value is to ensure consistent value-impact comparisons by evaluating each value and impact, regardless of when it occurs, in terms of its value at a selected base year. When all attributes are present worthed, the methodology is internally consistent, and any base year can be selected for making financial comparisons dNuclear Safety Ar.alysis Center, op. cit.
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without effecting the value-impact result.
A policy of not discounting health and safety effects makes the value-impact result sensitive to-the selection of a base year.
In industry's view:
t Quantities such as costs alone, benefits alone, and the net benefit (benefit minus cost) will differ by a factor that accounts for the value of money for the period between differing base-years.
For example, for
.j a 10 percent discount rate, a cost, or benefit, or net benefit for a certain base year would be a factor of (1.+ 0.10)5 - 1.61 larger than at-an assumed financial time base 5 years earlier.
l Additional arguments in support of this position include:
a)
The Office of Management and Budget (OMB) guidance is explicit that all values and impacts associated with proposed regulatory actions are to be present worthed.'
i b)
A recent court case involving the Environmental Protection Agency (EPA) indicated that the EPA should discount benefits as well as costs when i
performing a benefit cost analysis of a proposed regulatory action.
c)
Applying present worth techniques to all values and impacts occurring i
over time allows an analyst to evaluate a regulatory action on a common basis, in spite of its temporal disparity.
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i sit should be noted, however, that because the NRC is an independent agency, it is not required to follow OMB guidance.
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ACRS Letter of November 12, 1992.
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4 UMITED STATES e
'l NUCLEAR REGULATORY COMMISSION E
c ADVISORY COMMITTEE ON REACTOR SAFEGUARDS Y
f WASHINGTON, D. C. 20555
%....*/
November 12, 1992 Mr. James M. Taylor Executive Director for Operations U.S.
Nuclear Regulatory Commission Washington, D.C.
20555
Dear Mr. Taylor:
SUBJECT:
REVISED REGULATORY ANALYSIS GUIDELINES During the 391st meeting of the Advisory Committee on Reactor Safeguards, November 5-7, 1992, we reviewed a draft of NUREG/BR-0058, Revision 2,
" Regulatory Analysis Guidelines of the U.S.
Nuclear Regulatory Commission."
Our Subcommittee on Safety Philosophy, Technology, and Criteria considered this matter during a meeting on October 28, 1992.
During these meetings, we had the benefit of discussions with representatives of the NRC staff, and of the document referenced.
This brochure will be NRC's policy-setting document with respect to regulatory analyses.
As such, it deals with a number of very important issues that bear directly on the overall NRC regulatory philosophy and approach.
Some of the positions taken in the proposed guidelines represent departures from current practice, have never been formalized before, or differ from the industry and the Office of Management and Budget (OMB) positions.
We believe this to be such an important document that even a draft version to be issued for public comment should reflect high levels of intellectual and technical content, coherence, and clarity of thought and presentation.
Although the draft document does have much to commend it, we believe the subject deserves better.
We recommend that substantial additional effort be put into rethinking and redeveloping some of the regulatory positions and into developing a " showcase" document with respect to content, style, and quality of prose.
We da not see any urgent need for, and recommend against, issuing the draft document at this time.
We expect to review the revised document before it is issued for public comment.
In its presentations to us, the staff identified some specific issues for particular attention.
Although we agree with some of the positions taken on these in the document, we have fundamental differences with several of them. We provide you with our comments below.
Mr. James M.
Taylor 2
November 12, 1992 Safety Goal Implementation This document suffers from the absence of a clear statement of the means by which the Commission's overall regulatory philosophy will be implemented through the concepts of adequate protection, safety goals, the backfit rule, ALARA principles, etc.
Whether here or elsewhere, such a statement is urgently needed.
The safety goal decision chart only deals with issues that result in changing the core-damage frequency.
We believe it should also consider issues that could change the conditional containment failure probability.
Ouantification of Benefits Figure 3.1 of the proposed guidelines should include a step in which a determination is made on whether the proposed enhancement is something that can be evaluated by quantitative risk estimates.
If so, we believe that PRAs must be used to quantify the benefits.
If not, the analysis would go to a different decisionmaking scheme (e.g.,
expert opinion, engineering / regulatory judgment).
Treatment of Voluntary Actions We agree with the position taken on voluntary actions in the proposed guidelines.
However, we are concerned that this will tend to discourage voluntary actions.
Some
- means, outside the regulatory analysis process, should be sought to promote and encourage such actions.
Discount Rate While the OMB directive of 1981 (which has never been rescinded) applied specifically to executive agencies, NRC ought to have good reasons for ignoring it.
The fact that others do so is not a good reason.
We were told that efforts had not been made to better understand OMB's rationale.
We recommend that this be dohe.
Simultaneously Satisfyina the Recuirements of the Backfit Rule and/or the Committee to Review Generic Recuirements We agree that regulatory analyses should be made in such a manner that they also meet these other needs.
Treatment of Averted Onsite Costs The staff intends to treat averted onsite costs (AOSC) as an off-set to the costs incurred by the utilities [mplementing the associated requirement.
We believe AOSC should be included in the benefits column and not the costs column.
We are concerned, however, that the methods and assumptions used for computing AOSC
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Mr. James M.-Taylor 3
November 12, 1992 are highly uncertain and can dominate the final answer.
we recommend that further effort be given to
~Accordingly, establishing definitive guidance for AOSC evaluations.
i In the draf t document, the staff recommends that the results be i
presented in terms of net value (value minus impact) rather than as a ratio (value/ impact).
This should not be an issue because these l
are entirely different measures and both should be part of the l
decision process.
i Discountina of Health and Safety Effects 1
We are unconvinced by the arguments presented for the staff's position that health and safety effects not be discounted in the value/ impact analyses. Appropriate balancing of costs and benefits l
require discounting of each.
f Monetary Value of a Person-Rem Averted i
There is, in principle, no problem with the staff's proposed interim position, " continuing to use the value of $1000/ person-rca l
until a final recommendation can be made after further review and analysis," except that such a position has existed for about 15
- years, and can persist indefinitely.
We recommend that an I
appropriate treatment of the monetary values to be associated with and land onsite and offsite health effects (both early and latent) f contamination be developed promptly.
Sincerely, f
Paul Shewmon Chairman t
Reference:
Letter dated September 11, 1992, from C. J. Heltemes, Jr:, Office of Nuclear Regulatory Research, to Raymond F.
Fraley, Advisory Committee on Reactor Safeguards, transmitting i
(a)
Draft SECY paper (undated) for the Commissioners from James M.
Executive Director for Operations,
- NRC,
Subject:
- Taylor, Regulatory Analysis Guidelines of the U.S. Nuclear Regulatory Commission (Predecisional) l Draft NUREG/BR-0058, Revision 2
(undated),
" Regulatory
)
(b)
Analysis Guidelines of the U.S. Nuclear Regulatory Commission" (Predecisional)
(c)
Separate Enclosures (undated) on Averted Onsite Costs and i
Discounting of Health and Safety (Predecisional)
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Public Announcement B
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Public ' Announcement NRC Issues Draft Regulatory Analysis i
Guidelines for Public Comment l
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The Nuclear Regulatory Commission (NRC) is publishing for comment a proposed revision of the Reaulatory Analysis Guidelines of the U.S. Nuclear Reaulatorv Commission (Guidelines).
This is the NRC's policy-setting document with t
respect to regulatory analyses, and it includes a. number of policy positions j
that have broad implications for decisions which impose new requirements on NRC licensees. To assure a full airing of these policy issues, the NRC is i
inviting comment on its proposed Guidelines from all interested parties, The original version of the Guidelines was issued in January 1983.
In i
December 1983, the NRC issued A Handbook for Value-Impact Assessment,
[
NUREG/CR-3568, which set out systematic procedures for performing value-impact r
assessments.
Revision 1 to NUREG/BR-0058 was issued in May 1984 to include l
appropriate references to NUREG/CR-3568.
This proposed revision of the Guidelines (Revision 2) is being issued to reflect:
(1) the NRC's accumulated experience with implementing the previous Guidelines; (2) changes in NRC regulations and procedures since 1984, especially the backfit rule (10 CFR 50.109) and the Policy Statement on Safety Goals for the Operation of Nuclear Power Plants (51 FR 30028, August 21, 1986); (3) advances and refinements in regulatory analysis techniques; (4) regulatory guidance for federal agencies issued by the Administrative Conference of the United States and the Office of Management and Budget; and l
(5) procedural changes designed to enhance NRC's regulatory effectiveness.
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