ML20204C490

Provides Commission with Update on Status of Efforts to Obtain FY99-001 Funding from Us DOE to Support Us NRC Matl Protection,Control & Accounting Assistance to Nuclear Regulatory Agencies in Russia,Ukraine & Kazakhstan

ML20204C490
Person / Time
Issue date:	03/04/1999
From:	Travers W NRC OFFICE OF THE EXECUTIVE DIRECTOR FOR OPERATIONS (EDO)
To:
References
SECY-99-068, SECY-99-068-01, SECY-99-068-R, SECY-99-68, SECY-99-68-1, SECY-99-68-R, NUDOCS 9903230112
Download: ML20204C490 (10)

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POLICY ISSUE (Information)

March 4.1999 SECY-99-058 FOR:

The Commissioners FROM:

Williara D. Travers Executive Director for Operations

SUBJECT:

UPDATE ON U.S. DEPARTMENT OF ENERGY FUNDING FOR U.S. NUCLEAR REGULATORY COMMISSION MATERIAL PROTECTION, CONTROL, AND ACCOUNTING ASSISTANCE TO THE REPUBLICS OF THE FORMER SOVIET UNION l

PURPOSE:

To provide an update to the Commission on the status of efforts to obtain fiscal year (FY) 1999-2001 funding from the U.S. Department of Energy (DOE) to support the U.S. Nuclear Regulatory Commission's (NRC's) material protection, control, and accounting (MPC&A) assistance to the nuclear regulatory agencies in Russia, Ukraine, and Kazakhs+an.

DISCUSSION:

SECY-98-205 provided information concerning the status of NRC efforts to obtain funding from DOE to support NRC's MPC&A assistance to Russia, Ukraine, and Kazakhstan during FY 1999-2001. Staff committed to updcte the Commission on the Office of Nuclear Material l

Safety and Safeguards (NMSS) planned course of action soon after DOE's notifying NMSS of FY 1999 funding levels. After numerous meetings to discuss various aspects of the request, DOE provided a formal response to NRC's requests on February 16,1999, which addressed some of the issues.

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Theodore S. Sherr, NMSS/FCSS (301) 415-7260 l

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e The Commissioners 2-As part of NRC's funding request, DOE was provided preliminary funding information during 1997 and 1998, and, at DOE's request, NRC provided DOE, during July 1998, work plans, developed in coordination with the recipient countries, containing anticipated project and cost information for NRC's FY 1999 assistance for the three countries.

On July 1,1998, NRC sent a letter to DOE (Attachment 1) requesting: (1) DOE agreement to

. fund NRC staff costs for the support activities; (2) joint cooperation in the development of a reimbursable agreement to transfer DOE funding to NRC for staff and project-related costs; and 2

(3) DOE's commitment that, beginning FY 2000, a separate line item be established to fund NRC in DOE's budget request. On August 26,1998, the Commission met with Executive Branch officials to address interagency funding of NRC's safety and safeguards assistance to countries of the former Soviet Union. The DOE representative at that meeting stated that DOE could fund NRC staff costs through the reimbursable agreement mechanism. A follow-up letter was sent to DOE on September 25,1998, (Attachment 2) reminding DOE of the commitment its representative had made at the August meeting with the Commission, and requesting a

- response to the issues raised in the July 1998 letter.

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Staff continued to pursue resolution of FY 1999-2001 MPC&A support funding issues with DOE's Former Soviet Union Task Force management and staff. On four occasions (October 21,1998; Der, ember 18,1998; January 26,1999; and February 16,1999) NRC management and/or staff met w% DOE officials and contractors to discuss various aspects of the DOE funding of NRC's staff and project costs.

During the most recent meeting, on February 16,1999, NRC received a written response from DOE to the July 1998 and September 1998 letters (Attachment 3). In the response, DOE formally commits to provide reimbursement for NRC staff costo and task 'unding beginning in FY 1999. DOE states that it will provide NRC $280,000 in FY 1999 for MPC&A work with Russia and that these funds will be identified in DOE's next fina'1clat plan for transfer to NRC.

In addition, the letter acknowledges that the staffs from both agencies are working together to develop the NRC-DOE Reimbursable Agreement. (During the me6 ting on October 21,1998, NRC provided a markup of the NRC-DOE Plutonium Disposition Reimbursement Agreement to DOE, for DOE to use as model text for the development of an NRC-DOE MPC&A reimbursable agreement.) DOE did not endorse the use of a ceparate line item request in its budget as a mechanism for providing funds to NRC. Instead, the resoonse states, " DOE will continue to integrate NRC supported tasks into cur out-year planning as we develop long term requirements." Staff intends to pursue funding of staff salaries and benefits and overhead costs as well as travel and contractor support costs, all of which will be specified in the reimbursable agreement.

The utilization of the FY 1999 funding for Rutsia is not only dependant on the completion of the reimbursable agreement, but also requires agnement on the specific tasks to bo performed, in response to Reecian requests, NRC had proposed to conduct in FY 1999 two MPC&A workshops in Russia and support inspector accompaniments in both Russb and the United States, in addition, DOE has expressed interest in NRC support to Russia in developing a long term regulatory implementation and suoport plan.

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j-The Commissioners 3-i Assuming that agreement is reached on the proposed FY 1999 tasks and funding is received

~ by the third quarter, NRC should be able to complete the workshops by the end of the FY 1999.

In addition, work could commence on the development of the long term regulatory implementation and support plan.

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The DOE formal response addressed only funding for Russia for FY 1999. With regard to l

Ukraine and Kazakhstan, staff was informed that this would be addressed in a separate communicatien. The responsibility for Ukraine and Kazakhstan is in the process of being i

transferred to another Division within DOE. The new organization has included NRC projects in its preliminary draft plan, but the availability of resources is still being assessed. Also, at an l

upcoming meeting in early March in Vienna, DOE Intends to confirm that the NRC-proposed efforts do not duplicate those of any other donor countries. DOE also plans to coordinate plans for support with the European Union during May 1999.

Although the DOE response is helpful, it does leave open a number of important issues, some of which may be resolved as we continue to work with DOE in this area. However, it is possible that the conditions, level, and uncertainties associated with DOE's funding of NRC's MPC&A support may significantly dilute the contributions that NRC can make, and adversely impact, to a substantial degree, how efficiently NRC's contributions can be made. Three potential problems are as follows:

The uncertainty in the level of funding, and in the timing of when DOE funding decisions will be made, will make it difficult for NRC to plan staff assignments, and to coordinate activities with each recipient country in a time frame consistent with each country's implementation plans (i.e., the recipient country's internal plans for implementing elements of the regulatory program). It is already difficult to identify and coordinate the schedur.ng of activities with the recipient coun*:ies, in addition, DOE oversight, depending on how this is performed, could.ake this already challenging planning and coordination process more difficult, possibly resulting in program delays and additional staff effort to satisfy the needs of this oversight.

DOE staff, at times, referred to direct future NRC participation in DOE support activities, particularly with Russia. NRC has participated, on a limited basis, in DOE meetings, document reviews, and training sessions. More extensive participation in the future could dilute NRC's ability to make direct contributions to the recipient states (i.e., could interfere with the provision of regulatory support where NRC can make the greatest contribution to the MPC&A regulatory programs of Russia, Ukraine, and Kazakhstan).

The DOE letter states: "In any case, any contracting will continue to be done through the national laboratory system." If staff is constrained to use only DOE laboratory support, in lieu of private contractors with prior NRC regulatory experience, NRC would need to place less reliance on contractor support, and more on NRC staff. (The cost of the NRC staff would be covered by a reimbursable agreement) Without increased utilization of NRC staff, the MPC&A support activities would likely need to proceed at a much slower pace.

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Staff plans to continue working with DOE in implementing the FY 1999 program, and planning for FY 2000 and beyond. As part of this process, staff will prepare a letter to DOE, identifying the foregoing problems, and requesting a DOE response by June 1999. li such a response is not received by that time, or it does not adequately address matters that are crucial to the cost-effectiveness of NRC staff efforts, staff will propose to the Commission that a notification be sent to the National Security Council stating that NRC is withdrawing from this program. This notification would be appropriate because Presidential Decision Directive 41 addresses NRC's role in providing MPC&A regulatory support to Russia, Ukraine, and Kazakhstan.

RESOURCES:

NMSS' FY 1999 and FY 2000 budgets include two FTEs and zero contract support and travel dollars to support MPC&A assistance to Russia, Ukraine, and Kazakhstan. The DOE commitment of $280K in FY 1999 provides funds for activities associated with the Russian FederMion only. DOE plans to address funding to support MPC&A activities in Ukraine and Kazakhstan by separate communication.

COORDINATION:

This paper has been coordinated with the Offices of International Programs, General Counsel, the Chief information Officer, and Chief Financial Officer, which have no objections.

t NM 'w William D. Travers Executive Director for Operations Attachments:

1. Letter from NRC (M. Knapp) to DOE (R. Gottemoeller) dated July 1,1998

2. Letter from NRC (C. Stoiber) to DOE (L. Spector) dated September 25,1998 l

3.

Letter from DOE (L. Spector) to NRC (C. Paperiello) dated February 16,1999 i

DISTRIBUTION:

Commissioners

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July 1. 1998 Ms. Rose E. Gottemoeller, Director Office of Nonproliferation and National Secunty U.S. Department of Energy 1000 Independence Avenue, S. W.

Washington, DC 20585

Dear Ms. G,

ottemoeller:

Thank you for your letter of June 2,1998. which addressed matters related to future funding of the NucleOr Regulatory Commission's matenal protection, control, and accounting (MPC&A) regulatory support to the nuclear regulatory agencies of Russia, Ukraine, and Kazakhstan We appreciate the Department of Energy's (DOE's) commitment to provide future fundiitg to NRC for MPC&A related work.

Our letter of March 24,1998 included requests for the funding of NRC staff costs, as well as the fur, ding of program travel and contractor costs. Can we assume from your response that the DOE commitment includes the funding of NRC staff costs? This is a matter of specialinterest to the Commissioners who directed that staff pursue negotiations to obtain full reimbursemen' af staff costs. As noted in our March letter, in the absence of a DOE commitment for reimbursement of staff costs, NRC will be forced to reconsider its involvement in this program.

If the DOE commitment includes the funding of NRC staff costs, we propose that we commence with the development of a reimbursable agreement that provides for full recovery of NRC full time equivalent (FTE) costs beginning in FY 1999. Specifically, we propose a reimbursable agreement, applicable to NRC staff costs for the NRC MPC&A support program for Russia, Ukraine, and Kazakhstan, similar to the reimbursable agreement NRC and DOE negotiated and signed for NRC activities in support of the DOE program for excess fissile materials dispositio A copy of that Agreement is enclosed for your convenience.

With regard to program travel and contractor costs, in accordance with the guidance enclosed your letter, we will prepare work plans for the proposed NRC efforts for Russia, Ukraine, and Kazakhstan. In particular, we are updating and revising the MPC&A program and cost data, previously provided to DOE, to conform to the work plan guidance it is anticipated this information, pertinent to FY 99 activities, will be provided in the near future. An early decision with regard to DOE Fiscal Year (FY) 1999 funding of the travel and project elements of NRC's support program is essential to permit NRC to make appropriate arrangements with our suppor contractors, and confirm necessary arrangements with our regulatory counterparts in the three countries.

ATTACHMENT 1

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l R E. Gottemoeller To add predictability to the process in the future. we request that DOE's budget submissions.

starting with FY 2000. include requests for funds covenng staff. contractor, and travel costs specifically earmarked for NRC's MPC&A support program for Rc;sta. Ukraine. and Kazakhstan.

If your staff has any questions. they should contact Mr Theodore Sherr at (301) 415-7218.

Sincerely, L

& q) spy Malcolm R. Knapp, Acting Director Office of Nuclear Matenal Safety and Safeguards 1

Enclosure:

DE-Al01-97MD10203: Technical Suppod for the Preparation and Review of Licensing and Compliance and Documents cc: L. Spector, DOE M. McClary, DOE K. Sheely, DOE M. Haase, DOE i

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WASHINGTON, D.C. 20555-0001 Q-September 25, 1998 i

Mr. Leonard Spector, Director Office of Arms Control and Nonproliferation U.S. Department of Energy 1000 Independence Avenue, S. W.

Washington, DC 20585

Dear Mr. Spector:

Thank you for your participation in the Commission bnefing held at the Nuclear Regulatory Commission August 26,1998, which provided important information regarding the Department l

of Energy's (DOE's) position on the provision of funding for NRC's future materials protection.

control, and accouniing (MPC&A) support activities in Russia, Ukraine, and Kazakhstan. We appreciate DOE's commitment to provide reimbursement for NRC staff costs and task funding beginning in FY 1999 Our understanding from the August meeting is that you will be completing your review of NRC staff proposed FY 1999 activities, and providing the results of l

this review in terms of activities to be funded. To date, NRC staff has received no feedback on the work plans submitted by NRC staff on July 23,1998. These were submitted in accordance with the guidance provided in the Rose Gottemoeller letter of June 2,1998.

An early response is needed to facilitate appropriate planning for the conduct of the FY 1999 activities. Please let us know when we can expect this response. if additionalinformation is needed to enable an informed review, we will provide any additional information needed. NRC staff attempted to schedule a meeting with your staff in early September, without success.

You mentioned at the meeting with the Commissioners that a reimbursement mechanism similar to that utilized in the fissile materials disposition area would be appropriate. NRC is in the process of drafting an MPC&A reimbursable agreement, based on the fissile materials disposition agreement, and NRC will provide the draft to the DOE MPC&A Task Force in the near future for review and coniment.

As a related matter, we are still awaiting a response to the letter dated July 1,1998, which was sent to Ms. Gottemoeller from Dr. Knapp. This letter addressed two issues, i.e., DOE's willingness to fund NRC staff costs, and DOE budget funding specifical'y earmarked for NRC's MPC&A support program beginning in FY 2000, it would appear that your remarks at the Commission meeting address the first issue. We would appreciate a formal response addressing this issue, as well as the request for specific funding for NRC support activities beginning in FY 2000.

ATTACHMENT 2

F Mr. Leonard Sp ctor 2 - SEP 2 51998

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1 We appreciate your timely assistence in this important matter and if further information is needed, please contact Mr. Michael Kelly at (301) 415-8137 or Mr. Theodore Sherr at g

(301)415 7218.

Sincerely,

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hp,hrj.;..",auDef Carlton R. Stoiber, Director Office of International Programs i

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Department of Energy WasNngton, DC 20585 i

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Mr. Carl Paperiello, Director Office of Nuclear Material Safety and Safeguards U.S. Nuclear Regulatory Commission Washington, D.C. 20555-0001

Dear Mr. Paperiello:

This is to follow up on the letters previously exchanged between the Nuclear Regulatory Commission (NRC) and the Department of Energy (DOb) on the subject of funding for NRC i

support to DOE in Material Protection, Control, and Accounting.

)i DOE has made a commitment to provide reimbursement for NRC staff costs and task funding beginning in FY1999. Funding for NRC-supported work for FY1999 will be $280,000 for work in the Russian Federation. Our staffs have been working together for the last several months to work out the scope and details of the tasking to the NRC. They are in the process of developing the Inter Agency Agreement, with scope of work, tasks and deliverables and I have directed that the above funding be transferred to the NRC in the next fmancial plan.

NRC requested a line item starting in DOE's FY 2000 budget submission. This request wu for funds. designated to the NRC staff, contractors, and travel costs. DOE wants to exploit the expertise on the NRC staffin support of the MPC&A program Though not listed as a sepante line item, DOE will continue to integrate NRC supported tasks into our out-year planmng as w e develop long tenn requirements.

As we confirm our plans for FY 2000, we will be able to determine the scope of NRC staff support. We will provide details as soon as we can to facilitate your plannmg. In any case, any contracting will continue to be done through the national laboratory system.

Thank you for your patience and cooperation as we work through these issues. I am confident that we will bring them to a mutually acceptable resolution. If you have any questions, please call John Boyd (202) 586-2143.

Sincerely, jg Leonard S. Spector Director f

1 Office of Arms Control and Nonproliferation i

ATTACHMENT 3

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J. Boyd, NN-40 E. Ten Eyck, NRC J. Dunn Lee, NRC i

M. Kelly, NRC B. Moran, NRC T. Sherr, NRC l

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