ML20212G621

Transcript of 990922 Public Meeting in Rockville,Md Re Meeting on Center for Strategic & International Studies Rept, Regulatory Process for Nuclear Power Reactors Review. Pp 1-54.Supporting Documentation Encl

ML20212G621
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Issue date:	09/22/1999
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REF-10CFR9.7 NUDOCS 9909300058
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1 s:  ;; anu i UNITED STATES OF AMERICA i NUCLEAR REGULATORY COMMISSION

Title:

MEETING ON CENTER FOR STRATEGIC AND INTERNATIONAL STUDIES REPORT "The -

Regulatory Process for Nuclear Power Reactors-a Review" PUBLIC MEETING '

i Location: Rockville, Maryland

. O 1 Date: Wednesday, September 22,1999 io

%)Y Pages: 1 - 54 ANN RILEY & ASSOCIATES, LTD.

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PDR 10CFR PT9.7 PDR

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4 k :.

DISCLAIMER I

This~is an unofficial transcript of a meeting of

' the United States Nuclear Regulatory Commission held on September 22, 1999, in the Commission's office at One White Flint North, Rockville,. Maryland. The meeting was open to public attendance and observation. This transcript has not been reviewed,~ corrected or edited, and it may contain

- i 1

inaccuracies.

1 The transcript is intended solely for general  !

informational purposes. As provided by 10 CFR 9.103, it is not.part of the formal or informal record of decision of the matters discussed. Expressions of opinion in this transcript do not necessarily reflect final determination or j

beliefs. No pleading or other paper may be filed with the Commission in any proceeding as the result of, or addressed to, _any statement or argument contained herein, except as

. the-Commission may authorize. ,

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I~~* '1 : 1-UNITED-STATES OF AMERICA r 2 NUCLEAR REGULATORY COMMISSION l

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3 OFFICE OF.THE SECRETARY I: 4- ***

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l- 5. MEETING ON 6' CENTER FOR STRATEGIC AND INTERNATIONAL STUDIES REPORT-I

.7 "The. Regulatory Process'for Nuclear Power 8 Reactors-a~ Review" 9 ***

10 PUBLIC MEETING 11-12 Nuclear Regulatory Commission 13 One White Flint' North 14 Rockville, Maryland 15 Wedhesday, September 22, 1999 16 ,

The Commission met in open session, pursuant to 17 notice, at 9:00 a.m., Greta J. L '.cus, Chairman, presiding.

18 19 COMMISSIONERS PRESENT:

20 GRETA J. DICUS, Chairman of the Commission 21 NILS J. DIAZ, Commissioner 22 EDWARD'McGAFFIGAN, JR., Commissioner 23 'JEFFREY S. MERRIFIELD, Commissioner 24-l 25 ANN RILEY & ASSOCIATES, LTD.

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2 1 STAFF JJE) PRESENTERS SEATED AT THE COMMISSION TABLE:

• 2 ANNETTE L. VIETTI-COOK, Secretar, of the 3 Commission

<4 KAREN D. CYR, General Counsel 5 JOSEPH GRAY, Associate General Counsel 6 JOHN F AHEARNE, Project Chair, CSIS Nuclear 7 Regulatory Process Review Steering Committee j 8

9 10 11 12 13 14 15 16 l'7 18-19 20 21 22 23

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l L 3 1 PROCEEDINGS 2 [9 : 00 a.m]

3 CHAIRMAN.DICUS: Good morning, everyone. I would l 4 like'to welcome you all to today's meeting regarding the l

5 report by the Center for Strategic and International Studies 6 (CSIS) entitled "The Regulatory Process for Nuclear Power 7 Reactors, a Review."

8 The report, which is a product of the CSIS Nuclear 9 Regulatory Process Review Steering Committee, of which 10 Commissioner McGaffigan and former Chairman Jackson were 11 members, examined NRC's operational practices and regulation 12 of nuclear plan?s specifically in areas related to reactor 13 and plant operations.

14 It focused on those policy and process issues it 15 considered to be central to the interactions among the NRC, the industry and the public and where appropriate provided 17 ' recommendations for improvements or changes.

18 To present the observations and recommendations of 19 the report, I am particularly pleased to welcome Dr. John 20 Ahearne, the CSIS Project chair of this effort, who also 21 happens to be a former' Commissioner and Chairman of the NRC.

22 With your considerable experience since your days 23 . with the Commission prior to Three Mile Island, we look 24 forward to your presentation and insights that you can give 125 us as to'what has or~has not changed, where we are as an ANN RILEY'& ASSOCIATES, LTD.

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4 1 industry today, and where we can go from here.

2 Do any of my fellow Commissioners have any opening 3 remarks that they would like to make?

4 COMMISSIONER MERRIFIELD: Chairman, I have one 5 brief comment I would like to make. I want to join the 6 Chairman in thanking our former Chairman and colleague for 7 taking the' time to come before us today. I know he has a 8 very busy schedule, and we appreciate getting the benefit of 9 a small part of our time.

10 This was quite an effort. I haven't taken the 11 opportunity to review the entirety of the report and there 12 are a number of very helpful recommendations made by the 13 panel. Having spoken about it with the other members of the 14 Commission, I think we take very seriously the effort that 15 was put into this by you and the other members of your 16 panel.

17 I also want to make a last comment. I know there 18 was a very strong effort on your part as Chairman of this 19 particular project to include a variety of non-industry 20 participants and bring them to the table -- David Lochbaum, 21 Thomas Cochran at NRDC; Paul Portney of Resources for the 22 Future.

23 I know you also had to work hard to try to ensure 24 that some of their dissenting views were documented in the 25 report, which is contrary to standard CSIS practices. I I

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? -1 think that clearly shows.the amount of effort that you put 2 into making this a useful document, and I look forward to 7 3 the interchange this morning.

l 4 CHAIRMAN DICUS: Thank you very much.

5 Dr. Ahearne, welcome back.

6 MR. AHEARNE: Thank you. Several opening 7 comments.

<8- As we mention in the report, we froze our work at 9 the end of January so that the material presented was,as we 10 understood it, as was understood many months ago. 1 11 We also mentioned in the report several times we 12 understood the NRC was taking steps in the direction of many 13 of the scommendations and in some cases had done major 14 improv, ents. I understand-that this kind of progress has

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l 15 continued. So I recognize that the report as it stands is a 16 time photograph and consequently there may well have beer  ;

17 many changes since then, although I think most of the 18 recommendations still are solid.

19 I would like to acknowledge, as was mentioned, the 20 contributions of Chairman Jackson. Commissioner McGaffigan 4

21 worked very hard. He was a diligent, constant member of our 22 group. 'Ashok Thadani'provided significant assistance.  ;

23 Steve Crockett was also of immeasurable help. Ray Durante, 24 who is somewhere in the audience, who was the project 25 director for this, was someone who worked much harder than I ANN RILEY & ASSOCIATES, LTD.

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6 1 did. I don't know if Lisa Highland is here this morning, 2 but she was a' staff person at CSIS who also put in an 3 enormous' amount of effort.

4 This is, as was mentioned already by Commissioner 5 Merrifield, slightly differ,ent.than the usual CSIS document.

6; .It is a" consensus report except in those instances where 7 -there is a' comment mentioned that there was a disagreement, 8 and a disagreement in almost all cases was by the public 9 interest' group. representatives. They did agree with most of 10 the report, and in particular Dave Lochbaum was one of the 11 group leaders of the effort and contributed significantly in 12 moving this report forward.

13 What I would like to do is cover what I see as 14 some of the most important points. This is a relatively

,15 infornal meeting, so interrupt me any time that you would

16. like to. I assume that you have at least gone through the 17  : report, and there aren't any major surprises.and issues.

18 As you know, underlying the report, the reason for 19 it, was a concern not only in the Congress, but I'm sure in 20 the NRC and also very much in the utility industry that as 21 the utility industry moves towards the area of deregulation, 122 de-economic regulation of!the utility industry where plants 23 are being sold, other plants are being closed for economic 24 1 reasons', the number of utilities running nuclear power 25 plants.are decreasing and non-utilities are getting into the

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1 business of running nuclear power plants.

2 All of this is a sufficiently changing environment ,

3 that there is a real concern that the Nuclear Regulatory i

4 Commission is going to keep abreast of all of those changes. I 5 The NRC is a major factor in the economic success of the 6 nuclear industry. It's critical, obviously, for the safety, 7' but the actions taken by the NRC can have a major economic 8 impact. As the world is changing so rapidly, there was a 9 concern as to whether NRC was going to be changing rapidly l 10 enough.

l l 11 We broke these issues into areas of 12 implementation, the inspection, assessment, and enforcement

13 area. We call them emerging issues. Not that they are new, 1

i 14 but.that they are becoming more important to license 1

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'15 transfer, license renewal, decommissioning, and we stress 16 consistently through here the need for a clearer definition 17 of the safety philosophy; clear, concise definitions of 18 adequate safety. This was a major issues stresses not just 19 by the utility members but also by the public interest group 20 members.

21 We recognize the NRC has made changes and taken 22 steps to address many of the issues.

23 I noticed on my way in that the NRC is having a 24 ' seminar by Vince Cavello, who is a leading expert on risk 25 assessment. We point out that building risk insights into 1,

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8 1 the regulatory framework is going to be quite. difficult. We

• 2 ~ endorse it as being a very strong and positive' movement, but 3 we also comment that it's going to be quite difficult to do 4 that.

5 We urge the NRC to continue to pursue and complete 6 many of the proposed programs that we were told about.

7 We note that, for example, moving into very few 8 specifics, the assessment process, as you all know, can have 9 a major impact on the financial community. What the NRC 10 says about plants does have a ripple effect as far as the 11 financial side of the nuclear regulatory system impacting 12 upon the nuclear power plant industry.

13 We raise the question, is the NRC inspecting the 14 proper areas? Thtre is a mutual concern. On one hand, as 15~ we say, excessive or misguided inspection may result in 16 distraction of resources from safety issues. Inadequate or 17 misfocused inspection may result in the NRC failing to 18 detect activity or trends that compromise adequate 19 protection.

20 The largest set of criticism came from the 21 stakeholders -- in our terminology here, that meant both the 22 utility and the public interest groups -- that some 23 inspections don't maintain a sharp safety focus but deal 24 primarily with administrative details.

25 We come back many times to the question of what is 1

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9 1 the safety philosophy that the NRC wishes to embed in its 2 processes. For example, how is the NRC safety philosophy 3 embodied in the enforcement program? Is the enforcement 4' action, or the many actions, directly related to safety

5. significance of violations?

6 As you know, decommissioning is becoming a more 7 prevalent issue, because obviously older plants are going to 8 be decommissioned, and some plants are being decommissioned 9 before the end of their lifetime. There are many issues we 10 address that are outside the direct purview of the Nuclear 11 Regular Commission, but we urge the NRC to get involved in 12 some of those discussions with either Congress or other 13 federal agencies.

14 License transfer, as you well knew, is coming to 15 be a'more common feature as plants are being bought by other 16 companies. So far the NRC seems to have been doing a very 17 effective job on that. We essentially urge you to continue 18 to be effective on it.

19 License renewal probatty was the issue that was 20 most talked about before our study began, a concern 21 obviously being, are plants going to renew their licenses?

22 The Energy Department and the White House have had studies 23 done pointing out the need for the continuation of the 24 operating nuclear power plants, and these become even more 25 important as one understands the ramifications of such l ANN RILEY & ASSOCIATES, LTD.

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10 1 proposals as the Kyoto proposal: how can the. United States 2 significantly reduce or at least maintain without increasing 3 the amount of greenhouse gas emissions if a larger number of 4 nuclear power plants were to be shut down? So the 5 recognition is now more widely spread of the need to keep 6 the power plants open.

7 Of course this is a national interest; it's not a 8 utility interest. The utilities, looking at the economics 9 of those plants, are looking at sort of a different book.

10- As you well know, a major question is, will license occur on 11 a reasonable time scale and will a set of requirements be 12 imposed by the NRC that are able to be lived with by the

'13 utilities? These were very sensitive issues.

14 As far as we knew at_the time we wrote this, the 15 NRC was doing a very good job with the Baltimore Gas &

16 Electric and Duke Power proposals, but there still were a 17 large number of concerns raised by the utility side.

18 We talk a bit about risk-informed regulation. I 19 will get back to that and I will go into a little more 20 detail.

21 The backfit rule probably was the most contentious 22 and, as Commissioner McGaffigan knows, probably the most 23 difficult one for us to work through and actually get into 24' the' report in a way that people would sign off on.

25 Now let me hit a couple of the points that I would ANN RILEY & ASSOCIATES, LTD.

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11 1 like to stress.

2 We don't want to minimize, and I hope we don't, 3' the need for the. safety focus of the NRC. As we say, safety

'4 considerations must remain the primary focus. However, the 5 NRC must' find a way to work with its licensees and 6 stakeholders in a more constructive and open manner.

7 I will quote several times, but let me expand on 8 it. We say, the change from prescriptive deterministic 9 regulation to risk-informed, performance-based regulation is 10 a potentially dramatic one. It requires a change in the 11 procedural cultural of the NRC and the licensees. Also the 12 availability of resources and budget will have an impact.

13 I've looked at research programs'for many years.

14 A couple of years ago in association with a couple of other i 1

15 university colleagues I participated in a study that looked 16 at could the research program of the NRC and the research 17 . program of DOE somehow cooperate more closely because both I

18, were declining in dollars.

i 19 I spend a lot of my time now looking at the 20 long-range structure of the nuclear energy research program i

21 for the Energy Department. I also work a lot in science 22 policy type issues. Research is integral for the economic 23 health of a country like the United States. The United 24 States is a technological country. It' runs on the basis of 25 high technology. High technology doesn't magically appear.

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i 12 1 It requires'a lot of'research' effort, which takes time to *

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2 develop.

3 .A regulatory system, particularly one that~is i

i 11 ' moving in a new' direct direction, this risk-informed, 5: performance-based regulation, has to be based on solid )

6 understanding, and that's research. I must admit I'm 7 appalled by the-continuing reduction in the research budget 8 in the NRC.

l 9 .I'm not sufficiently familiar with the L10 interactions.between the NRC, OMB and the Congress. Having 11 playe'd in that game myself many-years ago, I know those are 12 not simple. But unless there is a base of research to

.13 . support this new trend, sooner or later a major problem is

'14 going to arise and you will find that the foundation is very

-15 weak. Research, I think, has to be supported, but that's an i 16 issue that you folks have to decide.

i 17 We said that PIUt can- be applied widely. We raised 18 'a concern -- are the techniques of PRA sufficiently well 19 understood? .Our conclusion was they are not. We have seen 20 .enough PRAs that are done poorly. We believe that both the 21 industry and the NRC staff are going to have to work hard to 22 ..be brought up to a level of technical understanding so that

'23- they can apply PRA consistently.

24 The concept of risk-informed, performance-based 25, regulation is excellent, but it really is a challenge to ANN RILEY & ASSOCIATES, LTD.

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e 13 make'sure people have the competence to apply it, and we 1

2 express-a concern that both the industry and the NRC staff 3 are not yet there.

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4 The application of risk insight will be wonderful 5 if the competence is developed. As we say, a major 6 education task will be to develop competence in both NRC and 7 industry.

8 For implementation, as I mentioned, we keep coming 9 back to a concern that the safety philosophy is not clear 10 enough. Many years ago the NRC developed safety goals. We 11 recognize there is a PRA policy statement and the strategic 12 plan has a statement of the safety philosophy, but our 13 consensus was the NRC does not have.a clearly defined safety' 14 philosophy that is consistently applied for all nuclear 15 power plants.

16 Our conclusion is there is little controversy 17 between advocates and adversaries of nuclear power that is 18, not rooted somehow in differences of opinion as to'what 19 ' adequate protection really means. Most of your regulations 20 were developed in an era'of determinism, so they are based 21 upon deterministic analysis. If you are to really move down 22 this path of risk-informed, performance-based regulation, a 23 lot of the regulations are going to have to be revised.

24 The current safe operations of plants, as we say, 25 is-a tribute to the skill and professional judgment of the ANN RILEY & ASSOCIATES, LTD.

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14 1 individuals-who framed the regulations that they have worked 2 as well as they have, but there will have to be a lot of 3 changes made, and that is going to be difficult.

4 We concluded that the boundary where the issues of 5 regulatory-change come is where you define the issues and 6 activities that, however important to the efficiencv of the 7 utility or to production of electricity, create no or very 8 minimal levels of risk. Therefore, those are areas where 9 the NRC, in our' conclusion, has no regulatory function, and 10 there is a criticism that in many cases the NRC has 11 , continued to operate in a regime where it can have a major 12 impact on the utility but not have any significant effect on 13 the-health or risks.

14 The seven cornerstones that the NRC developed we 15 endorse. As we understood at the time you wrote this, you 16 were moving forward to develop a safety philosophy around 17 those seven cornerstones.

18 .

On the assessment process we ran into, as I'm sure 19 all of you have, there were concerns that the assessment 20 process is different as you go across the regions of the 2 NRC. That is a problem, if that is correct. The argument 22 is that the assessment process is subjective and based on 23 unclear standards without a safety focus. We urge that 24 there be more work.put in in trying to develop clearer 25 guidelines that would be understood by all of your ANN RILEY & ASSOCIATES, LTD.

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15 1 inspectors.

2 The criticism that I'm sure you've heard we heard 3 strongly, and in this case both from the utilities but also

-4 very strongly from the public interest groups, that the NRC 5 inconsistently applies the criteria for putting out a 6 removal from the watch list.

7 A concern was raised that in some cases plants 8 seemed to have been not put on when, if you applied the 9 criteria consistently, they should have, and in some cases 10 they were put on, where if you applied the criteria 11 consistently they should not have. As I say, the unique 12 thing there was that both the public intercst groups and the 13 utility representatives saw this.

14 On the inspection process, we agreed, as you well 15 know, that the law assigns the NRC the responsibility for 16 establishing the regulations, but it's the responsibility of 1

l 17 the licensee to operate the facility safely. We also l i

18 understand that the inspection process is an audit process.

19 Consequently what you do is inspect on an a periodic basis 20 certain areas.

21 We_ note that there is criticism that the 22 . inspection has two kinds of weaknesses. One weakness is 23 that inadequate or misfocused inspection could lead to the 24 NRC failing to detect trends that compromise adequate l 25 protection On the other hand, misguided inspection may end ANN RILEY & ASSOCIATES, LTD.

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r 16 1 up focusing on areas where the utility puts resources in 2 that are not significant additions to safet.y but, since 3 utility resources are finite, detracts from their ability to 4 put those resources in areas that are.

5 Criticism that in an area that indicates degraded 6- performance the inspection process sometimes stops short of 7 going.to the root cause. Some stakeholders have criticized 8 the NRC, on the other hand, for using the inspection process 9- ar. a mechanism to impose new requirements, and I will get 10 back to that.

11' The. concern on the enforcement process was 12 somewhat similar. We say sanctions imposed at a higher 13 severity level than warranted by the safety implications 14 have tangible and intangible consequences. The tangible 15 ones, obviously, are the amount of a civil penalty. The

16. intangible ones' include the perception of a troubled 17 performer and therefore impacting the-plant's ability in the ]

18 financial community.

-19 However, there are adverse consequences when the 20 NRC puts lower sanc.tions on than are warranted.

21 Artificially lowered sanctions can mask the safety 22 significance of a violation.

23 We concluded that, at least at the time we looked,

.24 the enforcement program had several problems: lack of a 25 clear safety focus; use of undefined subjective criteria; ANN RILEY &. ASSOCIATES, LTD.

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. .. p 17 1 tendency to use different staff interpretations; and the .

2 lack of timeliness.

, 3 .A criticism was that many times, or at least l

L 4 sometimes, an inspection will turn up something that is j 5 going to lead to a a violation and enforcement process, and 6 six months later the enforcement action will be taken, which 7 is far too long.

8 The current policy allowing the staff to double a 9 civil penalty when the violation of a similar severity level 10 in the past two years han occurred and the policy allowing 11 the staff to mitigate a civil penalty when the licensee has 12 avoided a similar violation in the past two years, we 13 concluded both of those should be dropped.

14 The argument is if you are concerned about l 1

15 repeated offenses, it has tools other than boosting the 16 civil penalty, and you shouldn't overlook a performance 17 problem simply because the owner has not re,ently 18 . ' experienced the same problem. So our argument is that 19 inflating or deflating civil penalties in that manner j 20 artificially widens the gap between good and bad performing )

21- plants.

22 On the~other~ hand,-we agree that you should allow 23 the staff to dismiss the' civil penalty for severity 3

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24 violations when the licensee self-identifies and corrects 125' ~the problem, because we don't believe you should ever give ANN RILEY & ASSOCIATES, LTD.

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18 1- .the licensee'a disincentive to be undertaking 2 self-assessment.

3' On the decommissioning side, we recognize that 4 there are many issues that are not directly under the 5 licensing authority of the NRC, but nevertheless we do raise 6 -theLissues.

7 For example, the tax treatment of decommissioning 8 funds. the expressed a concern that the way the IRS code 9 currently was written, it had the assumption that the power

.:U] plants would remain under the control of a utility. The tax 11 code doesn't allow for the changes the industry is making as 12 it moves to this competitive market. The concern is that

'13 the tax code doesn't allow a tax free transfer of 14 decommissioning funds, which could significantly impact on 15 .the ability of a new owner to operate the plant.

16' The bankruptcy code doesn't ensure that the 17 obligation to fund decommissioning will continue to be met.

18 The AEC was formed under the Atomic Energy Act.

19 As'you know, that is then carried over, as amended, to you, 20 but it doesn't give you. explicit authority to retain 121 'j urisdiction'over a licensee that transfers their licenses 22- and~other interests in nuclear power plants but retains 23

responsibility for decommissioning funding.

24 These are issues that we believe should be 25 addressed, recognizing that this requires congressional ANN RILEY & ASSOCIATES, LTD.

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19 1 action. When talking about the IRS code, it's an action by 2 the Treasury Department to take that issue up with them. '

3 The bankruptcy protection also requires a change in the 4 statute. The obligations for non-licensees would require an 5 amendment to the Atomic Energy Act. So there are a number 6 of issues that relate to other agencies.

7 A contentious issues which we debated in our 8 committee and didn't reach any resolution other than saying 9 it is a significant issue, and I know the NRC is well aware 10 of that, is the overlap in radiation standard setting 11 authority between the NRC and the EPA. It's something that 12 you are very familiar with.

13 As we say, the majority of the Project Steering 14 Committee members felt the NRC was in the best position to 15 establish safety standards. It is recommended resolution of 16 the matter be agreed upon and decision be made as soon as 17 possible. This is one where the public interest group 18 representative definitely disagreed. One of the issues they 19 took up was they believe that the Part 50 which is now used 20 for decommissioning isn't the one that should be applied; 21 they believe that Party 72 should.

22 On license transfer, we concluded that you were i

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23 moving fairly smoothly in that direction. We just wanted to 24 encourage that to be continued. We note that this is both 25 an NRC and industry issue and you both must work together so i

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20 1 that-there.can be this.

2 We do recommend, and you may have taken action on 3 these, a series of actions to improve the process for 4 reviewing financial and technical qualifications:

5 Clarify to the extent possible the federal tax and 6 antitrust implications;

-7 Develop policy options with respect to foreign 8 ownership or3 control, and we note this may require amendment 9 to the Atomic Energy Act; 10 Develop standard review plans; 11 Issue lessons learned from completed transfers and 12 develop a road map.

'13 We point out NRC has achieved much progress and 14 continues to strive for greater efficiency and 15 standardization.

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As a personal note, it said NRC is considering

' 17, ' dropping the antitrust reviews. I don't know if you have

18. done that. That was the most painful thing I had to go 19 -through. Reading through those cases, all the antitrust 20 material, that'was a monster.

21 ' COMMISSIONER McGAFFIGAN: We've only done it for 22 license transfers. For.the initial operating license,-the 23 ' statute.requiras it.

24 MR ~. AHEJRNE: -I'm not a lawyer.

L '25 COMMISSIONER.McGAFFIGAN: The lawyer is laughing.

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21 l-COMMISSIONER MERRIFIELD:

i 1 I don't like it any more l

2 than you do. I am a lawyer.

l 3 MR. AHEARNE: On license renewal, as we point out, l

l 4 we-say it's important that any plant that can economically

~5 justify extending its plant life should be able to do so and 6- to expect a predictable, fair, efficient and timely 7 licensing process.

8 There are several issues that we raise that we 9 thought would have to be looked at with more care.

10 The question on whether the structured systems and 11 components regulations that already exist, we argue that 12 those should be enough and you need not have a major review 13 of those; if they are meeting the current regulations, that 14 should suffice.

15 The generally applicable renewal issues, both 16 technical and process, we urge those be completed on a 17 generic basis rather than being left open for the individual 18 plant cases. ,

i 19 We recognize that it's both an NRC and an industry 20 issue on the side that the industry could well use working 21 more closely with itself to try to see if they couldn't 22 reach some agreement on a uniform approach for license 23 renewal.

24 We suggest eliminating the requirement to perform 25 an aging management review for those that it can be shown on ANN RILEY & ASSOCIATES, LTD.  !

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22 1 a generic basis manage aging effects currently.

2 The public interest si'm!p people disagreed. They 3 contend that the license renewal unfairly prohibits 4 meaningful public participation and recommended the NRC 5 revise its procedures so that public comment doesn't begin 6 until'all the responses for additional information have been 7 received.

8 COMMISSIONER MERRIFIELD: Chairman, on that 9 particular point, since I wasn't part of the process as 10 Commissioner McGaffigan was, I think I might benefit from 11 having a better understanding of the interchange among the 12 members as it relates to that point, because I know that 13 issue has been raised to us directly by some of the public 14 interest groups. I'm wondering what some of the discussion 15 was among some of your members.

16 MR. AHEARNE: As indicated here, in any of our 17 sections where you have a set of recommendations and there 18 is no statement on the public interest group, that means 19 that they agreed with what was said. In this particular l

20 case they are pointed out as disagreeing. Everybody else 21 had a different position.

22 Their conclusion was that the current system of 23 moving towards a more streamlined approach for license 24 renewal, which clearly the industry strongly supports, the 25 administration is interested in having license renewal be ANN RILEY & AS,SOCIATES, LTD.

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E 23 1 done in an efficient and timely fashion and in a way that it 2 doesn't impose major obstacles to going for license renewal.

3 All of that is focused on streamlining the process.

l 4 The public interest group members raised the issue 5 that in that push towards streamlining the process major

.6 safety-significant issues may be submerged, and in 7 -particular they felt that the process for the public comment 8 shouldn't begin until the NRC has said, now we have all the 9 information that we need from the licensee, and then the 10 public comment period could begin. They are interested in a 11 greater opportunity to participate in the license renewal.

12 COMMISSIONER MERRIFIELD: Did that resonate at all 13 with the majority? Were there any suggestions about how we 14 might be able to ameliorate some of those concerns without 15 unnecessarily slowing down the process?

16 MR. AHEARNE: Probably the two areas would be one

17. point that I stressed many times here. In the absence'of a

~

18 better definition of what is meant by adequate protection, l

19 it is difficult to resolve a number of these issues on a 20 generic basis, and it ends up being a case-by-case basis.

21 It also brings in more subjective judgment.

22 I.think both sides of these debates would like to 23 get as clear a statement as possible so that one has a more 24 obvious standard against which to judge. Industry is not 25 interested in having significant safety issues swept under IdR1 RILEY & ASSOCIATES, LTD.

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24 1- the rug, because that only will later come back to be a 2 problem for them. Public interest groups are concerned that 3 that;will happen. I'm sure the NRC doesn't want that to 4 happen.

5 Another-point we do make fairly consistently is 6- that.the more transparent the NRC can make its processes, 7 the more likely you are going to be able to avoid the 8 distrust and the opposition.

9 COMMISSIONER McGAFFIGAN: 'If I could just add.

10 I'm having a hard time finding it in the chapter. That last 11 point th'at Chairman Ahearne made is in here, that we welcome 12 the involvement of the public interest groups throughout the 13 procesa. There is an involvement through the environmental 14 impact statement process that they have. It's a very public 15 process; the safety evaluation report process with the ACRS

~

16 involvement. So we try to stress there is a larger role for

-17 the pub'lic, if they choose, in making sure that safety 18 - issues are not missed.

19 On-the issue of mining the requests for additional 20 information, I made the point, and others, that that is 21- inconsistent with the way we conduct hearings. The National 22 Whistleblower Center in this case had six months in which to 23 come up with a viable contention and failed to do so during 24 that period,- and it's-inconsistent with the entire history 25 of-our hearing process that you wait to the end of the ANN RILEY & ASSOCIATES, LTD.

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25 1 drafting of the SER before hearing would begin.

They have l

2 to be bringing something to the table, and they should be 3 able to examine the license on their own.

4 That is before the court at the moment. That 1

5 issue is before the federal appeals court. That is the 6 heart of the case that will be judged on October 10. But 7 there are a lot of ways to be involved in our license l 8 renewal process other than through a formal hearing.

9 MR. AHEARNE: This expands beyond a particular  !

10 point here, but let me make a couple of comments.

11 Mark Shields once wrote, "In D.C. perception is j i

12. reality." He also said reality is reality. If your process

]

13 is perceived as being unfair, the fact that you can make an 14 argument that it's really fair.doesn't go too far. You've j i

15 got to worry about how is it perceived if you are worried 16 about whether it's going to be judged as unfair treatment.

17 In the end, many people in the nuclear industry 18 want to avoid what an old army general used to call the 19 hassle factor. If they perceive moving into an arena with 20 the NRC that is going to lead to a lot of heated arguments 21 by strong public interest groups, they'd just as soon avoid 22 it, and that "just as soon avoid it" may mean they'll shut 23 their plants down. You really have to worry about that.

24 You may win in the courts.

25 COMMISSIONER MERRIFIELD: As you know when you ANN RILEY & ASSOCIATES, LTD.

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26 1- were Chairman, it's a careful balance that we have to -

2 bridge,.on the one end fully satisfying the public's desire 3 for us to protect public health and the environment, at the 4 same time not imposing an undue burden on' industry and the 5 operation of those reactors.

6 MR. AHEARNE: It's not easy. I certainly wouldn't 7 Eay that all objections raised by the public interest groups 8 are sound.

9 COMMISSIONER MERRIFIELD: Nor are those by 10 . industry either.

11 MR. AHEARNE: That's right.

12 COMMISSIONER.MERRIFIELD: Chairman, I had a 13 related question that was brought up by the former Chairman.

14 CHAIRMMf OTCUS: .Go ahead.

15 COMMISSIONER MERRIFIELD: This resonates 16 throughout the Innort. It's the issue on the vision for 17 adequate.protecticn. It's. salted throughout the report that 18 that it is an important criterion. As you mentioned, it was 19 shared by both the public interest groups as well as

'20 industry.

21 M9 AHEARNE: Right.

22, COMMISSIONER MERRIFIELD: I don't know whether the 23 task force grappled with this or'whether you can articulate 24 it, but going from the theoretical sense of having that

-25 definition.to a more; practical route, trying to come up with ANN RILEY & ASSOCIATES, LTD.

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27 1< a definition that will satisfy ourselves, the industry that 2 we regulate, and the public interest groups and the public, i

3 how do we get there? How do we-come up'with a useful )

4 definition that we can grab on to, yet one that is going to

'5 satisfy these groups that have united in their opposition to 6' the-fact that'we don't have that definition?

l

'7 MR. AHEARNE: If it were easy, it would have been 8 done.

9 CHAIRMAN DICUS: They'd have done it in the 10 report. i

-11 COMMISSIONER MERRIFIELD: Some would assert that j 12 it's easy. By reading this report, some would assert that 13 it's easy.

.14 MR. AHEARNE: It's very hard. I think as we all 1 i

l 15 know, particularly some of the people sitting in the 16 audience, we.in this regulatory-framework have been 17 struggling with that for decades.

18 I think.as you-are moving more towards the risk

19. and performance you may have a better chance, but you are 20 going have.to try to probably. set up some kind of a task 21 -~ force, committee, composed of regulators, stakeholders, both 22 public interest groups and utilities, and to try to work 23 through that. -

24 It's missing, and its absence continually came up 25 as the fundamental reason why so many of these other ANN RILEY & ASSOCIATES, LTD.

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28 1 problems exist. We did not attempt to try to do that. We -

2 had a.hard enough time putting together what we have here, 3' but to actually try to develop that, that's a whole other 4 study and-it really would have to be done by the combination 5 of people that I mentioned.

6- CHAIRMAN DICUS: Let me interrupt.just for a 7 moment. I'm in the situation this morning that I have 8 overlapping meetings and I'm going to have to represent the 9 Commission at the other meeting. So I need to leave in a 10 couple of minutes. I want to ask you a question.

11 I very much appreciate your taking the time to be 12 here and to go through this and try to explain some of these 13 things and interact with us. I very much appreciate it.

14 I'm sorry I'm going to have to leave.

15 'The report states that risk-informed regulation 16 must be accepted and stilized by all levels of the NRC 17 organization, which we certainly recognize, and it is going 18 to be one of our challenges to do that. Could you give me 19 your views to what degree you think the risk-informed j 1

20 ' regulation has been accepted and will be accepted and

-21 utilized by the industry?

22 MR. AHEARNE: I think in words'it's quite widely l

23 accepted. If you start at the top of the organizations, you 24 will find that people use the words well. As you begin to 25 move down to middle management you probably still find ANN RILEY & ASSOCIATES, LTD.

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E l 29 l 1- acceptance of the words. When you move down to the worker 2 level, I don't think they really understand what it means.

3 This is compounded by the fact that in a number of instances 4 when the worker level and the utilities deal with the 1

5 inspector and the NRC, neither of them really understand I 6 what it means. It's going to take a long time.

7 CHAIRMAN DICUS: Ic will take time. I think'we 8 recognize that. It is going to be a challenge to the l 9 industry as well as to the NRC.

10 MR. AHEARNE: Absolutely. As we say, it's both 11 sides.

12 CHAIRMAN DICUS: One other quick question. The 13 NRC has as one of its performance goals to maintain safety.

14 MR. AHEARNE: I would have thought that is the 15 most important.

16 COMMISSIONER McGAFFIGAN: It is.

17 CHAIRMAN DICUS: But many of our international 18- colleagues have been quite vocal in voicing their views that 19 the role of the regulator is not to maintain safety but 20 rather to improve safety. Given your experience as a former '

21 regulator, I would be interested in your philosophy on this 22 subject.

I 23 MR. AHEARNE: On the one hand, there are many l 24 countries, the ones particularly with whom I spent time, the 1

25 Ukraine and Russia, that have to improve safety very l

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30 1 definitely. I think that in the United States the concept 2 of regulation is to establish a floor. If you fall below 3 that floor, if you have a gray band, you then come under 4 increased scrutiny, and if you go below the bottom of that 5 gray band, you get shut down. This is quite consistent

(

6 with, for example, the safety case philosophy in the United 7 Kingdom.

8 If you run into people who say that the role of 9 the regulator is to improve safety, I guess I would disagree 10 with that, unless you are in a situation where the safety is 11 inadequate, in which case you close it down.

12 CHAIRMAN DICUS: I think France has been very 13 concerned about that statement.

14 COMMISSIONER McGAFFIGAN: If I could follow on I

15 with that. Monsieur La Coste was here, the chief French 16 regulator, and we all' talked to him a bit about this. He 17 believes that his job is to improve safety. He will require 18 corium spreaders and containment liners and God knows what 19 else, and EPR.

i l 20 He says the difference between us French and you 21 Americans is we believe nuclear power has a future. We 22 invest in research; you don't. Ir. order to gain the l 23 public's confidence that the future is going to be better i 24 than the present, we're going to make them better, and we 25 are going to require that beyond any safety necessity.

l l

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[ 31 1

1- He links that there is a future to the nuclear 2 industry to his desire to improve safety beyond health 3 requirements.

4 MR. AHEARNE: As we all recognize, in France there 5' are bleary lines between the industry and the government and 6 the regulator.

7 COMMISSIONER McGAFFIGAN: They are trying to make 8 them clearer.

9 MR. AHEARNE: In this country it's obvious that 10 many in the industry, that is, the vendor side of the 11 industry, and the Energy Department do believe that new 12 designs ought to be seen as safer. That is part of the 13 philosophy that if nuclear power is to be reestablished in 14 this country,. changes have to be made, and the safer concept l 15 is not necessarily because the current plants are unsafe; 16 it's just that the in'dustry has concluded, DOE has concluded l'7 that that is one of the criteria that will have to be 18 applied for new plants. That is different than the role of 19 the regulator.

20 COMMISSIONER DIAZ: (presiding] Why don't we 21 finish with your comments, and then I think we all want to 22 go back to adequate protection, risk-informed, and all those 23 small issues.

24 MR. AHEARNE: Okay.

1 On the risk-informed, the point that we stress ANN RILEY & ASSOCIATES, LTD.

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32 1 several times is we see this as a major challenge to the NRC 2 to take these bodies of regulations and transform them into 3 a risk-informed, performance-based set. As we say, what has 4 not been looked at well and needs attention are the 5 regulatory requirements established immediately following 6 the accident at TMI-2 that were not based primarily on risk 7 insights. I can well endorse that since I was heavily 8 involved in setting up many of those, and risk insights were 9 not an issue that we were looking at at that time.

10 We do have the concern that was reflected by 11 industry that the NRC process is not well adapted to 12 incorporating new technologies. As we say, the NRC 13 historically has been slow to respond to industry-wide and 14 plant-specific requests for plant modifications and process 15 improvements based on PRA analysis and incorporation of 16 advanced technology or both. We urge moving forward with 17 the risk-informed approach.

18 The public interest group representative 19 disagreed. Their argument is that the quality of the 20 existing PRAs really doesn't support further progress. They 21 thought that the NRC should establish minimum standards for 22 PRAs and then conduct audits to ensure those are being met 23 before there is any further movement towards risk-informed 24 regulation.

25 On the license amendment, again we recognize that ANN RILEY & ASSOCIATES, LTD.

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33 1 the NRC has been making some major changes in the license 2 amendment process, but we urge further work to be done. We 3 did'not see the Arthur Andersen report, but our 4 understanding was that it identified significant room for 5 further improvements that'the NRC could make.

6 In the license amendment, again we comment that 7 the risk aspect did not seem to be incorporated into the 8 approach on license amendments.

9 We realized that as you move in these new 10 directions it would be useful to remove as much detail as 11 possible from the license and tech specs while it retains 12 the objectives. We know that the improved tech spec 13 approach, which has not yet been incorporated by all plants, 14 is a step in that direction, and we urge you to try to urge 15 the licensees to move in that direction.

16 On the hearing process, which was another area we 17 spent a lot of time discussing, we discussed the difference 18- .between the adjudicatory and the legislative hearing. As we 19 point out, we use the term " adjudicatory hearings" as trial 20 type hearings that make use of cross-examination and 21 discovery.

22 We urge the NRC to take advantage of the 23 flexibility allowed to it under the Atomic Energy Act to use more legislative hearings. We thought it offered potential  !

24 25 advantages. This was not something that the public interest ANN RILEY & ASSOCIATES, LTD.

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34 1 group representatives agreed with. They thought the current 2 requirement for formal hearings, discovery and 3 cross-examination is critical for the public to have an 4 appropriate involvement.

5 2.206 was an issue we discussed at some length.

6 .The 2.206 process, we grant, is something that is more 7 expansive than is necessary to satisfy the statutory 8 requirements, but the public interest side of the world does 9 not believe that the way the NRC implements 2.206 is doing a 10 f air j ob of it . In fact, the term they frequently used was 11 "it's a sham." So we made some significant recommendations, 12 including that the director's response be written in a way 13 that is more technical: I 14 The director's decisions could describe the 15 issues, the facts, the safety significance, corrective 16 actions, additional actions that should be taken, and a 17 conclusion regarding the overall adequacy. l 1

1 18 We note that many times the decision will say that i 19 they are rejecting the petition, but actually the licensee 20 or the NRC are taking most of the actions.

21 We also recommended that just as when a licensee 22 submits a vague application, the NRC staff will go back and 23 ask for clarification, when a 2.206 petition comes in that 24 is vague the NRC, rather than just rejecting it, should ask 25 for more information.

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l 35 1

1 The rule-making process. You've been doing a good I

2 job of improving it. We see that the efficiency in the l 3 rule-making process will be even more important as you go i

4 through the process of trying to redo a lot of regulations.

l 5 Finally, on the backfit rule, a very contentious 6 issue, I think that is one in which the NRC staff strongly 7 objects to'the criticisms that are raised by the industry on l 8 the backfit rule, but the industry is just as strong in 9 belief that the staff has taken many actions to 10 inappropriately impose requirements without going through l 11 the analysis required by the backfit rule.

12 Industry believes that misuse of the compliance 13 exception is a major problem; 14 Imposition of requirements by informal statements l l

15 during inspections, enforcement and assessment; l

16 And then the inappropriate use of averted onsite 17 costs. The case that is brought up is that averted onsite 18 costs that are not safety significant should not be used in j

( 19 the cost-benefit analysis of the backfit rule.

20 In this particular case we did not recommend any i

-21 changes, but we did recommend as a reconsideration, as we 22 say, the primary mechanism for improving the situation will 23 be continuation of the reform process that the NRC has 24 begun. Changes in the assessment and enforcement processes 25 to make them more objective, safety focused and risk ANN RILEY & ASSOCIATES, LTD.

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36 1 informed can eliminate many of the informal interactions 2 that result in the imposition of backfits.

3 Risk-informing Part 50 should reduce the volume of 4 regulatory guidance, and the use of the compliance exception 5 should be significantly reduced.

6 Then we suggest the NRC review its guidance for 7 considering averted onsite costs.

8 Again, here is an area where the public interest 9 group people disagreed. Their argument is the industry has 10 not provided the data to support the allegations of backfit 11 rule abuses.

12 That is a very lengthy in time but short in detail 13 summary.

14 COMMISSIONER DIAZ: Thank you very much. It is 15 really good of you to come.and share your thoughts with us.

16 I think I will take a stab at a couple of minor issues and 17 then I'll ask my. colleagues to pound on you -- I'm sorry.

18, To ask you some questions.

19 The issue of adequate protection. I'm sure you 20 struggled with that for many years, as you said, and all the 21 Commissions have struggled. I think everybody agrees that 22- further definition is required in that area.

'23 From your experience and from the complexity of 24 the issue and all of the relationships between adequate 25 protection and what the nation wants or what the national ANN RILEY & ASSOCIATES, LTD.

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E 37 1 interest'is, wouldn't it be a little simpler -- not that it 2 will be simple, but a little simpler process to address the 3 issue of the assurance'of adequate protection which can be 4 bound at:some level in which'you might have adequate-

5 protection, still not exactly defined with numbers and 6 things, but still be able to establish the processes with 7 assurance"of adequate protection, which is really.what we 8 can work at? We cannot really define what adequate 9l protection is;because the nation might want to define what

'10 that level is.

11 MR. AHEARNE: Two answers to that. First, 12 obviou_ sly the NRC's major regulatory function is, as you 13 say, to provide the. assurance that this is being done. What 14 our. report kept coming back to and the discussions kept 15 coming back to'is that if-you could in a. process that would' 16 have to be-widely encompassing come up with a better 17' definition of what is the adequate protection, then your 18 systems of assessing and enforcing and inspecting could do a 19 better job of assuring that that is met. If one doesn't

.20- know the-standard against which you are measuring assurance,.

21 it is quite difficult to make.a convincing case that you are 22 ensuring that amorphous standard is met.

23 Also, as was pointed out many times, the industry 24- believes that, given an amorphous standard, the NRC can 25 force changes that-are unnecessary, and the public interest I ANN RILEY & ASSOCIATES, LTD.

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38 1 group believes that, given an amorphous standard, the NRC 2 can avoid taking actions that should be taken.

3 I think it is the consistent view of this group 4 and also my view that it would be well worth another attempt 5 to see if one couldn't come up with some' acceptable 6 definition of what is adequate protection.

7 As I said, it's not something that you can do 8 yourself. It really has to. involve a broader set of 9 participants, and most likely if you were able to come up 10 with some strong definition like that, you would have to get 11 it validated by the Congress.

12 COMMISSIONER DIAZ: My point on that is that 13 because that is going to be a very difficult and long 14 process, we might be able to work in the shorter term to 15 establish the basis in which adequate protection can be 16 established or defined. Rather than coming from the top 17 down and getting something that really might be a very hard 18, case to sell, come from the bottom up in the same open 19 process, trying to establish what the assurance actually 20 represents today.

21 I think I am going to open it up to my colleague, 22 Commissioner Merrifield.

23 COMMISSIONER McGAFFIGAN: I wanted to get to this 24 point too. I participated in this report heavily. One of 25 the sentences I'm most proud of getting into this report is l

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39 i I

1 in the safety philosophy' chapter where1it says in a L 2; prescriptive deterministic framework, this, having a clear, 3 consistent, well understood statement of safety philosophy l 4 and meaning of adequate protection, may be impossible.

l L5 That is in the report.

6: It then goes on in the next sentence to say, a 7 risk-informed framework that makes use of risk insights 8' together with engineering-judgment and operational data can 9- narrow the difference and provide greater clarity. Not 10 perfect clarity..

11 Then in the risk-informed chapter, as you pointed 12 out, it states that the majority of the report, not just the 13 public interest groups who would say that w'e should go whole 14 hog, but the majority view says that'all the improvements 15 necessary to move to a risk-informed approach will not come 16 to pass'unless there is a significant effort to upgrade the 17 -capability of both NRC staff and licensee staff to do PRAs.

18, -Currently many of the PRAs are poorly done. It will take 19 'several years to bring the staff to the necessary level if "20 such an upgrade is. emphasized.

21 When you get back to safety philosophy, the only 22- thing that was actually said in here other than this call >

23- for doing what may be impossible, according to one of the 24 sentences, is in a deterministic framework.

25 MR. AHEARNE: But you're moving away from a ANN RILEY & ASSOCIATES, LTD.

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40 1 deterministic framework.

2 COMMISSIONER McGAFFIGAN: We are moving away from 3 it. Like Commissioner Dian just said, from the top down, do 4 you suddenly mandate ten to the minus four core damage 5 frequency, ten to the minus five LERF is how we are going to.

6 judge whether a plant is safe enough, when you have PRAs 7 that you say are poorly done and couldn't sustain that?

l 8 MR. AHEARNE: I said two things. First, I tried 9 to stress it's going to take several years to get to the 10 understanding of how to do good risk analysis. It's not  !

l 11 easy. It's easy to do it badly. It's not easy to do it  !

12 well. But if you don't get started, you'll never get there.

13 The second is, as I tried to say also, it is 14 because you are moving towards this different regulatory 15 framework that there may be a better opportunity to try to 16 get greater clarity into adequate protection. It is going 17- to have to be an iterative process.

18 As you know, probably as strong a consensus as we ,

19 had on anything across the spectrum of the participants was 20 the need.to get better clarity into what is adequate i

21 protection.

22- COMMISSIONER McGAFFIGAN. The frustration for this

-23 Commissioner was-that aside from saying you are probably on l

24 the right track with the cornerstones and the performance 25 indicators from the cornerstones which everybody agreed on, 4

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41

• 1 1 there was zero consensus as to how to get that clear, l 2 consistent statement.

3 MR. AHEARNE: But as you know, we didn't try to 4 get consensus on how to get to that, because that's an issue l 5 that really has to come out of the Commission working with 6 all of these other groups. Realistically, our small effort 7 here pales in comparison to the power and might of the 8 Commission.

1 9 COMMISSIONER DIAZ: I can't resist saying that I l 10 believe state-of-the-art risk analyses are quite adequate to j 11 get us to a different level. What is missing is the 1

12 commitment to get them done and use them.

l 13 MR. AHEARNE: I agree.

14 COMMISSIONER DIAZ: Now I turn to my colleague, i 15 Commissioner Merrifield. -

16 COMMISSIONER MERRIFIELD: We engaged in this 17 discussion about adequate protection. As you walk through 18, the difficulties it would take to get there in terms of 19 having external groups are.d ultimately having Congress make a 20 decision, we have enough difficulty getting Congress to act 21 on things which -- I' worked up there, so I guess I can say 22 this -- are relatively noncontroversial, let alone something 23 of this nature, which I would imagine would engender some l

24 greater degree of difficulty.

25 I am reminded of an old joke. We had three ANN RILEY & ASSOCIATES, LTD.

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l 42 1 individuals fall into a very deep hole in the ground. One 2 was a civil engineer, one was a mechanical engineer, and one 3 -was an economist. The civil engineer tries to create some 4 ramp so they can climb their way out. The mechanical 5- engineer is thinking about fashioning some sort of staircase-6 with' materials in the bottom of the hole. And the economist 7 says, well, imagine if we had a ladder.

L 8= This discussion almost reminds me of that.

9 Imagine if we could find adequate protection. Given all the 10 inabilities ~of this Commission and others to come up with t.

11 that over such a long period of time and all the other 12 hurdles we have to get there, it's a tough battle.

13- MR. AHEARNE: It ir a tough battle, but let me 14 point'out some years ago, right after Three Mile Island, 15 Dave Okrent, who was on the ACRS at the time, said, it might 16 be really useful if somehow we could achieve a safety goal.

17 It took six years to get the safety goal policy put in 18 place, but it was able to be done. It was a step forward.

19- It's hard to get there. It takes a lot of effort, and it 20 doesn't come quickly.

21 COMMISSIONER DIAZ: Other comments?

22 COMMISSIONER MERRIFIELD: I've got some other 23 'questionsLin another area.

~

24 - COMMISSIONER DI'AZ: Let's finish adequate 25 protection and then go forward. Anything else on adequate ANN RILEY & ASSOCIATES, LTD.

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I l L- 1 43 l' 11 prctection?

2 COMMISSIONER McGAFFIGAN: One of the frustrations 3 for me is there are 13 chapters and lots of recommendations, 4 but this report doesn't prioritize those recommendations.

5 MR. AHEARNE: As you well know, we did that 6 deliberately.

7 COMMISSIONER McGAFFIGAN: Right. Since you didn't 8 prioritize, where do we put this?

9 MR. AHEARNE: I think if you were to run a phrase ,

i 10 check through the document, you could probably reach the l 11 conclusion that developing a clearer definition of a safety 12 philosophy and adequate protection is integral to a large i

13 number of~the recommendations.

14 COMMISSIONER DIAZ: We will go to another subject.

15 Commissioner McGaffigan. ,

16 COMMISSIONER McGAFFIGAN: Maybe I am staying on 17 the same subject. We talked earlier about Monsieur La Coste

~81 and the Europeans.

19 MR. AHEARNE: Some Europeans. Not the UK.

'20 COMMISSIONER McGAFFIGAN: The UK is unique, but 21 the Germans and the French, say. We talked to ACRS earlier 22 .this year about safety goals and core damage frequency goals

-23 and LERF goals and that sort of thing. I mentioned to them

'2 4 ' .that I read in Nucleonics' Week they had FRAMATOML bemoaning 25 the fact that the Americans had not required of Westinghouse ANN ElLEY & ASSOCIATES, LTD.

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44 1 and GE and CE things like corium spreaders and containment

• 2 liners. Dana Powers, the head of our ACRS, said, well, 3 that's because the Europeans de facto have a LERF goal close 4 to zero, ten to the minus seven or something.

5 Are we ready for a debate? Should our LERF goal 6 be ten to the minus seven, ten to the minus six, ten to the 7 minus five? De facto in Reg Guide 1.174 for small changes 8 -- we don't believe the absolute numbers in these PRAs, but 9 for changes in PRAs we have a delta LERF that is ten to the 10 minus six; we will approve license amendments if they are 11 below ten to the minus six; if they are above that, we are 12 skeptical, although the LERF goal is ten to the minus five 13 as a whole. Just like CDF, we will approve things up to ten 14 to the minus five in a risk-informed license amendment. We 15 won't consider the range in between ten to the minus four 16 and ten to the minus five.

17 Are we really ready? If we have that debate, I 18 could well' hear Mr. Lochbaum or others say, well, ten to the 19 minus seven sounds pretty good. If that's the French goal, 20 the German goal, why can't it be the American goal?

21 That would require enormous changes even for the 22 next generation of reactors that we have already approved.

23 We didn't have that in the back of our head. We had the 24 policy statement of 1986 and the PRA policy statement and 25 things are not as constraining, but we have not had a big ANN RILEY & ASSOCIATES, LTD.

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45

'l national debate about how safe is safe enough for nuclear 2 reactors in many years. '

3 MR. AREARNE: All I think you are pointing out is 4 maybe it_is time.

5 COMMISSIONER MERRIFIELD: Let me take a little

-6 different tack. One of the things you mentioned was the 7 issue of research. I am almost wondering if Ashok Thadani I 8 paid you a little bit to say that.

9 MR. AHEARNE: The only person who paid me anything 10 is somebody bought me a cup of coffee.

11 COMMISSIONER MERRIFIELD: I say that facetiously.

12 MR. AHEARNE: I didn't even get paid for my Metro 13 ticket.

14 [ Laughter.] i 1

15 COMMISSIONER MERRIFIELD: I'm sure the 1

16 Commissioners will be glad to chip in for that one.

17 I understand the point that you are making, that 18 we necd to have sufficient research as we move forward.

19 MR. AHEARNE: We need to have more research.

20 COMMISSIONER MERRIFIELD: We are in a budget 21 atmosphere right now where Congress is not going to give us 22 .any more money. We are faced with an industry from whom we 23 receive our fees that is making a very strong attack against 24 the current amount of dollars that we receive. From the 25 Senate this year, unlike last year, we were able to get our ANN RILEY & ASSOCIATES, LTD.

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4 46 1 ' full funding. Last year we had threats, as you know.

• 2 This year we have not yet gotten the full amount 3 from the House. We received a $10 million cut from our 4 request.

5 We hope and expect in the end as we come through 6 conference we will receive the amount necessary to do what 7 we need to do to protect public health and safety.

1 8 Despite the fact that this nation has relatively l 9 large budget surpluses, there is significant pressure on all 10 agencies, including ours, to keep down our dollar levels.

11 So to the extent that one were to say we need more money for l 12 research, we are to a certain extent in a zero sum game 13 situation here, and that is, if we are to give more money to 14 research, where are we to take that from?

15 The other issue is there are a lot of things that 16 we do research on. We have recently as a Commission gone 17 through the early steps of our FY-2001 budget debate. We 18 looked at a lot of things in that budget debate, including 19 issues associated with research. There are an awful lot of 20 things that our research folks do very, very well. We have 21 excellent research, probably the best in the world. There 22 are other areas where'I think the Commission had some 23 questions: Do we need to be focusing on these areas?

24 The report says and you have repeated today that 25 we need to have more money for research. What areas i

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j Washington, D.C. 20036 l (202) 842-0034 l

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47 specifically do you believe we need more money for research?

1 2 Are there areas right now that we are spending money for 3 research that perhaps we don't need to be spending money on 4 research, and where do we get that money?

5 MR. AHEARNE: Let me give you a number of answers.

6 To start with, there are some areas that are 7 obviously outside of your direct control. I thought it was l l

8 a great mistake when the Congress said, unlike most of the l l

9 other regulatory agencies, NRC has to be fully funded by its '

10 licensees. I think that at least on research the Congress 11 ought to take that as part of the general budget and not 12 charge it to the licensees, because it's really protecting i

13 the public, just as EPA. I 14 As far as getting more money out of the Congress, 15 you worked in the Congress, and Ed, you worked in the 16 Congress, and I've dealt with the Congress for 25 or 30 17 years. It's very hard to get money out of the Congress.

18 It's very hard to get money through OMB. It can be done, 19 but you have to really believe it's very important.

20 I've got to be careful how I say this, but my 21 sense is that there has been a lack of appreciation at the 22 senior levels of the NRC of the longer term need to maintain 23 a strong research capability.

24 You said what areas should you put money into that 25 you are not and where are fou putting money that shouldn't ANN RILEY & ASSOCIATES, LTD.

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i 48 1 be. I'm not that familiar with the NRC research program

• 2 other than it has been declining significantly at the same 3 time that the issues that are being faced by the nuclear i 4 power plants and therefore by the NRC are changing. That 5 is, aging questions which are so significant for license 6 renewal; the development of the regulations that are gcing 7 to be on a different basis. All of these are questionk 8 which need better understanding underlying them, and that is 9 going to be done through the research programs.

10 I just think you need more money in research.

11 COMMISSIONER McGAFFIGAN: We had a discussion 12 about this at the steering committee meeting. I remember 13 Chairman Ahearne turning to the industry and asking if any 14 of the members supported our research budget, and I think we 15 were greeted by deafening sounds, at which point I piped up 16 and said not only do they not support our research budget, 17 but in NEI's annual comments on our fee rule they question 18 the value of the research program every year. When Tim 19 Martin Associates did its series of viewgraphs that 20 profoundly affected the Congress a year ago, they implied 21 that the ideal NRC research budget should be zero.

22 I don't think there is not appreciation at the top 23 of the NRC for'a research fund. You had people like Shirley 24 Jackson, Nils Diaz, and lots of people who come out of the 25 research community. I've looked at defense and DOE research ANN RILEY & ASSUCIMTS, LTD.

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g l -*

l 49 1 for years. Dana Powers, the head of our ACRS, who is an 2 employee at the Sandia National Laboratory, says that the l

3 quality of our small research effort dollar for dollar is i

4 much above that of DOE's.

5 MR. AHEARNE: Not necessarily a good standard.

6 COMMISSIONER McGAFFIGAN: He will add the same i

7 things even though he is a DOE employee, and I don't want to 8 get him in trouble.

I 9 I think you hit the nail on the head. I've had i 10 this discussion with the ACRS members. So long as the 11 research budget is within the fee base it is going to be .

l 12 squeezed. Everything pushes it to be squeezed.

13 I wish we had had more discussion in this report 14 as we were doing it about potentially putting it in the 15 general fund. The Congress told us to get 100 percent of 1

16 our fees, and even in the bills that are currently pending l 17 that would take some of the fees off the fee base and put 18 them in the general fund, it's a question of is a benefit 19 received by licensees from the program for international, 20 for site decommissioning management, for Agreement State 21 support. It's hard to say our licensees get the benefit.

I 22 So some of that might be taken off the fee base.

23 We haven't raised the issue in research as a 24 public good. Yet we cannot under those terms say it's a 25 fairness and equity issue because, by God, the industry ANN RILEY & ASSOCIATES, LTD.

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L . j

50 1 benefits from our research program. The heart of it really 2 is to get the research budget treated like the DOE budget 3 and the EPA budget, as a general fund appropriation.

4 MR. AHEARNE: Part of the difficulty is the 5 industry has a long record of shooting itself in the foot.

6 As the industry moves so strongly towards a competitive 7 environment, it is becoming like so many other industries, 8 looking at the quarterly report, the quarterly return, the 9 near-term bottom line. As the former professor well knows, 10 research doesn't work on that time schedule. As many 11 industries are now doing, they are shutting down their 12 research labs, because it doesn't show the near-term profit.

13 Research is a long-Larm profit.

14 CCMMISSIONER McGAFFIGAN: When you read the 15 report, there is a tone that we may need more resources in 16 many places, license renewal, license transfer, 17 decommissioning, rule-making to risk-informed regulation 18 itself. Yet_we all know that the budget environment we are 19 in at the moment is to cut or to get no inflation or

-20 increase, go down every year at the rate of inflation. That 23 environment for the industry, the first five I mentioned are  !

22 more important than researc.h.

23 The. dynamic again, looking ahead the next several 24 ' years, is in order to do risk-informed regulation, in order 25 to do license renewals and deal with the onset of additional ANN RILEY & ASSOCIATES, LTD.

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51 1 license renewal. applications, in order to honorably I 2 decommission the plants that are prematurely retiring, in 3 order to do all the other rule-making, unless we can get 4 budgetary increases or we do something, it's going to 5 continue to get squeezed, and Mr. La Coste is going to be  !

6 right. We may say there is a future, but maybe there isn't. )

7 COMMISSIONER DIAZ: Commissioner Merrifield.

8 COMMISSIONER MERRIFIELD: Speaking of 9 decommissioning, that raises one of the final questions I 10 have. Right now we are in the middle of working on 11 SECY-99-168 in which the staff is proposing a schedule for l

12. an integrated rule-making on decommissioning. While I think i 13 it's desireable to have an integrated set of regulations to )

14 govern these facilities, obviously doing this is going to 15 require no small amount of commitment of staff time and 16 financial resources. ,

17 In light of the fact that we are proceeding down 18 this road, we have at this point, for better or for worse, a 19 lower demand for those regulations than perhaps one might l 20 have thought of three years ago. We have far fewer plants  !

21 that are making the choice to choose early decommissioning. l 22 Given the resource load, given the number of 23 plants that are involved, did the group discuss at all 24 perspectives on the priorities that the NRC should be giving 25 to that part of the process?

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52 1 MR. AHEARNE: No. '

2 COMMISSIONER MERRIFIELD: Do you have any 3 individual thoughts in that regard?

4 MR. AHEARNE: I think the one thing that the group 5 did raise several times is the need for the NRC to try to do 6 some of what you just said. That is, look ahead and try to 7 understand'what might be coming in and make sure that you 8 are positioned to handle that as effectively as possible.

9 That would need probably reallocation of where your effort 10 . is put.

11 COMMISSIONER DIAZ: Let me just say personally 12 that I agree with many of the directions, One thing that I 13 gather from today's discussion, and maybe that explains why 14 you didn't establish priorities, is that this is really more 15- of a holistic look and trying to emphasize those areas, and 16 that we need to take those into consideration.

17 I appreciate your comments on research because 18 sometimes we do forget that the basis for the technical 19 decisions that will need to be made need to be well 20 grounded.

21 On behalf of the Commission, I would like to thank

22. .you for your presentation today. I know that your office is 23- in North Carolina, which was kind of wet last week, and you 24 probably did not have the peace of mind you normally require 25 to prepare. We appreciate that very much. Your insights ANN RILEY & ASSOCIATES, LTD.

Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034'

F 1 L *.

J 53 1 are' appreciated very deeply. We know that you put a lot of 2 effort into coming here and getting it to us.

3 Periodic introspective reviews of everyone's 4 programs, policies and procedures are necessary for.the l 5 continuous improvement of any organization. External 6 . reviews, too, are very helpful when they bring a different 7 perspective, and the effort undertaken by the CSIS is such 8 an example.

9 We recognize that the report was frozen at the end 10 of January and that we have taken many actions that are 11 already being recommended, and I think you have seen that 12 the Commission takes all of these things very seriously. We 13 will continue to follow up on these activities.

14 As with any study of this nature, there are bound 15 to be different views, and of course you have seen many of 16 those, over the conclusions reached for any of the various 17 issues investigated, and this study is no different, given 18 the different perspective of the participants and the 19 different composition of the Commission.

20 Public interest organizations have taken issue 21 with certain conclusions and recommendations, and certainly, 22- as you have heard today, so has the NRC. However, the value l l

23 of studies such as the CSIS study is not measured by the 24 number of areas in which there is agreement or disagreement ]

25 but rathdr by the degree to which it stimulates ideas for l l

l i

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54 ll 1 I improvement and contributes to.the overall motivations of

• 2 all parties to-do better, to listen better, to understand 3 one another better. Under your leadership, Dr. Ahearne, I 4 believe the CSIS report does just that, and we appreciate 5: the hard work by all'of those who contributed to the success 6 of this effort, including Commissioner McGaffigan.

7 Again, I thank you.for coming today.

8 Do my fellow Commissioners have anything to add?

9 COMMISSIONER McGAFFIGAN: No '. I think you just 10 got a sense today of the vigorous debate that occurred in 11 some of the steering group meetings.

12' COMMISSIONER MERRIFIELD: It's very helpful and I-13 think' coming here and having this opportunity to go through 14 the report in this kind of atmosphere will really enhance 15 our ability to understand where the project was coming from 16 .and perhaps use it.to an even greater extent.

17 COMMISSIONER DIAZ: Very good. If we don't have 18 any additional comments, we are adjourned. Thank you.

19 (Whereupon at 10:30 a.m., the meeting was 20 concluded.]

21 22 23 ,

.24 25 ANN RILEY & ASSOCIATES, LTD.

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CERTIFICATE This:-is to certify that.the attached description of a meeting of-the.U.S. Nuclear Regulatory Commission entitled:

TITLE OF MEETING: MEETING ON' CENTER FOR STRATEGIC AND INT..ERNATIONAL

STUDIES REPORT "The Regulatory Process for Nuclear Reactors-a Review" PUBLIC MEETING l

PLACE OF MEETING: Rockville, Maryland )

)

'DATE OF MEETING: Wednesday, September 22, 1999 .

l was held as.herein appears, is a true and accurate record of thvt meeting, and that this is the original transcript thereof triken' stenographically by me, thereafter reduced to

! l L cypewriting by me or under the direction of the court reporting company Transcriber: Mike'Paulus Reporter: Mike Paulus '

i

~

l The Regulatory Process for l Nuclear Power Reactors A Review l

A Report of the CSIS Nuclear Regulatory Process Review Steering Committee Project Chair Steering Committee John E Ahearne James Asselstine Phillip Clark Thomas Cochran Congressional Cocha. irs william Dircks Senator Pete V. Domenici James Howard Senator Bob Graham Shirley Ann Jackson Representative Joe Knollenberg Dale Klein Representative John M. Spratt Jr. David Lochbaum Edward McGafBgan Jr.

Project Director P3"I Po""cr John Rowland l Robert E. Ebel Steven Specker James Sullivan Project Coordinator Raymond Durante I

j AUGUST 1999

a di%%@f .

h N, ~

g MhM{~w Executive Summary 3? .

2:,

.7

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.I In 1999,103 operating nuclear power plants generate approximately 20 percent of the i s , " total U ..S electicity supply As the electric utility industry moves toward deregulation

[ .

and restructuring, it is becoming more imporiant to keep operating costs low enough

h. 4 ^ :to be competitive with other forms ofgeneration, and utilities are exploring all possi-

$pi ,

s bilities fo'r cosi reduction. External regulation, including that by the U.S. Nuclear

' Regulatory Commission (NRC), is one area that can have a significant impact on the l

e@h.9 E. , , ' operatmg costs of a nuclea_ r plant.-

i .

' This report examines NRC operational practices and regulation of nuclear plants specifically in' areas related to reactor and plant operation.' It focuses on 13 issues that j are considered to be significant and have in the past proved to be central to the inter-i actions among NRC, industry, and the public. Each issue is examined individually

[ and, where appropriate, recommendations are made for improvements or changes.

The premise of these suggestions is that it is the NRC's responsibility to assure the i protection of the health and safety of the public.

i The issues were categorized into three groups: implementation, emerging issues,

,; and process. Because all issues were considered important individually, no attempt was

• - made to assign priority. Considerable interdependence exists among specific issues with similar objectives, resulting in groupings that take on increased importance.

m Inspection, assessment, and enforcement are the direct links between the NRC j and operating nuclear plants and will have enormous impact on the economic and operational performance of a plant in the eyes of stakeholders and investment

communities. This report points out that the NRC is mov*mg toward a more effi-cient and effective way of conducting these responsibilities and is working closely

[-

with its stakeholders to establish equitable procedures while it protects the health and safety of the public. The report strongly recommends that maximum effort l

l and attention be directed toward these issues.

! a License transfer, license renewal, and decommissioning are emerging issues critical

. to the competitive position of utilities, particularly in the restructured business environment that all utilities face. The NRC is in the early stages of developing j , procedures for each action. This report suggests it will be necessary for the NRC to take corrective actions in its operating procedures and modifications to enabling legislation to be ready for increased activity in each of these areas. Although some actions are not direct NRC responsibility-other state and federal agencies, as well as the public, will need to be involved-the report points out the need for the utilities and the NRC to prepare for these actions and communicate with all stake-holders as the procedures evolve.

m Safety philosophy and the need for the NRC to establish clear, concise definitions of adequate safety to be consistently applied to all nuclear power plants and all iX n

x The Regulatory Procestfor Nuclear Power Recctors: A Review 4

NRC regulatory actions is of enormous importance. The move to risk-informed regulations and the change in the NRC culture will be based on the ability of the NRC to establish policies based on defining and articulating adequate protection and on creating a clear, consistent, and well-understood statement of safety philosophy.

The NRC has made many changes recently and has begun steps to address many of the issues raised by critics. This report concludes, however, that the changes under way should be accelerated.

Project participants sought to develop conclusions and recommendations that rep-resented a consensus of all the participants. There were however, several areas where individual members, particularly those representing public interest groups, held alter-nate views regarding the specific actions the NRC should undertake. These views are

~ included in the main body of this report in the appropriate sections.

It has been apparent that the NRC is engaged in a number ofinternal efforts to improve and streamline its operations and regulatory activities. As a result, many of the recommendations and conclusions made here were arrived at independently by the NRC and are already under consideration or in place. Although NRC personnel par-ticipated in the preparation of this report, it was not possible to be current with improvements made as a result of new programs instituted by the commission. It was necessary to freeze input at the end ofJanuary 1999 and make our assessments as of that time.

Implementation Safety Philosophy Safety philosophy constitutes and defines the basis for the NRC to promulgate, administer, inspect, assess performance, and enforce compliance with its regulations, which then results in adequate protection of public health and safety. The safety phi-losophy also provides the basis for licensees to design, construct, aperate, and maintain nuclear power plants. Because no human activity is absolutely safe, it is important and entirely appropriate to establish a clear, consistent, and well-understood statement of safety philosophy and the meaning of adequate protection.

~ This has proved extraordinarily difficuh for 40 years in the traditional regulatory framework because that framework is based on deterministic engineering judgment coupled with defense in depth. Building risk insights into the regulatory framework is important because in current practice there is a legal presumption that substantial compliance with th: deterministically based regulations provides adequate protection of public health and safety. However, using risk insights in formulating risk-informed regulations ensures that the body of regulations reflects a safety focus. Without a defi-nition of adequate protection, there is continued controversy among stakehelders.

The NRC is examining how risk insights might be further used within the regula-tory process to remove unnecessary burden. Recent discussions among the NRC, the industry, and other stakeholders regarding the assessment process did result in substan-p

Executive Summary xi tive discussion of partial descriptors of adequate protection. The NRC introduced the concept of seven cornerstones as a basis for defining scope in the new oversight model.

It is agreed that the NRC build its safety philosophy by defining objective thresh- )

. olds for the seven cornerstones. The NRC should contin'ue to pursue and complete on l a priority basis its proposed program to move to risk-informed regulations in parallel with the development of a clearly defined safety philosophy that can be consistently applied to all nuclear plants, and eliminate situations where there are inconsistencies between the regulations and the safety they are intended to ensure. i Assessment Process The results of the NRC's assessment process have substantial influence on the percep-tions of key stakeholders as to the financial and technical status of the operating facility. Given the practice of making these assessments publicly available, it is impor-tant that NRC assessments meet the highest standards of accuracy and objectivity and provide clear, consistent, safety-focused, objective, and meaningful appraisals of plants' safety performances. The NRC is exploring improvements to its inspection, assess-ment, and enforcement programs.

The NRC and the Nuclear Energy Institute (NEI) have jointly proposed a plant-assessment model that features three tiers of performance expectations that relate to public health and safety. The model i; facused on safety and makes use of risk insights, objective performance indicators, graded inspection findings, and regulatory action thresholds.

The NRC is evaluating this approach along with the seven cornerstones as a possi- ,

ble replacement for the systematic assessment oflicense perf"mance (SALP) process i that, until recently, was the primary vehicle for all NRC assessments. The NRC, l industry, and appropriate other stakeholders should expeditiously conclude the devel- l opment of this model and subject it to a pilot program. The NRC should j communicate the assessment results to its stakeholders via the Internet and public j meetings. ,

I Inspection Process f 1s the NRC inspecting the proper aicas from a safety perspective and are the inspection findings evaluated in the prope context? The NRC is responsible for establishing a clear and comprehensive def.niuon of adequate protection of public health and safety; it must have an inspection program in place that provides for effective oversight of licensee activity to assure that its mandate is achieved. Inadequate or misfocused j inspection may result in the NRC failing to detect activity or trends that compromise adequate protection. Excessive or misguided inspection may result in distraction of l resources from safety issues, which, in turn, can lead to degraded safety performance l and is certainly wasteful of both public and licensee resources.

Foremost among criticisms by stakeholders is that some inspections do not main-tain a sharp safety focus but deal with administrative details not directly related to safety. The NRC is also criticized for using the inspection process as a mechanism for imposing new requirements and overwhelming a licensee's resources and creating a i

i

J-e y

i xii The Regulatory Procenfor Nuclear Power Reartors: A Review y

. r, v

distraction to' safe operation. An effective inspection program must be developed in  :

concert with other changes now under way in the regulatory process. e The NRC is working with the industry and other stakeholders on an improved  ?

inspection process. It consists of two elements: independent verification and risk- i informed audits. Risk-informed core inspections offer several advantages over current ,

practice. NRC revisions should, whenever possible, provide objective acceptance crite-  :

ria that account for the risk-informed basis underlying the inspection.' An objective -

I acceptance criterion, which accounts for the risk-informed basis underlying the e ..  ;

inspectidn, will be necessary. The new processes als'o should be used to identify regula :  :

tions that needlt6bEamended. The NRC should periodically solicit feedback on th~e

' inspection. process from its external stakeholders to de. ermine if the substantive changes being implemented have met stated objectives.'

s t ,1# 1f ; a Enfdtcement' Process

' ^

How is'the NRC's safety philosophy embodied within its enforcement program for L nuclear power plants? Is' the NRC enforcement action directly related to the safety y significance of a violation based upon objective criteria? Does the NRC's enforcement l program provide clear, consistent, and meaningful response to plants' safety perfor- e mance problems? Notwithstanding unique plant design and the appropriate consideration' ofspecific details of each violation, it is important that the enforcement -

, program be as predictable and as consistent as possible. Sanctions imposed at a higher [

severity level than warranted by the safety implications of the problem carry both tan-  ;

gible and intangible adverse consequences. Artificially lowered sanctions can mask the i safety significance of a violation. The issue is also important because misapplied enforcement action diverts licensee and NRC resources from potentially more signifi-cant activities. 1 Enforcement-ation should be taken only for clear violations of a law, a regulation, " ,

the license, or the technical specifications. Enforcement should.not be based on sub- 7 jective criteria such as regulatoiy significance, regulatory concern, changing staff interpretations, or expanding views ofcompliance. -

In designing the new enforcement process,'the commission should address the l criticisms that have been levied against the current process and should periodically  !

solicit fenack from its external stakeholders to determine ifchanges have met stated t l objectivu. The NRC should continue its policy ofopen predecisional enforcement conferences and should post all plant enforcement actions on its Web site.

Emerging issues i

I Decommissioning l Competitive and restructuring forces are bringing a new focus to decommissioning issues. Some plants have been shut down before their operating licenses have expired; the same competitive forces will cause others to extend th'e licensed life. Some utilities may sell their plants and others may face bankruptcy in the competitive and restruc- l s

. 1

y W c% p gQ f

Erwutin Summary xiii p3 tured market. These factors will challenge the integrity of decommissioning plans M , fe#

?!8s k.I established in a regulated cost ofservice market.

Experience with early decommissioning efforts provides opportunities for i

l

1s improved efficiency in the regulatory process that involves decommissioning. A risk-U)f informed approach may be most beneficial here because a body of regulations pertain-t * -ing to decommissioning does not exist and there is not a legacy of deterministic regulations.

The report recommends action by the NRC, Congress, and federal agencies other than the NRC, but the NRC has a vested interest in all the recommendations. Issues l

involve the accrual and maintenance of decommissioning funds, tax considerations, a i R more efficient use of reiources by the NRC in the decommissioning process, and dual

[- @ regulation by NRC and the Environmental Protection Agency (EPA). Finally, the

{J R ' report recommends that the NRC facilitate public involvement to be certain that there J zi L ' is confidence that the plant and all the radiated materials will be disposed ofin a safe f manner. The public interest groups felt that, in order to protect the workers and the

, public properly,' decommissioning must be carried out under regulations in j 10 CFR 72, which pertain primarily to the on-site storage of spent fuel. -

[ License Transfer Section 184 of the Atomic Energy Act of 1954 requires that no license for any nuclear facility may be transferred without the review and consent of the NRC. The NRC has considerable experience in license transfer activities and has handled about 50 transfers efficiently. Restructuring of the utility industry in the wake of deregulation is resulting in increased demand for consideration oflicense transfer requests;in all cases, the par-ties to the transaction need to seek a timely resolution of the license transfer request.

The license transfer considerations should be focused on issues relating to the NRC's mandates under the Atomic Energy Act. 4 The report recommends that the NRC be sufficiently flexible to transfer licenses j expeditiously between panies whose qualifications are well known to the NRC, and i allow expeditious review of transfers that do not involve control or substantial owner-

~  !

ship. At the time of this report the NRC was already involved in taking many of these  !

actions and the report recommends that this effort be coatinued with periodic and frequent reviews with all stakeholders.

The report recommends that the NRC establish ground rules and procedures for dealing with the question of ownership and disposition oflow-level waste and spent i fuel; develop policy options with respect to foreign ownership domination or control;  ;

and develop a road map to provide guidance about which other federal agencies are

]

required reviewers and at what stage and to what . extent they will be involved. '

License Renewal Under the Atomic Energy Act and NRC regulations, the NRC issues 40-year licenses and approves 20-year renewals to commercial nuclear power plants operating in the United States. Although the first two license renewal applications submitted in 1998 are moving forward, the current process may still be unnecessarily complex and resource intensive, may r or be able to establish sufficient confidence in a predictable

xir & Regulatory Processpr Nudear Power Reactors: A Review and efficient path for follow-on applications, and may not be able to accommoda'te the overalllarge number of applicants anticipated to apply for renewal in the next 5-10 years.

Confidence in the license renewal process-whether it will be fair, predictable, and efficient-is essential for justifying the cost and risks associated with license renewal as contrasted with pursuing nonnuclear options for future generation. The scope, pro-cess, and acceptance standards for license renewal are still in a state of flux, and they need to be resolved expeditiously to facilitate future applications and to enable the

- creation of an efficient and predictable renewal process.

The current approach provides no milestones for resolving. issues, leaves open the possibility that issues will be reopened, and adds to the uncertainty of future reviews.

Both NRC and industry agree that the license renewal process can and must be streamlined and NRC has done a commendable job in many areas.

' The license renewal review scope is not risk informed. Although progress is being

- made to meet the commission's objectives ofa fair, effective, and efficient process, much is needed on a timely basis to achieve these objectives fully and to achieve a high percentage of nuclear plant license renewals. Note that the necessary improvements are not just for the NRC; industry bears significant responsibility, especially in the area of standardizing processes. .

The process must be seen by all as fair, effective, and efficient. NRC should estab-lish a firm schedule and formal process for resolving all open generic issues for license renewal. Once resolved, NRC must commit to a very high threshold (e.g., significant new safety information) to permit issues to be reopened for future applicants. NRC and industry should actively pursue means to simplify and standardize the process, both for industry submittals and for NRC reviews. The public interest groups contend that the present license renewal process prohibits meaningful public participation and the NRC should revise this procedure to permit public input.

' Risk-Informed Regulation The move toward risk-informed regulation is a significant transition taking place at

- the NRC and has the support of the commission and senior NRC staff as a high-i priority activity. A risk-informed approach may better focus licensee and regulatory

- attention on design and operational issues commensurate with their importance to

- public health and safety. This may also result in a reduction in unneeded expenditure of resources on matters that are not safety significant. The challenge is to accomplish this transition while maintaining the basic objectives of adequate protection of the

- health and safety of the public.

The report examines how risk informed regulations may benefit all stakeholders, recommends that the changes be introduced in a carefully controlled way with pilot

- applications, and notes that acceptance of this change by licensees will be on a volun-tary basis.'Although risk-analysis tools are valuable for understanding relative s importance ofissues, there are limitations in those tools and, thus, research and analy-sis must continue so that NRC can adequately understand the risk effects from aging of components and structures as well as the impact of technology advances and human performance.

Exaurin Summary xv i

,. The report suggests that, as a first pnority, defmitions must be. established for key

, reference terms such as " safety-related" and "important to safety." Finally, all improve-ments necessary to move to a risk-informed approach will not come to pass unless there is a significant effort to upgrade the capability of both the NRC stafTand the licensee staff to do probabilistic risk assessments (PRAs). Because many PRAs are poorly done, it will take several years to bring the staffs to the necessary level. The

_ public must remain confident in the NRC's ability to move to this and still protect health and safety. The public interest groups disagreed with the conclusions reached by the steering committee and felt that the NRC should establish minimum standards for PRAs and conduct audits to be sure these standards are met.

NRC Processes License Amendment Process Maintaining and updating the elements of an operating license are necessary and ongoing functions ofplant management that consume a significant amount oflicensee and NRC resources. An ineffective licensing amendment process affects the ability of the licensee to make the changes necessary to operate the plant in a safe, productive, and cost-effective manner.

Regulatory requirements state that any applications must be submitted and approved before detailed changes can be made to the license. Some changes can be made without prior NRC approval and the NRC is moving to expand the changes within licensee control. Some past license amendments have taken considerable time and a large volume of correspondence to win approval. The NRC, over the past year, has made progress in some of the most irrportant license amendrr.:nt areas. NRC has I

done a good job on several complex power uprate license amendments. NRC has undertaken initiatives to gain efficiencies more broadly in its license amendment pro-cess. A number of NRC initiatives now under way may result in increased demand for license amendments, heightening the need for greater efficiency in this area.

The report notes that there is considerable room for improvement on the part of bothiicensees and the NRC. It is important to maintain dialogue between the NRC and industry to identify lessons learned and to streamline the license process. Recom-mendations are made to improve clarity of communications, management accountability, considerations of the introduction of new technology and address the amount of detail embodied in licenses and technical specifications.

Hearing Process The Atomic Energy Act of 1954 provides an opportunity for a hearing to any person whose interest may be affected by commission proceedings on the granting, suspend-ing, revoking, or amending a reactor license. The central question is whether there is a broad requirement demanding adjudicatory hearings and whether it is efficient or in the interest of the regulatory process to select adjudicatory hearings preferentially. All hearings attraci criticism from various stakeholders and continue to insert substantial uncertainty, particularly with respect to timeliness. Issues include hearings' protracted

1 9

xvi The Regulatory Processfor Nuclear Power React:-s: A Review nature, the apparent inability to limit broad and nonspecific issues, and the tendency to permit unnecessary or protracted discovery. It is important that the hearing process be modifsed to provide the efficiency now demanded.

Although the NRC has used less formal hearings in some contexts, it has for the most part continued to use the adjudicatory hearing as the principal format for reacto actions other than reactor license transfer matters. The commission should fully embrace the notion that the Congress intends for the NRC to have extraordinary con-trol over the duration, subject matter, and nature of the hearings that they consider appropriate to meet their mandate unless Congress itself chooses to be specifi this principle in mind, the NRC should ensure that hearings are conducted only w necessary, but, when they occur, they should be efficiently run with decisions announced expeditiously and in a clear and succinct manner.

The commission should make legislative-type hearings the norm except those required for enforcement issues or where otherwise demanded by law or special c cumstances.The public must perceive a transparent and open process; and there must he a proper context for public participation in important issues that affect the public especially when hues are novel. It is inappropriate to either shut out the public or resort to the courts to hear issues ignored in the regulatory process. The public interest group representatives on the project steering committee maintained that the pub l cannot meaningfully participate in the regacoiy proce:s without the availability of '

formal hearings with rights of discovery and cross-inuion.

i Petitions under 10 CFR 2.206 Public groups believe that the 10 CFR 2.206 process does not afford members of t public a viable means for affecting NRC actions against a licensee. NRC's regula and procedures under Section 2.206 are more expansive than is necessary to sat

. statutory requirements under the Atomic Energy Act. The opportunities afforded by the 2.206 process, although not required, are viewed as important adjuncts to the '

opportunities for public participation provided by stature. I To help prevent the impression to petitioners that the NRC is summarily dismiss-ing their petitions without giving seriou; thought to the issues raised by them, NR director's decisions should adopt a style that is more technical and less legalistic in

~

nature. In the case of petitions that c re vague or do not provide supporting data, NRC j should formally contact the petitioner to clarify ambiguous issues. If new issues or information is identified, NRC should formally notify the licensee to enable it to sup-ply NRC with any relevant information. NRC should assure that no internal

• organizations inhibit or otherwise place unwarranted obstacles in the path of pub petitioners who use the 2.206 process. l

?

r Rule-Making Process .

Many of the proposals for change, in the way the NRC regulates the industry can accomplished administratively by NRC management. The nuclear electric power industry is undergoing rapid change in practices, technology, and risk assessmen industry must make decisions on the sale " retention of facilities, extension of oper inglicenses, and closing and deconi.u sioning plants.

c

Evecutive Summary xvii I

'Ithough signi6 cant reductions in the time required to publish a rule in fmal form

' have 1: en achieved, further reductions should be a continuing goal within the require- (

ments, flegislation governing NRC rule making and with du regard to the comple. ity and controversial nature of the subject matter. Failure to amend existing regulatio. s or adopt new ones to reRect current technology and new economic forces disserves th regulators' obligations, the interest of the regulated industry, and the broader pubi? interest. The commission should maintain the capability to make inde- l pendent techi ical conclusions to support the rule changes it proposes.

This rep rt recommends that NRC interact with both the public and the industry before it issues a proposed rule: get input for the content of the proposed rule; strive for simple, i s opposed to complicated, rules; issue draft implementing guidance for comment at the same time as issuing the proposed rule; improve discipline in the  !

internal management of comment periods; and meet with stakeholders to reach reso- I lutions of comments on proposed rules.

Backfit Rule i The backfit rule-intended to restrict the types of changes that the NRC may impose on a licensee's facility, procedures, and organization to those that meet deGned criteria-states that, except in cases involving compliance with existing regulations or adequate protection of public health and safety, NRC may not impose backGts unless it first performs a backfit analysis demonstrating that the backfit would result in a substantial increase in safety, and that the costs of the backfit are justified in view of l l

the increase in saferv.

Although the concept is admirable, in practice the rule frequently has not achieved {

its purpose. Industry believes three major problems have arisen: the misuse of the com-pliance exception in the rule; imposition ofinformal backfits through the inspection, i enforcement, and assessment process; and inapprepriate consideration of averted on-site costs.

The industry believes that one mechanism for voiding the intent of the backfit rule is the improper invocation of the compliance exception of the rule; a second mecha-nism occurs during inspection, enforcement, and assessment through frequent informal imposition of backfits by NRC personnel; and a third is that backfit rule provisions are sometimes misused through improper application of averted on-site costs as a reduction in the cost figures that enter into the determination of the value of a new requirement. Licensees contend that averted on-site costs are a matter of eco-nomic concern to the licensee only; the NRC has argued that consideration of averted costs is necessary to assure balanced analysis of costs and benefits and that public health and safety are affected.

The primary mechanism to improve the current situation will be the continuation of the regulatory reform process recently begun. Changes in the NRC's assessment and enforcement processes to make them more objective and risk informed may eliminate many informal backfits. Nevertheless, in the transition period, the NRC should restrict use of the compliance exception to significant safety issues requiring short-term resolution. Finally, the NRC should review its guidance on averted on-site costs and carefully consider the arguments of the industry against the NRC's practice of L

. l xvill Th." Regulatory Processfor Nuclear Power Reactors: A Review ,

considering such costs.' The public interest groups disagreed with the conclusion reached by the committee. They felt that there was not enough data to show wide-spread abuses of the backfit rule and therefore it should not be altered.

Other Factors in addition to the analysis provided by the working groups, there was recognition of other factors that, because of their nature, would have an impact on many or all of the issues described. Many of these are discussed in the chapter Crosscutth.3 I ssues, begin-ning on page 4. Because of the broad scope of NRC activities, it was nec nary to limit the field ofinterest to those areas having to do directly with nuclear electric power generation. This does not minimize the importance of such issues as high-level and low-level waste disposal, transportation of nuclear materials, isotope applications, dry

' cask storage, and other activities that come under the responsibility of the NRC.

Because of the time available to produce this report, it was decided to concentrate on the most immediate concerns of the electric power industry.

Conclusions An important conclusion reached by this study was that the NRC decisions and pro-cesses will continue to have a significant impact on the cost of operations for the nuclear power industry, and, therefore, N RC must continue to update and improve its aperational procedures to keep up with the changing times. Although the report sug-gests changes and improvements to 13 important issues, a more fundamental change must occur in operational procedures and the way in which the NRC discharges its responsibility. Risk-informed regulation must be accepted and utilized by all levels of the NRC organization. Clear, concise definitions of adequate protection must be developed and understood by the industry, NRC, and the public. The how-safe-is-safe-enough argument should no longer distract or dominate the regulatory dialog.

Industry and the NRC should strive to work more closely in a more informal and constructive atmosphere and conduct open dialogue with the public to arrive at regu-

' latory procedures that allow the NRC to discharge its mandate effectively without imposing undue economic penalties on the industry.

' Adoption of the iecommendations presented in this report, with input from par-ticipating members of the nuclear community, can produce positive results that can lead to better relations among NRC, the public, and industry. and. ultimately, will benefit the rate payers and the U.S. economy.

• Commissioner Edward\. tcGampn Jr. of the NRC recuws him elf of this.md other inue the commission will have to decide.

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