ML20215G229

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Advises That NRC Will Provide Comments on Draft Proposal to Use Financial Incentives to Improve Nuclear Util Performance
ML20215G229
Person / Time
Issue date: 03/03/1987
From: Stello V
NRC OFFICE OF THE EXECUTIVE DIRECTOR FOR OPERATIONS (EDO)
To: Kelliher J
NEW YORK, STATE OF
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l MAR 0 31987 Mr. John J. Kelliher Secretary, Few York Public Service Commission 3 Empire State Plaza Albany, NY 122?3

Dear Mr. Kelliher:

On December ?9, 1986, senior NPC management met with Mr. Lester Stuzin, Deputy to the Chairman of the New York Public Service Commission to discuss your draft proposal to use financial incentives to improve nuclear utility performance.

Following this meeting, I informed Mr. Sturin that I would be meeting with senior NRC managers and all Pegional Administrators to discuss your proposal and that I would then provide NPC views on the proposal after we had studied carefully its potential ramifications.

I met with senior NRC management on February 11, 1987. Py staff was in the process of preparing comments on the draft proposal when we received a copy of your February 20, 1987 press release requesting public comment on the pro-posal and on ten specific related issues and questions. The purpose of this letter is to infom you that NRC will be providing comments on the proposed

  1. inancial incentive program as requested in the press release. The coments, which we are presently preparing on the draft financial incentive program, will be revised, as appropriate, to respond +o the progran described in your press release end to address the ten specific issues and questions.

Sincerely, 3

(I)

Victor Stello, Jr.

Executive Director for Operations Distribution:

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FOR RELEASE:

87020/NI/C29536 IMMenfATE Psc CONSIDERS FINANcfAL TNCENTIVER_TO_ENEANCE NUCLEAR KareTY. arrra coMMr!NTS ON FROPQSAL i

l Albany, February.20--The' Public Service. Commission announced today that 1t is considering an innovative rate incentive plan--

developed by its senior staff at the behest of Deputy Chairman Gail l

Carfield Schwarta--designed 'to enhance power plant safety. The commission is(plityattenkLn_to nuclear seeking public comment before taking final action on the proposal.

The'propos'ed incentive plan would provide monetary awards or assess pentities on utilities, and offer salary bonuses for nuclear plant workers on the basis of the result 0 of the Nuclear Regulatory Co:r@lselon (NRC) Systematic Assessment of Licensee Performance (SALP) program. The mechanism also would take into consideration fines that might be levied by the NRC for safety violatione.

j To promo'te understanding of the proposed mechanism, the t

Commission Staff will conduct informational meetings with interested parties next month. Anyone desiring to take part in these conferecnes should advise John J. Kelliher, Secretary, Public Service Committion, 3 Empire State Plaza, Albany NY 12223, no later than March 6,1987.

TheComalastonaal(itwouldconsiderallec=m:ntt cutmittcC p

no later tha ' April 3,1987, to Mr. Kellihar.

i "Haile tied over astterc of nuclear safety liss with the Nuclear Regulatory Conniesion 0:nc), the Feblio service Cor.r.ission's influence on utility financici t..ctters may affect the timing and intennity of utilitics' effcrts to insure the safety of nuclear pla.ita," the Staff noted in the proposal. "We are cont,idering establishin; an economic techanism which will encourage exec 11cne:. in EDO --- 002Sb4

FEB,24 '87 13:03 HRC KING OF PRUSSIR P03

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'I Incentive-P.2 safety-related performanna of nuclear plants in New 2 k whue not inhibiting the NRC safety. review and reporting systema'.*

While noting that the NRC's SALP program is designed to provide that agency a sound basis for allocating its own resources to ensure safe nuclear operation, the Staff said that SALP also could be use.d as the basis for an incentive system since it ' appears to be the mos't comprehensive safety evaluation available." similarly, the Staff noted, the NAC system of civil penalties (fines) for violations of safety rules might be used to determine if a utility should be l

denied a safety-related award for which it might otherwise qualify.

The fines themselves, the staff pointed out, are paid by the utility stockh Adtgg, 9

An important factor in the Staff proposal is,a mechanism for providing*a cash bonus directly to employees of a nuclear plant that qualifies for a safety-related ir}centive payment. No penalty, however, would be assessed against the employees of a plant tha't'is subject of an NRC fine.

I The maximum reward or penalty for a utility in any year vould be linked by staff's proposal to the allowed return on common equity used in the utility's previous rate case. The amounts would be about

$1.4 million for Rochester Cas and Electric Corporation (RC&E) Ginna.

plant, 85.0 million for Niagara Mohawk. Power Corporation Nine Mile Point 1 plant, and SA.n million for Consolidated Edison Indian Pvint 2 plant. For a utility with more than one nuclear plant, such ao Niagara Mohawk, whose Nine Mile Point 2 plant la not yet in come.orcial operation, each plant could be subject to the sane maximum reward or penalty allowance under the staff proposal.

The Staff proposal incorporates a rating plan, linked to the 8 ALP scoring, for d(termining whether, and to what extent, a utility l

operating a nuclear plant would be entiticd to a r(vard (in el.ich its nuclear pl.u.t workers would share) or subject to a penalty. It alt.o would provic*e for the recovery of such r:verds through the utility's fuel adjustr.ent clause.

In its notice aceking comcr.ts on the staff propoet!, thC Commission raised these specific questioact

1. Uc uld the adoption of a financirl inctntive eccher.ic bt en effective method for escuring the marinum possibit ecfsty of

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FEB 24 '87 13:04 NRC KING OF PRUSSIA PO4 m m r pa t

Incentive-P.3 4

New York nuclear power plants?

Would the adoption of such a nochanism produce unintended side effects that might impair safety?

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2. Should the primary bases for a financial incentive mechanism be the NRC's SALP ratings and fines.

Are there other bases that might be more appropriate for use in this context?

Would use of the SALP procedure affect NRC's ability to regulate nuclear plant safety in any way?

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3. If the NRC's SALP and. fine systems were used, would it affect the present sources of information to the NRC and its Rusident Inspectors?

Would it affect self-reporting by the licensee to the NRC7 Would it affect the relationship between the Resident Inspector, the plant workers, and annagement?

1

4. Is it desirable for an incentive mecharism to include both a rc ward for good prformance and 4 penkity for poor performance, or Is the use of a reward-only method svfficient incentive for enhanced nuclear safety?

The it.centive mechanism being considered contem levying of a penalty for poor performance. plates the

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The lowest ratiny possible is Category 3, which the NRC describes as 5...minlmally satisfactory performance with respect to j

oferating safety..."

Mould it be appropriate to impose a penalty when a facility is, in fact, aseting NRC safety requirements, even though j

such efforts are judged only minims 11y satisfactory?

Comments are requested on how to detaraine when a penalty it i

appropriate.

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5. Is it appropriate to include trends in NRC ratings as part of the basis for rewards and penalties, or should each

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evaluation be considered a separate, independent event for tha purpose.cf economic regulation?

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6. Th3 'NRC Manual" states that one objective of the SALP is to collect available observatior;s on an annual basis.

In practice, however, 8 ALP reports are issued at 12 to 18-month

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intervals.

(Indian Point 2, for example, is evaluated on a 12-month cycle because of its location in a high population araa.) Also, the NRC has said that 6 ALP reports are sometimsa delayed-if the ple.nt h:s bcon e good perforner or bcoscec of KRC ttaffing prob 1 cms.

Ocx.:xnts are requested on hoi the timing of SALP mlght affcot inelar.entation of the proposed finanoiel incantive system.

Conversely, comments ato also rought on how the incentisc acchanism may affect the timing of CALP reviews.

7. At the present time, there tre 11 functional areas evalut.ted in the St.LP process.

Aro til of these functional trea; of equal importance in deterniring cEcrctionc1 refety?

Corr.onts are invited en how the functional areas might bc grouped in torsie of their importance to operctiont.1 st.fcty.

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.. FEB 2.4 '87 17:00 HRC KING OF PRUSSIA-2 P07 ei.w a 'er mee ws esc a.aw p,3 Incentive-P.4 What weighting factcre alght be assigned to each of the functional areas or to specifle groups of functional areast 4

8. Is it festible to have rewards. distributed to operating personnel in the manner suggested in staff's proposal?

If so, comments are sought on the number of employees who may he eligible to receive a bonus.

Obviously personnel 1

stationed at the site should be included, but comments are requested about support personnel located at the corporate headquarters and workers who are brought in for a short period of time to assist in a particular operation,thesuch as e r.. u...

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.uws ese requtsten on desirability and feasibility of targeting bonuses to workers by the SALP functional areas.

9. A goal of the Staff proposal is to have safety bonuses paid to plant staff as soon as possible after the SALP ratings are issued.

Bowever, SALP ratings may be contested.

Comments are requested on the likelihood of appeals of SALp ratings, how an a the ste.ff bonus, ppeal would effect the incentJve aspects of i

and whether NRC's capacity to process appeals of 8 ALP reporks would support or hinder the distribution of rows.rds.

10. Nine Mile Point Unit Two will be operated by Niagara Mohawk on behalf of the five Co-Tenants.

Comnents are requested on the appropriate entity or entities to receive the penalty or reward fo safety performance at this plant.

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Denton STATE OF NEW YORK Taylor PUBLIC SERVICE COMMISSION Murray flurley Case 29536 - Proceeding on Motion of the Commission to Investigate the Possibility ot Creating a Financial Incentive Mechanism tor Enhanced Nuclear Power Plant hatety.

NOTICE REQUESTING COMMENTS (Issued February 20, 1987)

At its session of December 17, 1986, the Commission directed Statt to develop a proposal for a rate incentive mechanism designed to enhance utility attention to nuclear power plant satety.

Attached to this Notice is a proposed incentive mechanism which provides for monetary awards or penalties to utilities, and salary bonuses for nuclear plant workers, based on the results et the Nuclear Regulatory Commission's Systematic Assessment of Licensee Pertormance (SALP) program.

The mechanism also takes into consideration tines the NRC may levy for safety violations.

Parties wishing to comment on Statt's proposal should submit ten copies of their comments to John J. Kelliher, Secretary to the Commission, Three Empire State Plaza, Albany, New York 12223, no later than April 3, 1987.

Any party wishing to discuss the proposal with Statt is turther advised that Statt will be conducting intormational meetings with interested groups in i

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J March.

Parties wishing to participate in these conterences should 4

advise the Secretary, in writing, no later than March 6, 1987.

JOHN J. KELLIHER Secretary 1

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i9e REQUEST FOR COMMENTS ON Potential Financial Incentive Mechanism for Enhanced l

Nuclear Power Plant Satety While 3urisdiction over matters of nuclear safety lies with the Nuclear Regulatory Commission (NRC), the Public Service Commission's influence on utility financial matters may affect the timing and intensity of utilities' efforts to insure the safety of nuclear plants.

We are considering establishing an economic mechanism which will encourage excellence in safety-related performance of nuclear generating plants in New York, while not inhibiting the NRC safety review and reporting systems.

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At a session of the Commission held on September 24, i

1986, the Commission encouraged Statt to develop a rate incentive mechanism to enhance utilities' attention to nuclear power plant safety.

Such a mechanism could include both rewards for exceptionally good safety records and penalties for poor records.

4 In recognition of the NRC's preeminent role and J

considerable expertise in matters of nuclear safety, Staff proposes that an economic incentive be based on the ratings and J

actions of the NRC.

There are two existing NRC systems could be used to form the basis for an incentive plan (1) the Systematic Assessment of Licensee Performance (SALP) procedure, which evaluates utility performance in selected functional areas that are important for f

the safe operation of nuclear power plants, and (2) fines for

_2 violations of law or regulations.

The following~ incentive mechanism, which Staft has discussed with the NRC statt, relies principally on the results of the SALP process.

BACKGROUND Systematic Assessment of_ Licensee Performance The NRC's Systematic Assessment of Licensee Performance It is intended (SALP) supplements its normal regulatory process.

to provide a rational basis for allocating NRC resources to ensure compliance with its rules and regulations and to promote quality l

and safety of plant operations by giving meaningful guidance to utili,ty management.

The SALP procedure is summarized in

j Attachment A.

An incentive system could be based on the NRC's SALP ratings because SALP appears to be the most comprehensive safety evaluation available.

The mechanism would focus on some or all of the elements of SALP, including:

the current ratings for functional areas, current trends and changes from previous SALP reports.

The SALP rating system has limitations.

For example, though the NRC has strived for consistent grading from plant to plant with time, the final determination is, to some extent, subjective.

Also, while any category rating is important, all SALP categories do not carry the same significance with respect to plant safety.

Overall, however, the SALP system appears to provide an acceptable basis for the incentive mechanism.

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Fines The NRC has established a system of civil penalties (fines) that are imposed on a utility operating a nuclear p1' ant if it violates the Atomic Energy Act or the NRC's regulations, license conditions, technical specifications or orders.

The maximum fine is $100,000 per day per violation.

A summary description of the NRC enforcerent policy and the basis for the amount of the fine is given in Attachment B, and a list of the fines assessed by the NRC and paid by the ~nvestor-owned New York utilities having operating nuclear plants is shown in Attachment C.

Fines generally are not consi,dered expenses for ratemaking purposes, and, therefore, are paid by stockholders.

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j The imposition of a fine by the NRC creates considerable attention and negative publicity for the company.

An NRC fine should provide a sufficient deterrent without the need for adding a rate penalty tied directly to such fine.

However, if a utility is fined by the NRC, it should, perhaps, be denied a safety-related reward to which it might otherwise be entitled.

Therefore, fines could be taken into account when determining the

' dollar amount of a reward or penalty that might be derived by I

reference to another system such as SALP.

ELEMENTS OF A REWARD / PENALTY SYSTEM

,t Notwithstanding the limitations of the SALP, staff has formulated, in outline form and general terms, an incentive mechanism based on SALP that would apply to plants owned or

_4 operated by investor-owned utilities in New York; i.e.,

Indian Point 2 (Consolidated Edison), Nine Mile Point 1 (Niagara Mohawk),

and Ginna (Rochester Gas and Electric).1 j

(1)

The maximum reward or penalty for a utility in any year J

would be equal to 20 basis points on the cost of common equity used in the utility's previous rate case.

This would amount to approximately $1.4 mi.111on, J5.0 million and $8.0 million for 3

i Rochester Gas & Electric Corporation, Niagara Mohawk Power Corporation, and Consolidated Edison Company of New York, Inc.,

respectively.

The company's total equity would be used, not just the equity in the nuclear plant.

For utilities that operate more r

1 than one unit, penalties and rewards would be assessed separately.

It, therefore, would be possible for the total reward or penalty j

f for any one utility to be equal to 20 basis points for each nuclear plant it operates., For no utility would the maximum 1

penalty thus calculated produce a revenue loss sufficient to contribute to a reduction in a company's nuclear safety program.

(2)

As important as the rewards or penalties applicable to a utility, Staff further proposes that rewards be given to the employees directly responsible for nuclear safety, namely, the plant staff.

A cash bonus could be tied to employees' base salaries and paid quarterly, beginning no later than six months l

from the date of issuance of the SALP report.

In no event would i

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The mechanism, of course, would apply to Nine Mile 2 once it enters commercial operation.

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penalties be imposed on the employees under this proposal.

Any

' reward system adopted should be consistent with site-specitic labor management agreements.

A maximum " bonus" of 15-254, for employees is being considered.

This bonus would be calculated using the index system described below, for determining the rewards for utilities.

(3)

The SALP ratings of "1,"

"2,"

or "3," could each be used to determine the amount of the reward or penalty.

Any reward so I

determined could be reduced or eliminated and any penalties increased on the basis of the trend ratings of " declining,"

" consistent" or " improving," and the change in rating from the previous SALP assessment for the 10 or 11 tunctional' areas the total value of fines levied since t'he previous SALP report.

Within the bounds described above, the. amount of reward or penalty would vary

  • depending on the SALP ratings, trends and fines.

For example, a plant that receives an outstanding SALP report (all "l's",

for instance) and has not been fined by the NRC since the l

previous report, would be eligible for 100% of the maximum reward.

't A plant that receives all 3's could receive the maximum penalty.

Nerely good performance (all "2's") would not be rewarded, but an average score of between 2 and 1 could perhaps receive one-halt the maximum reward.

(4)

The issuance of a SALP report would trigger the calculation of the ad]ustment.

The calculation would be submitted to the Commission for review within 30 days of such issuance and would be eftective in the cost month following the month in which i

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i the SALP report as issued.

Calculated rewards would be fully recovered through the Fuel Ad ustment Clause over a specified 3

period following the cost month.

Per.sities would be. booked "belcw the line" for the cost month.

(5)

The plan should have the flexibility to be changed if 1

i th~e need arises, the system proves ineffective, the NRC alters the SALP process, or the NRC develops a system of nuclear plant review that is better suited to a financial incentive mechanism than SALP.

Pequest for Comments from the Public We request comments on this general proposal to aid us in developing the details of an incentive mechanism.

In particular, i

comments should address the following areas:

1.

Would the adoption of a financial incentive mechanism be j

an effective method for assuring the maximum possible safety of New York nuclear power plants?

Would the adoption of such a mechanism produce unintended side effects that might impair safety?

i 2.

Should the primary bases for a financial incentive mechanism be the NRC's SALP ratings and fines.

Are

't there other bases that might be more appropriate for use in this context?

Would use of the SALP procedure affect NRC's ability to regulate nuclear plant safety in any way?

j i

j 3.

If the NRC's SALP and fine systems were used, would it affect the present sources of information to the NRC and its Resident Inspectors?

Would it affect self-reporting by the licensee to the NRC7 Would it affect the relationship between the Resident Inspector, the plant workers, and management?

4.

Is it desirable for an incentive mechanism to include i

both a reward for good performance and a penalty for i

poor performance, or is the use of a reward-only method sufficient incentive for enhanced nuclear safety?

The i

i

.- incentive mechanism being considered conteniplates the levying of a penalty for poor performance.

The lowest rating possible is Category 3, which the NRC describes as "... minimally satisfactory performance'with respect to operating safety..."

Would it be appropriar.e to impose a penalty when a facility is, in fact. Meeting NRC safety requirements, even though such efforts are judged only minimally satisfactory?

Comments are requested on how to determine when a penalty is 1

appropriate.

5.

Is it appropriate to include trends in NRC ratings as part of the basis for rewards and penalties, or should i

each evaluation be considered a separate, independent event for the purpose of economic regulation?

6.

The "NRC Manual" states that one objective of the SALP l

is to collect available observations on an annual basis.

In practice, however, SALP reports are issued at 12 to 18-month intervals.

(Indian Point 2, for example, is evaluated on a 12-month cycle.because of its location

-f in a high population area.)

Also, the NRC has said that SALP reports are sometimes delayed if the plant has been a good performer or because of NRC staffing problems.

. Comments are requested on how the timing of SALP might

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affect implementation of the proposed financial

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incentive system.

Conversely, comments are also sought on how the incentive mechanism may aftect the timing of SALP reviews.

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7.

At the present time, there are 11 functional areas j

evaluated in the SALP process.

Are all of these functional areas of equal importance in determining operational safety?

Comments are invited on how the functional areas might be grouped in terms of their i

importance to operational safety.

What weighting factors might be assigned to each of the functional areas or to specific groups of functional areas?

8.

Is it feasible to have rewards distributed to operating personnel in the manner suggested in Statt's proposal?

It so, comments are sought on the number of employees who may be eligible to receive a bonus.

Obviously personnel stationed at the site should be included, but comments are requested about support personnel located at the corporate headquarters and workers who are brought in for a short period of time to assist in a particular operation, such as refueling.

In addition, comments are requested on the desirability and feasibility of targeting bonuses to workers by the SALP functional areas.

I 1

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9.

A goal of the Staff proposal is to have safey bonuses paid to plant staff as soon as possible after the SALP ratings are issued.

However, SALP ratinas may be contested.

Comments are requested on the likelihood of appeals of SALP ratings, how an appeal would affect the incentive aspects of the staff bonus, and whether NRC's capacity to process appeals of SALP reports would support or hinder the distribution of rewards.

10.

Nine Mile Point Unit Two will be operated by Niagara 4

Mohawk on behalf of the five Co-Tenants.

Comments are

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requested on the appropriate entity or entities to receive the penalty or reward for safety performance at this plant.

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1 ATTACIDENT A DescriDtion of the Nuclear Reculatory Co==ission Systematic Assessment of Licensee Performance (SAu) Procedure The SALP procedure begins with the NRC assembling a SALP Board.

The Board is charged with the responsibility of assessing the past. performance of the licensee over a fixed interval of time, generally a 12 to 18-month period.

The Board normally meets for one day.

This meeting takes place about two months after the end of the time interval to be evaluated.

The Board makes its assessment on the basis of:

--investigations of allegations received by the NRC during the period,

--escalated enforcement actions, including those which led to civil penalties (fines),

--management conferences between the NRC and the utility, and

--Licensee Event Reports (LERs), that is, reports that the licensee is required to make to the NRC on personnel errors, design errors, defective procedures, component 1

failures and externally caused events that compromise safety.

The Board applies the following evaluation criteria:

1. Management involvement and control in assuring quality,
2. Approach to resolution of technical issues from a safety standpoint,
3. Responsiveness to NRC initiatives,

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4. Enforcement history,
5. Reporting and analysis of reportable
events,
6. Staffing, including management, and
7. Training effectiveness and qualification.

SALP involves the evaluation of utility performance in several functional areas.

The number of functional areas to be evaluated varies somewhat; the NRC may add special areas to highlight significant observations.

In general, most of the-following functional areas are evaluated:

1. Plant operations,
2. Radiological controls,
3. Maintenance,
4. Surveillance,
5. Fire protection,
6. Emergency preparedness,
7. Security and safeguards,
8. Outage activities,
9. Training and Qualification effectiveness, r
10. Licensee activities, and
11. Quality assurance.

Based upon the SALP Board assessment, the licensee performance in each functional area is classified into one of three performance categories:

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1 Category 1 - Reduced NRC attention may be appropriate.

Licensee management attention and involvement are aggressive and oriented j

toward nuclear safety; licensee resources are ample and effectively used so that a -

high level of performance with respect to operational safety or construction is being achieved.

j Category 2 - NRC attention should be maintained at normal levels.

Licensee management attention and involvement are evident and are concerned with nuclear safety; licensee resources are adequate and reasonably effective so that satisfactory 4

i performance with respect to operational safety or construction is being achieved.

1 Category 3 - Both NRC and licensee attention should be increased.

Licensee management l

attention or involvement is acceptable and

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considers nuclear safety, but weaknesses j

are evident; licensee resources appear to be strained or not effectively used so that l

minimally satisfactory performance with respect to operational safety or construction is being achieved.

1 1

In addition, the SALP Board rates the trend in each functional area by comparing the licensee's performance during the last quarter of l

the assessment period to that during the entire period.

There are three trend categories: Improving, Consistent and Declining.

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t ATTAQOENT EL 1

BASIS FOR NUCLEAR REGULATORY C0futISS20N FINES The NRC policy and procedure for its enforcement actions is specified in Appendia C to Part 2 of Title 10 of the Code of Federal Regulations.

The Atomis Energy Act of 1954, as amended, j

authorises the NRC to impose civil penalties not to escoed 8100,000 per violation per day.

A violation can involve a statute, regulation, license condition, technical specification or NRC order.

1 when the NRC becomes aware of a potential violation for I

which a civil penalty may be warranted, it normally holds -an 1

enforcement conference prior to taking enforcement action.

1 The purpose of the enforcement action is to discuss with the utility the violation, the needed corrective actions, and to determine if i

there are altigating circumstances.

Enforcenaat conferences are not normally open to the public.

i If a violation requires a fine, the civil penalty process i

I is initiated by an NRC. Office Director issuing a notice of l

violation which includes a proposed civil penalty.

The licensee i

any contest in writing the proposed imposition of a civil penalty.

The Director may then sitigate, remit or impose the civil penalty.

l l

If a civil penalty is imposed the licensee has the opportunity for a hearing.

l Depending on the severity of the violation, the NRC will categorize it into one of five levels of importance: Level I (most significant) to Level V (minor concern).

These five levels apply to each of eight activities:

2-I.

Reactor Operation, II.

Facility Construction, III.

Safeguards, IV.

Realth Physics, V.

Transportation, VI.

Fuel Cycle and Materials Operations, VII.

Miscellaneous Matters, and VIII.

Emergency Preparedness.

1 The NRC rules caution against comparisons of the 4

significance between the eight activity areas.

For example, the j

NRC says that the immediacy of the public hasard associated with a Level I violation in Reactor Operations is not directly comparable to that associated with a Level I violation in Reactor Construction.

j The severity level of a violation may be increased if NRC judges the circumstances surrounding the matter involved careless and willful disregard of requirements or deception.

The NRC 4

regulations state that in determining the specific severity level, one consideration is the economic advantage that might be gained as a result of the violation.

The NRC regulations state that in selecting the i

enforcement sanctions to be applied, the NRC considers enforcement actions taken by other rederal and State regulatory bodies having l

concurrent jurisdiction and it gives as an example, transportation.

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~ p mupF If a violition occurs, the NRC typically issues a " Notice of Violation *.

Civil penalties are imposed for Level I violations, are imposed for Level II 1.2 the.s are no sitigating circumstances, are considered for Level III, and may be imposed for Level IV if the violation is similar to a previous one and the licensee did not take corrective action.

The amount of the civil penalty depends on the severity level and the class of the licensee. ~ he basic civil penalties for l

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povae reactor licensees are 8100,000 for plant operations, construction, health physics, emergency planning, safeguards and r,

transportation of the more hazardous types of radioactive waste.

For violations of less dangerous types of radioactive wastes, the base civil pen'alties are 85,000.

For severity levels I through V, the percentage of the base civil penalty is adjusted by factors of 1.0, 0.8, 0.5, 0.15, and 0.05, respectively.

The NRC regulations state that the structure of its fine system generally takes into account the gravity of the violation as a primary consideration and the ability to pay as a secondary 1

consideration.

The regulation also states that it is not the NRC's intention that the economic impact of a civil penalty be such that it puts a licensee out of business.

The NRC system of fines calls for reductions of up to 50%

if.the licensee identifies and premptly reports the violation to the NRC, and takes prompt and extensive correction action.

The i

base amount of the fine may be increased by as much as 50% if t

i 6

prompt corrective action is not taken.

The past performance of the

^

licensee is also used to determine the amount of the fines adjustments of plus or minus 100% are specified in the regulation.

In determining the past performance adjustment, the RMC considers i

previous SALP evaluations and prior enforcement history including Level IV and V violations (which normally do not result In a fine).

The base civil penalty may be increased by as such as 50% if the licensee had prior knowledge of the probles as a result of a J

licensee audit, or specific NRC or industry notification.

Also, an t

increase uf up to 50% may be applied if multiple examples of a violation are identified during an inspection.

l The factors described above are additive, however, in no instance will the civil penalt'y be greater than 8100,000 per day j

per violation.

1 i

ATTACEMENT C A= aunt of Fines Paid by Investor-Ow_nad New York State Utilities with Operatina Euclear Plants 1974 - 1985 X3&L Utility P.lgni Amount

[

1974 Niagara Mohawk Nine Mile Pt. 1 8

8,000 1975 RG&E Ginna 10,000 s

1976 Con Edison Indian Pt. 2 20,850 1977 None 1978 RGEE Ginna 24,000 t

1979 Niagara Mohawk Nine Mile Pt. 1 18,000 1980 Con Edison Indian Pt. 2 190,000 g

Niagara Mohawk Nine Mile Pt. 1 215,000 1981 Con Edison Indian Pt. 2 40,000 Niagara Mohawk Nine Mile Pt. 1 50,000 1982 Con Edison Indian Pt. 2 180,000 1983 Niagara Mohawk Nine Mile Pt. 1 40,000 1984 Con Edison Indian Pt. 2 40,000 Niagara Mohawk Nine Mile Pt. 1 80,000 1985' None 1986 None t

4 0

' r % 'g UNITED STATES G

NUCLEAR REGULATORY COMMISSION i

h WASHINGTON, D. C. 20006 e,

k March 20, 1987 Dr. Richard J. Hornick, Past-President Human Factors Society Post Office Box 1369 Santa Monica, CA 90406

Dear Dr. Hornick:

I am responding to your inquiry regarding the Human Factors Society's (HFS) concerns about human factors activities at the Nuclear Regulatory Comission r

(NRC).

You stated that you have reason to believe that the NRC is ignoring the HFS Report and that human factors consideration in the NRC and the nuclear industry is close to pre-TMI levels. The NRC has, in fact, implemented most of the HFS Report recomendations. Of the 51 recor.mndations in the Report, 46 were specifically included in the NRC's Human Factors Program Plan (HFPP),

NUREG-0985. Appendix B of the original HFPP documents the extensive use by NRC of the HFS Report and the disposition of each recomendation. Because the Plan is a living document and a management tool to scheduie and allocate resources, a decision was made not to track completed actions in the Plan, rather completed work is identified in Appendix A (Revision 2) and its bibliography. As a result, the original Appendix B was not carried forward in subsequent versions of the Plan. The staff concluded that 5 of 51 recom-mendations in the HFS Report should not be adopted because:

Two recommendations were related to personnel selection which are not properly within the NRC purview.

The recomendation for better protective clothing, tools, and instruments, was being accomplished by the nuclear industry.

The HFS recomendation to terminate research related to human error contributions to support Probabilistic Risk Assessment (PRA) was i

not adopted based upon the importance NRC placed upon PRA.

l The recommendation to perform a systems analysis to determine the need for a Safety Parameter Display System (SPDS) at all plants was i

moot since NRC had already issued requirements for an SPDS.

4 l

Your statement that "No human factors engineering requirements have been established in the Code of Federal Regulations," implies a concern that NRC has not required human factors engineering be incorporated, when appropriate.

into the design of nuclear power plants. The NRC used a combination of means to implement human factors engineering requirements. For licensees of operating plants and applicants for operating licenses and holders of con-struction permits, the Comission initiated implementation of humar. factors engineering requirements through issuance of generic letters.

gh Vl

~

0

2 i

Specifically, the human factors engineering requirements related to development of Emergency Operating Procedures, (EOPs) Control Room Design Revitws (DCRDR) and Safety Parameter Display Systems (SPDS) were proposed on Dece:nber 17, 1982 via Generic Letter 82-33 which pursuant to 10 CFR 50.54(f) requeO4 the sub-mittal of schedules for completion of the basic requirements (including human factors engineering requirements) identified in the letter's enclosures. For i

plants then operating, confinnatory orders were issued following receipt of licensee-proposed implementation schedules to mandate implementation of these i

requirements. The requirements were implemented through license conditions in the initial license issued to applicants which had operating license applications pending at the time. For selected plants, for which construction permit appli-cations were pending, the Comission chose to implement these same requirements by amendment to the NRC's regulations. Section 50.34(f)(2) was revised to i

require human factors engineering for emergency procedures; control room designs and safety parameter displays.

In addition, new sections of the Standard Review Plan (SRP) addressing human factors have been issued; e.g., the new Chapter 18 which is dedicated to Human Factors Engineering. The regulations require under 10 CFR 50.34(g) that an applicant conform to the SRP or identify deviations and discuss how the alternative provides an acceptable method of complying with those rules or regulations of the Commission that underlie the corresponding SRP acceptance criteria. Thus, the guidelines in Chapter 18 of the SRP have the practical effect of requiring extensive human factors engineering or licensee justification of how the alternative proposed provides an acceptable method of complying with the regulations cited in SRP, Chapter 18.

We disagree that the guideline documents related to the DCRDR are unenforceable as implied by your letter. The staff chose this regulatory scheme for DCRDR and SPDS human factors engineering requirements to allow advances in human factors engineering especially in the area of computer technology to be incorporated into new designs. The staff did not wish to stifle innovation by imposing rigid requirements. With respect to enforcement of human factors requirements, the staff has utilized the full spectrum of enforcement options available under the enforcement policy in 10 CFR Part 2. Appendix C up to and including civil penalties for noncompliance with regulations, orders or license conditions pertaining to such requirements.

In regard to the specific questions you posed, the following answers should be considered:

1.

"What is the NRC doing to implement the recommendations of the Society's 1982 report to the NRC?"

i As discussed above, the NRC has adopted 46 of 51 of the Society's recom-mendations and has amended its regulations to require Human Factors Engineering. NRC believes that human factors has become a part of many ongoing NRC programs and that a separate HFPP is no longer needed.

2.

"What is the status of NRC funding for the conduct of human factors research?"

During Fiscal Year 1986, the Division of Human Factors Technology expended over a million dollars in research and development activities, j

primarily in the program areas of licensing examinations, procedures.

l

and the man-machine interface. The Office of Research expended approximately $1.2 million dollars in Fiscal Year 1986 in support of human factors programs in human reliability and human factors aspects of severe accident research. While the total amount is less than that programmed in previcus fiscal years, this is occurring because.many of the specific tasks identified in the HFPP have been completed.

3.

"What is the status of the NRC submission of a human factors engineering requirement for the Code of Federal Regulations?"

As noted previously, the NRC has used a combination of means to require human factors engineering. Based upon the requirements in Generic Letter 82-33 and 10 CFR 50.34, the NRC staff determined that an amendment to add a Human Factors General Design Criteria to 10 CFR 50, Appendix A was not required and thus, staff effort on a proposed rule change was terminated in Fiscal Year 1986.

4.

"What is the National Academy of Sciences charged to do that was not already performed by the Society's study team?"

The decision to request the National Academy of Sciences (NAS) to review where we've been and to make recommendations as to where we should go is based upon the continuing need to reassess the scope of human factors research. As described earlier, human factors activities have become part of ongoing NRC efforts related to the review of applications, amendments to operating licenses, evaluation of incidents and other day-to-day oversight of the safety of reactor operations. The objectives of the NAS study are to identify areas in the current and recent pro-grams that may have received inadequate attention and to provide guidance to NRC's Office of Nuclear Regulatory Research, and other research and development agencies in government, private industry, and universities regarding an appropriate research program in human facters to enhance the safe operation of nuclear power plants. The NAS report will be used to guide future NRC research.

It will not be used to develop research plans or programs, but only to identify those areas where more information or research is required.

In conclusion, it is our belief that the state of human factors consideration both by the NRC and the r.uclear industry has advanced significantly since TMI.*

Sincerely.

0:15i:21 signed by Vietor Stolly Victor Stello, Jr.

Executive Director for Operations cc:

Sen. Edward Kennedy

  • See attached for previous concurrences - RETYPED IN EDO 3/19/87I Revised per Commissioners' & OGC comments.

f

, OFC :DHFT:hFIB

DHFT:DD
DHFT:D
NRR:DD
NRR:D
Eq

. __...:_...________:_______ __..:____________: ___...____.:....._______:_ m.____.__.:...._______

NAME :DJones*

BBoger*
WRussell*
RVollmer*
hDenton*
V :ello DATE :2/24/87
2/24/87
2/24/87
2/27/87
2/27/87
3/C /87

' EDWARD M. KENNEDY MAS W MV$ M)

Enitch 6tated 6 enate WASHINGTON DC 20510 February 11, 1987 Carlton C. Kammerer Director office of Congressional Affairs U.S. Nuclear Regulatory Commission Washington, D.C.

20555

Dear Mr. Kammerer:

Enclosed is a letter that I recently received from the Human Factors Society which raises several questions concerning a com-prehensive long-range human factors plan.

I would appreciate it if you would respond to Dr. Hornick's questions and send a copy of your response to my office.

Thank you for your attention to this matter.

Sincere pf JY Edward M. Kennedy

~

C.

EMK/tv 903 2 o OT sp-

}{WMGM 7 actors Socictti Santa Monica, California 90406 (213) 394-1811/394-9793 Box 1369

  • January 19, 1987 The Honorable Edward.M. Kennedy SR-113 Russell Senate Office Building e ratsroEsr raen u chrwen.n Washington, D.C.

20501

Dear Senator Kennedy,

. PRESIDENT EUCT In res onse to the Three Mile Island Nuclear Station accident in

' "'d 1979, two bodies published reports that were diagnostic as well as prescriptive. One was the President's Commission (ref.1) and the other was the Nuclear Regulatory Comission's Special Inquiry Group (ref.2). Both reports concluded that a major cause of the accident

. rast rarsiorxT Rahard i Hormch was the failure to take human factors technology into account in the design and operation of the plant. As a result, the Nuclear Regulatory Comission (NRC) contracted in 1981 with the Human Factors Society to conduct a study of the state of human factors

  • SECRETARY TREASURER within the nuclear community and to recomend a comprehensive,

": 5 5'"d'"

long-range human factors plan. A select seven-member study team published a three-volume report and plan in 1982 which focused on corrective measures and projected such a 10-year program plan (ref.3) for the NRC.

. srcartAny-TarAsUnta EucT Kxnneth R Lau6,ry. sr In October 1986, the Executive Councis of the Human Factors Society h

enacted an action item for me, as the then president of this Society and as one of the seven study-team members, to write this letter which is being to the Chairman of the NRC and several members of

. rAsT srcartany-Congress who we think are particularly concerned with the safety of m AsCRER nuclear power plant operations. Our professional concern with the

" 8 " '8 " I' NRC's implementation of our recommendations was heightened, of course, with the occurrence of the nuclear accident at Chernobyl.

. ExtecTivE coUscit We have reason to believe that our report is being ignored by the Pau1 R Chatcher NRC and that the consideration of human factors within the NRC and F Thomas E gemeier in nuclear industry elements is nearly as bad as it was prior to 6

Three Mile Island in spite of the efforts of several competent human Alan s Neal Hzrold E Pnce factors professionals within the NRC. The current NRC Human Factors Program Plan (ref.4) does not contain any reference to our report Earl L Wwner

^aa* M wichaasky and its recommendations even though the NRC Program Plan's bibliography is extensive in other ways. The internal NRC budget for human factors research appears to have been reduced and diverted into other applications. Criteria and procedures for control room

' '*'[is nATon design reviews (CRDRs) which we proposed as requirements have been o

published merely as " guidelines" without enforcement. Furthermore, m,,an c Knoue, no human factors engineering requirements have been established in the Code of Federal Regulations (CFR). Finally, the NRC has contracted with the National Academy of Sciences (NAS)

"...to conduct a study of human factors research and to develop recommendations for further research."

page 2 4

Our questions to you, therefore, are these:

B 1.) What is the NRC doing to implement the recommendations of the Society's 1982 report to the NRC?

2.) What is the status of NRC funding for and conduct of human factors research?

i What is the status of the NRC submission of a human 3.)

factors engineering requirement for the Code of Federal Regulations?

What is the National Academy of Sciences charged to do 4.)

that was not already performed by the Society's study team?

Since we are a professional organization with individual and public safety as prime concerns, your reply is earnestly sought. Because you may not be familiar with our organization, I have included some materials which describe it.

Thank you for your attention to this inquiry.

Sincerely, l

(

) Q Richard J.

rnick, Ph.D.

Past-President RJH/dep

References:

et al. "The President's Commission on 1.) Kemeny, J.G., TTIiree Mile Island," U.S. Government, the Accident a October 1979.

2.) Rogovin, M. and Frampton G.T., Jr. "Three Mile Island: A Report to the Comissioners and the Public," USNRC Special Inquiry Group, January 1980.

3.) Hopkins, C.O., Snyder, H.L., Price H.E., Hornick, R.J.,

Mackie, R.R., Smillie, R.J., and Sugarman, R.C.

" Critical Human Factors Issues in Nuclear Power Regulation and a Recommended Comprehensive Human Factors Long Range Plan," NUREG/CR-2833, August 1982.

4.) USNRC. " Human Factors Program Plan," NUREG-0985, Rev.2, April 1986.

.

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