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Future of the National Materials Program Working Group Report for Concurrence
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Future of the National Materials Program Working Group Report October 2023 Huda Akhavannik (NMSS), Co-Chair Auggie Ong (NH), Co-Chair Michelle Beardsley (retired, NMSS), Alternate Co-Chair Duncan White (NMSS), Advisor Brian Harris (OGC), Attorney Leira Cuadrado (NMSS), Member Allyce Bolger (NMSS), Member Keisha Cornelius (OK), Member Tracy Jue (CA), Member Zubaida Gulshan (CA), Member Farrah Gaskins (RI), Member Jenni Dalzell (RIII), Member Sara Forster (RIII), Member Randy Erickson (RIV), Member

i Table of Contents Executive Summary.................................................................................................................... ii Purpose..................................................................................................................................... 1 Discussion................................................................................................................................. 1 Radiation Control Program Element Evaluation......................................................................... 2 Information Exchange and Training......................................................................................... 4 Program Organization and Program Staffing and Funding...................................................... 7 Rulemaking and Regulatory Requirements............................................................................10 IMPEP....................................................................................................................................11 Licensing and Inspection........................................................................................................11 Reciprocity.............................................................................................................................13 Events and Allegations...........................................................................................................13 Conclusion.............................................................................................................................13 Appendix A: Licensee Analysis............................................................................................... A-1 Appendix B: Outreach Activities.............................................................................................. B-1 Appendix C: Agreement State Oversight and Regulatory Support to Agreement States Final Fee Rule Information (FY 2002-2023)............................................................................................ C-1 Appendix D: Recommendations.............................................................................................. D-1 Recommendations to Improve Consistency......................................................................... D-1 Recommendations for NRC Resource Planning................................................................... D-5

ii Executive Summary As the number of Agreement States increases, enhancing communications, knowledge management, and collaboration will strengthen the National Materials Program (NMP) and foster a continued, strong U.S. Nuclear Regulatory Commission (NRC) and Organization of Agreement States (OAS) partnership. Additionally, assessing and identifying areas for increased efficiency and effectiveness for the NRC and for the overall NMP remains important.

The Working Group developed recommendations to address changes in the NMP as the number of Agreement States increases.

To develop these recommendations, the Working Group performed a broad licensee analysis with respect to the remaining quantity and type of NRC licensees and significant radiation control regulatory program elements and activities. This analysis identified scenarios in which the number of Agreement States would increase, thereby decreasing the number of NRC licensees, and the resulting impacts to both NRC and Agreement State regulatory programs.

One direct impact from declining licensees is that NRC licensees and applicants would incur increasing fees to recover the cost of maintaining the NMP. With an increasing number of Agreement States, the NRC will need to evaluate increased activity including:

Providing and updating current training courses, creating new training courses for emerging technologies, and paying for Agreement State travel related to training;

Increasing number of Integrated Materials Performance Evaluation Program (IMPEP) reviews and paying for travel to sites;

Increasing number of compatibility reviews; and

Updating current and developing new rulemaking and licensing, inspection, and IMPEP guidance documents.

The Working Group identified areas for improvement and developed ten recommendations listed below:

1 Develop an agreed upon method and identify tools to allow OAS members and NRC staff to collaborate on the development of rules and guidance in near-real time.

2 Expand Centers of Expertise or Communities of Practice which identify subject matter expert staff across the NMP to voluntarily provide guidance on important technical and regulatory topics.

3 Promote increased OAS participation to lead Government-to-Government Meetings.

4 Make available and update existing optional organizational and safety culture training resources for NRC and the Agreement States.

5 Update qualification training by incorporating compatible alternate options for qualification with Inspection Manual Chapter 1248.

6 Improve access to information about volunteering opportunities that would allow for the NRC and Agreement States to better collaborate on activities such as joint working group and IMPEP reviews.

7 The NRC should identify methods to appropriately prioritize updating NRC-issued guidance that are a matter of compatibility with the Agreement States.

8 Establish a working group to develop recommendations for structural, budget, and resource changes to the NRC materials program to enhance the programs ability to maintain fair and equitable fees as NRC oversight of materials licensees decrease.

iii 9

Establish a working group to develop options to increase flexibility and optimize resource expenditure through strategic use of hiring authorities as well as 274i Agreements with States to address temporary resource needs, and manage expenses related to attrition and onboarding to allow for more rapid adjustments to changing workloads.

10 Establish a working group to consider options and develop recommendations to address the challenge of maintaining fair and equitable fees while, with an increase in Agreement States, the fee-recoverable activities required to maintain the NMP will be borne by fewer NRC licensees.

These recommendations fall into two primary categories: (1) improving consistency through knowledge management, communication, and collaboration (Recommendation Nos. 1-7) and (2) improving NRC resource planning and utilization (Recommendation Nos. 8-10).

Recommendations Nos. 1-7 support consistency throughout the NMP by identifying activities which promote knowledge management, communication, and collaboration. Recommendations Nos. 8-10 on resource planning support maintaining a fair and equitable fee-recovery structure for the remaining NRC licensees while maintaining a robust regulatory structure where the NRC provides NMP leadership, consistent with its statutory responsibilities described in Section 274 of the Atomic Energy Act of 1954, as amended (AEA).

1 Purpose The purpose of the Future of the NMP Working Group (the Working Group), established under Management Directive 5.3, was to evaluate and make recommendations on the future structure and function of the NMP based on the changing number of Agreement States and NRC licensees.

This report summarizes the considerations and recommendations developed by the Working Group for NMSS management consideration and future implementation.

Discussion In the late 90s, a similar effort1 addressed the then increasing number of Agreement States and its potential impact to the NMP. In its 2001 final report (ML011590431), the group evaluated a range of potential NMP structural changes and recommended the Alliance option where Agreement States would share a greater proportional responsibility for development and maintenance of the national base of rules and guidance needed for an effective NMP.

Thereafter, in SECY-02-0107,2 the NRC staff recommended the Commission adopt the blended option that would maintain the NRCs current relationship with the Agreement States and NRC and the Agreement States would look for opportunities to increase use of Agreement State experience and expertise in the development and maintenance of products for the NMP as envisioned under the Alliance option. Ultimately, in 2005, the Commission approved the staffs recommendation to continue the NMPs structure under a blended option where the NRC and Agreement States collaborate to establish national priorities, share resources, and develop regulatory products. 3 Since the Commissions direction in 2005, the NRC and Agreement States have increased collaboration on the oversight of the NMP through joint working groups to develop guidance and regulations, prioritization of regulatory and technical products, and enhanced communications.

The NRC and Agreement States regularly collaborate to address technical and regulatory gaps and other programmatic challenges. In developing these recommendations, the Working Group considered the success of these efforts and the innovative culture of the NMP.

In 2022, the Future of the NMP Working Group was established. Its charter (ML22112A112) provides an overview of the Working Group activities and members. As described in its charter, the Working Group was tasked with identifying current and potential future scenarios and assessing key indicators to develop recommendations for increasing efficiency and effectiveness of the NMPs structure and function. The Working Group leveraged the observations reported by the previous similarly tasked working groups, including:

Increasing Agreement State technical expertise;

Increasing likelihood of new technologies emerging in Agreement States;

Decreasing numbers of NRC licensees to support NRC fee-based activities; and

Promoting consistent exchange of technical and regulatory information.

1 SECY-99-250 (ML993330109) 2 SECY-002-0107 (ML021580590) 3 SRM-SECY-04-0215 (ML050050563)

2 Additionally, the Working Group considered State Agreement (SA) Procedure SA-103, Joint Oversight of the National Materials Program, that describes NMP changes resulting from an April 2018 Office of Inspector General (OIG) audit, OIG-18-A-11, Audit of NRCs Oversight of the National Materials Program, (ML18094A280). The Working Group also considered indicators developed by the NRCs Signposts and Markers initiative. Specifically, the Working Group considered impacts from, new industrial uses of radioisotopes and new diagnostic and therapeutic uses of medical radioisotopes.

The Working Group conducted several activities, including:

Analyzing the number and type of materials licensees to identify hypothetical scenarios for evaluation (see Appendix A: Licensee Analysis);

Conducting multiple outreach activities to develop a holistic analysis of the NMP and to gather a diverse range of opinions (see Appendix B: Outreach Activities); and

Reviewing impacts to the Regulatory Support to the Agreement States and Agreement State Oversight fee-relief activities for FY2002-2023 (see Appendix C: Agreement State Oversight and Regulatory Support to Agreement States Final Fee Rule Information).

As a result of analyzing this data, the Working Group identified areas to enhance the NMP and developed 10 recommendations supporting consistency and resource planning. In the discussion below, this report details how the Working Group developed each recommendation.

Appendix D: Recommendations, provides a summary of all the recommendations along with an evaluation of the pros and cons of each recommendation.

Radiation Control Program Element Evaluation The Working Group analyzed areas that would be most impacted by an increase in the number of Agreement States. That analysis identified the following observations:

An increasing number of Agreement States means that the Agreement States will continue to regulate larger total numbers of licensees.

Technical experience for both new and emerging technologies continues to shift to the Agreement States.

With decreasing licensees, the NRC will have to recover its budget over fewer licensees.

An increasing number of Agreement States results in a greater need for consistency across the NMP.

Additionally, the Working Group reviewed AEA Section 274 to identify the NMP functions that are required to stay with the NRC and could be impacted by an increase in the number of Agreement States. These NRC responsibilities outlined in AEA Section 274 include:

Coordinating development of standards.

Authorizing entering an Agreement with the Governor of State.

Determining the adequacy and compatibility of an Agreement State program.

Granting exemptions necessary or appropriate to carry out an agreement for a state to become an Agreement State.

Providing money for training and travel in certain situations for Agreement State staff.

Terminating or suspending all or part of an Agreement (NRC regains regulatory authority over those licenses).

3 Using the observations listed above and considering the NRC statutory responsibilities, the Working Group identified potentially impacted program elements. The Working Group evaluated the program elements defined in the Agreement State Program Policy Statement (ML17262B205) and described in the Program Element Table in the Regulation Toolbox of the State Communication Portal. Program Elements are defined in the policy statement as, any component or function of a radiation control regulatory program which contributes to [the]

implementation of that program. Therefore, the Working Group considered the Program Element Table as the most comprehensive list of necessary functions for any NRC or Agreement State regulatory program. From the program elements table, the Working Group selected nine program elements for evaluation: (1) Program Organization, (2) Program and Staff Funding, (3) Information Exchange, (4) Rulemaking, (5) Regulatory Requirements, (6)

Reciprocity, (7) Licensing, (8) Inspection, and (9) Events and Allegations. The Working Group also considered the NRC responsibilities outlined in AEA Section 274 and included training and IMPEP to the program elements for evaluation.

Due to their similarities, the Working Group combined the analysis of some of the program elements for conciseness. The table below summarizes the impacts to the program elements:

Table 1 -NRC and Agreement State Impacts to Program Elements Program Element(s)

NRC Impacts Agreement State Impacts Information Exchange and Training Increased information exchange activity to develop new guidance for emerging technologies in joint working groups. Current level of activity to update current guidance.

Increased training activity to support increased Agreement State staff qualification and emerging technologies.

Increased information exchange activity, greater Agreement State participation in joint working groups to develop new and update current guidance and regulations.

Increased training activity with emerging technologies.

Program Organization and Program and Staff Funding Evaluated as Agreement State Letter of Intents are received.

No new impacts.

Rulemaking and Regulatory Requirements Increased activity, considering emerging technologies and greater Agreement State compatibility reviews.

Increased activity for Agreement State to maintain compatibility with increasing NRC regulatory activity for emerging technologies.

4 Program Element(s)

NRC Impacts Agreement State Impacts Increased activity to support joint working groups assigned to NRC rulemaking efforts.

IMPEP Increased activity with more Agreement States.

Increased activity to support IMPEP teams.

Licensing and Inspections Decreased activity with fewer NRC licensees. Increased activity to develop new guidance. Current level of activity to update current guidance.

Same level of licensing and inspection. Increased activity to support joint NRC guidance updates and development.

Reciprocity May increase or decrease as result of declining NRC jurisdictions and potential decrease of NRC licensees.

Same level of activity for individual Agreement States.

Increased reciprocity reviews across the NMP.

Events and Allegations Decreased NRC event response activities. Increased NRC reviews of notifications of incidents, events, and allegations from more Agreement States.

Same level of activity.

The impacts to the program elements are further described in the sections, below.

Information Exchange and Training The Working Group evaluated current methods for information exchange and training to recommend approaches to increase consistency through collaboration, communication, and knowledge management with an increasing number of Agreement States. The Working Group notes that the NMP continues to support collaboration between Agreement States and the NRC on wide variety of activities. With 39 current Agreement States and three new requests in process, the Working Group notes that successful information exchange and training is already occurring. However, it is important for the NMP to continually improve information exchange and training as it directly impacts the consistency and effectiveness of other program elements such as IMPEP, licensing, and inspection across the NMP. Additionally, as Agreement States and the NRC encounter new regulatory challenges from emerging technologies and novel uses of radioactive material, sharing lessons learned and actions taken will benefit the entire NMP.

Therefore, the Working Group recommends that intentional efforts to improve information exchange, knowledge management, and training should continue to increase as the number of Agreement States also increases.

To allow for increased collaboration between the NRC and Agreement States, the Working Group observed challenges in document sharing and access. For example, currently, while

5 performing IMPEP reviews and collaborating on joint working groups, technological and information security challenges can prevent access to certain documents for simultaneous review or input and create unnecessary version control burdens. Therefore, the Working Group developed Recommendation No. 1 to develop a method for the NRC and Agreement State staff to collaborate and access documents simultaneously.

During outreach efforts, the Working Group and Agreement States discussed several training improvements and suggestions. Many of these suggestions are either currently underway or under development. These include expanding the suite of available on-demand online training and Agreement States hosting training. Other suggestions included expanding specific training courses, informational videos, and the use of the Technical Training Centers Health Physics Laboratories. The Working Group notes that these ongoing efforts will be useful to improve collaboration and training access as the number of Agreement States increases.

The Working Group discussed possibilities to increase information exchange and training resources outside of creating and updating guidance documents and training courses. The Working Group noted that an increasing number of Agreement States will likely result in increased resource needs for the NRCs Regional State Agreement Officers (RSAOs). The Working Group considered recommending increasing the number of RSAOs and noted that this possibility should be considered as part of workforce planning and the efforts to enhance the IMPEP activities. The Working Group also discussed identifying technical experts across the NMP to form additional centers of expertise to ask for feedback and to help support essential NMP activities. The Future of NMP working group developed Recommendation No. 2 to expand centers of expertise in relevant subject areas. The Working Group identified the following areas that could benefit from a center of expertise:

Rule adoption.

Pre-IMPEP preparation.

Licensing.

Risk-informed inspections.

Event follow-up.

Transportation requirements including Quality Assurance Program inspection and licensing.

Next, the Working Group evaluated current collaborative activities such as Government-to-Government and Champions Chat meetings which provide an excellent forum for information sharing and training. In Recommendation No. 3, the Working Group notes that these meetings could be improved by promoting greater Agreement State participation in developing topics and presentations. For example, these meetings could be used to increase sharing operating experience from events and allegations.

The Working Group discussed the importance of a strong safety and organizational culture emphasizing leadership at all levels across the NMP. In 2013, the NRC shared with the Agreement States its then recently developed NRC Safety Culture Policy Statement (SCPS) information.4 The policy statement is not a matter a compatibility for the Agreement States but contains elements that promote consistency and information sharing within the NMP. For example, the SCPS defines traits such as fostering an environment for raising concerns, 4 Safety culture resources developed for the Agreement States can be found on:

https://www.nrc.gov/about-nrc/safety-culture/sc-info-for-agrmnt-states.html

6 effective safety communication, and continuous learning. At that time, the NRC provided numerous resources for Agreement State usage to promote a constructive organizational culture. The Working Group believes that available safety culture and leadership resources should routinely be updated and emphasized across the NMP. In Recommendation No. 4, the Working Group recommends the NRC and Agreement States collaborate to promote more consistent organizational and safety culture across the NMP.

In addition to developing and updating important guidance documents, efforts associated with developing and updating training will increase as the number of Agreement States increases.

For example, increased Agreement State input can be helpful to develop qualification training for emerging technologies. Agreement States, who likely will first encounter emerging technologies in their states, can share operating experience and their licensing and inspection challenges to better inform training. These efforts ensure that emerging technologies are consistently addressed across the NMP. Additionally, current qualification requirements will continue to be updated. With an increasing number of Agreement States, there will be greater training demands for the NRC staff. In Recommendation No. 5, the Working Group discussed modernizing current qualification training outlines in Inspection Manual Chapter 1248 to ensure continuing education for current staff and to train new staff. As part of this modernization, the Working Group recommends providing alternate options for qualification.

Additionally, the Working Group identified there are opportunities to better advertise for Agreement State participation in activities supporting the NMP such as joint NRC and Agreement State working groups, inspections out of their States, and serving as IMPEP team members and team leaders. Therefore, the Future of NMP working group developed Recommendation No. 6, which supports improving advertising for opportunities such as a need for a subject matter expert in a working group or a uranium recovery expert for a future IMPEP review.

As expertise and experience with new or emerging technologies increasingly occurs in Agreement States, resources needed to support information exchange will increase for both the Agreement States and the NRC. Agreement State participation in working groups to support new guidance development for emerging technologies will increase while efforts to update current guidance documents will remain constant. The NRC will need to coordinate increasing numbers of working groups and committees for emerging technologies. NRC staff participation will continue as members and co-chairs of these working groups. In Appendix A, Licensee Analysis, the Working Group also noted that the NRC should be sensitive to update NRC guidance that are a matter of compatibility with the Agreement States in a timely manner. With fewer NRC licensees and increasing likelihood that the initial development and deployment of emerging technologies will occur in Agreement States, the Agreement States may have more diverse licensee types than the NRC. In Recommendation No. 7, the Working Group highlights the need to appropriately prioritize updating NRC guidance focusing resources on issues with most impact to the overall NMP.

Finally, the Working Group acknowledges and commends the current NMP efforts underway to improve information exchange and training. While obtaining feedback on these recommendations, the Working Group identified ongoing efforts such as increasing adoption of web-based licensing, increasing Agreement State IMPEP and working group participation, updating the State Communication Portal website, and creating opportunities for rotations between Agreement States and the NRC.

7 Program Organization and Program Staffing and Funding As mentioned in the Discussion section of this report, the Working Group evaluated findings from a previous working group that also addressed the then increasing number of Agreement States and its potential impact to the NMP. In its 2001 final report, the group evaluated a range of potential NMP structural changes and recommended the Alliance option where states would share a greater proportional responsibility for development and maintenance of the national base of rules and guidance needed for an effective NMP. These options were subsequently provided to the Commission in a vote paper. Ultimately, in 2005, the Commission approved continuing the NMPs structure under a blended option which combined the structure options of alliance and current program. In this blended option, the NRC and Agreement States collaborate to establish national priorities, share resources, and develop regulatory products while the NRC assumes the leadership role. The previous working group performed a thorough evaluation of these options considering multiple criteria: maintains safety, optimize resources, promote consensus, account for individual program needs, flexibility, exchange of information, harmonize regulatory approaches, and public confidence. Additionally, it provided advantages and disadvantages for each of the options. The Working Group agreed that the analyses done by the past group are still relevant. This is evidenced by the strong current working relationship between the NRC and Agreement States which demonstrates the viability and flexibility of this structure. Therefore, the Working Group does not recommend any changes to the current structure of the NMP.

Considering the current NMP structure, the Working Group identified several challenges to the program elements of Program Organization and Program Staffing and Funding as the number of Agreement States increase. These challenges include sustaining fair and equitable fees for remaining licensees while maintaining appropriate resources to allow for the NRC to lead NMP activities, consistent with its statutory responsibilities described in Section 274 of the AEA.

The Nuclear Energy Innovation and Modernization Act (NEIMA) requires the NRC to recover, to the maximum extent practicable, approximately 100 percent of its annual budget, less the budget authority for excluded activities. As relevant here, excluded activity under NEIMA is,

[a]ny fee-relief activity, as identified by the Commission. Consistent with prior fee rules, fee-relief activities identified by the Commission include Agreement State Oversight and Regulatory Support to Agreement States.5 The NRCs Nuclear Materials Users Business Line provides the budget for the NRCs Nuclear Materials Users program across Headquarters and the Regions. Notably, part of this business line impacts annual fees for licensees as it is fee-recoverable while some portions are non-fee-recoverable. NRC licensees pay service fees and annual fees that support direct licensing and inspection activities, as well as these licensees share of the nationwide regulatory program. Once a state transitions to an Agreement State, the NRC no longer expends resources for direct licensing and inspection of licensees regulated by the Agreement State, nor will NRC fees be charged to these licensees.

5 The full list of fee-relief activities identified by the Commission for a fiscal year can be found in the NRCs final fee rules.

8 The Nuclear Materials Users Business Line includes two fee-relief activities: Agreement State Oversight and Regulatory Support to Agreement States. The following bullets provide greater detail on the NRC work covered by these fee-relief activities:

Regulatory Support to Agreement States:

Developing some regulations and guidance related to the Agreement States.

Regulatory research related to Agreement States.

Information Technology projects related to Agreement States.

Legal advice for NRC staff related to Agreement States.

Homeland Security activities associated with sources in Agreement States.

Agreement State Oversight:

Approving new Agreement States.

Assessing technical adequacy and compatibility of Agreement State programs.

Exchanging regulatory and safety information.

IMPEP.

Providing general technical assistance to Agreement States.

Providing NRC training to Agreement State personnel.

Paying for most Agreement State travel related to programmatic activities.

The Working Group reviewed these two fee-relief activities against the potential for increases in NRC resource needs to maintain leadership of the NMP, consistent with the NRCs statutory responsibilities under Section 274 of the AEA. Consistent with the NRC budget process, any increased resources for fee-relief activities require Commission, Office of Management and Budget, and Congressional approval. Increasing resources to these fee-relief activities may help the NRC to continue to provide leadership and support for an increasing number of Agreement States. These support activities include:

Providing and updating current training courses, creating new training courses for emerging technologies, and paying for Agreement State travel related to training;

Supporting an increased number of IMPEP reviews and paying for travel to sites;

Supporting an increased number of compatibility reviews; and

Supporting updating and developing some rulemakings and some licensing, inspection, and IMPEP guidance documents.

Appendix C, Agreement State Oversight and Regulatory Support to Agreement States Final Fee Rule Information FY 2002-2023, provides an overview of budgetary requests for these two fee-relief categories from FY 2002-2023. This appendix also provides examples where the NRC leveraged fee-relief activities to mitigate impacts to NRC licensees when other large Agreement States were transitioned. However, in these past examples, the NRC was operating under a different framework for fee recovery. For FYs 2005 through 2020, the Omnibus Budget Reconciliation Act of 1990 (OBRA-90) required the NRC to recover through fees approximately 90 percent of its budget authority for the fiscal year, less amounts for the activities excluded from fee recovery under OBRA-90 or other legislation. NEIMA, however, put in place a revised fee-recovery framework for FY 2021 and subsequent fiscal years, requiring the NRC to recover, to the maximum extent practicable, approximately 100 percent of its total budget authority for the fiscal year, less the budget authority for excluded activities.

9 The Working Group also considered the impact of increased Agreement States on fee-recoverable work. NRC licensees will continue to pay service fees and annual fees that support direct licensing and inspection activities, as well as these licensees share of the nationwide regulatory program. As NRC licensees decrease, the fee-recoverable activities required to maintain the NMP including generic activities like guidance and rulemaking will be borne by fewer licensees. A potential decrease in NRC licensees could challenge maintaining fair and equitable fees for remaining NRC licensees as some regulatory and guidance development conducted in support of the Nuclear Materials Users Business Line may be fee-based.

A possible impact to the NMP is restructuring the Nuclear Materials Users Business Line to sustain a fair and equitable fee-recovery structure for the remaining NRC licensees. The Working Groups assessment of the NRC Regions determined that Regions I and III, are more susceptible to changes in their organizational structure if the States with higher number of licensees in their region become Agreement States (see Scenario 2 in Appendix A, Licensee Analysis). In Recommendation No. 8 of this report, the Working Group highlights the need to establish a working group to develop recommendations for structural, budget, and resource changes to the NRC materials program to improve the programs ability to maintain fair and equitable fees as NRC licensees decrease. As part of developing these recommendations, the working group should identify appropriate timelines for action. These recommendations would increase the NRCs agility to timely react for future Agreement State requests and may result in restructuring6 of Offices and Regions under the NRCs Nuclear Materials Users Business Line.

The Working Group also evaluated whether other staff acquisition tools and hiring authorities could be leveraged to ensure the most efficient use of resources. One such tool that the Working Group evaluated are so-called 274i Agreements. Sections 161f and 274i of the AEA authorize the NRC to enter into agreements with states to perform inspections or other functions as the NRC deems appropriate.7 Agreements under this authority, commonly called 274i Agreements, can range from stand-alone agreements for an Agreement State to perform inspections on behalf of the NRC and be reimbursed by the NRC at hourly contracted rate to Memoranda of Understanding for Agreement State to participate in NRC inspections.

When strategically implemented, a 274i Agreement may be more efficient to complete short-term tasks when compared to hiring a full-time equivalent (FTE) NRC. As described in Recommendation No. 9 of this report, the Working Group determined that when used strategically, 274i Agreements could be used to compensate Agreement States for their participation in NMP activities where the NRC needs a short-term increase or limited-scope support. The NRC should evaluate the full lifecycle cost of completing a task under a potential 274i Agreement compared to hiring an NRC FTE in the agency.

In addition to 274i Agreements, the NRC could consider other hiring authorities as needed to support NMP activities in the future. For example, under certain circumstances, it may be 6 In 2016, the NRC staff provided options to potentially reorganize the regional materials program in SECY-16-0083, Project Aim - Materials Program Evaluation and Recommendation, (ML16148A826).

This paper highlighted qualitative and quantitative factors to consider. Any future action plan can consider these factors while evaluating expected increases to the number of Agreement States.

7 These agreements allow the Commission to pay for Agreement State travel, staff time, and equipment.

A successful example of this type of agreement was when Agreement State staff assisted the NRC in performing security inspections on behalf of the NRC. In this role, the State is performing an activity on behalf of the NRC using NRC regulations and policy, but the NRC makes the final determinations. These agreements can also be written so the Commission can assist States.

10 beneficial to hire annuitants, recently retired Agreement State employees, or Special Government Employees to work on specific projects on a limited, as needed basis. Other tools that can be considered depending on the nature of the work are grants and cooperative agreements.

With respect to the Agreement States, the Working Group did not identify major budgetary impacts to the existing Agreement States. The Working Group did note that Agreement State staff currently participate in NMP activities such as IMPEP reviews or working groups in addition to their responsibilities as State employees. As Agreement State staff participation in NMP activities continues to increase in the future, the NRC should be sensitive to the level of Agreement State participation to respect their workload planning.

Additionally, the NRC financially supports the OAS and the Conference of Radiation Control Program Directors, Inc. (CRCPD). The NRC issues grants to support important issues across the NMP including orphan sources, suggested state regulations (SSRs), annual meetings, and workforce development. These important activities promote consistency throughout the NMP and should be continued.

The process to become an Agreement State typically takes 3-5 years. As the number of Agreement States increase, the NRC will need to evaluate annual budget changes during that time to ensure continued fair and equitable fees to NRC licensees. This may include increasing funding to fee-relief activities, while accurately projecting Nuclear Material Users FTE for fee-based work. Should a significant number of licensees migrate to the Agreement States, the NRC could have potential challenges balancing the budgetary resources necessary to license and conduct oversight of NRC licensees and maintain the regulatory structure of a national program while ensuring that the fees charged to NRC licensees are fair and equitable. Because the NRC has limitations on its ability to assign responsibility for the NMP to Agreement States, the Working Group evaluated options to support improving the efficiency and effectiveness of NRC resources as NRC licensees potentially decrease. In Recommendation No. 10 of this report, the Working Group highlights the need to establish a working group to develop recommendations to address impacts from potential fee increases due to fewer NRC licensees.

Through this recommendation, the NRC can identify strategic and tactical options that address current fee-based activities in the Nuclear Materials Users Business Line that could significantly impact fees. This can include increasing the use of fee-relief to fund regulations and guidance development and evaluating any potential inequities imposed by the current fee calculation methodology. Additionally, strategically improving staffing flexibility and training can increase the NRCs responsiveness to any changes in needed resources that may result from an increase in the number of Agreement States.

Rulemaking and Regulatory Requirements The increase in Agreement States will result in an increase of compatibility reviews of regulations and other program elements that are a matter of compatibility. This is both for the initial review of a State transitioning to an Agreement State and for future adoptions of new or updated NRC regulations, changes in state legislation, and legally binding requirements.

Emerging technologies such as fusion energy, new industrial uses of radioisotopes, and new diagnostic and therapeutic uses of medical radioisotopes could increase the number of compatibility reviews. Compatibility reviews are inherently federal and cannot be delegated or relinquished to Agreement States.

11 As described in the sections on Program Organization and Program Staffing and Funding in this report and in Recommendation No. 10, the NRC would need to consider the increased resources to continue Regulatory Oversight as required in Section 274 of the AEA. This would include performing compatibility reviews and developing new regulatory requirements. As is currently the case, Agreement States whose jurisdictions include new technologies would participate in working groups that will recommend new regulatory requirements. Additionally, the NRC would need to continue to support CRCPD in related activities such as developing the SSRs.

IMPEP The Working Group considered impacts to IMPEP resulting from fewer NRC licensees and potential changes to the NRCs Nuclear Material Users organizational structure. To ensure the continued integrity of IMPEP, the NRC must continue self-assessments as described in SA-123, Conducting Self-Assessments of the Integrated Materials Performance Evaluation Program and as required by OIG-09-A-08, Audit of NRCs Agreement State Program -

March 16, 2009 (ML090750622). Regardless of the future organizational structure of the NRC, the recently implemented One NRC review allows for evaluating the NRCs overall Nuclear Materials Users in one IMPEP review.

Across the NMP, the number of IMPEP reviews will increase with an increasing number of Agreement States. Agreement State staff should continue to have an increased role and participation in IMPEP reviews both as team members and team leaders. Additionally, there will be an increased number of inspection accompaniments as part of the increase in IMPEP reviews. An increased number of RSAOs should also be evaluated given their important role in Periodic Meetings and as IMPEP review team members or leaders.

Future guidance and training development must take place with strong input from Agreement States as the diversity of NRC licensees decreases and Agreement States have greater experience with the noncommon performance indicators, i.e., Low level Waste and Uranium Recovery sites. As mentioned previously, Agreement States will be expected to have increased experience with future technologies. The Working Group anticipates that IMPEP guidance for future technologies such as fusion energy, new industrial uses of radioisotopes, and new diagnostic and therapeutic uses of medical radioisotopes can be developed alongside Agreement States and added to the current IMPEP procedures for their respective indicators.

As described in the sections on Program Organization and Program Staffing and Funding in this report and in Recommendation No. 10, the NRC would need to consider the increased resources to continue Regulatory Oversight as required in Section 274 of the AEA.

Licensing and Inspection With an increase in Agreement States, there will be fewer NRC licensees and correspondingly fewer licensing reviews and inspections. As described earlier, the fee-recoverable activities required to maintain the NMP including generic activities like guidance and rulemaking will be borne by fewer licensees as the number NRC licensees decrease. However, the Working Group believes that the NRC will still need to maintain technical expertise and leadership in developing and updating regulations and guidance and other oversight activities for the overall NRC materials program.

12 These activities include ensuring clear communication on the expectations between NRC and Agreement State staff when developing and updating IMPEP, licensing, and inspection guidance procedures. As described in Appendix A, Licensee Analysis, currently NRC licensees in the NMP consist of mostly medical and industrial licensees followed by academic and other8 licensee types. The Working Group evaluated licensee types for the future scenarios and observed that the majority licensee types will continue to be medical and industrial. As there is a significantly higher number of medical and industrial licensees, the NRCs work planning must ensure that the prioritization of work includes all license types/activities, not just those that only benefit most NRC licensees. This is addressed by Recommendation No. 7, which emphasizes the importance of prioritizing updating NRC-issued guidance that considers the needs of the entire NMP.

As described under the Information Exchange and Training program elements, the Working Group anticipates that licensing and inspection guidance for future technologies will need to be developed in working groups that have Agreement State representation, which is the current practice. With an increasing number of Agreement States, there is a greater likelihood that Agreement States will have more experience in handling these technological advancements and should provide their independent perspectives in guidance development. There may be cases where States are more advanced in developing guidance and so the NRC can look to build upon that guidance or work with Agreement States to develop guidance in parallel, as appropriate. The Working Group discussed the possibility of endorsing Agreement State developed guidance in a Regulatory Guide for use by NRC licensees. The Working Group discussed that the NRC could identify guidance documents already developed by Agreement States that could be evaluated for endorsement as a Regulatory Guide or to leverage and further develop other guidance by joint working groups. Currently, any guidance that is a program element for implementation by all Agreement States is reviewed for compatibility by the Standing Committee on Compatibility. The Working Group concluded that continuing to include Agreement States in future working groups and leveraging any Agreement State developed guidance would capture those States experiences with new technologies. In addition to leveraging already developed guidance for NRC guidance documents, Agreement States can communicate guidance documents for emerging technologies through venues such as Government-to-Government meetings as described in Recommendation No. 3.

The NRCs licensing and inspection programs must continue to maintain technically qualified staff. The NRC will need to ensure that there is an appropriate number of staff to complete inspection and licensing work for those licensees that cannot be regulated by the Agreement States and for those that maintain dual licenses to perform work in both NRC and Agreement State jurisdictions. Although it is uncommon, Agreement States have and could request to return portions of, or all their 274.b. Agreement to the NRC. For example, in the past, the State of Idaho completely returned their Agreement and other States have returned portions of their Agreement (e.g., Sealed Source and Device program) back to the NRC.

As licensing and inspection activities are fee-billable, these impacts should be considered when considering NRC resources. This is emphasized in Recommendation Nos. 8 and 10.

8 An example of another licensee type is veterinary uses.

13 Reciprocity The Working Group believes that the number of reciprocity reviews for the NRC could increase or decrease depending on NRC licensee business decisions. In scenarios where few NRC areas of jurisdiction remain, such as in Scenario 2 or 3, the demand for an NRC license could decrease as paying for reciprocity in remaining NRC jurisdictions might be more financially viable than paying NRC fees. This could result in an increase in reciprocity reviews for NRC.

However, generally with fewer NRC jurisdictions, the NRC may also receive fewer reciprocity requests.

The Working Group expects that the number of reciprocity reviews across the NMP will increase with more Agreement States. The Working Group discussed the potential for a national license that would remove the need to apply for a new license in other jurisdictions. However, reciprocity reviews are not considered a high burden activity. Therefore, the Working Group does not recommend nor anticipates any changes to reciprocity as the number of NRC licensees decreases.

As reciprocity reviews are fee-billable, these impacts should be considered when considering NRC resources. This is emphasized in Recommendation Nos. 8 and 10.

Events and Allegations The NRC will continue to receive notifications of incidents, events, and allegations from Agreement State programs and their licensees (e.g., allegations), as applicable. This could impact other NRC offices and staff, such as the Headquarters Operations Center, allegation, and Nuclear Material Events Database staff, as the number of notifications increase. Therefore, the NRC will need to continue its oversight of these activities including trending and tracking for Abnormal Occurrences.

Although the NRC will have less licensees resulting in decreased allegations, the number of reported Agreement State Program Performance Concerns may increase. The Working Group believes that a decrease in NRC licensees should not significantly impact the allegations program. Some allegation topics will continue to need to be addressed by the NRC such as exempt distribution. As stated previously, the NRC must continue to have the requisite skills and resources necessary to review, analyze and take actions to address and close materials allegations from NRC licensees. However, with fewer NRC licensees, activities associated with responding to events such as investigating and performing reactive inspections will decrease.

As described in the sections on Program Organization and Program Staffing and Funding in this report and in Recommendation No. 10, the NRC may need to consider the increased resources maintain leadership of the NMP and meet the NRCs statutory responsibilities under Section 274 of the AEA.

Conclusion The Working Group found that with the 39 current Agreement States the NMP continues to be successful. After reviewing past efforts and performing licensee and program element analyses, the Working Group does not recommend any changes to the current structure or roles and responsibilities of the NRC and Agreement States.

14 The Working Group developed ten recommendations, summarized in the table below. Appendix D provides a full description of each recommendation along with the pros and cons associated with each recommendation.