ML23307A162

OIG-24-A-01 Inspector Generals Assessment of the Most Serious Management and Performance Challenges Facing the U.S. Nuclear Regulatory Commission in Fiscal Year 2024

ML23307A162
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Site:	Diablo Canyon
Issue date:	11/03/2023
From:	NRC/OIG
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OIG-24-A-01
Download: ML23307A162 (27)

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November 3, 2023 OIG-24-A-01 The Inspector Generals Assessment of the Most Serious Management and Performance Challenges Facing the U.S. Nuclear Regulatory Commission in Fiscal Year 2024 Diablo Canyon Nuclear Power Plant, Units 1 and 2, Avila Beach, California (Source: Photo courtesy of ©Pacific Gas and Electric) i All publicly available OIG Reports, including this report, are accessible through the OIGs website:

nrcoig.oversight.gov

At a glance WHY WE DID THIS REPORT The Reports Consolidation Act of 2000 (Public Law 106-531) requires us to annually update our assessment of the U.S. Nuclear Regulatory Commissions (NRC) most serious management and performance challenges facing the agency and the agencys progress in addressing those challenges.

WHAT WE FOUND The Office of the Inspector General (OIG) has assessed, developed, and described each of the NRCs most serious challenges for fiscal year (FY) 2024, noting the NRCs already-completed actions and continuing work on each challenge. By addressing these challenges, the NRC will strengthen the execution of its mission, achieve its strategic goals, and maintain the highest level of accountability over taxpayer dollars.

The OIG has independently identified the following nine clear, specific, and actionable challenges that require the NRCs continued attention:

1. Ensuring safety and security through risk-informed regulation of established and new nuclear technologies, as well as cyber and physical security activities impacting the NRCs mission;

2. Overseeing the decommissioning process and the management of decommissioning trust funds;

3. Implementing new legislative requirements related to NRC core mission areas and corporate support;

4. Ensuring the effective acquisition, management, and protection of information technology and data;

5. Hiring and retaining sufficient highly skilled employees to carry out the NRC mission;

6. Overseeing the safe and secure use of nuclear materials and storage and disposal of high- and low-level waste;

7. Managing financial and acquisitions operations to enhance fiscal prudence and transparency of resource management;

8. Maintaining public outreach related to the agencys regulatory process; and,

9. Planning for and assessing the impact of Artificial Intelligence and Machine Learning on nuclear safety and security.

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AGENCY RESPONSE TO MANAGEMENT CHALLENGES FOR FY 2023 The NRC has constructively engaged with the OIG and sought to address OIG audit report recommendations throughout the year. The NRC faces extraordinary opportunities and challenges as it seeks to achieve its objective to become a more modern, risk-informed regulator.

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Contents Introduction.......................................................................................................... 1 Ensuring Safety and Security Through Risk-Informed Regulation of Established and New Nuclear Technologies, as well as Cyber and Physical Security Activities Impacting the NRCs Mission ................................................ 5 Overseeing the Decommissioning Process and the Management of Decommissioning Trust Funds ........................................................................... 8 Implementing New Legislative Requirements Related to NRC Core Mission Areas and Corporate Support ............................................................................ 10 Ensuring the Effective Acquisition, Management, and Protection of Information Technology and Data ..................................................................... 12 Hiring and Retaining Sufficient Highly Skilled Employees to Carry Out the NRC Mission ....................................................................................................... 14 Overseeing the Safe and Secure Use of Nuclear Materials and Storage and Disposal of High- and Low-Level Waste ........................................................... 16 Managing Financial and Acquisitions Operations to Enhance Fiscal Prudence and Transparency of Resource Management .................................................... 18 Maintaining Public Outreach Related to the Agencys Regulatory Process .... 20 Planning for and Assessing the Impact of Artificial Intelligence and Machine Learning on Nuclear Safety and Security ..........................................................22 To Report Fraud, Waste, or Abuse....................................................................23 Comments and Suggestions ..............................................................................23 Notice to Non-Governmental Organizations and Business Entities Specifically Mentioned in This Report ..................................................................................23 iv

Introduction FROM THE INSPECTOR GENERAL I am pleased to present our assessment of the most significant management and performance challenges facing the NRC in FY 2024.

The Reports Consolidation Act of 2000 requires us to annually update our assessment of the NRCs most serious management and performance challenges facing the agencyand the agencys progress in addressing those challenges. This report provides the updated OIG Robert J. Feitel, assessment in these areas.

NRC and DNFSB Inspector General The NRC continues to accomplish its mission, demonstrating through its work that it is dedicated to ensuring public health and safety, promoting the common defense and security, and protecting the environment through the effective regulation of nuclear materials. Beyond its nuclear safety and security mission, as a federal agency, the NRC must be a responsible steward of taxpayer dollars and expend its budgeted funds properly.

ABOUT THE INSPECTOR GENERAL In accordance with the 1988 amendments to the Inspector General Act of 1978, the NRCs OIG was established on April 15, 1989, as an independent and objective unit to conduct and supervise audits and conduct investigations relating to the NRCs programs and operations. The purpose of the OIGs audits and investigations is to prevent and detect fraud, waste, abuse, and mismanagement, and promote economy, efficiency, and effectiveness in NRC programs and operations. In addition, the OIG reviews existing and proposed regulations, legislation, and directives and comments on any significant concerns. The Inspector General serves under the general supervision of the NRC Chair but operates with personnel, contracting, and budget authority independent of the NRC. The Inspector General informs the Chair and Congress about problems, recommends corrective actions, and monitors the NRCs progress in implementing such actions.

ABOUT THE NRC The NRCs mission is to license and regulate the nations civilian use of radioactive materials to protect public health and safety, promote the common defense and security, and protect the environment. The NRCs vision is to 1

carry out this mission as a trusted, independent, transparent, and effective nuclear regulator, consistent with the NRC Principles of Good Regulation.

The NRC is led by a group of up to five Commissioners appointed by the President and confirmed by the Senate for 5-year terms.

One of the Commissioners is designated by the President as Chair, who serves as the official spokesperson of the Commission. On January 20, 2021, President Biden designated Christopher T. Hanson as Chair of the Commission. Chair Hanson is joined by Commissioners David A. Wright, Annie Caputo, and Bradley R. Crowell. The NRC Headquarters (Source: NRC)

Commission formulates policies and approves regulations governing nuclear reactor and materials safety, issues certain orders to NRC-regulated entities, and adjudicates legal matters brought before it.

The Executive Director for Operations carries out the policies and decisions of the Commission and directs the activities of the program offices. The offices reporting to the Executive Director for Operations strive to ensure the safe use of nuclear materials for commercial, medical, industrial, and research applications in the United States. As part of the regulatory process, the NRCs four regional offices conduct inspection, enforcement, and emergency response programs for licensees within their regions or areas of responsibility.

The NRCs FY 20222026 Strategic Plan describes the agencys mission, vision, and principles of good regulation, along with strategic goals, objectives, and strategies. The strategic goals of continuing to foster a healthy organization and inspiring stakeholder confidence in the NRC complement the safety and security strategic goal. The safety and security strategic goal, objectives, and strategies ensure the safe and secure use of radioactive materials.

The NRC carries out its safety and security activities through two major programs: Nuclear Reactor Safety, consisting of the Operating Reactors and New Reactors business lines, and Nuclear Materials and Waste Safety, consisting In-situ Uranium Recovery, of the Fuel Facilities, Nuclear Materials Users, Crow Butte, Nebraska Decommissioning and Low-Level Waste, Spent (Source: Courtesy of Fuel Storage and Transportation, and High-Cameco Corp.) Level Waste business lines. The agency 2

accomplishes its mission to provide reasonable assurance of adequate protection of public health and safety through regulatory activities such as licensing, oversight, and rulemaking.

In addition, the NRCs incident response activities prepare for and respond to emergencies involving radioactive materials.

The NRCs FY 2024 budget request is

$1,006.4 million and includes 2,948.9 full-time equivalents (FTE). Observing decommissioning activity at The FY 2024 budget request San Onofre Nuclear Generating Station, San Clemente, California (Source: nrc.gov) increased by approximately 6.7 percent over the FY 2023 Enacted Budget, primarily because of workload changes and adjustments to salaries and benefits.

CLOSURE OF OIG AUDIT RECOMMENDATIONS The NRC satisfactorily closed 27 OIG audit recommendations during FY 2023.

Closing a recommendation means the NRC has identified an acceptable course of action to fulfill the intent of the recommendation and has documented its completion of the necessary work. Some of the corrective actions completed by the NRC during FY 2023 also resulted in the final closure of six associated audit reports, among which were:

• Audit of the NRCs Material Control and Accounting Inspection Program for Special Nuclear Materials (OIG-21-A-04);

• Audit of the NRCs Nuclear Power Reactor Inspection Issue Screening (OIG-21-A-07);

• Audit of the NRCs Prohibited Security Ownership Process (OIG-21-A-17); and,

• Audit of the NRCs Process for Licensing Emerging Medical Technologies (OIG-22-A-07).

During FY 2023 the NRC has made progress in achieving its safety and security goals through continued oversight of the operation of nuclear power plants and fuel cycle facilities, and of the possession and use of radioactive materials. NRC staff accomplishments continue to move the agency toward the objective of becoming a modern, risk-informed regulator. The management and performance challenges summarized in this report highlight critical areas that demand continued NRC management focus.

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NRC FY 2024 MANAGEMENT AND PERFORMANCE CHALLENGES The OIG has assessed, developed, and described each of the NRCs most serious challenges for FY 2024, noting actions already completed by the agency, and the NRCs continuing work on each challenge. The challenges are not listed in any order of priority, nor do they necessarily equate to problems; rather, they should be considered areas of continuing focus for NRC management and staff.

NRC leadership noted its own assessment of the key challenges facing the agency in its response to the OIGs request for input in this area. We have considered this input and independently identified the following nine clear, specific, and actionable challenges that require the NRCs continued attention:

1. Ensuring safety and security through risk-informed regulation of established and new nuclear technologies, as well as cyber and physical security activities impacting the NRCs mission;

2. Overseeing the decommissioning process and the management of decommissioning trust funds;

3. Implementing new legislative requirements related to NRC core mission areas and corporate support;

4. Ensuring the effective acquisition, management, and protection of information technology and data;

5. Hiring and retaining sufficient highly skilled employees to carry out the NRC mission;

6. Overseeing the safe and secure use of nuclear materials and storage and disposal of high- and low-level waste;

7. Managing financial and acquisitions operations to enhance fiscal prudence and transparency of resource management;

8. Maintaining public outreach related to the agencys regulatory process; and,

9. Planning for and assessing the impact of Artificial Intelligence and Machine Learning on nuclear safety and security.

By addressing these challenges, the NRC will strengthen the execution of its mission, achieve its strategic goals, and maintain the highest level of accountability over taxpayer dollars.

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Challenge 1: Ensuring Safety and Security Through Risk-Informed Regulation of Established and New Nuclear Technologies, as well as Cyber and Physical Security Activities Impacting the NRCs Mission As the NRC continues to transform into a modern risk-informed regulator, the agency must continue to ensure safety and security through risk-informed regulations for established and new nuclear technologies as well as cyber and physical WHY IS THIS A SERIOUS security activities impacting the NRCs mission.

MANAGEMENT AND Specifically, the agency must: (1) Ensure risk-PERFORMANCE informed regulation is consistently applied to its CHALLENGE? licensing and oversight processes; (2) Be ready to license and regulate established and new reactor technologies; and, (3) Maintain robust and adaptive oversight programs to ensure nuclear power licensees can protect their facilities effectively against evolving cyber and physical threats.

CHALLENGE SYNOPSIS Ensuring Risk-informed Regulation is Consistently Applied Through Regulatory Activities Since 1995, it has been the NRC policy to inform regulatory activities with risk insights. The agency has emphasized this policy in recent years through various risk-informed initiatives such as the BeRiskSMART model, a framework to support consistent guidance and practices to accept well-managed risks in NRC decision-making. Additionally, nuclear power licensees have increasingly used probabilistic risk assessment to support changes to their license requirements.

Nevertheless, the NRC and the nuclear industry have methodological differences in their respective approaches to probabilistic risk assessment, and agency staff members sometimes disagree internally on the use of risk analysis in regulatory actions such as license amendments and inspection findings.

Readiness to License and Regulate Established and New Reactor Technologies With advancements in new reactor technologies, especially small modular reactors, the NRC must be ready to license and regulate new reactor technologies while managing the workload related to the existing nuclear power reactor fleet. The existing workload includes initial and subsequent license 5

renewal and other licensing reviews (amendments and exemptions) and oversight activities (security, inspections, and operator licensing examinations).

Further, domestic utilities are developing technologies that can extend the operating lifetimes of existing reactors, and Congress has passed legislation intended to facilitate research, development, and licensing of new reactor technologies. The technical complexity of these initiatives, combined with their cutting-edge nature, has challenged the NRC to adapt its regulatory processes to accommodate technologies that cannot be readily assessed using existing approaches.

Maintaining Robust and Adaptive Cyber and Physical Security Oversight Programs Federal government policy organizes critical infrastructure into 16 sectors, each with assets, systems, and networks considered vital to the security, economy, and public health and safety of the United States. The Department of Homeland Securitys Cybersecurity and Infrastructure Security Agency serves as the Sector Risk Management Agency for the Nuclear Reactors, Materials, and Waste Sector. The NRC regulates these activities in accordance with its statutory mission to ensure adequate protection of public health and safety, promote the common defense and security, and protect the environment.

Cybersecurity presents unique challenges to critical infrastructure protection because information technology and industrial control systems are highly complex, dynamic, technologically diverse, and often geographically dispersed.

This complexity increases the difficulty in identifying, managing, and protecting the numerous operating systems, applications, and devices involved.

Further, nuclear power plants must be able to successfully defend against a set of hypothetical threats that the agency refers to as the design-basis threat.

These hypothetical threats challenge a plants physical security, personnel security, and cybersecurity. Therefore, the NRC must ensure its cyber and security oversight programs are robust and adaptive to evolving threats.

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ONGOING ACTIONS COMPLETED ACTIONS The NRC is updating probabilistic risk The NRC staff completed the Final assessment models to improve the Safety Evaluation Report for SHINE realism of the NRCs risk models. Medical Technology LLCs application for a license to operate a medical The NRC is reviewing research and test isotope production facility, concluding reactor construction permits. One there are no safety aspects that would application is from Abilene Christian preclude issuing the license for University, which requested operation of the facility.

permission to build its Molten Salt Research Reactor facility on the To support modernization of its universitys campus. The other is for infrastructure for advanced reactor the Kairos Hermes 2 non-power test licensing, the NRC staff provided the reactor. The NRC is also conducting draft proposed Part 53 rulemaking application reviews of several package and 10 supporting draft advanced reactor designs. guidance documents to the Commission for consideration. The The Commission directed NRC staff to NRC has also issued for public publish a proposed rule that includes comment draft guidance for risk-the revision of the Generic informing the content of advanced Environmental Impact Statement reactor applications.

(GEIS) for license renewal. The GEIS covers environmental topics relevant In February 2023, the NRC issued to all nuclear power plant licensees Regulatory Guide 5.71, Revision 1, seeking renewed licenses. The staff Cybersecurity Programs for Nuclear updated the GEIS and developed the Power Reactors.

proposed rule to account for initial The NRC authorized Southern Nuclear license renewal and one term of Operating Company to load fuel and subsequent license renewal, including begin operation of Vogtle Unit 4 in which issues must be considered on a Georgia.

site-specific basis.

The NRC issued the final safety The NRC continues to be involved in evaluation report and final several interagency activities for cyber environmental impact statement for and physical security with multiple the Kairos Hermes non-power test agencies and stakeholders.

reactor construction permit The NRC continues to perform the new application.

nuclear power cybersecurity inspection procedure biennially as part of the Reactor Oversight Process.

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Challenge 2: Overseeing the Decommissioning Process and the Management of Decommissioning Trust Funds The increased numbers of power reactor sites in decommissioning, and of those opting for WHY IS THIS A SERIOUS accelerated decommissioning, add to demands on MANAGEMENT AND decommissioning program resources for all PERFORMANCE decommissioning licensing and oversight CHALLENGE? activities, including the NRCs independent analyses of licensees decommissioning funding status reports.

CHALLENGE SYNOPSIS There are 25 power reactors currently undergoing decommissioning. The licensees for these reactors and other nuclear reactors must provide reasonable assurance that funds will be available for the entire decommissioning process.

To oversee licensees decommissioning funding, the NRC requires licensees to provide a decommissioning financial status report biennially, and annually for five years prior to permanent cessation of operations. Prior to or within 2 years after permanent cessation of operations, licensees are required to submit a Post Shut-Down Decommissioning Activities Report that includes a description and schedule for the planned decommissioning activities and a site-specific cost estimate. Licensees in decommissioning must then annually submit decommissioning funding status reports.

The NRC has identified technical resource needs for the program in inspection, risk analysis, licensing review, and project management. Local communities may have additional concerns about the accelerated decommissioning model, entailing augmented opportunities for public interactions.

Key decommissioning challenges include:

• Ensuring that agency processes adequately address current reactor decommissioning business models, including those that provide for accelerated decommissioning activities;

• Managing oversight of the adequacy and use of decommissioning trust funds maintained by both operating and decommissioning reactors;

• Maintaining reasonable assurance that operating reactors will have sufficient funds to decommission safely;

• Overseeing accelerated schedules for decommissioning; and,

• Improving decommissioning guidance.

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ONGOING ACTIONS COMPLETED ACTIONS The NRC is performing licensing The NRC supported licensing and reviews and oversight for 25 power oversight for decommissioning reactors currently in various stages of programs with guidance updates and decommissioning. This includes the public outreach activities, including review of two license termination the issuance of NUREG-1757, plans. The agency anticipates Consolidated Decommissioning submission of four additional license Guidance, Vol. 2.

termination plans in the next year.

The NRC participated in a As of July 2023, the NRC is reviewing Congressional field hearing near the the Decommissioning Funding Status Pilgrim Nuclear Power Station site, (DFS) reports that were due from and conducted two Post-Shutdown decommissioning licensees on March Decommissioning Activities Report 31, 2023. Following the previous public meetings.

biennial review, NRC staff reported to The NRC improved its tracking of the Commission in December 2021, Decommissioning Funding Status that all licensees were in compliance reports and updated LIC-205, with funding requirements.

Procedures for NRCs Independent The NRC is going through rulemaking Analysis of Decommissioning to clarify when an exemption is Funding Assurance for Operating necessary for using the Nuclear Power Reactors and Power decommissioning trust funds. The Reactors in Decommissioning, to rulemakings estimated completion clarify the roles and responsibilities date is in the first quarter of FY 2025. and procedures related to DFS A Regulatory Guide, RG 1.184, is report review.

planned to follow the rulemaking to provide further guidance for NRC staff and licensees.

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Challenge 3: Implementing New Legislative Requirements Related to NRC Core Mission Areas and Corporate Support WHY IS THIS A SERIOUS Recent legislation promotes NRC review and MANAGEMENT AND licensing of new nuclear technologies but PERFORMANCE imposes strict corporate support budget limits.

CHALLENGE?

CHALLENGE SYNOPSIS The Nuclear Energy Innovation and Modernization Act of 2019 (Public Law 115-439) (NEIMA) imposed caps on NRC corporate support costs, which include expenditures for acquisitions, administrative services, human resources, financial management, information technology (IT), and training.

The NRC has experienced difficulties achieving the corporate support cap and anticipates significant challenges in future years. Notably, the corporate support cap decreases over time, ending at 28% for FY 2025 and beyond. Yet the NRC must still fund fixed costs, meet inflationary cost increases, and comply with other federal mandates, while working to meet the corporate cap requirement percentage to the maximum extent practicable. Additionally, the NRCs FY 2018 Congressional Budget Justification serves as the baseline for corporate support cost reductions, so the NRC is unable to make any adjustments based on benchmarking or operational experience. As a result, the NRC has reduced or postponed critical investments or services solely to meet the corporate support cap and anticipates substantial difficulties in future years with the declining percentage. The NRC also anticipates challenges associated with the cap on operating reactors annual fees and advanced reactors application fees.

Resources requested in the FY 2024 budget for Corporate Support are

$304.0 million and 588.0 FTEs, an increase of $18.7 million when compared to the FY 2023 Enacted Budget. The FY 2024 budget request supports modernization of the agencys information technology to increase productivity and security, leverage data as a strategic asset, and increase the efficiency and effectiveness of administrative services.

The proposed Accelerating Deployment of Versatile, Advanced Nuclear for Clean Energy (ADVANCE) Act of 2023 could help the NRC mitigate some challenges associated with the NEIMA by fixing the corporate support cost cap at 30 percent of the agencys budget, and by providing funding and other tools to help the NRC hire staff with specific technical skills needed for anticipated advanced reactor licensing activities.

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ONGOING ACTIONS COMPLETED ACTIONS Ongoing NRC IT modernization efforts The FY 2024 budget request of are intended to facilitate reductions in $304 million for corporate support costs over time, increase efficiency, would comprise 30.2 percent of the allow for better management of major NRCs total requested budget, which acquisitions, and support effectiveness reflects the agencys efforts to comply of administrative services. with the corporate support cap mandated by the NEIMA to the The NRC continues to develop the maximum extent practicable.

infrastructure for advanced reactors in accordance with the NEIMA and at In January 2023, the NRC staff a rate consistent with the NRCs submitted a paper to the Commission projections for interest in new that provided options for licensing technologies and cognizance of and regulating fusion energy systems.

prospective applicants plans. Consistent with the NEIMA, the NRC staff presented these options to support the development of a regulatory framework for fusion energy systems by 2027.

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Challenge 4: Ensuring the Effective Acquisition, Management, and Protection of Information Technology and Data WHY IS THIS A SERIOUS Information technology continues to advance MANAGEMENT AND rapidly. The challenge is supporting a future-PERFORMANCE ready workforce equipped with the modern CHALLENGE? tools, technologies, skills, and knowledge necessary to meet current and future mission needs.

CHALLENGE SYNOPSIS The NRC must continue to meet the regulatory and statutory federal mandates for Information Technology and Information Management (IT/IM) while remaining within statutory budget limitations for corporate support. The responsibility of the NRCs IT/IM program is to maintain and enhance services and infrastructure to enable accomplishment of the agencys mission. The NRC also faces evolving cyber threats and challenges to the security of data related to its oversight of operating and decommissioning facilities, use of nuclear materials, emergency preparedness, and incident response.

The NRC has increased investments to enhance its cybersecurity posture in the face of evolving threats and new federal mandates by automating compliance activities, developing an Information Security Architecture, and migrating Federal Information Security Modernization Act (FISMA) systems to a more streamlined environment. As the agency continues its efforts to modernize IT, it also works to better manage acquisitions by using best practices, and to improve the customer experience.

Key IT and information management and security oversight challenges for the NRC include:

• Managing ongoing supply chain risks posed to IT and operational infrastructure;

• Managing risk-based security strategies to protect against increasing numbers, types, and sophistication of cyber threats;

• Managing rigorous patching to meet compliance targets in the face of evolving threats and vulnerabilities;

• Aligning agencywide information resource planning to achieve benefits and flexibilities in support of workforce development, recruitment, and retention of critical cyber and IT staff;

• Protecting intellectual property associated with new technologies under development and licensing review; 12

• Executing the insider threat prevention and detection program to protect classified and safeguards information; and,

• Executing actions required by the FISMA, to strengthen information technology security.

ONGOING ACTIONS COMPLETED ACTIONS The NRC continues to address FISMA The NRC has integrated the privacy compliance recommendations program with other security areas and resulting from the OIGs annual business processes as well as audits. embedded the privacy program into daily decision-making to help identify NRC IT investments include those and manage privacy risks.

related to Executive Order 14028, Improving the Nations The NRC has developed a Cybersecurity, and related supplemental supply chain risk Cybersecurity and Infrastructure assessment (SCRA) process that Security Agency and Office of provides a basis for measuring and Management and Budget (OMB) monitoring metrics to assess risks mandates, such as OMB M-22-09, associated with contractor systems Federal Zero Trust Strategy. and services.

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Challenge 5: Hiring and Retaining Sufficient Highly Skilled Employees to Carry Out the NRC Mission WHY IS THIS A SERIOUS Increased interest in nuclear power places MANAGEMENT AND higher demands on NRC staff to support pre-PERFORMANCE licensing, licensing, and inspection of new and CHALLENGE?

existing technologies, following a period in which hiring has not kept pace with attrition.

CHALLENGE SYNOPSIS Renewed commercial interest in nuclear powerparticularly regarding advanced and small modular reactor designshas increased NRC pre-licensing work involving prospective reactor licensees, as well as a rulemaking to develop regulations for advanced reactor technologies. At the same time, agency personnel continue to perform licensing and inspection work for operating reactors and nuclear materials, while overseeing decommissioning activities for a growing number of reactors that have ceased operations.

External and internal stakeholders have raised questions about the NRCs ability to carry out its mission as the agencys full-time staff declined from approximately 3,780 in FY 2015 to approximately 2,860 in FY 2023. Current agency annual attrition rates under 10 percent are considered manageable; however, NRC officials acknowledge that hiring in recent years has not kept pace with attrition. Accordingly, the agency enhanced its strategic workforce planning process in FY 2022 to forecast future work requirements and hire personnel to meet those demands.

Even as new staff members are recruited, the challenge remains to strengthen organizational culture and maintain a collaborative work environment to retain and develop staff and effectively meet the NRC mission. Knowledge management efforts also support culture, staff development, and mission goals.

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ONGOING ACTIONS COMPLETED ACTIONS NRC management continues efforts to In FY 2023, NRC staff participated in understand and strengthen recruitment events at college organizational culture, while campuses and professional recruiting new staff and operating in a conferences, and organized a career hybrid work environment. exposition where NRC managers held on-the-spot interviews with job NRC management is working to applicants.

balance workloads across pre-licensing and licensing of new facilities The NRC staff posted two resume and technologies, while maintaining repository announcements for entry licensing and oversight of the existing level engineers and scientists and reactor fleet and licensed users of advertised NRC employment radioactive materials. Training new opportunities on various internet-employees and developing current based job search platforms.

ones is necessary to support efficient Through expansion of recruitment workload management.

and targeted outreach efforts to fill The NRC is evaluating its Strategic current and anticipated vacancies, 197 Workforce Planning Process and will new external hires have been update associated guidance to provide onboarded as of July 29, 2023.

specific methodologies, detailed instructions, measurement criteria, and scales that can be used to estimate the anticipated level of workload change, rank position risk factors, and prioritize workforce gaps or surpluses.

The NRC is working to address recommendations by the OIG to strengthen the NRCs vacancy announcement process.

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Challenge 6: Overseeing the Safe and Secure Use of Nuclear Materials and the Storage and Disposal of High- and Low-Level Waste This challenge involves the NRCs ability to continue its effective oversight of the use of WHY IS THIS A SERIOUS nuclear materials and the storage and disposal MANAGEMENT AND of nuclear waste. The NRC must also PERFORMANCE coordinate with the 39 Agreement States to CHALLENGE? ensure a consistent understanding and implementation of regulations associated with the oversight of radioactive materials.

CHALLENGE SYNOPSIS The Nuclear Materials and Waste Safety Program encompasses the NRCs licensing and oversight of nuclear materials in a manner that adequately protects public health and safety. This program provides assurance of the physical security of materials and waste and protection against radiological sabotage, theft, or diversion of nuclear materials.

Through this program, the NRC regulates uranium processing and fuel facilities; research and pilot facilities; nuclear materials users (medical, industrial, research, and academic); spent fuel storage; decontamination and decommissioning of facilities; and, low-level and high-level radioactive waste.

The NRC has sole responsibility for overseeing high-level radioactive waste, the highly radioactive byproduct of the reactions that occur inside nuclear reactors.

Spent (used) reactor fuel is one form of high-level waste.

Nuclear materials and waste safety and security oversight also entails coordination and consultation with other governmental entities, including federal agencies, tribal governments, and state governments. In particular, the NRCs regulatory framework includes Agreement States, which are U.S. states that have entered into an agreement with the NRC to regulate certain radioactive materials and limited quantities of special nuclear material.

Combined, the NRC and the Agreement States constitute the National Materials Program. Agreement States must demonstrate that their regulatory programs are adequate to protect public health, safety, and the environment, and are compatible with the NRCs program. There are currently 39 Agreement States; however, Connecticut, Indiana, and West Virginia have submitted letters of intent to also become Agreement States.

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ONGOING ACTIONS COMPLETED ACTIONS The NRC is completing reviews of The NRC issued 10 new inspection approximately 1,480 materials procedures under the Materials licensing actions (new applications, Inspection Program for the inspection amendments, renewals, and process for approximately 70 percent terminations) and approximately 600 of the more than 18,000 materials routine health, safety, and security licensees across the National inspections, as well as reciprocity and Materials Program.

reactive inspections.

The NRC issued the 2022 Radiation The Office of Nuclear Material Safety Source Protection and Security Task and Safeguards will review the existing Force Report, which is prepared every processes, guidance, and applicable 4 years and reflects the input of 14 regulations to develop a standardized federal agencies and the Organization process related to the handling and of Agreement States.

processing of irretrievable well logging The NRC issued the Final source abandonments. Environmental Impact Statement, and Supplement, related to the Holtec Consolidated Interim Storage Facility in New Mexico.

The NRC licensed a Rare Element Resources Inc. pilot project for the extraction of rare earth elements important to clean energy industries and other advanced technologies. The process will produce waste streams including some radioactive elements, requiring the NRC license.

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Challenge 7: Managing Financial and Acquisitions Operations to Enhance Fiscal Prudence and Transparency of Resource Management Sound financial management is vital for federal WHY IS THIS A SERIOUS agencies to accomplish their missions effectively MANAGEMENT AND and efficiently. A strong acquisitions management PERFORMANCE process increases the likelihood that the agency CHALLENGE?

awards contracts to the right contractors and monitors contracting actions in accordance with regulations.

CHALLENGE SYNOPSIS To maintain transparency, the NRC must continue to implement robust internal controls over financial management and reporting. A rigorous acquisition process is also an important aspect of NRC operations. The agency has continued to promote sound acquisition practices, improvements in contract management, and timely closeout of contracting actions. In addition, the agency must continue to administer its grants program in accordance with the prescribed federal regulations.

The NEIMA requires the NRC to recover, to the maximum extent practicable, approximately 100 percent of its annual budget, less certain amounts excluded from this fee-recovery requirement. It also requires the NRC to establish a schedule of charges that fairly and equitably assesses the fees to licensees and permit holders. To improve efficiency and accuracy, the NRC is piloting new IT applications to improve its fee billing process.

Key financial and acquisition concerns include the following:

• Developing and implementing the agencys budget in accordance with federal laws, regulations, and guidance;

• Maintaining a fee structure in accordance with laws and regulations that is fair to all types of entities regulated by the agency;

• Managing space planning, maintenance, remodeling, and restacking of the NRC headquarters and regional facilities;

• Continuing the effective management of appropriations; and,

• Exploring ways to improve the award, management, and timely closeout of acquisition actions.

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ONGOING ACTIONS COMPLETED ACTIONS The NRC has implemented the In November 2022 the NRC achieved G-Invoicing system which is required an unmodified opinion on its FY 2022 for new orders for federal program financial statements and internal agencies. controls over financial reporting and complied with laws and regulations.

The NRC continues to address recommendations made by the OIG in An independent audit organization separate audits of the NRCs property concluded in May 2023 that the NRC management program and its complied with the requirements of the enterprise risk management program. Payment Integrity Information Act of 2019 for FY 2022.

Fee billing improvements resulted in 100 percent invoice timeliness for FY 2023.

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Challenge 8: Maintaining Public Outreach Related to the Agencys Regulatory Process It is the NRCs policy to provide the public with WHY IS THIS A SERIOUS opportunities for meaningful participation in NRC MANAGEMENT AND processes. The pace of regulatory work increases PERFORMANCE the need for outreach activities, and new CHALLENGE? technologies open possibilities to enhance outreach efforts.

CHALLENGE SYNOPSIS The NRC has a long history of, and commitment to, public participation and collaboration in agency regulatory activities. The NRC has had a formal policy regarding open meetings since 1978. In March 2021, the Commission published its most recent update to the policy statement, Enhancing Public Participation in NRC Meetings. It reiterated the NRC policy to open meetings between the agency staff and one or more outside persons to observation and participation to the extent possible, and to balance openness and transparency with the need to exercise regulatory and safety responsibilities without undue administrative burden. In addition, the NRC Strategic Plan for Fiscal Years 20222026 emphasizes the public participation policy through the goal of inspiring stakeholder confidence in the NRC. One objective in this goal is to communicate in clear and accessible ways with diverse stakeholders.

Between October 1, 2022, and July 31, 2023, the NRC held more than 575 public meetings. Public meetings and opportunities for comment may occur as part of numerous NRC activities, ranging from rulemaking and guidance development to some licensing processes, certain oversight activities and performance assessments, and symposia regarding regulatory research.

In the recent policy statement update, the Commission committed the NRC to making efforts to find new and innovative ways to interact with individuals, including exploring varied meeting formats and other ways to incorporate technologies that allow participation from locations other than a meeting room.

Key public outreach challenges include the following:

• Communicating risk and the NRCs regulatory processes;

• Considering environmental justice in decision-making;

• Sharing information transparently; and,

• Enhancing stakeholder confidence in the NRCs technical decision-making.

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ONGOING ACTIONS COMPLETED ACTIONS The NRC continues to implement The NRC developed and shared strategic multilateral and bilateral preliminary proposed rule language cooperation on new reactor design and guidance and held multiple public and commissioning, as well as meetings regarding the draft safety supporting International Atomic and security requirements for the 10 Energy Agency and Nuclear Energy C.F.R. Part 53, Licensing and Agency activities, such as those regulation of advanced nuclear related to generic small modular reactors, rulemaking on a risk-reactor issues, standards informed, performance-based, and development, and new reactor design. technology-inclusive regulatory These interactions allow the NRC to framework for advanced reactors.

communicate its regulatory positions, The NRC held its first offsite receive feedback from international Commission meetings in over 40 years regulators, and share operating in New Mexico. The meetings experience for operating reactors.

provided the Commission with an The NRC implements its Tribal Policy overview of the interagency actions to Statement through outreach, guidance address the impacts of uranium development, and staff training; contamination on the Navajo Nation, coordination with other federal and updates on, and lessons learned agencies on Tribal matters and NRC from, remediation activities at former projects involving Tribal uranium mill sites throughout the consideration; and, updating Tribal West. The Commission also received a contact databases and mapping tools. first-hand account from the members of the Red Water Pond Road From October 2022 through March community on the impacts of uranium 2023, the NRC processed 89 Freedom contamination on the Navajo Nation.

of Information Act requests and received an additional 89 requests The NRC supported licensing and during the reporting period. oversight for decommissioning programs with guidance updates and public outreach activities, including the issuance of NUREG-1757 Consolidated Decommissioning Guidance, Vol. 2; NRC participation in a Congressional field hearing near the Pilgrim Nuclear Power Station site; and, conducting two Post-Shutdown Decommissioning Activities Report public meetings.

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Challenge 9: Planning for and Assessing the Impact of Artificial Intelligence and Machine Learning on Nuclear Safety and Security WHY IS THIS A SERIOUS As a modern, risk-informed regulator, the NRC MANAGEMENT AND must be prepared to review and evaluate the use PERFORMANCE of Artificial Intelligence (AI) and Machine CHALLENGE? Learning in NRC-regulated activities.

CHALLENGE SYNOPSIS The NRC held three public workshops in 2021, and another in September 2023, to provide a forum for the NRC, the nuclear industry, and stakeholders to discuss the state of knowledge and research activities related to data science and AI and their application in the nuclear industry. The NRC must be prepared to review and evaluate the use of AI and Machine Learning in NRC-regulated activities, particularly since the nuclear industry is determining how best to deploy AI applications in its operations.

The NRC also needs to identify how AI can support decision-making across the agency, considering the intentions of Executive Orders 13859, Maintaining American Leadership in Artificial Intelligence, and 13960, Promoting the Use of Trustworthy Artificial Intelligence in the Federal Government.

Moreover, the NRC must cultivate an AI-proficient workforce, keep pace with AI technological innovations, and ensure the safe and secure use of AI in NRC-regulated activities.

ONGOING ACTIONS COMPLETED ACTIONS To build an AI-skilled workforce, the The NRC issued NUREG/CR-7294, NRC is developing qualifications and Exploring Advanced Computational specific training in areas such as data Tools and Techniques with Artificial analysis and visualization, and Intelligence and Machine Learning in machine learning and natural Operating Nuclear Plants.

language processing.

In May 2023, the NRC published The NRC is developing evaluation NUREG-2261, Artificial Intelligence methodologies to review licensee Strategic Plan: Fiscal Years 2023-applications of AI and related new 2027. The plans purpose is to ensure technologies. the staffs readiness to review the use of AI in NRC-regulated activities.

The NRC continues to collaborate with other federal partners on AI applications in nuclear fields.

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Contact:

Online: Online Form Telephone: 1.800.233.3497 TTY/TDD: 7-1-1, or 1.800.201.7165 Address: U.S. Nuclear Regulatory Commission Office of the Inspector General Hotline Program Mail Stop O12-A12 11555 Rockville Pike Rockville, Maryland 20852 COMMENTS AND SUGGESTIONS If you wish to provide comments on this report, please email the OIG using this link.

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NOTICE TO NON-GOVERNMENTAL ORGANIZATIONS AND BUSINESS ENTITIES SPECIFICALLY MENTIONED IN THIS REPORT Section 5274 of the James M. Inhofe National Defense Authorization Act for Fiscal Year 2023, Pub. L. No. 117-263, amended the Inspector General Act of 1978 to require OIGs to notify certain entities of OIG reports. In particular, section 5274 requires that, if an OIG specifically identifies any non-governmental organization (NGO) or business entity (BE) in an audit or other non-investigative report, the OIG must notify the NGO or BE that it has 30 days from the date of the reports publication to review the report and, if it chooses, submit a written response that clarifies or provides additional context for each instance within the report in which the NGO or BE is specifically identified.

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