No. S-97-24
"The Lighthouse: Regulatory Stability in a Time of Change"
by
Dr. Shirley Ann Jackson, Chairman
U.S. Nuclear Regulatory Commission
at the
18th Annual Institute of Nuclear Power Operations
CEO Conference
Atlanta, Georgia
November 6, 1997, 4:30 p.m.
I. Introduction
Good afternoon. I am delighted to address once again this annual meeting of the chief
executive and senior nuclear officers of the Institute of Nuclear Power Operations'
(INPO) member utilities. The contributions that INPO consistently has made to
enhance the performance of the nuclear power industry deserve high recognition and
high praise. Today, in particular, I would like to note the outstanding leadership and
enduring contributions of Dr. Zack Pate during his tenure as INPO President and Chief
Executive Officer--and most recently, as Chairman. Dr. Pate has exemplified the
highest ideals of service to his country, beginning with 22 years of Naval service--from
1958 to 1980--followed by what will be a total of 18 years here at INPO, where he took
over as the successor to Admiral Dennis Wilkinson in 1984. Some of you may not be
aware that Dr. Pate and I share an alma mater; we each received our doctoral degrees
from the Massachusetts Institute of Technology--only 3 years apart. But we share more
than that: I want to express my deep appreciation for all that I learned from Dr. Pate
when I served with him, from 1992 to 1995, on the INPO Advisory Council. Zack, I
sincerely will miss your insight and experience, and I wish you well in every future
endeavor--including your most recently assumed critical role as Chairman of the World
Association of Nuclear Operators (WANO). I also would like to extend hearty
congratulations to Dr. James T. Rhodes, who will be taking over from Dr. Pate. I look
forward to working with you, and I wish you every success in your leadership here.
In my presentation to this forum last year, I focused on several challenges that were
facing the nuclear power industry, challenges that affected INPO and the U.S. Nuclear
Regulatory Commission (NRC) as well--in particular, electric utility deregulation, the
need for increased attention in areas such as licensee self-assessments and design
basis control, and issues derived from the NRC Strategic Assessment and
Rebaselining. I have entitled my presentation today, "The Lighthouse: Regulatory
Stability in a Time of Change." In many ways my focus always is essentially the same,
but I have selected a different set of issues to discuss, which include: (1) the NRC
effort to develop an integrated facility assessment process; (2) the current status of
NRC efforts on 10 CFR 50.59 and related design basis issues; (3) the license renewal
process; and (4) recent Commission guidance on safety and compliance. Each of
these areas of Commission focus is an illustration of the types of challenges that we
face, the progress we have made, and the need to maintain excellence as we position
ourselves for change.
II. Integrated Assessment Process
As you are aware, the Commission has been focused for some time on improving the
effectiveness of the Senior Management Meeting (SMM) process. Shortly after I began
my tenure as Chairman of the NRC, I began to press for improved performance
indicators--signals and processes that would facilitate earlier detection of a declining
trend in facility performance. The staff was asked to develop more consistency in the
performance assessment process among Headquarters and the regions, and to instill
more objectivity in the SMM process. To help accomplish this latter task, I asked the
staff to bring in outside help. The NRC contracted with Arthur Andersen. The Arthur
Andersen study evaluated the SMM process and recommended improvements,
including the development of an algorithm for using indicators that could be quantified,
weighted, and factored into the SMM evaluation process. In addition, a Performance
Evaluation Template is being developed to improve process structure and consistency.
As this scrutiny of the process intensified, the Commission began to see the need for
improving other plant assessment processes and regulatory actions, including the use
of the Plant Issues Matrix (PIM), the Plant Performance Review process, and the
Systematic Assessment of Licensee Performance (SALP) process. The staff also was
asked to identify supplemental actions for the NRC to consider when a plant remained
on the Watch List for an extended period. Given the degree of Commission interest
and the increasing scope and complexity of Commission direction related to various
aspects of these assessment processes, it became apparent that a more broad-scope
review was in order, that would consider reactor assessment as an overall function. In
August of this year, the Commission directed and approved the performance of an
integrated review of all reactor-related assessment processes, to achieve a number of
outcomes:
To clarify the objectives of each assessment method;To eliminate redundancies as much as possible;To define office and individual staff roles and responsibilities;To ensure consistency among the regions;To incorporate, to the extent possible, risk insights and risk assessment
methodology;To reduce administrative burden; andTo match the processes to available staff resources.
I am aware, from my interactions with some members of the industry, that the ongoing
NRC effort to refine the reactor licensee assessment processes is viewed as potentially
contributing to "regulatory instability." However, I would contend that exactly the
opposite is true. To the degree that, in past years, NRC changes in this area have
created mixed messages or licensee confusion, it has largely been the result of a
"piece-meal" approach that addressed each perceived process inadequacy with a new
process or a modification to an existing process. The focus of the current effort,
however, is to understand the objectives of each process, to identify strategies for
achieving those objectives (including the various types of data that feed the process),
and to develop a creative alternative that is at once more scrutable, more predictable,
more objective, and more efficient--a process in which all constituent parts are
consistent with each other, and properly integrated.
In the Spring of next year, the staff will be presenting to the Commission the results of
its review, with options for Commission consideration. The staff also will schedule a
workshop to obtain comments from stakeholders on the assessment process. I
encourage you to participate in the workshop, and to inform us of your views on the
assessment process.
III. 10 CFR 50.59 and Related Design Basis Issues
My second area of discussion today bears a resemblance to the first, in that the focus
of the Commission has evolved from a series of issues--each related to licensees
maintaining the design bases of their facilities--to an awareness of the "big picture" and
a commitment to finding an overall solution. Currently, the NRC has multiple methods
for dealing with inoperable and/or degraded equipment, each with a different formula for
classifying equipment--structures, systems, and components (SSCs). Among these
methods are 10 CFR 50.59; Generic Letter 91-18; 10 CFR Part 50, Appendix B,
Criterion XVI; Technical Specifications and Final Safety Analysis Reports (FSARs) of
varying scope and level of detail; and other guidance--each created at a different point
in the evolution of the NRC, and each with a specific purpose and scope. The resultant
ambiguity and overlap of these methods, guidance documents, and requirements have
created, in some cases, inconsistent application, or gaps in application, that in turn
have caused confusion and inefficiency both for the NRC and for licensees.
While the Commission recognizes the value of several actions that have been taken by
the staff to provide near-term clarification and guidance, our overall focus has
expanded to recognize the need for a unified, consistent overall approach that also is
understandable and risk-informed. Last month, in a paper to the Commission, the staff
presented five options that would address, in various ways and to varying degrees: (1)
implementation of improvements to 10 CFR 50.59; (2) the proper use and content of
the plant SAR; (3) maintenance of the facility design basis; and (4) NRC oversight of
licensee commitments and other related internal process improvements. The fifth
option draws from certain elements of Options 1-4 to include both small, risk-informed
enhancements to selected existing regulatory processes in the near term and, in the
longer term, the development of much broader implementation of risk-informed
decision-making and oversight for many regulations. Option 5 specifically considers the
relationship of 10 CFR 50.59 to other Part 50 requirements.
The Commission currently is weighing the merits of each option. What is clear is the
following:
The need to define clearly the scope of equipment within the plant that should
receive a significant degree of regulatory oversight; Within that scope, the need to establish a consistent, risk-informed method of
classifying facility equipment;The need to clarify the degree of regulatory oversight that should be accorded to
each class or type of equipment, and the course of licensee and NRC action that
should be taken (including an appropriate time limit for resolution) when
equipment is inoperable or degraded, when a temporary modification is put into
place, or when any other actions are taken that could impact facility adherence
to the design basis; and, finally,The need to delineate clearly the relative functions of the Technical
Specifications, the FSAR, and less formal licensee commitments. Simply put,
what is important is scope, classification/categorization and disposition; as well
as delineation of important documents, control of documents and commitment
tracking.
IV. License Renewal Process
Let me turn now to the subject of license renewal. By way of background: about 10
percent of the remaining nuclear plant licenses will expire by the end of 2010 (with the
first to expire in 2006), and more than 40 percent will expire by 2015. The timely
renewal of licenses, where appropriate, may be important to ensuring an adequate
energy supply mix for the U.S. during the first half of the 21st century. It could play into
the debate over mitigation of global warming. It also may be important to the economic
viability of a utility, due to the additional time over which investments can be amortized.
The decision on whether to seek license renewal rests with a licensee. The NRC task
is to establish a reasonable process and clear safety standards, so that licensees can
make timely decisions about whether to seek license renewal.
For nuclear power plant licensees, license renewal can be a two-edged sword. The
benefits of gaining 20 years on the existing investment must be weighed against the
uncertainties associated with the cost of renewal, based on a consideration of
economic, political, regulatory, and environmental factors. Uncertainties may exist
associated with future operation and maintenance costs. The timing of major
replacements, such as steam generators--or major maintenance operations such as
thermal annealing--may be considered.
For our part, the NRC has created the regulatory structure to support license renewal.
As you know, the Commission published an amended license renewal rule, 10 CFR
Part 54, in May 1995. The amended rule is based on two key principles. First, the
current regulatory process, continued into the extended period of operation, is
considered adequate to ensure that the current licensing basis provides and will
maintain an acceptable level of safety, with the possible exception of detrimental aging
effects for certain systems, structures, and components. The second key principle is
that the licensing basis for each plant must be maintained during the renewal term. In
other words, the foundation of license renewal hinges on the determination that
currently operating plants will continue to maintain adequate levels of safety, and that
these levels have been sustained over the life of the plant through maintenance of the
licensing basis, with appropriate adjustments to address aging effects identified during
the review, and to address relevant operating experience.
In support of license renewal efforts, the NRC staff performed a Generic Environmental
Impact Statement (GEIS) that reviewed over 90 possible environmental impacts of
license renewal. Out of this group, more than 60 issues were ranked as Category 1
and analyzed generically, based on meeting three criteria: (1) the issue was generic in
scope to all licensees; (2) the potential impact, whether high, medium, or low, was the
same for all licensees; and (3) no sufficiently beneficial mitigation measures existed
which licensees had not already taken. For these issues, covered in the GEIS, license
renewal applicants need not perform a site-specific analysis, but simply can adopt the
analysis given in the GEIS. For the remaining issues, ranked as Category 2, applicants
will need to present plant-specific impact analyses in their environmental reports.
One issue that has caused some potential applicants concern relates to the
environmental impact of transporting high-level waste (HLW) to the proposed geologic
repository at Yucca Mountain. At the time the GEIS was performed, given the uncertain
status of Department of Energy (DOE) activities at Yucca Mountain, this issue was
made a Category 2, thus requiring plant-specific environmental impact review. In June
1997, the Commission asked the staff to revisit this issue, and to prepare a set of
options, both near-term and long-term, for treating environmental impact analyses
related to HLW transportation and disposal for license renewal applications. These
options should be presented for Commission review later this month.
The current industry approach to license renewal is to submit for NRC approval plant-specific and Owners' Group technical reports on specific topics, prior to submitting
complete license renewal applications. This approach is intended to establish a
foundation of technical information that a licensee can use to evaluate the feasibility of
a license renewal application, and to reference that information later in the application
itself. The NRC is reviewing technical reports prepared by the Baltimore Gas and
Electric Company addressing the Calvert Cliffs units, and technical reports prepared by
the Duke Power Company addressing the Oconee units. We also are reviewing
generic reports prepared by the Babcock & Wilcox Owners' Group on behalf of five
operating B&W plants. The Boiling Water Reactor Owners' Group has submitted a
technical report for review, and the Westinghouse Owners' Group has submitted reports
on several structures and components. This level of activity on the part of industry
clearly reflects a serious interest in license renewal.
However, I also have heard some concerns expressed related to the efficiency of NRC
license renewal processes, and in particular the possibility of unnecessarily lengthy
hearings. As I am sure you are aware, the Commission always has the authority to
exercise its inherent supervisory authority over the conduct of adjudicatory proceedings,
and has done so in the past, both to provide guidance to the Licensing Board on novel
issues and to direct the use of expedited schedules. When the Commission's
adjudicatory review process was revamped several years ago to make the Commission
the sole appellate body, it gave the Commission greater opportunity and flexibility to
exercise oversight of its adjudicatory processes. In addition, we may be able to modify
certain internal NRC procedures in a way that would increase the efficiency of reviews,
safety evaluations, or other aspects of the license renewal process. I should mention,
however, that in an era of fiscal restraint, the level of staff resources applied to this area
must remain commensurate with the degree of foreseen activity and the number of
initiatives by potential license renewal applicants. We remain confident that we can
meet these challenges, and that a clear and stable regulatory process for license
renewal will result.
V. Safety and Compliance
My last topic today concerns a recent Commission action to provide guidance to the
NRC staff on the relationship between safety and compliance. Historically, this area
has been strewn with misconceptions--as evidenced by discussions of the supposed
difference between a safety inspection and a compliance inspection, or implications that
safety and compliance represent opposing ends of a continuum of how prescriptive the
NRC is in its approach to regulatory oversight. Such ideas not only are misconceptions,
they also fuel miscommunication, unpredictable regulation, and an unclear concept of
the role of the regulator.
I am reminded of a story that may be familiar to some of you, related to me by a
member of my staff:
On a dark night at sea, two lights were approaching each other. As they
continued to get closer, the captain of a ship sent out a message:
"Recommend you change course." The immediate reply came back:
"Recommend you change course!"
The captain, being somewhat miffed, signaled again: "This is CAPTAIN
Smith. Again, I recommend you change course!" The reply came back
just as quickly: "This is SEAMAN Jones; I recommend you change
course!"
By this time the captain was reaching the limits of his patience. He
ordered an immediate, uncompromising message: "I am on a U.S.
battleship. I order you to change course!!" to which the reply came back:
"I am on a lighthouse. I recommend you change course."
I know that, for some of you, your first impression of that story likens the NRC to the
battleship, ready to roll over the licensee lighthouses in its path. From my perspective,
the NRC is more like the lighthouse, reminding licensees, both large and small, of the
importance of safe operation. I would like to discuss the relationship between safety
and compliance in this context.
As commonly understood, safety means freedom from exposure to danger, or
protection from harm. In a practical sense, an activity is deemed to be safe if the
perceived risks are judged to be acceptable. The Atomic Energy Act of 1954, as
amended, establishes "adequate protection" as the standard of safety on which NRC
regulation is based. In the context of NRC regulation, safety means avoiding undue
risk or, stated another way, providing reasonable assurance of adequate protection for
the public in connection with the use of source, byproduct and special nuclear
materials.
The definition of compliance is much simpler. Compliance simply means meeting
applicable regulatory requirements.
What is the nexus between compliance and safety?
Safety is the fundamental regulatory objective, and compliance with NRC
requirements plays a fundamental role in giving the NRC confidence that safety
is being maintained. NRC requirements, including technical specifications, other
license conditions, orders, and regulations, have been designed to ensure
adequate protection--which corresponds to "no undue risk to public health and
safety"--through acceptable design, construction, operation, maintenance,
modification, and quality assurance measures. In the context of risk-informed
regulation, compliance can play a very important role in ensuring that key
assumptions used in underlying risk and engineering analyses remain valid.
Adequate protection is presumptively assured by compliance with NRC
requirements. Circumstances may arise, however, where new information
reveals, for example, that an unforeseen hazard exists or that there is a
substantially greater potential for a known hazard to occur. In such situations,
the NRC has the statutory authority to require licensee action above and beyond
existing regulations to maintain the level of protection necessary to avoid undue
risk to public health and safety.
The NRC has the authority to exercise discretion to permit continued operations--despite the existence of a noncompliance--where the noncompliance is not
significant from a risk perspective and does not, in the particular circumstances,
pose an undue risk to public health and safety. When non-compliances occur,
the NRC must evaluate the degree of risk posed by that non-compliance to
determine if specific immediate action is required. Where needed to ensure
adequate protection of public health and safety, the NRC may demand
immediate licensee action, up to and including a shutdown. In addition, in
determining the appropriate action to be taken, the NRC must evaluate the non-compliance both in terms of its direct safety and regulatory significance and by
assessing whether it is part of a pattern of non-compliance (i.e., the degree of
pervasiveness) that can lead to the determination that licensee control processes
are no longer adequate to ensure protection of the public health and safety.
Based on the NRC's evaluation, the appropriate action could include refraining
from taking any action, taking specific enforcement action, issuing orders, or
providing input to other regulatory actions or assessments, such as increased
oversight (e.g., increased inspection).
Where requirements exist that the NRC concludes have no safety benefit, the
NRC can and should take action, as appropriate, to modify or remove such
requirements from the regulations or licenses. Requirements that are
duplicative, unnecessary, or unnecessarily burdensome can actually have a
negative safety impact. They also can tend to create an inappropriate NRC and
licensee focus on "safety versus compliance" debates. As the Commission
states in its Principles of Good Regulation, "There should be a clear nexus
between regulations and agency goals and objectives, whether explicitly or
implicitly stated."
Since some requirements are more important to safety than others, the
Commission should use a risk-informed approach wherever possible when
adding, removing, or modifying NRC regulations, as well as when applying NRC
resources to the oversight of licensed activities (this includes enforcement).
Based on the accumulation of operating experience and the increasing
sophistication of risk analysis, the NRC should continue to refine its regulatory
approach in a manner that enhances and reaffirms our fundamental safety
objective.
These principles attempt to describe the nexus between compliance and safety. The
misperception that compliance and safety are somehow incompatible or unrelated
arises when the principles just outlined are not understood or are wrongly applied.
When understood and applied correctly, the result should be a consistent, credible
regulatory approach--as applied to licensing, inspection, enforcement, performance
assessment processes, and rulemaking.
This guidance to the NRC staff on safety and compliance represents the consensus of
Commission opinion, and, as I said earlier, it attempts to dispel the misconceptions that
sometimes arise in this area. It has been codified and issued to NRC staff for use in
developing inspection, enforcement, and rulemaking guidance. It is publicly available
should you wish to distribute it to your facility managers and employees.
To illustrate our seriousness with respect to how elements of this guidance can and will
direct what we do, let me discuss a direct final rulemaking change to 10 CFR 70.24,
and provide a brief on our activities related to risk-informed regulation.
10 CFR 70.24 concerns criticality accident requirements, including provisions for
criticality monitors and related emergency drills. This requirement is an example of an
area in which the NRC has issued a high number of exemptions. In fact, nearly 2 out of
3 reactor plants currently have an exemption to one or more of the requirements of
70.24. As you may have heard me say before, I do not believe in "regulating by
exemption." Exemptions should be reserved for unusual, highly specific circumstances.
When exemptions become the rule, either the rule or the regulator--or both--are at fault.
At the same time, a number of nuclear plant managers, of plants not subject to the
exemption, had complained directly to me of "nitpicking" on the part of the NRC staff,
with respect to compliance with the rule. These two sides of the situation were and are
untenable. I asked the staff, therefore, to examine how we were implementing and
enforcing the rule, and, if 2/3 of the plants were being exempted from the rule, why the
rule itself should not be changed to correspond to its implementation in reality.
In August 1997, the Commission directed the staff to proceed with a direct final
rulemaking on this issue, and to evaluate the agency's enforcement practices related to
this rule. A direct final rulemaking differs from the traditional rulemaking process in that
the provisions for public comment are reduced significantly. In this approach, the NRC
will publish simultaneously, in the Federal Register, the Proposed Rule and the Final
Rule. The Proposed Rule provides for a 30-day public comment period; however, if no
comments are received, the Final Rule becomes effective 75 days after the publication
date. The Commission will only use a direct final rulemaking when it has reason to
believe that no adverse comments would be expected on the rulemaking. The obvious
benefit of this approach, when it can be used, is that the streamlined rulemaking
process significantly improves timeliness. The Commission expects to review and act
on the staff's recommendations by the end of next month. As for enforcement, the
NRC staff issued an Enforcement Guidance Memorandum last month to withdraw
previously issued violations for power reactor non-compliance with this rule.
Finally, in the area of risk-informed regulation, many of you are aware that we have
been conducting a series of pilot applications with the nuclear power industry in the
areas of Technical Specifications (TSs), Graded Quality Assurance (QA), In-Service
Inspection, and In-Service Testing, using the draft PRA Standard Review Plans and
draft PRA Regulatory Guides published earlier this year. The NRC staff has received
applications in each of these four topical areas, and we are well into the process of
reviewing and issuing the associated Safety Evaluation Reports. As one example, the
staff has been working with the Combustion Engineering Owners Group (CEOG) on a
joint application that would modify existing CE TSs to allow a degree of risk-informed
operating flexibility. This TS change would allow licensees to employ a Configuration
Risk Management Program to make decisions on whether or not to enter an extended
Allowed Outage Time on specific plant structures, systems, and components, based on
incorporating probabilistic risk assessment (PRA) insights into the analysis of the
existing or intended plant configuration. A similar TS change was issued for the South
Texas plant last year. In May, the Commission reviewed this program and did not
object to the issuance of safety evaluations using this rationale. This program is
illustrative of the types of enhancements that are being achieved through risk-informed
regulation.
VII. Conclusion
In closing, I hope that I have succeeded today in giving you a sense of where I believe
we--the NRC and the nuclear industry--are headed, in terms of the challenges and
issues presented. In the areas of reactor-related assessment processes and regulatory
oversight of licensee design basis issues, I believe that the NRC has plotted a course
that will improve regulatory effectiveness and that is directed toward achieving
regulatory stability. I also believe that the NRC has created effective, reliable
processes that will ensure effectiveness and efficiency in reviewing any license renewal
applications that are submitted. I reiterate the Commission's conviction of the
complementary relationship between safety and compliance, and I encourage you once
again to review the recent Commission guidance in this area. I fully expect that INPO
will continue to be a leader and an ally in monitoring and maintaining a high standard of
licensee performance. Thank you for your attention.
