Nicholas S. Reynolds, James R. Curtiss, F. Stanley Echols
WINSTON & STRAWN

The momentum towards regulation of U.S. Department of Energy (DOE) nuclear facilities by the U.S. Nuclear Regulatory Commission (NRC or Commission) has recently increased to the point that some type of regulation appears virtually inevitable. In anticipation of this transition, DOE must begin to define what internal changes will be necessary to make the transition to an independently regulated environment successful and take steps to achieve those changes. DOE must make such transition in the shortest time frame possible in order to achieve the benefits and avoid jeopardizing the implementation of DOE's mission.

As a generally successful regulator of a mature regulatory program, the NRC will likely resist changing its regulatory philosophy as it is to be applied to DOE facilities. NRC personnel will gravitate towards the methods that they have developed and with which they are most comfortable. Accordingly, DOE and its contractors should seek to understand the NRC's regulatory framework, as well as the Commission's institutional biases. The NRC's experience in regulating commercial nuclear power plants provides clear, informative precedent that can be used by DOE and DOE contractors to predict the core principles underlying NRC regulation of DOE nuclear facilities.

DOE and its contractors can learn much about their future regulatory relationship with the NRC by focusing upon the NRC's expectations of its licensees, analyzing how well they can meet such expectations, and understanding the potential severity of the consequences of not meeting those expectations. This paper discusses various NRC expectations concerning its licensees: the need for strong leadership, single point accountability, and satisfaction of NRC safety requirements. Also discussed are the NRC's expectations regarding openness in communication, proactive self-assessment, correction of problems and deficiencies, and employee protection. The paper discusses the necessity of managing licensee commitments effectively and the need to control the basis of a facility's design. By anticipating how NRC regulation will affect the performance of its mission, DOE and its contractors will be better positioned to function under NRC regulation, and, perhaps, to influence the ultimate form of that NRC regulatory structure. To that end, this paper discusses methods that have been successful in leveling the playing field with the NRC.

If Congress and the President bestow upon the NRC the mantle of regulatory oversight over DOE nuclear facilities, the effect upon both these agencies will be significant. To predict the exact nature of the mature relationship that will evolve between these agencies is well nigh impossible. However, by carefully examining the development of the regulatory structure of the NRC and its developing relationship with DOE, it may be possible to predict the major elements of the regulatory paradigm that will develop. It is also possible to pinpoint significant issues that must be addressed if the NRC is to successfully implement its regulatory mission while permitting DOE to robustly carry out its statutory mandate. Understanding the NRC's posture is important to the DOE and its contractors, so that they may successfully plan for and respond to the NRC's initiatives and effectively shape the relationship through legislation, rulemaking and informal cooperative means.

Since the creation of the DOE and its predecessor agency (the Energy Research and Development Administration), the agency's nuclear activities have, consistent with its statutory authorization, focused on producing nuclear weapons, developing commercial and naval nuclear reactors, and conducting energy-related research. In the post-Cold War era, DOE's nuclear mission -- and, along with it, its nuclear budget -- has shifted somewhat. Today, approximately half of DOE's nuclear budget goes for materials management, decommissioning and cleanup, and waste management.[1]

Safety at DOE nuclear facilities has been essentially self-regulated by DOE since the enactment of the original Atomic Energy Act in 1946. Recent events suggest that this status will soon change. In 1994, legislation was introduced in Congress that would have subjected new DOE facilities to immediate external regulation. This bill did not pass. However one outgrowth of the proposed federal legislation was DOE's creation of the Advisory Committee on External Regulation of DOE Nuclear Safety. The mission of this Advisory Committee was to provide advice and recommendations on whether (and, if so, how) new and existing DOE facilities and operations might be externally regulated to ensure nuclear safety.[2] The December 1996 report of the Advisory Committee, "Improving Regulation of Safety at DOE Nuclear Facilities," recommended that essentially all aspects of safety at DOE nuclear facilities be externally regulated, and that existing agencies should be responsible for such external regulation.[3] It did not recommend a specific agency as the external regulator.

In debating whether the NRC or the Defense Nuclear Facilities Safety Board was best suited to regulate DOE in nuclear matters, the Advisory Committee focused primarily on three issues. First, the Committee recognized that an "efficient and flexible regulatory approach" was needed to accommodate the variety of work and circumstances at DOE's nuclear facilities. Additionally, it perceived the need for "value-added regulation," meaning "not just cost-effective regulation that did what it meant to do, but [also] regulation that addressed matters on a risk-based basis." Second, the Advisory Committee saw the need to engineer a smooth transition without overwhelming either DOE or the new regulating agency, or jeopardizing the core mission of either agency. Third, the Committee noted the need to maintain momentum for the transition within DOE, so as to "improve the internal management of all aspects of safety stewardship."[4]

After endorsing the Advisory Committee's recommendation, the Secretary of Energy appointed a working group (the DOE Working Group on External Regulation) to develop recommendations on how to implement the 1995 Advisory Committee Report. In December 1996, this DOE Working Group recommended that (1) the NRC should be the entity charged with external regulation of nuclear safety at DOE facilities; and (2) the transition to external regulation should proceed in phases with full regulation by the NRC in a little over ten years.[5]

In September 1996, the NRC, as part of the Commission's Strategic Assessment and Rebaselining, published a Direction Setting Issue Paper addressing options for NRC regulation of DOE facilities. In March 1997, the Commission endorsed the NRC's assumption of nuclear safety regulatory oversight for many, but not all, DOE nuclear facilities, contingent upon the agency's being given sufficient human and financial resources to assume this new responsibility, and also contingent upon a clear delineation as to what authority the NRC would exercise over DOE facilities.[6] The Commission also directed the NRC Staff to convene a high-level NRC Task Force to identify, in conjunction with DOE, the policy and regulatory issues that warrant study and resolution. In June 1997, NRC Chairman Dr. Shirley Ann Jackson and DOE Secretary Federico Peña agreed on a pilot program to pursue regulation of DOE nuclear facilities by the NRC. On October 16, 1997, the NRC and DOE entered into a Memorandum of Understanding (SECY-97-237) to establish the framework for such a pilot program.[7] In her speech to the 22nd Annual Symposium of the Uranium Institute last September, Chairman Jackson stated that the agency's primary goal is to "remain rigorous in ensuring public and environmental protection on a cost-justified basis, and to ensure that whatever steps we take toward phased-in DOE oversight do not compromise our ability to ensure adequate protection of public health and safety within the scope of our current mission."

This pilot program would simulate NRC regulation of a selected set of DOE nuclear facilities, over a 2-year period, to help both agencies gain experience in this area. "Simulated regulation," as defined for the purposes of this pilot program, means that the NRC will test regulatory concepts and evaluate a facility and its standards, requirements, procedures, practices, and activities against standards that the NRC believes would be appropriate to ensure DOE facility safety, in view of the nature of the work and the hazards at that pilot facility. The program will include NRC interactions with both the DOE and DOE contractors and inspections of each pilot facility to identify implementation issues. Any significant inspection findings with a health and safety impact will be transmitted promptly to the appropriate DOE organization for review and appropriate corrective actions by the pilot facility. Data concerning costs and benefits associated with external regulation will also be developed. After six to ten pilots have been developed, the NRC and DOE will determine whether or not to seek legislation giving the NRC statutory authority to regulate individual DOE facilities or classes of DOE facilities.

Among the questions to be addressed by the pilot program are the following:

• What form would the DOE regulatory process take (e.g., licensing, certification, consultation)?
• Who would be regulated -- DOE, its contractors or both?
• What safety criteria would be applied?
• What role would stakeholders play?
• What safeguards and security measures would be imposed?
• How best should DOE transition into the external regulation framework, including the development of any federal legislation?

While completion of the pilot program and analysis of the results by both agencies will be necessary to shape the final regulatory structure for DOE facilities, we can predict with some accuracy the internal changes that will have to take place within DOE and its contractors to enable them to successfully make the transition to a regulated environment. These changes are in basic culture and behavior, and are necessarily long-term efforts that cannot commence too soon.

The NRC and DOE have already recognized the necessity of working together at all levels within their organizations to achieve a successful transition to regulation. That transition will not be without some tension between the agencies as they seek to reconcile their differing missions. While the DOE has not been without internal safety review, in some cases mimicking the type of review and oversight of the NRC over its licensees, regulation by an outside independent entity will represent a quantum leap. It will require significant adjustments that cannot be anticipated by extrapolation from DOE's experience with self-regulation.

As the regulator, the NRC will have significant leverage both at the formative stage and, even more significantly, at the implementation stage, in defining the relationship between the two agencies. Based upon our experience in interacting with the NRC, we believe that in implementing its regulatory authority over DOE, the Commission is unlikely to give ground in areas which it believes could compromise the public perception of its regulatory authority over DOE facilities. Clearly, failure in its mission to regulate DOE facilities could damage the NRC's ability to regulate its current licensees. It is likely that DOE will find itself in a subordinate role and will have to change many of its basic tenets in order to successfully make the transition to a regulatory environment. There is significant pressure on the NRC to take the DOE facilities as it finds them and work collectively with the DOE to make gradual changes. Experience suggests, however, that the NRC will likely strive to impose upon DOE and its contractors those regulatory expectations developed over decades for current NRC licensees.

The regulatory process will be strongly influenced by the lower and mid-level management levels of the NRC. In the past, NRC regulatory policy has been shaped or significantly influenced by individual reviewers with responsibility for resolution of a particular technical issue. Such reviewers have tended to be conservative and somewhat unyielding in their outlook. It is difficult to modify technical and regulatory positions made at this level; once formulated, they are likely to take on precedential value and thus affect all licensees facing the same or similar issues.

Some expansion in the number of personnel at the NRC will likely be necessary to accommodate regulation of DOE facilities, with a number of individuals coming from the Defense Nuclear Facilities Safety Board and the DOE itself. However, the key players in the implementation of the NRC's mission will likely be veterans of that agency who have cut their eyeteeth overseeing the regulation of civilian power reactors. These individuals will be influenced by the development of NRC regulatory policy over the long term, and by the NRC's current technical and policy focus. It is our belief the NRC will not treat DOE differently from existing NRC licensees. Accordingly, the development of Commission regulatory policy, as well as the current regulatory climate at the NRC, must be well understood if DOE and its contractors are to make the successful transition to independent external regulation, and if they are to successfully engage the regulatory process so as to achieve the balancing of the NRC's objectives and their own.

In anticipation of being treated as an NRC licensee if regulated by the Commission, DOE should know, and seek to adopt, the attributes of a successful NRC licensee.

The DOE and its contractors must begin to "think like an NRC licensee." It is not too early to begin. In doing so, there must be the recognition that the NRC believes that its requirements are imperatives. They are requirements, not merely guidance or standards that can be relaxed or ignored, as the occasion demands. A corollary is that once a licensee makes a commitment as to how a requirement will be met, the NRC will expect a licensee to follow through with its commitments unless approval is obtained from, or appropriate notification is given to, the NRC.

Moreover, as an NRC licensee, DOE will be expected to redouble its own efforts to assure safety and compliance in its facilities. If anything, the NRC's expectation will be that DOE must become even more introspective and self-critical. DOE will have to demonstrate that effective mechanisms are in place to ensure that problems will be unearthed, analyzed and rectified. DOE will also have to be prepared to admit, usually publicly, when requirements are not being met, and be prepared to respond quickly and effectively to external inspections and requests to justify continuing operations.

One trait of a successful licensee that has proven difficult to acquire is the ability to analyze a problem or deficiency, determine the underlying root cause that addresses both the specific circumstances of the issue and the more global ramifications, and then match corrective actions to the root cause. In this regard, Chairman Jackson stated that in terms of assuring public acceptance, "neither the nuclear industry nor the NRC can afford to tolerate anything short of excellence. When problems do arise, I think it is important that we look not only at correcting the specific situation, but also ask ourselves whether there are underlying deficiencies which allowed the situation to occur."[8]

Another trait of a successful NRC licensee is strong leadership. NRC Chairman Shirley Jackson is viewed as a strong leader. She espouses the view that "If leaders do not set an example of vision, hard work, commitment to mission, willingness to take responsibility, creative thinking, and scrupulous adherence to ethical standards, they cannot expect those who work for them to meet those tests."[9] Experience shows that the Chairman is not shy about criticizing NRC licensees (sometimes publicly) that, in her opinion, fail to meet this leadership standard. One can expect Chairman Jackson to hold DOE and contractor management to the same high standard of leadership that she requires of herself. It is our observation that the hallmark of successful licensees regulated by the NRC is strong leadership at the top, willing to set and demonstrate high standards for themselves and their subordinates and to hold their employees and contractors accountable for their actions. Bureaucratic finger pointing, or the lack of acceptance of responsibility at the top, is not acceptable to the NRC.

Submitting to regulation by an independent entity such as the NRC is not merely the equivalent of adding a layer of bureaucracy at DOE. To the contrary, DOE will have to re-examine its fundamental role in those activities that become regulated. It must learn to accept overtly its single-point responsibility for the operation of DOE nuclear facilities and for each and every element of such operation. Whether DOE or its contractors turn out to be the licensed entity, the NRC is certain to look to the DOE as having overarching responsibility for its licensed facilities. This point was underscored recently by the NRC when it informed DOE in no uncertain terms that it still has quite a way to go in meeting the NRC's expectations regarding understanding and accepting its responsibility as an NRC licensee.[10]

In addition, DOE must understand that issues raised at one facility are certain to affect others, either directly or indirectly. The NRC will look to DOE to assure that technical and management issues arising at one facility are addressed at all facilities under its control. On the other hand DOE must also take responsibility for assuring that specific actions taken at the facility are not inappropriately generalized. Current NRC licensees have been conditioned such that they inherently recognize the need to examine generic implications of issues raised at one facility at all others operated by them. They recognize that the failure to explicitly address such generic implications leads to additional scrutiny by the NRC. Mechanisms will have to be developed to assure that issues that have generic implications are understood by all those having responsibility for DOE licensed activities. Only under these conditions can effective action be taken to address the issues on terms acceptable to all parties.

Another basic tenet of NRC regulation is that the bar is being continuously raised regarding its safety regulation. Successful NRC licensees recognize this fact and respond accordingly. Both the NRC and the regulated community assimilate lessons learned from past successes and failures, and actively seek out ways to improve safety performance and reliability of operation. The experience of Northeast Utilities over the last several years with its Millstone facility is considered an example of a licensee that became complacent and lacked the drive to continuously improve. Northeast Utilities was once considered an exemplary licensee. Now it is mired in problems, and three of its units have experienced long-term shutdowns. The cost to restart a unit and regain its reputation as a responsive licensee is astronomical compared to maintaining such a position from the outset.

The role of individual employees in assuring the maintenance and improvement in safety at licensed facilities is viewed as significant by the NRC. For example, Chairman Jackson blamed the significant delay in licensing TVA's Watts Bar Nuclear plant largely upon the licensee's failure early on to communicate employee mistakes to management, and management's failure to listen to employees' concerns.[11] The NRC views the presence of a "questioning attitude"as a major component of a healthy nuclear safety culture. The Commission has also blamed the existence of significant technical deficiencies at other power plants in large part on the absence of a questioning attitude by plant employees. In the NRC's view, because key individuals did not maintain a questioning attitude, they failed to identify and promptly correct problems in areas that management viewed as having low safety significance.[12]

The NRC expects employees to be able to raise safety issues without fear of harassment or intimidation. The Commission has not hesitated to pursue aggressively those licensees and individual employees whom it believes have interfered with the raising of safety issues, or who have created an atmosphere of fear or intimidation. While DOE has similar requirements in effect, DOE and its contractors must gain an appreciation of the emphasis that the NRC places on its requirements and of the consequences associated with failure to adequately address them. DOE must assure that its management appreciates the NRC's requirements, and that DOE and its contractors conform their management style and conduct to protect both themselves and their employees. We have found that this takes significant effort and constant reinforcement; a single errant step can bring disastrous results.

One theme of the current Commissioners, particularly Chairman Jackson, is the need for a transparent regulatory process. The NRC is extremely sensitive to the charge that it has failed in some instances to expose its regulatory decision-making process to public scrutiny and involvement. Of course, as a matter of federal law, the Administrative Procedure Act ("APA") provides for public involvement in the formal rulemaking process; and the NRC is subject to the APA. Chairman Jackson's efforts have gone beyond the APA, however. Without changing its current legal framework, the NRC is now holding more meetings that are open to the public. Many NRC enforcement conferences are open to the public, for example. Moreover, additional emphasis is being placed on the need to involve all "stakeholders" (NRC licensees, other members of the nuclear industry, the public, other Federal agencies, NRC employees) in many NRC decisions -- such as the agency's development of its Strategic Assessment and Rebaselining effort mentioned above.

DOE and its contractors must appreciate that the NRC's regulatory process has been set up for public access and scrutiny. The maintenance of an open docket and local public document rooms, the extensive use of open meetings and enforcement conferences, a willingness to enter into a dialogue with national and local groups and individuals interested in a particular facility or subject, experiments in interactive rulemaking, and a broad interpretation of the requirements for disclosure under the Freedom of Information Act all will affect regulation of DOE facilities. In addition, the NRC's regulatory process will also provide Congress and the media with new avenues of access to information concerning individual DOE facilities. DOE and its contractors must educate themselves as to its effect on their activities, and prepare for this new openness.

In her speech before the Regulatory Information Conference in April 1996, Chairman Jackson noted the steady improvement in nuclear plant safety performance, plant reliability, and plant availability in the United States nuclear industry during the 1980s and 1990s. Chairman Jackson explicitly cited licensee self-assessments (along with improved maintenance practices and consideration of risk in the operation of nuclear plants) as a primary cause of this increased plant availability. The Commission emphasized that self-assessment should be "an ingrained part" of every licensee's way of doing business. Moreover, the NRC expects the process of self-assessment to take place on both a case-by-case basis (learning from specific events) and on a broader scale (such as the NRC's extraction of various "lessons learned" from Millstone events). The regulatory expectation is that each and every licensee's performance will improve as a result of regulatory activity and the NRC's continuing insistence on licensee self-assessment and improvements in the safety culture. Expectations for the performance of DOE and its contractors will be no different.

In late 1995, Chairman Jackson directed the NRC Staff to perform a "lessons learned" review to improve its existing oversight processes and/or develop new processes to aid in earlier recognition of deficiencies or adverse trends at commercial nuclear power plants. Through this review (which was augmented by other inspection data), the NRC identified design and configuration control deficiencies at some plants that, in the agency's view, raised questions concerning whether the licensee programs were sufficient to demonstrate that plant physical and functional characteristics are consistent with the established design bases, and whether plants are being maintained and operated in accordance with their design bases.[13] As a follow-up, in late 1996, the NRC requested that reactor licensees provide it with additional information pursuant to 10 CFR § 50.54(f), a regulatory provision that is designed to provide the NRC with added assurance that individual licensees are operating and maintaining their nuclear plants within their design bases, and to provide assurance that any deviations would be reconciled in a timely manner.[14] Similarly, the Commission is currently involving itself in related policy questions concerning the use and maintenance of licensees' the Final Safety Analysis Reports and the implementation of 10 CFR § 50.59, which permits licensees to make certain charges in plant designs without prior NRC approval. Chairman Jackson has publicly expressed the view that these areas are "long overdue for improvement." It is our view that DOE will need to affirmatively take measures to get its arms around its "authorization basis" for its facilities -- which may currently be ill-defined, without adequate basis, not retrievable, or not adequately controlled, in order to make the successful transition to external regulation.

The Chairman's initiative also marked a new course by the NRC toward compliance-oriented regulation which is certain to be translated into its regulation of DOE facilities. In this environment, a licensee cannot attempt to pick and choose among "requirements" on the basis that some are more important than others. With verbatim compliance as the byword, it will be necessary to clearly define a facility's licensing bases and obtain the NRC's concurrence as to the universe of enforceable requirements. In a related matter, regulation by the imposition of performance based requirements has had a mixed record. While encouraged by the commercial nuclear power industry and adopted by the NRC for programs such as control over maintenance activities, it has sometimes evolved to a prescriptive basis to accommodate both the NRC reviewers and inspection activities. A similar result could occur if the NRC attempts to initiate performance-based oversight of DOE facilities.

The NRC has traditionally relied upon its inspection and plant assessment programs to identify adverse trends in safety performance. Successful NRC licensees realize that the Commission also uses its enforcement authority as a method of regulating licensees. In her speech before the Regulatory Information Conference last year, Chairman Jackson emphasized that "sound regulation means having regulations that are, first, tied to safety, and second, consistently and fairly enforced. Compliance with the regulations is, and should be, an important part of ensuring safety. If regulations are not important to safety, they should be revised or eliminated." Based upon inspection results by resident inspectors, regionally-based subject-matter experts and team inspections, the NRC takes the action it considers appropriate to protect public health and safety and to assure future compliance with its requirements by both that licensee and by all others. The NRC regularly cites NRC licensees for violations of NRC requirements, may also impose monetary civil penalties for such violations, and can even force shutdown of operations. While the DOE has similar authority, the NRC's use of such authority is more widespread and developed, and is an important instrument for implementing regulatory policy.

The Commission's enforcement authority is a significant regulatory tool, although not necessarily one that is overtly recognized. The power to cite licensees for violations of NRC requirements and impose monetary civil penalties has a significant impact on the conduct of the regulated industry. Because of continuing adverse publicity, the expense, the perception that the NRC will single out a licensee that challenges NRC enforcement action, and the small likelihood of ultimate success before an NRC tribunal, licensees are likely to lick their wounds and accept a violation and associated penalty. This is particularly true for licensees that have been identified as having programmatic weaknesses, are on the NRC's Problem Plant List, or have facilities that are shut down. Regulation by enforcement has the potential to exploit licensee weaknesses and extract licensee concessions. If regulated by the NRC, DOE and its contractors should anticipate a similar course and develop a coordinated strategy for dealing with it.

To ensure that the operation of NRC licensed facilities does not result in undue risk to public health and safety, NRC requirements have historically been based upon deterministic engineering criteria, establishing safety margins through the use of multiple barriers and the "defense in depth" philosophy. More recently, however, the Commission has recognized that Probabilistic Risk Assessment (PRA) methods offer a useful complement to its deterministic engineering approaches.[15] PRA insights, information, and methods are viewed as allowing the NRC to sharpen the focus and improve the effectiveness of NRC requirements. By honing in on these aspects of a facility most important to safety, PRA facilitates better decision-making and use of resources. Therefore, the Commission has continued to expand the application of risk assessment methodologies in an effort to improve the overall regulatory process.

PRA insights can be used not only to assist the NRC in understanding the basic risks related to facility operation, but also may be important in evaluating changes to the facility and in evaluating continuing operation should there be a nonconforming condition that challenges the operability of structures, systems or components. A sophisticated PRA analysis can assist a licensee in dealing with the NRC in these critical situations. However, the process for utilizing PRA's in the regulatory structure is in its infancy. We expect a number of perturbations before an accommodation between the NRC and its licensees is reached. DOE must understand the NRC's expectations regarding PRAs, so that it may begin to reconcile its efforts with such expectations and focus its efforts on developing new PRA evaluations where necessary to accomplish its mission.

An appreciation of the challenges presented by NRC regulation, and an understanding of how the Commission interacts with the existing regulated community, are first steps in assuring that the objectives of external regulation can be achieved. The next step is to establish an appropriate legislative framework. Next, the regulated community must develop an agreed upon set of standards to implement such legislation. An important aspect of this is that the DOE and its contractors must assure that they are not isolated and present a collective front when appropriate.

Many resources are available for building an understanding of the NRC's regulatory structure, and of the manner in which the agency interacts with its licensees. Perhaps the best way is to use the methods which existing licensees have found successful. In addition to the establishment of an umbrella organization used by commercial nuclear power plants to interact with the NRC, exchange information, and develop mutually acceptable positions, a number of special-purpose issue groups and clearinghouses, both formal and informal, and both short and long-term, have also been created to resolve issues with the NRC. For example, we have for some years successfully shaped the development, implementation, and enforcement stages of particular technical and generic issues through industry groups (such as environmental qualification, design basis issues, specialized team inspections, etc.). They help to provide assurance that licensees with a particular interest effectively develop common positions for dealing with the regulator. They also assure that those regulatory positions are adequately advocated. We have also found that simply ensuring that all licensees are cognizant of the latest status of developing issues assures that a rational basis for responding to the regulator can be developed and implemented. Ensuring that a licensee is prepared to respond to allegations and enforcement actions, and understands the basis upon which the regulator is acting in the larger generic context, are important to successful interaction with the regulator.

It is important to the transition to external regulation that the roles and responsibilities of the agencies are clearly defined. It is important to minimize any overlap or duplication in the agencies' responsibilities such that the NRC's regulatory mission can be carried out effectively at a reasonable cost while still permitting the successful completion of DOE's mission. Generic rulemaking and/or implementing guidance will clearly also be needed to ease the transition to outside regulation. Timetables for compliance with NRC requirements must be negotiated and means to assure limits on expenditures to come into compliance with NRC requirements and upgrades also must be established.

As with any complicated but worthwhile enterprise, the road to regulation will be marked by significant challenges that must be overcome if the NRC is given authority to regulate DOE nuclear-related facilities and activities. Success can be achieved in a cost-effective manner, leading to improved safety at DOE facilities. If that goal is to be timely achieved, DOE must begin now to make significant changes in its way of doing business. DOE should examine the NRC's relationship with its current licensees and begin to model the attributes of a successful licensed entity. Even taking into account the unique characteristics and status of DOE nuclear facilities, we believe that successful transition of DOE to external regulation can be accomplished.

1. Public Law 105-62, "Energy and Water Development Appropriations, 1988," 111 STAT. 1330, (October 13, 1997).
2. Charter of the DOE Advisory Group on External Regulation, Report of the Department of Energy Working Group on External Regulation (December 1996) <http://tis-nt.eh.doe.gov/extreg/report.htm>.
3. Report of the Department of Energy Working Group on External Regulation (December 1996) <http://tis-nt.eh.doe.gov/extreg/report.htm>.
4. "Regulatory Oversight of DOE Nuclear Facilities, NRC and DOE Briefing before the NRC Commission," 18-22, (September 19, 1997) <http://www.nrc.gov/NRC/
   COMMISSION/TRANSCRIPTS/19970919a.html>.
5. "External Regulation of DOE Facilities, DOE Meeting before the NRC Commission," (March 31, 1997) <http://www.nrc.gov/NRC/COMMISSION/TRANSCRIPTS/19970331c.html>.
6. Staff Requirements Memorandum, COMSECY 96-53, "Oversight of the Department of Energy (DSI 2)," 1, (March 28, 1997).
7. Memorandum of Understanding, SECY-97-237, "Pilot Program on External Regulation of DOE Facilities by the NRC," (October 16, 1997).
8. S.A. JACKSON, "Looking Back, Assessing the Present, And Planning for the Future, Address at the Nuclear Assembly," S-96-11 (May 30, 1996) <http://www.nrc.gov/OPA/gmo/nrarcv/s-96-11.htm>.
9. S.A. JACKSON, "Remarks Before Virginia Power Company's Seventh Annual Leadership Reception," S-97-2 (January 28, 1997) <http://www.nrc.gov/OPA/gmo/nrarcv/s-97-02.htm>.
10. Letter from William F. Kane, Director, Spent Fuel Project Office, Office of Nuclear Material Safety and Safeguards, U.S. Nuclear Regulatory Commission to J.M. Wiloynski, Manager, Idaho Operations Office, U.S. Department of Energy Re: NRC Inspection Report No. 72-0009/97-207 (Fort Saint Vrain Independent Spent Fuel Storage Installation) (July 8, 1997).
11. S.A. JACKSON, "Challenges for the Nuclear Power Industry and its Regulators: The NRC Perspective, Regulatory Information Conference," S-96-2 (April 9, 1996) <http://www.nrc.gov/ OPA/gmo/nrarcv/s-96-02>.
12. S.A. JACKSON, "Nuclear Power in a Competitive Era, Address the National Association of Regulatory Utility Commissioners' Conference on Nuclear Energy in Competitive Electricity Markets," S-97-1 (January 23, 1997) <http://www.nrc.gov/OPA/gmo/nrarcv/s-97-01.htm>.
13. Hugh L. Thompson, Jr., "Millstone Lessons Learned Report, Part 2: Policy Issues," SECY-97-036, March 2, 1997.
14. James Taylor, "Request for Information Pursuant to 10CFR50.54(f) Regarding Adequacy and Availability of Design Bases Information," October 9, 1996.
15. "Final Policy Statement on Commission Use of Probabilistic Risk Assessment Methods in Nuclear Regulatory Activities," Office of the Secretary of the Commission, August 10, 1995.

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