u .s. n ommission performance and ......this report reflects the nrc’s continued commitment to...

PERFORMANCE ANDACCOUNTABILITYREPORT

U . S . N U C L E A R R E G U L A T O R Y C O M M I S S I O N

F i s c a l Y e a r 2 0 0 0

Availability Notice

Availability of Reference Materials Cited in NRC PublicationsMost documents cited in NRC publications will be available from one of the following sources:

1. The NRC Public Document Room, 11555 Rockville Pike, Rockville, MD 20852-2738

2. The Superintendent of Documents, U.S. Government Printing Office, Mail Stop SSOP,Washington, DC 20402-0001

3. The National Technical Information Service, Springfield, VA 22161-0002

Although the listing that follows represents the majority of documents cited in NRC publications, it isnot intended to be exhaustive.

Referenced documents available for inspection and copying for a fee from the NRC Public DocumentRoom include NRC correspondence and internal NRC memoranda; NRC bulletins, circulars, informationnotices, inspection and investigation notices; licensee event reports; vendor reports and correspondence;Commission papers; and applicant and licensee documents and correspondence.

The following documents in the NUREG series are available for purchase from the Government PrintingOffice: formal NRC staff and contractor reports, NRC-sponsored conference proceedings, internationalagreement reports, grantee reports, and NRC booklets and brochures. Also available are regulatory guides,NRC regulations in the Code of Federal Regulations, and Nuclear Regulatory Commission Issuances.

Documents available from the National Technical Information Service include NUREG-series reportsand technical reports prepared by other Federal agencies and reports prepared by the Atomic Energy Com-mission, forerunner agency to the Nuclear Regulatory Commission.

Documents available from public and special technical libraries include all open literature items, such asbooks, journal articles, and transactions. Federal Register notices, Federal and State legislation, and con-gressional reports can usually be obtained from these libraries.

Documents such as theses, dissertations, foreign reports and translations, and non-NRC conferenceproceedings are available for purchase from the organization sponsoring the publication cited.

Single copies of NRC draft reports are available free, to the extent of supply, upon written request to theOffice of the Chief Information Officer, Publishing Services Branch, U.S. Nuclear Regulatory Commission,Washington, DC 20555-0001.

Copies of industry codes and standards used in a substantive manner in the NRC regulatory process aremaintained at the NRC Library, Two White Flint North, 11545 Rockville Pike, Rockville, MD 20852-2738,for use by the public. Codes and standards are usually copyrighted and may be purchased from the originat-ing organization or, if they are American National Standards, from the American National Standards Insti-tute, 1430 Broadway, New York, NY 10018-3308.

NUREG – 1542Vol. 6

PERFORMANCE ANDACCOUNTABILITYREPORT

U . S . N U C L E A R R E G U L A T O R Y C O M M I S S I O N

F i s c a l Y e a r 2 0 0 0

U.S. Nuclear Regulatory CommissionOffice of the Chief Financial Officer

Reflection of the One White Flint Building on the Two White FlintBuilding at NRC Headquarters Located in Rockville, Maryland

ii

U.S. NUCLEAR REGULATORY COMMISSION

NRC Principles of Good Financial Management

Those who handle public resources have a special responsibility to safeguard the resources entrusted tothem and to use them properly. Poor financial management by NRC can undermine the confidence thatwe are effectively accomplishing our health and safety mission. NRC managers must ensure that publicfunds are used for authorized purposes only and that they are used economically, efficiently, and withinestablished limits. Toward these ends, the NRC uses the following Principles of Good Financial Manage-ment.

PLANNING. Good financial management begins with good planning. NRC’s strategic planningshould be based on sound assumptions and accurate information and should provide the foundationfor the entire fiscal process. Resource requests must be consistent with program goals, guidance, andplanning assumptions, and must consider current financial status. Plans should be developed forcommitment and obligation of funds based on program needs, procurement lead times, and the needfor continuity of funding.

CONTROL. Good financial management requires good financial control. Appropriate effective costcontrols throughout the financial management process ensure adequate accounting of funds expended,prevent over-obligation of funds and inappropriate expenditures, identify early instances where fundsshould be reallocated, and produce valuable information for the planning process.

COMMUNICATION. Good financial management requires good communication among thoseinvolved in the financial management process. Complete, accurate, and timely financial information mustbe readily available, and financial implications must be considered in decision making. Financial systemsshould be integrated and meet both agency and office data needs. New information and ideas must beshared throughout the organization.

COST EFFECTIVENESS. Good financial management balances expenditures and results. Managersat all levels must ensure that NRC gets what it pays for and that the results are what NRC needs to accom-plish its mission. Ongoing projects should be evaluated to ensure results justify continued funding. Appro-priate precautions ensure that waste is avoided. To ensure maximum utility of available resources, fundsshould be obligated as early as practicable during the fiscal year, and excess funds should be deobligated assoon as practical after project completion.

EVALUATION. Good financial management requires periodic evaluation of performance againstmeaningful financial and program performance measures. Such performance assessment should evaluateplanned versus actual program results as well as the comparison of program costs with program accom-plishments.

PERSONNEL. Good financial management is the product of competent and motivated people. Thosewho are given financial management responsibility must have integrity, dedication, and be well trained andqualified. They must have authority commensurate with their responsibility, and they must be recognizedwhen they achieve superior performance.

FY 2000 PERFORMANCE AND ACCOUNTABILITY REPORT

iii

Table of Contents

(continued on page iv)

NRC Principles of Good Financial Management..................................................... ii

Foreword ................................................................................................................ vii

The NRC’s Mission .............................................................................................. viii

Message From the Chairman .................................................................................. ix

Message From the Chief Financial Officer ............................................................. xi

Management’s Discussion and Analysis.................................................................. 1

About the NRC ................................................................................................... 1

Mission .......................................................................................................... 1

Organization .................................................................................................. 2

Regulatory Responsibility ............................................................................. 2

Program Performance Highlights ....................................................................... 2

Financial Performance ........................................................................................ 4

Financial Statement Highlights ..................................................................... 4

Financial Condition of NRC .......................................................................... 5

Sources of Funds ........................................................................................... 5

Uses of Funds by Function ............................................................................ 5

Prompt Payment ............................................................................................ 7

Debt Collection.............................................................................................. 7

iv


Table of Contents (continued)

Systems Controls and Legal Compliance ................................................................ 7

Chairman’s Integrity Act Report ................................................................... 7

NRC’s Management Control Program .......................................................... 8

Financial Management Systems .................................................................... 8

Biennial Review of User Fees ....................................................................... 9

Management Decisions and Final Actions on Office ofthe Inspector General Audit Recommendations ............................................ 9

Performance Report ............................................................................................... 13

Strategic Arenas ................................................................................................ 14

Nuclear Reactor Safety ..................................................................................... 14

Nuclear Reactor Safety Accomplishments for FY 2000.............................. 15

Nuclear Materials Safety .................................................................................. 20

Nuclear Materials Safety Accomplishments for FY 2000 ........................... 21

Nuclear Waste Safety ....................................................................................... 24

Nuclear Waste Safety Accomplishments for FY 2000 ................................ 25

International Nuclear Safety Support................................................................ 28

International Nuclear Safety Accomplishments for FY 2000...................... 29

Management and Support Accomplishments for FY 2000 .................................... 30

Verification and Validation of Data ....................................................................... 31

Program Evaluations .............................................................................................. 33

Management Challenges ........................................................................................ 33

Crosscutting Functions with Other Government Agencies .................................... 33

Fiscal Year 2000 Principal Financial Statementsand Independent Auditors’ Report ......................................................................... 35


v

Figures

1 Sources of Funds ........................................................................................... 6

2 Uses of Funds by Function ............................................................................ 6

3 NRC Organization Chart ............................................................................. 12

4 U.S. Commercial Reactors .......................................................................... 15

Tables

1 Management Report on Office of the Inspector General Auditswith Disallowed Costs ................................................................................. 10

2 Nuclear Reactor Safety Performance........................................................... 16

3 Nuclear Materials Safety Performance ........................................................ 22

4 Nuclear Waste Safety Performance ............................................................. 26

5 International Nuclear Safety Support Measures .......................................... 29

Appendix

The Inspector General’s Assessment of Management Challenges ................... 87

vi



vii

Foreword

This report was prepared to meet the requirements of the Reports Consolidation Act of 2000(RCA), Public Law 106-531. This legislation builds on the success of a pilot programauthorized under the Government Management Reform Act of 1994 which demonstrated thatconsolidated and integrated reports yield better information in a more useful and understandablemanner. The RCA provides permanent authority for agencies to integrate financial and performanceinformation into a single consolidated report beginning with the Fiscal Year 2000 submission.

This report consolidates the information previously contained in the following documents:

• The NRC’s annual financial statements and auditor’s report, required by theChief Financial Officer’s act of 1990 (CFO Act);

• The NRC’s annual performance report, required by the Government Performanceand Results Act of 1993 (GPRA);

• The Chairman’s annual report to the President and the Congress on internal controls,required by the Federal Manager’s Financial Integrity Act of 1992 (Integrity Act);

• The Chairman’s statement on the compliance of the agency’s financial managementsystems with applicable Federal requirements and accounting standards, required by theFederal Financial Management Improvement Act of 1996 (Improvement Act); and

• The Chairman’s semiannual report to the Congress on management decisions andfinal actions on Office of the Inspector General audit recommendations, required by theInspector General Act of 1978, as amended.

Comments on the content and presentation of this report are welcome and may be sent to:

Office of the Chief Financial Officer

Mail Stop O-17 F3

U.S. Nuclear Regulatory Commission

Washington, DC 20555-0001

or

Internet Address: [email protected]

viii


The NRC’s Mission

The U.S. Nuclear Regulatory Commission regulates the Nation’scivilian use of byproduct, source, and special nuclear materials to

ensure adequate protection of the public health and safety, to promotethe common defense and security, and to protect the environment.


ix

Message From the Chairman

(continued on page x)

I am pleased to present the U.S. Nuclear Regulatory Commission’s(NRC) Performance and Accountability Report for Fiscal Year 2000.This report reflects the NRC’s continued commitment to employ soundmanagement strategies in regulating the Nation’s use of nuclear materi-als. NRC’s Fiscal Year 2000 Performance Report has been integratedinto this report and shows that the agency achieved its overall goals ofprotecting public health and safety.

In September 2000, NRC published a revised Strategic Plan forFiscal Years 2000 to 2005 that describes how we intend to accomplishour mission. In particular, it discusses our core principles and strategiesand sets out both performance goals and measures to gauge perfor-

mance. It has been exciting to observe the NRC’s continuing efforts to create an environment inwhich the agency and its programs are managed to performance goals.

I am also pleased that the agency has earned its seventh consecutive unqualified audit opin-ion on its financial statements. This achievement reaffirms the NRC’s continued commitment toensure that sound financial management principles are consistently followed by all employeesresponsible for public assets. However, important work remains to be completed in order tocomply fully with Federal accounting and reporting standards. The NRC evaluated its manage-ment control and financial management systems for Fiscal Year 2000 as required by the FederalManager’s Financial Integrity Act of 1982 (Integrity Act) and the Federal Financial ManagementImprovement Act of 1996 (Improvement Act). The results of the Integrity Act evaluation dis-closed no material weaknesses. The Improvement Act evaluation disclosed that the NRC’smajor financial management systems were in overall compliance with this act except for (1) thefailure to achieve full implementation of the Statement of Federal Financial Accounting Stan-dards Number 4, Managerial Cost Accounting Concepts and Standards for the Federal Govern-ment and (2) the inability of the Treasury’s Financial Management Service to test businesscontinuity plans for the NRC’s core accounting system. The agency’s response to the auditreport on the agency’s financial statements, provided at the end of this report, contains a discus-sion of NRC’s corrective actions.

Consistent with the requirements of the Reports Consolidation Act of 2000, this reportincludes a summary and an assessment by the agency’s Inspector General of the most seriousmanagement challenges facing the agency and the agency’s progress in addressing them. Whilesome of these issues concern initiatives which are not central to our mission, others are critical inmaintaining our future capability to protect the public health and safety. Each of these issues isimportant, and each will continue to receive senior management attention.

Of course, external factors beyond NRC’s control will have a major influence on how theNRC carries out its mission. Such factors include deregulation in the electrical power industry,

x


a renewed interest in expanding the capacity to produce nuclear power, and the disposition ofspent nuclear fuel. My colleagues and I look forward to meeting the challenges and are confidentthe American public will be the benefactors of our success.

Richard A. Meserve

Message from the Chairman (continued)


xi

Message From the Chief Financial Officer

Iam pleased to report that the U.S. Nuclear Regulatory Commission(NRC) has completed another productive and successful year in theperformance of its financial management responsibilities. The NRCfirst issued audited financial statements for FY 1992 and has received anunqualified audit opinion each fiscal year since FY 1994.

Our financial performance also reflects notable accomplishments inother areas. Efficiency and effectiveness were achieved by makingalmost all of our payments to employees and commercial vendorselectronically. Delinquent debt owed to the NRC was held to less than 1percent of the total amount that was billed and was reduced by 40percent over the FY 1999 amount. We met the requirements of the

Omnibus Budget Reconciliation Act of 1990, by assessing and collecting fees to offset 100percent of our new FY 2000 budget authority which was required to be offset.

We continue to strive to be a leader in the Federal government for financial management.During FY 2000, progress was made in implementing the Statement of Federal Financial Ac-counting Standard Number 4 (SFFAS 4), Managerial Cost Accounting Concepts an Standardsfor the Federal Government. We are currently parallel testing an integrated payroll, humanresources, and time and labor financial management system. This new system coupled with ourcost accounting module will help us comply with SFFAS 4 and provide additional cost-basedinformation to agency managers. We expect the system to be operational during 2001.

We also made progress, during FY 2000, in integrating program performance with resourceand program management by fulfilling the requirements of the Government Performance andResults Act of 1993. We issued NRC’s FY 2000-2005 Strategic Plan, our first triennial updateof the strategic plan; a combined and integrated FY 2001 Budget Estimate and PerformancePlan; and our first Performance Report to Congress. These efforts have helped to ensure that ourprograms and activities are aligned with our mission and goals, and that we can effectivelymeasure our performance.

While we have had success, work remains as the NRC continues to strive for excellence infinancial management. We look forward to another productive and successful year in FY 2001.Our strength lies in unified, coordinated action, and this report is an important indicator in theprocess of achieving this outcome. We will continue to maintain the high standards we haveachieved and seek improved methods to carry out our fiscal responsibilities.

Jesse L. Funches

xii


Message from the Chief Financial Officer (continued)


1

Management’s Discussion and Analysis

(continued on page 2)

The Management’s Discussion and Analysisis designed to provide a high-level overview ofthe agency. It consists of four sections: About theNRC which describes the agency’s mission, organi-zational structure, and regulatory responsibility;Program Performance which discusses the agency’ssuccess in achieving its strategic goals; FinancialPerformance which provides highlights of theNRC’s financial position; and Systems, Controls,and Legal Compliance which describes the agency’sinternal control environment and contains theChairman’s reasonable assurance statement.

About the NRCThe NRC was established as an independent

regulatory agency of the Federal Government onJanuary 19, 1975. It was created by the

U.S. Congress to regulate various commercial andinstitutional uses of nuclear energy. The agencysucceeded the regulatory function of the AtomicEnergy Commission, which had the responsibilityto both develop and regulate nuclear activities.Its purposes are defined by the Energy Reorgani-zation Act of 1974, as amended, along with theAtomic Energy Act of 1954, as amended, whichprovide the foundation for regulating the Nation’scivilian uses of nuclear materials.

MissionThe NRC’s mission is to regulate the Nation’s

civilian use of byproduct, source, and specialnuclear materials to ensure adequate protection ofthe public health and safety, to promote thecommon defense and security, and to protect theenvironment.

The Nuclear RegulatoryCommission Headquarters

in Rockville, Maryland

2


OrganizationThe NRC is headed by a Commission composed

of five members, with one member designated bythe President to serve as Chairman. Each memberis appointed by the President, by and with the adviceand consent of the Senate, and serves a term of 5years. The Chairman serves as the principal execu-tive officer and official spokesman for the Commis-sion. The Executive Director for Operations carriesout the program policies and decisions made bythe Commission.

The agency’s mission is carried out with astaff of approximately 2,800 and a budget ofapproximately $470 million, most of which isrecovered through fees charged to NRC licensees.The agency’s budget has been declining sinceFY 1993. The FY 2000 budget reflects an overallreduction of 13 percent in funding and 16 percentin staffing compared to FY 1993.

The NRC executes its mission at its headquar-ters offices in Rockville, Maryland, and fourregional locations in King of Prussia, Pennsylva-nia; Atlanta, Georgia; Lisle, Illinois; and Arling-ton, Texas. The NRC also has resident inspectoroffices at each commercial nuclear power plant.The NRC organization chart is located at the endof this section.

Regulatory ResponsibilityUnder its responsibility to protect the public

health and safety, the NRC has three principalregulatory functions: (1) establish standards andregulations, (2) issue licenses for nuclear facilitiesand users of nuclear materials, and (3) inspectfacilities and users of nuclear materials to ensurecompliance with the requirements. These regula-tory functions relate to both nuclear power plantsand to other uses of nuclear materials, such asnuclear medicine programs at hospitals, academicactivities at educational institutions, researchwork, and industrial applications for gauges andtesting equipment.

Management’s Discussion and Analysis (continued)

Program Performance HighlightsThe Government Performance and Results

Act requires Federal agencies to provide anannual performance plan to Congress that setsgoals with measurable target levels of perfor-mance beginning with FY 1999. Within 6 monthsof the end of that fiscal year, agencies mustsubmit actual program performance data to theCongress. The NRC established four strategicgoals consistent with its mission. To assess theresults in achieving the strategic goals, the NRCidentified FY 2000 strategic goal measures andsubsequently modified them in the Budget Esti-mates and Performance Plan - FY 2001 (NUREG-1100, February 2000).

STRATEGIC GOALS• Prevent radiation-related deaths and

illnesses in the use of civilian nuclearreactors.

• Prevent radiation-related deaths andillnesses in the use of source,byproduct, and special nuclearmaterial.

• Prevent significant adverse impactsfrom radioactive waste.

• Support U.S. interests in the safe andsecure use of nuclear materials andin nuclear nonproliferation.

The NRC has organized its strategic goals intofour strategic arenas: Nuclear Reactor Safety,Nuclear Materials Safety, Nuclear Waste Safety,and International Nuclear Safety Support.

The NRC has also established performancegoals to support the strategic goals for each of thefour strategic arenas. These performance goalsand their associated performance measures forFY 2000 will be reported in the NRC’s FY 2000Performance and Accountability Report.


3

Nuclear Reactor SafetyStrategic Goal: Prevent radiation-related deaths and illnesses, promotethe common defense and security,and protect the environment in theuse of civilian nuclear reactors.

In FY 2000, the NRC met itsnuclear reactor safety strategic goalmeasures and had:

• No nuclear reactoraccidents.

• No deaths resulting from acuteradiation exposures fromnuclear reactors.

• No events at nuclearreactors resulting in significantradiation exposures.

• No radiological sabotages at nuclear reac-tors.

• No releases of radioactive material fromnuclear reactors causing an adverse impacton the environment.

Nuclear Materials SafetyStrategic Goal: Prevent radiation-relateddeaths and illnesses, promote the commondefense and security, and protect theenvironment in the use of source, byproduct,and special nuclear material.

In FY 2000, the NRC met its nuclear materi-als safety strategic goal measures and had:

• No deaths resulting from acute radiationexposures from civilian uses of source,byproduct, or special nuclear materials ordeaths from other hazardous materials usedor produced from license material.

• No events that result in significant radiationor hazardous material exposures from theloss or use of source, byproduct, and specialnuclear materials.

• No events resulting in releases of radioac-tive material from the civilian use of source,byproduct, or special nuclear materials thatcause an adverse impact on the environ-ment.

• No losses, thefts, or diversion of formulaquantities of strategic special nuclearmaterial; radiological sabotages; or unau-thorized enrichment of special nuclearmaterial regulated by the NRC.

• No unauthorized disclosures or compro-mises of classified information causingdamage to national security.

Nuclear Waste SafetyStrategic Goal: Prevent significant adverseimpacts from radioactive waste to the currentand future public health and safety and theenvironment, and promote the common defenseand security.

In FY 2000, the NRC met its nuclear wastesafety strategic goal measures and had:

• No deaths resulting from acute radiationexposures from radioactive waste.

• No events resulting in significantradiation exposures.


Pressurized Water Reactor Diagram

4


• No releases of radioactive waste causing anadverse impact on the environment.

• No losses, thefts, diversions, or radiologicalsabotages of special nuclear material orradioactive waste.

International Nuclear Safety SupportStrategic Goal: Support U.S. interests in thesafe and secure use of nuclear materials and innuclear nonproliferation.

In FY 2000, the NRC met its internationalnuclear safety support strategic goal measuresand had:

• Fulfilled 100 percent of thesignificant obligations overwhich NRC has regulatoryauthority arising fromstatutes, treaties, conven-tions, and Agreements forCooperation.

• No significant proliferationincidents attributable tosome failure of the NRC.

• No significant safety orsafeguards events thatresulted from NRC’s failureto implement its interna-tional commitments.

FINANCIALPERFORMANCE

Financial Statement HighlightsThe NRC prepared its financial statements in

accordance with the accounting standards codi-fied in the Statements of Federal Financial Ac-counting Standards and Office of Managementand Budget Bulletin No. 97-01, Form and Con-tent of Agency Financial Statements, as amended.The NRC has prepared audited financial state-ments since FY 1992 and has received an unquali-fied opinion on its principal statements for the


Chairman Richard A. Meserve, U.S. Nuclear Regulatory Commission, andChairman Miroslav Lipar, Nuclear Regulatory Authority of the Slovak Republicsigning the renewal of the bilateral nuclear safety arrangement.

seventh consecutive year. Preparation of financialstatements is an important step towards improvedfinancial management and providing accurate andreliable information to be used in assessingperformance and allocating resources.

For FY 2000, the auditors identified twomaterial internal control weaknesses concerningimplementation of Statement of Federal FinancialAccounting Standards Number 4 (SFFAS 4),Managerial Cost Accounting Concepts andStandards for the Federal Government, andmanagement control over license fee develop-ment. The auditors also identified two new

reportable conditions concerning debt collection.In addition, 11 reportable conditions were carriedover from FY 1999. Seven of the reportableconditions from previous years remained open atthe end of FY 2000. They included the imple-mentation of managerial cost accounting, theagency’s progress in developing financial systemsto aggregate payroll transactions to the strategicarena level, ineffective management controls overfee development, business continuity plan for thecore accounting system, the financial statement


5


Sources of FundsThe NRC has two appropriations, and funds

for both are available until expended. One appro-priation is for agency salaries and expenses, andthe other is for the Office of the Inspector Gen-eral. The NRC’s total new FY 2000 budgetauthority was $469.9 million including$464.9 million for the Salaries and Expensesappropriation and $5.0 million for the InspectorGeneral appropriation. Additionally, available toobligate in FY 2000 were $31.1 million fromprior-year appropriations, $3.6 million from prior-year reimbursable work, $5.7 million from currentand prior-year transfer of funds from other Fed-eral agencies, and $5.6 million for new reimburs-able work to be performed for others. The sum ofall funds available to obligate for FY 2000 was$515.9 million.

Consistent with the requirements of theOmnibus Budget Reconciliation Act of 1990,the NRC collected and offset approximately100 percent of its new budget authority, excluding$19.1 million derived from the Nuclear WasteFund, $3.8 million from the General Fund forregulatory review and other assistance providedto the Department of Energy and other Federalagencies, and other offsetting receipts.(See Figure 1.)

Uses of Funds by FunctionAs previously stated, the total budgetary

resources available for use by the NRC in FY2000 was $515.9 million. Of that amount, theNRC incurred obligations of $485.5 million, withapproximately 58 percent used for salaries andbenefits. The remaining 42 percent was used toobtain technical assistance for the NRC’s princi-pal regulatory programs, to conduct confirmatorysafety research, to cover operating expenses, (e.g.,building rentals, transportation, printing, securityservices, supplies, office automation, and train-ing), staff travel, and reimbursable work. (SeeFigure 2.) Of the $30.4 million in budget author-ity that was not obligated in FY 2000, $0.6 mil-lion of transferred funds expired at the end of the

preparation process, controls over the verificationof small entity status for fee assessment, anddevelopment of the hourly rate under Title10 Code of Federal Regulations (CFR) Part 170.The agency has taken corrective action on theseaudit findings and expects to fully implementcorrective action during FY 2001.

Financial Condition of NRCAs of September 30, 2000, the financial

condition of the NRC is sound with respect tohaving sufficient funds to meet program needsand sufficient control of these funds to ensure thatNRC obligations do not exceed budget authority.NRC’s total assets were $225.9 million. Totalliabilities as of September 30, 2000, were $129.8million, which included $94.2 million of liabili-ties covered by budgetary resources and $35.6million not covered by budgetary resources.Liabilities not covered by budgetary resources areprimarily from unfunded liabilities associatedwith accrued annual leave and future workers’compensation. Total exchange revenue for theyear ended September 30, 2000, was $463.0million which was derived from licensing feesand fees for inspections and other services,assessed in accordance with 10 CFR Parts 170and 171. The net cost of NRC operations totaled$47.7 million for the year ended September 30,2000. The majority of these costs were in theNuclear Materials Safety and Nuclear WasteSafety arenas.

The net cost of operations is expected toincrease in the future as a result of recent changesto the fee collection requirement, as contained inthe Energy and Water Development Appropria-tions Act, 2001. The requirement to recoverapproximately 100 percent of the agency’s newbudget authority by assessing fees, less amountsappropriated for the Nuclear Waste Fund and theGeneral Fund, will be reduced to 98 percent in FY2001 and continue to decrease 2 percent per yearuntil FY 2005, for a total reduction of 10 percent.This change is expected to result in an increase inNRC’s net cost of about $9 million for FY 2001.

6



Figure 1Sources of Funds

Figure 2Uses of Funds by Function

Reactor Fees$388.6M Nuclear Waste Fund

$19.1M

Nuclear Materials Fees$58.4M

General Fund$3.8M

New Budget Authority $469.9M

Salaries and Benefits$282.0M Travel

$11.4M

Contract Support$182.2M

Reimbursable Work $9.9M

Total Obligations $485.5M


7


fiscal year, $4.3 million was for reimbursablework, and $25.5 million in budget authority isavailable to fund critical needs in FY 2001.

Prompt PaymentThe Prompt Payment Act requires Federal

agencies to make timely payments to vendors forsupplies and services, to pay interest penaltieswhen payments are made after the due date, andto take cash discounts when they are economi-cally justified. For FY 2000, the NRC made96 percent of its 8,237 payments subject to thePrompt Payment Act on-time. This exceeds thegoal established by the Office of Management andBudget for Federal agencies to make 95 percentof payments subject to the act on-time and reflectsthe third consecutive year NRC has achieved 96percent. The amount of interest penalties incurredwas just under $6,400. In addition, the agencymade over 99 percent of its vendor paymentselectronically. This exceeds the Governmentwidegoal of 69 percent.

Debt CollectionThe Debt Collection Improvement Act of

1996 was enacted to enhance the ability of theFederal Government to service and collect debts.The agency’s goal is to maintain the delinquentdebt owed to NRC at year-end to less than onepercent of its billings for that year. The NRCcontinues to meet its goal and has kept delinquentdebt at less than one percent for the past 5 years.Control over delinquent debt is accomplishedthrough a concerted debt management strategy.The strategy includes license revocations andreferral to the Department of the Treasury’s DebtManagement Services through a cross-servicingarrangement.

Delinquent debt at the end of FY 2000 was$1.5 million which is 40 percent less than theamount at the end of FY 1999. This reductionwas the result of implementing accounting policychanges pursuant to revised guidance issued bythe Department of the Treasury and the reductionin the number of licensees due to the establish-ment of a new Agreement State.

SYSTEMS, CONTROLS, ANDLEGAL COMPLIANCE

The Federal Managers’ Financial Integrity Actof 1982 (Integrity Act) mandates that agenciesestablish controls that reasonably ensure that:(i) obligations and costs comply with applicablelaw; (ii) assets are safeguarded against waste,loss, unauthorized use, or misappropriation; and(iii) r evenues and expenditures are properly re-corded and accounted for. The Integrity Act encom-passes program, operational, and administrativeareas as well as accounting and financial manage-ment. It also requires the Chairman to provide anassurance statement on the adequacy of manage-ment controls and conformance of financial systemswith Governmentwide standards.

The Federal Financial Management Improve-ment Act of 1996 (Improvement Act) requireseach agency to implement and maintain systemsthat comply substantially with: (i) Federal finan-cial management system requirements,(ii) applicable Federal accounting standards, and(iii) the standard general ledger at the transaction

8



level. The Chairman is required to determinewhether the agency’s financial managementsystems comply with the Improvement Act andto develop remediation plans for systems that donot comply.

NRC’s ManagementControl Program

A committee of senior agency executivesreviewed individual assurance statements pre-pared by NRC office directors and regionaladministrators that identified weaknesses thatwarranted the attention of the executive commit-tee. This committee was comprised of seniorexecutives from the following offices: ChiefFinancial Officer, Chief Information Officer, andExecutive Director of Operations, with the Gen-eral Counsel and the Inspector General as advi-sors. These statements were based on varioussources including:

•Management knowledge gained from thedaily operation of agency programs andreviews.

•Management reviews.

•Program evaluations.

•Audits of financial statements.

•Reviews of financial systems.

•Annual Performance plans.

•Inspector General and General AccountingOffice reports.

•Reports and other information provided bythe congressional committees of jurisdiction.

NRC’s ongoing management control programrequires, among other things, that managementcontrol deficiencies are integrated into offices’and regions’ annual operating plans. The operat-ing plan process has provisions for periodicupdates and receives the attention of an executivecommittee made up of the agency’s senior manag-ers. The management control information inthese plans, combined with the individual assur-

ance statements discussed previously, provide theframework for monitoring and improving theagency’s management controls on an ongoingbasis and for advising the Chairman on whetherthere are any management control deficienciesserious enough to report as material weaknessesor material noncompliances.

The NRC evaluated its management controlsystems for the fiscal year ending September 30,2000. This evaluation provided reasonableassurance that the agency’s management controlsachieved their intended objectives. As a result, itwas concluded that NRC did not have any mate-rial weaknesses in its programmatic or adminis-trative activities.

However, the agency recognizes that incom-plete implementation of managerial cost account-ing (SFFAS 4) continues to be a significantweakness which merits the close attention ofsenior management. Progress has been made overthe past year to implement managerial cost ac-counting. A cost accounting software packagewas selected, purchased, and installed and isbeing configured to reflect how the agency ini-tially plans to report direct costs and allocate itsindirect costs. Consistent with the remediationplan, the agency expects to implement managerialcost accounting and achieve compliance withSFFAS 4 during FY 2001.

Actions have also been taken to strengthen themanagement controls over fee development. Thelicense fee rule development process has beendocumented, and an analysis of the fee model hasbeen completed and improvements made. Theagency completed these corrective actions inNovember 2000.

Financial Management SystemsThe NRC evaluated its financial management

systems to determine whether the agency’s sys-tems comply with Governmentwide standards, asrequired by the Integrity Act, and with applicableFederal requirements and accounting standards, asrequired by the Improvement Act. This evaluation


9


disclosed that NRC’s major financial managementsystems are in compliance with the Integrity Act.The evaluation also disclosed that overall finan-cial systems are in compliance with the Improve-ment Act. NRC’s financial management systemscomply substantially with Federal financialmanagement systems requirements and the stan-dard general ledger at the transaction level, butdid not comply substantially with applicableFederal standards due to the lack of implementa-tion of SFFAS 4, managerial cost accounting. Asdiscussed previously, the agency is continuing toaddress the implementation of SFFAS 4.

The NRC has five financial systems: theFederal Financial System (FFS), CapitalizedProperty PC System, License Fee Bill GeneratorSystem, Allotment-Financial Plan System, and aBudget Formulation System. The NRC also has amixed system, the Payroll/Personnel System.

The FFS is the core accounting system thatthe NRC uses through an interagency agreementwith the Department of the Treasury (Treasury).This system is reviewed annually by Treasury’sFinancial Management Service (FMS) for itsclient agencies that utilize the system. FMSperformed a vulnerability assessment that dis-closed no material or nonmaterial weaknesses.Their limited review of FFS provided reasonableassurance that FFS, as operated by FMS for NRC,is efficient and effective; contains necessarycontrols; and conforms with the principles, stan-dards, and related requirements prescribed by theComptroller General with one exception. TheFMS has yet to test its business continuity planfor FFS and this exception is considered a mate-rial nonconformance. FMS has delayed suchtesting because of higher priorities imposed on itsdata center.

The FMS has also notified the agency thatthey will terminate cross-servicing core account-ing services at the end of FY 2002. DuringFY 2001, NRC will pursue acquiring core ac-counting services from another Federal agency.

Biennial Review of User FeesThe Chief Financial Officers Act of 1990

requires agencies to biennially conduct a reviewof fees, royalties, rents, and other charges im-posed by agencies and make revisions, if neces-sary, to cover the program and administrativecosts incurred. During FY 1999 to FY 2000, theNRC reviewed each type of fee subject to thebiennial review of fees requirement. Each year,the hourly rates for licensing and inspection feesare revised and the annual fees are adjusted tomeet the fee collection requirements of the Omni-bus Budget Reconciliation Act of 1990. The mostrecent changes to the licensing, inspection, andannual fees are described in the Federal Register(65 FR 36946, June 12, 2000). The followingfees and charges were also revised to more appro-priately recognize actual costs: fees for public useof the auditorium, administrative charges imposedon delinquent debt (10 CFR 15.37(f)), fees forsearch and review time to respond to Freedom ofInformation Act and Privacy Act requests, andlicensing and inspection fees based on averagenumber of hours. Reviews of other types of feesconcluded that fee revisions were not warranted atthis time.

Management Decisions andFinal Actions on OIG AuditRecommendations

The agency has established and continues tomaintain an excellent record in resolving andimplementing open audit recommendationspresented in Office of the Inspector General(OIG) reports. Section 5(b) of the InspectorGeneral Act of 1978, as amended, requires theChairman to report on management decisions andfinal actions taken on OIG audit recommenda-tions. Table 1 gives the dollar value of disallowedcosts determined through contract audits con-ducted by the Defense Contract Audit Agency(DCAA). “Questioned Costs” are those costs thatare questioned as to whether they are allowable.

10



“Unsupported Costs” represent costs challengedbecause of a lack of adequate supporting data.Because of the sensitivity of contractual negotia-tions, details of these contract audits are notfurnished as part of this report.

Management Decisions Not ImplementedWithin One Year

Management decisions were made beforeSeptember 1999 for the OIG audit reports dis-cussed in the following paragraphs, but as ofSeptember 30, 2000, NRC had not taken finalaction on some of the issues in the reports. TheOIG did not recommend that funds be put tobetter use for any of these reports.

Review of NRC’s Implementation ofInspection Manual Chapter 1245,“Training Requirements,”November 4, 1994

The NRC has implemented the TrainingAdministration module of the PeopleSoft HumanResources Information System. The implementa-tion was completed as part of Phase II of theStarfire project. The live date for Training Admin-istration was November 14, 2000. The TrainingAdministration module combined the informationresiding in three separate administrative systems:the Agency Training system (ATS), the TechnicalTraining Center registration system, and theProfessional Development Center registration

Number of Questioned UnsupportedCategory Audit Reports Costs Costs

A. Audit reports with management decisions 0 $0 $0on which final action had not been taken atthe beginning of this reporting period.

B. Audit reports on which management 4 $113,797 $0decisions were made during this period.

C. Audit reports on which final action was 4 $113,797 $0taken during this report period.

(i) Disallowed costs that were 4 $113,797 $0recovered by managementthrough collection, offset, propertyin lieu of cash, or otherwise.

(ii) Disallowed costs that were 0 $0 $0written off by management.

D. Reports for which no final action had 0 $0 $0been taken by the end of the reportingperiod.

Table 1Management Report on Office of the Inspector General Audits with Disallowed Costs

For the Period October 1, 1999-September 30, 2000

As of September 30, 2000, no outstanding audits recommended that funds be put to better use.


11

system. The PeopleSoft Training Administrationmodule is now the official training records systemfor the agency. Course registration is now accom-plished through the Training Administrationmodule. All NRC offices now have a designatedtraining contact who has the ability to enterexternal training completion (Form 368 training)into individual training records. These officeindividuals can also report on individual trainingportfolios and monitor the enrollment of indi-vidual training sessions. In addition, each train-ing contact has full access to all of the publicreports and queries developed for the TrainingAdministration module.

As a result of implementing this new systemand providing full access to appropriate individu-als in each office, the agency now has a trainingtracking system that meets management needs forproducing reliable information for overseeinginspector training. As stated in a previous updateon this subject, an upgrade to the enhancedfeatures of the PeopleSoft Training Administra-tion module along with additional PeopleSoftimplementation will provide desktop access to allstaff members, through an employee self-servicefunction, enabling them to review their owntraining portfolios and check their course sessionenrollment status.

Make NRC Management DirectivesAvailable on the NRC Web Site

The OIG recommended that the Office ofChief Information Officer (OCIO) make agencymanagement directives and corresponding hand-

books available on the NRC’s web site to facili-tate easy search and retrieval of pertinent guid-ance. In January 1999, the OCIO agreed to makeall management directives and correspondinghandbooks available. In November 2000, theentire set of management directives and thecorresponding handbooks were placed on the webas web pages.

Independent Auditors’ Report andPrincipal Statements for the Year EndedSeptember 30, 1998

The OIG recommended the Chief FinancialOfficer assess the immediate needs of NRCmanagers to receive reliable and routine costaccounting information in light of performanceand results mandates included in the GovernmentPerformance and Results Act. Additionally, theChief Financial Officer, in preparing aremediation plan should develop a strategy,including milestones, to incorporate cost manage-ment standards and concepts throughout theagency.

Progress has been made over the past year toimplement managerial cost accounting. A costaccounting software package was selected, pur-chased, and installed and is being configured toreflect how the agency initially plans to reportdirect costs and allocate its indirect costs. Consis-tent with the remediation plan, the agency expectsto implement managerial cost accounting andachieve compliance with Governmentwide costaccounting requirements during FY 2001.

12



Fig

ure

3N

RC

Org

aniz

atio

n C

hart

as

of S

epte

mbe

r 30

, 200

0

Offi

ce o

f Nuc

lear

Mat

eria

l Saf

ety

and

Saf

egua

rds

Offi

ce o

f Nuc

lear

Reg

ulat

ory

Res

earc

h

Offi

ce o

fS

tate

and

Trib

alP

rogr

ams

Offi

ce o

f Nuc

lear

Rea

ctor

Reg

ulat

ion

Offi

ce o

fE

nfor

cem

ent

Offi

ce o

fIn

vest

igat

ions

Offi

ce o

fA

dmin

istr

atio

nO

ffice

of

Hum

an R

esou

rces

Offi

ce o

fS

mal

l Bus

ines

san

d C

ivil

Rig

hts

Reg

ion

IP

hila

delp

hia,

PA

Reg

ion

IIA

tlant

a, G

AR

egio

n III

Chi

cago

, IL

Reg

ion

IVA

rling

ton,

TX

Offi

ce o

f the

Gen

eral

Cou

nsel

Offi

ce o

fC

omm

issi

onA

ppel

late

Adj

udic

atio

n

Offi

ce o

fIn

tern

atio

nal

Pro

gram

s

Offi

ce o

f the

Sec

reta

ry o

f the

Com

mis

sion

Ato

mic

Saf

ety

and

Lice

nsin

g B

oard

Pan

el

Adv

isor

y C

omm

ittee

on N

ucle

ar W

aste

Adv

isor

yC

omm

ittee

on

Rea

ctor

Saf

egua

rds

Dep

uty

Exe

cutiv

e D

irect

orfo

rR

eact

or P

rogr

ams

Dep

uty

Exe

cutiv

e D

irect

orfo

rM

anag

emen

t Ser

vice

s

Dep

uty

Exe

cutiv

e D

irect

orfo

r M

ater

ials

, Res

earc

h,an

d S

tate

Pro

gram

s

Offi

ce o

f the

Insp

ecto

r G

ener

al

Offi

ce o

fC

ongr

essi

onal

Affa

irs

Offi

ce o

f Pub

licA

ffairs

Offi

ce o

fC

hief

Info

rmat

ion

Offi

cer

Offi

ce o

fC

hief

Fin

anci

alO

ffice

r

Exe

cutiv

e D

irect

or fo

rO

pera

tions

The

Com

mis

sion

Com

mis

sion

erC

omm

issi

oner

Cha

irman

Com

mis

sion

erC

omm

issi

oner

Inci

dent

Rep

onse

Ope

ratio

ns

Lege

nd

Dire

ct R

epor

ting

Rel

atio

nshi

pG

ener

al S

uper

visi

onA

dvis

ory

Bod

y


13

Performance Report

The Government Performance and Results Act(GPRA) of 1993 requires agencies to developand institutionalize processes to plan for andmeasure mission performance. The NRC hasmade progress in becoming a more performance-based organization. This effort began as a resultof the agency’s strategic rebaselining and contin-ued with subsequent implementation of theGPRA. The agency established a framework forimplementing the performance approach through-out the agency referred to as the Planning, Bud-geting, and Performance Management (PBPM)process. Products that emanated from our PBPMprocess include submitting to Congress thetriennial update to the FY 2000-2005 Strategic

Plan, the FY 1999 Accountability and Perfor-mance Report, and the FY 2001 Budget Estimatesand Performance Plan.

The GPRA requires an agency to provide anannual report on its annual performance andprogress in achieving the goals and objectives laidout in the agency’s five year strategic plan andannual performance plan. Actual performance iscompared to the estimated performance. Thesafety performance indicators reported within thisreport are based on NRC’s FY 2000-2005 Strate-gic Plan that sets the framework for the develop-ment of the performance indicators. Theseoutcome-based safety performance indicators

MANAGINGTO OUTCOMES

Ass

essi

ngPe

rform

ance

Directi on

Setting the

Strategic

Determin

ingRe

sour

ces

and

Planne

d Acc

ompl

i shm

ents

Measuring

andMonitori ng

Perform

ance

and

Ass

essm

ents

Pro

gram

Evalu

ations Str ategic

Plan

Budget

As

sum

pti o

ns

B udget/P

erfo

rman

ceP

lan

Operat ing Plan

Perfo rm

ance Rep ort

and

Reviews


14


Performance Report (continued)

provided the first critical link to theNRC’s long term strategic objectives.These safety strategic goal measureswere originally established in our FY2000 Final Performance Plan (Febru-ary 1999) and subsequently modifiedin our FY 2000 Revised Final Perfor-mance Plan (as reflected in the FY2001 Performance Plan, dated Febru-ary 2000). Note that the non safetyperformance goals which are identifiedin the updated FY 2000-2005 StrategicPlan (increase public confidence,make NRC decisions more effective,efficient, and realistic, and reduceunnecessary regulatory burden onstakeholders) which have associatedFY 2001 milestones will be reported inthe FY 2001 Performance and Ac-countability Report. The FY 2000Performance and AccountabilityReport contains new and revised safety perfor-mance measures as identified in the FY 2001Performance Plan. Unlike many of the previoussafety performance measures in the FY 1999Accountability and Performance Report that useda “combined five-year average” method of calcu-lating value, the FY 2000 Performance andAccountability Report measures were changed toan annual value. The FY 2000 Performance andAccountability Report contains actual perfor-mance data for FY 1999-2000. The actual datareported for some of our strategic goal and themaintain safety performance goal measures aresubject to change as a result of NRC analysis ofreported information as well as the receipt ofnewly reported information. Changes to this datawill be reported and explained in future perfor-mance report submissions.

Strategic ArenasThe NRC’s Strategic and Performance Plans

are organized into strategic arenas. This section isorganized into the same four strategic arenas:

• Nuclear Reactor Safety

• Nuclear Materials Safety

• Nuclear Waste Safety

• International Nuclear Safety Support

For each strategic arena, we state the strategicgoal from the FY 2000-2005 Strategic Plan,provide a brief introduction to the arena, delineatethe strategic and performance goals and measures,and identify performance. In reviewing thefollowing performance goals, one must be awarethat the safe and secure use of nuclear materialsfor civilian purposes is the responsibility of NRClicensees and Agreement State licensees, and theregulatory oversight of licensees is the responsi-bility of NRC and the Agreement States. Thus,achieving these goals requires the collectiveefforts of the NRC, the Agreement States, andtheir licensees.

Nuclear Reactor SafetySTRATEGIC GOAL: Prevent radiation-relateddeaths and illnesses and protect the environmentin the use of civilian nuclear reactors.

The Nuclear Reactor Safety strategic arenaencompasses all NRC efforts to ensure thatcivilian nuclear power reactor facilities, as well as

Control Room at a Nuclear Power Plant


15


non-power reactors, are operated in a manner thatadequately protects public health and safety andthe environment and protects against radiologicalsabotage and theft or diversion of special nuclearmaterials. The Atomic Energy Act of 1954, asamended, and the Energy Reorganization Act of1974, as amended, are the foundation for regulat-ing the Nation’s civilian nuclear power industry.These efforts include reactor licensing; reactorlicense renewal; operator licensing; financialassurance; inspection; performance assessment;identification and resolution of safety issues;reactor regulatory research; regulation develop-ment; operating experience evaluation; incidentinvestigation; threat assessment; emergencyresponse; investigation of alleged wrongdoing bylicensees, applicants, contractors, or vendors;imposition of enforcement sanctions for violationsof NRC requirements; and reactor technical andregulatory training. Table 2 identifies nuclearreactor safety performance goals and relatedFY 1999 - 2000 performance data.

Nuclear Reactor SafetyAccomplishments for FY 2000

In FY 2000, the NRC continued to make majorchanges and improvements in its nuclear reactorsafety program. Discussed below is a brief descrip-tion of noteworthy program achievements.

Revised Reactor Oversight Process

Began implementation of major processimprovements to the reactor oversight process.The revised process includes a risk-informedbaseline inspection program, use of licensee-reported performance indicator information, andrevised assessment and enforcement activities.Process improvements were developed in re-sponse to staff assessments, Commission direc-tion, and external stakeholder comments toprovide for greater objectivity, predictability, andconsistency, and to provide the public with greateraccess to plant performance information.

Note: There are no commercialreactors in Alaska or Hawaii

MA

CTRI

MENHVT

NY

PANJ

OH

MDDE

VAWV

MI

IN

KY

NCTN

IL

SC

GAAL

FL

MS

MO

AR

TX

OK

KS

LA

IANE

WI

MNND

SD

WY

MT

CO

NMAZ

CA

NV

UT

ID

O

WA

Licensed to Operate (103)

Figure 4U.S. Commercial Reactors

16



STRATEGIC GOAL: Prevent radiation-related deaths and PERFORMANCEillnesses, promote the common defense and security, and protectthe environment in the use of civilian nuclear reactors

MEASURES Target Actual

No nuclear reactor accidents.1 FY 2000: 0 FY 2000: 0FY 1999: 0 FY 1999: 0

No deaths resulting from acute radiation exposures from nuclear reactors. FY 2000: 0 FY 2000: 0FY 1999: 0 FY 1999: 0

No events at nuclear reactors resulting in significant radiation exposures.2 FY 2000: 0 FY 2000: 0FY 1999: 0 FY 1999: 0

No radiological sabotages at nuclear reactors. FY 2000: 0 FY 2000: 0FY 1999: 0 FY 1999: 0

No releases of radioactive material from nuclear reactors causing an adverse FY 2000: 0 FY 2000: 0impact3 on the environment. FY 1999: 0 FY 1999: 0

PERFORMANCE GOAL: Maintain safety, protection of the environment, PERFORMANCEand the common defense and security.


No more than one event per year identified as significant precursors of FY 2000: 1 or less FY 2000: 0nuclear accidents.4 FY 1999: 1 or less FY 1999: 0

No statistically significant adverse industry trends in performance.5 FY 2000: 0 FY 2000: 0FY 1999: 0 FY 1999: 0

No events resulting in radiation overexposures6 from nuclear reactors that exceed FY 2000: 0 FY 2000: 0applicable regulatory limits. FY 1999: 0 FY 1999: 0

No more than three releases per year to the environment of radioactive material FY 2000: 3 or less FY 2000: 0from nuclear reactors that exceed the regulatory limits.7 FY 1999: 3 or less FY 1999: 0

No breakdowns of physical security that significantly weaken the protection against FY 2000: 0 FY 2000: 0radiological sabotage, theft or diversion of special nuclear materials in accordance FY 1999: 0 FY 1999: 0with abnormal occurrence criteria.

Table 2Nuclear Reactor Safety Performance

1 “Nuclear reactor accidents” is defined in the NRC Severe Accident Policy Statement (50 Federal Register 32138, August 8, 1985) asthose accidents which result in substantial damage to the reactor core, whether or not serious offsite consequences occur.

2 “Significant radiation exposures” are defined as those that result in unintended permanent functional damage to an organ or aphysiological system as determined by a physician in accordance with Abnormal Occurrence Criteria I.A.3.

3 Releases that have the potential to cause “adverse impact” are currently undefined. As a surrogate, we will use those that exceed the limitsfor reporting abnormal occurrences as given by AO criteria 1.B.1 (normally 5,000 times Table 2 (air and water) of Appendix B, Part 20).

4 Such events have a 1/1000 (10-3) or greater probability of leading to a reactor accident.5 The agency provides oversight of plant safety performance on a plant-specific basis as well as on an industry-wide basis. As a refinement to

the existing process, new parameters and criteria for measuring statistically significant adverse trends in industry wide safety performancewill be developed. In the interim, the NRC continues to use the same parameters as in past years. Future parameters to be monitored couldinclude NRC-approved performance indicators, inspection findings, accident sequence precursor results, and other risk-related indications ormeasures of industry safety performance that will be developed and qualified for use in phases.

6 Overexposures are those that exceed limits as provided by 10 CFR 20.2203(a)(2), excluding instances of overexposures involving ashallow dose equivalent from a discrete radioactive particle in contact with the skin.

7 Releases for which a 30 day reporting requirement under 10 CFR 20.2203(a)(3) is required.


17


The revised reactor oversight process will main-tain safety by focusing staff and industry attentionon risk-significant activities while reducingunnecessary regulatory burden, thus achievinggains in staff effectiveness. A six-month pilotprogram to test the new regulatory oversightprocess at nine nuclear power plant sites wascompleted in November 1999. Staff activitiesincluded the conduct of a number of publicworkshops to solicit feedback on process changes;establishment of internal andexternal web sites to provideplant performance informa-tion to industry and mem-bers of the public; andextensive work on inspec-tion procedure developmentand inspector staff training.The NRC ensured a highlevel of stakeholder partici-pation in the development ofthe revised process, includ-ing public workshops ineach of the regions to informlicensees and the publicabout the new process,roundtable public meetingsin the vicinity of the ninepilot program plant sites,and the conduct of a LessonsLearned Public Workshop onthe pilot program. The NRCbegan industry wide imple-mentation of the revised reactor oversight process,with the exception of DC Cook, in April 2000.

License Renewal

Continued to meet or exceed all establishedschedules for license renewal activities. The agencyissued the first renewed license on March 23, 2000,for the Calvert Cliffs Nuclear Power Plant, followedby the second renewed license on May 23, 2000, forthe Oconee Nuclear Station. License renewalapplications were received for Arkansas NuclearOne, Unit 1, on February 1, 2000; for Hatch NuclearPlant on March 1, 2000; and for Turkey Point on

September 11, 2000. These applications, whichreflect an increasing interest by licensees inlicense renewal, are under review by the staff.The agency also issued for public comment onAugust 31, 2000, draft improved license renewalguidance consisting of a Generic Aging LessonsLearned report, Standard Review Plan for LicenseRenewal, and a Regulatory Guide for LicenseRenewal that proposes to endorse an industryimplementation guideline.

Year 2000 Programs

Implemented in the first quarter of FY 2000 aplan for responding to potential Year 2000 (Y2K)problems affecting the commercial nuclear indus-try. This effort required extensive communicationand coordination with other Federal agencies, theWhite House, the public, and the nuclear industry.Due to the extensive collaborative effort betweenthe industry and NRC in preparing for and ad-dressing Y2K issues, NRC and its licensees madethe transition to Y2K without incident. NRC’sY2K contingency plan was extensively tested

Chairman Richard A. Meserve meets with Mr. Christian H. Poindexter, Chairman of theBoard and Chief Executive Officer, Constellation Energy Group (formery BaltimoreGas and Electric) on the occasion of the renewal of the Calvert Cliffs Nuclear PowerPlant license (March 24, 2000)

18



through exercises involving other Federal agen-cies, the White House, State and local officials,and the industry. One of NRC’s goals in develop-ing a Y2K contingency plan was to maximize theextent to which the Y2K preparations could beleveraged for future benefit to the agency. Forexample, upgrades and testing of telecommunica-tion and emergency power systems in Region IV(the backup to NRC Headquarters during the Y2Ktransition) were completed during FY 2000.These upgrades also support the NRC’s continuityof operations plan required by Presidential Deci-sion Directive 67. Similarly, steps were taken toenhance the reliability of communications withlicensee and State decision makers, so that emer-gency communications will be assured in theevent of public telephone network congestion orunavailability. NRC also developed a secureInternet-based Year 2000 early warning system(YEWS) to facilitate international information-sharing during the Y2K transition. NRC hasprovided this computer code to the InternationalAtomic Energy Agency for future use.

Reactor Licensing

Continued to meet or exceed establishedperformance measures for completing nuclearpower plant related actions. The NRC staffcompleted 1,574 licensing actions, and main-tained 98 percent of all licensing actions in itsworking inventory to an age of one year or lessand 100 percent at two years or less. Included inthe licensing actions completed are responses tolicensee requests to change or amend their li-censes in areas such as license transfers, poweruprates, initiatives involving risk informed regula-tion, and voluntary conversions of plant technicalspecifications to an improved standard format.

Risk-Informed Regulation

Continued to incorporate risk information intothe regulatory process through a systematic, risk-informed examination of current technical re-quirements in 10 CFR Part 50. Results of thisexamination included the recommendation tochange NRC’s regulation on combustible gascontrol during reactor accidents, potentially to

eliminate requirements which have minimalsafety benefit and impose unnecessary burden,and to add requirements where necessary toensure safety.

License Transfers

With a number of States taking steps towardderegulation of the power market, the unbundlingof services, and general industry consolidation,there was significant activity in the financialreview program for nuclear power reactors.During the performance period, the NRC pro-vided regulatory guidance in the form of Regula-tory Issue Summaries, Regulatory Guides, andStandard Review Plans to enhance stakeholderunderstanding of practices involving licensetransfer applications. These included guidance onforeign ownership, antitrust issues, non-owneroperators, and an overarching guide that summa-rizes NRC practices. The NRC completed over25 licensing actions under this program during theperiod with cases ranging from the sale of apassive owner’s minority share, to the creation ofan intermediary holding company, to the mergerof two major license holders to form Exelon. Thelatter case was the most complex transaction seento date and involved over 20 nuclear powerreactors. The NRC has established an ambitioussix-month target for completing license transferlicensing actions and has met that target in virtu-ally all cases.

Public Outreach Efforts

The agency increased its focus on initiatives toimprove the effectiveness of communications.Various actions were used to methodically improvethe consistency of staff communication activities,improve the management of communicationactivities, and improve communication skills.For the more visible programs, the staff devel-oped and implemented communication plans(CPs). Additionally, a large effort was undertakento evaluate and redesign the NRC web site toincrease its effectiveness. The significant imple-mentation activities included: 1) Developed CPsfor significant and generic topics; 2) Identified


19


communication interfaces (organi-zations/groups); 3) Solicitedfeedback from stakeholders atpublic meetings; 4) Developedguidance and provided training onCP development and implementa-tion; and 5) Established a WebRedesign Work Group

Other Accomplishments

• Amended its regulations inJanuary 2000 to allowholders of operating licensesfor nuclear power plants tovoluntarily replace thetraditional source term usedin design basis accidentanalyses with alternativesource terms (ASTs). Thisaction allows interestedlicensees to pursue cost-beneficial licensing actions to reduceunnecessary regulatory burden withoutcompromising the margin of safety of thereactor facility. In July 2000, the NRCissued a new guide in its Regulatory Guideseries to provide guidance to licensees inimplementing an AST at their facility. Bythe end of FY 2000, the NRC reviewed andapproved two AST implementations andhad four AST implementations underreview. Seven additional nuclear powerplant sites have expressed interest withsubmittals expected in FY 2001. Additionalsubmittals are also expected in FY 2002.

• Conducted several significant rulemakingsin FY 2000, including revisions to 10 CFR50.59, 50.72, and 50.73. In the beginningof FY 2000, NRC published a revision to 10CFR 50.59 which, when effective in mid-March 2001, will provide clarity and flex-ibility in regulations that allow licensees tomake certain changes to their facilities andprocedures, or to conduct tests and experi-ments. In July 2000, the Commissionapproved a revision to the reporting require-ments of 10 CFR 50.72 and 50.73. These

revisions reduce the reporting burdenassociated with events of little or no safetysignificance, clarify the reporting require-ments where needed, and extend reportingtime limits consistent with the need forprompt NRC action.

• Certified in January 2000, the Westinghouseadvanced passive pressurized water reactor(AP600) standard plant design after acomprehensive review. The AP600 was thethird standard plant design to achievecertification, joining the General ElectricAdvanced Boiling Water Reactor and theASEA Brown Boveri Combustion Engi-neering System 80+ standard plant designsthat were certified in 1997.

• Supported the license renewal effortthrough resolution of Generic Safety Issue190, “Fatigue Evaluation of Metal Compo-nents for 60-Year Life,” and through evalu-ation of technical issues such as thermalaging embrittlement of cast stainless steels.Outcomes of these efforts have contributedto both maintaining safety and the reduction

Spent Fuel Storage Pad at Calvert Cliffs.

20



of unnecessary burden through develop-ment of technically defensible positions thatjustified not imposing generic requirementsin these areas for license renewal.

• Approved for use ABB CombustionEngineering’s (CE) 800 steam generatortube repair technique at Baltimore Gas &Electric’s (BG&E) Calvert Cliffs plant.BG&E is expected to become the first U.S.plant to apply this repair method, whichuses differential thermal expansion to repairsteam generator tubes. According to ABBCE, the sleeve’s non-welded design allowsquick installation and easier in-serviceinspection.

• Issued the safety evaluation report (SER)for the ABB “Crossflow” measuring systemtopical report. The increased accuracy ofthe Crossflow measuring system can beused to support a reduction in the powerlevel margin used in the plant emergencycore cooling system (ECCS) evaluations.In turn, licensees can submit a licenseamendment to operate the power plant athigher power levels. With issuance ofthe ABB Crossflow SER, licensees seekingsuch license amendments now have achoice between two vendor designs.

• Submitted for Commission approval a finalrule that amends 10 CFR Part 50, AppendixK, “ECCS Evaluation Models.” Theamendment will facilitate small but cost-beneficial power uprates for commercialnuclear power plants seeking to utilize theimproved feedwater flow measurementsystems discussed above. While all plantscould conceivably benefit from this risk-informed rulemaking, if only 50 plantlicensees pursue a marginal power uprate,they would share an annual benefit rangingfrom $50 million to $135 million.

• Approved a rulemaking plan to revise 10CFR 73.55, “Requirements for PhysicalProtection of Licensed Activities in Nuclear

Power Reactors Against Radiological Sabo-tage.” The staff’s proposal includes a require-ment for periodic drills and exercises forevaluating power reactor licensees’ capabilityto respond to safeguards contingency events.The proposed rule is scheduled to be submit-ted to the Commission in May 2001. Thestaff and industry continue to work on avoluntary industry initiative called the Safe-guards Performance Assessment that isintended to test the concepts being consideredin the new rule and maintain assurance oflicensee readiness to respond to safeguardscontingency events.

• Held meetings regarding the licensees’interest in amendment requests for a 15 per-cent power uprate. Five plants representing 9units are expected to submit their licensingamendment requests in the coming year. A15 percent uprate for these 9 units representsabout 3,400 Mwt (1,100 Mwe) of additionalgenerating capacity. Until late 1998, poweruprates have been limited to 5 percent nomi-nal. A total of 42 power uprate amendmentswere issued between 1977 and mid-1998, allwithin 5 percent. Any uprate beyond the5 percent threshold would require significantbalance-of-plant equipment upgrades.

Nuclear Materials SafetySTRATEGIC GOAL: Prevent radiation-relateddeaths and illnesses, promote the commondefense and security, and protect theenvironment in the use of source, byproduct,and special nuclear materials.8

The Nuclear Materials Safety strategic arenaencompasses NRC efforts to ensure that NRC-regulated aspects of nuclear fuel cycle facilitiesand nuclear materials activities are handled in amanner that adequately protects public health andsafety and promotes common defense and secu-rity. This arena encompasses more than20,000 specific and 150,000 general licensees thatare regulated by the NRC and 32 Agreement


21

States. This diverse regulated community in-cludes: uranium extraction; uranium conversion;uranium enrichment; nuclear fuel fabrication; fuelresearch and pilot facilities; and large and smallusers of nuclear material for industrial, medical,or academic purposes. The last group—the largeand small users of nuclear materials—includes:radiographers, hospitals, private physicians,nuclear gauge users, large and small universities,and others. This arena also includes all regula-tory activities carried out by the NRC and theAgreement States to ensure that nuclear materialsand facilities are used in a manner that protectspublic health and safety and the environment, andprotects against radiological sabotage and theft ordiversion of special nuclear materials. TheAtomic Energy Act (AEA) of 1954, as amended,the Energy Reorganization Act of 1974, asamended, and the Uranium Mill Tailings Radia-tion Control Act of 1978, as amended,(UMTRCA), provide the foundation for regulat-ing the Nation’s civilian uses of nuclear materials.

The scope of regulatoryactivities carried out under thisarena includes regulation andguidance development;nuclear materials research;licensing/certification, inspec-tion, and enforcement activi-ties; identification andresolution of safety and safe-guards issues; regulation ofuranium recovery activities;operating experience evalua-tion; incident investigation;threat assessment; emergencyresponse; technical training;and investigation of allegedwrongdoing by licensees,applicants, certificate holders,and contractors. Table 3identifies nuclear materialssafety performance goalsand related FY 1999-2000performance data.

Nuclear Materials SafetyAccomplishments for FY 2000

In FY 2000, materials licensees and fuel cyclefacilities continued to operate in a safe fashion.We began revising portions of nuclear materialsregulations to make them risk-informed, asappropriate. We have formed a new group fo-cused on risk assessment and risk management toensure a more consistent decision-making processand a consistent underlying risk basis for nuclearmaterials regulations, regulatory guides, and staffreview guidance. Discussed below is a briefdescription of noteworthy program achievements.

Licensing Process and Application

Improved the efficiency and timeliness of thenuclear materials licensing process that will resultin improved service to stakeholders. Completed amajor portion of the materials licensing guidanceconsolidation project by issuing 20 NUREGdocuments in draft of final form. This will assist

An off-shore platform in the Gulf of Mexico where NRC conducts unannouncedinspections of well-logging activities.


22


licensees by providing an up-to-date electronicreference for preparing licensing submissions.This will also make it easier for NRC and Agree-ment State license reviewers to complete theirreviews in a more timely, efficient, and uniformfashion. Initiated efforts to streamline the materi-als inspection process (i.e., a pilot temporaryinspection procedure for some medical licensees).Completed 1,600 materials inspections with theprogram focused on those licensees engaged inactivities with the highest risk, and those licenseeswith previous performance problems.


Issued a final Standard Review Plan in antici-pation of a license application for a mixed oxide(MOX) fuel fabrication facility. The NRC heldpublic meetings to describe our role and to obtaincomments and questions regarding the proposedMOX facility and plans for the use of MOX fuelin commercial power reactors.

Regulatory Framework

Completed a number of changes to NRC’srules and regulations that will improve the regula-tory framework of the Nuclear Materials Safety


STRATEGIC GOAL: Prevent radiation-related deaths and illnesses, promote the PERFORMANCEcommon defense and security, and protect the environment in the use of source,byproduct, and special nuclear materials.


No deaths resulting from acute radiation exposures from civilian uses of source, FY 2000: 0 FY 2000: 0byproduct, or special nuclear materials, or deaths from other hazardous materials FY 1999: 0 FY 1999: 0used or produced from license material.

No more than six events per year that result in significant radiation or hazardous material FY 2000: 6 or less FY 2000: 0exposures9 from the loss or use of source, byproduct, and special nuclear materials. FY 1999: 6 or less FY 1999: 4

No events resulting in releases of radioactive material from civilian use of source, FY 2000: 0 FY 2000: 0byproduct, or special nuclear materials that cause an adverse impact on the environment.10 FY 1999: 0 FY 1999: 0

No losses, thefts, or diversion of formula quantities of strategic special nuclear FY 2000: 0 FY 2000: 0material; radiological sabotages; or unauthorized enrichment of special nuclear FY 1999: 0 FY 1999: 0material regulated by the NRC.11

No unauthorized disclosures or compromises of classified information causing FY 2000: 0 FY 2000: 0damage to national security.12 FY 1999: 0 FY 1999: 0

Table 3Nuclear Materials Safety Performance

8 For fuel cycle activities, this extends to other hazardous materials used with, or produced from, licensed material, consistentwith proposed amendments to 10 CFR Part 70. It also includes exposures from uranium recovery activities under the UraniumMill Tailing Radiation Control Act.

9 Significant exposures are defined as those that result in unintended permanent functional damage to an organ or a physiologi-cal system as determined by a physician. Hazardous material exposures only apply to fuel cycle and uranium recoveryactivities in the Materials Arena.

10 Releases that have the potential to cause “adverse impact” are currently undefined. As a surrogate, we will use those thatexceed the limits for reporting abnormal occurrences as given by abnormal occurrence criteria 1.B.1 (normally 5,000 timesTable 2 (air and water) of Appendix B, Part 20). This information is available in the Abnormal Occurrence Report to Con-gress, NUREG-0090, which can be located at http://www.nrc.gov/NRC/NUREGS/SR0090/V22/sr0090V22.pdf.

11 In accordance with Appendix G to 10 CFR part 73 and 10 CFR 74.11(a).12 In accordance with the requirements of 10 CFR 95.57.


23

Table 3 (continued)Nuclear Materials Safety Performance

PERFORMANCE GOAL: Maintain safety, protection of the environment, Performanceand the common defense and security.


No more than 356 losses of licensed material.13 FY 2000: 350 or less FY 2000: 201FY 1999: 350 or less FY 1999: 22714

No occurrences of accidental criticality. FY 2000: 0 FY 2000: 0FY 1999: 0 FY 1999: 0

No more than 19 events per year resulting in radiation over exposures15 from FY 2000: 19 or less FY 2000: 11radioactive material that exceed applicable regulatory limits. FY 1999: 19 or less FY 1999: 2614, 16

No more than 45 medical events per year.17 FY 2000: 45 or less FY 2000: 28FY 1999: 45 or less FY 1999: 3514

No more than 39 releases per year to the environment of radioactive material from FY 2000: 39 or less FY 2000: 1operating facilities that exceed the regulatory limits.18 FY 1999: 39 or less FY 1999: 314

No events that occur during the NRC-regulated operations that cause impacts on FY 2000: 0 FY 2000: 0the environment that can not be mitigated within applicable regulatory limits, using FY 1999: 0 FY 1999: 0methods that are within available licensee resources and are not cost prohibitive.19

No more than five substantiated cases per year of attempted malevolent use of FY 2000: 5 or less FY 2000: 2source, byproduct, or special nuclear. FY 1999: 5 or less FY 1999: 2

No breakdowns of physical protection or material control and accounting systems FY 2000: 0 FY 2000: 0that result in a vulnerability to radiological sabotage, theft, diversion, or FY 1999: 0 FY 1999: 0unauthorized enrichment of special nuclear material20.

13 Material entering the public domain in an uncontrolled manner. The Nuclear Materials Event Data base contains the list of theseevents as reported by the NRC licensees and, through the Agreement States, their licensees.

14 Actual FY 1999 data has been revised as reported in the FY 2001 Budget Estimates and Performance Plan based on more reliablehistorical data.

15 Overexposures are those maximum annual exposures that exceed limits as provided by 10 CFR 20.2203(a)(2). For fuel cycleactivities, this extends to other hazardous materials used with, or produced from, licensed material, consistent with proposedamendments to 10 CFR 70. Reportable chemical exposures are those that exceed license commitments.