3. The amount of funding flexibility within NRC is minimal. For example: NRC's FY 1977 actual experience was that unobligated balances remaining at the end of the year and available for obligation during FY 1978 amounted to only $2.5 million or less than 1 % of the agency's total budget. However, even this small amount of funds did not provide NRC any flexibility in that essentially all of such funding represented contractual commitments made in FY 1977, with actual contract awards (and thus obligation of the funds) to be made in early FY 1978.

4. To further compound NRC's funding problem, our agency's experience has been that while we were unable at the beginning of the year to identify sufficient funds to preclude a supplemental requirement, we have on the contrary identified some $2.6 million in additional priority program requirements which we must resolve during FY 1978.

ENACTMENT OF SUPPLEMENTAL BILL

Question. In calculating the requests, when did you assume that the supplemental bill would be enacted?

Answer. Our estimate for the program supplemental was based on passage in the April-May timeframe. Our estimate for the pay raise just assumed it would be passed anytime prior to the end of the fiscal year.

Question. If the supplemental bill is not enacted until July or August of 1978, how much of your $10.7 million request could effectively be used during FY 1978? Answer. NRC's FY 1978 supplemental request of $10.7 million consists of three main elements; I&E's revised inspector program ($2,650,000), NMSS's accelerated high level waste repository effort and increased uranium fuel cycle licensing support ($2,700,000), and funding for the pay raise ($5,350,000). A delay in the enactment of the supplemental bill would impact each element differently, although it is important to note the planning for use of the supplemental funding was based upon enactment coming by about May 1978. Therefore, the delay to July or August represents only a 2 to 3 month slippage in the assumed schedule.

For I&E, the initial implementation of the revised inspection_program_will be deferred until the latter part of FY 1978 and into FY 1979. Due to advanced planning and the need to integrate the initial effort into the full implementation schedule of the revised inspection program substantially all of the FY 1978 supplemental funding request of $2,650,000 would be obligated in FY 1978. However, about $450,000 of the initial operating expenses for personnel compensation, administrative support and travel would not be required.

For the NMSS supplemental request, virtually all of the funding would still be required. Part of these funds ($1.6 million) would be required to restore a temporary reallocation of funding that occurred in September 1977 to accelerate the high level waste (HLW) repository effort.

The NRC considered the effort to develop the licensing capability to meet the national goal of having at least one HLW repository operational by 1985 to be of such high priority that it was decided to initiate this effort in advance of FY 1978 supplemental funding. Nonetheless, the funding that was reallocated in FY 1977 had been earmarked for other high priority requirements, particularly for computer requirements that are largely generated as a result of DOE no longer providing computer support to NRC. It is NRC's intention to restore this funding to the activities from which it has been reallocated. The remaining $1.1 million would provide the funding required for the contractual efforts related to: continuing the accelerated HLW efforts initiated earlier in FY 1978; undertaking accelerated development of high priority waste management regulations for uranium mill tailings and high level, low level and transuranic wastes; and enhancing NRC capability to review uranium fuel cycle license applications.

For the 1978 pay raise, the requirement for these funds is not affected by the date of enactment of the supplemental since this is needed to comply with existing legislation. However, the pay raise estimate contained in the supplemental request was based on factors available at the time, particularly the estimated hiring rate. Although this rate has been somewhat slower than anticipated, we believe it is premature to assume this lag in hiring will continue. Accordingly, no change in the estimate is appropriate at this time.

RESIDENT AND NON-RESIDENT INSPECTIONS

Question. Currently inspections are performed on a nonresident basis. What would be the difference in the number of nuclear facilities inspected and the frequency of inspections at the various facilities assuming your request is approved?

Answer. There would be no difference in the number of facilities inspected; however, inspections would be conducted virtually every day at all operating reactor sites, all sites with reactors in test, and at all sites in the later stages of construction when the revised program is fully implemented. Under our current program inspections are conducted on an average of once per month at reactors under construction and one to two times per month at reactors in test or operation. We believe that significantly increased presence by NRC inspectors is the principal benefit of resident inspectors and will result in enhanced assurance of public health and safety. We anticipate that this increased presence by NRC inspectors will: Increase NRC knowledge of the conditions at a licensed facility and provide a better technical base for regulatory action.

Lessen the programs reliance on the accuracy and completeness of licensee records by improving the inspector's ability to independently verify licensee performance.

Provide additional assurance that licensee management-control systems are effective and that licensee performance is acceptable.

Question. How will your resident inspector effort affect the number of nonresident inspections to be performed in the future?

Answer. The revised inspection program with resident inspectors will decrease the number of inspections that must be performed by regional-based inspectors. Our intention is to have the resident inspector perform as much of the inspection program as possible, with concentration on increasing the type and number of licensee activities that we directly verify by observation or measurement. Nevertheless, there is a continuing need for inspectors who are located in the regional offices to periodically visit the site to perform inspections that require specialized talent. We estimate that there would be 5-10 visits per site each year by these specialists.

Question. Provide for the record a breakdown of the number of resident and nonresident inspectors by type of inspection for FY 1977, 1978, 1979, and 1980. Answer. The number of resident and nonresident inspectors by type of inspection for fiscal years 1977, 1978, 1979, and 1980 are shown below. The projections for 1980 are early estimates.

1 Full-time resident safeguards inspectors on site at select critical fuel facility sites.

INSPECTION SITES

Question. On page 3 you state that when the full program is implemented, there will be resident inspectors at every operating site, selected construction sites and more than one inspector at multiple reactor sites. Would you provide for the record a listing by fiscal year of the sites where you intend to employ resident inspectors and the number of inspectors at each site.

Answer. The revised inspection program is planned to be implemented in a phased manner beginning in fiscal year 1978. Full implementation is scheduled during fiscal year 1981. Full implementation will require a resident inspector at each operating reactor facility and each reactor facility in the later stage of construction (generally three years after the start of construction).

During FY 1978 we will have 20 resident inspectors; in FY 1979, 45 ; in FY 1980, 70; and in FY 1981, 95. Each site selected will be manned by one inspector through fiscal year 1980. During fiscal year 1981, sites with more than two operating units will have an additional inspector assigned.

The twenty sites scheduled for implementation during fiscal year 1978 are provided for the record. They were selected so as to include:

A mix of reactor types.

A mix of facilities in construction, testing and operating phases.

A distribution of facilities among the five regional offices approximately proportional to the number of facilities in each region.

The specific sites for subsequent implementation will be selected approximately one year in advance of the planned implementation.

SITES SELECTED FOR MANNING BY RESIDENT INSPECTORS DURING FISCAL YEAR 1978

Question. Also, provide for the record an estimate of the cost and personnel requirements associated with the program in FY 1979 through 1982.

Answer. The estimated number of personnel required for the revised inspection program for reactor construction inspection (RCI) and reactor operations inspection (ROI) as compared to the current inspection program is provided for the record. This estimate is based on current forecasts of reactors in construction and operation, and includes all inspectors and non-inspectors associated with the program.

Fiscal year 1979:

Current inspection program.
Revised inspection program....
Increase for revised program__

416

471 55

The estimated marginal cost of the revised program in these years is $2.62 million in FY 1979, $2.28 million in FY 1980, $1.57 million FY 1981, and $1.4 million in FY 1982.

PERFORMANCE APPRAISAL

Question. On page 4 you state that you intend to employ performance appraisal inspectors to provide periodic independent appraisals of resident inspector program performance. Why do you believe this necessary?

Answer. Although the existing NRC inspection program provides an adequate technical basis upon which to assure the safety of licensee operations, there are areas which can be improved. Performance appraisal provides for three important improvements: one, evaluation of the performance of NRC licensees from a national perspective; two, an evaluation of the effectiveness of the NRC inspection program; and three, confirmation of the objectivity of NRC inspectors. Performance appraisal will involve assessment teams which make indepth measurements of various aspects of reactor construction and operation. The teams will analyze inspection and licensee reports to identify potential weak spots and correct developing problems. The performance appraisal teams will also independently evaluate the effectiveness of the inspection program (including the effectiveness and objectivity of the resident inspectors). Periodic critical reviews of selected areas of licensees activity will provide insight into the performance of the regional inspection program and the resident inspectors.

Program performance appraisal is an essential function, with or without resident inspectors. However, since resident inspectors will be placed in an environment where they continually interact with licensee personnel, they are exposed to increased challenges to their objectivity. While we are building a number of mechanisms into our program to insure inspector objectivity, we nevertheless feel that it is prudent management to explicitly confirm the continuing objectivity of our inspectors through performance appraisal.

Question. How many of these inspectors do you intend to employ?

Answer. The performance appraisal function will be operated on a trial basis through FY 1979 and during this period no more than 15 regionally based inspectors will be assigned to performance appraisal duties. These inspectors will function as ad hoc teams under the direction of IE headquarters management.

INDEPENDENCE OF RESIDENT INSPECTORS

Question. What other procedures do you intend to use to insure the independence of the resident inspectors?

Answer. In addition to assessment of inspection adequacy, uniformity and independence (objectivity) by performance appraisal teams, the measures being built into the revised inspection program to insure inspector objectivity include: Selection of mature, tested individuals as resident inspectors.

Emphasis on NRC's code of conduct and the Office of Inspection and Enforcement code which is even more demanding.

Planned rotation of resident inspectors at three year intervals.

Frequent contact with regional supervisors including careful supervisory review of all inspection reports and at least quarterly accompaniment of resident inspectors by their supervisors during an inspection.

Periodic participation in inspections at other sites by the residents.

Frequent visits by other inspectors, including other resident inspectors and technical inspectors from the regions.

Careful evaluation of inspection and licensee reports to detect adverse trends or indicators together with performance appraisal inspections of the licensees. We believe that these measures will insure that our inspectors will continue to conduct thorough, objective inspections.

TRAINING OF RESIDENT INSPECTORS

Question. Also on page 4, why is it necessary to augment your existing technical training program for the training of resident inspectors?

Answer. The revised inspection program involves a substantial increase in NRC efforts to independently verify licensee actions by direct observation and measurement. Additionally, the resident inspectors must possess a broader base of technical knowledge than is essential for all inspectors in the current program. Accordingly, the training program is being expanded to provide this broadened base and to incorporate the training required to perform the additional independent verifications. In addition, an inspection techniques course has been added n order to focus on the qualities that a resident inspector must possess.

INDEPENDENT EVALUATION OF PROGRAM IMPLEMENTATION

Question. Also referring to page 4, why is it necessary to contract for an independent evaluation of program implementation?

Answer. It will be especially important for us to carefully evaluate the revised inspection program throughout the period of implementation so that we can gain the most from the program. We must learn what is working well and what is not, and we must be alert to changes that are required. We have found that a consultant can be of great assistance in such an evaluation and we intend to contract for assistance in evaluating the revised program. The use of consultants for this type of work will provide us with specialized experience in program evaluation and will bring us a neutral, unbiased view of the program's strengths and weaknesses.

WASTE MANAGEMENT

Question. You are requesting $2,000,000 for the waste management effort under nuclear material safety and safeguards. These funds are to be used for contractual support for the development of licensing tools-methodologies and proceduresfor evaluating repository site development. What specific guidance or instructions do you plan to give the contractor regarding this project?

Answer. This program has been initiated due to its high priority. Contractors have been instructed to accelerate efforts already underway to develop analytical models, and specific technical data required to exercise such models, for evaluating the disposal of high-level radioactive wastes in deep geological formations. The contractors have also been instructed to (1) expand present studies to include the disposal of spent fuel (in line with national policies regarding commercial reprocessing) and defense wastes and (2) develop the analytical techniques needed to evaluate waste disposal in geological media which appear to warrant NRC consideration based on emerging DOE programs (i.e., disposal in domed salt, crystalline rock, and basalt).

In summary, the specific instructions given to the contractor required:
Acceleration of the site suitability studies in bedded salt and shale,

Redirection of the waste form performance studies to consider spent reactor fuel, high-level military wastes, and both military and commercial transuranic contaminated wastes, and

Expansion of the site suitability studies to consider disposal in domed salt, basalt, and crystalline rocks.

Detailed instructions for carrying out the required studies and to assure that a useful product is obtained is provided through continuous communications between the staff and contractors.

HIGH-LEVEL WASTE MANAGEMENT

Question. Have you established a specific plan for completing the various tasks which will be necessary to enable you to evaluate and make a decision on the license for a high-level waste repository in a satisfactory time frame? If so, provide a summary of the plan for the record.

Answer. In response to your question, I would like to supply the following description of the NRC High-Level Waste Management Program for the record.

THE NRC HLW MANAGEMENT PROGRAM

New NRC regulations will be stuctured to require conformance with a fixed set of minimum acceptable performance standards (technical, social, and environmental) for waste management activities, while providing for flexibility in technological approach.