STATEMENT OF HARRISON WELLFORD

EXECUTIVE ASSOCIATE DIRECTOR OF THE

OFFICE OF MANAGEMENT AND BUDGET

BEFORE THE HOUSE GOVERNMENT OPERATIONS COMMITTEE

Mr. Chairman and Members of the Committee:

I appreciate the opportunity to appear before you to present the President's proposal for strengthening the performance of the Nuclear Regulatory Commission. This reorganization is part of a series of actions taken by the President to improve nuclear safety management following the accident at Three Mile Island. The President is convinced that NRC's management structure impedes its Commissioners and staff in addressing safety issues and vigorously pursuing corrective actions.

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NRC's Organizational Difficulties - Evidence of organizational problems within NRC is compelling, documented by broad-ranging investigations initiated after the Three Mile Island accident. Let me summarize those findings:

Following the accident, the President appointed a Commission,
headed by Dr. John Kemeny, to determine the causes and to
report to him and to the American people on measures needed to
strengthen nuclear safety. Among the Commission's conclusions
was the serious charge that lack of unified management in NRC
has contributed to safety issues not being raised, analyzed and
resolved. The Commission and the Chairman have not understood
their respective authority and responsibility. Lacking clear
leadership, program offices too often have proceeded on their own,
rather than together, in pursuing common safety objectives.

These findings have been corroborated and supplemented by a
comprehensive management study initiated by the NRC itself and
carried out by the firm of Mitchell Rogovin. This study bluntly
charged that the Commission "is not so much badly managed as
it is not managed at all." It stated that five Commissioners have
been dealing individually with the various office directors,
without coordination and even often in competition. A phrase
often heard in the agency is that each Commissioner feels he
'owns 20 percent of the agency." Lacking coherent direction,
NRC has not focused on priority objectives in advancing
nuclear safety.

A third study, by the General Accounting Office, highlighted
the Commission's failure to establish policy objectives and control
regulatory actions. Because authority of the Chairman and 'the
Executive Director for Operations is undefined, the staff has
lacked guidance and firm direction in meeting regulatory objectives.
The GAO study urged that the NRC Chairman be made the Chief
Executive Officer in fact as well as name.

In developing this Plan, we have consulted extensively with the NRC Chairman, other Commissioners and key officials. We have also obtained views from Members of Congress and from a range of knowledgeable persons within and outside the government.

A common theme emerges from these contacts and the studies: no one is accountable for managing the agency. This is most obviously true for emergencies where trying to respond by Commission action has confused the public and embarrassed the agency. The Three Mile Island accident showed that you cannot manage an emergency by committee. But, it is also clear that no one is now in charge of carrying out NRC's regular or non-emergency responsibilities. No one assures feedback of operating experience to institute corrective actions. Individual Commissioners have acted on their own in giving staff assignments. The Commission has neglected its collegial tasks, in part because each Commissioner has been immersed in management and administrative details. In response to such criticisms, NRC has taken some steps to clarify management responsibilities and to address its collegial tasks. But existing law remains an impediment to forceful and unified direction of the agency's regulatory activities. While improvement actions are welcome, they should still be confirmed and made permanent through enactment of the Plan.

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The President's Proposal In responding to the report of the Kemeny Commission, the President stated that he would submit a Reorganization Plan to correct this situation. He did not accept the recommendation of the Kemeny Commission, later repeated in the Rogovin report, that NRC be reconstituted as an executive agency, under a single Administrator. Rather, in view of the history of nuclear energy and public concern that nuclear safety matters be protected from actions that narrow the diversity of viewpoints and reduce safeguards against unwise decisions, the President decided to retain the independent Commission, but to propose that necessary internal reorganization be instituted to correct problems found.

The President stated that the Reorganization Plan would enable the Chairman, as chief executive officer, to put needed procedures in place to implement Commission policies. He declared that the Chairman must be able to select key personnel subject to Commission approval, and to act on behalf of the Commission during an emergency. In sum, the advantages of the independent Commission in developing nuclear regulatory policies and rules, and as the final arbiter of adjudications, should be retained and strengthened through authorizing the Chairman to manage NRC's operations.

There is nothing radical or novel in this approach. Indeed, NRC is unusual among independent regulatory commissions in having a Chairman and Executive Director who have lacked real management authority. The first Hoover Commission, in its repórt of March, 1949, on regulatory commissions, stated: "Administration by a plural executive is universally regarded-as inefficient." That landmark report concluded that cases of superior administration in independent regulatory commissions occurred after administrative duties had been vested in the Chairman. The report's first recommendation was that all administrative responsibility be vested in the chairman of the commission. Reorganization plans to accomplish this in a number of regulatory commissions were approved by the Congress, but the Atomic Energy Commission was not included because of the newness of the agency in handling an awesome area of national security.

That agency's original legislation was amended in 1954 to contain a provision, carried forward in creating the NRC, that each Commissioner "shall have equal responsibility and authority in all decisions and actions." In 1975, an amendment to NRC's statute was enacted that provided that the Chairman be the principal executive officer. However, the other conflicting provision was retained, fostering the confusion that continues to the present, and perhaps contributing to the practice of often operating by consensus rather than the simple majority required by law. In large measure, then, the main thrust of this Reorganization Plan is to finally implement the legislation passed by the Congress five years ago.

The President submitted the Reorganization Plan to the Congress on March 27, 1980, and there have subsequently been hearings before the Senate Committee on Governmental Affairs and detailed discussions with Members of Congress and others on its provisions. Organizational changes in the area of nuclear energy are bound to be controversial. But our soundings have affirmed that the Plan takes important steps to correct NRC's serious management problems.

Since the Plan was introduced in late March, we have been open to suggestions for its improvement, and have brought to the attention of the President those which had merit and were consistent with our goal of strengthening the management of NRC. The reorganization act, as you know, authorizes the President to make modifications within thirty calendar days of continuous session of Congress after the Plan is submitted. After consultation with the Congress, the President has decided upon and has transmitted amendments which respond to concerns of two general kinds. The first was to the effect that Commission, acting by majority vote, should play a role in confirming the Chairman's selections of certain key program officers of the agency, as well as the EDO. The second, which developed in the course of Senate hearings, was that the Plan may tie up the Chairman in too much managerial detail and that, as a result, and should be great reliance on the Executive Director for Operations to relieve the Chairman of some of the burden of day-to-day management.

Let me now address the amendments to the Plan specifically, and then proceed to describe the effect and purpose of the Plan as amended.

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Several amendments have been made which underscore that the collegial role of the Commission remains strong notwithstanding the added powers granted to the Chairman.

Four positions are added to the list of key selections by the
Chairman which require Commission approval, whereas the
original Plan had the Chairman appointing them unilaterally.
These are: the Executive Director for Operations, the Director
of Inspection and Enforcement, the Director of Standards
Development, and the director of Nuclear Regulatory Research.
Each of these positions is directly or indirectly involved with
substantive nuclear safety issues. They support Commission
functions and have a major influence on the direction and performance
of the agency. This amendment continues to give the Chairman the
added leverage of initiating selection and removal of these major
officials unlike the present situation in the NRC. The Commission
will have an advise and consent role in these and other key positions
in a manner which is common in other independent regulatory
commissions.

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The Advisory Committee on Reactor Safeguards (ACRS) is a
respected group that participates in all reactor licensing cases

and gives its advice to the Commission as a whole. The 15 members
are appointed by the Commission and serve 4-year terms. The Plan,
as submitted, provided that the members be nominated by the Chairman
subject to approval by the Commission. The plan is now amended
so that a Commission member, as well as the Chairman, can initiate
the appointment (or reappointment) of an ACRS member to the
4-year term.

Concern has been expressed that the Plan would permit the Chairman to restrict the flow of information to the Commission. This is neither intended nor provided by the Plan. To place greater emphasis on our original intent, the amended Plan contains a specific requirement that the Chairman and the Executive Director, through the Chairman, keep the Commission fully and currently informed.

A few amendments have been made to further ensure that executive and administrative powers are vested in the Chairman, and, under his supervision, the Executive Director for Operations.

о The Chairman is explicitly given the function of taking the
lead in planning for policy guidance and presenting it for
consideration by the Commission. In the past, this responsibility
has not been clearly fixed and consequently has been neglected.

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The Chairman is directed to delegate day-to-day administrative
management of the agency to the EDO. The original Plan intended
that the Chairman would make such a delegation so that he could be
relieved from excessive managerial detail, but the Plan did not mandate
such a delegation. Under the mandatory delegation, it remains clear that
the Chairman retains final decisionmaking responsibility, subject
to Commission approval where indicated, for the functions he
delegates. It is also clear that the EDO performs these functions
subject to the supervision and direction of the Chairman to whom
he reports. The Chairman is also directed to consult the EDO when
initiating the selection of a person to fill an office director position
under supervision by the EDO. Staff office heads under the EDO
will be appointed by the EDO acting alone. In sum, the changes
which affect the EDO give that position additional status as the
Chairman's designated subordinate responsible for managing the
day-to-day activities of the agency.