ML13010A105

M130108 Transcript for Briefing on Fort Calhoun Public Meeting, January 8, 2013

ML13010A105
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Site:	Fort Calhoun
Issue date:	01/10/2013
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UNITED STATES OF AMERICA U.S. NUCLEAR REGULATORY COMMISSION BRIEFING ON FORT CALHOUN JANUARY 8, 2013 9:00 A.M.

TRANSCRIPT OF PROCEEDINGS Public Meeting

Before the U.S. Nuclear Regulatory Commission:

Allison M. Macfarlane, Chairman Kristine L. Svinicki, Commissioner George Apostolakis, Commissioner William D. Magwood, IV, Commissioner

William C. Ost endorff, Commissioner

2 APPEARANCES Omaha Public Power District (OPPD):

W. Gary Gates OPPD President and Chief Executive Officer

Kerry Ihnen Manager, Nuclear Oversight, OPPD

Lou Cortopassi

Fort Calhoun Station Site Vice President & CNO

Mike Prospero

Fort Calhoun Stat ion Plant Manager

Susan Landahl Exelon Senior Vice President of New Development

Mohamad (Mo) Doghman

OPPD Vice President of Energy

Delivery & COO

NRC Staff:

Bill Borchardt Executive Director for Operations

Elmo Collins

Regional Administrator, Region IV

Louise Lund Deputy Director, Division of Operating Reactor Licensing, NRR

Michael Hay

Branch Chief for Project Branch F, Division of Reactor Projects, Region IV

3 P R O C E E D I N G S 1 CHAIRMAN MACFARLANE: Okay. Everybody here? Good.

2 Good morning. Today's meeting is going to focus on the Omaha Public Power 3 District's recovery plan, and the agency's ov ersight of the Fort Calhoun Station in 4 Nebraska.

5 Fort Calhoun has been in the NRC's inspection manual Chapter 6 0350 process since December 2011. The NRC invoked this process which 7 provides increased oversight due to significant performance problems and a 8 significant operational event involving a fi re that occurred in the safety-related 9 electrical switch-gear at the plant. The reactor at Fort Calhoun cannot restart 10 until approved by the NRC. Most Commission meetings that we have here focus 11 on policy issues. However, a meeting lik e this that focuse s on the operational 12 safety of one licensee is vitally impor tant to the NRC's mission of protecting 13 public health and safety.

14 I look forward to hearing today about the progress being made at 15 Fort Calhoun and the challenges that st ill remain. Would any of my fellow 16 Commissioners like to make any opening remar ks? No? Okay. Then I think that 17 brings us to the external panel presentations. And to get us st arted this morning, 18 I'm going to turn things over to Gary Gates, who is president and chief executive 19 officer of the Omaha Pub lic Power District.

20 GARY GATES: Good morning, Chairman and Commissioners. If I 21 could have Slide 1, please? Thank you fo r allowing us to m eet with you today.

22 My name is Gary Gates; I'm the President and CE O of Omaha Public Power 23 District. It was February 22nd last year when we sat down in front of you and 24 shared that I was clearly not satisfi ed with where we were. I gave you my 25 4 commitment and the commitment of the entire Omaha Pub lic Power District that 1 we would identify, analyze, and resolve our performance issues. Today, we will 2 discuss significant progress we have made to recover Fort Calhoun Station. Our 3 remaining work is well-understood; we have the right leaders in place to do that 4 work. While we are proceeding with urgency, we are not after short-term fixes.

5 We are taking the time necessary to put Fort Calhoun back on track to 6 excellence and to sustain it in the long-haul. We are coordinating very closely 7 with your staff. We will restart Fort Calhoun Station when we are satisfied 8 ourselves, and demonstrated to the NRC, that the plant is ready and that we can 9 sustain the improvements we have made. Slide 2, please.

10 We are here today to update you on the significant actions we have 11 taken and the significant progress we've m ade since our last meeting. Following 12 my introductory remarks, we'll addre ss our operating serv ices agreement with 13 Exelon Generation; our new vision, missi on, and values that guide our actions 14 and decisions; improvements we have made to our site organization; progress 15 we have made on our restart checklist items; and our strengthened and 16 independent corporate gover nance and oversight.

17 We also look forward to answe ring your questions. Here at the 18 table with me today are Lou Cortopassi, our chief nuclear officer and site vice-19 president; Mike Prospero, our plant manager; Kerry Ihnen, our manager of 20 nuclear oversight; and Susan Landahl. Sus an is the Exelon Generation senior 21 vice-president for new development. Mo Doghman, our vice president for energy 22 delivery and chief compliance officer is also here today.

23 Supporting these exceptional ex ecutives are the men and women 24 of OPPD, who are dedicated professionals. OPPD is committed to providing the 25 5 right resources to Fort Calhoun. We will return the plant to safe and efficient 1 operation and we will put t he plant on a path to excellence. Slide 3, please.

2 Our performance was clearly unaccept able to all of us at OPPD, as 3 it was to you. We have defined our challenges clearly; we've implemented 4 comprehensive discovery activities to fully identify the br eadth and depth and the 5 causes of our performance deficiencie

s. OPPD workers and outside experts 6 have completed thousands of hours of r oot-cause analysis. Where necessary, 7 we expanded our scope to look broader and deeper, to ensure that we go to the 8 root of the issues. When appropriate , independent teams of experts were 9 brought in to review our work and provi de stronger reassurance that we got it 10 right and that we are implem enting the necessary corrective actions. Slide 4, 11 please. 12 We are accountable to you, to our selves, and, most importantly, to 13 our customers and neighbors. We will not restart Fort Calhoun until we are 14 convinced that the plant is ready for safe and effici ent operation, and that our 15 continued improvement actions are sustainable for the long-haul. I'm here to 16 personally tell you that we're on the right path, and we are doing this in a 17 thorough, professional, and transparent way. While you will be hearing about the 18 details of our significant pr ogress throughout this presentation, I want to take time 19 to highlight two major initiatives that I f eel are game changers in this effort. Slide 20 5, please.

21 Our most notable initiative is our 20 year operating services 22 agreement with Exelon Generation. We believe that Exelon Generation 23 represents our ideal part ner, and will effectively mitigate the single unit 24 challenges faced by Fort Calhoun Station. Exelon Generation provides fleet 25 6 capabilities, experience and support, organi zational breadth and technical depth, 1 and bench strength for us. Exelon is t he single largest donor and operator of 2 nuclear plants in the United States, with a capacity equivalent to almost 38 Fort 3 Calhouns.

4 Exelon has thousands of nuclear employees, who also have an 5 existing relationship with Exelon. They have been assisting in our recovery 6 activities since last February. And, mo st importantly to us, Exelon has a long-7 term demonstrated history of exceptional nuclear operations. I'm pleased to 8 have Susan here today with us to shar e how Fort Calhoun Station is being 9 integrated into the Exelon fleet. As you know, OPPD remains the owner of Fort 10 Calhoun and the license holder for the plant; we retain the ultimate accountability 11 for the safe operation of Fort Calhoun. Exelon will have the re sponsibility for the 12 day-to-day operations of the plant. Slide 6, please.

13 Our second major initiative deals with having a strong, 14 independent, and intrusive corporate oversight of Fort Calhoun Station. This is 15 the one key to assuring that type of performance problem does not go 16 uncorrected in the future. The Nuclear Regulatory Commission will always serve 17 that role from a regulatory and a public perspective, and we appreciate your 18 work, but we feel strongly that we need to build additional independent, rigorous 19 oversight into our own organization. Ha ving the questioning attitude from both 20 inside our nuclear business unit, as well as from the rest of our company, will 21 serve us well. Slide 7, please.

22 So let's get started with our pr ogress report. Susan will go into 23 detail on the operating services agreement with Exelon, what it means for a 24 restart, and how it will support sustained performance at Fort Calhoun. Next, Lou 25 7 will share specifics on how we are bringing Fort Calhoun's vision, mission, and 1 values to life. Progress on certain restart activities will be summarized by Lou 2 and Mike. And, finally, I will share with you how we have strengthened our 3 corporate governance and oversight, and Kerry will give you specific insights on 4 the outcomes of these changes. So now le t me turn the presentation over to 5 Susan Landahl.

6 SUSAN LANDAHL: Thank you, Gary. Good morning, Chairman 7 and Commissioners. My name is Susan Lan dahl, and I am Exelon senior vice-8 president of New Development. In this role, I'm the chief executive responsible 9 for the integration of Fort Calhoun Station into the Ex elon fleet. I have 10 approximately 30 years of experience in t he nuclear industry, and with Exelon I 11 have held several senior positions, including chief operating officer, senior vice-12 president for Midwest operations, and site vi ce-president at the La Salle Station.

13 Slide 8, please.

14 The operating services agreem ent forms the foundation for 15 achieving and sustaining excellence at Fort Calhoun Station.

I will elaborate on 16 three elements of this agreement. Firs t, we placed 11 Exelon leaders in key 17 positions at Fort Calhoun. These l eaders have not only demonstrated success in 18 their specific areas of expertise, but t hey fully embrace the accountability culture 19 that is a key element of the success of the Exelon nuclear m anagement model.

20 In addition to the on-site personnel, we have established an 21 integration team reporting to me thr ough the vice-president of integration 22 projects. This is the second key element of the agreement. T he integration team 23 includes Exelon experts who are providing on-site -- ongoing site support and 24 transition planning organized around more than 22 different functional areas, 25 8 everything from operations and engineering to human resources and information 1 technology.

2 The third element of the agreement addresses the long-term 3 sustainability of Fort Calhoun through t he implementation of the proven Exelon 4 nuclear management model, and full integr ation into our fleet. The management 5 model is developed around the strategic focus areas, beliefs, and behaviors that 6 are essential for a strong nuclear program. It includes process management 7 controls comprised of several hundred policies, programs, procedures, and 8 processes. And these are continually updated to ensure that they comply with 9 industry best practices.

10 Also key to the model are the performance management and 11 results assessment tools that ensure accoun tability to achieve the ultimate result, 12 which is consistently str ong performance with a strong nuc lear safety culture as 13 its foundation. We recognize the magnitude of this task.

Full integration into the 14 Exelon fleet will be conducted in a deta iled, rigorous, and systematic manner 15 over several months, with appropri ate focus on change management.

16 Our near-term focus is in suppor ting Fort Calhoun in completing the 17 necessary actions required to prepare the unit for safe restar

t. Our long-term 18 focus is on continuous improvement and achieving sustained excellence. And 19 while the operating agreement has only been in place for four months, things are 20 already different at Fort Ca lhoun. Next slide, please.

21 As you heard earlier, Lou Cortopassi is in place as the chief nuclear 22 officer and site vice-presi dent, leading the Fort Calhoun organization. Lou is a 23 dynamic and inclusive leader, who has integrated the new Exelon leaders with 24 the OPPD managers into his blended senior leadership team.

And you'll hear 25 9 more about that from Lou in a few minut es. Our fleet experts are actively 1 supporting Fort Calhoun to assure error free performance of critical evolutions, 2 such as radiography and radiological diving.

3 Other examples of fleet support include using engineering expertise 4 to assist in resolving equipment is sues, and participation in site self-5 assessments. In addition, Fort Calhoun managers have already taken 6 advantage of fleet opportunities to attend te chnical training, and to participate in 7 leadership forums with their Exelon peers. Next, the long-term integration plan 8 has been established and is being implemented.

9 This plan provides the necessary structure to ensure that the 10 management model, which is the key to sustained performance, is successfully 11 implemented at Fort Calhoun. And lastly on this slide, formal accountability 12 meetings with senior executives from both OPPD and Exelon are held monthly.

13 These are full day meetings held at the pl ant, and include time spent in the plant 14 in addition to reviewing performance and pr ogress. These types of forums for 15 corporate executive challenge are a ke y element of the Exelon management 16 model. At this point, I would like to turn the presentation over to Lou Cortopassi.

17 LOU CORTOPASSI: Thank you, Susan. Good morning, Chairman 18 and Commissioners. Slide 10, please. My name is Lou Cortopassi; I'm the chief 19 nuclear officer at OPPD and the site vice-president at Fort Calhoun Station. I 20 have 29 years of nuclear experience.

I was the vice-president Exelon mid-21 Atlantic operations, and have he ld senior leadership roles at four different nuclear 22 plants, including plant manager at one pl ant during a significant performance 23 recovery. I was also a licensed reactor oper ator and senior reacto r operator. I've 24 been at Fort Calhoun Station since Januar y in a senior recovery role, and I 25 10 became site vice-president in August and ch ief nuclear officer in September.

1 To start with, at Fort Calhoun we've established a new vision, a 2 new mission, and a new set of values. Firs t, our vision, what we describe to our 3 staff, is our destination: the safe and effici ent restart of Fort Calhoun Station, and 4 achievement of sustained excellence. And, of course, our focus right now is on 5 that first half of that visi on. We will return Fort Calhoun to safe power operations.

6 However, an important part of that milest one is the second part of our vision. As 7 Susan mentioned, we've established a foundation for continuous improvement 8 and have made significant progress.

9 The drive to restart the plant is supported on the short-term by the 10 operating services agreement, and its implem entation plan. On the longer term, 11 our sustained improvement will be facilitated through integration into the Exelon 12 fleet, and through implementation of the Exelon nuclear management model. On 13 to our mission, it's what we strive to do every day: safe, efficient -- excuse me --

14 safe, event-free, cost-effective nuclear produ ction of electricity. We describe this 15 to our staff as our destination.

It clearly captures our top two priorities of safety 16 and event-free human performance, and I can assure you that we're 17 incorporating these into the fabric of our culture.

18 Our other two priorities are to fix the plant and to effectively 19 implement the corrective action program to find and fix our own problems, and to 20 learn from others experi ences and best practices. Slide 11, please.

21 We've also clearly communicated to our staff our five core values.

22 These values guide our activities and decisions. I've already mentioned safety.

23 I'll expand that here to include nuclear, industrial, radiological, and environmental 24 safety; safety remains our prime value.

But I'll also briefly describe our other 25 11 values, starting with alignment, which begins with our senior leadership team and 1 expands across the site through our Ou tage Control Center leaders and our 2 supervisors in the field, with a strong focus on face-to-face communications and 3 feedback on performance.

4 On to accountability where we've realigned the leadership team and 5 have recently completed training cycle to this core value. It is a positive 6 leadership trait with examples of what excellence looks like, with respect to 7 accountability. Our bias fo r action, where issues ar e appropriately elevated and 8 the right athletes are assigned to drive i ssue resolution; that ties nicely to our 9 priority of fixing the plant, as well as the corrective action program.

10 And all of this is anchored with a strong nuclear safety culture. We 11 do understand the special and unique characte ristics of nuclear power, and the 12 importance and vitality of maintaining a strong nuclear safety culture. This 13 applies to every employee of the organizati on; it is our first value adopted and 14 never abandoned. These values and behaviors they drive are critical to the 15 fulfillment of our vision and mission. Slide 12, please.

16 As Susan mentioned, we've blended the Exelon leaders with the 17 existing experienced leaders at Fort Calhoun Station, to perform a -- to form a 18 strong and balanced team that is capable of returning Fort Calhoun Station to 19 excellence. I was specifically involved and chose these leaders, based on their 20 proven successful experience, and their co re values in alignment with Fort 21 Calhoun values. Each senior leader, on average, has 28 years of experience, 22 with experience at multiple nuclear site

s. And we verify and have challenged, 23 and continue to push alignment with our vision and mission. We assure that 24 through our daily and nightly outage meet ings, our end of the day alignment and 25 12 turnover meetings, and other face-to-face interactions with the senior leadership 1 team. 2 I and the senior team also meet on Monday morning with station 3 supervisors and managers, to ensure alignment through the organization on 4 values and expectations, and on priorities and goals for the week. At these 5 meetings we will also high light one of the INPO safe ty culture principles and 6 bring it to life through examples an d discussion; we discuss successes and 7 opportunities from the past week, we tie it to our station prioriti es, we look at our 8 values, standards, behaviors, and also, most importantly, the leadership behind 9 that. 10 We also discuss major recovery accomplishments, activities, and 11 upcoming milestones. This information is provided to the supervisors and 12 managers in a slide presentati on, where they, in turn, align their crews or their 13 specific departments with t he same information on Tuesday mornings. The team 14 is engaged in holding Fort Calhoun accountabl e to our expectations. While this 15 accountability throughout the organization is palpable, it's not always 16 comfortable, but it's always necessary for us to achieve our best. Slide 13, 17 please. 18 So what does that mean today regarding performance at Fort 19 Calhoun Station? As mentioned, senior leadership team has been in place for 20 about four months. We now have an in tegrated schedule that describes our 21 known outage work with the right level of detail. We've established an outage 22 control center, where operat ors, engineers, and maintenan ce staff work together 23 facilitating the work in the st ation. With the right meas urement tools in place, the 24 right work is being done correctly and at th e right time. And we're reinforcing the 25 13 values and behaviors, as I mentioned befor e, to ensure safety and quality, and 1 that the work through timely in-field obs ervations and feedback, and continue to 2 use that face-to-face interaction with our employees, reinforcing behaviors. Slide 3 14, please.

4 I'm going to transition to discussing progress we've made in the 5 following areas: organizational effectiv eness, safety culture, and problem 6 identification and resolution. This really does set the foundation for all of the 7 actions and improvements we're making at Fort Calhoun Station. Our focus now 8 is on driving and measuring our performance and instilling behavior change in 9 our people.

10 Through our root-cause analysis, we identified three overarching 11 issues that drove performance decline at Fo rt Calhoun Station. First, we did not 12 have a sufficiently robust structure in place to ensure effective governance and 13 oversight and we did not establish the right expectations for leadership 14 accountability. Second, our nuclear sa fety culture needed improvement across 15 several areas. We were sending mixed messages to our staff on what we 16 expected. Safety was not clearly articulated as our prime value and 17 responsibility. In addition, our staff was sometimes reluctant to bring up issues 18 based on the reaction that they received from leadership.

19 And, finally, with these flaws in our foundation, the corrective action 20 program did not effectively or adequately assure that we're finding and fixing our 21 own problems and learning from our experiences, and the ex periences of others.

22 Bottom line is we did not have the fundamental elements in place to assure clear, 23 consistent expectations that our st aff be always present, engaged in safety, and 24 have a bias for the right action at the right time to maintain excellence. Slide 15, 25 14 please. 1 So what does that mean today regarding performance at Fort 2 Calhoun Station? As I mentioned, we cl early established and reinforced our new 3 safety-focus vision, mission, and values.

This does come from the top and is 4 being inculcated throughout the organiza tion. We've established clear 5 expectations for our leaders and are holdi ng them accountable to ensure their 6 staff has the proper focus. We've impl emented an improved corrective action 7 program. Site senior leaders conduct daily meetings to ensure the corrective 8 action program is now functioning effect ively. We placed corrective action 9 program coordinators in key departments to ensure t he program was working 10 effectively and efficiently and to reinfo rce behaviors and expectations.

11 We have effective program -- excuse me -- performance indicators 12 on the health of the corrective action program. They reflect industry best 13 indicators, but not yet industry best perform ance. I hold facilitated 2Cs meetings.

14 The "C" stands for compliments and concerns, where I have small groups of 15 employees with a facilitat ed manner providing me f eedback on things that are 16 going well at the station, as well as areas that we need to continue to improve on.

17 We've reinvigorated our safety cu lture monitoring panel, chaired by 18 one of my direct reports. That panel now meets essentially weekly, looking at 19 any emerging issues and to address any thing with respects to an emergent 20 safety culture issue.

21 We have a monthly pulse survey where our workers are asked a 22 series of questions, and they are provid ing their feedback and insight on issues 23 affecting our safety culture, as well as successes in the organization. These 24 surveys feed station performance indicators on the health of our safety culture.

25 15 Again, they reflect industry best indicato rs, but not yet industry best performance.

1 These are some of the tools that prov ide us a solid foundation for understanding 2 the health of the organization and understanding necessary next steps. Slide 16, 3 please. 4 We've made significant progress completing the activities 5 necessary for a safe and efficient restart of Fort Calhoun Stat ion. The recovery 6 of Fort Calhoun Station is described in our integrated performance improvement 7 plan; we call it our IPIP. Revision for the IPIP was docketed on October 31st, 8 2012. That revision included updates re flecting the implementation of our 9 operating services agreement and a new se ction addressing our post-restart plan 10 for sustained improvement. The IPIP also includes a detailed restart checklist 11 implementation strategy t hat segments each restart ch ecklist item into four 12 activities: scoping, discovery, analysis, and implementation. The strategy also 13 includes scope expansion criteria and checklist item closure criteria. We have 14 made progress on each and ever y checklist item.

15 All of the scoping activities are complete. We've made significant 16 progress on the discovery and analysis for a ll items, and are over 85 percent fully 17 complete. And we have made progress on implementing the necessary activities 18 to prepare for restart. I'd now like to turn the presentation over to Mike Prospero, 19 our plant manager, to go into more dept h and detail on several of our restart 20 activities.

21 MIKE PROSPERO: Thank you, Lou. Good morning, Chairman 22 and Commissioners. S lide 17, please.

23 My name is Mike Prospero and I became the plant manager at Fort 24 Calhoun Station in Februar y 2012. I have nearly 30 years of experience, 25 16 including senior leaderships at five differ ent nuclear power plant

s. Most recently, 1 I was a plant manager at t he Exelon Quad Cities Nuclear Power Station. I've 2 held other leadership posit ions in outage, nuclear oversight, and operations.

3 Finally, I was a licensed senior operator.

4 When I arrived on-site, I began establishing and reinforcing the 5 right expectations at Fort Calhoun Stati on. In the nuclear industry, we have 6 found a close correlation between successful nuclear power plants that operate 7 with significant safety marg in and those leader- and work er-behaviors that result 8 in a workplace without injuries and wit h few human performance concerns.

9 Our expectations are clear and I want to emphasize that these are 10 continuously reinforced expectations. We expect to be rigorously focused on 11 planning, performing, and monitoring, and we stop and seek help when we have 12 unexpected situations arise.

13 I, my managers, and supervisors, ens ure that our st aff works in a 14 way to minimize the likelihood of injuries. We have made significant progress in 15 reducing worker injuries. This chart depi cts the overall work er improvement and 16 worker safety at Fort Calhoun Station. We attribute this trend to the renewed 17 leader and worker expectations. These beh aviors that have significantly reduced 18 worker injuries are the same behaviors that result in top flight nuclear safety at an 19 operating reactor.

20 I would like to share an example of how we respond in the 21 workplace to injuries. A maintenanc e worker was working on a new storage 22 cabinet and bruised his forehead bec ause of a hinge that had broken during 23 shipment. Our reaction to this event wa s different than the reaction has been in 24 the past at the Fort Cal houn organization. The worker, his supervisor, and I 25 17 would all meet in my office and discuss the matter. Then the three of us walk out 1 to the maintenance shop, examine the cabinet, and reenact the event, and make 2 sure that we understand what happened. We took action to examine the other 3 cabinets to make sure that the problem would not reoccur. Our bias was for 4 action, and all the maintenance workers in the shop who saw our behaviors in 5 addressing would be perceived as a small event, sent a message and reinforced 6 that we will respond to small issues to make sure that we prevent the more 7 significant issues from ever occurring. Slide 18, please.

8 We also monitor human performance using industry standard 9 thresholds called "Station Clock Rese ts" and "Department Clock Resets." We 10 have significantly reduced hum an performance issues. This chart depicts the 11 overall improvement in hum an performance at Fort Ca lhoun Station. Those 12 same leader- and worker-behaviors that reduced injuries have also reduced 13 human performance errors. We performed hundreds of activities correctly each 14 week, but we learn when things do not go right.

15 I would like to describe a response to a recent department clock 16 reset. After replacing control valve solenoid an electrician re-landed wires in a 17 junction box one log off -- one log off from w here they were supposed to be. This 18 error was discovered during post-maintenance testing. The qualifications of the 19 craft-worker and the quality control inspector were suspended while an 20 investigation was performed. The electr ician had used a poor work practice for 21 making the log when the lead was lifted.

22 Further review disclosed that this was a common work practice 23 among electricians. In addition, the QC inspector fell into the same human 24 performance trap as the elec trician. We took action to improve these work 25 18 practices and to ensure that the QC personnel perform valid, independent 1 confirmation of quality work. This leve l of engagement has sent a clear message 2 to my staff on preventing human perform ance error, and reinforcing expected 3 behaviors. Slide 19, please.

4 I would now like to discuss, briefl y, the status of several of our 5 restart items. In June 2011, Fort Calhoun experienced elec trical fault and fire in 6 a 480 volt switchgear. This event revealed several shortcomings in our 7 performance. We restored and improved the 480 volt bus and switchgear. It is 8 now available to safely support the plant today. We utilized independent industry 9 experts to work alongside OPPD experts to complete a comprehensive root-10 cause analysis. We have improved our electrical distribution hardware, our 11 engineering processes, and our procedures. Our electr ical bus is available 12 today, and the final testing that support oper ability during heat up and restart is in 13 progress. Slid e 20, please.

14 To ensure that the plant is fully restored from t he effects of the 15 2011 flood, we developed a flood recovery plan as part of our IPIP. The flooding 16 recovery plan is comprehensive and has hundreds of actions. All the actions 17 necessary to be flood-ready for 2012 flooding season have been completed. A 18 few actions remain for restart. The NRC has inspected and closed multiple flood 19 recovery items. We have made significant progress on this area. Slide 21, 20 please. 21 One of our concerns from the 2011 flood was the impact of the 22 flood waters on the strength of the soils beneath our safety-related structures.

23 We've scoped this issue and performed comprehensive discovery and analysis 24 activities involving extensive soil borings, testing, and analysis. The work 25 19 involved two separate engineering firms. Du e to the unique complexity of this 1 type of work, we opted to hire a third, independent engineering firm to provide an 2 assessment on the adequacy of the work of the other two firms. The item is 3 complete, and the conclusion is that ther e are no structural concerns affecting 4 the safety of Fort Calhoun St ation. We are currently finalizing the closure book to 5 support NRC inspection of this item. Slide 22 please.

6 During the course of the extensive discovery actions at Fort 7 Calhoun Station, our staff i dentified two significant issu es that must be addressed 8 before a restart. The first issue concerns a number of electrical penetrations 9 through the containment wall that inclu de Teflon seals and wires that could 10 degrade in a post-accident environment. Some of the penetrations are unused, 11 those are being kept. Some of the penet rations will be replaced with tested and 12 qualified components. For t he remainder of the penetra tions, over 300, we are 13 pursuing several options in parallel.

14 One path is an ongoing analysis to determine whether these 15 penetrations remain operable. A second path is a modification we have 16 designed to address the issue. We have begun the environmental qualification 17 testing process for the modified penetrati on assembly. In addition, we are 18 procuring replacement feed thr ough. Slide 23 please.

19 Another item by our staff c oncerns problems with some of the 20 original design drawings and design calculation for the columns and beams 21 inside containment. This does not affect t he containment shell, it is robust. Nor 22 does it affect the sub-compartments inside containment, those are also robust.

23 However, it does affect the internal beams and columns supporting the floors and 24 equipment outside the sub-co mpartments but inside co ntainment. The design 25 20 work has been completed -- the design work was completed well before the 1 availability of computer bas ed, three-dimensional mode ling tools in use today.

2 We performed preliminary calculations and analysis to ensure that those 3 structure elements would meet the safety function for the current plant condition.

4 The containment internal struct ure is functional today. It appeared 5 from those preliminary calc ulations that some elements may not have as much 6 design margin as they should. We will adjust this bef ore restart.

7 We have suspended work that could have impact on the 8 containment building internal structure. We initiated a full reanalysis of the 9 containment internal and structure desi gn. Those models have been built and 10 validated including in dependent engineering review.

As a modification is 11 proposed, the model is updated and rerun and then impact of the modification on 12 the rest of the struct ure is determined. By repeating the process the 13 modifications necessary to ensure the bes t solution for integrated structure are 14 determined.

15 We are now completing operability determinations and we recently 16 met with the NRC staff here in headquarters to discuss the issue. Any 17 modifications that are necessary for operability will be completed prior to restart.

18 I gave you a snapshot of certain discove ry and recovery activities we have 19 underway at Fort Calhoun Station. I will now like to turn the presentation to Lou.

20 LOU CORTOPASSI: Thank you, Mike. Slide 24 please. As we 21 discussed earlier, we have a det ailed restart checklist implementation strategy in 22 our IPIP or integrated perfo rmance improvement plan. It is guiding our recovery 23 and restart activities. In addition, the NRC oversight panel has issued its restart 24 checklist basis document that provides clear and predictable guidance for their 25 21 actions to confirm that we've adequately addressed the checklist items.

1 For each checklist item, OPPD staff and my management prepares 2 a closure book that clearly describes the scoping, discovery, and analysis for 3 each item and implementation of the corrective actions to prevent recurrence.

4 That closure documentation then goes through three levels of review before it's 5 presented to me for approval. First, t he technical review board comprised of 6 experts reviews the material for tec hnical adequacy. Then a challenge board of 7 managers and senior leaders eval uates whether the staff is ready for inspection 8 for that item. And finally, our ind ependent nuclear oversight reviews the 9 adequacy of closure and readiness for inspection.

10 Only when all three of these re views are successfully completed, 11 will I consider an item ready for NRC inspec tion. I can assure you that none of 12 these reviews are rubber stamps. Some books have been approved but also 13 some have been sent back for additional ac tions. I will not pr esent an item as 14 satisfactory for restart until we are convinced that we've done our work correctly.

15 Slide 25 please.

16 It's also my decision on when t he plant is ready for restart. I will 17 ensure all checklist items are satisfactorily resolved as I've described. I will also 18 confirm that our organization has adequately resolved each item in a 19 confirmatory action letter. We're also reviewing key systems, programs, and 20 departments with Exelon fleet support to identify any gaps for safe and efficient 21 restart and those gaps will also be addressed.

22 During heat up of the plant, we will perform around the clock 23 assessments using OPPD and independent experts and ensure that our 24 operators and shift crews are functioning safely and effectively. This will include 25 22 all the support organizations for safe operations such as maintenance, 1 engineering, radiation protection, work c ontrol. We'll run the organization through 2 its paces and make sure we're ready.

3 Finally before I submit the Fort Calhoun Station rest art report to the 4 NRC, we will perform independent reviews of our recovery actions by our nuclear 5 oversight department, our corporate governance and oversight committee, and 6 our safety audit and review committee. Only when we are convinced will we 7 determine that the plant is ready. I'd now like to turn the presentation over to 8 Gary. 9 GARY GATES: Thank you, Su san, Lou, and Mike. I have made 10 changes in our corporate governance and over sight for Fort Calhoun Station to 11 ensure that the subtle indicators of protractive performance decline do not go 12 unaddressed in the future. We stay on a path of continuous improvement in the 13 future. During our organizational effe ctiveness assessment we identified areas 14 to improve our corporate ov ersight at Fort Calhoun Stat ion. We've taken clear 15 actions to improve our governance and oversight at Fort Calhoun.

16 First we established a strategi c plan which incorporates Fort 17 Calhoun Station and corporate level proced ures defining expectations, roles, and 18 responsibilities. We've also improved the expertise and effectiveness of our 19 safety audit and review committee. We call it a SARC, it's like an NSRB in other 20 plants. This is an independent assessment function required by our license. The 21 SARC currently has one retired NRC regional manager and four highly 22 experienced outside nuclear industry senior executives, one that was recently 23 assigned.

24 In addition to these experts, SARC membership has been 25 23 supplemented by several new member

s. Mo Doghman is one of the new 1 members on the SARC. These actions will improve SARC assessments and 2 actions we are taking to improve our safety culture and enhance our corrective 3 action program. We will improv e the effectiveness of SARC.

4 Now I'd like to discuss our new corporate nuclear governance and 5 oversight committee. Mo chairs this committee. This committee meets monthly 6 on-site and receives input from station leaders, station perfo rmance metrics, our 7 SARC, and our nuclear over sight department. This pr ovides another resource 8 for frequent, independent, oversight of Fort Calhoun. They report their insight 9 and results to me and to our elected board of directors. The nuclear oversight 10 department is also new at OPPD and repor ts directly to Mo. The department 11 reign reflects a new and broader focus for nuclear audits assessments and 12 oversight.

13 Nuclear oversight includes the traditional functions of quality 14 assurance and quality control, but it also includes new accountabilities for 15 oversight, observation, and audit beyond t he minimum regulatory requirements 16 with a focus on behaviors that lead to, and sustain, excellence in our nuclear 17 operations. Nuclear oversight also includes our expanded and confidential 18 employee concerns program. Nuclear oversi ght is led by Kerry Ihnen. Kerry will 19 share several outcomes of this more in trusive, independent oversight of Fort 20 Calhoun Station performance. Kerry?

21 KERRY IHNEN: Thank you, Gary. My name is Kerry Ihnen. I am 22 the nuclear oversight manager at OPPD.

I am completely independent of the 23 nuclear operations chain of command and I report to Mr. Doghman in the 24 corporate office. I have held this positi on for four months.

I have 27 years of 25 24 nuclear experience in engineering and operat ions and I've held a senior reactor 1 operator's license. I also worked sev en years for the Nuclear Regulatory 2 Commission as an operating license c andidate examiner and as a resident 3 inspector. Before coming to Fort Ca lhoun, I was the nucl ear oversight manager 4 for five years at an operating Exelon Nuclear plant. Slide 27 please.

5 As Gary indicated, nuclear ov ersight at Fort Calhoun today is 6 different. The Exelon nuclear management model includes strong accountability 7 and oversight checks and balances. The nuclear oversight component of the 8 model is one of the early aspects of the model that we've implemented to provide 9 enhanced assurance that OPPD has well-structured, independent, and intrusive 10 oversight of Fort Calhoun Station perfo rmance. My team of 20 individuals 11 performs inspections, audits, and assessments of station activities. Our role is to 12 challenge the station behaviors, their adher ence to standards and expectations, 13 identify improvement s needed and any gaps to excellence.

14 Nuclear oversight staff member s are in the fi eld providing an 15 independent set of eyes and ears observi ng daily performance and reinforcing 16 behaviors. As an example, during recent work associated with the repairs to the 17 voltage regulator for the emergency diesel generator, my team identified quality 18 issues with the soldering that was being performed and also identified gaps in the 19 processes used at Fort Calhoun. Those so ldering processes were not as robust 20 as those used in the Exelon fleet. Based on the issues we identified, the station 21 was required to rework the solder joints and has upgraded the processes used 22 for soldering including problematic changes and additional training for the 23 technicians that perform the soldering.

24 This is just one example of nucle ar oversight being intrusive, in the 25 25 plant, challenging the status quo, and driving improvement s and standards.

1 Nuclear oversight is having an impact on accountability for, and reinforcing, the 2 expected values and behaviors. We've al so improved the effectiveness of our 3 employee concerns program which now report s directly to the corporate office.

4 We've increased from one to three the number of fully qualified individuals to 5 accept employee concerns. Employee conc erns program is just one of many 6 avenues the employees have to raise concerns. We have experienced an 7 increased trust and confidence in our employee concerns program.

8 In 2012 we received more contracts to our employee concerns 9 program and we saw a significant reducti on in the number of allegations being 10 reported to the NRC, both of which are key indicato rs that ECP is being viewed 11 more favorably by our employees.

12 Finally, we have completed training for Fort Calhoun Station 13 supervisors, managers, and executives in establishing and maintaining a safety-14 conscious work environment. Similar tr aining's been provided to all Fort Calhoun 15 Station personnel. We've made significant progress. I'd now like to return the 16 presentation to Gary for closing remarks.

17 GARY GATES: Thank you, Kerry. Slide 28 please. Chairman and 18 Commissioners, thank you for giving us th is opportunity to speak to you today.

19 As Lou and Mike have said, we focus each and every day on safety and it will 20 remain that way. We are serious about the safe and efficien t restart of Fort 21 Calhoun Station and we will restart Fort Calhoun Station.

We understand what 22 we need to do. We have the right leadership in place to get it done.

23 We, at Fort Calhoun Stat ion, have demonstrated excellent 24 performance in the past. We are seri ous about ensuring the fundamentals we 25 26 put in place will continue to drive our performance improvement after restart and 1 we will return Fort Calhoun to operational excellence. I k now what the Fort 2 Calhoun employees are capable of. They y earn to be the best. The plant is safe 3 today and you have my assurance that we will not restart Fort Calhoun Station 4 until we have demonstrated to ourselves, and to you, that we have in place the 5 right tools and mindset for continued improvement after restart.

6 As you can see, we've accomplished much and we are well on our 7 way. We now look forward to answering your questions.

8 CHAIRMAN MACFARLANE: Thank you very much. Thank you 9 very much for the presentation. We will now have questions from the 10 Commission. And we will start off with Commissioner Magwood.

11 COMMISSIONER MAGWOOD: Thank you, Chairman. I thank you 12 for this morning's presentation; it was ve ry detailed, very specific, and very good 13 so I appreciate that. I al so wanted to appreciate -- express my appreciation for 14 OPPD's interaction with the agency and the Commission, in particular, over the 15 last year or so. Gary, you've been here quite a bit and you've been very open, 16 very honest about what you're going throug h at the site. And I think that 17 openness has been very helpful to help me understand, you know, the situation, 18 to be able to evaluate the staff's work.

19 In an earlier conversation, and I was listening Lou's discussion 20 about sort of what went wrong.

That's sort of the spec ifics of what went wrong.

21 But I remember asking you some time ago what you thought w ent wrong, where 22 Fort Calhoun took that left turn that led to lower perfo rmance. And I thought that 23 perhaps you'd like to give us your thought s on that for the re cord. So I think 24 there are lessons learn ed in there for others.

25 27 GARY GATES: Thank you, Co mmissioner. The past performance 1 of Fort Calhoun -- and I indicated this in our February 26th meeting too -- the 2 overall performance indicators for Fort Calhoun were good on the bigger scale.

3 But we had subtle issues that were devel oping over time. Th ey resulted from the 4 fact that we didn't have consistent application of our leadership principles and we 5 weren't having alignment completely thr ough the organization for those. That 6 resulted in a lack of visibility of these subt ler -- more subtle issues for us and not 7 available for us to react to as a leadership team.

8 On the flip side of that, what we've developed now and what you 9 heard about this morning is the processes, particularly the Exelon model, drive 10 that kind of visibility, driv e that kind of alignment and dr ive consistent practices.

11 So from my view, it was the alignment and lack of consistent application of those, 12 the fix that we have in place with the model and the overa ll procedures at the 13 plant are driving the correction of that.

14 COMMISSIONER MAGWOOD: Appreciate that. You mentioned 15 the operating contract with Exelon. A nd one question that I have about that is 16 can you explain exactly where the points of demarcation are in decision-making, I 17 mean, at what point does OPPD assert it self as the owner? Can you give us 18 your thoughts on how that's going to work?

19 GARY GATES: Sure, these are contractual elements as well, but 20 the OPPD is ultimately responsible for t he plant, for the safety of the plant, the 21 operation of that plant. We have c hosen to use Exelon as our day-to-day 22 operator. But I, personally, approve the per sonnel that are coming to the site to 23 be involved in the station. I also have c ontrol on when they might leave so that it 24 can't be a short-term effort if somebody wants to lure Mike and it's not 25 28 appropriate for OPPD at this time, I control that feature as well.

1 We do provide the budget for t he plant and Exelon manages to that 2 budget so there's a financial c ontrol there, which is not insignificant when you're 3 managing a unit like this. But key to th is is the complete alignment between 4 OPPD and the Exelon leadership. You won't see a difference in what our values 5 are, how we manage, and how we treat sa fety issues. And when we believe 6 we're ready to restart the unit, or when we're operating th is unit five years from 7 now and we need to make a decision of a r epair to that unit, there will be a total 8 alignment, it's just the way the contract is set up. But it's also a clear 9 demarcation in day-to-day operations that Lou's responsible for. Lou has the 10 advantage, I'll say the advantage of having two bosses, both of which are sitting 11 here. And he's doing quite well at that. And the reason is that Susan and I are 12 completely aligned. And Susan, you might have some other comments on that.

13 SUSAN LANDAHL: Speaking from Exelon's perspective, 14 Commissioner, I agree with everything Gary ju st said. We are very aligned, we 15 understand the mission, we have the same expectations of Lou and his team.

16 And we actually haven't seen any conflicts at all in this arrangement and I think 17 the continued openness, the fact that, you know, we're involved together in these 18 management review meetings and phone calls, you know, challenge meetings to 19 address schedule, human performance, what ever, we're extremely aligned.

20 COMMISSIONER MAGWOOD: Appreciate that, and Susan, since 21 you're talking about this, you know, I think there's been so me past experience 22 with operating arrangements a little different from this where the operators, the 23 organizations responsible for operating the plants, would have like to have spent 24 perhaps more resources on various issues and found some difficulty in getting 25 29 the owners to agree to part with those resource

s. And I appreciate that you're in 1 alignment today but as I think you've in dicated this is a long-term arrangement.

2 Ten years from now, if the operators w ant to, you know, spend more money to 3 enhance safety in some area what's your a ssurance that you'll be able to get that 4 to happen? How does the public and how do we know that those conversations 5 are taking place where the operator says we need to spend $1,000,000 and the 6 owner says, "Absolutely not."

7 SUSAN LANDAHL: Well, part of the strategy, if I can speak, at 8 least in part for OPPD about bringing Ex elon in was this long-term view of 9 continued excellence. And, you know, wh en you look at the elements of the 10 contract, it is not just about running t he plant but it is about returning it to 11 excellence and staying t here. And so, you know, given that that's its fundamental 12 goal, if there is a need to do something from a safety perspective, from a 13 production perspective, from a people perspective, you know, clearly OPPD is 14 committed to having that vision of excellence and I don't see a conflict in the 15 future because that is the foundation of the contract to begi n with. And it's 16 actually very clearly laid out in that contract.

17 GARY GATES: If I could add, t he focus for the OPPD senior team 18 will be maintained on Fort Calhoun and the reason I can assure you of that is 19 their performance now is an integral part of that -- their apprai sal. Every vice 20 president that works for me right now has specific nucle ar responsibilities. In 21 addition to Mo Doghman, t hat you've heard about today, our vice president for 22 our -- essentially for our fossil generation is the liaison to Fort Calhoun, so he's 23 up there frequently, every week. Our CFO is responsible for the safe operation 24 of the plant and part of that is reflected in his performance appraisal. So it's not 25 30 going to be at any advantage of him to try and cut any corners because he needs 1 to have that as well. Our corporate communications is actually on the site now 2 helping us communicate internally and externally going forward, and our HR and 3 procurements services are tied right to Fort Calhoun as well. So the hearts and 4 minds of the whole senior team are par t of Fort Calhoun by definition and by 5 commitment. It's a great team. I don't anticipate that there will be any problem in 6 the future. But there are contractual and links that will pr event that from 7 happening.

8 LOU CORTOPASSI: And Gary, just to add that, I look at where 9 rubber meets the road, and I'll start with the work management process, the 10 outage planning process, the design c hange process, the long-term asset 11 management, all tools that we can compar e against the rest of the fleet and with 12 resources that we do have, I'll say more efficiently and effectively, to make 13 changes to the plant that are needed.

14 COMMISSIONER MAGWOOD: Appreciate that. Lou, since you 15 have the microphone, let me just sort of ask you, one unique aspect of the 0350 16 process is that you tend to have plants that are offline for a considerable period 17 of time. I guess it'll be about two years at least that you'll be looking at. How do 18 you draw from previous experience about -- when it comes to plants that have 19 been shut down for such a long period of time? There hasn't been water flowing 20 for a long time, there hasn't been many electrical parts that haven't been 21 energized in so -- in such a long time.

What's the previous experience and how 22 are you drawing from that?

23 LOU CORTOPASSI: Yeah, so we've taken procedures from plants 24 that have been in a similar process. As I mentioned, you know, looking at it from 25 31 the department readiness standpoint, we look at staffing, we look at corrective 1 action backlog, we look at training, we look at qualifications. From an 2 engineering program standpoint, again, being able to compare what's -- you 3 know, benchmark and compare changes we might need to make to the 4 engineering program. But probably most importantly we just have finished up a 5 reconstitution of our system health, and that's a combi ned team of system 6 engineers, maintenance in oper ations with a cross-functional look, again, to look 7 at backlogs and to look at surveillance and system readiness. And we're just to 8 the initial throes of that right now, we expect to be starting up our circulating 9 water system in the next couple of weeks, our condensate system, and start to 10 put the -- you know, start to put the plant through its paces with respects to 11 systems.

12 The other piece that we've been ve ry cognizant of is the operators 13 and operator training and how we best keep the operators, you know, focused on 14 what an operating plant looks like as well as what we use the simulator for, you 15 know, for transient training, for emergency operations procedures. We've done 16 cycles of training where the operators will spend time at normal plant operations 17 doing their surveillances, doing their log re ading, doing their normal interface with 18 plant employees. And those are just some of the things we've done right now 19 based on industry experience to ensure that the plant gets ready for an initial 20 aspect of start up, or restart.

21 COMMISSIONER MAGWOOD: Okay. Thank you. Thank you, 22 Chairman.

23 CHAIRMAN MACFARLANE: Okay. Commissioner Ostendorff.

24 COMMISSIONER OSTENDORFF: Thank you, Chairman. I add 25 32 my thanks to that of Commissioner Magwood's for your presentations today. I 1 want to start out just by making a co mment that it's always hard to ask people 2 outside for help, and so I commend OPPD for asking for help and also commend 3 Exelon for stepping in to provide that help. There are many examples around the 4 U.S. where sometimes those kinds of circumstances don't exist. People are 5 afraid to ask for help, or people, industry partners are not willing to step in. So I 6 commend both organizations for that.

7 I want to kind of tag-team on Commissioner Magwood's questions 8 because I think it was -- my questions are very much aligned along some of his 9 thoughts, and so I'm going to piggy-back on my colleague here a little bit. And 10 I'm going to start out, Gary, in your area and I appreciate the discussion about 11 bringing in -- Exelon coming in on the operating services agreement and 12 alignment with Exelon and so forth. And I note that I think thr ee of the five people 13 at the table here -- well, actually four of the five, you have all been doing this for 14 less than one year. Is t hat roughly about right?

15 LOU GORTOPASSI: At Fort Calhoun.

16 COMMISSIONER OSTENDORFF: At Fort Calhoun. And so, 17 again, multi-part question, I'll start with Gary. What was the biggest learning you 18 had as CEO in looking at how Exelon does business and how that might 19 translate to changes at Fort Calhoun? What's been the biggest issue for you?

20 GARY GATES: The biggest issu e for me is the management model 21 and the rigor and preciseness of that management model. That management 22 model drives the accountability piece and it drives visibility and it drives 23 consistency. They -- and it's modularized so that we could implement it as we 24 are now and I think Susan re ferenced that we've prioritized the various pieces of 25 33 that management model that we're implementing. But with regard to interface 1 with Exelon, the management model, the preciseness, and the consistency of 2 that are the biggest issue that I've seen for improvement for Fort Calhoun.

3 COMMISSIONER OSTENDORFF: Okay. Now I'm going to shift 4 over and ask Susan and Lou and Mike -- maybe Lou, the symmetrical question.

5 I'll start with Susan. From an Exelon standpoint, when you all were brought in to 6 provide assistance to OPPD, what have you seen as the biggest area of concern 7 or the hardest area to addr ess from where you sit with the Exelon organization?

8 SUSAN LANDAHL: I don't know if it's the hardest, but certainly the 9 most sensitive area is the people at the plant and making sure that, you know, 10 there are many good people who work at Fort Calhoun, many of them eager to 11 learn, eager to get back to the excellent performance. And making sure that as 12 we incorporate new processes, as we raise the accountability, ask deeper 13 questions that we're really do ing that in a way that brings the staff along. You 14 know, it's a coaching way, it's not about, you know, things that aren't right or 15 discussed for purposes of future learning, not because you personally, you know, 16 made a mistake. So I think, you know, the most important part and the thing that 17 really takes, you know, care whether it's how we're working on something in the 18 corporate office that we're preparing to, you know, bring to Fort Calhoun for a 19 training session or whether it's the interaction in meetings, it's really making 20 absolutely sure that we consider the perspective of the individual employees 21 there because it's really -- you know, Exelon is there in a leadership role but it's 22 clearly the folks at Fort Calhoun who are going to bring the station back to 23 excellence.

24 COMMISSIONER OSTENDORFF: Okay, thank you.

25 34 LOU CORTOPASSI: I'll just buddy on that from really three 1 perspectives, one that Susan mentioned. Just a more intrusive leadership, more 2 questioning, and that really does translate now to the manager level, to the 3 superintendant level, to the supervisor level. As Mr. Prospero illustrated with his 4 example of industrial safety, what you see at the shift now, is the supervisor doing 5 that intrusive look on the behaviors and repor ting out to Mike as opposed to Mike 6 using it as a teaching moment, we're starting to see that transition.

7 Probably the other two biggest pieces is just fundamentally how the 8 corrective action program is viewed. Is it core business or not core business?

9 Now it's core business at the start of each day, intrusive into what was written on 10 the last 24 hours2.777778e-4 days <br />0.00667 hours <br />3.968254e-5 weeks <br />9.132e-6 months <br />, are they properly screened, are they properly prioritized, as 11 well as the back-end product review. That is core business done each and every 12 day by the senior leadership team. And then the last piece which I'll touch under 13 culture, and maybe to some ex tent safety culture, is as we looked at the station 14 progress from a very experienced workforce and over the past few years starting 15 to transition new people in. And we've seen this in the industry and I use the 16 term, "a culture of individual choice in the field," where there are standards 17 written, but their applicability and thei r consistent use maybe not has always 18 been reinforced. And we're wo rking strongly in that area , especially the areas of 19 human performance, we mentioned industrial safety. But this is the standard and 20 the passion for preparation for a job activity and adherence to those standards, 21 observations to those standards and reinforcement is probably the biggest 22 change that we're driving down at the workforce level right now.

23 COMMISSIONER OSTENDORFF:

Mike, you want to --

24 MIKE PROSPERO: Yeah.

25 35 WILLAIM OSTENDORFF: Your perspective please?

1 MIKE PROSPERO: The biggest thing is the behaviors of people.

2 The performance difference between 2011 and 2012 with personal safety is 3 almost remarkable. And I'll give a good example. Someone scratches their 4 nose. I want to know why. Why did you scratch your nose? Well, someone 5 scratched their nose the other day. He had his own personal safety glasses, that 6 was fine. His welding hat was a little loose. Figure out why and deal with it. And 7 then we go to the human performance with those behaviors with safety go right 8 to the human performance. And like Lou says, we've got to put it in a corrective 9 action program so that we have the learnings for the future and it's sustainable.

10 And then the only other thing that I'll add is just fixing our plant. And we're 11 making good progress doing that. But to work with the people, we've got very 12 good people at Fort Calhoun and adapt ing, and we're moving forward.

13 COMMISSIONER OSTENDORFF: Okay, let me shift gears a little 14 bit. I'm going to stay, though, with you and your plant manager role. Obviously 15 the NRC has issued some orders in early 2012 associated with Fukushima action 16 items. And there have been ot her 50.54F letters out and so forth. How are you 17 balancing the Fukushima action items with your restart checklist action focus?

18 MIKE PROSPERO: We have a gentleman dedicated to those 19 actions, he is on the team. And a good -- bigger picture, I'll call it recovery team, 20 and we've got the -- I'll call it the in-plant. Recovery team deals with a lot of the 21 issues, for example, the Fukushima issues, the flooding issues, whereas we're 22 working through the actual fixing the diesels, fixing our raw water pumps, fixing 23 our electrical buses. So we've kind of divided up and got to conquer all these 24 major activities, including the Fukushima and some of the other recovery items 25 36 that we're working on. We'll get the Fukushima flood issues done by -- before the 1 restart, and it's due this spring.

2 LOU CORTOPASSI: Yeah, so as Mike mentioned there's, you 3 know, several industry activities. And that can be a concern sometimes, right?

4 We get so focused internally on recovery that the rest of the industry continues to 5 progress. And so those activities, as Mike mentioned, we kept dedicated 6 resources both engineering, operations and licensing resources to meet our 7 commitments in that area. There's other areas where we'll get ready to get into 8 our period of extended operation in the latter part of the summer so there's 9 commitments and programs and processes that have been maintained in that 10 area. Transition to NFPA 805, just a number of industry initiative items that we've 11 maintained dedicated resources on above and beyond the recovery piece. And 12 then stayed in contact with industry groups and now obviously support from the 13 Exelon fleet provides an additional level of oversight and really efficiency and 14 implementation.

15 MIKE PROSPERO: you know, Commissioner, another example is 16 using the fleet. This is where the fleet comes in, really benefits us. There are, for 17 example, on emergency preparedness. We took the gentlemen, put them right 18 through their fleet peers, and it's just been a great assistance to help us.

19 COMMISSIONER OSTENDORFF: Okay. I'm not going to ask 20 another question. I am going to, though, comment on Commissioner Magwood's 21 concern that I share is how long, you know, after you have been shut down for a 22 long period of time, the ability to keep people motivated, focused is real hard. I 23 saw it numerous examples in my time in the nuclear submarine force where we 24 had ships that were in prolonged overhaul s or construction periods that got 25 37 extended, got extended, and trying to keep that human edge at an appropriate 1 level and sustainable is really hard. And so I -- Commissioner Magwood, I 2 appreciate him bringing that up because I share that concern and I thank you for 3 your responses today. Thank you Chairman.

4 CHAIRMAN MACFARLANE: Great.

My turn. So I'm happy to hear 5 that you guys have done quite a lot of l earning about the root causes of the 6 issues at Fort Calhoun and you've done a lot, especially on the management 7 side, to address them, and so that gives me some comfort. Let me -- because 8 you guys ended with the question of Fukush ima, I have a similar question and I'd 9 just like to hear more detail about what exactly -- what specifically Fort Calhoun's 10 done in terms of acquiring new equipment to address the mitigation order and 11 especially in terms of the flooding hazard analysis request.

12 LOU CORTOPASSI: Specifically with respect to the flooding 13 analysis, we did procure new pumps in March of last year, are finalizing 14 procedures that would allow implementation of that new equipment. But even 15 going back to the mid '90s where we've done an additional look at external 16 events, our licensing basis, you know, flood elevation of a 1,014 foot, we have 17 obviously done a lot of work with respect to response to the yellow finding in that 18 area. But above and beyond, going back to the mid '90s, we've had a mitigation 19 strategy in place for a multiple dam failure event. Again, we're going to be 20 reanalyzing that with input from the Army Corps of Engineers. That would have --

21 that mitigation strategy would be succe ssful up to an elevation, an expected 22 elevation, of a 1,029 feet.

But again the inspections that we've done both from a 23 flood inspection standpoint, as well as I mentioned the procurement of new 24 equipment, along with the strategies that allow us to continue to strengthen the 25 38 beyond-design-basis, especially with respect to flood.

1 GARY GATES: And with regard to this -- appreciate that question 2 because it's -- we've partnered with NPPD, with Cooper Station to do our flood 3 analysis that goes beyond the multiple -- t hat goes into the multiple dam beyond 4 this mitigation strategy that we talked about which covers about four. So we'll be 5 partnering with them to look at the Missouri River Basin. We're looking for input 6 from the Army Corps of Engineers. We have a parallel plan that if we aren't 7 getting -- if we can't get the input we need from that we'll have to develop a base 8 and model ourselves, but we're partnering with them so we're going to take one 9 swing at it for both nuclear plants that are on the Missouri right now.

10 CHAIRMAN MACFARLANE: Okay, thanks, I appreciate that level 11 of specificity. So let's now talk about some of the other issues. So I appreciated 12 hearing about some of the specific examples that you gave on industrial safety 13 and you spent a lot of time this morning talking about management changes. But 14 I guess I'd like to hear some concrete ex amples, some anecdotes that would give 15 me some assurance that some of the c hanges that you've implemented in terms 16 of safety culture are -- have actually -- are beginning to ta ke root. So specifically 17 I'm interested in the area of safety culture where employees feel comfortable to 18 raise issues with management and I wonder if any of you have any anecdotes 19 you could share?

20 MIKE PROSPERO: I do. We're working on our diesel generators 21 and we had an area that we had to go up on the ladder and do some work. One 22 of the gentlemen did not feel comfort able going up on that ladder and doing the 23 work. He went and talked to the super vision and they stopped that work and 24 they got the appropriate equipment, a differen t pump, and we were able to put it 25 39 on the ground level without going up the ladder and taking care of it. I meet with 1 quite a few of the -- if anything ever comes up with that, I usually meet one-on-2 one with that person and Kerry's organiza tion has an independent review of 3 anything that may not come back up. So that is a concrete example that 4 occurred approximat ely a month ago.

5 CHAIRMAN MACFARLANE: Okay. Good, good.

6 LOU CORTOPASSI: As Mike mentioned we've been focusing a lot 7 especially with the physical work t hat's going on at t he plant with the 8 maintenance craft feeling comfortable to stop and get help with supervision. So 9 multiple examples of some of the work that we've been doing with our intake 10 structure, lifting and rigging that didn't look quite right or feel quite right. Work up 11 on scaffolding, again, that didn't feel quite right or look quite right or didn't match 12 what they saw in their pre-job briefing.

And that's what we've -- strong focus with 13 that feedback back to the craft, it does reinforce t he direction that we've been 14 giving which is that passion for preparation which makes work go in the field 15 much smoother. And so a lot of focus on maintenance, a lot of focus on our RP 16 technicians, I'd say we basically pay our RP technicians to observe radiological 17 behaviors in the field. They have stop-work authority, we've been doing quite a 18 bit of work in our reactor cavity, fixing fuel transport equipment, we've done some 19 additional work on some sandbox covers. And again, with the RP technician 20 having clear, clear understandi ng that if work is not progressing as they would 21 expect from a radiological standpoint, that they can stop. And they do, and we 22 document it in the corrective action system and use that in our post-job critiques 23 and look to -- excuse me --

improve performance going forward.

24 KERRY IHNEN: And -- I'm sorry. Another example I would use is 25 40 use of the corrective action program. The -- in 2012, there was over 20,000 1 condition reports initiated by station pers onnel indicating that no fear to enter 2 things in the corrective action program. At meetings, one of the things that my 3 organization looks for is when an issue is being brought up in a meeting. Is there 4 an immediate reaction to eit her a condition report has already been written or will 5 be written. And also if you look at the shift manager turnover sheet, every day, 6 now behind every item that's new on the shift manager turnover note, there will 7 be the number of what condition repor t was initiated for that issue.

8 CHAIRMAN MACFARLANE: [affirmation]

9 KERRY IHNEN: To me that's i ndicative of an improvement in the 10 use of the CAP.

11 GARY GATES: I think the comfor t level of people raising issues is 12 definitely there. And I'll give you an example. I attended an alignment meeting 13 last week. And -- the 415 alignment m eeting and in that m eeting there was a 14 question on some HR issues that needed to be resolved appropriately. And the 15 individual didn't hesitate to pick me out of the back of the crowd and say, "Gary, 16 you're the link to the HR, so what are we going to do about this?" So I think that 17 kind of comfort, you know, we have a mantra that we start ed there that we need 18 to continually focus on our nuclear safety culture and if absolutely necessary we'll 19 even use words. It's our actions that make a difference.

20 CHAIRMAN MACFARLANE: [affirmation]

21 GARY GATES: And we have to demonstrate that as a leadership 22 team and that's what we are doing.

23 CHAIRMAN MACFARLANE: Okay. What's your biggest challenge 24 moving forward?

25 41 GARY GATES: Biggest chall enge moving forward for us, as we 1 work through the restart, is make sure that obviously we're going to make sure 2 we satisfy ourselves that everything is ready for restart and safely going forward.

3 I'm very optimistic on the future as fa r as Fort Calhoun goes. I think the 4 challenge of bringing a lot of new personnel on, at the last meeting we talked 5 about new employees, we're getting quite a few of them. The folks coming out of 6 the schools today are fantastic, we hav e a great, young, professional group at 7 our plant. But the challenge to bring them into the nuclear environment, continue 8 to share what information some of us of more experience may have had and 9 make sure that's transferred appropriately. And yet give them the freedom to go 10 forward and do things in a new and different way, so mine is to get the people 11 ready for the future.

12 CHAIRMAN MACFARLANE: Susan, what do you think the biggest 13 challenge from Exelon's point of view is?

14 SUSAN LANDAHL: I go back to t he people as well. You know, I 15 mentioned making sure that it's really, y ou know, a team effort as we go into 16 integration, that there' s good understanding by both parti es of, you know, what 17 the future looks like, what the future organization processes, procedures, and 18 making sure that we're, you know, toget her all along because that's really going 19 to be key to make sure that it's sustainable in the long term.

20 CHAIRMAN MACFARLANE: And then the final question for me 21 and you're all welcome to jump in, any feedback on the experience of working 22 with the NRC in these areas? Any areas fo r improvement in that process?

23 LOU CORTOPASSI: Yeah, there's a -- if I look at right now where 24 we're at, especially having the restart checklist, you know, I mentioned our 25 42 implementation strategy and that's what we started with as we developed the 1 recovery plan last year, and now that we

've got the complementary document of 2 what inspection looks like, that that puts us in a much more predictable, you 3 know, predictable fashion for this element of our recovery. And that's probably 4 been the biggest change or the most importa nt change over the last six months 5 as we've been working with the 0350 panel and the Region on restart activities.

6 GARY GATES: I think, and what I really appreciate, is access to 7 the staff, and not only your time, I think we've been back three times in between, 8 and that's important to us, to share what we're doing because of the situation 9 we're in, but the access to the Region and NRR has been very good for us when 10 we need to talk about issues, and that's nece ssary to complete the projects that 11 we're on right now, so that access has been very good. I think -- and I'm sure 12 that will continue to be in the future.

13 CHAIRMAN MACFARLANE: Areas for improvement?

14 GARY GATES: I think what we

'll do at the end as we go through 15 lessons learned is that, you know, how do we get -- as we get through these 16 restart checklists, because MC 0350 is not an often used process, and that's 17 good, but how do you implement those not-o ften-used processes? I think we can 18 probably provide some lessons lear ned from that w hen we're done.

19 CHAIRMAN MACFARLANE: Okay. That'd be helpful. Great.

20 Commissioner Svinicki.

21 COMMISSIONER SVINICKI: Good morning, and I add my thanks 22 to those expressed by my colleagues for your presentation. My colleagues have 23 also covered a number of important topics already in their questions, so I won't 24 cover that ground again. I can't help but re flect as I sit here that in my years on 25 43 this Commission, particularly in the Co mmission's annual meeti ng where we hear 1 from the NRC senior executives under the agency's review meeting of licensee 2 performance, and then we hear from licensees that are having performance 3 issues annually as part of that process.

I have a lot of confidence that licensees 4 that are having performance challenges can get well. I don't know if I'm alone in 5 thinking this. I think with enough commitment and resources and obviously at 6 Fort Calhoun Station there's been a tremendous accessing of external resources 7 and expertise, as one of my colleagues ment ioned, and so I know that stations 8 can improve their performance.

9 What surprised me when I ca me to the Commission and began to 10 hear from licensees that were in categorie s of regulatory ins pection or oversight 11 where they were having performance c hallenges was I heard also about 12 licensees that had traditionally been ve ry high performers and then had years 13 later found themselves having performance challenges, and so I don't observe 14 that there is any particular day where a licensee, again, this is just my 15 observation, comes in and says let's all take -- I think the term used was a left 16 turn -- let's take a left turn and begin to have a performance that's less than we've 17 had historically.

18 So, I've also attended a workshop at the Goizueta Institute where 19 they train incoming board members for utilities, and I was asked to come in and 20 talk about NRC, but I also thought what wa s really interesting was for utility board 21 members, they really wanted to tackle th is issue, not just of nuclear safety 22 performance, but performance generally, whether it's a fo ssil or a nuclear plant, 23 and why is it that there seems to be somewhat of a cyclic process, and for some, 24 you know, they can stay at high levels of performance for longer periods of time.

25 44 And I also acknowledge that if you look at what INPO tracks, which is different 1 than what NRC does, but to be a top quart ile performer in the nuclear -- in the 2 United States in the nuclear business, it means a higher level of performance 3 today than it meant historically, because the overall level of performance is 4 higher, and that's not, you know, really w hat we're talking about now. I'm kind of 5 mixing the concepts of excellent perfo rmance and regulatory requirements, and I 6 am going to acknowledge that I am kind of mixing those up, but we talk about 7 sustainability. Your performance impr ovement plan talks about post-restart 8 activities and I think the person who c an solve this issue of making excellent 9 performance sustainable in perpetuity wil l be a very, very successful person 10 going forward.

11 And I remember when I first began service on this Commission, I 12 was -- I don't want to use too strong a word, but I was somewhat astonished to 13 hear that some of our top per formers of the periods of time that those stations 14 had really been in the bottom, and so I don't -- you know, there's a lot of industry 15 experience on your side of the table beyo nd Fort Calhoun. What is the thinking 16 of any of you about this notion? I don't be lieve -- I think that people want to be 17 part of a successful winning organization and I don't accept for a minute that 18 there was any point in time where Fort Ca lhoun collectively decided that it didn't 19 want to perform well. So why -- you k now, what's your thinking on why this 20 happens?

21 SUSAN LANDAHL: I'll start and sa y that there are a couple of key 22 elements around having the right standards, but also being sufficiently involved in 23 the industry to understand when the industry is getting better and when 24 standards are improving, because clearly performance today is better than it was 25 45 10 years ago or 20 years ago, as the fleet

-- you know, as the U.S. or world 1 nuclear fleet continues to improve in performance, but understanding current 2 state, understanding what the best in the industry is, and constantly having that 3 internal pressure that no matter how good you are, if you're not getting better 4 you're sliding back, and then having the st ructure in place that makes any gaps 5 very obvious, and then having the rigor to go after them and not make excuses 6 for why they're okay, not rationalize them.

7 COMMISSIONER SVINICKI: Is that where we get to this concept 8 that it is harder to create that atmosphere at a single -- if you have a single site?

9 SUSAN LANDAHL: I believe so because it's harder to create that 10 external driving force. You know, even --

certainly there are single sites that can 11 be successful, so I won't talk in generalities, but --

12 COMMISSIONER SVINICKI: They

're going to have to really 13 conscious of doing this, is that what you're saying?

14 SUSAN LANDAHL: I believe so, because they're -- they don't have 15 it internal to their organization to have that, you know, that input available, that 16 external challenge availabl e, that knowledge of what

's going on in the industry 17 available, so it makes it more difficult.

18 COMMISSIONER SVINICKI: Gary, did you want to answer?

19 GARY GATES: You can never back off from performance, and you 20 can never back off from evaluating your performance. There' s a current concept 21 in human behavior that's being explored right now and the term they're using is 22 called practical drift. And it's the fact that as people we have procedures, we 23 have policies we perform, but over time we will drift away from excellent 24 performance. It's a -- I wouldn't say human nature, but it can happen. So how 25 46 do you fix that? You never assume that you're in -- you c ontinually challenge 1 yourself. You continually challenge standards. You asked the question about a 2 single unit. It's a great question. Single units can run fine. We did for a number 3 of years. I think you have to decide on an individual basis as a single unit when 4 is there enough activities at your site, enough outside activities, that you really 5 are going to lose that day-to-day focus and drive that and be aware of that 6 practical drift, and a fleet allows you to do th at. It eliminates that issue for you.

7 So that piece from the overall perform ance that you mentioned, to me, is the 8 reason why a fleet can do t hat, but the fundamental reas on is you can never take 9 performance for granted. It can't be tak en for granted. You have to challenge 10 yourself every day if you're doing the right things.

11 COMMISSIONER SVINICKI: I appreciate that. Lou, did you want 12 to add something?

13 LOU CORTOPASSI: Yeah, just a few things to add on. We have 14 the benefit right now and we leverage i t, especially with our new employees.

15 We've got several, as I mentioned, engineers, new operators that in some cases 16 haven't seen the plant run. So how we'r e able to leverage, one, this significant 17 emotional event, as well as the amount of experience they

're getting both with 18 the regulatory interface plus all of the wo rk that we're doing, they're getting to see 19 a lot right now, and it's interesting.

So how do you keep that going forward?

20 Oftentimes from a leadership per spective, you know, we wait for 21 people to get promoted to first-line s upervisor and then star t making leaders in 22 the organization, have to back that up a ll the way to, you know, selection of 23 personnel, my involvement in the selection of personnel, Mike --

the entire -- you 24 know, I'll say the entire organization's focu s on our first-round draft choices, who 25 47 we're bringing in, and how we

're creating leadership from day one from folks that 1 are, you know, starting in their initial training programs I think is one of the other 2 key elements that will help us. And then as Gary and Susan mentioned, the --

3 one of the many beauties of t he fleet is just that early detection, whether it's, you 4 know, deviation from what we're seeing at the other plants or as the fleet 5 continues to benchmark on what best practice s look like. You know, the ratings, 6 whether it's the monthly, the quarterly ra tings, they're there to see. You can't 7 hide performance based on compar ison to your peers.

8 COMMISSIONER SVINICKI: And I appreciate you mentioning that, 9 of all that the average station employee is seeing right now, I imagine this has to 10 be quite different than the la st number of years that t hey worked there. And I 11 know that a couple of my colleagues made re ference to the fact that the station, 12 you know, will have been shut down for some period of time. My sense is is 13 maybe not in the equipment that Commissioner Magwood talked about, but as 14 far as personnel, they're seeing a lot. They

're probably fairly -- kept fairly busy 15 these days, and I don't think they're si tting around idle and all of the sudden 16 when there's restart they're going to go "Gee, I guess I'd better get back in shape 17 and get to work." My sense is this is really putting them through their paces in a 18 significant way.

19 And I know that there was some mention of maybe the plant will be 20 definitely shut down two years. I just w ant to be clear, I'm not aware of any, and I 21 think the NRC staff will also testify, that t here is not a schedule for that decision.

22 Obviously as the station operators you' re making all your efforts towards 23 completing the checklist and being ready for the inspection and things like that.

24 I'll be asking the NRC staff if there are any impediments to our ability that if you 25 48 get there will we be able to support the independent verification and reviews that 1 we need, but I just want to clarify fo r anybody listening, there isn't any super 2 secret, you know, schedule that says you' re restarting on date X, and so I know 3 you're nodding your heads on that.

4 Gary, I just wanted to close t hat in your performance improvement 5 plan, you talk about additional oversight in addition to the recovery and the things 6 that you've described in your presentation today. This is the number of additional 7 oversight boards. There is an Engi neering Assessment B oard, a Station 8 Corrective Action Review Board, a Depar tment Corrective Action Review Board, 9 and Condition Review Group. There's a Plant Review Committee, a Plant Health 10 Committee, Nuclear Oversight Committee, a Safety Assessment and Review 11 Committee, and a Corporate Governance and Oversight Committee. How do 12 you keep all that coherent?

13 GARY GATES: We keep all that coherent because of the nature of 14 each -- the charter for each of those organizations, and they are a hierarchical 15 organization. The broader one is the corpor ate oversight piece. Then it goes to 16 Kerry's organization for the oversight, and then the internal committees that the 17 operating group has. So they

're all defined by charter, there's a hierarchy to 18 them, and they're coordinated very well, and I've observed that personally.

19 COMMISSIONER SVINICKI: Okay , thank you. Thank you, 20 Chairman.

21 CHAIRMAN MACFARLANE: Okay. Commissioner Apostolakis.

22 COMMISSIONER APOSTOLAKIS:

Thank you. Well, my 23 colleagues covered all the issues I had in mind, so I'll be very brief. We've heard 24 a lot about safety culture today.

What is safety culture? Is it what we say it is in 25 49 our policy statement? Is it what INPO says?

Is it both? Lou?

1 LOU CORTOPASSI: Yeah. We certainly use the principles as a 2 basis for the discussion, and the beauty of the principle-based discussions is that 3 it does open up, you know, the interface with employees to talk about what does 4 it look like behavior-wise, and while some times it's not easy to talk about, but 5 also talking about attitude, what's in the hearts and minds of individuals when 6 they're making decisions, what's in t he hearts and minds of individuals who are 7 making leadership decisions.

8 COMMISSIONER APOSTOLAKIS: Ho w can you tell what's in their 9 hearts and minds?

10 LOU CORTOPASSI: Now that I've opened up that discussion on 11 attitudes, I'll do my best to cl ose it. It really is --

12 [laughter]

13 -- it is that one-to-one interface.

It's the group interface, as I 14 mentioned, just the time that we spend with the employees watching them 15 express, you know, both what they're ex pressing to me verbally, what they're 16 expressing in the corrective action program. When events -- you know, as Mike 17 mentioned, when a human performance event does occur, you know, what's 18 different when someone's watching than w hen someone isn't watching? Is there 19 a delta in behaviors? Is there a delta in expectations? Is there a delta in 20 performance? We use all of those to colle ctively measure. As I mentioned in the 21 observation piece, but now as we're ge tting smarter even with, you know, pulse 22 surveys and other tools that we're using down to the department level to measure 23 the behaviors, and the best we can, the attitudes of our employees.

24 COMMISSIONER APOSTOLAKIS:

When we talk about safety 25 50 culture a minute, at the high level we talk about putting safety first and having the 1 questioning attitude and all that, can we identify one or two best ways for 2 communicating to the workforce that this is what they ought to be doing? What is 3 the best way of spreading this culture --

cultural attitude? Or maybe there isn't 4 one, and maybe there are many. I don't know, but --

5 LOU CORTOPASSI: Yeah, I really do think you hit on it from a 6 communication strategy, and I do believe it is varied on both -- I believe it's both 7 formal. For example, we have all-hands meetings that Michael and I will conduct 8 this week. We just kind of stand back and scorecard for the group where we're 9 at, where we're going, and I think that's an important interchange. I mentioned 10 some of the other communicati on strategies that we have , but I'll also say, I take 11 it down to the crew level, to every shi ft turnover that the control room does to 12 every pre-job brief that maintenance does , that supervisor, that crew is 13 establishing their safety culture, I'll say for that shift, for that day, and it's either 14 flat, it's on an uptrend or it's on a downtrend. Our obs ervations help with that.

15 Our reinforcement to the supervisors of what their roles and responsibility help 16 with that, but I believe you can have pockets of safety culture that, you know, 17 each crew has their own, you know -- an individual crew, department, a station, 18 and how we best detect and correct t hat, how we measure it, how we 19 communicate it, I think it really is a very approachable formal and informal 20 communication strategy.

21 COMMISSIONER APOSTOLAKIS: But -- I'm sorry.

22 SUSAN LANDAHL: I was just go ing to add that I think it's the 23 consistency across all the forums that r eally -- you know, I don't think it's any one 24 thing. It's not just sending folks to tr aining and teach them safety culture and 25 51 then walk out and do things just like they'v e always been done. I think it's what 1 we say in the classroom.

It's the messages that come from the senior leaders at 2 the site in big forums. It's how we address individual issues when they come up 3 in smaller forums, and it's really the consistency beyond all of the interaction 4 opportunities that we have where we demonstrate by our questions, as well as 5 our follow up, what, you know, what our expectations are with safety culture and 6 how we make that health y across the site.

7 GARY GATES: The other piece is that you really -- excited about 8 this, but the other piece is that you really have to re cognize good safety culture, 9 and when you see that, verbalize it, recognize it, say this is -- that was a good 10 safety culture practice because that also illustrates to the team what you want to 11 do. It's the questioning on when you have issues, but the recognition when the 12 team does a good safety culture exercise to make sure everybody knows that.

13 That helps as much as the other piece.

14 COMMISSIONER APOSTOLAKIS:

Now, Lou, you mentioned the 15 small groups and the supervisor of small group and then Susan mentioned 16 classrooms. There is really a classroom teaching of what safety culture is?

17 LOU CORTOPASSI: Yes. We mentioned one of our corrective 18 actions. There was a subset of that, was a safety-conscious work environment 19 essentially to get us back on the same page of what that important aspect of 20 safety culture meant, but then as I m entioned, you know, as we look at 21 classroom training and just the introduction of safety culture principles into that 22 forum, for example, we're teaching operabi lity training for our engineering leaders 23 and our senior reactor operat ors, and just being able to tie the importance of 24 safety culture with, you know, some of the improvement areas that we made with 25 52 respect to how we categorize and how we fix, you know, degraded equipment at 1 the station, obviously some very good exam ples from operating experience. It's 2 a useful tool in training to help, you know, reinforce that principle.

3 MIKE PROSPERO: But the other thing I want to emphasize is 4 24/7. Every single night Lou, mysel f, and my managers get on a phone call with 5 the people at work and we cover what our priorities are, where we're going, and 6 we always start off with safety, human performance, every single night we go 7 through it to make sure we are aligned through the night to do what we need to 8 do. 9 COMMISSIONER APOSTOLAKIS: Well, thank you very much.

10 Back to you, Madame Chairman.

11 CHAIRMAN MACFARLANE: Do my colleagues have any other 12 questions? Further questions? Go ahead, Commissioner Magwood.

13 COMMISSIONER MAGWOOD: Yeah, I feel like I have to react to a 14 point of order, Commissioner Svini cki mentioned my left turn.

15 CHAIRMAN MACFARLANE: I object to the left turn thing being 16 left-handed, just to note.

17 [laughter]

18 COMMISSIONER MAGWOOD: Some of my best friends are left-19 handed. 20 CHAIRMAN MACFARLANE: Good.

21 [laughter]

22 COMMISSIONER MAGWOOD: You're all a little strange, actually.

23 [laughter]

24 CHAIRMAN MACFARLANE: Aha. Well, there we go, Gary.

25 53 [laughter]

1 COMMISSIONER MAGWOOD: Just very brief to make a 2 comment. I do think there is -- I heard you talk about the single unit utilities.

3 There is a potential for losing key personnel that you can't replace very easily. In 4 the fleet it's easier to backfill when a key person leaves. When you have a fleet 5 it's easier to react to a large outage or large perturbation of operations where you 6 have a surge of activity, and I think there's evidence over time that for single-unit 7 utilities, that those sorts of events create long-term i ssues. I don't know if you 8 want to react to that, but that's just one of the things. When I think about left 9 turns I think about things like that, th ings where the plant has had to endure a 10 major change and it just has ramifications that sort of percolate over time.

11 GARY GATES: Now, for us, as I said, part of --

the major part of 12 that decision was just the breadth and technical depth and backup and ability to 13 get people for a single unit, like Fort Calhoun.

The other big part of that decision 14 was looking 20 years down t he road. This decision with the operating services 15 agreement has immediate effects, obvious ly, and we've talked about those today, 16 but it's a strategic decision, and t he way I looked at that decision and 17 recommended it to our board and they l ooked in depth at it before their 18 agreement for it, was that it's a 20-y ear plan and when I looked out 20 years I 19 knew there would be challenges along the way. There will be other issues we 20 need to face, either as an industry or as a plant, and to have that kind of backup 21 is what we needed to be successful and not be back talking to you about this in 22 the future.

23 COMMISSIONER MAGWOOD: I'm su re you don't want to do that.

24 And really just a quick question for Mike.

As I recall in the yellow finding -- I just 25 54 don't know this, I'm sure the staff could ans wer this -- but in the yellow finding, I 1 recall one of the issues was a procedure where the plant was planning to use 2 sandbags on top, I think it was the floodgates, to protect the auxiliary buildings, 3 some other structures. Has that been closed out? Have you -- what's the 4 situation?

5 MIKE PROSPERO: We put so me HESCO barriers out on the 6 intake structure.

7 COMMISSIONER MAGWOOD: Did y ou really? Okay. Thank you.

8 That's good.

9 LOU CORTOPASSI: Yes. Just in addition from a flood seal, I'll say 10 inventory testing, you know, inspection piece to look at anything that's 11 penetrating, you know, the important structures below that elevation of 1,014 is 12 part of that resolution also.

13 COMMISSIONER MAGWOOD: So you had the barriers as a 14 permanent structures or temporary structures

? What's the --

15 MIKE PROSPERO: They are out there permanently right now 16 unless we come up with something new.

17 GARY GATES: In addition to that we put up floodgates that are 18 heavy metal with seals on them so they seal the doors as opposed to using any 19 sandbags in many of the entrances.

20 COMMISSIONER MAGWOOD: Thank you. Thank you, Chairman.

21 CHAIRMAN MACFARLANE: Anybody else? No, okay, thank you 22 very much for your presentation. We will now take a five minute break before the 23 next panel.

24 [break]

25 55 CHAIRMAN MACFARLANE: All right. We will continue with our 1 meeting on the Fort Calhoun Station. And now we have our NRC staff panel and 2 I will turn it over to B ill Borchardt, the EDO.

3 BILL BORCHARDT: Thank you, Chairman. Fort Calhoun entered 4 Column Four of the reacto r oversight process in Sept ember of 2011. Following 5 that, additional significant performance issues were identified. And as a result 6 the staff transitioned Fort Calhoun Station to the Inspection Manual Chapter 0350 7 oversight in December of 2011. We held a Commission meeting in February of 8 2012, which is within the six-month period by our internal procedures to hold a 9 Commission meeting. Fort Calhoun was discussed during the June 1 10 Commission briefing on the results of the annual agency action review meeting 11 or AARM meeting. Today's meeting was or iginally scheduled fo r October of last 12 year, but was rescheduled because of Hurricane Sandy, as you remember. And 13 given that 11 months have passed since the February briefing, we're here today 14 to update the Commission on the current status of the staff's inspection activities, 15 results, challenges and our path forward.

16 I should remember you that any lessons learned during the 17 oversight process of Fort Calhoun Station will be incorporated into our Manual 18 Chapter 0350 and into the reactor ov ersight process to improve their 19 effectiveness. You talked about in the fi rst panel this doesn't happen all that 20 often that a plant's in 0350, so we ta ke advantage of every time we do have the 21 situation of going back, revisiting the guidance, and making any improvements 22 that are necessary. We will be discussing Fort Calhoun at our next agency 23 action review meeting and at the next Commission meeting that reports on the 24 results of the AARM meeting.

25 56 The oversight of Fort Calhoun is in fact an agency-wide effort.

1 Region IV is leading the effort, but has the support of the other Regional offices, 2 as well as the offices of Nuclear Reacto r Regulation, and the Office of Public 3 Affairs. And just to addr ess one of the questions that came up in the first panel, 4 I'm very confident that the NRC has adequat e resources to deal with all of the 5 inspection and technical review activities that we can foresee. While I think we 6 have a good understanding of the scope of the work, we don't have the exact 7 schedule yet. So there may be times when we'll need additional support from the 8 other three Regions to provide inspection assistance or be able to utilize the 9 resources from a number of different progr am offices to do the technical work.

10 But you'll hear some more from Elmo , Louise, and Mike about those kinds of 11 activities coming up. So I'll turn the presentation over to Elmo.

12 ELMO COLLINS: Thank you, Mr. Borchardt. Chairman, NRC 13 Commissioners; good morning. I think as y ou just heard from t he previous panel, 14 Omaha Public Power District has been wo rking hard to determine the causes, 15 extended conditions, and a necessary corrective actions for what we call a restart 16 checklist and beyond. Since Fort Cal houn was placed in Manual Chapter 0350 17 oversight a little over a year ago, the NRC has not only been tracking the 18 progress, following the progress, but the panel has been meeting and formulating 19 and understanding of the issues what should go on the restart checklist. And so 20 what needs to be completed. And of course that is published and those 21 commitments are memorialized in the confirmatory action letter.

22 And so today what we want to present for you is just a quick 23 detailed overview of the process we're using and where we're at with respect to 24 status results challenges in the path forward. And to help us give that 25 57 presentation today is Louise Lund; she is the vice chair for the 0350 panel. Tony 1 Vegel, the chair was going to be here, but he was unfortunately taken ill. I 2 needed to have him stay home because he's got a lot of work -- he's got to get 3 healthy, he's got a lot of work ahead of him.

So, but in his place, Mike Hay, who 4 is the branch chief for the Fort Calhou n Station, also a member of the 0350 5 oversight panels. We'll give you that pres entation. So with that I'll turn the 6 presentation over to Louise.

7 LOUISE LUND: Okay, thank you, Elmo. Good morning, Chairman, 8 Commissioners. My name is Louise Lund and as Elmo said I'm the vice 9 chairman of the 0350 panel and I'm also the deputy division director for the 10 Division of Operator Reactor Licensing in NRR. I plan to provide a very brief 11 overview of how Fort Calh oun entered the Inspection Manual 0350 process, the 12 actions NRC has taken as a result, and the outreach activities that are 13 associated with this process. My comm ents will be brief as I plan to reserve 14 much of our time for Mike to provide current status and insights from the staff's 15 initial inspections, next slide.

16 So the history of the -- this is slide 4, 2011 flood. In 2010 the NRC 17 finalized a finding of yellow significance in the reactor oversight program. This 18 dealt with an inadequate flood strategy that was identified by NRC inspectors. In 19 2011 the Fort Calhoun Station was in the process of preparing for the 95-002 20 inspection, which is conducted for a plant that enters the degraded cornerstone 21 of the reactor oversight pr ocess. Ultimately, that inspection was scheduled for 22 June of 2011. However, just before that in May, we received notification, both 23 the licensee and the NRC, that the Corps of Engineers planned to increase the 24 release rates from the dam's -- th eir Missouri River system to unprecedented 25 58 levels. The projected water at the Fort Calhoun Station that they were given by 1 the Corps of Engineers indicated that they would experience water on the site at 2 the station, which you can see in slide f our. On June 6, the licensee declared an 3 unusual event. The waters were approachi ng 1,004 feet, which is the grade level 4 at the site, which is also the emergency ac tion level for an unusual event at Fort 5 Calhoun Station. The water peaked at 1,006 11 inches in July of 2011. Next 6 slide, please.

7 The history of the breaker fire in June 7, the licensee -- of last year, 8 the licensee experienced another event wher e a fire started in a safety-related 9 480-volt electric breaker. You can see the result of this in slide five. In August 10 Region IV was finalizing a finding of white significance associated with the 11 reactor protection system. This combi ned with the yellow flood finding, earlier 12 greater-than-green security findings and bei ng in the fifth quarter of the degraded 13 cornerstone, NRC's assessment determined that the Fort Calhoun performance 14 warranted the oversight provided by Co lumn Four of the reactor oversight 15 process. Fort Calhoun entered Column Four of the action matrix on September 16 1, 2011.

17 In September we conducted reacti ve inspections, primarily to look 18 at the fire that had occurred on June 7 in the safety-related switchgear and there 19 were several performance deficiencies id entified that were characterized by 20 having a high safety significance, which is red. Based on this significant 21 operational event and other safety and securi ty significant issues, Region IV, in 22 consultation with NRR and with the executive director for operations, decided 23 that the Manual Chapter 0350 process was the most appropriate oversight 24 guidance for use at Fort Calhoun Station.

On December 13, 2011, Fort Calhoun 25 59 transitioned out of the normal reactor oversight proce ss into the Manual Chapter 1 0350, which is the oversight of reactor facilities in a shutdown condition due to 2 significant performance or operational concerns. Next slide.

3 So the NRC actions: we conducted a public meeting in Omaha 4 with the licensee as the waters were starting to go down to understand their 5 plans, their actions post-flood for inspections test and verifications of equipment 6 in the site to make sure that the facili ty was properly prepared for return to power.

7 This resulted in the substance of our confirmatory action letter that we issued on 8 September 2, 2011. It had so me other actions in ther e for equipment problems, 9 but it was primarily focused on restoring the plant and the equipment to pre-flood 10 conditions. The confirmatory action le tter was issued prior to entry into the 11 Manual Chapter 0350 process.

12 Subsequent to that a new confi rmatory action letter was issued on 13 July 11, 2012, following entry into Manual Chapter 0350 to confirm OPPD's 14 agreement to complete sections one through five of the restart checklist. This 15 restart checklist contains those actions that the licensee committed to implement 16 that will be confirmed by NRC inspection activi ties prior to plant restart. The new 17 confirmatory action letter has all the items from the previous confirmatory action 18 letter plus items specific to safety culture, organizational effe ctiveness, resolution 19 of significant performance problems, NRC inspection letter procedure 95-003 key 20 attributes, among others.

21 In addition to these oversight activities, the NRC plans to conduct 22 an assessment to determine if the NRC oversight process provided sufficient 23 warning to the significant reductions in sa fety that occurred at the Fort Calhoun 24 Station. This assessment will be conducted by reviewing the types and causes 25 60 of performance problems that led to ent ry into the Manual Chapter 0350 process 1 with previous performance indicator in inspection program data. The findings 2 from this assessment will be documented in a separate report co-addressed to 3 the Region IV regional admin istrator and the director of NRR. Next slide:

4 outreach, talking about outreac h activities. I'm sorry; it's actually the previous 5 one. 6 We've been engaged in significant out reach activities near the site 7 that have been tailored to reach those areas close to the plant, as well as, you 8 know, around the largest city, Omaha. We've used a combination of formal 9 meetings with an open house and poste r-board format to enable us to 10 communicate most effectively with t he populace in that area and hear their 11 concerns and questions. We've also r eached out to conc erned individuals and 12 local organizations and groups in order to answer their questi ons directly. We 13 conducted seven public meetings in Nebraska last year with a large turnout, 14 averaging about 150 attendees per meeti ng, and established a special NRC 15 oversight at Fort Calhoun website to make it easier to find information for those 16 interested in our oversight activities. One particular item on the website is the 17 video footage taken during the public meeti ngs. We've received many comments 18 from the public that they value having access to that footage.

19 What we've heard repeatedly co mmented on from our discussions 20 and the meetings, is that the public has questions about, and is concerned about, 21 the electricity rates, the agreement with Exelon, and potent ial for future flooding.

22 And lastly, we recently held a working-level meeting, pubic meeting here at 23 headquarters in December on one of the important topics that you've heard 24 about, containment internal structures.

And now I'd like to turn the discussion 25 61 over to Mike Hay, Branch Chief for Fort Calhoun from our Region IV office, Mike?

1 MICHAEL HAY: Thank you, Louise. Good morning 2 Commissioners and Ms. Chairman. My name is Mike Hay. I guess before I get 3 started, I'd like you all to know I've been the branch chief for Fort Calhoun for 4 three months so when you have y our questions keep that in mind.

5 [laughter]

6 You know, just to give you a li ttle perspective on my background. I 7 had 10 years nuclear Navy, I was an electric ian and a staff instructor. I've been 8 with the NRC now for about 16 years as a resident, a senior resident, a health 9 physics inspector, and I'm currently on my fifth branch chief job. I've dealt with 10 plants in all columns of the action matrix and now a plant in Manual Chapter 11 0350. So anyways that at least gives you a little perspective. I'm just trying to 12 demonstrate that I feel I do have a good understanding of what a good performer 13 is and what a poor performer is and so hopefully when the questions come up, I 14 can give you different perspectives on that.

15 Today I plan to discuss with you the current status of NRC 16 inspection activities and our assessment results. I plan to talk about current 17 challenges that we're facing and I plan to look ahead at the path forward. You 18 know the big message that I want to impar t is, you know, we're verifying that the 19 plant is safe to operate before we reco mmend restart and, you know, that's the 20 most important thing to everybody that

's out there doing inspections.

21 The overall scope of the actions described in the confirmatory 22 action letter of June 2012 were developed to ensure that significant safety and 23 security issues are adequately addressed, specifically, you know we've already 24 touched upon the red breaker fi re issue, the yellow floodi ng issue that dealt with 25 62 inadequate mitigation strategies. One that we haven't talked about in any detail, 1 but there was a white finding that was involved with a degraded reactor 2 protection system. And t hen there's been multiple security greater-than-green 3 issues that really hasn't gotten much att ention, but are very important and there's 4 a lot of inspection activities that will be done to follow up on those issues.

5 In addition to those significant inspection issues, the confirmatory 6 action letter also addresses that the licensee thoroughly evaluate the impact of a 7 flood and ensure that the system struct ures and components are, you know, 8 ready for a restart following the flood even

t. We're also looking at the programs 9 and processes that resulted in the decline in performance. We'll be talking more 10 in detail about some of these program and process deficiencies, but those are a 11 major effort, not only prior to restart, but I believe post-restart also.

12 The NRC agrees that the Fort Calhoun Station has taken significant 13 steps to evaluate both programmatic and technical deficiencies at the site.

14 These steps have included bringing in out side assistance from Exelon and the 15 use of outside experts in specific areas.

You know they did a safety culture 16 assessment last year where they used a third party support for that and we've 17 also talked about the containment stru cture and containment penetration issue 18 where they've looked at -- where they've gotten a lot of outside technical support.

19 I will tell you that, you know, not only has some of these issues caused the 20 licensee to seek expertise, but it also has been a challenge in-house for us to 21 ensure we have the proper expertise to handl e some of these issues. And right 22 now I do feel confident that we have the in-house expertise. It' s just a matter of 23 finding the people with the availability to do the inspections. But we haven't had 24 any challenges yet where that hasn't happened.

25 63 We have a very thorough and detailed NRC inspection plan that 1 was created and is being implemented that ensures both the technical and the 2 programmatic issues are being adequately a ddressed. Last year we performed 3 over 3,000 hours0 days <br />0 hours <br />0 weeks <br />0 months <br /> of inspections and that was using inspectors from all four 4 regions and headquarters. I mean it truly has been an agency effort and it will 5 continue to be so in the future. The inspections have covered all significant 6 areas of licensed activities that include ops , engineering, fire pr otection, radiation 7 protection, emergency preparedne ss, security, and even a trip that we made to a 8 vendor site that was involved in supplyi ng the 40-volt breakers that resulted in 9 the fire at the site back in 2009. Our primary focus has been and will continue to 10 be the assessment of licensee corrective actions involving these programmatic 11 and technical problems, independently verify ing that Fort Calhoun Station is 12 thoroughly evaluated, the ext ent of condition, and implem enting effective actions 13 to fix the problems and prevent their recurrence. Slide eight, please.

14 You know obviously we're doi ng many, many inspections and 15 they're very focused. We put together a basis document that clearly articulates 16 exactly what we're going to inspect. This picture here is a picture inside the Fort 17 Calhoun containment. As a ma tter of fact, the person t hat you can see their face 18 is Jacob Wingebach; he's my resident inspector at Fort Calhoun Station. As a 19 matter of fact, I was in containment at this time and so was Tony Vegel. And we 20 were with the licensee getting a hand's eye view of the containment structure 21 issues and exactly what, you know what's the impact and based at that point in 22 time what the licensee was planning to do to resolve the problem.

23 I'll get into more detail later about this issue, but I will say it's a very 24 complex issue. Clearly the margins of safety have been affected. And as the 25 64 licensee said, you know, they are evaluat ing the condition and in what we call 1 operability space, meaning it's a non-conforming condition, but operable, and 2 we're going to have a lot of NRC inspection activities that will be taking place to 3 validate that the structure is in fact operable before restart. And then it was 4 already discussed that last month we had a public meeting to specifically discuss 5 this issue with our technical staff here at headquarters. Next slide, please.

6 Next I'd like to present our inspection results thus far. The licensee 7 has made significant progress with re spect to identifying programmatic 8 deficiencies and how these problems have manifested and the specific concerns 9 affecting plant system stru ctures and components. In addition, the licensee's 10 causal analysis and extended condition evaluations in general have shown 11 improvement. Although it should be noted, as previously discussed, the licensee 12 has had to reevaluate several areas ei ther based on NRC comments or self 13 identified by the station. Although Fort Calhoun Station has made significant 14 progress in identifying issues, significant work remains ahead of the licensee to 15 complete the implementation of correctiv e actions. As the licensee previously 16 discussed, most of the significant restart checklist items have not been 17 completed through the implementation stage. Although the NRC has been 18 following the licensee's progress, the majority of our NRC inspection activities will 19 be performed after the licensee has completed all of the reviews. Next slide, 20 please.

21 I'll now talk about some of the challenges. There are significant 22 programmatic and technical challenges rema ining that the licensee is currently 23 addressing, which need to be independently evaluated by the NRC. The 24 licensee completed a collective evaluatio

n. Basically, they looked back at 25 65 historical problems and based on the caus es of those problem s, they identified 1 15 what they call fundamental performance deficiencie

s. These 15 fundamental 2 performance deficiencies in effect were t he result of what caused the decline in 3 performance over the years at the site. I've got just a sampling here of some of 4 these fundamental performance deficiencies. They include the corrective action 5 program, leadership, organizational effectiveness, engineering design, 6 configuration control, equipment reliability, work managem ent, and safety culture.

7 The NRC will evaluate the licensee actions regarding all 15 of these fundamental 8 performance deficiencies with significant inspection activities that will focus on 9 improvements to the corrective acti on program, engineering, operations, and 10 maintenance programs.

11 Regarding corrective action prog ram implementation, in the past 12 the program was not consistently effective in ensuring the problems were 13 identified at the appropriate threshold and thoroughly evaluated. Specific areas 14 for improvement included the licensee's ability to t horoughly evaluate problems 15 to determine their causes, identification of corrective actions that correlate to 16 these causes, and timely implementation of corrective actions.

In addition, there 17 was a lack of effective internal self-a ssessments and nuclear oversight to verify 18 that the problems or issues were fix ed and that the corrective actions were 19 effective. Regarding maintenance and engineering, num erous equipment 20 deficiencies have resulted from inadequate implementati on of these programs.

21 I'd like to just talk about a couple of examples.

22 One example deals with what's called equipment service life. The 23 licensee did not have a robust program that would keep track of when certain 24 things needed to be replaced, whether t hey be relays, valve work, you know, I 25 66 could just go on and on. They have hundreds of these items.

And I will say, you 1 know, the licensee has done a really good job identifying what needs to be done.

2 The challenge now is getting the parts and getting the time to bring all of this 3 equipment back to the standards that it should be at.

And I will say they are 4 doing a lot of work in that area, but I'll also comment and say there's going to be 5 a population of equipment where, for whatever reasons, vendor-recommended 6 replacements or maintenance activities probably will not be done. And in those 7 cases the licensee's going to have to eval uate why that equipment is still capable 8 of supporting plant restart. The NRC will be reviewing all of those evaluations.

9 A number of significant technical challenges are also currently 10 being addressed. Two examples that we've already talked about deal with the 11 containment internal structure not being built in accordance with design 12 requirements. And just to give you a li ttle perspective on that issue, you know, a 13 couple months ago when I was at the site in containment with the experts that 14 were evaluating this issue at the site, you know, they were talking about -- well, 15 first of all the real problem is there's a number of beams that support loads that 16 aren't adequately built and, you know, we talked about -- well, we didn't talk 17 about what some of this stuff supports, like safety injection tanks. But the bottom 18 line is the beams aren't adequate and so they're looking at installing a number of 19 columns that will basically support these beams. And these columns, you know, 20 you can't just put one column in betw een one floor, you have to go all the way 21 down to the base. So there's going to be a number of significant modifications 22 that could be needed to support the c ontainment structure issue.

23 Another issue that we're wo rking on deals with the containment 24 electrical penetrations. Back in the '

80s there was a repor t from a lab that 25 67 indicated that the penetrations that Fo rt Calhoun had wouldn't be sufficient to 1 support a design-base accident. What the issue was is you've got conductors 2 that are insulated by Teflon and then you've got a seal of Teflon that degrades 3 with a lot of radiation. And I was at the labs a couple months ago when they 4 were testing these penetrations and the Teflon basically disintegrates under a 5 high-radiation condition. And so the conc erns there is not only do the conductors 6 lose the insulation, so you get hot shor ts and grounds, but you can also lose the 7 seals and therefore containment integrity could be affected. This is another issue 8 where the licensee has taken a lot of acti ons to get outside help and is going to 9 require a lot of NRC use also. Slide 11, please.

10 As the Fort Calhoun management team described to you earlier, 11 they've done a lot of work, but a substantial amount of work still remains. The 12 licensee is actively identifying specific corrective actions to address the many 13 technical issues and is developing the timelines for implementing these actions.

14 The NRC is closely monitoring licensee progress to ensure our inspections are 15 being implemented -- I'm sorry. The NRC is closely monitoring licensee progress 16 to ensure our inspections are being implem ented in a manner that is effective 17 and efficient. In November of 2012, the NRC issued the restart checklist basis 18 document. And basically what this is is it's a list of about 450 discrete items that 19 clearly articulate, like I described, all of the inspection activities that we will 20 implement which will satisfy all of the main aspects of the restart checklist that's 21 in the confirmatory action letter. Our goal is to ensure that Fort Calhoun Station 22 is self-identifying and addressing thei r performance issues through thorough and 23 independent NRC inspections. Slide 12, please.

24 In addition to the inspections being performed by individual 25 68 inspectors on a routine basis, a number of team inspections will also be 1 implemented to focus on key areas. Recently, we completed a focused 2 engineering team inspections of the auxil iary feedwater system. Starting this 3 month we'll be conducting significant team inspections that will focus on the 4 effectiveness of the licensee's corrective action program and safety culture.

5 Additionally, we have upcoming inspections that deal with security. As I already 6 talked about, there were a num ber of greater-than-green se curity issues. And in 7 addition to that, we will also be performing operational assessment team 8 inspections during heat-up activities.

9 In addition to ensuring the plant is safe to operate, the NRC will 10 also verify that the licensee has establis hed appropriate measur es to monitor the 11 effectiveness of performance improvement initiatives. These measures will be 12 tailored to fit the specific enhancements the licensee is developing to address 13 programmatic performance deficiencies. The licensee's development and the 14 implementation of these effectiveness measures will be key to ensuring that 15 corrective actions are resulting in improved performance and when these 16 outcomes are not obtained, additional actions can be implemented.

17 The 0350 panel recognizes that t here is still a substantial amount of 18 inspection activities that need to be performed. The NRC has no timeline for 19 when the plant will restart. Currently our overriding priority for the 0350 panel is 20 to ensure that we thoroughly and independently verify that the plant is safe to 21 operate. The 0350 panel will not recommend re start at Fort Calh oun Station until 22 we have assured ourselves that the people, processes, and equipment at the 23 station are ready to support safe plant operations. Thank you. And now I'll turn 24 over to Elmo for closing remarks.

25 69 ELMO COLLINS: Thank you, Mike. Commissioners, I hope you 1 can see that there's considerable amount of depth and detail in the work that 2 we're performing with the 0350 oversight and the inspection that we plan to 3 perform. I also hope we can leave you wit h the impression that the 0350 panel is 4 up and running. There's a high degree of cooperation between the region, 5 headquarters and the other regional offices. There's truly an agency effort. And 6 with me here today also is Kriss Kennedy, the director of reactor projects in 7 Region IV. He has overall oversight for t he reactor plants, but is also tasked with 8 making sure that the 0350 panel efforts are integrated.

Today the path forward, 9 while containing some uncertainties, is much clearer than it was when we met 10 with you in February of 2012. The items for NRC inspection are identified, and 11 we will inspect them when the licensee is ready. And for the NRC the bottom line 12 is safety. And we will perform the amount of independent verification that we 13 need to verify that the plant's ready to return to power oper ation. And this 14 concludes the staff presentation.

15 CHAIRMAN MACFARLANE: All right. Thank you, guys, very 16 much. Much appreciate i

t. Let's start off questi oning with Commissioner 17 Magwood. 18 COMMISSIONER MAGWOOD: Thank you, Chairman. Thank all 19 of you for your presentations. Let me star t by, you know, I -- as Bill can testify, 20 I'm sometimes a little harder on the staff, but it -- of course and it's the positive 21 part. But, you know, I need to say that I also like to re cognize when I think the 22 staff has done outstanding work. I think this is a good case in point. When I 23 think I met with Elmo very early in the evolution of this discussion, even before 24 the 0350 manual was activated, it was ve ry clear there were a lot of open 25 70 questions, it wasn't clear what process or procedure we were going to use to 1 apply to Fort Calhoun. There were a lot of people speculating about what 2 direction this panel will take. And th is evolved in a very, very methodical 3 direction, involving a lot of different elements of the agency, a lot of different 4 people who were pulled in from other tasks because of their expertise, and it 5 resulted in an inspection approach that's ve ry well-defined, very precise, and has 6 given the licensee a very clear path fo rward. And I think that's to be 7 commended. Of course, Mike gets no credit for any of this because he's only 8 been here for three months.

9 [laughter]

10 One of the things that I think that comes to mind when you hear 11 about this was that some of the issues --

in fact, a lot of the issues that we're 12 talking about, you know, the penetrations in containment, for example, which I'd 13 love to spend some more time talking about, may want to get briefing on that, 14 and even the structural integrity of inside containment. These ar e not issues that 15 arose from the ROP findings. These are th ings that you found after the fact, after 16 the flood. And it's, again, something that happened after the flood. So it raises a 17 question in my mind. What's our ability to find these things before something 18 goes wrong, that brings our special att ention onto a plant?

I mean if there is 19 some other plant that has structural issues inside containment, how will we ever 20 figure that out? Ho w will we find that?

21 ELMO COLLINS: I'll start, Commi ssioner. In Fort Calhoun, this is a 22 challenge, I think, for the reactor oversight process. It truly is incident event-23 driven. It is a sampling program a nd tends to focus on the more active 24 components of a facility. We do have the component design basis inspection, 25 71 which was put in place after Davis-Besse. So we do have an inspection effort 1 that happens once every two years at a site, specifically to go identify passive 2 components based on their risk significance, and pursue those to the extent that 3 we understand the design basis of that component and that it's in place and it is 4 being maintained. But once again, that's a sampling program. So I think that's 5 our best effort to get at these types of passive components right now. So we do 6 have a feature, it's not meant to be an ent ire revalidation of the plant's design, 7 so... 8 COMMISSIONER MAGWOOD: In particular with the Teflon seals, 9 have you put out notices to other licensees? Is this so mething that, as we found 10 this, are we looking at this specifically at other plants?

11 ELMO COLLINS: The answer is yes.

This is actually a historical 12 issue. It's well known and been well identif ied. The application at Fort Calhoun 13 hinged around safety-related penetra tions versus non-safety-related 14 penetrations. This issue was raised back in the 1980s --

15 COMMISSIONER MAGWOOD:

At Fort Calhoun?

16 ELMO COLLINS: Industry-wi de. The issue with Teflon in 17 penetration and seals in Teflon used for insulation of piping under the 18 environmental qualification programs. So we got a certain frame put around it, 19 hinged around electrical components inside the containment, active components 20 inside the containment. Those that needed to perform functions during the 21 accident where it could be exposed to the high radiation. And that's how Fort 22 Calhoun implemented it. It wa s with that focus, and if t he circuit was deemed not 23 safety-related or not needed during the acci dent, it did not get the attention as 24 the others did. And so the Teflon remained in place.

25 72 COMMISSIONER MAGWOOD: So the Teflon at Fort Calhoun is 1 non-safety? Is that what you're saying?

2 ELMO COLLINS: With the electrical circuit.

3 COMMISSIONER MAGWOOD:

The circuits were not --

4 ELMO COLLINS: The circuit going through the containment 5 penetration -- obviously the containment penetration -- the containment isolation 6 function is a safety-related function.

7 BILL BORCHARDT: Yeah, just to step back for a second. All 8 reportable events that licensees report to us, inspection findings are reviewed by 9 the events assessment group and they'r e assessed if there's sufficient 10 experience. I believe that this could be a more generic issue. We send out a 11 generic communication, which could range from an information notice, which is --

12 just informs licensees there's something they might want to follow up on to higher 13 levels of regulatory oversight.

14 COMMISSIONER MAGWOOD:

Right. In this case, was 15 something put out?

16 BILL BORCHARDT: Previously.

17 COMMISSIONER MAGWOOD: Previously, but nothing new, 18 because this isn't new. But I mean, this distinction between the safety and non-19 safety conduits. Isn't that a little bit of a new issue?

20 BILL BORCHARDT: I'm not sure.

21 MICHAEL HAY: Yeah, well the decision at Fort Calhoun back in 22 the '80s when they received the informati on that this type of penetration was not 23 going to work, was they, like Elmo was saying, they replaced the safety-related 24 penetrations but they didn't replace the non-safety. And so, you know, that's 25 73 what's in the plant today.

1 COMMISSIONER MAGWOOD: Ri ght. But that's the problem.

2 ELMO COLLINS: Yeah, right. T he issue was reported, so we have 3 a new event report. So that's publicly available, but we do need to consider this 4 further. And we think we're waiting on the licensee's ongoing evaluation to see 5 where it actually leads. But this distinct ion in how it was applied to Fort Calhoun 6 is good operating experience for the industry.

7 COMMISSIONER MAGWOOD: Appreciate that, and might want to 8 follow up on this one a little bit later in mo re detail. Obviously one of the safety 9 culture, you know, I think my colleagues talked about this a bit earlier in the 10 previous panel, was really essential to what's happened at Fort Calhoun. Have --

11 from what your interactions with the plant staff as we've done inspections, have 12 we begin to see any turnaround ourselves beyond what the assessment's been 13 telling us? Have we been able to see it on the ground?

14 MICHAEL HAY: Yeah, I would sa y we are seeing a lot of different 15 things that show us improv ements are taking place. You know, if you're at the 16 plant on a daily basis, you're seeing that they're, you know, working on valves, 17 they're working on diesels, they're worki ng on pumps, restoring those to vendor-18 recommended conditions. And so from t hat perspective, I think you'll see 19 physical evidence that the plant is im proving. I think from the personnel 20 standpoint, you know, we're still seeing w here there's some human errors, don't 21 get me wrong. You know, there's been some operational incidences where 22 they've had valve line-ups that didn't go right. As the site talked about, they've 23 had maintenance activities where wir es didn't get landed right.

24 But I will say that, you know, one of the things that we're seeing 25 74 different now is how the licensee is addressing those problems, I mean, 1 differently than how they would address t hem in the past. I think we're also 2 seeing improvements with respect to the corrective action pr ocess, where the 3 licensee is not only entering more issues into the corrective action process, 4 which has been a significant improvement.

One of the things that my residents 5 often complain a bit about is, you know, it went from about 50 condition reports a 6 couple years back to 300 per day. So they spend a couple hours a day reading 7 condition reports that are written.

8 But I think also, you know, not only from the identification 9 standpoint, but also from the thoroughness of how they evaluate problems.

10 We're seeing where they're even looking back at some of the previous things that 11 they've evaluated and determined this isn't good enough. And so that's delayed 12 some of our inspection activities bec ause those are items that we planned to 13 inspect, but it does reflect the fact t hat they are looki ng at problems with a 14 different set of eyes today.

15 COMMISSIONER MAGWOOD: As I recall the plan that we have 16 for inspecting Fort Calhoun includes assessments to whether the third-party 17 assessment has been satisfactory. There'll be an evaluation of that. Is there a 18 timeframe when we expect to reach that conclusion?

19 MICHAEL HAY: Just on clear, are you talking the third-party --

20 COMMISSIONER MAGWOOD:

Third-party, yes.

21 MICHAEL AHY: Yeah, yeah, star ting next week is our first week.

22 There's going to be a team of five individuals, again, different folks from different 23 regions and headquarters that are going out.

And they'll be starting the safety 24 culture inspection from the NRC's perspective. And, you know, part of that 25 75 inspection next week is to review previous asse ssments and the one they just 1 performed last year, and valid ate that there's independence in that safety culture 2 assessment. It's going to be a two-week on site inspection. The next week is in 3 February.

4 And, you know, one of the big focuses of this inspection, besides 5 looking at the results of their own a ssessment and what actions they're taking, 6 but a big portion of what we do is we have what we call focus group interviews 7 with a significant number of site personnel. And that way we can get their 8 insights directly and it'll help us validat e the results of their assessment and the 9 actions that they're taking. And it also gives us a perspective on how in tune are 10 the staff with the site's pr oblems and the actions that the site is taking with 11 respect to those problems.

12 COMMISSIONER MAGWOOD: Excell ent. I appreciate that. And I 13 guess we'll hear more about that during the AARM coming up later this year. So, 14 again, good work, exc ept for Mike --

15 [laughter]

16 And thank you for the presentation. Thank you Chairman.

17 CHAIRMAN MACFARLANE:

Commissioner Ostendorff.

18 COMMISSIONER OSTENDORFF:

Thank you, Chairman. And 19 thank you all for the presentations today. I want to start out at a fairly high-level 20 question for Elmo, and others can add in as you want them to. With respect to 21 the Manual Chapter 0350 process, I recognize we don't do this very often. What 22 historical examples and NRC regulatory experience are helping you and your 23 team look at how to best handle this 0350 process?

24 ELMO COLLINS: The salient example which has informed us has 25 76 been the experiences at Davis-Besse. That

's the only one that I'm aware of, at 1 least for any length of time in the reactor oversight progr am. And so there were a 2 number of changes made to 0350 after that experience. The 0350 process was 3 developed well before the reactor oversight process, and so I think we're still --

4 we learned a lot from Davis-Besse. I think we're going to learn a few things out 5 of this one as well. And what's the best way to integrate thos e two efforts?

6 0350 has guidance, but we continually go back to the inspection 7 procedures, the inspection guidance of the reactor oversight process to pull from 8 those to know how we're going to do our process. One challenge I see in 9 particular is how we make sure we a ccomplish the 95-003 level of activities 10 under the 0350 process and how we're applying them here at Fort Calhoun. So 11 we'll evaluate that.

12 COMMISSIONER OSTENDORFF: Is there any particular example 13 from Davis-Besse that has had a bearing on how your team has approached the 14 Fort Calhoun inspection?

15 ELMO COLLINS: I think we t ook that information and developed 16 our -- I'll say our implementation strategy

-- for Fort Calhoun. The goal of 95-003 17 is to really nail down all the key perfo rmance issues at the site, fundamental 18 performance deficiencies. And here, we really are relying on the licensee to 19 conduct that effort. We dev eloped that process to ins pect them as they're going 20 through that process, and t hen we'll do our independent veri fication at the end.

21 That's a different approach -- rather t han go out with a 25-pers on-team inspection 22 for three weeks, so...

23 COMMISSIONER OSTENDORFF: If I heard correctly, I think you 24 or Mike said that there's 450 discrete items on this rest art plan. Is that what I 25 77 heard? 1 MICHAEL HAY: Yes.

2 ELMO COLLINS: That's the deta ils of the specific inspections.

3 COMMISSIONER OSTENDORFF:

I don't want to react to a 4 number, but it seems like a large number to me. And I'm just curious -- you 5 know, how -- help the Commission put in perspective that number with where 6 things were with respect to the flooding, electrical fire issues, you know, the June 7 of 2011 time period.

8 MICHAEL HAY: Yeah -- I guess, to put it in broad terms, flooding 9 recovery actions. Every system has to be assessed as to was there an impact 10 from the flood? So right there you've got 25 items, of which, you know, 80 11 percent of the systems on the site weren't even touched by the flood, so there's 12 no impact. You know, you've got the fundamental performance deficiencies.

13 Each one of those, which there's 15 of t hem, we'd like to take a look at. You 14 know, what was the cause of the f undamental performance deficiency? You 15 know, what are the actions that the licens ee plans to take and was the extent of 16 condition adequate? So there's 45 more examples.

17 For each of the significant per formance deficiencies, again, we're 18 going to be taking a look at the adequacy of the root cause, the extent of 19 condition, and the corrective actions. So each one of those has at least three 20 distinct items associated wit h them. The red breaker fire, you know, the licensee 21 had put together a list of, I think at least 40 or 50 discrete things that they would 22 be doing to address the fire. And thos e are in their integrated performance 23 improvement plan, and we went through that. And the important ones, we put 24 into our basis document so that we could look at, you know, if you're replacing 25 78 breakers, we want to look at that.

We want to look at the post-maintenance 1 testing, you know. So, a lot of those ar e, like I'm talking about, you know, they're 2 following up to flood impacts, the si gnificant issues, and the fundamental 3 performance deficiencies.

4 COMMISSIONER OSTENDORFF: Okay. Let me then now shift --

5 I'm going to stay with you and Elmo --

on your slide 10 on challenges. And I 6 know that -- I think Elmo, in Februar y of 2012, we had a meeting here. You 7 talked specifically on the design control process for replacement of electrical 8 breakers. And, had that been a key factor in this whole el ectrical fire aftermath?

9 Can you comment in that area, Mike and Elmo, about -- has the licensee made 10 progress in that particular substantive area?

11 ELMO COLLINS: I -- go ahead, Mike.

12 COMMISSIONER OSTENDORFF:

Whoever wants to answer it, 13 yeah. 14 MICHAEL HAY: Yeah, I will tell you that we've had a number of 15 inspection activities that have specifically looked at the actions related to the fire.

16 I'll tell you that in probably the broadest perspective, we're comfortable with the 17 actions that the licensee took. There are a couple of areas that we're still talking 18 about where we're not sure if we're, you know, completely certain that the 19 licensee has addressed all of the technical issues related to the fire. However, 20 one of the things that the licensee recognizes is that, you know, the processes 21 that they implemented that installed t hose 40-volt breakers, you know, the 50.59 22 process, the design control processes, t hat they were not adequate. The receipt 23 of the breakers and their inspections of those breakers, thos e are all different 24 processes that the licensee has improvement initiatives in place. I will tell you 25 79 that we haven't completed all of our inspections of those activities. So I'm 1 basically telling you where we

're at today. You know, I' m not at a position to tell 2 you that we've closed these items and that we find them all the --

3 COMMISSIONER OSTENDORFF:

No, I understand. I was not 4 expecting that. I was just trying to see is progress being made? Because to me, 5 that's just a fundamental --

6 MICHAEL HAY: Yes, it is being --

7 COMMISSIONER OSTENDORFF: Y ou can't get the design control 8 piece done, then I'll stop.

9 MICHAEL HAY: Correct.

10 COMMISSIONER OSTENDORFF: T hat's just a fundamental core 11 attribute we'd expect of the license.

12 MICHAEL HAY: Yes. There has been a lot of work in those areas, 13 but I will say that we haven't completed our inspections for that yet.

14 COMMISSIONER OSTENDORFF: Okay.

15 ELMO COLLINS: Just add real quick. Related to that quality 16 assurance and quality control aspects of implementing the modification and all 17 the aspects of that, implementing at t he post-mod testing, I think we haven't 18 inspected it yet though, but we understand there's significant corrective actions in 19 that area, and we'll be in specting that as well.

20 COMMISSIONER OSTENDORFF:

Okay. During the first panel 21 today, numerous Commissioners had discussions in the Q&A piece with OPPD 22 and Exelon about the status of the operating service agreement between the unit 23 and the fleet operator. And we heard a lo t of discussion from the first panel's 24 perspectives as to how that's proceedi ng. I wanted to kind of get your 25 80 independent check and know how are things going from where you sit? And I'll 1 open it, maybe, Louise, did you w ant to start out with that one?

2 LOUISE LUND: Yeah. The inte ractions that we've had with OPPD 3 and Exelon, I think that -- I have thought that it's worked very well and their 4 regard for the reasons that they cited, particularly in bringing more of a fleet 5 experience to what it is that they are doing, and as far as the management model 6 and, you know, improvements.

I was going to mention, act ually earlier, as far an 7 anecdote about the safety cult ure aspect. When I went to visit on site and I was 8 meeting up with the rest of the panel in the parking lot, and obviously I didn't 9 have any designation of being with the NRC, and I'd gotten out of the car. I was 10 walking there and had someone from site wa lk up to me and say, you know, "You 11 need to be walking in the crosswalk. You know, safety is important at this site."

12 You know, I was very, you know, I'd been to a lot of sites and I think this was the 13 first time that somebody, you know, came up to me, totally out of the blue and 14 basically corrected me in that way -- that I wasn't, you know, doing things 15 according to, you know, the -- you know, I think from my perspective, I've seen 16 some early benefits from that.

Mike, do you want to comment?

17 ELMO COLLINS: Well, I'd just like to add to what Louise said. I 18 believe we could give a number of examples where we've seen the performance 19 change at the site, positive examples. And one of the challenges we've had is, 20 for ourselves even, is remembering that OPPD is the licensee, and so when we 21 engage -- once the agreement was finalized, we endeavored to engage anyone 22 who had been brought in from the Exelon organization as licensee employees 23 and approached them t hat way. So -- because they are the licensee and we 24 need to keep that clear.

25 81 COMMISSIONER OSTENDORFF: Thank you for providing that 1 reminder to us. It's helpful. I won't ask a last question, just comment very 2 favorably on your public outreach efforts as well as the dedi cated Fort Calhoun 3 website information. I've looked at that. I found it cl ear and understandable, and 4 I commend you for your effo rts in that area. Thank you all. Thank you, 5 chairman.

6 CHAIRMAN MACFARLANE: Okay. Thank you. All right. This has 7 been a very helpful briefing. It's helpfu l to hear how much work is being done 8 there that you guys are doing, and I especially appreciate your dedication to the 9 mission of the agency: protecting public health and safety. So, very much 10 appreciate it.

11 Let me go to some of the questions about what's going on at the 12 facility itself. And let me just pick up on this discussion that you were having 13 earlier with Commissioner Magwood about t he electrical penetrations IN the 14 containment. What do other reactors use?

15 MICHAEL HAY: Well, all reactors use these electrical penetrations 16 -- 17 CHAIRMAN MACFARLANE: Right, but what do they protect them 18 with? 19 MICHAEL HAY: Well, the differenc e is they use different materials 20 that aren't susceptible to being degr aded during accident conditions, and 21 therefore you have containm ent integrity and your electrical wires don't get 22 impacted by the accident conditions.

23 CHAIRMAN MACFARLANE: And how many reactors still use 24 Teflon? 25 82 MICHAEL HAY: Well, currently we're just aware of Fort Calhoun.

1 CHAIRMAN MACFARLANE: Okay, okay. So this is something 2 that needs to be fixed.

3 MICHAEL HAY: Correct.

4 CHAIRMAN MACFARLANE: And then in terms of these 5 containment issues, can you just give me a little bit of history, when you noticed 6 this, because these aren't the issues that got them to where they are right now.

7 MICHAEL HAY: Right, right.

8 ELMO COLLINS: I'll kick it off, but I think this is one of the positive 9 examples we've seen at this site.

An engineer was inside the containment, 10 scoping out some modifications they would need to make for, I believe, what's an 11 ultimately planned power upr ate. He was looking at the equipments, the 12 cabinets, and the beams and said, "I'm not sure that they look right," and actually 13 challenged it and went back and looked at the design spec. And so it was a 14 questioning attitude on the part of site personnel to say is this really what it's 15 supposed to be. And they went through the load calculations and they found it 16 wasn't. It was not --

17 CHAIRMAN MACFARLANE: So when did this happen?

18 ELMO COLLINS: This --

what about -- go ahead, Mike.

19 MICHAEL HAY: Yeah, I don't have the exact dates, but these all 20 occurred between like April and May last year.

21 CHAIRMAN MACFARLANE: Okay, okay.

22 MICHAEL HAY: So after they were in 0350 during the discovery 23 phase of their efforts.

24 CHAIRMAN MACFARLANE: Right, okay, okay. That's good. All 25 83 right, let me see, where else do I want to go with this? Commissioner Ostendorff 1 asked about the fire fixes and where you are with there. What about the 2 flooding? How are they doing with addressing the flooding issue? And I imagine 3 that the Fukushima orders and directi on gets folded into this, or not, or?

4 MICHAEL HAY: Well -- you w ant me to tackle that one? You 5 started to --

6 ELMO COLLINS: Put it in context --

7 MICHAEL HAY: Okay.

8 ELMO COLLINS: [laughs] And I'll han d it to Mike.

I think that the 9 flooding issue, the finding we had was act ually one of the item s at the 50.54 (f) 10 letter was trying to drive. In the walkdown we've asked all our licensees to do, 11 given the current licensing bases, where doe s a facility stand with respect to that 12 level of protection? Well, that was our in spection finding from several years ago.

13 They did not have the level of protecti on we thought had efficacy, and so that's 14 very closely related to the walkdown that the licensee is completing, and we are 15 still just finishing up our inspection. I'll let Mike give you the details on that.

16 MICHAEL HAY: Yeah, I see it as, you know, you have the yellow 17 flooding issue and we're still doing our inspections related to those corrective 18 actions, and then the impacts of the actual flood.

19 CHAIRMAN MACFARLANE: Right.

20 MICHALE HAY: And I will tell you that we've -- you know, the 21 licensee has, I think, just about completed all of those actions. There's a few left 22 but just about all of those are complete and we've completed our inspections with 23 a large majority of those activities. So with respect with the im pact of the flood, a 24 lot of the work's already been done. There is some geotechnical analysis that we 25 84 are still reviewing that deals with, you know, below-grade, you know, what's the 1 impact on the soils and the structures and whatnot. It doesn't appear that there's 2 any issues there yet. But like I said, our experts are still looking at that sort of 3 analysis.

4 CHAIRMAN MACFARLANE: [affirmative]

5 MICHAEL HAY: And with respect to Fukushima, you know, the 6 licensee is, like they talked about, working with Cooper Nuclear Station, and they 7 plan to submit their analysis, I believe -- I fo rget the exact month, but it's in 2014.

8 Think it's in May or April.

9 ELMO COLLINS: I think it bears considerable weight in my mind 10 that while we didn't want to have the experience -- the flood that we experienced 11 in 2011, it did test the flood barriers up to almost 1,007 feet, which was a 12 substantial test in its own right. And so those results, I think, also flagged a 13 number of corrective items for the licensee to go tackle with respect to 14 penetrations and seals. And so we have a level of confidence at the facility.

15 CHAIRMAN MACFARLANE: Unless the flood goes higher next 16 time. Okay, so you said --

in one of your slides you said you were going to do a 17 safety culture team inspection. So what do they inspect for? Are there criteria 18 that they use? I had a briefing yesterday, I was asking these questions. So what 19 -- exactly how do you inspect for safety culture?

20 MICHAEL HAY: Yeah, I'm going to repeat a lot of what I spoke to 21 Commissioner Magwood's question. Basica lly the, you know, the essence of 22 what we inspect is depicted in inspection procedure 95-003. A nd what it has us 23 do is, you know, validate that the licensee performed an independent safety 24 culture assessment on their own, and so that

'll be part of it. The next part is, you 25 85 know, looking at the method that they used, and are we in agreement that the 1 method looked appropriate. And then when we've concluded the method is 2 appropriate and it was perfo rmed by an independent group, then we look at the 3 results. And we look at what did the licensee do with those results. And then 4 one of the -- and I won't say one of the most important, but it's definitely very 5 important aspect is we do focus group intervie ws. And that's a big majority of our 6 on-site time, is where we have two inspectors with typically a group of like 8 to 10 7 folks, and they spend a good hour to an hour and a half with this group going 8 over, you know, how do you feel about the corrective action process? Do you 9 use the corrective action process? How do you feel about raising issues to your 10 management? And you know, there's just a number of different scenarios that 11 they go through to find --

12 CHAIRMAN MACFARLANE: And these are -- these are going to 13 be people without their m anagers and supervisors?

14 MICHAEL HAY: Correct. Corre ct. And typically it's random, 15 although if you have insights that there's a certain group that'll like -- you know, 16 like at Fort Calhoun, there mi ght be a certain group that we want to focus on, you 17 know. Then we can organize that focu s group depending upon what we want to 18 do, so -- and then after we do our fo cus group assessments, that gives us 19 indication on, you know, does it align with the licensee's results? And if it 20 doesn't, then we try to look to understand wh

y. And what we're planning to do, 21 since our focus group interviews are going to be happening starting next week 22 and then in February, we're going to get those insights. And then we have 23 another large team inspection that's going to be taking place after that where we 24 can focus on the insights that we get fr om the focus group inte rviews, and that'll -

25 86 - and that'll allow that team to look at human performance, PINR, and safety 1 culture using the insights that we got from the focus group interviews.

2 CHAIRMAN MACFARLANE: Okay, good, thanks.

3 MICHAEL HAY: You're welcome.

4 CHAIRMAN MACFARLANE: Last question. Yeah. Elmo, you 5 know you're in the hot sea

t. So I'm just interested in the outreach efforts and 6 how well they've been received, how -- what your impressions of the licensees' 7 experience of outreach that we've been doing, and how we can improve. So 8 public meetings, et cetera.

9 ELMO COLLINS: Yeah, I think in general, the environment at Fort 10 Calhoun is very conducive to our -- what I'll call kind of our standard 11 methodologies of outreach. We just -- there's just a number of them we have to 12 do, and we tried different tools and diffe rent types of meetings, Category 1 13 meeting with the licensees, poster board, I think, workshops were mentioned, 14 and then outreach to individual organizations and individuals. We've -- I -- the 15 licensee -- I'll just give my observations wit h OPPD, is they have -- they've also 16 conducted their own extensive, sometimes in parallel with us and also a lot on 17 their own that we're just not cognizant of. We've had more interest at Fort 18 Calhoun than we've ever had at the site in my history of a long time with Region 19 IV. 20 CHAIRMAN MACFARLANE: Sure, makes sense.

21 ELMO COLLINS: This has brought out some attention and some 22 engagement that we haven't had, so we --

but I think the meetings have been 23 informative and that people are getti ng their questions answered, so...

24 CHAIRMAN MACFARLANE: Okay.

Okay. Lessons learned? I'm 25 87 over time.

1 ELMO COLLINS: Right.

Well, I'll take --

2 CHAIRMAN MACFARLANE: Maybe Louise wants to jump in.

3 Yeah? 4 LOUISE LUND: I just want to make a comment too.

5 CHAIRMAN MACFARLANE: Yeah.

6 LOUISE LUND: I think some of the concerns that were raised were 7 really not within our purview, like electr icity rates and something else. They had 8 had board meetings that were scheduled pretty close to that time period, so that -

9 - you know, I think one of the lessons lear ned was being able to point out to, you 10 know, some of the attendees that their concerns may be best addressed by 11 going to -- because they were also public meetings as well, so -- you know, to 12 basically put it at the ri ght meeting, because some of these concerns, although, 13 you know, we would hear the concerns and we'd, you know, explain, you know, 14 what to do, we also want to ma ke sure there was a venue as well.

15 CHAIRMAN MACFARLANE: Ri ght. Okay, thank you.

16 Commissioner Svinicki?

17 COMMISSIONER SVINICKI: Thank y ou all for your presentations.

18 And Louise, are you the one who subbed for T ony today, or is that Mike? Okay.

19 So thank you. I know that we have a la te-emerging flu season, so I hope it's not 20 that. But Elmo, you had mentioned that T ony Vegel has a lot of work to do, so 21 you need him to get well, and I -- that made me pause and refl ect for a moment 22 on all the work that faces the agency, NRR certainly has its hands full. But I think 23 that Region IV, I want to add to Chai rman Macfarlane's recognition that it's 24 evident what a strong focus there is on the public health and safety mission of 25 88 the agency by NRC employees generally. But I wanted to commend you and all 1 the people, the women and men in Region IV that you are leading. It isn't just 2 Fort Calhoun that's keeping them busy.

The region is very busy, and it is not 3 possible when we are budgeting and resourci ng two years out to know with a lot 4 of fidelity exactly what will be needed.

5 Mr. Borchardt was kind enough in his opening remarks to address 6 my question about resourcing for thes e types of emergent needs, and he 7 expressed that there is the ability between regions and also with technical 8 experts from headquarters to augment and be able to give you the surge 9 capacity that, you know, he -- I don't want to react to 450 either, but it's a large 10 number, and so the agency needs to be able to resource that. It's not something 11 I think we can predict, you know, years out in advance and even at this point, we 12 don't know exactly when we'll get indications of the licensee's readiness to have 13 us come and do the inspection oversight.

14 So I know that Region IV is an organization, I think, that is, I won't 15 say on the hot seat, but definitely, you know, under just a stress from level of 16 activity. And so again, I --

we sit here at this table and we see a few different 17 faces, but really, you all ar e representing the work of hu ndreds of people, in your 18 case, and so I just want to, I guess, s end my props and my shout-out to Region 19 IV and really thank them. I think right now they're being called upon in a unique 20 way to support a lot of the important agency in itiatives. So thank you, and please 21 take that back to your staf f, I wanted to recognize them.

22 You know, I talked about there is a lot of activity, and I talked about 23 all with the OPPD and Exelon panel, all of the resources, the influx of that and all 24 of the focus and expressed that I think t hat, given the right focus and resources, 25 89 most organizations are able to hav e improvement, but that sustaining 1 improvement is something that arguably, in some instances, may be the greater 2 challenge than achieving improvement, is su staining it. I didn't know if there 3 were any insights. Most of you have worked with various licensees and stations 4 that at different points in their cycle maybe are performing better or being more 5 challenged in their performance.

Is there anything that you would add as far as 6 our oversight? I know that the reactor oversight process is set up in a way that it 7 is our purpose to try to find indications of things before they become larger 8 issues. But could you share to the extent you'd like to just any of our regulatory 9 approach to that issue of sustainment?

10 ELMO COLLINS: I -- two thoughts.

One you've already heard this 11 morning from the previous panel, and that's just that my characterization is it 12 takes energy to sustain that performance, and it -- so it has to be continually 13 injected. It can't be taken for granted.

Nuclear -- in these technologies and age, 14 you never arrive. It always has to be applied, and it takes energy.

15 And then the second, you know, perspective for us is how the 16 reactor oversight process engages or doesn't engage. It does have a -- the 17 premise behind it that, you know, iss ues will manifest themselves and risk-18 significant items before substantial deter iorating performance. And actually, we 19 saw some of that, quite a bit of that, at Fort Calhoun. We actually did -- the 20 licensee did transition over in the process, and so it was -- it was working. The 21 receptiveness, though, of facilities to input, which goes hand in glove with the "it 22 takes energy to keep the site sustained," I believe, so the energy and the 23 receptiveness to input are nec essary for excellence.

24 We're going to see a lot of, I'll say, compensatory measures put in 25 90 place, I'm sure, at Fort Calhoun, that I don't think they've all yet been developed, 1 and so -- and so at some poi nt in time, then they'll start -- there'll be a tendency 2 and a desire to scale back, and there -- t hen so there's a necessary -- I think 3 resulting less energy. And so how does the infrastructure maintain what was put 4 in place? That's been a challenge we've seen at other facilities.

5 COMMISSIONER SVINICKI: Thank you.

6 BILL BORCHARDT: And I'll just add that, you know, plant restart is 7 an important milestone, but it's not the destination, and it's certainly not the 8 destination for us, nor is it for the licens ee. So as the plant gets authorized to 9 restart and it begins operation, we' ll have a very thoughtful and methodical 10 transition to the Reactor Oversight Pr ogram. It doesn't happen instantaneously, 11 because of course, performance indicato rs aren't racking up new data, so we 12 need a very thoughtful transition period. There will be enhanced inspection, 13 enhanced oversight from both the region and headquarters for a significant 14 amount of time after restart, and t hen monitoring of sustained performance, 15 improved performance, will be the focus of our inspection program, and I suspect 16 the focus of the managem ent and staff that operat e the facility.

17 COMMISSIONER SVINICKI: Thank you. I think that's really 18 helpful. I have seen that in some of the licensees' documented submittals --

19 docketed submittals that have talk ed about the performance improvement, and 20 there are -- there's extensive information about post-restart activities, and we 21 have a companion process to that as well, so thank you for mentioning that. It's 22 a very, very important point.

23 I would just mention on the outreach, I -- to share my perspective, 24 that it may be that there's not a good understanding or calibration on what it is to 25 91 have an average of 150 people at some of th ese meetings in Nebraska, which I 1 think was the -- was the number that was m entioned. I -- in some areas of the 2 country, is it not true that we will have a public meeting that will have maybe --

3 you can count the member s of the public on the fi ngers of one hand. I mean, 4 that's not unheard of. That way it doesn't sound like I'm being a little bit 5 lighthearted about it, but we sometimes just get maybe six or seven people, 6 something like that. And so that the presenters so overwhelm the number of 7 people in the audience. So I think that is very -- it would certainly, when you say 8 this is the higher level of interest, that certainly thos e kinds of numbers certainly 9 indicate that.

10 And then I just have one other question. You heard me talk about 11 left turns earlier, and so that's an indication that I try to listen very, very closely to 12 both the presentations and the Q&A with my colleagues, and so I need to be 13 certain that I understand or t hat the record is clear. Mi ke, when you were on your 14 slide seven, current status, I think y ou might've departed from your presentation 15 and were paraphrasing a bit, but I took a pretty careful note here. You 16 mentioned multiple greater-than-green security findings, but you went on to say 17 these multiple greater-than-green security findings, quote, "haven't gotten much 18 attention." And that was

-- I wrote that down and tried to be very precise about 19 that. Obviously, we'll have a transcript later.

Who is it that y ou feel has not -- are 20 you stating that there are security-related findings that either NRC or the licensee 21 is not attending to? Is that your testimony?

22 MICHAEL HAY: No, actually, and this goes from my days as a 23 branch chief in charge of security. We'r e very careful about what we put out to 24 the public related to security findings, and so my comment has no reflection on 25 92 the amount of effort that the licensee or the NRC has taken related to these 1 issues. It's more with the -- with respect to the fact that we just don't talk about it 2 out in public because of the sensit ive nature of t he information.

3 COMMISSIONER SVINICKI: Okay.

I appreciate it. Because I 4 think the precision in how we communicate that is very import ant. I -- it's been 5 my observation that for those NRC person nel that work on these issues that 6 there is -- I don't think that they would agree that there's not a -- there's any lack 7 of attention to it. The licensee, my sense is that we require that they take it very, 8 very seriously and compensatory measures are needed. And so I just -- I know 9 that there are the necessary and requisite withholdings that we have for security-10 related information, but I didn't want to leave the impression that we neglect 11 security and security-related findings.

That's certainly not my experience.

12 ELMO COLLINS: I made the same -- annotated my notes the 13 same way. Maybe "visibility" would' ve been a better word. They're getting 14 significant amount of attention on the part of the NRC and the licensee.

15 COMMISSIONER SVINICKI: Okay.

Thank you. Well, thank you 16 all again. Thank you, Chairman.

17 CHAIRMAN MACFARLANE:

Commissioner Apostolakis?

18 COMMISSIONER APOSTOLAKIS: Thank you. I'm a little 19 confused about the issue of penetrations, c ontainment penetrations. Elmo said 20 that containment isolation is a safety function. I believe you, Mike, said that there 21 are some non-safety-related penet rations? Are these consistent?

22 MICHAEL HAY: Well, I think when you say "isolation of 23 containment," you're talking like a pipi ng system and you'd have a valve. What 24 we're talking about here is electrical penetrations, where electrical wires go 25 93 through a steel tube --

1 COMMISSIONER APOSTOLAKIS: Yeah.

2 MICHAEL HAY: -- and there' s a Teflon plug on each side of 3 containment. One's an inboard plug, and one's an outboard plug. And the 4 concern is, under high-radiation conditions --

5 COMMISSIONER APOSTOLAKIS:

I understand the concern. But 6 are all these penetrations safety-related? Yes?

7 ELMO COLLINS: Let me take a stab at it. From a containment 8 isolation and containment --

well, containment isolation, containment integrity 9 perspective, they are. The actual penetration piece, that containment function is 10 a safety-related function.

11 COMMISSIONER APOSTOLAKIS: Okay.

12 ELMO COLLINS: So we're talking two -- but potentially two safety-13 related functions. Now we also hav e the electrical wire going through the 14 penetration, which will need to activate a component inside the containment.

15 That component activation could also be sa fety-related, and so there's actually 16 two considerations we have at the same time.

17 COMMISSIONER APOSTOLAKIS: Bu t there isn't such a thing as 18 a non-safety-related --

19 ELMO COLLINS: Not from a containment penetration safety 20 function.

21 COMMISSIONER APOSTOLAKIS:

There is no other function.

22 ELMO COLLINS: That's correct.

23 COMMISSIONER APOSTOLAKIS: Okay.

24 [laughter]

25 94 ELMO COLLINS: The electrical wire may be non-safety related but 1 the penetration is safety-related.

That's correct, thank you.

2 COMMISSIONER APOSTOLAKIS:

Now, the -- again, I believe, 3 Mike, you mentioned that t he National Laboratory identified the issue of Teflon 4 degradation in the '80s. And then I believe you also said that it was one of our 5 inspectors -- no, Elmo said one of our inspectors was in the containment. He 6 looked there at the penetration. "Hey, this doesn't look right." That's what you 7 said. 8 CHAIRMAN MACFARLANE: Licensee.

9 COMMISSIONER APOSTOLAKIS:

It's not the penetration?

10 ELMO COLLINS: I believe I was referring to the -- to the beam, the 11 containment internal structure. If I miscommunicated, I apologize. Licensee 12 engineer that the --

13 COMMISSIONER APOSTOLAKIS:

When was the Teflon identified 14 at Fort Calhoun, that there was Tefl on there? When was that identified?

15 MICHAEL HAY: It was identifi ed last year by the licensee.

16 COMMISSIONER APOSTOLAKIS:

Now, the question is, if the 17 National Laboratory says in t he '80s that there may be a problem with Teflon, 18 why is this identified as an issue in 2012? What happened in between? Didn't 19 you guys ask the licensees to go and check if they have Teflon?

20 MICHAEL HAY: Actually, in the '80s, I believe, we -- the NRC 21 wrote an information notice that informed a ll licensees of this problem to try to 22 ensure that they would take the right actions, and it's our understanding that all 23 licensees did replace these penetrations, with the exception of Fort Calhoun.

24 COMMISSIONER APOSTOLAKIS: Why was Fort Calhoun an 25 95 exception?

1 MICHAEL HAY: Because they made a decision that they would 2 replace the penetrations that dealt with safe ty-related electrical loads, but the 3 non-safety electrical loads wouldn't need to be replaced, so they didn't identify 4 the fact that the penetration didn't support the containment function.

5 COMMISSIONER APOSTOLAKIS:

I don't know. I am really 6 perplexed here. I'm trying to understand wh y an issue that was identified in the 7 '80s was still an issue in 2012.

8 BILL BORCHARDT: I think we're -- we would need to do a little 9 study of the situation and look at inspection reports and perhaps some SERs.

10 We can provide you some follow-up, because I think we just need to --

11 COMMISSIONER APOSTOLAKIS: I'd appreciate that.

12 BILL BORCHARDT: -- at this point.

13 COMMISSIONER APOSTOLAKIS:

Yeah. Please send us 14 something to clear it up. Now, again, anot her issue that confuses me a little bit.

15 What is the role of ROP? Is the role of ROP to give us guidance as to how 16 safety-related -- safety-significant findings are? Is it also its role to tell us where 17 to look or what, and why are we finding th ings like you said, Elmo, the inspector 18 said, "It doesn't look right to me"? If it was another guy, maybe he wouldn't have 19 said that. So is ROP -- it needs to be supplemented by something else? I 20 thought it was a major achievement having the ROP, and maybe it still is, but I...

21 ELMO COLLINS: I think we -- obviously part of the 0350 and the 22 95-003 process is to take a look back at our oversight processes leading up to 23 the day's performance issues at Fort Calhoun and what lessons learned can we 24 glean from that. But in terms of how the reactor oversight process is defined, it 25 96 has -- it is a defined baseline inspec tion program, but even within those 1 inspections, there's a sampling that occu rs. The containment -- the component 2 design basis inspection and engineering ins pection was really aimed at -- for 3 passive components from the Davis-Besse.

But it's a sampling, right? It doesn't 4 say, you know, go look at this system in this way. We try to in form that as best 5 we can, but we pick -- we pick t hose components and try to understand the 6 design basis and how it's applied, but it's not a 100-percent validatio n of facilities.

7 So we have a -- we have a defined program , it's risk-informed, it's a baseline 8 inspection program, and it's implemented, but it -- but it's only sampling by basis.

9 COMMISSIONER APOSTOLAKIS: My question or maybe my main 10 concern is, to what extent do I have to rely on people like this inspector who said, 11 "This doesn't look good to me"?

What -- is that essent ial for us to rely on people 12 like that, or is there anything else we c an do? I mean, of course, don't tell me 13 that we have to have good inspectors, I know that. But when I have ad hoc input 14 like that, because a guy happened to be very good and he also happened to look 15 there, that worries me a little bit.

16 BILL BORCHARDT: Well, you know, I think as Elmo has said, it's a 17 sampling program after initial licensing, that the Reactor Ov ersight Program and 18 the baseline inspections. It doesn't eliminate the possibility of having special 19 inspections, and it's -- there's a continuous feedback process of taking operating 20 experience and assessing through our annual review of the Reactor Oversight 21 Program and then the inspection procedures that support t hat to see whether or 22 not there needs to be revisions. After Davis-Besse, we went -- the agency went 23 on a very concerted effort to validate and verify the design bases at nuclear 24 power plants. It's a ch allenge in the United States because there's so many 25 97 different designs and -- but the inspec tion program tries to establish a 1 consistency of the baselin e program so that we c an compare the performance 2 amongst various plants, and t hen the ROP also lets us allocate resources based 3 upon those inspection findings and the perform ance indicator data that we have.

4 COMMISSIONER APOSTOLAKIS: Go ahead.

5 ELMO COLLINS: What I'd like to add to what Bill has said, one of 6 the -- your question seems to point to one of the underlying pillars of the Reactor 7 Oversight Program, or basic assumptions , and that is that the licensee has a 8 viable and reasonably effective corrective acti on program. Because it can't -- it 9 can't come down to NRC inspectors identif ying everything that's not correct at a 10 facility. We need the licensee -- but we do need the licensee to go out and do 11 that job and do it thoroughly and do it very well. And so there is a component to 12 ROP as well where we try to understand through our inspection how well they 13 are doing that by our sampling inspections.

14 COMMISSIONER APOSTOLAKIS: Wh y did you characterize it as 15 a sampling process? What do you mean by sampling?

16 MICHAEL HAY: Well, I mean, I'll just give you my perspective as 17 an inspector in my past life. You know, you've got a procedure that tells you to 18 do 12 surveillance inspections per year. The licensee does a few hundred 19 surveillances every year, and I need to pick 12 that I'm going to inspect. So I'm 20 sampling a fraction of these surveillances that the licensee performs.

21 BILL BORCHARDT: It's the inspec tion procedures that support --

22 that provide the foundation for the ins pection findings that go into the ROP 23 assessment process. We don't have --

there is no activity, no function, no 24 verification that the NRC does through inspection that is a 100 percent. There 25 98 might be an inspection, right, that looks at penetrations.

1 COMMISSIONER APOSTOLAKIS: But that was part of the 2 baseline inspection, which you just said?

3 MICHAEL HAY: Yeah, that's baseline, yeah.

4 COMMISSIONER APOSTOLAKIS:

Which then goes to the ROP.

5 MICHAEL HAY: Well, it

's part of the ROP, yeah.

6 COMMISSIONER APOSTOLAKIS: If I look at it -- if I look at the 7 ROP itself, it has performance indicators , and it has all sorts of other things:

8 inspections, sirens, this and that. That's not a sample. That's fairly complete in 9 my mind, what's there.

10 BILL BORCHARDT: No, the inspection findings, which are part of 11 the ROP, right, performance indicators and inspection findings, those inspection 12 findings are based upon a sample of activities and systems that --

13 COMMISSIONER APOSTOLAKIS:

Okay. Right. I will yield the 14 point. Thank you Madam Chairman.

15 CHAIRMAN MACFARLANE: Any further questions? Okay?

16 COMMISSIONER MAGWOOD: Don't want to make a habit of this, 17 but just two things. First, I wanted to mention that it was actually -- I think Elmo 18 mentioned earlier that it was actually a licensee person nel that picked up on the 19 structural issue in containment. It wasn't, you know, during inspection, so I'll just 20 pick that up. But I also, as we're creating a meeting record, just to sort of get this 21 nailed down, I think Commissioner Apostola kis asked for a CA note or something 22 to give us some information about this Teflon issue. Could you also add to that 23 anything related to generic application of the -- of the concern and whether we 24 should be putting out a notice or something of that nature? So just to make sure 25 99 the meeting notice picks that up. Thank you. Thank you, Chairman.

1 CHAIRMAN MACFARLANE: Anybody else?

2 COMMISSIONER APOSTOLAKI S: I'm still confused.

3 [laughter]

4 ELMO COLLINS: You get another shot at me this afternoon.

5 ALLISON MACAFARLANE: All right.

Well, in that case then, I will 6 thank everybody for their informative presentations today. I think we've seen that 7 there's been a fair amount of work done at Fort Calhoun. There are challenges 8 that remain, and I look fo rward to hearing about the progress at Fort Calhoun 9 Station in the future. We will be paying attention to what's going on there. And 10 then with that, I think we will adjour

n. So thank you very much.

11 [whereupon, the proceedi ngs were concluded]

12