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International Nuclear Energy Resurgence: A Conversation With Dale Klein

Speaker: Dale E. Klein, Chairman, Nuclear Regulatory Commission
Presider: Sherri W. Goodman, General Counsel, CNA
February 13, 2009
Council on Foreign Relations

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SHERRI GOODMAN: Well, good afternoon. It's a pleasure to welcome everyone to the Council -- and particularly to the nice new space here on a balmy winter afternoon for a very important and timely subject. We're honored today to have the chairman of the Nuclear Regulatory Commission, Dale Klein, join us.

A few reminders, for our Council members and guests, that you should turn off your cell phones please -- they reminded me just before I came in. And this meeting is on the record. So, we are very pleased to have Dale Klein. He's been chairman of the Nuclear Regulatory Commission since 2006. He brings extensive experience in the nuclear industry; has served also at the Department of Defense in an important position there, as assistant to the secretary of Defense for nuclear, chemical and biological weapons.

He's been an advocate for increased cooperation with international partners, and for increased attention to the American nuclear industry as it expects to receive additional -- many additional licenses. And I think he also is saying he's proud that the NRC is considered to be one of the best places to work in the U.S. government, I understand --

DALE KLEIN: That's true.

GOODMAN: -- Dale, so that's a tribute to your leadership and those of the other commissioners. So, we are pleased to have you this afternoon.

Our format today is we will have about 10 minutes of remarks by Commissioner Klein, then he and I will engage in discussion, and then we'll have about a half hour for discussion here with the audience.

Over to you, Dale.

KLEIN: Thank you, Sherri, and let me thank the Council for having this format. I think any time a regulator has an opportunity to talk about what it does, is good. It's important to know, for those of you that don't remember, we are not a promoter. We are a regulator. Our job is safety and security. It's Department of Energy's job to be the promoter. And so when the Atomic Energy Commission was split into two parts, we were the regulator, and so we always make that a point to remind people what our job is.

So, our job is to protect people and the environment. As Sherri indicated, we were selected as "The Best Places to Work in the Federal Government" in 2006 -- it was announced in 2007. The announcement will be made in 2009. And while it has not been announced who "The Best Places to Work" might be, we do know that, on the survey, we did better than in 2006. So, we're optimistic that we will be "The Best Places to Work" again in 2009.

Since we don't make -- we're just -- people are our most important product, and so (it's) very important for us to hire and to train, and so education is a big part of what we do to make sure we're a good regulator.

In terms of the industry, as I had told Sherri earlier, we can say "nuclear" in public again. For a long period of time it was one of those words that you couldn't really say too much. There is a nuclear renaissance around, not just in the United States, but in the world. And since this is a Foreign Council, it's important that you realize the NRC is very active in the foreign area. We are viewed as the best regulator in the world. We have both safety and security. Not all regulators have that. We spend a lot of time with our fellow regulators, in terms of having consistent programs, and in terms of a reactor needs to be as safe in Europe as it needs to be safe here.

It needs to be as safe in all countries. So, we try to share a lot of information among ourselves to make sure that we all maintain high standards. And we share information a lot. We are a very open agency. All of our meetings are in public. Our documents are publicly available. And we provide a lot of our documents to other countries so that we can ensure safety.

In terms of the nuclear renaissance in the U.S., we have 17 applications for 26 reactors, so that part is very busy. But our main focus, as a regulator, is the 104 plants that are running today. Our job number one is to make sure that those plants are safe and secure every day.

In addition to the reactor side, we also have things like uranium mining; and then we have this miner thing called the Yucca Mountain application that the Department of Energy submitted in June of last year, that we are starting through the process of evaluating the technical aspect of that program.

So, for an agency, I think we're probably the busiest we've ever been in our history, with the license renewals, with power (upgrades ?), increased interest in uranium mining and recovery, with our international activities, and then with the reactors, we've been very busy.

So, that means we've been hiring a lot of people. In 2007 we hired 441 people, for a net of 219. For some reason, even though we're "The Best Places to Work," people still want to retire. So, we've had -- we typically have about 200 people a year retire, so in order to have a net gain of 200 people, we had to hire double what we normally did.

In 2008, we hired over 400, again, for over a net of 200. We're pretty well at our staffing levels now. So, we're really in a lot of training to make sure that the men and women that we've hired do a good job.

In 2007, one of the good news we had for hiring is that 60 percent of our new-hires were women and minorities. So, we are becoming a diverse regulatory body and we have to work at that every day like other technical agencies as well.

So, I think, with that, Sherri, I'll stop. And even though, as you indicated, in my former life as an academic I'm trained to talk in 50-minute increments, but I'll try to keep it less than that and leave time for our dialogue and then for the audience. GOODMAN: Excellent. And I know our interested audience will have many questions as well.

Dale, you are presiding over the NRC during what is arguably the rebirth of the nuclear industry to meet both growing global energy demand, as well as combat the threats of climate change. And what do you see is the primary challenge, for both the NRC and the nuclear power industry, in rising to meet this challenge?

KLEIN: Well, I think, Sherri, the primary aspect is safety. Clearly, everything that we do has to be safety. And so, when I meet with our chief nuclear officers what I tell them is that if there's a problem at any plant, at anything that occurs, number 105 is going to be very difficult. So, the most important thing we have to do, in terms of operation, is to maintain that safe and secure environment.

The next issue (is) people -- how do we hire and how do we train? So, I would say that the first issue that we look at is safety, the next issue is people.

GOODMAN: Well, speaking of people, you know, during the Cold War it was conventional wisdom that the U.S. Navy and the nuclear weapons laboratories provided a lot of the feedstock for the human capital that had supported the nuclear industry, and now much of that has turned in different directions as we combat new and different global challenges. How should the U.S. be growing the talent that it needs to staff-up the nuclear industry in future years?

KLEIN: The Naval Reactor program has always been a source of employees, not only for the Nuclear Regulatory Commission but also for the industry, and so they have always been a major pipeline. That pipeline is getting smaller as the nuclear Navy program downsizes and maintains a good level.

They have also learned that -- what we have learned, and that is it's important that if you spend a lot of money training people you want to keep them. So, retention is a program that the nuclear Navy has focused on for the last several years, so there's not as many people leaving that area.

So, in order to meet the workforce needs, clearly, the academic program is an area that we have to look at. But, not only is it the academic side, but it's also the trade craft. If there's going to be a nuclear renaissance and we start building a lot of new plants, I think one of the major challenges that we will have is skilled workers -- nuclear welders.

When TVA restarted Browns Ferry Unit 1, they were 75 certified nuclear welders short than what they really wanted. So, while we tend to concentrate -- for us, as a regulatory body, (on) the professional college and advance-degreed people, in the industry they really need to look at: how do they train, and where do they get skilled workers, technicians. And so we need to look across the board for our workforce.

Congress moved a program from DOE to the NRC on an educational program. We had always put some limited funds into that program -- about $5 million a year. Congress moved a $15 million program to the NRC in 2008 -- you know, for scholarships, fellowships, new faculty, and also for trade skills so that we would work with trade schools.

And so I think, as we look forward for human capital, we need to look all the way from the Ph.D.s to skilled crafts.

GOODMAN: And, given the economic crisis that we face now, and the administration's focus on green-sector job recovery, do you see opportunities within the nuclear industry to, within the next few years, to create jobs for Americans that will be so-called "shovel ready?"

KLEIN: Well, Sherri, there are some shovel-ready plants, you know, in the pipeline right now. Southern Company has stated that they intend to be shovel-ready this year. There's still another issue that they need to solve within the State of Georgia, and they will start a plant (at) the Vogtle site. And there are other sites that are also equally ready to start doing limited work authorization. So, there are several areas that could be shovel-ready.

Certainly, we need to be training ready. We need to be training now for both the graduate and the skilled crafts so they are available and ready once the construction starts.

GOODMAN: On the international side -- and since we are the Council on Foreign Relations here -- what worries you most, Dale, about the prospect of increased cooperation and coordination on nuclear power with international partners?

KLEIN: One of the areas that we have spent a lot of time on is quality control and quality assurance. We work a lot with our international partners on manufacturing. Clearly, manufacturing is an area that we used to make all of our components in the United States.

We are now in a global economy. And one of the areas that I've talked a lot with our federal regulators -- our counterparts in other countries -- is to make sure they have a quality control, a quality assurance program so that there are no fraudulent parts that get into the nuclear industry. So we have a regulatory requirement in the U.S. that if there's any fraudulent parts that don't meet requirements that that's publicly notified. Everyone checks that. And we're also encouraging our counterparts in other countries to do the same thing, so that if they find any weak components, that that clearly is identified.

So I would say that internationally, when we talk to our peers, manufacturing and the quality of those manufacturing parts is a concern.

GOODMAN: What can the new administration --

QUESTIONER: (Off mike) -- some of the other sites besides Georgia?

KLEIN: The other sites? There are about 50 reactors under construction throughout the world. China is by far potentially the largest. There's also India. France is expanding their plant. Olkiluoto in Finland is building one. So in terms of sites that are under way, there's a lot of activity in a lot of countries.

QUESTIONER: So here in Georgia, is that the only one in the U.S.?

KLEIN: In the U.S. we have 17 applications for 26 reactors. The ones that have publicly stated that they are shovel ready is Southern Company in the state of Georgia. GOODMAN: Okay. I'm going to ask you two more questions and then we will go to the audience.

Dale, if you looked into your crystal ball and said what the state of nuclear waste management be in 20 years from -- an area that's been a source of some obvious disagreement and irresolution in this country for decades now -- where would you think we'll be 20 years from now?

KLEIN: Well, hopefully we will still have a strong independent regulator at the Nuclear Regulatory Commission. But I think in terms of -- with my academic hat on, I think we will have a recycling program at some point in time. I think it will be different than what is currently done in France. I think it will be a different technique, with a different looking at how you recycle the components and how do you really dispose of the waste program.

If you look at most major nuclear countries, they have a recycling program and there are a lot of reasons. I think the challenge the United States has had in its waste management program is that we tend to look at a single issue rather than a systematic approach. You know, we'll look at it for fuel availability or we'll look at it for cost or we'll look at it for volume. We really need to do a systematic approach to our waste stream and our whole fuel cycle.

I was pleased to hear Dr. Chu comment on that in his testimony that we really need took at a systematic approach to our waste system and our entire fuel cycle.

GOODMAN: And what counsel would you give to the new administration to assure skeptics that nuclear power can indeed -- if it grows in the United States and internationally -- be done in a way that's safe, that addresses proliferation risks, as well as waste management concerns?

KLEIN: Well, first of all, I think the record speaks for itself pretty well. And so I would say that continued vigilance on an oversight body like ours for the regulator for safety and security. And the other is for the industry never to become complacent -- you know, that they need to pay attention and do it right.

On the proliferation side, again, I think Chu has commented on the fact that we need to look at a systematic approach and address nonproliferation globally, because what we do in the United States is part of the picture, but there's a lot of other countries out there that clearly are going nuclear and we need to be a partner and a player in that and not be isolated.

GOODMAN: Okay, terrific. Now we turn to the audience. And I'll try to go around the room and catch all the hands.

We'll start here with Peter. Please wait for the mike and please identify yourself. QUESTIONER: Peter Zimmerman --

GOODMAN: And stand.

QUESTIONER: You want me to stand? Oh, well.

GOODMAN: I put my cards there. We can be more informal here if you prefer.

QUESTIONER: I've just retired from Kings College, London.

I wonder if I can take you back to the waste management/waste storage problem. Over the years, many people asserted that spent fuel stored onsite was unsafe and susceptible to terrorist attack. Indeed, I was on a National Academy panel that studied that.

I'd like to ask you if you are confident that the measures taken -- as a result of that study and others -- really allow us to give assurance that even if spent fuel needs to be stored -- let me use a vague word -- "indefinitely" onsite, that it is indeed both safe and secure?

KLEIN: Well, obviously, the NRC is responsible for the safety and security of the dry-cask storage on the sites. And so for those facilities that currently have dry cask storage, it is safe; it is secure.

As Sherri indicated, in my former life before I came to the NRC, I had the noncontroversial portfolio at the Department of Defense that dealt with the nuclear, chemical and biological defense program. And so we spent a lot of time dealing with terrorism and how to defend against that.

The NRC is currently undergoing its waste confidence activity. But in our technical analysis that we have looked at, the dry casks that are at the plant are safe and are secure and can be for decades.

So it can be done and it is being done safely. I think a policy issue that our nation needs to address is, is that the best approach? Is there a better way? And again, as a regulator, we will make sure whatever the Department of Energy proposes will be done safely and securely. But I think there are opportunities to look long term and do it better, but again, that's a separate from the regulator. We will just do our job for safety and security.

QUESTIONER: If I could follow up very briefly.

GOODMAN: Wait for the mike, Pete.

QUESTIONER: I'm sorry. I'd also like draw your -- to ask you about the spent fuel pools themselves and whether you think the technologies adopted overseas for dry cask storage are as secure as ours?

KLEIN: I think in terms of different countries -- again, they have the right to do things differently. And I have not seen any countries that have done it as well as we have and we have a very robust security system, very robust containers. But again, other countries will do what their policies are.

But I think from the standpoint, while they could be done better, they're relatively good. But we spend a lot of time talking with our fellow regulators on improvements that the might want to take -- certainly in the security area.

QUESTIONER: (Off mike.)

MR. KLEIN: The spent fuel both at the reactors that we have in the U.S. are safe, secure. We have more guards and protection at our plants than any other country has. And again, every country will do things according to their laws and their regulations.

But currently, both dry cask and in-pool storage is handled safely with a lot of what-if scenarios that are covered that if certain things happen, do you have responses and techniques and procedures in place?

GOODMAN: The gentleman here on the right -- my right.

QUESTIONER: Gabriel Pellathy with Westinghouse.

I just wanted to turn around an earlier question: What do you see as the most positive developments in your interactions with foreign governments?

KLEIN: I think the most positive interactions with other foreign countries is that we have very good communications and very open channels of communication.

For example, China is an area that is bringing on a coal-fired plant about one a week. I'm not an expert in global warming, but clearly we need an energy diverse picture and China is moving to their nuclear cycle. I just returned from India where we talked about the 123 agreement.

And so there's a lot of positive communication worldwide in what's happening with energy and what part nuclear can play in that role. So I would say the most positive aspects is open and very good dialogue.

GOODMAN: Admiral Nathman.

QUESTIONER: Mr. Klein, John Nathman. Thank you for the opportunity. I work part time for Sherri, so I'm a pawn or something here. But the question I have kind of deals with your comment on safety, which is your role as a regulator. You lead that advocacy, as well as the regulations to do it.

But it's interesting to me -- how do you judge, now, the new administration, because in their campaign, they talked about their concerns about waste, proliferation and safety for nuclear plants? I think one of the best opportunities we have is when build new we're going to build GEN III or GEN III-plus plants instead of just repairing and restoring and sustaining the GEN II plants and some of those issues.

So I wonder how you see the advocacy inside the current administration and inside DOE for GEN III plants and building the future for nuclear power in the country.

Thank you.

KLEIN: As you might expect, the new administration is very new. (Audience member laughs.) And so we really haven't had a lot of dialogue yet with how they want to change things.

Being the NRC, being an independent regulator and not part of the executive branch, we communicate a lot, but we haven't really seen a lot of concrete formulation policies.

We follow what Dr. Chu says and what President Obama says in terms of energy to kind of see where we think they're going.

But I think in terms of the opportunities for the new plants, we know a lot more than we knew when we built the last generation, and so the next generation will be safer and more secure. A lot more passive features.

Not to put a plug for any company, but I did notice that a question previously was from Westinghouse. The AP 1000 has a lot more passive characteristics than previous plants. And so the new plants that are likely to be built will be simpler, safer, easier to operate, and more robust.

And we believe that the Obama administration will certainly encourage that kind of development -- safer, simpler, and secure.

GOODMAN: Laura?

QUESTIONER: Laura Holgate from the Nuclear Threat Initiative.

The NRC has a long history of constructive cooperation with your Russian regulator colleagues, and I was just curious -- as their own regulatory system undergoes its reorganization and their nuclear industry is having some interesting organizational changes, moving from a completely government enterprise to this quasi-private thing, whatever it's going to be -- curious what advice you might have for your Russian counterparts, or what issues you think pose themselves in the context of the regulatory environment and the Russian nuclear environment. KLEIN: That's a great question, Laura.

We meet with the Russian regulators often and, in fact, we will have our regulatory information conference coming up in Washington, of which there, I think, are eight to 10 Russian individuals coming, including their head regulator.

It's not clear from the outside watching how Russia moves. In terms of being an open, transparent society, sometimes they're not quite there.

In terms of their regulators, we've had good discussions with them. It's not clear what kind of authority they have. For example, do they have the authority to shut down a plant if they believe safety is not at the high level?

So we talk a lot, when I meet with my counterparts, including the Russians, the importance of having a strong, independent regulator that has the authority to shut down plants if they believe safety is not there.

I have not -- I met in Vienna their new head of their Russian regulatory structure, but I -- it was only a meeting of 30 minutes, and so I really don't have a feel for that. I think if you ask me that question after the -- our regulatory information conference, I'll know more.

But we do have a very good dialogue with the Russians and we try to help them where we can. As you know from your dealings, sometimes they're a little independent.

But I think all of us need to work together, and certainly we need to work with the Russians so that they have those high safety standards just like we do.

GOODMAN: The gentleman in the back?

QUESTIONER: My name is John Fialka. I'm the editor of a publication called ClimateWire.

You have the licensing chore at Yucca Mountain. Do you have the resources to carry that out? How long is your time table going to be for that? And what sort of international interests -- interest do you get from this job that you have on Yucca?

KLEIN: That's one of the Yucca Mountain questions I can actually answer. (Laughter.) Usually I always preface any question on Yucca saying, well, it's in process. But those questions I can answer. Let me answer them in reverse.

There are a lot of international focus on Yucca. When we go to the conference at the IAEA in Vienna, the general conference everyyear, I get a lot of comments from the attendees that they're watching what happens in the United States.

And so they want to know what's happening to Yucca. Is it going to be licensed? How is DOE doing with their application? Is it going to actually be used? And so there there's a lot of questions internationally about Yucca.

The question on your -- the first one about the budget, do we have the amount of funds necessary, the answer is no. We are already way into our 2009 fiscal year. We still do not have a budget for '09. The budget that was submitted was about $40 million short of what our needs were.

And dealing with the budgets are challenging. They always say that you don't want to watch sausage or laws being made; well, probably the budget process is a subset of that.

When we were building our budget for '09 and we were indicating that if DOE did submit the license application in '08, we needed to be ready to review that application, to make a technical review, to start that long process.

And our individuals at OMB said, well, DOE's not going to submit it. And so I said, well, if they submit it we will need to be ready to start hiring and training. Well, they're not going to submit it. So our budget was short to begin with.

So in the budgeting process the House had added some funds, but the Senate didn't. And so we had expected some word, a (strike to ?) the balance between that, and we don't know yet what will happen with the omnibus bill, if it comes out.

So the challenge we have as a regulator, we will do a technical review of the license application. We make no policy decisions on whether it should be there or should not. That is not our -- our job is to evaluate the application that we receive.

We are required by law to do that in three years. We can have one additional year, if we need it, with notification to Congress that it will take four years. With the current funding stream, we will not be able to meet that schedule.

So we are in a dilemma. We either need relief from the congressional requirement of the three to four years, or the funding for which we should be held accountable.

It's, I think, a little difficult to hold us accountable but not provide the funds for the technical analysis.

So we've been talking with Congress and indicating that we have a dilemma. We want to be responsive to their requirements of the High- Level Waste Act, but we will need the resources in which to make that technical determination. GOODMAN: The gentleman in the back?

QUESTIONER: Stephen Dolley, with Platts.

Mr. Chairman, as you know and probably most of the people in here know, but not as many people in the general public know, you mentioned a few minutes ago that most of the major nuclear power countries are recycling their fuel. But in pretty much all of them that do that -- U.K., France, Japan, Russia -- the pace of reprocessing the fuel has far outstripped the pace of actually recycling the plutonium and uranium that's recovered.

As a result, there are hundreds or even thousands of tons of this material, some of which is potentially weapons-usable, sitting around in these countries waiting to be reused.

If the U.S. moves to a system of reprocessing and recycling, what sorts of challenges does that potential situation pose for a regulator, and how can the U.S. avoid those kinds of pitfalls in an advanced reprocessing cycle?

KLEIN: That's a good question, because if you just recycle and you don't think where it goes, you haven't really accomplished your in-state desire.

As you indicated, France certainly has staged their recycling with their demand for fuel. And they have looked at their fuel cores, and they are licensed to burn the mixed oxide fuel -- the plutonium- uranium mixture. In the United States we do not have -- all of our plants are not licensed to burn mixed oxide fuel.

So that if we did a recycling program in the United States, the utilities would have to come to the NRC to demonstrate how they intended to use mixed oxide fuel, and then we would have to determine, from a safety standpoint, were they able to do that.

And at this point, there are not a lot of nuclear plants, commercial plants in the U.S. that are licensed to burn mixed oxide fuel.

QUESTIONER: Could I follow up real quickly?

GOODMAN: Mm-hmm. (Approval.)

QUESTIONER: Well, what about -- how would NRC address, or how should NRC address a potential plutonium surplus building up in circumstances like that?

KLEIN: Well, the only area that we have now to address that is the mixed oxide fuel plant that is being built in South Carolina from the surplus weapons program.And so currently we had talked to and had licensed one of the Duke plants to burn the mixed oxide fuel. So our responsibility as a regulator would be to essentially make sure that those plants that want to burn that fuel understand how to do it and do it right.

If one looks at that mixed oxide fuel production out of the MOX plant, there currently is a disconnect between the production of the mixed oxide fuel and the number of plants that can use it.

We have pointed that out to the Department of Energy, reminding them that they probably need to be aware of supply and demand -- that if they're going to make mixed oxide fuel, there should be a path to use it.

As a regulator, we will evaluate applications that come to us. So we, at this point, are just reminding DOE that they need customers for that production.

GOODMAN: (Lloyd ?).

QUESTIONER: (Inaudible.)

GOODMAN: (Lloyd ?), can you take the mike?

QUESTIONER: Excuse me. Thank you.

To piggyback on the last question, how does the joint program that the U.S. was developing under the auspices of the G8 to cooperate with Russia for the disposition of weapons-grade plutonium? And then the second part, related only generally by subject matter, is given the level of safety that you identified -- (inaudible) -- with current production of nuclear power and the disposition for waste, do you foresee that a greater percentage of the power requirements in the U.S. -- energy in the U.S. -- will be generated by nuclear power? And if not, why not?

KLEIN: Well, probably your first question about the program between the U.S. and Russia -- I should've let Laura answer that question. When I was still at the University of Texas I was involved in a program with plutonium disposition that worked between the U.S. and Russia. And at one time there was a program that they moved in parallel that both countries would take surplus weapons or weapons- usable material, make it into mixed oxide fuel, and that would then go in the commercial reactors.

The program with Russia has been challenging in terms of them actually building the plant and using the fuel. And so currently the United States is pretty well going on its own on the mixed oxide. The Russians have always stated their preference to use their surplus plutonium in breeder reactors. And so there's always been a disconnect.

The program that was actually signed and agreed upon for mixed oxide was to go in parallel together, that one seems to have deviated and we're still on our path and it's not clear if the Russians will stay on their path. And again, that's beyond my role as a regulator, but certainly we watch that picture.

In terms of your question about increased generation from nuclear power and so forth, we are a light water agency, and so if we go to advanced reactors and recycling we will have to build a new workforce to look at safety and security and those issues. But we are really well-prepared to analyze and handle applications for new light water reactors. We currently have the 17 applications for 26 reactors and we expect by the end of '09 maybe two dozen applications for maybe around 30 reactors. And then how they are built and staged will depend on each utility and their demand. The Department of Energy had done a study and they said by 2030 they expected the demand for base- load electricity to increase by about 30 percent. And so if those numbers were to hold true, you would have to add 50 nuclear plants just to maintain the 20 percent share. So if you talked about increasing our share above 20 percent, then that means more than that 50 if our demand for base-load grows. So I think in terms of what the industry does, the industry will do what the industry does. Our job is to make sure it's safe and secure.

And so I think Dr. Chu will try to look at a balanced portfolio. Clearly wind and solar has a role; nuclear has a role; clean coal has a role. So I think when you look at our economy right now -- the fact that we're in a pause -- if you looked, say, two years ago and electricity demand was really going up, I think we're in a pause right now, but at some point the economy will turn around. Demand for base- load will increase, and then it's up to the utility to determine how they meet that demand. And they will make their decisions on economic and so forth.

I think one of the challenging issues before all of us is what will happen with global warming and climate change? Will there be a cap and trade, will there be a carbon tax and what form will that take? When I talked to the nuclear utilities that also run other plants, they try to balance their needs and have a diverse portfolio. And clearly Congress can play a role in driving energy one way or the other, and cap and trade and carbon tax will have an impact -- we don't know yet exactly what impact.

So I think a lot of that will depend -- the future of nuclear will depend on what happens with carbon legislation, the economy, the demand. But I can tell you, in the world nuclear is really growing. There are about 61 plants planned or under construction right now. China is looking at adding 21 nuclear plants in the very near future; India, about 12; Russia has several. So worldwide there's a big increase in demand for nuclear and the United Arab Emirates is also looking at getting into the nuclear generation for a country that has not had any. So there's a lot of interest, and I think that will continue for a variety of reasons, and the United States will be a player in that arena as well. It's just not clear how fast and how soon.

GOODMAN: Gentleman here in the back, yes?

QUESTIONER: You just mentioned the 123 Agreement with the -- you just mentioned the UAE. We have a 123 Agreement that's been signed but not yet submitted to Congress. And advocates of the agreement's passage by Congress or concurrence argue that it's a model for agreements with other countries, even potentially with Iran, because the UAE forswears re-processing. What's your view of that agreement and the likelihood that it does become a model for others?

KLEIN: Well, I think that 123 Agreement could be a model for other countries. And other than the United Arab Emirates trying to hire some of our Nuclear Regulatory Commission employees, they're doing it right. (Scattered laughter.) You know, they really are --they've gotten some very good people; they're looking at it very logically; they're developing laws, regulations; they're getting a structure; they have hired our former executive director of operations. So they've gotten some very good talented people.

And so I think two things on the UAE that could be a model. One is the 123 Agreement that is, I think, very robust. And then the other is the fact that they are doing it very logical step-wise and they understand that it's not a one-year program, it will take years to get their laws, regulations, their people trained and implemented. So they understand the timeline and they also have the financial resources to do it right. So I think it can be a good model.

We have encouraged Bill Travers, our former EEO, that has been hired; he had retired from the NRC so they didn't quite steal him directly from us. But they are hiring a very good staff and I've encouraged Bill to keep very good detailed notes because I think the detail for which they're doing this can serve as a model for other countries.

GOODMAN: The gentleman here in the front?

QUESTIONER: Henry Sokolski with the Nonproliferation Policy Education Center. I just finished serving actually with Steve Rademaker here on a congressional commission on the prevention of WMD proliferation and terrorism. I'm curious, are you familiar with the analysis and recommendations of that report -- that's first. We were pretty critical. We went to Vienna and what we saw made us apprehensive that some of the goals were too liberal, not hard enough for real safety in another area which has to do with proliferation. And I'm curious, as we gear up -- as I hear you say we need to -- what you're doing in the NRC to expand and improve your international safeguards department?

KLEIN: Well, as you probably know or may not know, the NRC is the one that does all of the import-export licensing, so we work very closely with the State Department, the Department of Energy and the Interagency Agreement -- including the Department of Defense -- on the import-export license activities. So before we can export any of our technology, there's a very strict guideline for which we follow.

I think in terms of what we control in the U.S. is one aspect, but if you look globally, I can assure you there are other countries that are very active in the nuclear community. France is very active marketing not only their reactors but their recycling technology. Russia is very proactive. So I think we have to be careful as a nation that we don't become so isolated that we're not aware of what other countries are doing because we all need to work together in terms of non-proliferation and safety and security. I believe this administration will put more resources into the IAEA to help on the nonproliferation side. So I think that is an area that we are a participant and a player in, and we work a lot in that area. So I think in terms of a regulatory agency, we have a limited role in nonproliferation, but it's a very valuable one. so I think you're going to see an increased emphasis on the IAEA for nonproliferation in this administration but I think we also have to recognize that nonproliferation will not just come from this country. There are other countries that need to be proactive in nonproliferation, not just the U.S.

QUESTIONER: From that answer I look forward to briefing him.

GOODMAN: It sounds like there's a new study worthy of discussion here at the council.

Yes, Gail?

QUESTIONER: Hi, Gail von Eckhart (sp) (Spur Gale Force 5 ?). I had a question about small novel nuclear reactors for localized purposes. There's been talk of potentially using these on military facilities or things like that. How -- how do you view that as a regulator challenge or opportunity?

KLEIN: Gail, the thing that's interesting on the small what are called grid-appropriate reactors, we get a request for one of those about one a month, if not more. And the challenge that we have as a regulator -- we are a fee-recovered agency, so 90 percent of our budget gets paid by those we regulate.

So if someone comes in and has a great idea, then we meet with them a couple of times, but the third time they get to bring a checkbook. And a lot of these companies that have great appropriate reactors are what I would describe as the paper reactor -- you know, they're a design concept. And so there's no there there yet and it takes a lot of effort to get there.

And so as the world, we absolutely need great appropriate reactors, in other words, and I think it's a role that the NRC should be playing in, but we have a challenge of how do we play in that field when we have to recover our fees by those we regulate. So if a small reactor or vendor wants to come in and get a license for a grid appropriate reactor, small size, the first thing we say is who is your U.S. customer?

And so we have a little bit of a disconnect in what we need to do as part of our international relationships and what we can do financially. So the confusing answer is that we need to play and we haven't figured out how to play. There are countries that need smaller reactors than what is marketed in the U.S. that we license. If you looked at a country like Yemen, you know, as an example and you tried to put a 1,500-megawatt reactor on their grid, it would not be a happy grid, and if it was able to get on the grid and went off, it would also be unhappy.

So there are certain applications that we do need smaller reactors, but for the United States, the utilities typically want a large reactor because our grid is so big and robust and our demand for base-load is so high.

So we don't have a real good answer yet. When vendors come in, we will meet with them a few times and talk about our processes to certify a reactor, but we have limited opportunities to get in very detailed design review because we are a fee-recovered agency.

GOODMAN: Dale, can I pursue that with you a little bit? Because if we as a nation, in order to make more robust our electric grid in future years, move towards more distributed energy sources as we make a smart grid, is there -- will the NRC or some other entity in the future need some additional authorities beyond what exists today in order to make feasible this type of what you call grid-appropriate or sort of smaller, in this case, nuclear power, but it could be other types of energy sources that enable, for example, military installations to deal with their vulnerability to the grid or other critical infrastructures that needs to be addressed in future years? KLEIN: I think in terms of -- I think you will see a lot of focus put on the grid in the next several years, both on its robustness, need for diversity, and certainly, if you want to capture wind, typically where the wind is generated and where you can capture it is not where the grid is. So there needs to be lines run out to bring that in.

In addition, I think there's a lot we can do with smart meters, you know, to load level and demand so we don't just have a peak and then it drops off because we have to meet the peak. So there's a lot we can do as a nation in our whole energy infrastructure. Most of that lies outside of the NRC and will be under the jurisdiction of the Department of Energy for transmissions and for smart meters and things like that.

With your question about grid appropriate reactors and smaller reactors and more distributed, people have talked about that, but for, I think, the near-term in the United States, we will continuously add big reactors in the U.S. I think there are some applications, particularly in the chemical industry where they need a heat source that nuclear could provide that. The challenge will be security. 9/11 taught us a lot and that is we have threats that we now are more sensitive to, and when you talk about small reactors distributed around, there will have to be appropriate security on those facilities, which means the costs will go up and then you'll have to do your tradeoff. Can you get your electricity generated by natural gas, for example, rather than a small nuclear reactor? So economics will play into that.

But I think one of the challenges that we will have on the small reactors that people think might be distributed around will be security. Now, if they're on a military base, usually security is pretty good there anyway, but I think for industrial applications, it will have to be addressed.

GOODMAN: Spurgeon?

QUESTIONER: Spurgeon Keeney. I gather from your comments that you expect that through a renaissance in nuclear power will probably be largely confined to replacing existing plants that come to the end of their life or may well be largely that, and given the present economic statusing (ph), I'm wondering how real do you think most of these applications that you're receiving for these 26 reactors are, and whether they're simply place holding. And in that connection, what is the obligation of the NRC in granting licenses? Does the company requesting them have to make any economic commitment to actually going to construction? Can it just be place holding? And if I might, also in this context, does the NRC have a role in the decommissioning of nuclear plants, which will become a major activity in the years to come or is that not part of your commitment? KLEIN: I'll answer your last question first because it's easy. The NRC absolutely has a role in decommissioning, and so we are involved in that. We require utilities to have a decommissioning fund and we also will establish a lot of the requirements for the decommissioning. So decommissioning is part of the NRC's area.

Your comments about placeholders and how do you determine which ones are coming forward. I think there were a lot of applications submitted in order to meet the loan guarantee and tax credit activities, so there's no doubt in my mind that there was an incentive for utilities to meet a deadline, to get an application submitted to the NRC. And I think there are some that are on a different time scale than others, whether it's a placeholder or their need for electricity is further out, but they wanted to get their applications in order to meet other incentives of the Energy Policy Act of 2005.

So when we look at the applications we have received, most of them are for facilities at existing sites, and if you look at the Vogel site because Southern has indicated that they are going to build there, that site was designed for four units and they only built two, and so there are now additionally the next two. There are many sites like that. Originally, these sites were selected for more sites -- more units than were built. So most of our applications are what we call brown field sites, they are sites that are existing facilities that are already there, that means a lot of the infrastructure is there, the transmission lines and a lot of their infrastructure.

So when we currently are starting our licensing reviews of those plants, we typically are prioritizing our workload along units; in other words, we will have a team that are looking at all the AP1000s and we will stagger those. We have a team that are looking at the advanced boiling water reactors, the EPR, the Arriva design and so forth. So we have a matrix of people looking at these license applications.

If we end up believing that we have a crunch and we cannot meet the demands that all the applicants have applied for which they get the pay by the way, so the new applications that come in we don't require that they put down a deposit, but they get billed for the services that we provide -- and it's very good service by the way.

So we bill them for those tasks for which they pay. But at this point, they don't have to, you know, put money on the table for us to do it, we bill them and they then reimburse the government, it goes into the Treasury.

So there's no requirement at the moment for the United States, when a utility comes in, they don't have to put a deposit down for example and build. They have a lot of steps that they go through within their own states. They have requirements that they have to meet, as well as the federal requirements for us. In addition, they have to start getting in queue for long lead items. If they need heavy foragings, which they all do, they better get into queue becausethere's a four year lead time for Japan Steel Works, for all the heavy foraging.

So what we look at for the utilities that we think are going to build sooner than others, we look for indicators, are there incentives in the state like the state of Florida that allows construction work in progress? Are they ordering long lead items? Are they doing preliminary site designs for limited work authorization? So we look at those activities. But at the moment, we've been hiring to meet the needs of the licensees and we have not had to pick and choose those we think are first or second, but at some point, we may have to look at that and then we will -- we will look at those decisions like have they ordered their heavy foragings? Frankly, I would hope the industry would prioritize more so than us. I would rather the industry tell us this is when we're going to turn dirt and they agree among themselves which ones are one through 10, which ones are 10 through 20 and so forth.

QUESTIONER: Do you think the existing applications fulfill the need to replace decommissioned -- anticipated decommissioned reactors?

KLEIN: The current reactors are basically just meeting the increased demand that the utilities see coming. Most of the reactors are coming in for license extensions, and so originally they had a 40- year license. We are looking at -- we have granted 51 of the 104, a 20-year license extension, so they have to come in. So a lot of licenses are coming in with license extensions.

We are working in conjunction with the Department of Energy for life beyond 60, that doesn't mean our lifetime, but we are looking -- you know can these reactors run longer than 60? What are the technical issues that we have to address for that?

So I think most of the demand for the current applications is for new demand, not necessarily shutting down the existing fleet.

GOODMAN: Gentleman? Time for one more.

QUESTIONER: Jeff Naff with UC Capital Partners. Coming back to Yucca Mountain, there's at least an implied threat from certain members of the Congress on the viability of that program, the funding of that program.

KLEIN: We've heard that.

QUESTIONER: Wondering what your sort of view going forward is if the viability of the Department's program were reduced to a level where it perhaps could no longer interact with you all in the license?

And at what point does that process forward impact your ability to license reactors and extend their licenses?

KLEIN: As you might expect, for anyone who has followed the Nuclear Regulatory Commission, when an application comes in, it's -- rarely meets all of our needs.

And so we usually have what's called RAIs, requests for additional information, and we will have those on the Yucca Mountain application. So we are assuming that when we send those RAIs back to the Department of Energy, they will be able to answer those questions.

So we take no position on Yucca Mountain, other than safety and security. There are a lot of policy issues that are swirling around it, and obviously there's the senator from Nevada that is not too happy about the Yucca Mountain site and the way it was selected.

That issue is by our 535 advisers and by the Department of Energy -- so 435 in the House and 100 in the Senate. So we will leave those policy decisions to the -- that policy side. Our job is strictly a technical and a scientific review of the application.

And at this point, we're watching the budget, like everyone else is, to see whether or not we believe the Department of Energy will be able to have the funds to answer our questions.

But both the NRC and the DOE have a slight dilemma. They are required by law to submit an application, and we are required by law to evaluate that application. So we -- I think both DOE and the NRC intend to follow the law to the extent that we can.

And so now that we have the application, our job is to follow the law and do it in as timely a manner as we can, and do it in a technical way.

And we will not make any policy decisions on whether that site should have been selected or if there's a better one. We are only analyzing the application that we have.

QUESTIONER: Thanks. Could I do a follow-up -- (off mike)?

GOODMAN: Very quick. (Scattered laughter.) So we have time for one more question -- QUESTIONER: The second part of the question really was related to your ability to license reactors and the confidence rulemaking. Is there any picture of that, if Yucca were nonviable?

KLEIN: We -- the question really relates to the waste confidence issue, and -- on new reactors. And it sort of gets back to the question that was asked earlier about dry cask storage.

Dry cask storage is safe, it's secure, and we have said that it can be done for up to 100 years. It may be -- beyond that; we have not looked at a period beyond that. So we are currently going through our waste confidence issue.

But clearly, from the licensee, being the regulator, we believe that reactor storage is safe and secure.

GOODMAN: Okay. Last question.

QUESTIONER: Well, I have one minute. (Chuckles.) Nuclear fuel. My name's Nick Timbers (sp).

There is an NRC existing regulatory regime for uranium enrichment here in the United States and it's well established.

Now there are three new plants trying to be built right now, but different technology. With nuclear plants you have BWRs or PWRs -- new generation.

But now nuclear fuel, you're going from a --

KLEIN: Gaseous diffusion to centrifuge.

QUESTIONER: Gaseous diffusion to centrifuge, which is an entirely different regulatory regime challenge for you.

And how are you addressing that?

KLEIN: It turns out that we have a team -- obviously we will be the licensee for the first one, which is LES. We have an application for ESEC (ph), and also AREVA is going to build a facility. So we have three enrichment facilities that are in various stages.

We look in the details of the technical characteristics to the safety issues of that technology. We have a limited number of people that have security clearances that can look at more details of that process than our normal staff.

So we do a thorough technical review, and we have a trained staff that can make those evaluations. So I think that one is pretty good.

The challenge that we will have on new technology is the techniques that General Electric is looking at, and that's for laserisotope enrichment. And so we are trying to move our technology understanding in parallel with -- as the technology advances, the regulation needs to be following in parallel.

And then I talked to Dennis Spurgeon when they were looking at Generation IV reactors. Don't surprise the regulator. As you need a technology license, make sure you keep the regulator informed at various stages.

So on the LES, the centrifuge, we have given them a partial license to do part of their work, and we will do it at various stages. So technically, we have a good process of the requirements and the staff to make that decision.

QUESTIONER: (Off mike.)

KLEIN: For the operational aspects, the fact that these plants exist in other countries, we share.

Sometimes we are not the holder of all knowledge, so we go to countries where these plants have been in operation. We ask the regulators what did they look at, what did they learn, what are the issues. So it's a two-way street.

So for the centrifuges, we are learning more from other countries in what to look for and how to do it.

GOODMAN: Dale, on behalf of the Council, I'd like to thank you for sharing your afternoon with us and for sharing your important insights at this pivotal moment for the nuclear industry, as well as on the cusp of a new energy economy.

Thank you very much.

KLEIN: Thank you, Sherri. (Applause.)

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