ML19343A585
| ML19343A585 | |
| Person / Time | |
|---|---|
| Issue date: | 08/08/1980 |
| From: | Eilperin S NRC OFFICE OF THE GENERAL COUNSEL (OGC) |
| To: | Harold Denton, Minogue R, Stello V NRC OFFICE OF INSPECTION & ENFORCEMENT (IE), Office of Nuclear Reactor Regulation, NRC OFFICE OF STANDARDS DEVELOPMENT |
| Shared Package | |
| ML19343A580 | List: |
| References | |
| FRN-43FR48621, FRN-44FR32489, RULE-PR-21, RULE-PRM-2-8, RULE-PRM-2-8-44FR32489 NUDOCS 8011190045 | |
| Download: ML19343A585 (12) | |
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pa "'%r UNITED STATES NUCLEAR REGULATORY COMMISSION 4
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WASHINGTON, D. C. 20555 3
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j' august 8, 1980 MEMORANDdM FOR:
-- Harold Denton, Director, NRR Victor Stello, Director, OIE Robert Minogue, Director, OSD Howard Shapar, Executive Legal Director James J. Cummings, Director, OIA Boyce H. Grier, Director, Region I James P. O'Reilly, Director, Region II James G. Keppler, Director, Region III Karl V. Seyfrit, Director, Region IV Robert H.
Engelken, Director, Region V StephenF.Eilperif icitor FROM:
SUBJECT:
NATURAL RESOURCES DEFENSE COUNCIL (NRDC)
SUIT CHALLENGING 1978 AMENDMENTS TO PART 21 As you may know, the Commission has been sued by the Natural Resources Defense Council (NRDC) in the U.S. Court of Appeals for the D.C. Circuit challenging the 1978 Amendments to Part 21 which excluded " commercial-grade", or "off-the-shelf", items from the reporting requirements of Part 21 until those items are dedicated for use as a basic nuclear component. 1/
We think that the merits of the appeal are lik.ly to turn on our ability to convince the court that the " commercial-grade" limitation on the reach of Part 21 has not allowed known defects which later prove to be of safety significance to go unreported to NRC.
NRDC's argument is that a defect in a commercial grade item, such as an ordinary valve, may cause a substantial safety hazard, may be undiscoverable by the purchaser, and therefore should be reportable to the NRC.
In order to best defend this lawsuit we must be able to evaluate the functioning of Part 21.
We need to know if in practice 1/
For the purposes of Part 21, commercial-grade item has been defined as an item that is (1) not subject to design specifi-cation requirements that are unique to facilities or activities licensed pursuant to Parts 30, 40, 50, 70 or 71 of this chapter; (2) used in applications other than facilities or activities licensed pursuant to Parts 30, 40, 50, 70, or 71 of this chapter and (3) ordered from the manufacturer / supplier on the basis of specifications set forth in the manufacturer's published product description (for example, a catalog).
Contact:
Trip Rothschild, OGC, 41465 so3 3 ro oof5
4 significant defects have gone unreported due to the " commercial-grade" exclusion.
Since your office is familiar with abnormal occurrences and Licensee Event Reports, we would appreciate any information you have regarding:
(1)
Any instances where Licensee Event Reports (LER's) involved commercial-grade components.
In such cases, did the LER involve component failure due to a manu-facturing defect, or was there some other problem such as faulty installation of the component?
(2)
What follow-up has been taken in instances, if any, where a defect in a commercial-grade component caused a sub-stantial safety hazard.
(3)
Any instances where defects were known to the component supplier and would have been reported if Part 21 did not exc1_ude such items from the reporting requirements.
In short, we would appreciate any examples you know of where problems could have been forestalled if Part 21 applied to suppliers of commercial-grade items.
We would also appreciate any cther thoughts you might have on petitioner's arguments advocating the expansicn of the coverage of Part 21.
We have attached the pertinent part of their brief for your information.
I would appreciate a response by August 22.
Attachment:
NRDC Brief (portions)
In addition, the rule challenged by the NRDC in its rulemaking petition was invalid because procedurally it was fatally flawed.
Although the Supreme Court has restricted the scope of judicial examination of particular co= mission procedures, vermont Yankee Nuclear Power Corp. v. Natural Resources Defense Council, 435 U.S.
519, 539-49 (1.78), it has never condoned an agency ignoring the APA completely.
Id. at 548.
Since the Commission, without good cause, failed to provide public notice and comment on the amendments to Part 21, thereby violating the APA /, it was arbitrary and capricious for the commission to have denied the petition seeking rescission of that invalidly promulgated rule.- /
B.
The October 197", Amendments To 10 C.F.R. Part 21 Were Beyond Thc Agency's Discretion And Contrary To Congress' Intent In Enacting Section 206 Of The ERA.
1.
Section 206 was intended by the Congress to increase the public's protection against nuclear accidents by requiring persons with access to information on potential problems to provide early warnings.
The Nuclear Regulatory Commission was created by the Congress to regulate the nuclear industry for the protection of the public against nuclear accidents.
Indeed, the Senate's original name for the agency was the Nuclear Safety and Licensing Commission and the 2/ See section C, infra.
- */ The decision in this case depends upon a finding that the denial of tee rulemaking petition was arbitrary and capricious.
This finding, in turn, depends upon the court finding that the regulations that were the subject of that petition are unlawful, either substantively or proced-urally.
The agency action in question, however, is not the promulgation of the amendments, but rather the January 23 denial.of the rulemaking petition.
There is, therefore, no time question under 28 U.S.C.
S 2344 (1976).
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.,. in the legislative new Commission's mission was clearly spelled out The Report accompanyi'ng"the Senate version history of the ERA.
of the bill stated:
as reported, establishes a new Nuclear Title II, Safety and Licac. sing Commission to replace the AEC, which is abolished in Title I as reported.
The new name is intended by the committee to clearly reflect the new mission of the Commission. */
As finally enacted, the ERA clearly embodies this congres-Various sections of the Act establish offices within sional intent.
The Office of the Commission with particularized safety functions.
Nuclear Reacter Regulatien, 42 U.S.C. S 5843 (1976), the Office of Nuclear Safety and Safeguards, 42 U.S.C. S 5844 (1976), and the 42 U.S.C. S 5845 (1976),
Of fice of Nuclear Regulatory Research,
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improving safety are a11 required to perform duties related to-1 in the nuclear industry.
Thus, the statute clearly reflects the Congress' overriding e=phasis on safety.
Section 206 plays an important role in this emphasis on safety.
It provides:
(a) Any individual director, or responsible officer of a firm constructing, owning, operating, or supplying the components of any facility or activi-ty which is licensed or otherwise regulated pur-to the Atomic Energy Acr of 1954 as amended, suant to this chapter, who obtains informa-or pursuant tion reasonably indicating that such f acility or activity -
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S. Rep. No.93-980, 93d Cong., 2d Sess., (1974) U.S. Code Cong. & Ad. News at 5486.
Similar language appears in other For example, the Report also states:
portions of the Report."The missica of the new Commission is to ensure the safety and the security of the nuclear industry and the weapons-grade and other radio-active materials used to fuel it.
Id. at 5471.
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, (1) fails to comply with' the Atomic Energy Act of 1954, as amended, or any applicable rule, regulation, order or license of the Commission relating to substantial safety hazards, or (2) contains a defect which could create a substantial safety hazard, as defined by
- gulations which the Commission shall promul-c
- gate, st.11 immediately notify the Commission of such failure to comply, or of such defect, unless such person has actual knowledge that the Commission has been adequately informed of such defect or failure to comply.
As the language of the section states, Congress intended that the section apply to those persons most likely to discover a defect which could create a substantial safety hazard in a nuclear facility or activity and required them to report such information to the Commission.
To emphasize the importance of these reporting require-ments, the section provided civil penalties for knowing and conscious v iola tions. */
In this way Congress sought to ensure that the Commission obtained early warnings where possible and thereby pre-vent any potential safety problems.
The legislative history confirms the role the section was intended to perform.
Section 206 was.first included in the Senate's version of the ERA, S.
2744, on April 6, 1974.
The Report accom-panying the bill stated:
Section 205 (206 in the bill as finally passed] requires officers and employees of licensed nuclear facilities, or of firms supplying components to, or constructing,
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originally proposed by the Senate, criminal as well as civil, penalties were provided.
In a compromise with the House, criminal penalties were dropped.
Conference Rep. No. 93-1445, 93d Cong., 2d Sess., [1974]
U.S. Code Cong. & Ad. News 5550.
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, these facilities to report knowledge of sefety defects or of noncompliance with the Nuclear Safety and Licensing Commission regu-lations, or face civil or criminal penalties.
The committee intends by thit orovision to upgrade the system of detecti,g, and anticipating the defects that increasingly have plagued the nuclear power industry and threatens its safety record on a daily basis.
The application of this provision to com-ponent suppliers is intended to benefit electric utilities in particular, which usually have no way of knowing that a sealed, prefabricated part is defective until it triggers a shutdown costing tens of thousands of dollars a day in lost generating capacity.
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domponent failures accounted for more than half of the 861 abnormal occurrences in nuclear power plants which were reported to the Atomic Energy Commission in 1973.
Often the defective components were relatively noncomplex hardware items.
For example, valves were the most frequent components in.volved in abnormal occurences -
amounting to 157 failures, or 19% of the total.
Yet, the breakdown of a simple valve has potential catastrophic implications.
The system most frequently involved in abnormal occurrences (210) was the primary cooling system which is used to prevent a meltdown of the nuclear core of a reactor.
The system next most frequently affected by defects (166) was the emergency core cooling system which prevents a meltdown in case the primary cooling system fails.
A meltdown is the worst conceivable reactor accident; according to testimony, such an accident could result in breaching of the con-tainment vessel of a power plant and in the release of radioactive fallout equivalent to many Hiroshima bombs.
The committee intends, and the provision so states, that only " basic" components are t
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, covered by this requirement to report defects, as distinguished from inci-dental components unrelated to the safety of a nuclear facility.
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The Conference Report basically adopted the Senate's language, with the only significant change being the elimination of any criminal sanctions for failure to comply. **/
The Conference Report stated:
" Generally, tr s section is directed toward assuring that the Commission has prompt information concerning defects in major components of facilities subject to licensing which could create a substantial safety hazard". ***/
The import of the legislative history is clear:
Congress was concerned that defects would be undetectable unless component suppliers had an obligation to report.
In addition, the concern was for all defects in basic or major components - i.e.,
those whose failure could have a significant safety hazard.
The concern was for nonccmplex, hardware items in prefabricated parts.- It is precisely these type of parts that were exempted from Part 21 by the NRC's amendments.
2.
The Commission's october 1978 amendments to 10 C.F.R. Part 21 are contrary to Congress' expressed intent because they exempt components that Congress intended to be covered.
On June 6, 1977, NRC issued final regulations implementing section 206 of the ERA.
The regulations, required, inter ali'a,
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S. Rep. No.93-980, 93d Cong., 2d Sess. (1974] U.S. Code i
Cong. & Ad. News 5527-28.
(emphasis added).
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Conference Rep. No. 93-1445, 93d Cong., 2d Sess., [1974)
UTS. Code Cong, &-Ad. News 5550.
Civil penalties were also applied only if the noncompliance were " conscious" rather than
" willful" and liabilities were limited to directors and
" responsible" officers.
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- that all directors and responsible orricers of organizations supplying basic components to a nuclear facility or-activity notify the Commission of the existence of any defect in the basic component supplied.
Basic components.were defined, when referring to nuclear power reactors, as a plant structure, system, component or part thereof necessary to assure (1) the integrity of the reactor coolant pressure boundary, (2) the capability to shut down the reactor and maintain it in a safe shut down condition, or (3) the capability to prevent or mitigate the consequences of accidents which could result in potential harmful exposure to the population in the adjoining surroundings.
10 C.F.R. Part 21, S 21-3(a). */
These regulations :learly extended only to directors and responsible officers of organizations supplying basic components, which could, in the event.cf a defect in these components, result in a serious hazard to the public's health and welfare.
They were, therefore, consistent with the express intent of the Congress.
The Commission's own staff noted this fact in a discussion paper pre-pared for the Ccmmission and released to NRDC in response to its Freedom of Information request.
The paper, entitled Elementary Impact /Value Analysis of 10 C.F.R. Part 21, in relevant part, states:
'/ When applied to other facilities or activities of a Commission licensee, basic c.omponents were defined as those in which a failure or defect could create a substantial safety hazard.
Substantial safety hazard, in tu.n, was defined as a loss of safety function to the extent that there is a major reduction in the degree of protec-tion provided to public health and safety.
Id.
Thi.s case deals with the definitions and regulations that apply to power reactors.
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If Section 206 is implemented by means of the Part 21 contained in Enclosure 3, it is esti-mated that no more than forty valid notifica-tions will be submitted to the Commission in a year.
NRC may receive an equal number of notifications that have been submitted when not required.
Indication has been received that some segments of the industry will noti-fy NRC of every " deviation" prior to their evaluation of the deviation in order to lower the possibility of civil penalties.
Two of these issues would have a significant impact on the resources the Commission would need to achieve effective implementation of Section 206.
These are:
Issue 4 How should the Commission define a " basic component";
i.e.,
how far down the tiers of suppliers should Part 21 be applied?
The alternative selected for Issue 4 utilizes one, definition for the identification of basic components when applied to nuclear power reactors licensed for construction or operation and a different definition when applied to the "other licensed facilities and activities."
The definition of basic component when applied to power reactors is based upon existing terms and definitions In power reactors a basic component may be produced a number of tiers of suppliers below the licensee; for example, Part 21 would bring within its coverage a pump manuf acturer who sells to a motor supplier who sells the motor pump combination to a nuclear steam system supplier (NSSS) who sells to a licensee.
The second definition is considered appropriate for use with the nonpower reactor activities since they do not posses a significant characteristic of a power reactor -- latent dis-persal mechanisms associated with high tempera-tures, high pressures.
The absence of this characteristic will mitigate the consequences of an accident and therefore, a narrower coverage of components is deemed appropriate.
The application of the second and more narrow defini-tion cf the basic component to power' reactor activities does not appear consistent with the Congressional mandate.
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The regulations issued on June 6, 1977 covered all tiers of-suppliers that could affect safety and were therefore consistent with the congressional mandate.
The Commission's 1
October 1978 amcadments, however, effectively nullified the success o, these regulations in implementing the purpose of **
s e cti.on.
The mnendments redefined " basic ccmponents" so as to exclude from its coverage a class of components designated as
" commercial grade".
A commercial grade item was defined as an item not subject to unique nuclear design or specification require-ments, used for other than nuclear purposes, and ordered from the manufacturer / supplier based on its own published product description.
10 C.F.R. Part 21, S 21.3(a-1).
In short, a cocmercial grade item is an off-the-shelf item manufactured for general public use and not specifically for inclusion in a nuclear facility.
Thus, the effect of the amendments is to no longer require reports of defects, from directors or responsible officers of a manufacturer / supplier of a noncomplex, hardware item, such as a valve or a bolt, even if the director or officer knows that the defect could create a substantial safety hazard.
As the legislative history quoted above shows, this was not what Congress intended when it enacted section 206.
The Commission attempts to limit the negative safety implica-tions of the exclusion of all commercial grade items by making them subject to Part 21 once they are " dedicated."
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21-commercia1 grade item occurs only after that item has been purchased and is designated for use as a basic component, 10 C.F. R. P art 21, S 21. 3 (c-1).
But this is no solution to the problem posed by e class wide exemption of commercial grade items, because the dedicating purchaser is now required to report defects which occurred at the manufacturing stage.
The result is that the purchaser, the party with little or no ability to discover defects in ecmponents manuf actured by a dif ferent party, must assume the burden of the regulation's reporting requirements.
Obviously th!.s is a meaning-less safeguard.
The goal of section 206 was to enforce real quality assurance, not find responsibility for ccmponents later found to be defective.
To fulfill its mission, 10 C.F.R. Part.21 must be made appli-cable to precisely the class of components currently exempted.
The legislative history of section 206 refers to "non-complex hardware items" as a major source of " abnormal occurrences in nuclear power-plants."
Valves, generally a commercial grade item, are expressly identified as the item most frequently involved in abncrmal nuclear occurrences.
Bolts, another commercial grade item, were identified in an article reprinted in the August 15, 1974 Congressional. Record as the cause of a' problem that developed in the reactor core of a nuclear power plant. */
Senator Ribicoff, a strong supporter and floor manager of S. 2744, had reprinted a story fram the New York Times of March 31, 1974, which discussed an abnormal occurrence r'
1/ 120.Cong. Rec. S. 15035 (1974).
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.. at the Massachusetts Yankee Nuclear Plant caused by bolts.
That failure resulted in the plant being shutdown for a six month period and requiring over S6 million in repairs.
The article went on to point out that a major problem for nuclear plants was the low quality of equipment received from suppliers.
Thus, it is clear that Congress was aware of the safety hazards posed by defec-i tive commercial grade items and fully intended that their manufac-turers and suppliers be required to report any known defects or face substantial civil peanities.
The amendments, by exempting commercial grade items until'ded.ication, have r,ignificantly limited the role section 206 was intended 'a play in protecting the public health and safety.
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In United States v. Larionoff, 431 U.S.
864 (1978), the Court, in concluding that regulations issued by the veteran's Administration i
were inconsistent with that agency's enabling statute, stated:
[R] egulations, in order to be valid must be consistent with the statute under which they are promulgated.
M,. at 873.
4 The October 1978 amendments to 10 C.F.R. Part 21, because they are not consistent with the statute under which they are promulgated, section 206 of the, ERA, are similarly invalid.
Thus, the Commission's denial of petitioner's request for their rescission, was arbitrary and capricious.
C.
THE OCTOBER.1978 AMENDMENTS TO PART 21 WJUSTIFIABLY FAILED TO MEET APA R;0QUIREMENTS.
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