ML20006B418

Responds to Notice of Violation & Proposed Imposition of Civil Penalty in Amount of $50,000.Corrective Actions: Licensee Denies Both Parts of Violation Re commercial-grade Items Installed W/O Selection or Review for Suitability

ML20006B418
Person / Time
Site:	Crystal River
Issue date:	01/26/1990
From:	Beard P FLORIDA POWER CORP.
To:	Lieberman J NRC OFFICE OF ENFORCEMENT (OE), NRC OFFICE OF INFORMATION RESOURCES MANAGEMENT (IRM)
References
3F0190-15, 3F190-15, EA-89-118, EA-89-130, EA-89-172, GL-89-02, GL-89-2, NUDOCS 9002020132
Download: ML20006B418 (17)

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coneoaniow January 26, 1990 3F0190-15 Mr. James Lieberman, Director Office of Enforcement U.S. Nuclear Regulatory Commission Attn: Document Control Desk Washington, D.C. 20555

Subject:

Crystal River Unit 3 Docket No. 50-302 Operating License No. DPR-72 Proposed Imposition of Civil Penalty Inspection Report 89-200 and 89-24 Enforcement Action EA 89-172

Dear Sir:

In accordance with 10 CFR 2.201, Florida Power Corporation provides

, Attachment ~I to this letter as our response to the Notice of Violation, and in accordance with 10 CFR 2.205, provides Attachment II as our answer to the Proposed Imposition of Civil Penalty dated i December 1, 1989. The appropriate office directors are copied due l to.the backfit issues raised in this response.

l-l The attached response clearly states FPC's position that the proposed enforcement action is inappropriate. FPC takes this position because we believe our procurement program provided reasonable assurance that items intended for safety-related applications were suitable for the intended service based on good engineering practice and regulatory guidance available at the time.

FPC is also concerned that such enforcement action will have a negative impact on continued industry /NRC progress on resolution of. the procurement issues facing the industry. Further, the

' generic backfit implications warrant a thorough review.

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. GENERAL OFFICE: 3201 Thirty fourth Street South

• P.o. Box 14042 + St. Petersbur0, Florida 33733 + (813) 866 5151 9002020132 90012b "

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A Florida Progress Company

!j PDR ADOCK.05000302:

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• January 26, 1990 3F0190-15 Page 2 The technical issues raised on both the raw water pump and the procurement items have been aggressively addressed and dispositioned. The review of the raw water pump issue helped improve our post maintenance test program. The commercial Grade Items Reverification Study demonstrated that all of the procurements were performed in accordance with then existing applicable requirements. Also, the study effort assisted in improving our implementation of the new industry guidelines on dedication of commercial grade items. FPC considers these issues ,

closed from a regulatory perspective.

FPC would be pleased to meet and discuss our response to the proposed violations. Your consideration is appreciated.

Sincerely,

-C f P.M. Beard, Jr.

Senior Vice President Nuclear Operations PMB:REF:ead

. Attachments xc: Regional Administrator, Region II Senior Resident Inspector Director, Nuclear Reactor Regulation j Director, Analysis and Evaluation of Operational Data l

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ATTACHMENT I FLORIDA POWER CORPORATION NRC INSPECTION REPORT N0. 50-302/89-200 AND 89-24 REPLY TO NOTICE OF VIOLATION

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VIOLATION 10 CFR Part 50, Appendix B, Criterion III, " Design Control", requires that measures be established for the selection and review for suitability of application of materials, parts, equipment, and processes that are essential to tie safety-related functions of structures, systems and components.

Contrary to the above, inadequate measures were established for selection and 1 review for suitability of application of materials, parts, and equipment that are essential to the safety-related functions of systems and components.

Specifically.

A. Pursuant to the actions initiated by the indicated material qualification  !

form (MQF) or Purchase Order (PO), the following commercial grade items that are essential to the safety related functions of systems and components were  ;

installed, as of April 24, 1989, without adequate selection or review for suitability:

1. MQF 1436 Transferred three ASCO series 8321, three way, air-operated solenoid valves, initially procured as non-safety, from the CR4 fossil plant to CR3 in January 1989. These valves were installed in valves CAV-6 SV and CAV-7 SV in the chemical addition system. The basis for .

dedication was limited to a visual inspection, part number comparison with page 48 of ASCO's commercial grade catalog No. 31, and a continuity check of the solenoids electrical coil.

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2. MQF 1433 Upgraded two series 8321 and two HT 8320A20 three way air operated ASCO solenoid valves. The electrical coils from the 8320 series valves were installed in the 8321 series valves that were subsequently installed in main steam valves MSV 130 and 138 in January 1989. The dedication basis for the four ASCO valves was limited to a visual inspection and a part number comparison with the ASCO commercial grade catalog.

3. MQF 1413 Upgraded two Agastat 7012 ac model time delay relays.

Characteristics verification was limited to a visual check of the physical dimensions per the Agastat catalog, a verification of nameplate details, such as voltage and time range and a check for physical damage.

4. MQF 1332 Upgraded a 600 volt, three phase,10-ampere, HE 3A010-type l ITE molded-case circuit breaker for valve MVV-53, located in the makeup system, in January 1988. Characteristic verification was limited to a visual inspection to verify the dimensions and part number and to check l for physical damage.

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5. MQF 1301-87 : - Upgraded a three phase, HE 3A025 type ITE molded case circuit breaker required to replace a failed breaker on motor center 381 (unit 118), which povers a motor-operated valve located in the decay heat removal system, ir. November 1987. The characteristic verification was limited to checking the dimensions and part number.

6. MQF 972 85 - Upgraded three Model VIIHAA three way air operated solenoid valves, manufactured by Johnson Controls, for use in the air damper system for the 1B EDG in August 1985. Dedication was limited to a visual inspection to determine equivalency with the manufacturer's catalog.

7. P0 F9038125V - Issued on October 1985 to Norton Corrosion Limited for an extended snout, 9 inch shielded Bayanode element used for cathodic protection and installed in the service water system. A review of the procurement file revealed the following deficiencies: Hardness testing was not performed; electrical characteristics were not addressed; traceability was not established from the material manufacturer's certificate to that of the Bayanode's manufacturer's certificate; and a review for suitability of critical operating requirements was not performed.

B. During the Spring 1989 overhaul of raw water pump 28, an incorrect impeller, which was procured in 1981, was installed, resulting in the pump being unable to provide the flow rate specified in the plant design.

This is a Severity Level III violation (Supplement I).

Civil Penalty - $50,000 FLORIDA POWER CORPORATION (FPC1 POSITION l FPC respectfully denies both parts of the violation. As will be discussed below, Part B of the cited violation does not represent a violation of 10 CFR Part 50, Appendix B, Criterion 111. Further, FPC denies Part A of the violation.- In this regard, FPC's commercial grade procurement program complied with available NRC guidance and, therefore, enforcement action represents an inappropriate backfit. As the following discussion provides, even if Parts A and B represented violations of NRC requirements they should not rise to the level of escalated enforcement. The followig discussion provides the support for our position. <

RESPONSE TO VIOLATION PART B In October, 1980, FPC initiated a purchase request for spare parts to be used in refurbishing any one of the five raw water pumps (RWP) located at the Crystal River Unit 3 (CR-3) facility. The RWPs were designed and L manufactured by Bingham Wil11mette (Bingham). A purchase order (P.O. #

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F10946Q) was completed and submitted to Bingham in June,1981. Among the parts being ordered was the impeller which was ultimately used in RWP-28.

l The originator of the purchase request specified the type of impeller based on the information contained in the vendor's technical manual for the five I

RWPs. The purchase order provided all of the ordering information requested '

by the technical manual, including the part numbers of the five pumps it was intended to support, and the pump type. In addition, the purchase order 2-e

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requested certification of the impeller to the requirements of the original purchase order (P.O. #PR3-Il60) and FPC's specifications (R.O. #2755) for the five pumps. FPC was, and is, not in possession of detailed design drawings due to the proprietary nature of such information.

FPC was confident the correct spare impeller would be delivered since it was ordered from. the original manufacturer, and the part would be provided pursuant to a 10 CFR 50, Appendix B quality assurance program which had been approved by FPC. The apparent deficiency in the procurement process, t1erefore, fell squarely upon Bingham. This is further demonstrated by the fact that while the 1981 purchase order identified the serial numbers of all five RWPs, the combination of vane configuration and diameter supplied by Bingham was not appropriate for any of the five pumps specified.

In 1982, Bingham again apparently failed to recognize there were five (versus seven) vanes on the impeller in question. Specifically, FPC ordered a second impeller in January,1982 and, before manufacturing the order, Bingham called FPC to advise that the impellers for the five pumps specified on the )urchase order had 3 different diameters. Bingham asked FPC for which, of tie pumps the spare impeller was intended. Apparently, there was subsequent (undocumented original spar)e part order (#F10946Q) was trimmed for RWP-2A&B. discussion th FPC then modified the second spare part order (001798930) to require 2 impe11ers; one trimmed for RWP 1 and one trimmed for RWP-3A&B. Bingham never identified to FPC that more than one vane configuration was available.

The thoroughness of FPC's procurement action is demonstrated by the actions taken ont.c the RWP-2B impeller was received at CR-3 in October,1981. First, FPC performed a recei)t inspection (Inspection Report No. 4528) consistent with those performed ay the rest of industry for similar purchases. Among other things, this involved ensuring an adequate certificate of compliance from the Part 21 vendor, checking for the proper part/model number of the i spare part, and ensuring that there was no evidence of damage. FPC performed l various dimensional fit checks on the impeller when it was being installed I l: in RWP-2B in May, 1989 (Work Request No. 112399). These checks identified no inconsistency in parameters. (As demonstrated by the photographs provided at the enforcement conference, the visual difference of a five and seven vane impeller is not as obvious as it may seem). Once the impeller was installed, FPC performed its post-installation test according to procedure SP-344B.

As FPC previously explained at the enforcement conference, and in Licensee Event Report (LER) No. 89-30 and its Sup31ement, the most likely cause of the incorrect flow measurement during tie post-maintenance test and the  :

resulting failure to identify the impeller problem was related to the man- i machine interface with the instrumentation used. The root cause of the flow rate error may have been the failure of test personnel to fully close the low pressure side instrument vent needle valve resulting in an erroneous flow measurement. If an inadequacy existed, it resulted from several unique events which created an isolated occurrence which was not reasonably foreseeable by FPC. This is further supported by the fact that the subsequent quarterly surveillance test using the same test method and

= instruments identified that the flow rate for RWP-2B was not within the '

surveillance requirements. FPC had been using this particular test method for a relatively short time (i.e. about a year) and had no data to indicate 3

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• L i that this scenario could occur. FPC has subsequently recognized that certain i physical and/or procedural enhancements can be made in the test method.  ;

o The above discussion demonstrates that there was no procurement-related  :

deficiency on the part of FPC. Therefore, the NRC incorrectly characterized the violation under 10 CFR Part 50, Appendix B, Criterion III. It is FPC's position that Part 8 of the violation should be considered separately from l Part A because they are unrelated.  ;

Finally, the engineering analysis set forth in our LER (and Supplant) -

clearly demonstrates that even in its " degraded" condition, RWP-2B would have  !

been capable of providing water flow sufficient to meet the accident cooling load requirements (during a design basis accident (DBA).) Consequently, in accordance with the NRC's Enforcement Policy (10 CFR Part 2, Appendix C),

FPC should agi be cited for a violation when this item is considered '

separately. ,

RESPONSE TO VIOLATION. PART A i

1. Backaround l As the above discussion demonstrates, the only procurement-related activities addressed by the Notice of Violation (NOV) are those described in Part A. Therefore, the following discussion will address the  :

appropriateness of the NRC's citation to 10 CFR Part 50, Appendix B, Criterion Ill for these activities. The discussion will demonstrate that the NRC inspection and enforcement efforts related to the commercial -

grade (CG) procurement activities cited in Part A of the NOV constitute a backfit under 10 CFR Part 50.109,

2. Backfittina imolications

a. Introduction and Summary j The NOV cites seven examples in which commercial grade items were  ;

i procured and installed in safety-related applications in a manner

!. that allegedly violated the requirements of Appendix B, Criterion ,

l Ill. Contrary to the NOV, FPC has demonstrated that our procurement i and dedication practices have met NRC requirements to assure that items installed are suitable for their application. Our compliance was confirmed by the NRC during previous reviews of procurement practices. Moreover, NRC requirements and guidance in this area have previously been extremely broad or even nonexistent. The NRC in this enforcement action is, in effect, redefining what constitutes adequate procurement practices. While FPC has and will continue to

1. improve its program, FPC believes that enforcement action is L inappropriate in this context and that the NOV should be withdrawn, if the violation is not withdrawn, we respectfully request that the Staff position be reviewed under 10 CFR Part 50.109 before being imposed, l

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Below, we first discuss past NRC acceptance of our CG procurement and dedication practices and then review the existing .NRC

, requirements in this area to show that the Staff position reflected

, in ti,e NOV is not explicitly required by NRC regulation.

b.. The NRC Has Previousiv Acoroved FPC's CG Procurement and Dedication Practices FPC's procurement program for Commercial Grade Items (CGI) has been in place since 1982, and has undergone enhancements since implementation. Previous NRC inspections have directly and indirectly reviewed FPC's program against the requirements in effect at the time and found both the program and implementation to be acceptable. However, recent NRC/ Industry concerns regarding misrepresented material and the detailed guidelines for CGI procurement have raised some concerns about existing industry practices. This has resulted in revised NRC inspection procedures and new. industry initiatives regarding CGI procurement. However, such initiatives are not applicable to past procurements. The NRC inspection and enforcement efforts have the practical effect of applying such initiatives to past CGI procurements and thus constitute a backfit.

FPC's CGI procurement program was adopted in 1982 based on the i

requirements of 10 CFR Part 50, Appendix B and ANSI N45.2 The program identified CGI procurements intended for safety related applications at the time the procurement was initiated, and:

l Provided for the review of supplier quality assurance programs for such items.

Provided for the review of procurement requirements by dedicated procurement engineering and procurement quality assurance groups.

L Specified stringent vendor packaging requirements for such items.

Required vendor documentation of conformance to requirements.

Provided for an independent inspection at receipt, not limited to a review of documentation.

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Provided for the identification of non-conformances at receipt L and corrective actions by CGI suppliers.

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Provided for the storage of such items under appropriate, controlled conditions prior to installation. ,

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E This program was consistent with other successful licensee programs  !

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'which we understand the NRC reviewed and approved. FPC's CGI i procurement program was subsequently reviewed in NRC inspections .

dealing specifically with procurement (Inspection Reports 83-04 &

p 85-40) and found to comply with applicable requirements. Further,  :

o aspects of the program have been reviewed by the NRC.in connection l I with the Systematic Assessment of Licensee Performance (SALP) review process in 1983 and 1985, and found to be well controlled-and in '

compliance with requirements. FPC believes that the CGI procurement program met applicable standards in effect prior to the NRC's ,

inspection in April and May, 1989.  ;

FPC has continued to enhance its program since inception, adding to  !

procurement and inspection requirements as the industry has gained '

experience. FPC has enhanced its knowledge of procurement issues and .

has contributed to the advancement of industry standards by active  !

participation in the EPRI/NCIG effort that produced the NCIG-07 CGI

• Guidelines as well as the NUSQAC/NUPIC quality assurance group and i NUMARC. ,

The 1989 NRC procurement inspection did not cite FPC for failure to

• follow its program or procedures. The NRC inspection, and the resultant report, cited FPC for failure to implement adequate measures for the selection and review for suitability of certain CGI components. The practical effect of the specific measures cited is the imposition of several elements of new industry initiatives including:

Field surveillance of commercial grade suppliers.

Identification of all CGI critical characteristics.

Verification of all critical characteristics via vendor i inspection, source inspection or receipt inspection, r The industry initiative (EPRI NP-5652 (NCIG 07)) and NRC endorsement  ;

(Generic Letter 89-02) were not issued until March,1989. The initiative was, as committed by NUMARC, effective as of January 1, 1990. Nonetheless, the April /May,1989 inspection report addressing ,

CGI procurement from 1982 through 1988 cites FPC for noncompliance with specific guidance which was not published until the 1988/1989  :

time frame. While it is understandable . that some of these contemporary criteria may have been inadvertently applied by the NRC -

inspection team, FPC cannot concur with the application of new criteria to past actions as a basis for enforcement, The above referenced initiative and NRC Generic Letter represent several facets of a dynamic situation regarding procurement of CGI, A variety of NRC bulletins and information notices have been issued from 1987 through 1989 documenting misrepresented material (as recently summarized in NRC Information Notice 89-70 dated October 11, 1989). These documents are evidence of growing NRC/ Industry concern. FPC and other licensees have been making continual L adjustments in procurement programs to address these problems. It 6-  !

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became evident that the available NRC/ Industry guidance for  ;

procurement of CGI was extremely limited, and an industry group -

produced the NCIG-07 document under EPRI sponsorship. This document was published in June,1988, adopted by the industry as an initiative ['

in March,1989, endorsed in general by NRC Generic Letter in March, l 1989, and was to be in effect as an-industry (NUMARC) initiative on January 1, 1990. Thus, the NRC inspection of FPC's procurement  :

program was conducted at a time of considerable change in the approach to procurement of CGI. Much effort on the part of both the NRC and industry had finally resulted in tangible guidance and  :

criteria for both the industry and NRC. '

FPC has taken a number of actions to date to respond to recent .

regulatory and industry guidance in the area of CGI procurement as  !

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- Participation in EPRI/NCIG effort to develop CGI guidelines (NCIG-07).  ;

- Leadership in NUSQAC/NVPIC industry, joint quality assurance effort addressing implementation of Guidelines for CGI suppliers.

- Participation in EPRI Task Force to develop additional criteria  ;

o for CGI critical characteristics to implement CGI Guidelines. >

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Management commitment to implement NCIG 07 Guidelines prior to NRC Inspection (actual implementation July 1,1989).

- Reverified operability of 41 CGI procurement packages questioned by the NRC procurement inspection.

l. - Reverified 174 additional procurement packages to address NRC

! inspection team concerns. (CGI Reverification Study) '

t Committed to enhance inspection programs for electrical items procured as CGI to fully implement NCIG-07 Guidelines.

7 Replaced the Material Qualification (MQF) Process with processing in accordance with NCIG-07 Guidelines.

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Added traceability critoria to procurement procedures based on l i recent industry data.

Regarding the CGI Reverification Study completed in 1989, FPC ,

believes that the results demonstrate that all of the procurements were performed in accordance with FPC's procurement program which met applicable requirements. This program was designed to provide reasonable assurance that CGI dedicated for safety-related service met their intended safety function.

Considering FPC's review of these 174 procurements and the NRC's review of over 150 packages during the inspections, including the 41 reverified by FPC for operability, it is clear that a reasonable sample of CGI procurements has been rereviewed. FPC believes that

o. 3 this effort provides reasonable assurance that the CGI procured for use at CR-3 are properly dedicated.

Based on the above, FPC believes that enforcement is inappropriate, and that a backfit of requirements has clearly occurred in this instance. FPC has demonstrated th&t it has complied with applicable requirements and guidelines in effect at the time of procurement.

Further, FPC's actions have demonstrated full awareness of both requirements and industry trends, as well as a commitment to improve its procurement program as warranted by changes in both requirements

' and industry trends. FPC has been aggressive in implementing improvements to its program, and has been heavily involved in industry efforts aimed at improving CGI procurement,

c. The Staff Position Reflected in the NOV is not Suonorted by Existina NRC Reauirements 10 CFR Part 50, Appendix B, establishes general quality assurance requirements for safety-related structures, systems and components.

It does not explicitly address commercial grade item procurement and dedication and does not establish any precise steps that licensees must follow to assure that items and components are suitable for their application.

l Criterion III, " Design Control," contains only a broad provision that

"[m]easures shall also be established for the selection and review L.

for suitability of application of materials, parts, equipment, and processes that are essential to the safety related functions of the structures, systems and components." This. provision, which the NRC cites as the basis for the present violation, is not further defined in Appendix B or in the rulemaking history.

Moreover, there is little or no regulatory guidance on the meaning of this provision of Criterion III. Significantly, even the current Standard-Review Plan fails to provide any guidance on the meaning of this provision. SRP 6 17.1.3, " Design. Control," is silent

[ regarding the " suitability application" provision, and the related i guidance in Acceptance Criterion 3A of SRP 517.1 merely states that design control activities should - address " compatibility of materials."  ;

The broad provisions of Appendix B have been clarified over the years in various industry guidelines. The primary guidance document was ANSI N18.7, to which FPC is committed for its QA program. ANSI N18.7 i provides general guidance on QA for procurement. The NRC endorsed ,

ANSI N18.7-1976 in Regulatory Guide 1.33 as an adequate basis for  !

complying with the requirements of Appendix B. However, ANSI N18.7 addresses commercial grade items only very briefly, and does not 3 l discuss dedication of CG items for safety-related use. ANSI l N45.2.13, which was endorsed by the NRC in Regulatory Guide 1.123, ,

provides more specific guidance on QA for procurement of items and '

i. services. The standard, however, does not explicitly address l

commercial grade procurement and dedication.

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activities that licensees are expected to undertake. It follows that i i licensees have been free to implement programs that in their judgment 1 meet the intent of .the requirement. For this reason alone, I enforcement action that would establish specific new procedural and  !

? documentation requirements is. inappropriate. - Absent a showing that i l installed items are not suitable for their application,- new I requirements should be applied only prospectively.

l FPC 'is well aware that as a result' of the fraudulent and counterfeit l equipment problems that arose in- 1988, which were identified by l industry procurement programs in effect at the time, the NRC for the first time published detailed guidance on commercial grade item 1 procurement and _ dedication. Generic letter 89-02, " Actions to- '

Improve the Detection of Counterfeit and Fraudulently Marketed ,

Products," issued March 21,1989,~ conditionally endorsed NCIG-07 and I provided additional guidelines to apply to the dedication process. 1 While the Generic letter stated that those guidelines, as modified l by the Generic Letter, established methods for satisfying " existing" 1 requirements of Appendix B, the Staff did not explain the legal basis I for such a conclusion.

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1 On March 16, 1989, the NRC published an Advance Notice of Proposed l Rulemaking (ANPR) (54 Fed. Reg. 9229) on procurement practices, '

specifically including commercial grade item dedication. The

j. Commission noted that it was reconsidering the adequacy of current o regulations in this area. Questions posed in the ANPR strongly j t

suggest that the Commission did not believe that existing regulations require the extensive verification tests assumed in the NOV. For i

. example, the Commission asked: )

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How should products . . . be inspected to verify that all critical characteristics are satisfied? ,

Should all upgrade inspections be restricted to inspections and tests or should they include, on a sample basis, destructive '

inspections and tests to verify chemical and physical characteristics?

How should inspections verify all critical characteristics (for example, chemistry physical properties, dimensions, special processes,etc.)?

Had the Commission believed that these actions were already mandated by existing regulations (as the NOV assumes), there would have been no need to pose these questions. The only conclusion that can be L drawn is that the Commission did not believe these requirements were within the contemplation of the current regulations.

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4 d.- Conclusion

'In summary, it can be seen from-the above survey of the regulations

! and guidance that: (1) the regulations do not contain explicit standards and requirements for CG procurement and dedication; and (2) ' the regulations do not contain explicit criteria on which specifications are to be included in procurement documents and the' scope of receipt inspections and examinations. Indeed, as the NRC's-own Inspection Procedure states, " consistent criteria for determining an item's suitability for its intended application have not been

- clearly established," (Inspection Procedure 38700, at page 2.)

Given the absence of . clear regulatory criteria governing CG procurement, enforcement action is wholly inappropriate.

Florida Power Corporation therefore respectfully requests that the Notice of Violation be withdrawn. We must also observe that the NRC's apparent reliance on new standards to review past procurement activity could greatly discourage industry sel f-improvement.

Enforcement action in these circumstances would therefore not be in the public interest.

3. Clarifications to Notice of Violation Findinas The following information is provided as clarification to the 'seven procurement items cited in the Notice of Violation.

I NRC Findings I and 2:

-h HQF-1436-89 and MQF 1433-89 were installed in accordance with a design modification. This type of commercial product is part of CR3's original design. The design input and material selection was detailed in the design modification process, as per FPC procedures. In addition to inspections verifying manufacturer's markings, nameplate information, >

and dimensional configuration to the catalog, a modification functional test was performed to verify critical operation characteristics.  ;

NRC Finding 3:

MQF 1413-88 was initiated to replace original, installed items. This upgrade was to replace an existing original design component with a like component. The function of the subject relay in this application is non-safety related but was conservatively classified by the procurement i program as safety-related commercial grade.

NRC Finding 6:

MQF 972-85 authorized the use of a "like-for-like" replacement Johnson Controls solenoid valve. In addition to physical inspections, the item was functionally tested after installation. The system also undergoes monthly periodic testing under SP-354A and SP-354B.

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[: NRC Finding 7: ,

L Purchase Order F9038125V was for an anode. The item has no electrical

[ safety function and therefore no electrical characteristics needed to be identified. Reasonable assurance of material hardness was obtained via the material test report provided by the manufacturer detailing i physical and chemical properties. j l

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i', '.o ATTACHNENT II FLORIDA POWER CORPORATION ENFORCENENT ACTION EA 89-172 NRC INSPECTION REPORT N0. 50-302/89-200 AND 50-302/89-24 ANSWER TO NOTICE OF VIOLATION Florida Power Corporation (FPC) provides the following in response to Enforcement Action EA 89 172. This response is provided in accordance with 10 CFR 2.205.

FPC believes that the information provided in the Reply to Notice of Violation, Attachment I, shows more than sufficient facts to support the conclusion that no violations should be cited for the events described in the Notice of Violation (NOV). The facts presented in Attachment I demonstrate that at worst, Parts A and B of the violation cited in the NOV rise only to the level of separate Severity Level IV or V violations. Therefore, no civil penalty is warranted for these incidents.

However, should the NRC decide that a civil penalty is warranted, the discussion below offers facts to support the conclusion that the Enforcement Policy provides for full mitigation of the proposed civil penalty.

With respect to the application of Adjustment Factors, the NOV states that the

" escalation and mitigation factors in the Enforcement Policy were considered."

Because the NOV specifically discusses only three of the six factors, corrective action to prevent recurrence, past performance, and multiple occurrences, the only conclusion that may be reasonably drawn is that those re.;.:.ining factors were deemed to have no effect on the proposed base civil penalty. FPC agrees that ,

the factors of prior notice of similar events and duration are not applicable. t However, FPC believes that the factor of identification and reporting should have been included and that the NRC did not properly apply the factors of past performance and multiple occurrences.

1. Past Performance l With regard to past performance, the NOV indicates that NRC balanced FPC's i i

Systematic Assessment of Licensee Performance (SALP) rating in the "en ineering category" and the recent escalated enforcement action (EA 89- ,

118 addressing environmental qualification (EQ) against FPC's " good overall '

qua ity assurance program and recognition of active participation in industry initiatives." In sum, NRC concluded that "neither escalation nor mitigation is warranted." Contrary to the NRC's reasoning, however, FPC believes that the facts of this case and NRC's prior enforcement precedent demonstrate that >

mitigation is warranted.

First, the October 13, 1988 (53 Fed. Reg. 40019) change to the Enforcement Policy states that:

(this) factor (past performance) has been changed to provide more  ;

flexibility in considering past performance in the assessment process.

Currently, past performance focuses on prior performance in the area of concern though overall performance can be considered. The effect of deleting the reference to general area of concern is to permit greater consideration of overall performance.

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Consistent with this change, the NRC in a recent escalated enforcement action (EA 89-135) permitted 100 percent mitigation for the utility involved because its overall SALP performance. However, not only did the NRC not consider FPC's overal1 SALP performance, but it focused on the individual area of concern (i.e., the functional area of ' engineering). This is clearly inconsistent 'with both the Enforcement Policy, as revised, and prior L enforcement precedent.

Second, the October 13, 1988 Enforcement Policy change (53 Fed. Reg. at 40020) specifically eliminated the terminology " area of concern" as applied to prior violations. Nevertheless, with respect to 9111 violations, the NRC suggests in the Policy that it intends to apply a more limited focus. The NRC indicates, by way of example, that such violations must be "similar problems," (53 Fed. Reg, at 40025). The word similar is explicitly defined in footnote 3 of the Enforcement Policy as follows:

The word "similar," as used in this policy, refers to those violations which could have been reasonably expected to have been prevented by the licensee's corrective action for the previous violation, (53 Fed. Reg.

at40024).

In applying the past performance factor to this case, NRC's use of EA 89-118, which involved EQ concerns, is improper. EQ and CG procurement are not "similar." EA 89118 has not been resolved in that FPC's appeal is under review. Further, the corrective actions taken for EQ concerns would not have reasonably prevented the issues raised by NRC in the present procurement NOV.

Therefore, this purported " negative factor" was improperly included in the consideration of the past performance civil penalty adjustment factor.  ;

Consequently, upon proper consideration, additional mitigation is warranted.

2. Multiole Occurrences With regard to multiple occurrences, the NOV states that:

In this case, the civil penalty has been escalated 50 percent in recognition of the added significance of an example in which a replacement part, the raw water pump impeller, was not only of indeterminate quality but was demonstrably unsuitable for its 3 application.

Contrary to the NRC's reasoning, FPC believes that the facts of this case, as well as a reasonable interpretation of the Enforcement Policy, demonstrate that escalation is not warranted under this factor.

First, based on the NRC's statements, there can be no doubt that the principal consideration for escalation under this factor was the circumstances associated with the pump impeller issue (Part B of the NOV). l This is further demonstrated by a comparison of the FPC proposed enforcement action with EA 89-130. In the latter case, which also dealt with procurement-related examples, there was absolutely no mention of the multiple occurrences factor -- and EA 89-130 included nine examples, whereas the FPC NOV only contains eight.

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Second, given the above, and irrespective of the relative numbers issue, I the impeller concern should not have been considered as part of this factor

, because it is not a procurement related concern, as discussed in Attachment

1. Thus, it should not have been considered as one of the " multiple occurrences of a particular violation."

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Third, and perhaps most significantly, the NRC has incorporated an inappropriate consideration into this escalation factor. A plain reading I of the Enforcement Policy shows that the " quality," or perceived l j significance, of a particular example is not a consideration appropriate E for civil penalty adjustment under this factor. Regulatory or safety 1 significance of deficiencies are to be addressed in the Severity Level 1 determination, not under the escalation factors. Furthermore, a review of. j the regulatory history for the Enforcement Policy demonstrates that 1

• quality," or regulatory concern, has never been part of the multiple ]

occurrences factor. NRC's statements, supra, clearly demonstrate that it l was the alleged quality, or the nature of the impeller concern, that was -

principally responsible for NRC's escalation under the multiple occurrences i factor. This reasoning forms an inappropriate- basis for escalation.

Furthermore, the purported significance is in error since FPC has clearly demonstrated the impeller could indeed have performed its intended safety i function.

Finally, a review of the regulatory history also shows that, even if the i impeller issue could have been used as an escalation factor, its effect was -

! offset by FPC's prompt identification and reporting of this concern as l discussed below. ,

3. Identification and Reportina The Statement of Consideration for the March 8,1984 Enforcement Policy i revision (49 Fed. Reg. 8583, 8585) states that " escalation under [the I multiple occurrences) factor may- be offset by mitigation for prompt l identification and reporting." It is recognized that since the Harr.h 8,1984 Enforcement Policy revision, there have been several other revisions.-

However, no substantive change has been made to the multiple occurrences factor. Therefore, it is appropriate to use the 1984 Statement of Consideration in evaluating NRC's actions in this case.

NRC Inspection Report 50-302/89 24, dated September 18, 1989, as well as LER 89-30 (and its Supplement), support the conclusion that FPC promptly reported and corrected the impeller concern once we became aware of the problem.

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With respect to identification, FPC's performance must be viewed in the

, context of the circumstances. Consistent with the subfactors discussed in

., the Enforcement Policy under the identification and reporting factor, FPC '

had very little opportunity to discover this problem and there was no ease >

of discovery. Furthermore, FPC provided prompt and complete reporting of the incident. Therefore, based on this consideration alone, escalation under the multiple occurrences factor for the impeller concern should be offset. ,

In summary, FPC believes a complete and proper consideration of all the appropriate adjustment factors would support full mitigation of any civil ,

penalty.  ;

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