ML20042D690
| ML20042D690 | |
| Person / Time | |
|---|---|
| Issue date: | 03/20/1990 |
| From: | NRC COMMISSION (OCM) |
| To: | |
| References | |
| REF-10CFR9.7 NUDOCS 9004050028 | |
| Download: ML20042D690 (69) | |
Text
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UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMIS SION Tit 16:
nRzzrzna on ReconstuDtD Actron FoR SUBSTANDARD PARTS i
bOCSI CE..
RoCKVILLs, MARYLAND h3I6:
MARCH 20, 1990
?Eges:
ss races Eli R. CROS5 lE CO., IUC.
I C o t' R f RIPORfERS AND TRANSCRIBER 3 l
1323 ?.hode :sland Avenue.
Jorthwest Washington, D.C.
20005 (202) 234-4423 t
PDC D
l l
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DISCLAIMER This is an unofficial transcript of a meeting of the United States Nuclear Regulatory Commission held on March 20, 1990 in the Commission's office at one White Flint North, Rockville, Maryland.
The meeting was open to public attendance and observation.
This transcript has not been reviewed, corrected or edited, and it may contain inaccuracies.
The transcript is intended solely for general i
I informational purposes.
As provided by 10 CFR 9.103, it is not part of the formal or informal record of decision of the matters discussed.
Expressions of opinion in this transcript do not necessarily reflect final determination or beliefs.
No pleading or other paper may be filed with the Commission in any proceeding as the result of, or addressed to, any statement or argument contained herein, except as the Commission may authorize.
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UNITED STATES OF AMERICA
.1 NUCLEAR REGULATORY COMMISSION BRIEFING ON RECOMMENDED ACTION FOR SUBSTANDARD' PARTS PUBLIC MEETING Nuclear Regulatory Commission One White Flint North Rockville, Maryland-Tuesda'y, March 20, 1990 The Commission met in open session,. pursuant to notice, at 10:00 a.m.,
Kenneth M.
Carr, Chairman, presiding.
COMMISSIONERS PRESENT:
KENNETH M.
CARR, Chairman of the Commission KENNETH C.
ROGERS, Commissioner JAMES R.
CURTISS, Commissioner FORREST J.
REMICK, Commissioner NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVENUE. N W.
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STAFF SEATED._ AT THE COMICSSIO11 TABLE:
' SAMUEL J.
CHILK, Secretary WILLIAM C.
PARLER, General Counsel JAMES TAYLOR, Executive Director.for Operations FRANK MIRAGLIA,-Associate Director for Inspection and Technical Assessment, NRR BEN HAYES, Director, Office of Inspections BRIAN GRIMES, Director, Division of Reactor Inspection and Safeguards, NRR E. WILLIAM BRACH, Vendor Inspection Branch Chief, NRR I
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1 P-R-0-C-E-E-D-I-N-G-$
2 10:00 a.m.
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3 CHAIRMAN CARR Good morning, ladies and t
4 gentlemen.
i i.
5 Commissioner Roberts will not be with. us 6-today.
[
7 The purpose of today's meeting is f or ' the 8
staf f ' to brief the Commission on recommended action.
r 9
for substandard parts.
'This is an area'of.'particular f
f 10 concern to the Commission. due ' t o the increased 11 discovery of misrepresented or substandard.replacem+nt l-i
'I 12 parts in licensed nuclear power plants;during the last
-f 13 few years.
The presence of such components in the' i
14 power plant could significantly degrade the: ability of f
15 systems and components to operate as' designed when
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16 challenged.
It is important^ that we continue' to 17 aggressively pursue effective methods toidetect'these.
18 misrepresented parts and prevent.their use in plant 19 safety systems.
p 20 The Commission was last. brief ed on this 21 subject in February 198 9 with specific focus on a q
22 proposed rule covering the subject.
23 I understand the copies cf the staff's
-h 24 presentation slide and the associated, staff paper, 25 SECY-90-57, are available 'at the entrance' to the NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS
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1 meeting room.
2 Do.any 'of my fellow Commissioners have 3
opening comments?
4 If not, Mr. Taylor, please proceed.
S
'MR.
TAYLOR:
Good '. morning.
You mentioned, 6
sir, that'the Commission approved' an Advanced Notice i
7 of Proposed.Rulemaking.which was issued 'in -March of' 8
1989 and also. mentioned the paper which is available 9
at the entrance.
The briefing today will cover the 10 public' comments on the Advanced Notice. of Proposed 11' Rulemaking and provide a current-status of the~various 1
12 associated staf f ' activities 'in this area.
l 13 Although we have' not found an imminent 14 safety hazard to. exist from the.use of fraudulent or 15 substandard equipment, I consider the potential' safety 16 problem posed by substandard hardware to warrant 17 continuing high priority attention by.my office, NRR, i
18 the regions and the Office of Investigations.
I'm
(
19 personally briefed on this subject ~every two or three 20 weeks.
21 Although we will not discuss in detail the 22 work of OI today, Mr. Hayes is here at the table with 23 us to respond to questions in his area.
24 I must note that OI has been working with 25 the staff and has made important contributions to our 1
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1 efforts in this area and.the cooperation of OI and the 2
technical staff continuer to be outstanding.
3 As a direct result of the work of the OI and 4
the staff, one vendor company president.just recently 5
pied guilty to several fraud counts and last week was 6
sentenced to a jail term.and other penalties.
7 We will brief you today on actions the staff 8
has taken to address the two separate but related 9
issues involving misrepresented vendor products, and-10 also' problems identified.in licensing procurement and 11 dedication programs, The. staff will_~first provide'an t
12 overview of actions'taken to addresc' identified cases 13 of misrepresented vendor products, such asl fasteners, 14 circuit breakers and valves, and the, status of our 15 implementation of the. action plan to assure-16 appropriate safety actions ar'e' taken and 'to ' share 17 information with other. federal agencies, which we have 18 continued to do, 19 The staff will also discuss NRC and industry..
20 action to improve licensee programs and capabilities 21 for detecting misrepresented and substandard. products.
22 NRC concerns on misrepresented products and the 23 effectiveness of licensees' programs have a common 24 element in that much of the fraudulent activity of 25 which NRC is aware has occurred in the commercial NEAL R. GROSS COURT REPORTERS AND TRANSCRIDERS 1323 RHODE ISLAND AVENUE, N W (202) 234-4433 WASHINGTON.DC.20005 -
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7 d
O-1 grade product market.
The incoming product to a 2
licensee's dedication program is frequently a.
or is a commercial grade item and ' f or 3
commercial 4
these reasons.many of the staff actions we will be.
5 discussing today; are f ocused on addressing NRC 6
concerns'over both misrepresented vendor products and 7-the programs by which' licensees both procure and-8 dedicate commercial grade parts for safety services.
9 I will now turn the details of the briefing 10 over to Mr. Miraglia and with me at the table r.r a Mr.
11 Grimes from NRR, Mr. Hayes you know and Mr. Sill Broch 12 who heads the. vendor group in NRR.
13 MR. MIRAGLIA:.Thank you, Mr. Taylor.
14 I just have ~ a f ew. opening remarks and then 15 the briefing will:be done by. Brian Grimes..
16 (Slide)
May I have sli'de 2, please?
17' Slide 2 is an.cutline.of the briefing that 18 you're here today.
As indicated, the main purpose ~ is 19 to describe the staff actions that have occurred over 20 the last year with respect to misrepresented vendor 21 products.
In addition, we're going to report on the 22 comments received on the Advanced Notice of 23 Rulemaking.
24 When we last spoke with the Commission, we 25 indicated that there were many materials, equipment NEAL R. GROSS COURT REPORTERS AND TRANSCRIDERS 1323 RHODE ISLAND AVENUE. N V/
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and compenents tnat are sut$ect to counterteit er
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2 substitution or misrepresentation.
As we indicated at 3'
that, briefing, the current rules and regulations were 4
predicated on the integrity of-the process, that there S'
wouldn't be an intent' to mislead ~or misrepresent j
6 materials, and therefore perhaps the regulatory 7
process was not sensitive enoogn. to screen out that B
kind of product.
This led to the publication of the 9
Advanced Notice of Proposed Rulemaking to perhaps j
20 strengthen the process.
f 11 The area of procurement has becomo more and l I
12 more sensitive.
.n o t only because. of - misrepresented f
i 13 material, but as Mr. Taylor has indicated, a large i
14 fraction of commercial products are being used becaus+
I r
15 Appendix B vendors are no longer available and 16 commercial products are being dedicated and upgraded 17 for use in commercial and safety grade systems.
I 18 As a result, dedication of commercial grade 19 products becomes a very important' feature that would f
20 address not only the use of standards, good quality I
21 commercial
- products, but-also can. enhance the I
'22 detection of f raudulent 'matorial.
So, ' there 's two l
23 separate but related programs here.
.i 24 We have been encouraging the industry and j
i 25 working with the industry since the fall of 1988.
In I
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!Jovember of 'SB they started, under. the aus;icss of g
L 2;
IWMARC, a nuclear plant equipment procurement group.
3 Many of the' issues and programs that they've developed 4
are addressing some of the concerns expressed by the 5
staff.
Brian will be giving you a synopsis of where 6'
they stand and where their activities are,
\\
7 With.
- that, I'd.like to turn the briefing i 8
over the Brian.
9 MR. GPIMES:
Good morning.
1 10 (Slide)
Ceuld we have slide 3. please?
'll This slide describes the !JRC action plan.
12 It's the same slide as we used-in previous briefings 13 with the Commission.
Staff continues to follow this 14 plan.
The staff has -issued a number of generie 15 communications in the last. two years' to provide 16 licensees with timely intelligence in this-area.
17 Since January of
- 1988, seven bulletins and 25 18 information notices have been issued in this regard.
19 In addition, we've held numerous meetings 20 with lit!M A R C and licensees, vendors..
other-21 organizations such as ASME, IEEE,- the liational Board 22 of Pressure Vessel Inspectors and American IJuclear 23 Society, to distribute information in regard to these-H
~1 24 problems.
25 In
- addition, a number of referrals of' i
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possible wrongdoing have been made to the office of 2
Investigations.
They have worked with the staff to 3
develop these issues and, where appropriate, referred 4
them to the Department of Justico.
As Mr. Taylor 5
mentioned, some of these have cone to conclusion j
6 recently and one has recently r e s ul t.ed in a jail 7
sentence and 9 thor penalties.
I 8
(Slide)
Slides 4 and 5, if I may have slide 9
4, list the types of vendor products that have been 10 identified as misrepresented and have been provided to j
11 the nuclear industry.
For the first three items on 1
12 slide 4.
fasteners, the fittings and flangee and the 13 molded case circuit breakers, we've issued bulletins 14 requesting specific actions of licensees.
These are 15 the more safety-significant items on the. list.
16 (Slide)
For the other ' items,
including 17 metal-clad circuit breakers, plate and piping 18 material, if we can turn to slide 5,
the. valves and 19 valve replacement parts, relays and fuses, we have 20 issued information notices to - provide the relevant 21 information to licensees and vendors so that they can 22 take the appropriate action.to assess.the.saf ety l
23 significance of the application of these materials in j
24 their plants, 25 We've had frequent interaction with NUMARC NEAL R. GROSS count ataoattas Awo taANscastas un nwoot mawo avtwut.w w
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regarding thw industry actions that are needed.
For i
2 exanple,.with regard to fittings and' flanges, INMARC E
coordinated an industry effort to analyze a large
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4 number of deficient materials.and provided a basis.on i
5 which we could stop trying to find every last fitting:
6 in the plants, a very positive outeeme both in terms 1
7 of resolving the issue and reducing the impact on j
4
-l 6
industry.
Other bulletins that we have discussed in 9
public meetings before issuance to try to reduce the 10 impact on the industry and we've got good feedback in 11 that regard.
12 The underlying causes that in the past have l
13 allowed these materials to enter the nuclear market 14 appear to me to be related ' to deficiencies and 15 licensees' awareness of the problem and their related j
l 16 inability to detect the products.'that were coming in.
17 coupled with the deficiencies we've found in l
18 inspections in commercial grade dedication programs.
19 These are two separate problems.
They 20 converge into one in many cases, the misrepresented 21 products and the inadequate procurement and dedication j
22 programs for comn.ercial grade parts.
Of course, the 23 misrepresented products involve an. intent to deceive l
l 24 and our existing programs assume that there is vendor l'
25 integrity and really are aimed to confirm product H
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quality.
2 The commercial grade dedication programs,-
3 we've foand a number of deficiencies which we think 1
4 could improve if corrected inadequate engineering 5
involvement, acceptance of certification from-6 unaudited vendors, reliance on simple model number i'j 7
comparisons and inadequate review, examination or 8
testing as appropriate before the parts are used in 9
the plant.
These two problems converge because most 10 of the or much of'the counterfeit and fraud is in 11 the commercial market and the incoming equipment then 10 must be examined through these dedication programs if 13 it's to be used.
So deficiencies there will allow the l
14 equipment to enter the plants.
15 Slide 6 --
16 COMMISSIONER REMICK Brian,. what do we know 17 about how widespread this is with other industries?
18 MR. GRIMES:
We think it's fairly widespread 19 with other users and a little later I'll discuss the 20 federal agencies.
But as we have gone through j
i 21 procurement documents, particularly in seme of the 22 search and seizure operations that we've participated 23 in, we have sorted those that apply to other agencies 24 such as NASA or FAA, Defense Department, and sent 25 those to other federal agencies..
So, we've identified NEAL R GROSS court REPORTERS AND TRANSCR$ERS on Ascot ist$90 avewut, w w
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.1, a number of other end users that are concerned in this
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area also.
L 3l COMMISSIONER REMICK:
So it's not' 4
necessarily targeting the nuclear industry?
MR. GRIMES:
No, No, especially in the i
6 commercial market.
Sometimes the commercial. persen,
7 who is at fmult in providing these is even unaware E
sometimes that it is' going to a nuclear power plant.
9 But it arrives there through the chain.
10 MR. TAYLOR:
That's an e.v.e(r 11 e n t question.
11 I don't believe anything we've seen would say that :he j
12 nuclear industry, as such, is being targeted.
Would 13 you all agree with t h a t */
We've been working on this 14 for a long time, but it is the commercial secter and j
15 the process does, as --
16 CHAIRMAN CARR:
But it's fair to say it's a 17 lucrative market, especially in the safety-related 18 stuff where the price is a lot higher.'
So, it 19 MR. TAYLOR:
That is correct.
20 CHAIRMAN CARR:
It entices.the crook' by 21 value.
.1 22 MR. TAYLOR:
Right.
23 MR. GRIMES:
There are things tied to the 24 nuclear industry in terms of falsification of' upgrades 25 or falsification of
- ASME, but material, that's 1
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specifically tired.
But the general inadequate i
2 materials that as passed -- used materials passed off 3
as new, that's more of a
case of just general
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4 commercial grade items.
5 MR. GRIMES:
(Slide)
Slide 6 indicates some 6
of the NRC initiatives which address these - preblems.
7 We issued a generic letter in March 1989 entitled, i
8
" Actions to Improve the Detection of Ceunterfeit and 9
Fraudulently Marketed Products."
This shared with 10 licensees the NRC view of the elements which have been 11 shown effective in detecting misrepresented vender l
i 12 products.
These include engineering involvement in
.I 13 the procurement process, better receipt and inspection 14 and testing programs, commercial grade. dedication 15 programs which check the' important f eatures ' of the
)
16
- product, and product-oriented. vendor audits rather 17 than just paper checks of the vendors.
18 The generic letter also provided an 19 endorsement, with a few exceptions, of. the EPFI 20 guidelines on commercial grade dedication.
21 In addition to the staff -
I'll discuss the 22 ANPR which was mentioned on the slide a little bit
.j 23 later.
'But in addition to the 'staf f reviews of.
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14 1l and vender. procurement programs and een,me rci al gr sde '
ll dedication programs.
There have been 13 such 3
ins'pections in the last'three years'.
i 4
The findings of these inspections were that, 5
as I'd mentioned previously, there were inadequate 6
controls in place for commercial grade items.
7 (Slide)
Slide 7 describes our coordinatien 6
with other federal agencies.
I had previously 9
mentioned we provide material as we find it to other i
10 federal agencies.
In July 1988, NRC asked OMS te I
11 assist in arranging an interagency meeting to discun l
1 10 misrepresentation of vendor products.
At the August j
13 1988 meeting of about 20 agencies, Chairman Zech, Mr.
14 Stello and Mr. Hayes all provided NRC perspectives en 15 this issue.
And the outcome of the meeting was that 16 CMB and two President's councils, the President's 17 Council on Integrity and. Efficiency. and the 18 President's Council on Management Improvements, have l
19 the lead for the federal government.
However, we have 20 seen little activity from those agencies.
21 Since the OMB meeting, we've taken another i
22 tact an'd that is through a series of meetings 23 establish personal staff contacts with other federal 24 agencies.
This has begun to bear fruit.
NASA, for 25 example, sponsored an interagency meeting in January NEAL R. GROSS
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of this year and ~ a working group meeting on I
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2 information exchange will be held in April atnong a y
3 number of federal agencies.
We routinely send all our N'
4 information notices and bulletins to other federal 5
agencies.
6 CHAIRMAN CARP.:
How about the National 7
Association of Manufacturers?
Has anybody brought 6
them into it?
9 MR. GRIMES:
.No, I don't believe so.
-l 10 CHAIRMAN CARRt You might look at th%t.
11 It's an organization who probably is as interestd in 12 the problem as we are.
- {
13 MR. GRIMES:
Yes.
When we dealt with 14 circuit breakers, we did deal with a couple of i
15 industry groups in terms of the commercial--
j 16 controlling commercial area.
17 MR. MIRAGLIA:
Underwriters.
18 MR. GRIMES:
The Underwriters baboratory and 19 what was the-electrical --
.q 20 MR. BRACH:
That's the ' National Electrical 21 Manufacturers Association.
22 MR. GRIMES:
So we'did involve'two industry 23 groups in the molded case circuit breaker issue.
24 COMMISSIONER REMIC)*:
Is it safe to infer 25 that the other federal agencies are notifying us w' hen NEAL R. GROSS l
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they beeon+ aware of f rauduler.: parts?
U Oj MR. GRIMES:
The intornation flow.is largely 1
I one way right now and we, hope that these meetings will 4
set up a better nochanism to get that two.way flow of 5
communication.
6 MR. MIRAGLIA:
We've joined a' process called 7
Guide Up, which is government information e>: change.
8 Perhaps Mr. Brach could add something to that.
9 MR. BRACH:
It's a computer network that's j
10 established under the Department of Defense.
U.S.
thvy i
l 11 that a number of federal agenci+s.
as w.411 as i
12 manutacturers belong to.
It's a public information 13 sharing network.
We recently joined that this past 14 year and into that system as well have 'been puttin?
15 information notices in' bulletins concerning. vendor-16 related issues, whether it be a counterfeit and fraud 17 type of concerns or substandard quality. issues.
.We're 18 looking at that and, as Brian had mentioned a minute 19 ago the llASA meetings, one of the focuses of that 20 meeting and the one coming ~up in April is to make 21 better use of that system so that it will-by, j
22 hopefully, more a two way street o f., 'llRC information i
23 being shared with others and how we're get ting more 24 information from other agencies.
25 As Brian and Jim have mentioned, a number of NEAL R. GROSS court REPORTERS AND TRANSCR$tRS 1323 RHoDE ISLAND AVENUE. N W.
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.I 17 lit the vendors that we have involv uer.t, the n u cl e.r l
2l' industry h e,s involvement with, have, as well,. major
,c 3'
involvement with NASA and space _ type activities.
4 MR. GRIMts:
(Slide)
Slide 8, moving to the industry initiatives.
In July.
of 1988. NRC asked 6
NUMARC to cocrdinate industry activities in these 7
nreas and NUMARC formed a working group on nuclest 8
plant equipment procurement, which is headed by Bill 9
Cavanaugh of Surry.
NRC management has met with the 10 working group on several occasions and th+ NUMAFC l.
11 initiatives and plans were provided wit h-the $EC7 12 paper as-attachments.
13 One noteworthy accomplishment of NUMARC to 14 date is the endorsement of the EPRI guidelines which 15 the NRC also endorsed last March and commitment by the 16 industry for implementation by January 1990.
We were 17 informed by the NUMARC staff that they did a survey 18 this January to determine the. status of that 19 implementation and all but three utilities indicated 20 that they had programs noW in place to implement the-21 EPRI guidelines, uhich is a very good return.
And'the-22 remainder of the utilities were scheduled to;be done 23 by this summer with their implementation.
24 Another significant milestone. is the 25 consolidation of two former industry groups which NEAL R. GROSS COURT REPORTERS AND TRANSCR6BERS 1323 RHoDE ISLAND AVENUE, N W (20PWg WASHINGTON. D C 20006 -
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d performed audits.-
Thi s f i s.
new. si group callsd NUP:C' 0
and it has a stronger evphasis on product-oriented or 3
performance-oriented audits.
We've not really 4
evaluated'the,affectiveness of these initiatives yet, i
5 but we believe they're certainly in.the right 6
direction.
'7
'Other areas ' that were noted in Nt! MARC's i
8
' January letter which were included in the Commission.'
9 paper and which we now understand the Board of 10 Directors at NUMARC. may ' act on this June; relate to i
.t 33 ceneral procurement practices which include thw use of 12 approved suppliers and original equipment 13 manufacturers, guidelines. for product acceptance, 14 including receipt inspection,- and guidelines for 15 performance-based supplier audits.
16 COMMISSIOMER CURTISS:
What is the 1
1 17 originally scheduled to be addressed in March, what's 18 the reason for the delay on the subject?
19 MR. GRIMES:
I believe,they decided -- they 20 made a presentation, as I understand it, to the Board 21 in March but decided not to request action until.they 22 had further discussed impact and got commitments as to 23 the scale of etfoet that was to. be expected of
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24 utilities.
So I think in the next two months there 25 will be a number of additional working group and l
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H l-if ecmmittoo n e t t i r.g s to mthe sure that e ti c h utility I2 understands the full impact'of what they're committing I
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- to and the Board would then act in June.
4 CCMMISSIONER CURTISS:
In June.
Okay.
5 MR. GRIMEst (Slide)
Slide'9.
i 6
With respect to the Advanred Notice of 7
Proposed Rulemaking, which we issued last year. 64 8
public comments were received and 43 of those ' were 9
from. licensees.
The comments were summarized by the t
10 office of Research and the summary was provid+d with 11 the SEC'i papur.
es an attachment.
The indosery j
10 responses, particularly those from licensees, were 13 against any new regulations.
Some of the industry 14 responses did indicate the need for clearer positions 15 on what utilities and the NRC really expected in this
[
area from the vendor community.
l 16 17 Our conclusions after evaluating the ANPR i
f 18 comments and considering our findings from inspections 19-of vendors and licensees are first that while the 1
00 current regulations don't specifically address i
21 counterfeit or fraud or commercial grade dedication 22 programs, they do lay out the general requirement that 23 suitability for service'needs to be determined and the 24 quality established before use in safety-related t
25 applications.
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1 Second, we've concluded that expectations en
'2 both licensees and vendors q.:ality. pr opre.ms ' and 3 E implementation need to be better understood and some 4
aspects could usefully be spoken to more specifically 5
by either NRC or industry.
This is what the' industry 6
initiatives, we believe, can accomplish,.is laying out 7
in more detail the expectations for implementation by 8
the industry.
9 In this regard, as Commissioner Curtiss 10 n'e n t i one d. the industry efforts have not preceeded a r.
11 rapidly as we expected.
We're of the opinion that 12 it's appropriate to continue our efforts to develop a 13 regulatory basis for rulemaking in this area while we 14 continue to review and assess the industry progress.
15 (Slide)
Slides 10 and 11 describe our 16 planned activities.
Our first priority continues.to 17 be to keep the industry full and timely appraised of 18 information which may impact on plant safety.
Th'is 19 will be achieved through generic communications and 20 meetings with HUMARC as the f ocal point.of the 21 industry.
We intend to keep informed of'the status of.
22 industry initiatives'and progress and work with NUMARC 23 to make sure there's a common understanding in 24 important inplementation aspects.
25 In this regard. NUMARC has suggested further NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 AHoDC ISLAND AVENUC, N W
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'1 l meetings on ' critical characteristics, traceability, l
2j documentation and the role of distributors for 3
commercial grade items that are to be.used in safety-4 related applications.
5 (Slide) slide 11 continues with the staff 6
retivities.
Because we have a concern with the timing i
~
1 7
and implementation by the industry of improvements in 8
these areas, the staff will continue to develop the 9
basis for proposed rulemaking and the elements that i
10 the statf is considering for that development are in 11 an enclosure to the SECY paper.
These include-for 10 example, more specific attention in the regulations to 13 the need-for engineering involvement in the i
1 14 procurement activities, specification of preferred-l 15 purchase f or manuf acturers under an. Appendix B l
16 program. if that's feasible.
Licensee feedback to the 17 NRC on negative vendor audit. findings would be another l
18 possibility.
19 In the area of ' insp tetion activities, the 20 staff is rethinking its approach and a ' separate
- j 21 Commission paper has been provided in this regard, i
1 22 In-conclusion, staff believe s'e t h a t 23 significant progress..is being made by the industryLin.
.l 24 this area of misrepresented and' substandard products, 25 but that further examination of the effectiveness of NEAL R, GROSS
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20 4
1)i industry efforts is warranted.
Wu ccnclude that the l
2l option of rulemaking should be retained by continuing i
3 to develop the basis for a proposed rule.
4 That's the end of my presentation, if there 5
are questions.
6 MR.
TAYLOR:
That concludes our 7
presentation.
8 CHAIRMAN CARR Commission Remick?
9 COMMISSIONER REMICK:
I have several 10 questions.
What's the status of the large vender 11 interest in getting into tbr spare parts?
I think in 12 the SECY paper you mentioned that Westinghouse was 13 considering getting into the spare part manufacturing 14 business.
15 MR. GRIMES:
Yes.
I don't know if that was 16 in the SECY paper, but I've seen industry press 17 material'on that and I don't know much more than that 13 except that it appears to be something that the 19 industry should seriously look at in terms of being.
20 able to rely on a single source f or. important 21 equipment.
22 COMMISSIONER REMICK:
I assume that this 23 gets to be more of a problem as plants get older and' 24 there are fewer vendors available to supply spare 25 parts.
What does this bode for license renewal where NEAL R. GROSS COURT REPORTERS AND TRANSCAIBER$
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plantr. riight receive. license = extending cut for r>
2 number of additional years?
3 MR. TAYLOR:
The spare parts problem will l
4.
continue in the renewal term, So this is an ongoing 5
problem that industry faces.
As life extends even.
6 you know --
7 MR. MIRAGLIA:
It's a problem that exists 8
right now and will exist for most of these plants.
I 9
think that industry recognizes it.
One element of the
'l 10 industry program is an element to look at the question
'l 11 of obsolescence, how would they handle it.
The*r e has
{
12 been talk of consortium-type efforts or' activities, a 13 jointly utility sponsored kind of thing to assure a 14 common base of spare parts where possible.
The groups 15 become different si:es depending upon the ' nature of 16 the material.
Some parts many plants ' would h' ave in
)
l 17 common.
Others have kind of unique needs.
So
-it's
-J i
IS an issue thats out there that they're dealing with 19 and trying to deal with and' cope with within the 20 context of this program.
i 21 COMMISSIONER CURTISS:
Let me pick up on 22 that.
Is the problem more acute for some particular 23 kinds of parts or is it one that we're seeing across 24 the board for a whole range.of spare parts?
25 MR.'MIRAGLIA:
In terms of obsolescence?
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don't kne w if I have a ' definitive. snawer.
I veuld s,ay 2
it's probably discreet kinds of issues.
We've' 3
explored with the industry and the staff itself has 4
taken. an initiative to say what group of components 5
would be more vulners.ble to the misrepresentation 6
aspect of it.
We've developed a list to look at arear.
7 to be sensitive to, but they're pretty consistent with 8
what we've been finding, the' circuit breakers, valves, 9
common conponents that are used not only in a nuclear 10 industry but are widespread in the commercial 11 industry, defense and other areas as well.
12 MR. GRIMES:
I would say probably more in 13 the electrical area. for example, than in the piping 14 area.
Piping doesn't become obsolescent, but a 15 circuit breaker may well become obsolescent if the 16 vendor has changed his product line over the last ten 17 years.
18 CHAIRMAN CARR:
- Relays, 19 MR. GRIMES:
And relays, yes.
20 CHAIRMAN CARR:
My experience in this areas 21 is that if you've done business with what we call a i
'1 22 "onesie, onesies" where you're one of a kind and one 1
l
\\
i 23 supplier, you've really got some problems.
l 24 COMMISSIONER REMICK:
What's the staff's l
25 view on the extent of the scope and the significance NEAL R. GROSS CoVRT REPORTERS AND TRANSCRIBERS f
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of the problem conpared to what ycu Aight have V2ewed 2l say two cr three years ago?
Is the scope as big or is 3
the safety signifi::ance as great as.you might have i
4 perceived at that tine?
5 HR.' TAYLOR:
We haven't seen, as I said in I
6 my remarks, an imminent safety issue.
But clearly, I 7
think our knowledge has increased.
We've spent a lot i
8 of time in this area in the past few years and, Bill.
t
{
9 I'll let you expand on it..
So, we're more aware of 10 the activities.
L 11 Bill., do you want to add to that?
{
{
r 12 MR. BRACH:
I think ' there are a couple of l
13 points.
One, I believe in the last couple years we've
(
t 14 seen more instances of what ~ I'll call
[
1 15 misrepresentation or counterfeit and fraud and that's 16 not to say it maybe didn't occur-five, ten years ago.
17 I think though there at e a number of, I'll" call them i
18 contributing causes, that mayb'e explain why we're f
19 seeing more today than maybe five, ten years ago.
]
20 One that we mentioned briefly is that ten
.l 21 years ago there were more Appendix - B ' or nuclear.
e 22 quality suppliers in th'e market than there are today, f
23 So, the availability of an Appendix B quality f
24 assurance pedigree-type item war perhaps more 25 available ten years ago.
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Secondly, as was mentionwd, there's a cost l
i P
'2 incentive.
As the number of nuclear suppliers has 31 decrossed and yet the need for replacement parts is 4
still there, the demand is still there that supplies 5
may be going down from the. Appendix B supplier 6
perspective and so that there's more of an arena of
.7 going to the commercial or more of a demand for 8
going to the commercial market for procurement of 9
items.
The potential there f or misrepresentation is 10
- there, So maybe in the past few years that's another il l reason for the increase in misrepresented parts of a 12 commercial natare being found in nuclear power plants.
13 other causes I think Mr. Taylor' alluded to 14 is that we're more alert today perhaps to looking for-15 nisrepresentation than there were five or so years 16 ago.
Today we're more attuned. if the part looks 17 suspect to ask ourselves and' start enquiring through 18 the vendor process, "Is the part as represented or.is 19 it fraudulently provided?"
Maybe some. years ago the 20 part would have been identified as being defective or 21 of a substandard nature and perhaps discarded at that 22 point and not fully explored to see if'it's a case of 23 misrepresentation.
..i 24 So, I
think a
few of those items
{
l 25 collectively add up to perhaps a more prevalent NEAL R. GROSS l
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29 1-identificatien of issues t oday t han some-yars ago.
I 2'
MR. GRIMES:
If I eculd just.further comment 3h on the safety significance aspect, I'd say my 4
perception has stayed similar in terms of the 5
potential for a problem.
But I think we're probably 1
6 in better shape today because people are much more i
7 aware and have looked better.
So, I think we are in 8
better shape today but the potential is still there if 9
you don't continue close attention to all the material
.10 you purchase, you have the potential fer --
11 CHAIRMA!! CARR:
But it's fair to way the 12 spotlight of the last two years has m a d e_. v v e r y b o d y 13 aware and it's awful hard for somebody to break into 14 the business, I would think, right now.
Also. the 15 concern we had, for instance, on flanges. I~ understand 16 that of all the flanges we tested, we-didn't find any 17 that really weren't ' adequate for the safety and'
~
18 service, but they didn't meet the criteria that they 19 should have met.
J 20 MR. GRIMES:
Yes, it's somewhere as low as 21 40 percent of the yield strength they should have had, 22 but still when examined the margins of saf ety' were 23 adequate to cover all of'them.
24 C O M t!I S S I O ll E R REMICK:
Am I
safe in 25 characterizing the staff's position on industry i
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initiativet snat you're impressed with these. ycu'rw l
2 disappointed that they're not as f ar. along schedule-3
-wiset Is that a fair. characterization?
4 MR. GRIMES:
I think that's fair.
5 CHAIRMAN CARR But they're just starting
'6 and you haven't had a. chance to evaluate them yet, 7
MR. GRIMES:
Right.
We haven't actually 8
evaluated the success.of the implementation by each of-9 the utilities.
10 MR. MIRAGLIA:
But if one looks in terms of 11 the program that they set out, they started in 00teber l
~
12 or November of '88 and they gave us a white paper in 13 the spring of '8P and had certain milestones in that.
14 We meet with them on a
quarterly basis and
^ l 15 Commissioner Remick : essentially characterized my 16 comments every time'I go to see them, "You've got the 17 right topics, it has the right scope, the right depth 18 as far as what the program ~ should be.
We'd like to l
19 see you decide on the program and then start 20 implementing it at a quicker pace."
So, that's a 21 constant kind of concern.
I think they're trying to-22 address the areas of' receipt inspection.
23 They have mad'e progress' in the audit.
-1 24 Getting the joint NUPIC group was a major activity of' 25 getting two auditing groups together and get a j
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process.
We haven't tested the' effectiveness of the.t I
l 2'
yet, but that certainly was' a major milestone, the
,3 EPRI guidelines.
4 So, progress is being made but June is going 5
to decide.the programs.
So, implementation of those 6
programs will require time and it'will be past June.
7 So, that's the concern.
It's the timing.
8 COMMISSIONER REMICK:
Well, putting together 9
the various things that it's an important problem but I
10 apparently we've got ten ' industry's attention, we're s
f 11 impressed with what they plan'to do, we don't know if j
i i
12 they're going to carry it out or can and so forth.
I L
i 13 raise the question why are we proceeding with the rule i
r 14 at this time determining the basis ~ if there are sone i
15 indications that things are progressing?
I'm thinking
.j i
I 16 with limited resources and so forth, why is your 17 recommendation that you continue to develop the basis 18 versus deferring for six months?
I 19 MR. GRIMES:
I guess it's the old problem of 20 it's easy to set out what should be done,. but it 's 21 hard to do it.
Each utility is going to have to 22 commit the appropriate resources to actually implement, i
23 this and that has not been done yet.
Part of the i
24 reason, in my view, that we haven't had faster action 25 is a lot of discussion of should we really expend the f
NEAL R. GROSS CoVRT REPORTERS AND TRANSCRIBERS 1323 RHoDE ISLAND AVENUE, N W 5
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10 1l recources in this area by n number of utilities?
fo 2
the industry has a mechanism te decide that jointly i
3 and that mechanism is working rather slowly.
I can't 4
predict f or sure the outcome.
I'm hopeful that the 5
outcome will be positive.,
But if it is not positive, 4
6 I think we should be prepared to move ourselves.
7 COMMISSIONER REMICK:
But I assume our 8
continuing to work on a rule is not going to. change 9
the June date when some of those decisions will be 10 made.
So --
11 MR.' GRIMES:
No.
i 12 MR. TAYLOR:
No.
13 MR.
GRIMES:
I hope it might influence 14 whether the decision is positive.
i 15 COMMISSIONER REMICK:
Okay.
Fine.
That's 16 all.
17 CHAIRMAN CARR:
Commissioner Rogers?
18 COMMISSIONER ROGERS:
Just getting a little i
19 bit more of a handle on how effective the OI efforts 20 are, how many referrals have you had, Ben, on this 21 for --
22 MR. HAYES:
So far, my notes indicate we've i
i 23 had five referrals, Commissioner.
1 24 COMMISSIONER ROGERS:
Five?
25 MR. HAYES:
Yes, sir.
Now, we are working
.l NEAL R. GROSS court REPORTERS AND TRANSCRIBERS 13D RHoDC ISLAND AVENUE, N W I
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31 1
eurrently.
We are working with a couple of g r a r.d 2
juries around the country.
We're working with 3
Department'of Justice officials and other cities, not 4
grand jury material, but other cities coordinating 5
efforts where other federal agencies are involved, 6
which may culminate into a grand jury and possible 7
prosecution.
8 COMMISSIONER ROGERS:
Do you think that this 9
is that that five that we've seen presumably over 10 the 50 some odd utilities or whatever that we'rw 11 dealing w i~t h in indicative of the size of
- he 12 wrongdoing aspects of this?
13 MR. MAYES:
Well, the staff touched en it a-14 little bit earlier in the presentation.
That in that i
15 many of the people that we have under investigation i
16 not only do business with the licensees, but do l
17 business with DOD, DOE and NASA and what have you.
18 So, it's very difficult to say to scope it to the 1
19 nuclear industry per se.
I think as I look across the
]
20 last two or three years of investigative.ef f ort that
)
21 we've undertaken, not ene licensee 'comes to mind--
1 22 well, I take that back.
A couple of lie,)nsees only 23 out of the.50 some cases that we've' had in the last 24 two years are actually on licensees ~
opposed to as
.l 25 vendors.
We have found very little culpability'
]
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directly related to s licensee.
So, I think thaS a i
f 2
good trend.
We're continually vigilant in that area, 3
but usually the licensees are taken, if you will.
4 MR. TAYLOR:
I must say one single referral 5
in the molded case circuit breaker area took an 6
enormous amount of field work beemuse it is a broad 7
area.
8 COMMISSIONER ROGERS:
Yes.
9 CHAIRMAN CARRt But it was turned up by a'
10 licensee, wasn't it?
L' 11 MR. GRIMES:
A licensee and a v.indor, i
10 MR. MIRAGLIA:
And a vendor.
'l 13 MR. TAYLOR:
But then we got into it and Ben 14 did a great deal of field work.
So, some of them have 15 been very broad, is I gueso the way I'd-like to --
)
16 MR. GRIMES:
I guess I'd also remark that
]
'l 17 the number 5 doesn't refleet the number of times.there 18 is a joint preliminary look by O' and the technical 19 staff.
20 COMMISSIONER ROGERS:
Well, I guess what I 21 was trying to understand is to what extent this is l
22 just plain sloppy quality control in the commercial
-l 23 sector and to what extent that then people just shovel 24 it out the door and sell it and what extent it is an l
25 actual planned effort to deceive a customer.
NEAL R GROSS COURT REPORTERS AND TRANSCRIBt RS j
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FJ. TAYLOR:
I think.that would oe hard to-l 2
give you a percent.
3 COMMISSIONER ROGERSt Yes.
4 HR. TAYLOR:
The fraud'is there.
5 MR. MAYES:
We have cases where we have 6
,locumented false' pedigrees, CMTRs and the l
7 documentation.
8 COMMISSIONER ROGERS:
Yes.
Oh, yes.
9 MR. HAYES:
We have cases where we have
+
10 speedy printer printing up labels of uf er vendors.
11 till thst sort of thing.
j i
12 COMMISSIONER ROGERS:
Well, I've seen some l
13 of these.
I know they're really --
14 MR.
HAYES:
So, with that kind of 15 background, obviously the vendor's intent is to 16 present that product as something that it is not.
And 17 the licensee then, it becomes incumbent'upon'them to 18 be able to detect that in the inspection process, i
19 COMMISSIONER ROGERS:
Well, it 's just that-20 we have a fairly long list.of dif f erent. kinds of
.l 21 places where these things, where these products have 22 turned up.
And some, oneLwould expect. I know in thei 23 circuit breaker area'I've 'seen ' these counte'rfeit i
24 labels myself and they're really absurd in some sense-j 25 that anybody would even think that somebody would N
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i I
1 accept that, it's
- s. o cbvious, but in.--
and that's 2:
clearly an attempt to. deceive.
3 When you talk about the f astener area, I 4
wonder whether a fair amount of _ that, isn't it just 5
poor quality control?
6 MR. GRIMESt Yes.
I think we did in the 7
fastener area finally conclude that there is a bigger 8
quality problem than fraud problem.-
But there are 9
aspects in certain grades of bolt where some are sold 10 as having heat treatment but did not have heat 11 treatment.
12 COMMISSIONER ROGERS:
Yes.
13 CHAIRMAN CARRt Was that mostly offshore 14 procurement?
15 MR.
GRIMES:
I think the source was 16 offshore.
The actual people that may have 17 misrepresented involved U.S. companies as well, i
18 COMMISSIONER ROGERS:
Well, it's a question 19 of just how where do you'go to stop it, at the i
20
- source, as close to the source as possible.
And.I 21 guess the concern that I have with respect to a rule 22 is that we're focusing on the victim in the rule as D
i 23 much as we are the perpetrator.
I'm just a little 24 concerned about whether there isn't some other way to 25 go closer to the source of this problem that would be NEAL R. GROSS court REPoHTER$ AND TRANSCH$(RS 1323 RHoDE ISLAND AvfNUE. N W (202) PMg WASHINGTON.OC 20006 (202) 232 4 000
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33 I
1 equally' effective and'lus'enerour, fcr the licensees.
'2 MR.
GRIMES:
I would hope joint industry i
I 3
efforts might do that, but we do'try to. hold ' the g
4 licensee ultimately responsible, f
5 CHAIRMAN CARR:-
'It's his responsibility, by 6
our rules.
i 7
COMMISSIONER ~ ROGERS:
Oh,
- yes, there's no'
[
8 question about. that'.
But whether the same effect' 9
couldn't be achieved ' without an additional burden on-10 the licensee, I:mean they have to have programs and se' i
11 on and so'forth, but whether it's'still if we just I
12 stop there, if it stops there whether we ' re. really 13 rooting this thing out.
i 14 MR. GRIMES:
We do havea Vendor. Inspection
[
r 15 Branch that attempts to:go to the source.
i 16 MR. MIRAGLIA:
But the number of vendors---
[
t.
4 17 I mean it's in the Vendor Inspection ~ Branch, I think 18 Bill will smile when I.say that,; I keep'saying, "Well, l
19 when are we going to get our arms around it?
When do
?
20 we stop?"
We can go off and look at valve parts and 21 it's like pulling a
thread..
It takes you to 22 Louisiana, back to Tennessee and we've got folks all 23 over just tracking one piece or various components.
5 t
24 So, the ' opportunity to misrepresent, the. opportunity
[
,25 just for poor quality, even. taking misrepresentation f
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i n
t-I aside<. is large.
l 2
.What we see in terms of upgrade - and 3
dedication of commercial products to use in safety 4
equipment indicates that we could d o.. b e t t e r ' t h e r e.
5 There's a vulnerability.
From' our perspective of
~
6 safety-related material getting in the plant, if we 7
could upgrade the procurement and receipt product and.
8 protect against that vulnerability, I think that's our 9
best, from an NRC prospective.-
We cannot; address the 10 fraudulent material.
I think there will be bolts cut <<
11 there.
There's a market.
As;the Chairman has.Said.
10 there's an incentive for people to do that.
From our 13 perspective,-I think'we.want to focus on; safety grade 14
. material.
I think-it's incumbent upon the licensee 15
- saying, "I have a $5 billion machine,"land he ought.to 16 know what he's putting into ~ a commercial product' f or 17 safety.
18 CHAIRMAN CARR:
We'll-it's not only 19 incumbent, it's a requirement.
20 MR. MIRAGLIA:
Yes,' sir.
21 CHAIRMAN CARR:
I mean we have~ those 22 regulations and I don't I guess I may miss the 23 point, but it seems to me like they're in place and 24 that's how you're catching people.
But it's the i
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1 who's buying it to make sure he 's - get ting the right 2
thing.
If he runs a proper inspection progra.m,.he.'s 3
going'to root it out.
4 MR. TAYLOR:.
Well,. we 're encouraged the 4
5 industry is working on the problem and I. think ~this 6
NUPIC is an example.
There have been attempts through-7 the years to get these combined' auditing efforts into 8
a top grade operation.
I'm hopeful that thats going.
9 to happen..
That's been talked about as-long as I've 10 been around.
11 CHAIRMAN CARR:
But if the guy ' that swrites 12 that procurement spec writes it right and then the: guy 13 that goes out and-inspects against'.it inspects 14 correctly, that will turn up.the problem.-
They' won't 15 end up with the wrong piece of.ma terial, in my l
16 opinion.
17 Excuse me.
18 COMMISSIONER ROGERS:
No, that's fine.
I 19 don't have anything else.
- 2. 0 CHAIRMAN CARR:
I thought I'd better jump-21 in.
22 COMMISSIONER ROGERS:
Why not?
23 COMMISSIONER CURTISS:
I've just got a grab' 24 bag of questions here that I want to cover.
First, on i
25 the licensee implementation of the EPRI guidelines, NEAL R. GROSS CoVRT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVENUE. N W.
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1 the commercial grade dedication guidelines, first tell 4
2 me who are the three who have' not implemented that 3
yet?
4 MR. GRIMES':
I don't have that information 5
and NUMARC did~not communicate that.
Typically they 6
are willing to tell.us the results,- the gross results 7
of-surveys of this sort,- but they e don ' t provide us 8
with detailed information.-
There's no ' specifi'e 9
regulatory requirement at'this point to --
10 CHAIRMAN CARR:
But there was no indication 11 they weren't going to.
10 MR. GRIMES:
No, they;were ---
1 13 COMMISSIONER CURTISS:
Th$= summer, I.think 14 you said.
15 MR. GRIMES:
slower.t.?,,
ne ' res t t 'of the 16 pack and --
17 COMMISSIONER CURTISS:
When you say they 1
18 have implemented the program, what does that entail?.
19 MR. GRIMES:
To my understanding, they have 20 the programs in place and they're using them m as. of 21 January.
22 COMMISSIONER CURTISS:
If you went out to.
23 those utilities that have implemented the program, 24 you'd expect to have them --
25 MR.
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Have the procedures in place NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVENUE, N W '
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and being used.
2 COMMISSIONER CURTISS:
-- a full blown EPRI 3
progrcm.
4 MR. MIRAGLIA:
For the commercial?
5 MR.
TAYLOR:
For commercial: grade 6
dedication, right.
7 MR. GRIMES:
.It's one aspect.
8 COMMISSIONER'CURTISS:
Yes.
'9 MR. TAYLOR:
Very'important.
10 COMMISSIONER CURTISS:
Give me a fevi-fnr 11 the three that are going to be the subject of the June-12 meeting.
If they approve those after-the additional 13 clarification on what's required, can you give me a 14 feel for each of those three areas in terms l of how 15 long it takes to implement them?
16 MR. GRIMES:
Yes.
I don't'have any direct 17 information from NUMARC on that.
I would say -that 18 some utilities probably have those ' things already in 19 place and others that have to start from-; scratch, it 20 may take six months or'so to get everything in~ place.
o 21 COMMISSIONER CURTISS:
Okay.
Let me sh3ft.
22 to what happens after the eight areas that.the NUMARC 23 guidance covers are all addressed.
Assuming ; NUMARC 24 proceeds with the three programs that are going to:be 25 addressed at the June meeting and all the programs are lf NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVENUE, N W -
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in place' at the utilities. what do you envision in 2
terms of our role to' assess'the effectiveness of the 3
, programs and to ensure that they're being implemented 4
in the way that the program is contemplated?
What's 5
the next stepihere?~
6
.MR. ~ GRIMES:
For' example, in the joint audit 7
area, I would: expect that we.would'probably.go out to 8
some of the vendors that NUPIC had audited and see if 9
we come up with similar or different'results'and look 10-at their process, perhaps in their offices also,. to 11 get some. confidence that that particular initiative is 12 bearing. f ruit.
And I think we'd later on go in and 13
- look, as we have.in the. pas t,
at how licensees '
14 procurement' programs are, working in terms of taking 15 specific items, tracking'those through. and' seeing.if 16 we agree that indeed we have looked at the. appropriate 17 characteristics, for example, before they applied. a 18 commercial item in a safety-related area or that they 19 have used vendors who have been preapproved or that 20 they've done appropriate receipt inspect' ion to make 21 sure that they got the product they ordered.
22 COMMISSIONER CURTISS:
If you identify 23 problems at'that point, is the basis for enforcement i
24 action the industry programs or is it Appendix B7 25 MR. GRIMES:
No.
It's Appendix B.
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COMMISSIONER CURTISS:
I guess that raises a c
t 2
question that I have.
In looking atLthe comments on i
3 the proposed rule, I gather a ' number of' people have:
j i
4 raised a question about tho ' clarity of Appendix B'
5 itself, that it's not clear what we expect in Appendix
[
6 B'for these particular programs,and hence.the need for.
j 7
additional industry guidance.
.Is it' clear enough in t
8 the context of what the industry has implemented to-9 take action in the particular areas that they have in i
10 mind?
{
11 MR. MIRAGLIA:
Well, I.think'with respy t to e
12 the generic letter on commercial grade dedication,.I 13 think the guidelines plus the exceptions we took give i
14 you the basis of what expectations in that' area are.
k 15 I'would believe similarly in the other areas they had j
16 a
technical document on. replacement
- parts, 17 characteristics of replacement parts.
They'would have 18 those kinds of characteristics.
19 One could look at either making the rulec 20 more explicit or perhaps providing reg guides that 1
21 would say, "Here's acceptable ways of demonstrating 22 compliance with the rules," or you could even endorse r
23 the
- industry, saying these are accept able,
the 24 requirements in the regulations.
25 COMMISSIONER CURTISS:
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get.a handle on whether the --
i' 2
CH AIRMAN.. C ARR :. 'And the clarity comments in 3
there look 'to me like they were mostly fr.om the 4
vendors.
5 MR. GRIMES:. Yes.
6
< CHAIRMAN CARR:
I don't know.how much' 7
clearer you can get in Appendix BLthat says,you'll do j.
8
.it right.
9 MR.
TAYLOR:
'Well, right.
Through the 10 years. Appendix B gives you that broad approach and there;are various s ys 11 you go out and look.at the a
12 that ' people - run programs ' under Appendix B to. meet -
13 those criteria.
In the. case of. commercial'-- upgrade 14 of commercial grade
- parts, our experience in 15
' inspection show that it was not being done.
In many.
9.
16 cases, very little was being' done r"and that that whole 17 program needed attention.
The ef forts by. EPRI' and 18 others to work on that now put in place a generally 19 uniform way of doing it.
I hope that will solve this-20 issue.
It's been a long, burningiissue.
21 COMMISSIONER CURTISS:
I raised that 22 question because it came up in the context of the rule 23 itself and the comments on the ANPR as well, I gather, 24 as in the context of enforcement actions where it'n 25 not clear to some what Appendix B requires.
If you're J
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confident that after obtaining the commitments of the f
2 industry in the eight areas that are covered in the
'3 NUMARC program, that Appendix B'is clear enough to-
]
4 r
.4-take enforcement action where someone'out1there hasn't
=t
'[
5 implemented a program at all' or has;come up short on I,
6 the implementation, I guess I'm: comfortable with-that, i
.7 I just raise that question. because i t; ' came up in a
[
8 couple of different areas that'suggest~that Appendix B
.(
9 might not be clear'enough.
. 10 Let me -- a. couple other questions.
l
[
11 Ben,. on the investigations, ' do you have a 12
' number of pending investigations or; can it be-
[
t 13 calculated that way'here?
14 MR.
HAYES:
I.' v e. g o t.
I can give you l
r
?
15 statistics of that, Commissioner..
l t
16 COMMISSIONER CURTISS:
Okay..
1 17 MR.' HAYES:
'I've got 25 open product fraud -
f 18 oriented inves tiga tions,: five open Part' 21-type-t 19 investigations for~a total ' of ' 30 open ' cases in. this j
.h 20 broad area right now.
We have closed out since I
21 January of
. '88 26 vendor-oriented cases, five of which
[
h 22 were referred to the Department of Justice.
'l 23 COMMISSIONER ~ CURTISS:
Okay.
All right.
I 24 Thanks.
That's all I have'.
I 25 CHAIRMAN CARR:
It seems to me that thb
~
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licensees, if they've got a proper receipt inspection 2
program and recognize that the. documentation only.
g 3
-won't prove the safety, that really. turns up most of t
4
.the problems we find.
And it.seemed to me that your i
5 13 inspections orfwhatever ~ it was.just. turned up the 6
fact that those' programs ' haven ' t.been' very extensive
[
7 or adequately implemented.-
We ' ve.got plenty of l
8 enforcement authority, as I read this thing.
It just 9
- says,
" Measures shall also. be ' established f or the L
10 selection and review for suitability of applientien of
+
11 materials, parts, equipment ' and processes-that ~ ar e 10 essential to safety-related functions as' structures, B
13 systems and components."'
.I don't think anybody's -
'I l
t 14 don't know how many cases you've~ lost.of enforcement,
' {
15 but I would --
16 MR.
TAYLOR:~
I think we'.have enough r
17 authority there.
l r
18 CHAIRMAN CARR:
But it seems to me= that 19 probably one of the contributing causes'was our'maybe I
20 not focusing the inspection effort enough or broadly i
21 enough on the programs in.the plants so that they 22 would know what we were looking at.
I guess I don't 23 have any objection to a NUREG if that provide I
L 24 don't get the impression from' reading those comments F-25 that the utilities thought there was any problem with NEAL R. GROSS
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.1 knowing what to do or how to do it.
I think there is 2
a problem probably in the way they write-their 3
specifications ~ and do their f ollow-up to make sure 4
they're getting the product that they ordered.
5 How - ext'ensive do you think their receipt 6
inspection and independent testing programs need to be 7
in order to detect misrepresented components?
8 MR. GRIMES:
It's a case by, case decision.
9
.That's why we encourage the engineers to.be. involved 10 in the. process.
A ' knowledgeable, technical person 11 needs to look ' at the specific situation and you get 12l that confidence both by receipt inspection and knowing
~
13 who you're dealing with through audits.
So, if 14 you --
15 CHAIRMAN CARR:
Yes.
Well, the first clue 16 is when the guy looks in the catalog that's going to 17 order it ~ and finds; out there's no longer a catalog 18 number and the guy is out.of business ~.
That's flag 19 one that goes up that says, " Hey, I've got a problem."
20 And the engineer then comes in the circuit, I would' 21 hope.
22 MR. GRIMES:
Right.
23 CHAIRMAN CARR:
Do you have a feel now that 24 you've got through all that, for instance, that we 25 were discussing on the flange issue, the difference NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVENUE, N W.
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1 between. the misrepr+sented 6nd the actua'lly 2
substandard parts, justi because it didnt have the 3
pedigree?
- And how many cases of: 'really unsafe 4
components have we found?'
I understand the breakers 5
were really in'an unsafe situation.
6 MR. TAYLOR:
Yes.
7 MR. MIRAGLIA:
.Yes.
8 MR. ~ GRIMES::
I'd say the flanges were a 9
substantially out of specification, but there - were
_10 enough margins.in the plant to-take care of that.
Soi
'it took.a 11 I wouldn't -- we finally; concluded after 12' good deal of examination ' and testing, but' we. finally 13 concluded that. that ' was not an unsafe-situation.
'It 14 was not clear at the outset.-
15 The fasteners,,we found in' all ' cases,. 'I.
16 believe, that there was adequ' ate margin, even though 17 there were some deficiencies.-
18 The ' two cases of circuit breakers, the 19 molded case, which I think you were speaking of and 20 then I think there are some actual problems with. metal' 21 clad breakers also.
So, those two cases, I would say, 22 present actual deficiencies.
23 COMMISSIONER ROGERS:
Excuse me.
Were they 24 actually installed?
25 MR. GRIMES:
Yes.
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COMMISSIONER ROGERS:
They were installed?
2 MR. GRIMES:
Ye s'..
In some cases they'd'had 3
to be.taken out of the plants.'
4 Plate and piping material,-'again, there's i
5 generally enough margin but you don't know'that.until 6
you've tracked it'down.and taken enough samples of a1 7
specific case.
8 Valve and valve replacement parts, I would 9
say there's a potential there, but I don't think we've 10 found any. specific case where there was an' actual 11 l problem.
12 Relays and
- fuses, a g a i n',
.t h e r e ' s 7
13 potential, ' but^ I don ' t. think ' we ' ve-identified any 14 specific case where misrepresentation has led ' to the.
d 15 safety' problem.
16 CHAIRMAN.CARR:
Have you. had.enough of a 17 review of the program that they're' planning to put in 18 to determine that if.that program, is effectively 19 implemented by the people who've committed to,it,-that 20 will really take care of the problem?
21 MR.
GRIMES:
We haven' t seen the ' final 22 UUMARC program on these last three issues and we have.
23 commented on some subdocuments wh'ere we have.. some 24 different views.
So, I think there's a need ' f or 25 further interaction with the industry on 'th'e details NEAL R. GROSS 1
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of their: guidance,.that. we,need to make'sure that we 2
understand their position. and. they.. understand' our i
3 views.
But'I think the. culmination-of that should be 4'
satisfactory by this: summer, I would guess.
'S
. MR. ' MIRAGLI A:-
With respect to the generic.
6 letter on. commercial' grade dedication, 'we. essen tially.
7 endorsed ' that with some exceptions.
.If they 8
implemented a program"along that line, that 9
CHAIRMAN CARR:
What kind of exceptions'were 10 they?
I didn ' t s e e. ' -- I read where you. said we 11 endorsed it with exceptions, but I couldn't'-find 12 exceptions.
13 MR. BRACH:
One of the exceptions,..the EPRI 14 document allows a'
method for procurement and 15 dedication of commercial grade parts where part-of 16 that reliance on'the quality.of that' commercial grade 17 part is based on a-long-standing history or 18 relationship between the vendor andl the utility 19 without audit.
Our exception is that while that's 20 the --
21 CHAIRMAN CARR:
He's always given me good 22 service, he'll probably continue to.
23 MR.
BRACH:
Yes.
Our exception to that 24 example is while that 's.a base to give you comfort, 25 it's not a base under Appendix B to provide a NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVENUE, N W (202) mg WASHINGTON. O C. 20005 '
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~ determination of suitability for use.
t-
.2 CHAIRMAN CARR:
Okay.
3-MR. BRACH:
Audits require this.on example.
4
'MR.
GRIMES:.
I think there' was only one I
5 other exception.
I can't remember what it was.
6
' MR. BRACH:
It was. related as well with.
7 audit of vendors 'providing parts, reliance on-8 certifications from vendors.
9 MR. GRIMES:
The EPRI document provides five' 10 different methods, I b'elieve --
11 MR. BRACH:
-Four.
12 MR.
GRIMES:
Four different methods of 13 qualifying commere'ial'orade.
14 MR. BRACH:
And'we have an exception on two 15 of them.
16 CHAIRMAN CARR':
'Yes.-
17 MR.' GRIMES:
We took two exceptions ~.
18 CHAIRMAN CARR:
Does the staf f. agree with.
19 that?
When I read the comments and then I read 20-Appendix B,
I didn ' t see what the lack of clarity 21 really was.
Then I noticed it was mostly from the 22 vendors and I couldn't tell whether the. vendor - was 23 trying to become a ' sole supplier because he had a 24 completely approved program and therefore his comment 25 was, "You ought to make it as tough as heck and get NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS l
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rid of-all the competition."
.I couldn't tell.
2 Do you think that Appendix B is clear enough 3
'that you don ' t.. have any trouble understanding what 4
requirements are on the' people?
I don't know what the 5
' staff's position on the clarity of Appendix B is.
6
- COMMISSIONER CURTISS:
Let me just -- just.
7 en that subject, from the other paper, and this is the 8
reason I raise the question, there have been 9
differences both within the industry and the NRC staff 10 as to the expectations 'of what needed to be done to 11 dedicate commercial grade. parts to meet the basic 12 requirements of Appendix 'B.
That's the question I 13 guess I had, is. there a difference of opinion within 14 the staff as to what Appendix B
requires or 15 contemplates?
16 MR. GRIMES:
I think in'past years there's
- 17 been quite a variety of field interpretation of what 18 Appendix B contemplated in this commercial grade area.
19 Some areas it was looked at closely and in other areas 20 it was pretty much left alone.
So, I think perhaps 21 there's been less than uniform staff interpretation of 22 the past.
I think we've tried to have a lot of 23 discussions internally over the last two years and I 24 think we now have a pretty even understanding within 25 the staff of what the expectations are.
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CHAIRMAN CARR:
Well', does the lack of or 2
the discussion about whether. it's clear or not boil 3
down to the fact that just because. you ' think 'it 's 4
clear doesn't mean it stands up for enforcement?
5 MR. GRIMES:
No.
If I could'go'back to the 6
comments, the vendor comments, I think there they were 7
seeing a lot of different utility interpretations of 8
Appendix B and so they are --
9 CHAIRMAN CARR:
Everybody writes.them a 10 different set of specs.
11 MR. GRIMES:
'Right.
They would like. their 12 life made easier by everyone doing ' things the same' 13 way.
There's a lot of flexibility and, a: lot of
)
14 different a c c e pt'a bl e ' way s of doing things under 15 Appendix B.
I think.--
16 CHAIRMAN CARR:
I can see that..
17 MR. GRIMES:
- 'they would like a little-18 more uniformity in that and we would like a little 19 more uniformity in that'.
20 CHAIRMAN CARR:
I see.
.I may.want it 21 nickel-plated and somebody else may want it chrome-
'22 plated and both cases meet our requirements and 'the 23 vendor would like to have just.one.
I'can understand.
24 that.
25 I
think that takes into.effect all my NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVENUE, N W (202) 234-4433 WASHINGTON. D.C 20005 -
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1 questions.
Anybody ---
several' 2
COMMISSIONER REMICK:
I'd like 3
. things have come up that remind me of.a point I'd like
~
4 that.
Jim, you mentioned the industry' kind of 5
coordination on some,of~this, sharing of information,.
6 the indication 'that we take ' a couple of exceptions 7
because of audit..
It reminds'me o'f a case'-- I have a' 8
close' friend:who's a vice president of a small company 9
that provides' scientific calibration equipment.
It's.
10 not unique to the nuclear industry.
In f s e t ',-
th-y' 11 supply.this to a
broad range of-industries, 12 international, although it is a small company.
~
13 In fact, a few technical profess'ienals that 14 run the company, they have told me on several-15 occasions that they're thinking very seriously of not' 16 selling to the nuclear industry because they are 17 flooded with different utilities coming.
They',11. send.'
18 two inspectors for two days and there are~ two 19 technical people in this small company, which has been 20 highly successful, and then another industry ^will come 21 and inspect them.
They just feel that they can't.
22 spare that type of effort to justify their continuing I
23 to sell to the nuclear industry.
It's a small part of 1
1 24 their overall market.
l 25 So, there is the danger of too much. of the NEAL R GROSS COURT REPORTERS AND TAANSCRIDERS 1323 RHODE ISLANO AVENUE, N W (202) 234 4433 WAaNGTON, D.C. 20006
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~ auditing, inspecting and so forth.
2 MR.
TAYLOR:-
That comment has been heard 3
from suppliers for many, many years because there 4
is -- that then ' -- this NUPIC idea is a good idea.
5 because if they get' talent and audit, they can -- and 6
.we acknowledge that that's appropriate.
7 MR.
GRIMES:
If he can do' one five day 8
inspection in more depth than ten-two day inspections..
9 MR. TAYLOR:
We have seen that.
10 CHAIRMAN CARR:
Well, is the intent then to.
11 come out some list of blessed vendors?
12 MR.
GRIMES:
NUPIC will ' provide the Audit 13 information and then utilities ~.can use those-audits as 14 a basis for their --
15 MR.
TAYLOR:
Their~ support _f or that audit 16 and they've looked at it.
17 MR. GRIMES:
And several utilities may put 18 people on the same audit team.
19 COMMISSIONER REMICK:
Good.
Good.
I hope 20 it comes about.
21 CHAIRMAN CARR:
One other question, I guess.
22 I'd like to ask you.
Has anybody' checked, with the 23 automotive manufactures on fasteners?
I would assume 24 they're one of the major users of fasteners.
25 MR.
MIRAGLIA:
I think because of NEAL R. GROSS TURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVENUE. N W (202) 234g '
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1 Congressman Dingle's ' interest in tne f ri s t e n e r.
k
<3 question, I think --
3 CHAIRMAN CARR:
Everybody's into that act.
4' MR. MIRAGLIA:. Yes, sir.
I don't believe'we 5-on the staff --
6 MR.' TAYLOR:
Bill, 'do you have.anything'you--
7 want to say?
4 8
MR. BRACH:
Not'directly with the automotive 9
industry, no.
10 COMMISSIO!!ER CURTISS:
'Just s-quick
- .l 11 question --
'13 -
CHAIRMAll CARR:
Sure.
13 COMMISSIO!!ER CURTISS:
-- on the rulemaking.
14 What's the
'as you indicated in response-to.
15 Commissioner Remick's question, you-. intend:. to proceed; 16 with that.
Can you give us a f eel. f or what-the 17 resources and schedule.would'be like on.that or does.
18 it hinge upon the actions'in~ June?
19 MR. MIRAGLIA:
I think at this point'in time
~
20 we'd like to monitor and see where the ' industry is
~
21 going and the scope and depth of that and report back s
22 to the Commission at a time as to how we think that 23 progress is going.
4 s
4 s
24 COMMISSIO!!ER CURTISS:
Okay.
That's a111I 25 have.
NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVENUE, N W, (202) N WASHINGTON. D C. 20005.
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U'.
r 55-1 CHAIRMAN CARR:
We11, I'd like'to thank t her 2
staff for this informative briefing.
This effort to 3
prevent installation of misrepresented or substandard 4
parts ~in' nuclear power plants is important.
Licensees, 5
have the obligation, through their. quality': assurance 6
- programs, to take reasonable steps to preclude J the 7
introduction of substandard parts in'the plant.
8
'I urge staf f. to ' continue notifi~ cations to 9
industry and other government-agencies when specific 10 examples are identified and to continue monitoring 11 industry initiatives to es tablish sys t ems -. to detbet 12 misrepresented parts and thereby prevent.their - uselin, 13 plants.
14 I would suggest the staff report back to.the 15 Commission in about six months o'n this issue.and'the 16 industry actions to address the prob 1'em.
17 Do my f u low Commissioners ;have; any other 18 comments?
19 If not, we stand adjourned'.
20 (Whereupon, at 11:10 a. m.-, - the above-21 entitled matter was concluded.).
22 J
23 24
- l 25 NEAL R. GROSS COURT REPOHTERS AND TRANSCAtBERS 1323 AHODE ISLAND AVENUE, N W.
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CERTIFICATE OF TRANSCRIBER This is to certify that the attached events of a meeting
[
of the United States Nuclear Regulatory Commission entitled I
TITLE OF MEETING:
BRIEFING ON RECOMMENDED ACTION l'
FOR SUBSTANDARD PARTS PLACE OF MEETING:
ROCKVILLE, MARYLAND DATE OF MEETING:
MARCl! 20, 1990 were transcribed'by me. I further certify that said transcription is accurate and complete, to the best of my ability, and that the transcript is a true and accurate record of the foregoing events.
Reporter's name PETER LYNCH l
l I
NEAL R. GROSS COURT Rf90efft$ AND TRANSCRistR$
1333 aH00t ISLAND AVINUE. H.W.
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2000$
(202) 232 6600
f i
i
)
l BRIEFING ON RECOMMENDED ACTION FOR SUBSTANDARD PARTS I
s f
Ma rch 20, 1990 1
l t
i j
Bria n K. Grimes i;
Fra nk J. Miraglia
)
Contact:
E. William Brach, 492-0961
~
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i AGENDA FOR STAFF PRESENTATION i
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NRC action pla n i
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ANPR comments.
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Share information with other agencies i
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Misrepresented vendor products i
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o Fa steners I
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o Fittings and flanges o Circuit breakers and pa rts 4
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SUMMARY
OF ACTIONS I
(CONTINUED) i 2.
NRC initiatives l
o Issued Generic Letter 89-02 in l
Ma rch 1989 i
o Issued Advance Notice of Proposed '
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Rulemaking (ANPR) in Ma rch 1989 i
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o Procurement inspections of licensees i
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NRC COORDINATION WITH OTHER FEDERAL AGENCIES o OMB is lead federal agency o NRC's Vendor Branch is focal point o Staff contacts established with DOE, FAA, DOD, and NASA
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INDUSTRY ACTIVITIES o NUMARC formed Nasclear Plant Eqasipment Procurement (NPEP) working group o NUMARC endorsement of EPRI guideIInes on dedication of commercial grade parts o Joint utility audit program forsesod o Other initiatives under developeseent
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ANPR COMMENTS i
o Licensee and NUMARC responses opposed to additional regulations t
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o Other Industry and Individual l
j responses indicated need for l
clearer NRC positions
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CURRENT AND PLANNED r
1 STAFF ACTIVITIES i
o Keep industry informed of t
misrepresented products j
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o Pursue investigations as appropriate i
f o Monitor Industry Initiatives 1
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l CURRENT AND PLANNED
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STAFF ACTIVITIES (CONTINUED) i i
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o Proceed with development of basis for proposed rule which a ddresses misrepresented products and commercial grado procurement / dedication issues j
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Occument Control Desk. 016 Phillips ADVANCED COPY TO:
The Pubite Document Room J/JP/90 CATE:
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$lCY Correspondence & Records ltranch l
i A+.tached are copies of a Comission meeting transcript and related meeting document (s). They are being forwarded for entry on the Daily Accession t.'st and placement in the Public Document Room.
No other distribution is reeuested or required.
1 Meeting
Title:
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Item Description *:
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