ML23151A401

PR-002 - 53FR40019 - Policy and Procedure for Enforcement Actions: Policy Statement

ML23151A401
Person / Time
Issue date:	10/13/1988
From:	Chilk S NRC/SECY
To:
References
PR-002, 53FR40019
Download: ML23151A401 (1)

Text

{{#Wiki_filter:DOCUMENT DATE: TITLE: CASE

REFERENCE:

KEYWORD: ADAMS Template: SECY-067 10/13/1988 PR-002 - 53FR40019 - POLICY AND PROCEDURE FOR ENFORCEMENT ACTIONS:POLICY STATEMENT PR-002 53FR40019 RULEMAKING COMMENTS Document Sensitivity: Non-sensitive - SUNSI Review Complete

STATUS OF RULEMAKING PROPOSED RULE: PR-002 RULE NAME: POLICY AND PROCEDURE FOR ENFORCEMENT ACTIONS: POLI CY STATEMENT PROPOSED RULE FED REG CITE: 53FR40019 PROPOSED RULE PUBLICATION DATE: 10/13/88 ORIGINAL DATE FOR COMMENTS: 12/12/88 NUMBER OF COMMENTS: EXTENSION DATE: I I 12 FINAL RULE FED. REG. CITE: 53FR40019 FINAL RULE PUBLICATION DATE: 10/13/88 NOTES ON COMMISSION APPROVED REVISION TO POLICY STATEMENT BY A 4-0 VOTE (SR TATtJS M-M880916"i3). EFFECTIVE 10/13/88. COMMENT PERIOD WAS OPEN UNTIL 12/ OF RULE 12/88. FILE LOCATED ON Pl. TO FIND THE STAFF CONTACT OR VIEW THE RULEMAKING HISTORY PRESS PAGE DOWN KEY HISTORY OF THE RULE PART AFFECTED: PR-002 RULE TITLE: POLICY AND PROCEDURE FOR ENFORCEMENT ACTIONS: POLI CY STATEMENT PROPOSED RULE SECY PAPER: FINAL RULE SECY PAPER: 88-226 PROPOSED RULE SRM DATE: FINAL RULE SRM DATE: DATE PROPOSED RULE I I SIGNED BY SECRETARY: 10/06/88 DATE FINAL RULE 09/27/88 SIGNED BY SECRETARY: 10/06/88 STAFF CONTACTS ON THE RULE CONTACTl: JAMES LIEBERMAN CONTACT2: MAIL STOP: WF/7H5 MAIL STOP: PHONE: 492-0741 PHONE:

DOCKET NO. PR-002 ( 53FR40019) In the Matter of POLICY AND PROCEDURE FOR ENFORCEMENT ACTIONS: POLI CY STATEMENT DATE DATE OF DOCKETED DOCUMENT 10/13/88 12/09/88 12/12/88 12/12/88 12/12/88 12/12/88 12/14/88 12/14/88 12/14/88 12/16/88 12/20/88 12/20/88 12/29/88 10/06/88 12/08/88 12/12/88 12/12/88 12/12/88 12/12/88 12/12/88 12/12/88 12/09/88 12/09/88 12/12/88 12/14/88 12/28/88 TITLE OR DESCRIPTION OF DOCUMENT POLICY STATEFMENT: REVISION COMMENT OF CONNER & WETTERHAHN, P.C. AND CLIENTS (TROY CONNER, ESQUIRE) (

1)

COMMENT OF SIX UTILITY CLIENTS (DEBORAH CHARNOFF) ( COMMENT OF NINETEEN POWER REACTOR LICENSEES (NICHOLAS REYNOLDS, ESQUIRE) (

3)

COMMENT OF NUMARC (JOE COLVIN, VICE PRESIDENT) ( COMMENT OF CAROLINA POWER & LIGHT COMPANY (LEONARD LOFLIN, MANAGER) (

5)

COMMENT OF DETROIT EDISON (B. RALPH SYLVIA, VICE PRESIDENT) ( COMMENT OF LONG ISLAND LIGHTING COMPANY (JOHN LEONARD, VICE PRESIDENT) (

8)

COMMENT OF COMMONWEALTH EDISON (L. DELGEORGE, VICE PRESIDENT) (

6)

COMMENT OF KERR-MCGEE CORPORATION (JOHN STAUTER, DIRECTOR) (

9)

COMMENT OF GULF STATES UTILITIES COMPANY (J. BOOKER, MANAGER) (

10)

COMMENT OF PHILADELPHIA ELECTRIC COMPANY (J. GALLAGHER, VICE PRESIDENT) (

11)

COMMENT OF TENNESSEE VALLEY AUTHORITY (R. L. GRIDLEY, MANAGER) (

12)

7)

2)

4)

fl CKET NUMBER PR Q. TENNESSEE VALLEY AUTH~ SEO RULE CHATTANOOGA. TENNESSEE 37401 ( ~3 FR 1/0rJ} q ) SN 157B Lookout Place Oli8 281988 U.S. Nuclear Regulatory Commission ATTN: Document Control Desk Washington, D.C. 20555 Gentlemen: NUCLEAR REGULATORY COMMISSION (NRC) ENFORCEMENT POLICY REVISIONS: 10 CFR PART 2, APPENDIX C The Tennessee Valley Authority (TVA) has reviewed and is pleased to provide the following comments on the enforcement policy revisions noticed in the October 13, 1988 Federal Register (53 FR 40019-40033). TVA supports NRC's continuing effort to refine its general Enforcement Policy as set forth in 10 CFR Part 2, Appendix C to promote licensee identification, reporting, and correction of deficiencies and to streamline the enforcement process. As a general matter, however, TVA believes that rather than increasing escalation factors to provide incentives to address deficiencies, NRC should give increased recognition to mitigating factors as positive incentives for improving performance. Below is TVA's specific comment on the enforcement policy revisions.

1.

Page 40024, Section V(A), third paragraph, second sentence TVA is concerned that the incentive to avoid receiving a notice of violation for problems found in inspections of short duration may result in licensee pressure to unduly accelerate its investigation, thereby increasing the possibility of conducting a faulty root cause analysis or taking inadequate corrective action. TVA recommends adding the phrase "or at a later time specified by NRC" to the end of this sentence or making clear in the Statements of Consideration that initiation of an aggressive investigation of the root causes of a violation be considered a part of the corrective action for this purpose. We appreciate this opportunity to comment on these revisions. cc: See page 2 Very truly yours, TENN R. L. Gridley, Manager Nuclear Licensing and Regulatory Affairs An Equal Opportunity Employer

G;I. NUCLEAR REGULATORY COMMISSION DOCKETING & SERVICE SECTION OFFICE OF THE SECRETARY OF THE COMMISSION Document S cs Postmar~ D;:itc j) '-"--=------- iCopins P~*-,i, d U.S. Nuclear Regulatory Commission cc: Ms. S. C. Black, Assistant Director for Projects TVA Projects Division U.S. Nuclear Regulatory Commission One White Flint, North 11555 Rockville Pike Rockville, Maryland 20852 Mr. F. R. McCoy, Assistant Director for Inspection Progran\\S TVA Projects Division U. S. Nuclear Regulatory Commission Region II 101 Marietta Street, NW, Suite 2900 Atlanta, Georgia 30323 Dlii 281988

OOCKET NUMBER PR n 10PQSED PUL .:...:.:.---=" PHILf,0,_,E~HIA ELECTRIC COMPANY {_)-J ~olf QpJ/fT)sTREET P.O. BO X 8 699 PHI L AD ELPHIA, PA 19 101 '88 OEC 20 A11 :59 J O SE P H W. G AL LAGH E R V I CE PRE S I OE"NT NU CLE AR SE R VI CES Mr. Samuel J. Chilk Secretary of the Commission ( 2 1 5 ) 84 1-500 1 U.S. Nuclear Regulatory Commission Attn: Document Control Desk Washington, DC 20555 December 14, Docket Nos. License No. 1988GF~ ~-- O(JCr( ~ 'j' I 5 0- 3 5 2 r,;,. ~, NPF-39

Subject:

Comments Concerning the Nuclear Regulatory Commission Policy Statement Revision, 10 CFR 2, Appendix C, "Policy and Procedure for Enforcement Action" (53FR40019, October 13, 1988)

Dear Mr. Chilk:

This letter is being submitted in response to the Nuclear Regulatory Commission's (NRC's) request for comments concerning revisions to the Enforcement Policy codified in 10 CFR 2, Appendix C, and published in the Federal Register on October 13, 1988 (53FR40019). The Philadelphia Electric Company (PECo) appreciates the opportunity to comment on the revisions to th2 NRC E~force~e~~ P0licy. In general, PECo agrees with the published revisions in that these changes will provide a more reasoned basis for determining 1) whether enfor cement action is necessary, and 2) the appropriate level of enforcement once actions are deemed to be necessary. In PECo's opinion, these revisions will allow the implementation of the Enforcement Policy to result in actions which are in closer agreement with the stated objectives of a more uniform treatment of licensee violations, and to encourage licensee identification, reporting, and correction of violations. In addition, we are providing, for the NRC's consideration, specific comments to particular paragraphs which apply to the revisions of 10 CFR 2, Appendix C. If you require additional information, please do not hesitate to contact us. Attachment Very truly yours, ~~ FEB 1 6 1989 Acknowledged by caret..** ;:;;;.;:;:::-;;:;;, zu

.. :". J! AIORY COMMISSIOl'f 001'.'KntNG A SERVICE SECTION OFF l(E OF THE SECRET ARY OF THE CCMMISSION Document Statistics

• )cstm'lrk Date r:.L J l I H Cop*es R.. ccive.

/ ~dd' I CC'p,-:-s R~;; *oducod Special D1stributio'1 J?J:,IJJ Pf)fl ./ I

Specific Comments to Revisi on of 10 CFR 2, Appendix C Attachment Page 1 ~ecific Comments A. Paragraph V.A, "Notice of Violation " PECo agrees that a f o rmal noti ce of violation and response from t he licensee are not necessary for identified violations which are determined to be isolated, and categorized as "Severity Level V", so long as the corresponding corrective actions are either underway or are completed by the end of the inspection period. B. Paragraph V. S, "Civil Penalt y" 1. Additional examples of discret iona ry imposition of civil penalties for Severi ty Level III violations (paragraph V.B, "Exercise of Discretion") PECo agrees with the addition of "Example l". Imposing civil penalties for a violation which met the three stated criteria, given that a licensee was being aggressive in identifying, reporting, and correcting the violation, would unfairly penalize the licensee, whose actions are in keeping with the objectives of the Enforcement Policy. We strongly agree with the inclusion of "Example 2" in that encouraging licensees to identify and ccrrect lo~g-s t anding engineering, design, or installation deficiencies before the system affected by the deficiency is called upon to perform its intended safety function, is clearly preferable. Accordingly, penalizing a licensee after identifying just such a problem would be counter-productive to the overall aim of ensuring safety. "Example 3" is consistent with the previous example, and we agree to it being added to the Enforcement Policy. The imposition of additional civil penalties for licensee identified violations resulting from investigations carried out in r esponse to an Enforcement Action would also be counter-productive, and serve no deterence purpose.

2.

Revisions to mitigating and escalating factors. With respect to the revision to the "Corrective Action" factor, PECo agrees that the qualification of "unusually", as previously applied to corrective actions, has no real merit when judging the effectiveness of the corrective actions taken since appropriate corrective actions, by their nature, should be timely and comprehensive.

Attachment Page 2 With respect to the revision to the "Past Performance" fa cto r, we find that fixing the time peri od f o r assessing performance in all cases t o two (2) years (or within the last two inspections), ma y no t reflec t a licensee's e f forts in certain specific areas where improvements may take longer that t wo years t o be effective. We conclude that the time period f o r assessing prior performance should be determined o n a case-by-case basis, accounting for the previous actions taken and a reasonable estimate of the time needed for the intended improvements to become effective. C. Paragraph V.E, "Enforcement Actions Involving Individuals" The wording of the re vision to this paragraph creates an ill defined condition of potential enforcement action. The purpose of the revision is to clarify that enforcement action can be taken against an individual if that individual's conduct (i.e., integrity, competence, fitness for duty) places into question the NRC's reasonable assurance that licensed activities will be properly conducted even if a violation of specific Commission requirements is not identified (emphasis added). PECo believes that this paragraph should require that all Enforcement Actions involving individuals should be derived from an identified violation of Commission requirements.

(!!) GULF STATES UTILITIES ~ '.'L:_l{[jii ~ ) Ni*, CO~.PANY *aa DEC 20 A 9 : 15 POST OFFICE BOX 2951

• BEAUMONT, TEXAS 77704 AREACODE409 838 - 6631 Secretary of the Commission U. S. Nuclear Regulatory Commission Washington, D.C.

20555 Attention: Docketing and Service Branch Gentlemen: December 12, 1988 RBG-29610 File No. G9.23. 2 Gulf States Utilities Company (GSU) appreciates the opportunity to provide comments regarding the October 13,

1988, policy statement revision concerning, "Policy and Procedure for Enforcement Actions," to 10CFR Part 2 (53FR40019).

On the whole, the additional changes in the Commission's Policy and Procedure for Enforcement Actions should increase incentives for a licensee to scrutinize its own operations at its own initiative. However, GSU suggests a few improvements to clarify the intent of certain areas within the policy statement. Section V.G. of

10CFR2, Appendix C,

which allows an exercise of discretion by the NRC regarding self-identification and correction of problems requires further clarification in the policy statement. Current regional inspection activities imply a phil~sophy of self-identified versus self-disclosing events. It is GSU's understanding that self-disclosing events are not considered self-identifying events

and, therefore, are subject to notices of violations.

The terms self-identified and self-disclosing should be explained in the policy statement if licensees are to be issued notices of violations based on this criteria. In addition, if a notice of violation is issued and factors involving 10CFR2, Appendix C, Item V.G were considered when the NRC made its determination on the notice of violation, then the subject inspection report should explain the rationale as to why the notice of violation did not meet 10CFR2, Appendix C, Item V.G. criteria. Efforts by the Commission and the licensee should continue for communicating improvements in various enforcement actions and other FEB 16 Acknowledged by caret 1989

u. 5. NL_

• _. __,\\,,J, COMMISSION DOCKETING & SERVICE SECTION OFFICE OF THE SECRETARY OF THE COMMISSION Document Statist ics

?ostmark Date / ;)..-/ J-83 Copies Received __ L _____ _ Add' I Copies Re:produced _,,]'------- Special Distribution fJ) ~ /'L,JJ)S l 1 e.- ~ e.rl't-..{J,.,.._

NRC regulations. comments. Sj~ JEB/LAE/RJK/do Page 2 GSU appreciates the opportunity to provide its stated Sincerely, /*~~ J. E. Booker Manager-River Bend Oversight River Bend Nuclear Group

CKET NUMBER PR J '~ rR OSED RULE R. </OD/ q) ~ KERR-MCGEE CORP 1/lA"ON ! ' 'i. * * * } . 11/ I-; : *. ~ KERR-McGEE CENTER

• OKLAHOMA CITY, OKLAHOMA 73 12 5- - -

1 * ' I_* ~ ~p

• I
• aa OEC 16 Pl2 :Q8 Decent>er 9, 1988 CERTIFIED MAIL RETURN RECEIFr ~

Secretary U.S. Nuclear Regulatory Commission Washington, DC 20555 Attn: Docketing and Service Branch RE: Comments Relating to NRC Policy and Procedures for Enforcement; FR Vol. 53, No. 198, October 13, 1988, Pg. 40019 Gentlemen: Kerr-McGee Corporation supports the above referenced Nuclear Regulatory Commission Policy and Procedure Statement relating to enforcement actions. We agree with NRC that the policy changes will encourage licensees to self identify violations and take corrective action to prevent continued non-compliance and future reoccurrence. JCS/SCM/at John C. Stauter, Director Environmental Affairs FEB 1 6 1989 Acknowledged by card

• * * * * * * *
• 4 ~....... WO

)

u. S. NUCLEAR REGULATORY COMMISSIO,-.

DOCKETING & SERVICE SECTION OFFICE OF THE SECRETARY OF THE COMMISSION Document Sta*ist 1cs Postmark Dal ecn1v Add' I r c-piP* R r

• pecial :) tr JI

I JOHN D. LEONARD, JR. DOCKET NUMBER PR / 1 t'ROP(}SJ~ RYLE LONG,sfl.Jl l~grAf,N~ ~G>: ii. COMP ANY SHOREHAM NUCLEAR POWER STATION P.o. eox s1e, NORTH COUNTRY ROAD* WADING :a8e~ v.ltb~3 :33 VICE PRESIDENT

• NUCLEAR OPERATIONS December 12, 1988 Mr. Samuel J. Chilk, Secretary U.S. Nuclear Regulatory Commission Washington, DC 20555 ATTN:

Docketing and Service Branch VPNO 88-168

Subject:

Comments on Policy Statement Revision - Policy and Procedure for Enforcement Actions

Dear Mr. Chilk:

We hereby submit our comments on the Policy Statement which was publis hed in the Federal Register (53FR40019) on the subject of Policy and Procedure for Enforcement Actions. The Supplementary Information to Section V. A. states that, "Docu-mentation of the violation in an inspection report or offic ial field notes i~ sufficient provided corrective action is underway before the inspection ends. " The end of an inspection however, is not de f ined. Possibilities as to what constitutes the end of an inspection could include the latest date of the period covered by the inspection report or the exit meeting date. Since this could be critical in assessing when corrective action must be underway before the inspection ends, the Commission may want to clarify what is intended by the phrase "before the inspection ends. " That same section also states, "A Notice of Violation may be issued if the violation was willful, if past corrective actions have not been sufficient or, if the circumstances warrant in-creasing the severity of level V violations to a higher severity level. " Since the determination of a "willful violation" re-quires judgment, the Commission may wish to establish the criteria for making this determination. Also, the circumstances which "warrant increasing the severity of level V violations to a higher severity level" should be defined. If a level V violation is raised to a higher severity level, the violation should be originally identified as level Vanda rationale provided for the increase. Acknowledged by ca-FE~ 1 __ !_ 1989 11.1 ** <<-.+eotJ;pi7'lxiMI -

OOCKtllN~ & SERVICE S1:CTION OFFICE OF THE SECRET ARY OF THE COMMISSION Documer.t Statistics ~o,tmerk Dale 12-/ 13/JY I ~opies Recei vcd ~dd' I Copi~s Repr:>duc~ Special Distri!:.ution J'l ~ fj~

VPNO 88-168 Page 2 In the General Statement of Policy, Section V.B.2.c, the subject of past performance is raised, including specifically, SALP Reports. The Commission understands that SALP Reports address overall performance in functional areas and not necessarily each facet or task within an area of operation. Thus, the Commission may wish to clarify the guidance to provide consideration for the fact that a category 3 rating in one functional area should not increase the potential for civil penalties unless that particular task or problem had been subject to scrutiny before. Finally, the Supplementary information to Section V.B.2.d states that, "If a licensee is put on notice of a problem by its own actions, its responsible employees, industry or NRC and fails to take action to prevent a severity level III violation, then a penalty should be substantially increased." Since this could have far reaching ramifications, the Commission may want to define or give examples of what is intended by the term "failure to take action." As the Commission well knows, notices can justifiably be under review for a lengthy period before being finally resolved. These instances should, as an example, not constitute a failure to take action. Similar issues can be raised regarding the subject of the duration factor. LILCO appreciates this opportunity to review and comment on the subject Policy Statement and should you require any additional information, please do not hesitate to contact this office. Very truly yours, cc: S. Brown F. Crescenzo Document Control Desk

Detroit Edison B. Ralph Sylvia Sen ior Vice President ~LiC~ : ii_ 'l,/i. 6400 North D1x1e Highway Newport. Michigan 48166 (313) 586-4 t50

• aa OEC 14 P 3 :32 OH V G1)CK[, ;*,l_-, ;,,-,*~(-

bRANt.,;-_;* \\ I December 12, 1988 NIC-88-0298 The Secretary of the Commission U.S. Nuclear Regulatory Commission Washington, D. C. 20555 Attention: Docketing and Service Branch

References:

1)

Fermi 2

Subject:

NIC Docket No. 50-341 NR: License No. NPF-43

2)

Pol icy and Procedure for Enforcement Actions; Policy Statement Revision (Federal Register, Vol. 53, No. 198, dated Thursday, October 13, 1988) Detroit Etlison's Cornrrents on the Policy Statement Revision Regarding Policy and Procedure for Enforcement Actions The NOC has published revisions to its Enforcement Policy 1) to provide for greater discretion in determining whether to issue a civil penalty for certain licensee-identified and corroctErl violations; 2) to provide for higher civil penalties for NOC-identified violations, licensee's failures to take action in response to prior notice of concerns at any of its facilities, and rultiple exarrples of significant violations; 3) to clarify the assessment factors for corrective action, past performance, and duration; 4) to modify the severity level exarrples involving violations for 10CFRS0.59 and medical misooministrations; 5) to make minor deletions and language changes. The Enforcement Policy statement is interned to inform licensees, vendors, and the public of the bases for taking various enforcement actions. The policy is codifiErl as Apperrlix C to 10 CFR Part 2. After reviewing the revision(s) of this policy statement, the Detroit Etlison Company would like to offer the following cormrents:

1)

On page 40019, Section V.B., Civil Penalty, for the Severity Level III Violation where civil penalties may not be issued; i.e., the one involving utility-identifiErl and corroctErl violations. It is not clear what is meant by reasonably prevented. FEB 1 9 1989 Acknowledged by card................, *,.., * **

DOC'<ET ING & S:~:Vl<.E ~-'-- 1,_., o:~*'E Of THE SECREiARY oc H'E COMMISSION Add' I Cc,p1 *. R... Special 01,lr !.,, 110 /2,:[.,Y}S - J!!Jf[:,

USNOC Decerrber 12, 1988 NOC-88-0298 Page 2

2)

As noterl in 2.b, Corrective Action, on page 40020, whether or not to grant 50% mitigation of a civil penalty will now be based on timeliness, initiative, and conprehensiveness of the corrective act ion taken. These terms neerl to be better def inerl for 1 icensees to understand the application by the NOC.

3)

On page 40020, under "c. Past Performance", the assessment period is defined as the period within the last two inspections. On page 40024, under "B. Civil Penalty", the assessment period is definerl as after the date of the last inspection. This results in confusion and should be clarified. The assessment period definitions should be consistent.

4)

As noterl in Section V.A, Notice of Violation (NOV), on page 40024, a NOV will be issued for Severity Level v violations if "circumstances warrant increasing the severity level of the violation." A clear definition of how this will be invoked by the NOC or at least several exanples may be helpful to understand its application.

5)

Section V.B.l on page 40025 states that rerluctions of up to 50% may be given when a licensee identifies the violation and prorrptly reports it to the NOC. Based on a recent meeting with the ~, crlditional guidance is needed on what is meant by a licensee identifying the problem. This item also states that no considerations will be given to a reduction in civil penalty if irrarediate corrective action is not taken. Corrective action is the follow-up issue and should not be considered under the identification and reporting factor. Also, it is not clear whether a violation will be considered self-identified if discovererl by the licensee and inspector at the same tirre when the inspector is working with the licensee personnel investigating a problem. If the investigative effort is being led and corrlucted by the licensee the violation should be considered self-identifierl.

6)

In general, a utility interface conference on the regional level to describe the changes in this policy and how they will be inplemented would prove beneficial.

7)

Finally, the policy should require the NOC to state the specific reason(s) for any application, increase or mitigation of civil penalties in written correspondence to licensees. This is alrecrly done to some degree, but it should be more detailed in the discussion as to the specific reasoning used.

USNOC! Decerrber 12, 1988 NOC-88-0298 Page 3 If you have any questions, please conta:=t Mr. Arnold Jaufmann at (313) 586-4213. cc: Mr. A. B. Davis Mr. R. C. Knop Mr. W. G. Rogers Mr. J. F. Stang Sincerely,

USNIC Decerrber 12, 1988 NIC-88-0298 Page 4 bee: C. Borr (WPOC, Inc.)

s. G. Catola G. Cr anston P. Fessler J. H. Flynn D.R. Gipson L. s. Goodman D. Hahn (Michigan Dept./Public Health)

C. A. Naegeli W. S. Orser C. Settles R. B. Stafford F. J. Svetkovich B. R. Sylvia R. J. Szkotnicki/H. Whitcomb G. M. Trahey

w. Tucker/G. Preston/J. Plona Inforrnat-ion Management - 140 NCC Secretary's Office (2412 WCB)

NRR Chron File NSffi Secretary RACTS Coordinator UFSAR Coordinator Author Routing Copy

Commonwealth Edison t'R One First National Plaza, Chicago, lllinoiD OCK£T NUMBc.. PR 2,, Address Reply to: Post Office Box 767 PROPOSED RULE ~ Chicago, Illinois 60690 - 0767 ( [;' 3 F R L/ (P

19)

Mr. Samuel J. Chilk Secretary Docketing and Service Branch U.S. Nuclear Regulatory Commission Washington, D.C. 20555

Dear Mr. Chilk:

December 9, 1988 L'O(;K[ff ~* USNi'C

• aa DEC 14 P 3 :34 This provides Commonwealth Edison Company's (Edison) comments on the recent revisions (53 Fed. Reg. 40019; October 13, 1988) to the Nuclear Regulatory Commission's (NRC or Commission) General Statement of Policy and Procedure for NRC Enforcement Actions (Enforcement Policy) set forth in 10 CFR Part 2 Appendix C.

The Commission's stated purpose for revising its Enforcement Policy is to provide greater incentives for licensees to identify and correct violations. Those increased incentives are provided in two ways: (1) decreasing civil penalties below base amounts where licensees have identified and corrected violations under their own initiative; and (2) increasing civil penalties above base amounts where licensees fail to identify, prevent or correct violations before they are discovered by the NRC. Edison supports those revisions of the Enforcement Policy which would give licensees greater credit for identifying and correcting violations before they are identified by the NRC. Edison believes that a positive response to licensee initiatives provides the greatest incentive for licensees to avoid, identify and correct violations. Indeed, the Commission's announced intention to expand the scope of its exercise of discretion not to issue a Notice of Violation or Civil Penalty may provide the greatest incentive under the Enforcement Policy. By contrast, the punative revisions which would increase civil penalties or escalate enforcement sanctions, in Edison's opinion, will not result in substantial decreases in violations. Therefore, Edison believes that the Enforcement Policy revision would be more effective if licensees were given greater credit (for identifying and correcting violations) rather than greater penalties. Edison also has the following specific comments on particular aspects of the revisions to the Enforcement Policy. Escalation for NRC Discovery; Under the prior Enforcement Policy, licensees were encouraged to discover violations on their own by providing up to 50% mitigation for a Civil Penalty. Although no evidence was provided to indicate that this incentive was inadequate, the NRC has determined to increase the incentive for licensee self-discovery of violations by adding the potential to escalate by 50% the Civil Penalty imposed for an NRC discovered violation. Edison believes that a greater incentive for licensee self-discovery would have been provided by increasing to 100% the amount of mitigation which could be applied to a Civil Penalty for a licensee identified violation. 7 FEB 1 6 1989 Ael<nowledged by card ~ --*~-**

• * -***..........-.~* * 'Li

..i. ~- NU(UAR RCGULATORY COMMISSION DOCKET ING & SERVI CE SECT ION OFFICE Of THE SECRETARY OF THE COMMISSION Document Stal isl i cs Postm:irk Dale _/ 2-/:t_.._p_,,yJ Copies i!c:ci1ve>d / ------ Add' I C:>pi<?s R~prc;Ju~ad ~ecial Dislri6ut:on i:J;;, "fl:CY}) PD~ J

2 - Edison ls also concerned that the escalation criterion ls not well

defined, A Civil Penalty could be escalated if a licensee should have "reasonably discovered" a violation before it was discovered by the NRC, however, the tests for determining what ls "reasonable" are not indicated.

In addition, safeguards will have to be applied to prevent the clarity of post-discovery hindsight from providing the basis for arguing that a licensee had a reasonable opportunity to discover a violation. These considerations strongly suggest that the escalation of a Civil Penalty for a licensee's failure to identify a violation should be replaced by an increase in the mitigation allowed when a licensee does identify a violation. Scope of Past Performance; Under the prior Enforcement Policy, past performance focused on prior performance in the area of concern. The scope of this focus has been broadened to the fullest extent possible by expanding it to include all aspects of prior performance. This diffusing of the focus of this factor effectively prevents it from having its intended effect, In the past, when past performance was focused in the area of concern, this factor provided the NRC with a reasoned basis for exercising its discretion. This factor indicated whether a violation was an isolated incident or whether it really did indicate a lack of licensee appreciation for a particular requirement. This tind of precise analysis is no longer contemplated with the factor broadened as proposed, Rather, by also considering the record on unrelated matters, the NRC may be making a much coarser judgement regarding a licensee's performance. Thus, adjustments to Civil Penalties based on this factor as revised will-not have the same focused impact on a licensee's performahce in the particular area under consideration. Edison believes that these considerations suggest that this revision should be rescinded. Escalation for Prior Notice; Under the prior Enforcement Polley, escalation for prior notice was limited to 50~ and to notice of similar activities at the same facility. -These revisions have increased the

• escalation factor to 100~ and have expanded the scope of notice to include all of the licensee's facilities and findings by the "industry" in addition to those made by the *1icensee and the NRC.

As a general matter, Edison believes that the goal of this factor would be.better achieved if instead of escalation, mitigation of up to 100~ was provided for prompt licensee response to new information. More specifically, Edison is concerned that the reliance on notice from "industry" findings is unreal-istic. Not only is the scope of such notice not well-defined, but it also assumes an unrealistically high level of individual licensee knowledge about everything that goes on in the nuclear industry. Consequently, to protect themselves, licensees will have to expend significant resources to increase their awareness of everything going on in the nuclear industry, whether or not such additional knowledge is worth the cost.

3 - Finally, by expanding prior notice to include a licensee's other facilities under different licenses, multi-site licensees can be placed at a disadvantage since they are more likely to invoke this escalation factor. Edison believes a time requirement in the policy is necessary when expanding prior notice, for the colTITiunication of new information and the determination of its applicability (since the applicability, in some instances, will require considerable evaluation). In addition, the policy should provide flexibili,ty to prevent escalation which originates from differing opinions (based on good engineering judgement) as to the applicability of prior information. The revision to prior notice should be carefully re-examined by the NRC. Multiple Examples; This escalation factor has been increased from so, to 100, to better reflect the added significance of multiple violations". The rationale for this increase is inconsistent with the philosophy behind these factors. These factors are intended to encourage licensees to take action when they have the opportunity to do so. This goal is not served by an escalation factor based solely on safety significance. Rather, for this factor to serve the goal of encouraging licensee action to avoid violations when possible, or to correct them as soon as possible after they occur, this factor should apply only where the licensee has had an intervening opportunity to correct a violation before it happened again. Duration: This is a new factor for escalating a civil penalty for a violation which becomes progressively more significant through the passage of time. This factor may be applied where a licensee either was aware of a violation, clearly should have known of a violation or failed to take the opportunity to correct it. In applying these tests after the fact, experience shows that the clarity of hindsight colors the perception of what a licensee was aware of or should have clearly been aware of, and what constituted a reasonable opportunity for correction. Therefore, there is a need for explicit guidance on these tests to ensure that they remain meaningful. Such guidance is especially necessary because this factor, unlike the others, could lead to much greater escalations of Civil Penalties. Escalation of Sanctions; This part of the Enforcemept Policy has been revised to permit the NRC to escalate the sanctions for violations at one of a licensee's separately licensed facilities by considering how that violation has been treated at the licensee's other separately licensed facilities. Once again, multi-unit licensees are placed at a disadvantage by this revision, since it could be unfair to sanction one unit for the deficiencies of another. In addition, credit must be provided in the enforcement policy for the reasonable, realistic need to evaluate (for applicability) and to communicate conclusions between licensed facilities. Edison does not believe this revision is appropriate.

4 - Supplement I,C.61 The failure to perform a review under 10 CFR 50,59 should not be categorized at Severity Level III if a subsequent review shows that no unreviewed safety question was in fact involved. To impose a Severity Level III penalty under such considerations would be to ignore the general level of safety significance appropriate to warranting finding an event worthy of a Severity Level III Civil Penalty. Commonwealth Edison appreciates this opportunity to submit these comments on the revisions to the Enforcement Policy. rf 5436K it-1~&-- Assistant Vice President

Mr. Samuel J. Chilk Secretary DOCKET NUMBER PR /] PROPOSED RULE ~ - CP&L ( 5'3 l'R.l/OOJC, Carolina Power & Light Company DEC 1 2 1988 U.S. Nuclear Regulatory Commission Washington, D.C. 20555 Attention: Docketing and Service Branch COMMENTS ON REVISIONS TO THE ENFORCEMENT POLICY 10 CFR PART 2, APPENDIX C 53 FR 40019 (OCTOBER 13, 1988)

Dear Mr. Chilk:

J f'tJ. ;~1,ory ra~irt J J)--/)-3 ~ On October 13, 1988, the Nuclear Regulatory Commission ("NRC" or "Commission") published in the Federal Register (53 FR 40019) a revision to the Enforcement Policy (Appendix C to 10 CFR Part 2). Although the revised Enforcement Policy became effective October 13, 1988, the Commission solicited comments on or before December 12, 1988. Carolina Power and Light Company (CP&L} appreciates the opportunity to comment and respectfully submits the following comments. I. GENERAL OVERVIEW The revised Enforcement Policy places greater emphasis on licensee identification and correction of violations, and establishes greater NRC authority to exercise discretion. In SECY-88-226, Revision to the General Statement of Policy and Procedures for Enforcement Actions (10 CFR PART 2, APPENDIX C), the Staff indicates that the "primary objective of the Commission's Enforcement Policy is to encourage licensees to identify and correct violations. There are inherent safety and operational benefits in identifying and correcting violations prior to their disclosure by failure of systems to perform their intended safety functions." CP&L fully supports this objective, and concurs that the regulatory process will benefit from increased incentives to identify and correct violations. However, certain aspects of the policy could compromise this objective. CP&L believes that the enforcement policy should foster effective self identification of violations. Effective, within this context, means a process that, through the normal conduct of operations, assures that substantive evidences of violations are not ignored. Effectiveness could be compromised by two circumstances. First, if the enforcement policy or its interpretation result in the 411 Fayetteville Street

• P. 0. Box 1551
• Raleigh, N. C. 27602 FEB 1 6 1989 Acknowledged by card.***~~ p

s.

LI.~. l'wl 1 '-o,....,,Hi.J,1.)~tUi" DO(KETll'!G & SERVICE SECTION Of~ICF OF THE SECRETARY Of THE COMMISSION Doc~rnc~t Siatistics Postr:i.ark Date /jo...,.,,.._p. e,R_,t}tlJ-{,'r-e_/v Copius R~-:c1 v~;!.. -J Add' I Coi;i~s Re:-r::::L:~e<l Special Distdn;fion f?::-:i'/!>i- '}6 /J Jl ~ (;cf. lDfj rec"J /J--4* i~

Mr. Samuel J. Chilk, Secretary U.S. Nuclear Regulatory Commission Page 2 creation of a new program solely dedicated to locate potential violations by constantly challenging the design and operation of a nuclear power plant in the hope of discovering a violation that may or may not exist, then the safety and operational benefits noted in SECY-88-226 would be compromised by the constant disruptions. Second, if the enforcement policy or its interpretation require the licensee to question the adequacy of the design and operation of the plant as a result of any information that may bring it into question, regardless of its origin, then considerable resources may have to diverted from other critical functions at the plant in order to address the large volume of information that is received informally by the licensee. Such diversion of resources would not be in the best interest of the public health and safety. In the statements of consideration, the Commission states that: The primary changes being made involve providing greater incentives for licensees to identify and correct violations by decreasing civil penalties for certain of those violations and increasing civil penalties where the licensee fails to identify, prevent, or correct violations (emphasis added). CP&L concurs with the use of incentives in the form of mitigation to foment an environment where the discovery of violations can be viewed by licensee personnel as a positive action for the company. i.e., averting of the civil penalty. SECY-88-226 correctly "recognizes that imposing civil penalties for licensees who identify, report, and correct violations may provide disincentives to licensee's employees who may not want to discredit their companies." However, CP&L disagrees with the Commission with increasing the civil penalties where licensees fail to identify or prevent violations. The base civil penalty provides an adequate punitive measure for the existence of a violation discovered by an NRC inspector. CP&L believes that escalation is only warranted when there is concrete evidence that a licensee took actions to prevent the discovery of a violation. With regard to prevention, it can be argued that any violation is preventable. Therefore, if the NRC was to apply such consideration in an equitable manner, it would have to escalate every violation. Such action would not serve any practical purpose.

Mr. Samuel J. Chilk, Secretary U.S. Nuclear Regulatory Commission Page 3 II. DETAILED COMMENTS Set forth below are CP&L's detailed comments on the Enforcement Policy. The comments are not limited to the revisions. CP&L takes this opportunity to offer additional changes and observations.

1.

Purpose of the Enforcement Policy (Section I) This section of the Enforcement Policy remained unchanged. However, CP&L takes the opportunity to offer a comment. The Commission notes that "The purpose of the NRC enforcement program is to promote and protect the radiological health and safety of the public... by:... encouraging improvement of licensee and vendor performance." The term "improvement", within the enforcement framework, should be restricted to upgrading licensee performance to a level of compliance with established NRC Staff positions. The enforcement process should not be used to promote enhancements on licensee performance beyond basic compliance. Further, the enforcement process should not be used to establish new Staff interpretations of existing regulations. CP&L recognizes that from time to time, as a result of valid technical concerns, the Staff may define new positions regarding what is necessary to meet the underlying regulatory requirements. For those cases, the NRC should utilize an appropriate method to inform licensees, such as an NRC Generic Letter or an NRC Bulletin, not the enforcement process.

2.

Enforcement Conferences (Section IV) CP&L takes the opportunity to propose a change for this section. This section provides that the NRC will hold an enforcement conference "whenever the NRC has learned of the existence of a potential violation for which a a civil penalty or other escalated enforcement action may be warranted." The policy notes: The purpose of the enforcement conference is to (1) discuss the violations or nonconformance, their significance and causes, and licensee's or vendor's corrective actions, (2) determine whether there are any aggravating or mitigating circumstances, and (3) obtain other information which will help determine the appropriate enforcement action. Objective (1) is generally achievable during the conference because it is generally limited to discussion of technical issues. However, objectives (2) and (3) can, at

Mr. Samuel J. Chilk, Secretary U.S. Nuclear Regulatory Commission Page 4 best, only be partially attainable for cases where civil penalties are under consideration. Discussion by the part of the licensee of what may constitute appropriate enforcement action requires the knowledge of the civil penalty under consideration. Generally the NRC, at the enforcement conference stage, has not yet formulated a position with this regard. Therefore, licensees are generally placed in the position of having to speculate. This situation does not provide licensees with a meaningful opportunity to discuss escalated enforcement consideration such as mitigating factors because no civil penalty has yet been proposed. CP&L believes that the process could be enhanced by allowing for a separate opportunity to discuss civil penalty considerations such as the amount of the base civil penalty and the application of mitigation and escalation factors, for cases where civil penalties are being considered. CP&L suggests adding the following paragraph after the second paragraph in Section IV: For cases where the NRC determines that a civil penalty is warranted, following issuance of the notice of violation, the NRC will allow the licensee the opportunity to request a second conference to discuss information of relevance to the determination of a civil penalty amount. This conference would take place prior to the submittal of the licensee's response to the notice of violation. The purpose of this second conference is to assure that all pertinent information is considered prior to final action. CP&L believes that this additional opportunity for a dialog is in the best interest of the enforcement process.

3.

Mitigation and Escalation Factors a) Identification and Reporting (Section V.B.l) -- CP&L agrees with the Commission that if a licensee identifies and reports, as appropriate, a violation, such action should be rewarded by mitigation. However, CP&L disagrees with the caveat that states that "no consideration will be given to a reduction in penalty if the licensee does not take immediate action to correct the problem upon discovery." Corrective actions are the subject of a separate mitigation/escalation factor. Therefore, if the Staff judgement on the expediency and degree of the corrective actions is used to adjust the Identification and Reporting factor as well as the Corrective Action, the Staff would be double counting", contrary to sound administrative practice.

Mr. Samuel J. Chilk, Secretary U.S. Nuclear Regulatory Commission Page 5 In addition, the policy has been modified to allow escalation of the base civil penalty by 50% if the NRC identifies the violation provided the licensee had a reasonable opportunity to discover the violation before the NRC identified it. The key to this factor is what constitutes reasonable opportunity to discover the violation. CP&L is concerned with the possible misinterpretation of what constitutes reasonable opportunity. CP&L maintains that the term reasonable opportunity, for escalation purposes, should be reasonably bounded. The Commission should recognize that a utility receives information from many sources. Effective processing of this information requires that certain prioritizing take place. As a result, it is possible that the genesis of an issue that is subsequently determine to be significant may be evident in some form within the files of a licensee. This fact, however, should not be used to automatically escalate a civil penalty. To do so, would discourage the free exchange of information among licensees because it may create a potential enforcement liability. Such effect is not in the best interest of the licensees, the Commission, or the public. b) Corrective Action to Prevent Recurrence (Section V.B.2) -- CP&L considers this to be a positive change. Time is limiting factor in the implementation of corrective actions of high standards of quality. The previous language, "unusually prompt," had the undesirable effect of promoting the reduction of implementation time possibly at the expense of quality. c) Prior Notice (Section V.B.4) -- The changes provide that the base civil penalty may be increased as much as 100% if the licensee had prior notice of the potential problem. Prior notice is considered to include industry or other source of information. CP&L is concerned that this definition of prior notice can be improperly and unreasonable interpreted. This factor could become unbounded and unreasonably subject licensees to escalated enforcement actions based on vague, informal information that the licensee has no safety or legal obligation to pursue, e.g., newspaper articles, casual conversations between utilities, and trade press articles.

Further, overly broad interpretation of this phrase may penalize licensees for aggressively seeking information that could impact safety and might even encourage "the less you know the better you are" philosophy, an attitude that is neither in the interest of NRC licensees nor the public.

CP&L maintains that the definition should not be defined to discourage licensees from seeking or exchanging information.

Mr. Samuel J. Chilk, Secretary U.S. Nuclear Regulatory Commission Page 6

4.

Exercise of Discretion (Section V.G) Section V.G has been modified to allow for the use of discretion for certain Level III violations. The NRC will be permitted to refrain from issuing a notice of violation or a proposed civil penalty if certain conditions are met. CP&L fully supports such change and agrees with the Commission that it will encourage initiatives for self identification and correction of problems. Example 5 in this section addresses the case where deficiencies are identified as a result of the corrective actions for a previous Level III violation. The Enforcement Policy notes that "the NRC will consider whether the licensee acted reasonably and in a timely manner appropriate to the safety significance of the initial violation, [and] the comprehensiveness of the corrective action." (emphasis added). CP&L will note that timeliness and comprehensiveness can be two competing factors. A comprehensive corrective action program must follow a structured process that follows a logical sequence of actions. As a result, the discovery of.additional deficiencies will be a function of when they are discovered within that logical order. Deficiencies discovered in the later stages of the process should not view as laking in timeliness. Such assessment would undermine the comprehensiveness of future corrective actions. III. CONCLUSIONS In summary, CP&L supports the Commission's efforts to promote self identification through the use of enforcement discretion. However, as noted in the comments above, CP&L is concern with regard to the way some of the changes may be implemented. Therefore, CP&L encourages the Commission to further modify the policy. If you have any questions, please contact me at (919) 836-8015, or Mr. Pedro Salas at (919) 836-8015. Sincerely yours, I.re Licz:::g Section

00~1{ET NUMBER PR

• • \\I' '.,.

. "' ~ULE ~ c..5 3 F-t2 'f O O I q

:,( k: i C*

NUCLEAR MANAGEMENT AND RESOURCES COUNCIL _, 1-,,* 1776 Eye Street, N.W.

• Suite 300
• Washington, DC 20006-2496 (202) 872-1280

.88 OEC 12 P4 :H Joe F. Colvin Executive Vice President & Chief Operating Officer Mr. Samuel J. Chilk Secretary U.S. Nuclear Regulatory Commission Washington, D.C. 20555 Attention: Docketing and Service Branch Re: Revisions to Policy and Procedures for Enforcement Actions - 53 FR 40019 Request for Comments

Dear Mr. Chilk:

December 12, 1988 HAND DELIVERED These comments are submitted on behalf of the Nuclear Management and Resources Council, Inc. ("NUMARC") in response to the request of the U.S. Nuclear Regulatory Commission ("NRC") for comments on the revision to the NRC's Policy and Procedures for Enforcement Action - 53 FR 40019 (October 13, 1988). NUMARC is the organization of the nuclear power industry that is responsible for coordinating the combined efforts of all utilities licensed by the NRC to construct or operate nuclear power plants, and of other nuclear industry organizations, in all matters involving generic regulatory policy issues and on the regulatory aspects of generic operational and technical issues affecting the nuclear power industry. Every utility responsible for constructing or operating a commercial nuclear power plant in the United States is a member of NUMARC. In addition, NUMARC's members include major architect-engineering firms and all of the major nuclear steam supply system vendors. We support the NRC's decision to revise the Enforcement Policy so that enforcement goals of promoting licensee compliance, responsibility, and initiative can be better achieved. The industry has long advocated that NRC regulations should be stated as clearly and unambiguously as possible so that all parties affected by the regulatory process (i.e., licensees, NRC staff and the public) will be able to better understand the intent and effect of the regulations and comport their actions accordingly. As the NRC has appropriately observed, the Enforcement Policy is a policy statement and not a regulation, but the revisions adopted are consistent with the goal of bringing stability and certainty into the regulatory environment. Although NUMARC does not believe that licensees need "greater incentives" to identify and correct violations of NRC regulations, NUMARC supports the NRC's intent to provide for a reduction of civil penalties when licensees FEB 1 6 1989 AcJcnowledged by ---- WIUU, ***If'-._,;;;;;;-, t-1,..,,,,*., .. v* r; r

DOCKETING & SERVICE SECTION OFFICE Or THE SECRET ARY Of THc COMMISSION 1'e5hnatl D.>' A~J__ ~ llt}L,-.te} ci,ios P..:, I Acid' I Cc,pi _\\ c~.-:l Spec, l

• r.,
• n

..fLZ(Jr;/ _p *~ _..,,c.__ __

Mr. Samuel J. Chilk December 12, 1988 Page 2 take the initiative to identify and resolve any violations that have occurred. For example, the NRC clarification that where enforcement discretion is appropriate for a Severity Level IV or V violation, no Notice of Violation will be prepared and no licensee response will be necessary appropriately streamlines the enforcement process and will promote the more effective use of both NRC and licensee resources. Further, the examples provided of Severity Level III violations where the staff may exercise discretion and refrain from issuing civil penalties will appropriately encourage licensee responsibility. It serves little purpose to cite licensees for minor violations if those violations have been identified and promptly corrected,. or to fine licensees for non-willful Severity Level III violations of a kind falling into the other new examples. With respect to encouraging licensee identification and reporting, however, NUMARC does not support some of the policy revisions related to the mitigation and escalation factors. Specifically, the Enforcement Policy previously allowed a 50% reduction in the base civil penalty when the licensee identifies and promptly reports a violation. The revised policy adds a provision for 50% escalation if the licensee has failed to self-identify and report. This revision appears to offer no new encouragement to self identify beyond that already provided by the mitigation possibility; rather, it seems punitive in nature by escalating the penalty for a licensee's failure to identify a violation. This represents, in our view, a negative and counterproductive approach to enforcement. Similarly, the revised policy increases possible escalation of 50% to 100% in those circumstances where the licensee had prior knowledge of a potential problem and had failed to take effective preventative steps (the licensee had "prior notice"). The industry continues to be concerned about the application of the "prior motive factor," especially with respect to its application to multiple facilities of a licensee. Further, NUMARC believes that a 100% escalation penalty for this factor offers no additional incentive to respond to the "prior notice" concern that was not already present in the previous Enforcement Policy that provided for a possible 50% escalation. The revision to increase the punitive penalty accomplishes no public health and safety benefit. The purpose of the Enforcement Policy is to ensure licensee compliance with NRC regulations and license conditions, obtain prompt correction of violations, deter future violations and encourage the improvement of licensee performance; the purpose of the policy should not be to penalize licensees or to produce revenue. Consistent with that purpose, the NRC should provide the maximum incentive for licensees to diligently and promptly identify, report and correct any violations. It should impose penalties, through the levying of civil fines and in escalating amounts, when the conduct of the licensee or the severity of the violation so warrant those actions.

However, implementation of the Enforcement Policy should allow 100% mitigation of

Mr. Samuel J. Chilk December 12, 1988 Page 3 fines where licensees have established and diligently prosecuted a comprehensive policy to identify, promptly report and take immediate corrective actions when any violations of NRC regulations or license conditions are discovered. Complete mitigation of the civil penalty should be possible, based on the relative severity of the violation, the licensees record of performance, and its responsiveness to the need to identify and promptly correct identified violations. NRC enforcement policy should focus on rewarding licensee responsibility and competence rather than on punishing licensee failures. The former approach, we believe will in the long run be the most effective toward achieving the NRC's and industry's goals: responsible and effective licensee management, continued regulatory compliance, and a reduced need for commitment of the NRC resources to the enforcement process. We appreciate the opportunity to comment on the Commission's rev1s1ons to the general Enforcement Policy and would be pleased to discuss our comments further with appropriate NRC staff personnel. Sincerely, I k__--::/-. h L-Jof F. Colvin JFC/RWB:bb I

WRITER"S DIRECT DIAL BISHOP, COOK, PURCELL & REYNOLDS 1400 L STREET, N.W. WASHINGTON, D.C. 20005-3502 (202) 371-5700 December 12, 1988 Mr. Samuel J. Chilk Secretary of the Commission U. S. Nuclear Regulatory Commission Washington, D.C. 20555 Attention: Docketing and Service Branch /' *--,--: I TELEX, 440574 INTLAW UI TELEC0PIER, (202) 371 -5950 Re: Revisions to Policy and Procedures for Enforcement Actions (53 Fed. Reg. 400 19)

Dear Mr. Chilk:

On October 13, 1988, the Nuclear Regulatory Commission ("NRC" or "Commission") published in the Federal Register and made effective several revisions to the NRC's General Statement of Policy and Procedure for NRC Enforcement Actions (10 C.F.R. Part 2, Appendix C). See 53 Fed. Reg. 40019. Although the rev isions are presently in effect, the Commission invited1public comments. On behalf of nineteen power reactor licensees, we respectfully submit the following comments. These comments are intended to supplement the comments filed by the Nuclear Management and Resources Council, Inc.

1.

Summary The NRC's latest revisions to the En£orcement Policy are, in many aspects, very significant. For example, the revisions do the foll owing: o Clarify that where discretion is appropriate for Severity Level IV and V violations, no NOV i/ Alabama Power Company; Arkansas Power & Light Company; Baltimore Gas & Electric Company; Boston Edison Company; Commonwealth Edison Company; Consolidated Edison Company of New York, Inc.; Duke Power Company; Florida Power and Light Company; Georgia Power Company; Long Island Lighting Company; Niagara Mohawk Power Corporation; Northeast Utilities; Pacific Gas & Electric Company; Rochester Gas & Electric Corporation; South Carolina Electric & Gas Company; System Energy Resources, Inc.; TU Electric ; Washington Public Power Supply System; Wisconsin Public Service Corp. FEB 1 6 1989 Acknowledged by card..**,.,..,_...,.....

• IJ. S. NUCLEI,~ RfGlitATORY COMMISSION DOCKETING & SERVICE SECTION OFF :er Or THE SECP.ET /\\Ry Or THE COMN.ISSION

Mr. Samuel J. Chilk December 12, 1988 Page 2 will be issued and no licensee response will be necessary; o Offer specific examples of Severity Level III violations where Staff discretion may be exercised to refrain from issuing a civil penalty; o Increase the importance of licensee identification and reporting of violations; o Require that multi-unit licensees be prepared to address system-wide prior occurrences that should have or could have given notice of a deficiency; o Revise the severity examples for safeguards violations to better reflect the actual significance of these violations. In some respects, we enthusiastically support these revisions. For example, the expansion of the concept of enforcement discretion to allow the Staff to refrain from issuing civil penalties for certain Severity Level III violations is an excellent, and long overdue revision. This change allows the Staff to recognize such factors as licensee initiatives and corrective actions, or licensee identification and reporting of violations. We view this as an excellent example of use of the enforcement process to achieve licensee responsibility and compliance by rewarding positive performance. In other respects, however, we are less enthusiastic regarding the revisions. For example, the changes to allow escalation for lack of licensee identification, or to allow 100% escalation for prior notice, appear to place too much emphasis (in computing civil penalties) on licensee action at the expense of actual safety significance. Moreover, this approach to enforcement, i.e., emphasizing punishment of licensees that fail to identify problems, undercuts the goals of the reward approach embodied in enforcement discretion. A licensee, and more particularly licensee personnel, who fear the extreme punishment now allowed under the Policy, will understandably be less inclined to seek out new information and new deficiencies. Further, in recent years we perceive a trend for the NRC Staff to "aggregate" vaguely related, minor violations into one violation (or "problem") for which the Staff deems escalated enforcement to be appropriate. This action results, notwithstanding the fact that the violations separately would not have sufficient significance to warrant more than a Severity Level V or IV sanction. In our view the practice often involves "double counting" of violations and is legally inappropriate.

Mr. Samuel J. Chilk December 12, 1988 Page 3 Even accepting the legitimacy of aggregation, further guidance on the proper use of the practice appears to us to be appropriate. This subject, therefore, along with others is discussed below. In sum, we believe that the Commission has undertaken a significant revision to the Enforcement Policy. However, we herein offer several suggestions to further improve that Policy. Our suggestions are oriented toward achieving a policy that is more effective at achieving its 02jectives and one that will be more objective in implementation.

2.

Revisions to Enforcement Policy

a.

Discretionary Issuance of Notice of Violation Under the Enforcement Policy, the NRC Staff is given discretion not to issue a Notice of Violation for Severity Level IV or V violations that were identified by the licensee and that meet certain other requirements (see Section V.G.). Sections V.A, V.G, and VIII of the Policy have now been revised to further clarify that the Staff will generally not issue a Notice of Violation for those types of violations. Moreover, the Staff will not issue a Notice of Violation for isolated Severity Level V violations, regardless of who identifies the violation, provided that the licensee initiated corrective action before the inspection ended. Section V.G is similarly being revised to clarify that violations for which no Notice of Violation is issued will be recorded in an inspection report or in official field notes. This will also serve as documentation of the licensee's closure of the matter. All of these revisions are designed to eliminate the need for the Staff to prepare a Notice of Violation and the need for the licensee to prepare a response where the violation is of minor concern and the licensee has taken prompt corrective action. We have long advocated increased Staff discretion in the area of licensee-identified minor deficiencies. We support this effort to make the enforcement process more efficient and less burdensome for both the Staff and licensees. y We note in passing that the NRC chose to issue the Policy revisions and make them immediately effective, prior to considering public comment. While the Commission may be entitled to adopt this procedure, we believe that it is in the best interests of both the NRC and the industry that major Enforcement Policy revisions such as these be issued only after an opportunity for public comment.

Mr. Samuel J. Chilk December 12, 1988 Page 4 However, we note that under this enforcement discretion option, "a notice of violation will normally be issued... if past corrective actions for similar violations have not been sufficient to prevent recurrence.... " We believe that it remains important to carefully delineate in this context what is meant by "similar violations," or this discretion may be unnecessarily foreclosed in many cases. For example, where a particular equipment qualification ("EQ") deficiency relates to a specific type of equipment, all subsequent adverse conditions identified with respect to that type of equipment should.not be held to have been within the scope of past corrective actions. Inspectors in this case should be instructed to compare the causes of the first deficiency and the later deficiencies -- as opposed to merely comparing equipment type -- in assessing the scope of the prior corrective actions. Such instructions in the Enforcement Policy would result in clear guidance and would preclude an overly simplistic approach to enforcement discretion.

b.

Discretionary Imposition of Civil Penalties For Certain Severity Level III Violations Prior to the current revisions to the Enforcement Policy, it was the practice of the NRC Staff to always assess a civil penalty for a Severity Level III violation; that is, unless mitigating circumstances were present that would reduce the base civil penalty to zero. The Commission is now revising Section V.G of the Policy to provide that, notwithstanding mitigating and escalating factors, the Staff has discretion (regardless of the base civil penalty) not to propose a civil penalty for certain Severity Level III violations. The revisions specifically add three new paragraphs to describe those Severity Level III violations that may warrant such an exercise of discretion. The three new examples where this discretion would be appropriate generally involve (a) non-willful, licensee-identified and corrected violations, (b) violations identified as a result of major voluntary efforts to review past activities, and (c) additional occurrences, identified by a licensee, of a violation for which enforcement action has previously been taken. All of the examples are intended to (and generally will) encourage licensee initiative, responsibility, and competence. We applaud this revision to the Enforcement Policy. We have long advocated that licensee-identified violations not give rise to enforcement action. Similarly, civil penalties should not be used in a manner that inhibits responsible licensee behavior. It seems logical that these new examples could help remove the threat of civil penalties in appropriate circumstances, thereby

Mr. Samuel J. Chilk December 12, 1988 Page 5 encouraging licensees to identify, report, and correct violations. We believe that use of the Enforcement Policy to reward desired behavior will be the most effective type of enforcement. The new enforcement discretion policy is also consistent with the reality that the NRC is limited in its resources and must rely greatly on licensees to act in a responsible and prudent manner. Nevertheless, several observations are in order with respect to the recent additions to Section V.G. First, we emphasize the importance of the general language added to the end of the Section, allowing similar discretion in cases not exactly falling into one of the three examples. The previous Enforcement Policy, with its inherent flexibility, did not preclude any Severity Level III case from eligibility for an 3 exercise of discretion to refrain from issuing a civil penalty. We do not believe, therefore, that the three new examples should limit otherwise appropriate discretion, simply because the examples are somehow viewed by the Staff as exclusive. We further believe that the requirement that the Staff seek specific Commission approval prior to an exercise of "catch-all" discretion will in fact serve to discourage such exercises. That requirement should be removed to make the revised Policy more consistent with the prior flexibility of Sections V.B and VIII. In addition, it is important that the existence of this discretion not silently influence severity level determinations. Severity levels are to be based on actual safety significance of a violation, and not on any other circumstances (such as those involved in mitigation/escalation decisions). See Enforcement Policy, Section III. However, we can foresee the potential for the NRC Staff to raise Severity Level IV violations (no civil penalty) to Severity Level III (no civil penalty), simply because it no longer feels the need to include a civil penalty with the latter. We believe words of caution in the Policy, to the effect that the existence of this new enforcement discretion should not enter severity level determinations, would be appropriate. With respect to the specific new examples, further clarifications are also appropriate to provide more objectivity in the process of applying the examples. Example 3 under this ]__/ As stated by the Commission, the current revisions are in reality consistent with discretion that had already been inherent in the previous Enforcement Policy. Sections V.B and VIII did appear to give the Staff discretion to refrain from civil penalties for Severity Level III violations. It seems to us, however, that in practice this discretion was seldom exercised by the staff (at least absent mitigating factors).

Mr. Samuel J. Chilk December 12, 1988 Page 6 new policy would allow enforcement discretion only if, among other things, the violation was not "reasonably preventable by the licensee's action in response to a previous regulatory concern identified within the past two years... or since the last two inspections [whichever is longer]." There is a very subjective determination involved in assessing what was "reasonably preventable." We believe that two factors must be explicitly incorporated, under the Policy, into that determination: the underlying cause of the prior concern (as opposed to merely the equipment involved) and the state of knowledge at the time of the prior concern. With respect to the first, it is again important to consider whether the prior concern was really the same, as opposed to merely a concern involving the same equipment. With respect to the second factor, equipment qualification again is a good example. Knowledge in the area has moved ahead considerably such that two years ago actions taken in response to a concern may have been much different than they would be today. Enforcement discretion should not be precluded by retrospectively applying today's knowledge in determining what was yesterday "reasonably preventable." Example 4 provides that enforcement discretion may be exercised where a problem was identified as a result of voluntary efforts to address a past problem. First, there seems to be little guidance as to what "voluntary efforts" might qualify under this factor. Second, the Policy states that the Staff may exercise discretion only if the licensee was otherwise "not likely to" identify a particular deficiency by "routine" efforts in the past. However, it is important for the staff here again to recognize that the nature of what is "routine" effort may evolve over time. Enforcement discretion should not be precluded if between the time the licensee identifies the deficiency and the time enforcement is considered, the definition of what is "routine" has increased. Even more importantly, the NRC staff in utilizing enforcement discretion should not in4effect develop new, higher standards for "routine" surveillance. Under Example 5, the Staff may refrain from imposing a civil penalty based on corrective actions for a prior violation if, in those corrective actions, the licensee acted reasonably and in a timely manner "appropriate to the safety significance of the .1/ For example, through first round equipment qualification enforcement, it became clear that the staff views the EQ regulations as including an inherent requirement that licensees conduct detailed walkdowns of EQ equipment. Industry had previously taken the position that no more than basic walkdowns were required. We do not want to see new interpretations of this kind arising in enforcement discretion decisions.

Mr. Samuel J. Chilk December 12, 1988 Page 7 deficiency." This should be explicitly called out in the Enforcement Policy as an actual safety significance assessment. The nature and extent of licensees' corrective actions will be based more on actual safety significance than on any other factor, particularly where the original violation may have been based only on documentation deficiencies. Moreover, in assessing the appropriateness of discretion under the example, the Staff is instructed to consider both the "timeliness" and "comprehensiveness" of the prior corrective actions. These two factors may in many cases work against each other. For example, the more comprehensive a licensee program, the longer it will take to implement and begin identifying further violations. Comprehensiveness should, in our view, be rewarded regardless of how long a program takes to achieve results. Any other view would encourage "quick fix" corrective actions.

c.

Mitigation and Escalation Factors. Identification and Reporting -- Previously, the Enforcement Policy allowed a 50% reduction in the base civil penalty when the licensee identifies and promptly reports a violation. Significantly, the Policy as revised now allows 50% escalation of the base civil penalty if the NRC identifies the violation. This new escalation possibility is intended to further encourage licensees to identify violations. We question, however, whether the possibility of 50% escalation based on this factor provides an incentive for licensee identification and reporting that the existing mitigation possibility, the new enforcement discretion opportunity (discussed above), and the base civil penalty do not already sufficiently provide. Moreover, this is an example of enforcement by punishment that we view as counter-productive. The threat of extreme enforcement could actually discourage licensee identification. This change also has the indirect effect of raising the base civil penalty for NRC-identified violations. We do not believe that such a blanket change is warranted. If this change remains in effect, it should be clarified such that escalation will not be applied to all NRC-identified violations. Rather, it should be applied only if the licensee has failed to identify a condition, had an opportunity to do so, and clearly should have done so. Words to that effect should be specifically added to the Enforcement Policy to guide inspectors in applying the criterion. corrective Action to Prevent Recurrence -- The revisions change this factor (a 50% mitigation factor) to provide that corrective actions need not be "unusually" prompt and extensive, but need only be "quality" corrective action. This is a positive change that encourages and rewards corrective actions.

Mr. Samuel J. Chilk December 12, 1988 Page 8 Past Performance -- The revisions involve two changes to this factor. First, the revisions allow the past performance determination to focus not only on the "area of concern," but on overall performance. This change is intended to provide more flexibility in the past performance analysis. We generally agree with the policy behind the change, specifically because it allows a more accurate assessment of overall plant and management performance. However, all violations can be traced to some vague notion of "management" inattention or weakness. We are afraid, therefore, that as a result of the revision this factor could be used as a means to penalize what the Staff broadly views as "problem plants." We believe that such perceptions can be self-fulfilling, in that the Staff will tend to consistently fine these plants at higher levels, thus leading it to continue to consider the plants to be "problems." Therefore, we advocate that some limit be placed on the scope of activities to be considered appropriate under this factor. Second, the revisions provide a time frame of past performance that may be the subject of consideration: only performance within the past two years of the inspection at issue or the period within the last two inspections (whichever period is longer) will be considered in the past performance assessment. This change appears to be inconsistent with the first. The first expands the focus of the determination, providing added flexibility in the past performance determination. The second change -- the time frame limitation -- reduces that flexibility. We do not, however, foresee that the latter change will significantly affect the outcome of the past performance assessment. Relatively recent prior enforcement history, SALP ratings, and prior corrective programs should continue to be the key considerations, as they have been in the past. Finally, the past performance factor presents some unique ramifications for equipment qualification. First round EQ enforcement actions were based on the EQ-specific Modified Enforcement Policy of Generic Letter 88-07. Under that policy, licensees were arguably subjected to enforcement which did not take into account the same factors as are considered under Appendix C. (For example the severity level determination was not the same. Rather than focusing on actual safety significance, this determination rested largely on numbers of documentation deficiencies.) Thus, a licensee's past performance -- either specifically in the EQ area or even more generally (due to EQ civil penalties) -- could be viewed unduly harshly simply because of the differing enforcement policies. Accordingly, the Staff should be cautious in referring to prior enforcement history in the EQ arena in applying this factor to future enforcement actions.

Mr. Samuel J. Chilk December 12, 1988 Page 9 Prior Notice -- The revisions increase the possible escalation percentage under this factor from 50% to 100%. Additionally, prior notice" may now include findings of the NRC, the licensee, or the industry made at other facilities of the licensee (whether or not those facilities are under different licenses), "where it is reasonable to expect the licensee to take action to prevent similar problems at the facility subject to the enforcement action at issue." The NRC states that this change is prompted by lessons learned at Tennessee Valley Authority. At the outset, the increase in this factor from 50% to 100% seems harsh. We recognize the importance the NRC places on licensees' responsiveness to notice of problems and appreciate the intent behind the change. We believe, however, that 100% escalation is more a punitive measure than a deterrent measure. In other words, 100% provides no further incentive to licensees to respond to notice of a potential problem than was already provided by the base civil penalty and possible 50% escalation. As with the changes in escalation amounts for the identification and multiple examples factors, this revision highlights a fundamental legal problem. Under Section 234 of the Atomic Energy Act, the NRC has authority to impose civil penalties. However, to be lawful under Section 234, those civil penalties must be rationally related to both (a) some deterrent effect and (b) the actual safety significance involved. For example, in Atlantic Research Corporation, CLI-80-7, 11 NRC 413, 421 (1980), the Commission correctly observed that fines may properly be issued only if it has been established that the "civil penalties may positively affect the conduct of the licensee or other similarly situated persons in accord with the policies of the Atomic Energy Act, and that the civil penalties are not grossly disproportionate to the gravity of the offense." The inflation of the escalation factors in the recent revisions threatens to exceed this doctrine. First, as discussed above, the increase appears to offer no additional deterrence. Second, the emphasis on escalation factors will result in civil penalties for which the amount depends less and less on safety significance (i.e., Severity Level). Rather, the bulk of the civil penalty will be decided by subjective assessments of the circumstances surrounding the violation and the licensee's apparent behavior. We advocate a return to actual safety significance as the prime factor in determining civil penalty amounts. Accepting that prior notice will remain a factor, we also believe that the present Policy still fails to delineate any meaningful, objective guidance as to what constitutes prior notice. It fails to recognize that licensees are bombarded with information and face extreme practical difficulties in trying to

Mr. Samuel J. Chilk December 12, 1988 Page 10 assimilate and analyze that information. All too often under this factor, the Staff has applied what appears to be 11 20-20 hindsight." In order to make the factor more objective and more meaningful, we suggest that "prior notice" be restricted to cases in which the licensee had specific notification of a specific problem. Otherwise, the possibility of 100% escalation for failing to respond to prior notice could actually have a counter-productive impact: to avoid enforcement exposure, licensees may decide to severely cut back on the information they attempt to receive in-house. In sum, if adopted, 100% escalation should be used sparingly and only in truly egregious cases where specific notice has been ignored. The Staff must exercise responsibility in determining what constitutes prior notice. Another fundamental concern here is the increased enforcement exposure for multi-site utilities. The potential sources of "prior notice" will be greater for these licensees, and the Staff would in these cases seemingly be much more likely to invoke this escalation factor. In practice, the Staff should recognize that prior notice from other units of the licensee is not always a simple matter. Plant vendors, and often even basic plant types, vary widely within many multi-unit systems. Therefore, applicability of new information is not always readily apparent, at least without considerable analysis. This change to the Enforcement Policy ignores that fundamental reality and could discourage the efficiencies otherwise inherent in multi-unit operation. At a minimum, the Policy should include language to the effect that the staff, in applying this factor, should recognize a reasonable time requirement in which the licensee can study and communicate relevant new, cross-unit information. Where reasonable engineers exercising informed judgment could disagree as to the applicability of prior information, no escalation should be invoked. Multiple Examples -- The revisions will permit escalation by 100%, rather than 50%. Again, 100% escalation for any factor seems unduly punitive, and would seem to offer no further deterrence. Further, if adopted, we believe that 100% escalation should be reserved for rare cases involving a very large number of examples. In addition, we have serious concerns regarding use of multiple examples as an escalation factor, especially after multiple examples have already been calculated into the severity level determination (through aggregation or a safety significance determination). The practice of enforcement by aggregation is discussed in more detail below. However, in the present context, suffice it to say that the unfair practice of aggregating and/or determining significance, and then also escalating based on multiple examples, constitutes "double counting." This results in overly high severity levels and

Mr. Samuel J. Chilk December 12, 1988 Page 11 overly severe fines. Multiple examples should be excluded as an escalation factor where tge factor has already been used, either implicitly or explicitly.

d.

Escalation Of Enforcement Sanctions Section V.D of the prior version of the Enforcement Policy provided for the progression of enforcement actions for prior similar violations, based on violations under a single license. The revisions delete the reference to prior violations under a single license, on the ground that progression is an area where discretion and flexibility are required. Therefore, similar to the change discussed above, the NRC may now take a more severe enforcement action based on prior similar occurrences at another facility controlled by the same licensee. Again, for the reasons discussed above, we do not believe that this is an appropriate change. Credit must be given, in the Enforcement Policy, for the reasonable, realistic need to analyze applicability of information and to communicate conclusions between units. Further, plant management and operating organizations may be completely distinct between units. It therefore would be unfair, and potentially dispiriting, to sanction one unit for the deficiencies of another. Absent recognition of these realities, multi-unit licensees are placed at an unfair disadvantage.

e.

Enforcement Actions Involving Individuals First, Section V.E is revised to clarify that enforcement action may be taken against an individual's license or against a corporate license in a way that may impact an individual, where the person's conduct places into question the NRC's reasonable assurance that licensed activities will be properly conducted. The revisions provide that "enforcement action may be taken regarding matters that raise i$SUes of integrity, competence, fitness for duty, or other matters that may not necessarily be a violation of specific Commission requirements." Second, the revisions clarify that, notwithstanding the provision that .2./ Again, equipment qualification presents a unique problem under this factor. Many EQ deficiencies impact multiple pieces of equipment. We believe that an EQ deficiency for one type of equipment, regardless of the number of times that equipment is utilized in the plant, should be considered one example under this factor. The issue of number of systems affected by the deficiency is an issue related to actual safety significance (i.e., Severity Level). To consider that issue again under this escalation factor would constitute double counting.

Mr. Samuel J. Chilk December 12, 1988 Page 12 enforcement action may be taken against an individual who willfully takes actions that violate technical specificatio~s, enforcement action will not be taken for a willful violation in an emergency, provided the standards of 10 C.F.R. § 50.54(x) are met. The first change does not significantly alter the policy for enforcement against individuals, as that policy was explained when issued last year. The new policy language is consistent with guidance provided in the previous policy and Statement of Considerations. Therefore, we have no comment on that change beyond stating our continued position that enforcement against an individual is an extreme sanction that should be carefully and rarely invoked. We support the second change as a worthy clarification.

f.

Examples of Severity Level III Violations for Reactor Operations Supplement I to Appendix C provides examples of violations that merit various Severity Level categorizations. Example 6 of the Severity Level III examples involves the failure to meet_l0 C.F.R. § 50.59 requirements. As explained in the Commission's Statement of Considerations for the revisions, this example is being revised to clarify that a licensee who commits a "significant" failure to meet§ 50.59 requirements and operates in an unanalyzed condition may be subject to a Severity Level III citation -- even if it turns out that an unreviewed safety question or a conflict with a technical specification did not exist. According to the NRC, this revision is designed to encompass the circumstances where a reasonable engineer would need to perform an evaluation before concluding that an unreviewed safety question or a conflict with a technical specification did not exist, but did not perform such an evaluation. First, we find this new example to be confusing. By its terms, the example is no longer limited to failures to seek a required license amendment. However, one has to read the Statement of Considerations to learn the Commission's true intent behind the example. Second, we disagree with the substance of this change (as articulated in the Statement of Considerations). We do not underestimate 10 C.F.R. § 50.59 and its importance to the design control process. However, one violation of§ 50.59, where no unreviewed safety question or conflict with technical specifications in fact existed, simply cannot be considered a Severity Level III violation. Such a violation does not have the requisite safety significance as

Mr. Samuel J. Chilk December 12, 1988 Page 13 generally defined fgr a Severity Level III in Section III of the Enforcement Policy. In Supplement I the Commission has also added a new Example 8 relating to aggregation of minor violations into a Severity Level III "problem." Example 8 states that to qualify for such treatment, there must be "a number of violations that are related" or a number of isolated violations that are "recurring" and "collectively represent a potentially significant lack of attention or carelessness toward licensed responsibilities." As mentioned above, the NRC Staff's recent practice with the aggregation concept probably fits the terms of this new example. However, we find that practice and the new example to be arbitrary, amorphous, and extremely broad. To amplify, this standard, in our view, allows the Staff to, as a practical matter, aggregate minor violations at will. There is no definition of the "number" of violations needed. There is no definition of what "related" means. There is no limit to the scope of violations that represent a "potentially significant lack of attention" to responsibilities. In fact, in practice the off-cited relationship of aggregated violations is some form of "management problem" or some vague concern regarding "lack of attention." However, these standards are not standards at all. Any violation may be (or not be) tied into such a relationship, because any violation may be traced in a general way to management inattention. Therefore, in practice we have seen an extremely wide range of Severity Level III problems involving no discernible pattern. Inevitably, the vague standard for aggregation allows such enforcement to be based on such subjective (and self-fulfilling) factors as perceptions of whether a plant is a "problem plant." We maintain that this form of enforcement is inherently unfair and has the potential to be completely arbitrary. In conclusion on this point, it seems that the Commission may follow either one of two options: It may define some meaningful guidance regarding aggregation or it may dispense entirely with the practice (thus citing and categorizing each violation individually). The current revision does neither.

g.

Examples Of Safeguards Violations The examples of safeguards violations contained in Supplement III to Appendix C have been revised and supplemented. W Section III of the Enforcement Policy states that a Severity Level III violation (or problem) is one that is "cause for significant concern."

Mr. Samuel J. Chilk December 12, 1988 Page 14 According to the NRC, the most significant change addresses the area of access control violations. The Policy has been changed to consider the predictability (i.e., the length of time a vulnerability exists or the frequency of a vulnerability), identifiability (~, the ease with which the opening can be observed), and the ease of passage(~, the structure of the opening). The NRC believes that this will give the Staff much more flexibility to match, the severity level for these violations to the actual significance of a specific deficiency. We concur with this change. In recent years, the NRC Staff has taken a very large number of enforcement actions as a result of violations relating to vital area barriers and access control. These safeguards violations have consistently, in our view, been categorized at severity levels that far exceeded any actual safety significance. The revised Policy should represent an improvement.

3.

Conclusion In sum, we believe there are many positive aspects of the Commission's recent revisions to the Enforcement Policy. These include the expansion of the enforcement discretion concept and the clarifications with respect to safeguards violations. However, several revisions such as those increasing the degree of potential escalation for certain factors, seem to be unduly harsh and to offer no further deterrent effect. Further, we continue to be concerned with the concept of aggregation, in that it involves elements of double counting and appears to be based on no discernible criteria. Finally, we believe that more specific, objective guidance is necessary for defining such amorphous concepts as "comprehensiveness" of corrective actions and for determining whether "prior notice" existed. Therefore, we sincerely encourage further refinement of the Policy in these areas. As always, input into the we greatly appreciate this enforcement process* / Resp c fu opportunity to provide BISHO, COOK, PURCELL & REYNOLDS 1400 L Stre~, N.W. Washington, 1

• c.

20005-3502

DOCKET NUMBER PR 2. - ~ . !'ROl'OSED RULE u; ~ F-f!:. '-IO. I q) @ SHAW, PITTMAN, POTTS & TROWBRIDG E. 1 /'.' A PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS 2300 N STREET, N. W. TE LE X/CABLE 89 *2693 (SHAWL AW WSH) WASHINGTON, D. C. 20037 .88 DEC 12 P 3

• 4A VIRGIN/A OFFICE Yso1 F"ARM CRE DIT DRIVE MCLEAN, VI RG IN I A 22102 T E LEPHONE (202) 663 -8215

. DEBORAH B. CHARN O FF BY HAND DELIVERY Mr. Samuel J. Chilk Secretary December 12, 1988 U. s. Nuclear Regulatory Commission Washington, D.C. 20555 Re: Comments on Revision to NRC's Enforcement Policy, 53 Fed. Reg. 40019 (October 13 1988)

Dear Mr. Chilk:

(703) 790*7900 TELECOPIER (202) 663-8007 On October 13, 1988, the Commission published in the Federal Register revisions to its Enforcement Policy which are intended to further clarify and refine the agency's policy for taking var-ious enforcement actions, as set forth in 10 C.F.R. Part 2 Appen-dix C. The Commission's notice of its policy revisions stated that the revisions were to be immediately effective, but requested comments by December 12, 1988. See 53 Fed. Reg. 40019 (Oct. 13, 1988). These comments are provided on behalf of The Cleveland Electric Illuminating Company, Louisiana Power & Light Company, Northern States Power Company, Sacramento Municipal Utility District, Union Electric Company and Wisconsin Electric Power Company. Overall, we would like to applaud the Commission's further refinement of its Policy on Enforcement. This Policy has a very significant impact on NRC licensees, and the Commission's efforts to clarify its intentions with regard to enforcement matters results in a much greater understanding by licensees' of NRC pri-orities in this area. We do have two comments on the revisions which we believe merit your serious consideration. A. So-Called Deviations from the Enforcement Policy The Summary accompanying the October, 1988 revision to NRC's Enforcement Policy makes the following statement about the pur-pose of NRC's policy on enforcement matters: The Enforcement Policy statement is intended to inform licensees, vendors, and the public of the bases for tak ing various enforcement actions. FEB 1 6 1989 Acknowledged by carcf. * --

"' !>. r, 1... 1,..,,.* r.__0MN11 :,~1Uh DOCKETING & !tRYICE SECTION OfFICE Of THE SECRF.T ARY OF THE COMMISSION r,.,:;~1mr:,1 St 1is1ics Postmark Det:., J4~ #JLk...J Copies Rcceiv I / Add' I C:-ipi<-< ~.-:-r 1..J.:d ~---~- Spec:i I °if/ 1 i,Jn --rt:£DS J,..;.L l!,_l:n-,14.~

SHAW, PITTMAN, POTT S & TROWBR I DGE A PARTNERSHIP JNCLU D ING PROFESSIONAL CORPORATIONS Mr. Samuel J. Chilk December 12, 1988 Page 2 53 Fed. Reg. at 40019. This statement of purpose is echoed in the Policy Statement itself, which states: The following statement of general policy and procedure explains the enforcement policy and procedures of the U.S. Nuclear Regulatory Commission and its staff in initiating enforce-ment actions, and of presiding officers, the Atomic Safety and Licensing Appeal Boards, and the Commission in reviewing these actions.... This statement of general policy and procedure is published in the Code of Federal Regulations to provide widespread dissemination of the Commission's Enforcement Policy. 53 Fed. Reg. at 40022. This stated purpose - - of notifying licensees and the public of the bases for enforcement action -- is laudable. A licensee is able to gain an appreciation of the "values" of the NRC, and can conform its conduct to those values (or, if it fails to do so, it is on notice of the consequences of that failure). When the Policy is functioning in this manner, it is serving an extremely useful function. In our view, most of the recent changes to the Enforcement Policy further clarify the values of the NRC, and thereby enhance the Policy's usefulness. Thus, for example, the three situations provided in the revised Policy of instances where in its discre-tion, the Commission will not impose a civil penalty for a Sever-ity Level III violation, emphasize to licensees the importance to the Commission of timely licensee identification, reporting, and correction of violations. Enforcement Policy at§§ V.B and V.G. Similarly, it is useful for the Commission to have provided fur-ther guidance on the "past performance" that normally will be considered in evaluating the severity of a particular violation. Enforcement Policy, § V.B.3. Notwithstanding the predominant enhancement of the clarity of the Enforcement Policy, its new language which asserts that the Commission may "deviate from the Enforcement Policy as is appropriate under the circumstances of a particular case" consti - tutes a virtually unlimited caveat to the guidance provided by the Policy Statement, and therefore detracts substantially from its reliability.

SHAW, P ITTMAN, POT TS & TROWBRIDGE A PARTNERS H IP INCLUDING PROFESSIONAL CORPORATIONS Mr. Samuel J. Chilk December 12, 1988 Page 3 It is well-understood by licensees that the Commission's issuance of a notice of violation involves judgment, see Enforce-ment Policy, S VIII, and that "each enforcement action is depen-dent on the circumstances of the case". See Enforcement Policy, SI. Thus, in any given circumstance, there is a wide range of reasonable enforcement action that might be appropriate. These elements of subjectivity and fact-specific analysis, however, do not equate to a need to wholly deviate from specific regulatory guidance in making an enforcement judgment. Surely it is not the position of the Commission that any exercise by it of enforcement authority necessarily is appropriate as "an exercise of discre-tion". See Enforcement Policy, SI. Mistakes in judgment can be made, even by the NRC. And the purpose of the Enforcement Policy is to provide specific guidance not only to licensees, but to the Commission's staff in making the very judgments that are the sub-ject of the Enforcement Policy. Obviously, the Commission would like its Enforcement Policy to enhance licensee performance, to increase licensee confidence in the fairness of enforcement action taken by the NRC, and thereby "to encourage and support licensee initiative for self-identification and correction of problems". Enforcement Policy, S V.D. The apparent concern by the Commission that it not be limited in any way in the enforcement action that it can take appears to be unjustified and creates a serious limitation on the ability of licensees to have confidence in the reliability of the Enforcement Policy. The Commission does not need to devi-ate from its Policy because as written, the Policy permits more than enough flexibility in enforcement decisionmaking. And the new language providing for wholesale deviations from the Policy Statement detracts substantially from the reliability of the Pol-icy Statement. In short, if the framework for making enforcement decisions that is contained in the Enforcement Policy is valuable, which we believe it is, there is no need for this extraordinary qualifica-tion about the application of the Policy Statement in any given instance. B. Increases in Civil Penalties We are also concerned about the apparently felt need by the Commission to increase civil penalties in certain specified i nstances,~, from 0% previously to up to 50% of the base pen-alty when the NRC identifies a violation, from 50% previously to up to 100% of the base penalty if the licensee had prior notice,

SHAW, PITTMAN, POTTS & TROWBRIDGE A PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS Mr. Samuel J. Chilk December 12, 1988 Page 4 and from 50% previously to up to 100% of the base penalty in the case of multiple violations. See Enforcement Policy at§§ V.B.l, V.B.4 and V.B.5. We are not aware of any studies that the Commission has done which suggest that the level of fines that it has been imposing on licensees have been inadequate to make the Commission's views on enforcement matters well understood -- fines which, in many instances, are substantial and are felt not only financially, but by virtue of the considerable publicity attendant to heavy fines. From our perspective, there is an element of arbitrariness and, hence, unfairness in this decision by the NRC, with a stroke of the pen, to suddenly impose a civil penalty of $160,000, for example, for a Level II violation, rather than the serious pen-alty of $120,000 that would have been imposed for the same viola-tion prior to this unilateral revision to the Enforcement Policy. If there is no factual basis for increasing the level of fines, we respectfully request that the Commission return to the prior penalty amounts, at least pending its assessment of the data available to the Commission on whether it would further the interests of the Policy -- ~' increase self - policing by licensees -- if the specific proposed increases in penalty amounts were increased as contemplated by the revision to the Policy Statement. Respectfully submitted, Deborah B. Charnoff DBC:jah

DOCKET NUMBER PR i"') PROPOSED RULE ~ -~ (D LAW OFF I CES CONNER & WETTERHAHN, P.C. '. \\

r_i (Sa Ffl-'/C)()Jq) 17 47 PENNSYLVANIA AVENUE, N. W.

TROY B. CONNER, J R. WASHINGTON, D. C. 20006

• ss OEC -9 A11 :32 MARK J. WETTERHAHN R O BERT M. RAD ER N ILS N. N I C HOLS BERNHARD O. BECHHOEFER December 8, 1988

~ t* *- OF COUNSEL Samuel J. Chilk, Secretary United States Nuclear Regulatory Commission Washington, D.C. 20555 . t. Re: Revisions to NRC Policy and Procedure for Enforcement Actions, 53 Fed. Reg. 40019 (October 13, 1988)

Dear Mr. Chilk:

'. t* V. C: 12021 e33-35oo CABLE ADDRESS: ATOMLAW On behalf of its clients and itself, the firm of Conner and Wetterhahn, P. C. offers comments in response to the Commission's Notice of Revisions to Policy and Procedure for Enforcement Actions and Request for Comments. The Enforcement Policy Statement as Illegal Rulemaking. Before commenting on the substance of the most recent revisions to the Commission's Enforcement Policy, we must address a fundamental legal flaw which has plagued the Policy since its inception. This is the failure of the Commission to comply with the requirements of prior notice and opportunity to comment under Section 4 of the Administrative Procedure Act (APA), 5 U.S.C. §553. In the past and now once more, The Commission has proceeded in this fashion under the mistaken assumption that calling its enforcement standards and criteria a "policy" rather than a "rule" excuses the Commission from compliance with the rulemaking requirements of the APA and allows it to publish revisions to its Enforcement

Policy, made immediately effective, without prior notice and opportunity to comment.

When the Commission originally proposed its Enforcement Policy for adoption as a new Appendix C to 10 C.F.R. Part 2, it approved reliance upon the proposed standards as an interim policy while public meetings and workshops were held and comments from interested individuals and entities were FEB 1 6 1989 Acknowledged by card

• • ---.._,0 w

• .,.,.. ' l-)1\\,Ml.;SJOd COCK[ tir c; !', :,i'l,V!C~.,,CT ION OrF:CE Cr w~ 1:t(;'!:TA"Y CY:- i'i,t CC,\\A,Mf:;;',ION Postmu!:

Copies Rec*.ivcC: Add' I, cpi,,, P. -,,ro ucoJ ~ Special Dbtribu*ion IZJ Yµil tl 1=1*~1,~ ~

Samuel J. Chilk December 8, 1988 Page - 2 - received.1/ The notice of this proposed action, stating the Commission's intent to utilize the proposed Policy Statement as interim guidance in enforcement actions, did not give any consideration to the legal requirements under the APA for prior notice and an opportunity to comment. The Commission has repeated this practice in subsequent revisions of its Enforcement Policy, including the most recent changes. However labeled, the sum and substance of the Com-mission's enforcement program for the issuance of notices of violation and the levying of civil penalties is contained in the Enforcement Policy set out in 10 C.F.R. Part 2, Appendix C. The Enforcement Policy has, since its adoption in 1980, constituted the operative basis by which the NRC determines (1) the severity of a violation of license conditions or NRC regulations; (2) the assessment of civil penalties by means of a detailed and dollar-specific matrix of escalating and mitigating factors; ( 3) and the actions to be taken by licensees in consultation with the NRC to achieve regulatory compliance. Thus, it is indisputable that the NRC has, in fact, utilized its Enforcement Policy as a self-contained basis for enforcement actions. Under these circumstances, the Enforcement Policy is far more than simply a generalized statement of how the NRC intends to apply in particular cases the civil penalty provisions of Section 234 of the Atomic Energy Act, as

amended, 42 u.s.c.

§2282. Simply

put, the so-called "policy" constitutes the "rules of the game" under the NRC's enforcement program.

As

such, compliance with APA rulemaking procedures is legally required, whatever the NRC may choose to call 10 C.F.R. Part 2, Appendix C.

As the United States Court of Appeals for the District of Columbia has observed, "the APA broadly defines rules subject to § 553 procedures, and carves out only limited exceptions.** where the need for public participation is overcome by good cause to suspend it, or where the need is too small to warrant it, as for example, when the action in fact does not conclusively bind the agency, the court, or affected private parties."I/ l/ See 45 Fed. Reg. 66754 (1980). Batterton v. Marshall, 648 1980) (footnotes omitted). F.2d 694, 704 (D.C. Cir. See generally Alcaraz v. (Footnote Continued)

Samuel J. Chilk December 8, 1988 Page - 3 - The Court explained that "legislative" or "substantive" rules, which must be adopted in conformance with APA proce-

dures, "implement congressional intent; they effectuate statutory purposes" because "they grant rights, impose obligations, or produce other significant effects on private interests." 3 /

As the Court further explained, "interpre-tative" or- "non-binding"

rules, in

contrast, "merely expresses an agency's interpretation, policy, or internal practice or procedure. *.

[and] are not determinative of issues or rights addressed" because they merely "express the agency's intended course of action, its tentative view of the meaning of a particular statutory term, or internal house-keeping measures organizing agency activities" and do not "conclusively affect rights of private parties."!/ One form of an interpretive rule is a general statement of policy. A statement of policy is exempt from rulemaking requirements for these reasons: [ It] is neither a rule nor a precedent but is merely an announcement to the public of the policy which the agency hopes to implement in future rulemakings or adjudications. A general statement of

policy, like a

press

release, presages an upcoming rulemaking or announces the course which the agency intends to follow in future adjudications."1/

(Footnote Continued) Block, 746 F.2d 593, 612 (D.C. Cir. 1984) (exceptions construed narrowly and only reluctantly countenanced); National Ass' n of Horne Health Agencies v. Schweiker, 690 F.2d 932, 949 (D.C. Cir. 1982), cert. denied, 459 U.S. 1205 (1983) (exceptions recognized only reluctantly so as not to defeat the salutary purposes of §553). Batterton v. Marshall, 648 F. 2d at 701-02 ( footnotes omitted). Id. at 702 (footnotes omitted). Pacific Gas & Electric Co. v. FPC, 506 F.2d 33, 38 (D.C. Cir. 1974) (footnote omitted). See also Alcaraz (Footnote Continued)

Samuel J. Chilk December 8, 1988 Page - 4 - Obviously, applying a "policy statement" label to a substantive rule does not settle the matter. A reviewing court will not classify a rule as interpretative "just because the agency says it is."6/ Instead of relying upon abstract characterizations, the-Commission should look, as would a reviewing court, to "whether the agency action carries substantial impact on the rights and interests of private parties."l/ By any reasoned analysis, an agency's substantive criteria for citing violations and imposing monetary penalties do not qualify as statements "which merely clarify or explain existing law or regulations" or are "essentially hortatory and instructional, "8/ and thereby merely remind parties of existing duties under the law.9/ There can be no question but that the comprehensive scheme of measures and factors contained in 10 C. F. R. Part 2, Appendix C greatly expands upon and thereby implements, not merely restates, the provisions of the Atomic Energy Act which authorize the NRC to issue citations and impose civil penalties. In fact, it would be difficult to conceive of rules which have a more direct and substantial impact upon regulated entities than those which prescribe the agency's standards for determining (Footnote Continued) Va

Block, 746 F.2d at 613.

An agency's policy statements are exempt from the notice anq corrnnent requirements of the APA. 5 U.S.C. S553(b) (A)~ American Mining Congress v. Marshall, 671 F.2d 1251, 1263 (10th Cir. 1982). In fact, because a policy statement is presumably tentative and not finally determinative of the issues and rights it has addressed, a court may decline judicial review. See Regular Common Carrier Conference v. United States, 628 F.2d 248, 252 (D.C. Cir. 1980). Chamber of Commerce v. OSHA, 636 F.2d 464, 468 (D.C. Cir. 1980). Batterton v. Marshall, 648 F.2d at 708-09 n.75 and 83 and accompanying text. Alcaraz v. Block, 746 F.2d at 613. Cabais v. Egger, 690 F.2d 234, 238 (D.C. Cir. 1982).

Samuel J. Chilk December 8, 1988 Page - 5 - the existence of violations as well as the level of sanctions to be meted out._!.Q./ The NRC's reliance upon its Enforcement Policy in innumerable notices of violation establishes beyond doubt that the policy carries the weight of a rule. As one court stated: When an agency promulgates a [statement of] policy without the formalities required to make it a valid

rule, it

must, in subsequent rulemakings, as in subsequent adjudications, "be prepared to support the policy just as if the policy statement had never been issued.".!.!_/

Obviously, the NRC's practice has never been to justify every notice of violation or civil penalty independently of the analysis and conclusions of its Enforcement Policy. But an agency "cannot escape its responsibility to present evidence and reasoning supporting its substantive rules by ..!.Q./ In Pickus v. United States Board of Parole, 507 F. 2d

1107, 1113 (DaC. Cir. 1974), the Court stated that rulemaking exemption did not "include any action which goes beyond forrnali ty and substantially affects the rights of those over whom the agency exercises authority," and certainly "does not include formalized criteria adopted by an agency to determine whether claims for relief are meritorious."

See also Kessler

v. FCC, 326 F.2d 673, 680 (D.C. Cir. 1963) (substantive rules are those which change standards);

Aiken v.

Obledo, 442 F.

Supp.

628, 649 (E.D.

Cal. 1977) (procedural rules relate to the agency's method of operation, while substantive rules establish standards of conduct or entitlement) * .!.!_/ Simmons v. ICC, 757 F.2d, 296, 300 (D.C. Cir. 1985), quoting Pacific Gas & Electric Co. v. FCC, 506 F.2d 33, 38 (D.C. Cir. 1974) (footnote omitted). As yet another court put it: "When the agency applies the policy in a particular situation, it must be prepared to defend it, and cannot claim that the matter is foreclosed by the prior policy statement." Guardian Federal Savings and Loan Ass'n v. Federal Savings and Loan Insurance Corp., 589 F.2d 658, 656 (D.C. Cir. 1978).

Samuel J. Chilk December 8, 1988 Page - 6 - announcing binding precedent in the form of a general statement of policy."g/ The originally stated basis in 1982 for failing to follow APA rulemaking requirements was that the Commission desired "maximum flexibility" in revising its policy "to reflect changes in policy and direction of the Commission."13/ This attempted justification is, in our view, simply an acknowledgement that it is easier to change the rules without the necessity of complying with the APA. No doubt, there are many areas in which the NRC or any other agency could more flexibly implement changes in policy and direction if it did not have to offer interested parties an opportunity in advance to comment on the changes. But that is not a valid justification because, as shown above, an institutional desire for flexibility may not override the procedural protection afforded parties by Congress under the APA. A second reason given by the Commission years ago has been to provide the staff "discretion to take appropriate action if, after considering the policy statement, the Director determines that application of the criteria is inappropriate."14/ This assumes, incorrectly we believe, that the NRC would sacrifice discretion by codifying its enforcement criteria. To the contrary, we see nothing in the regulatory experience of other federal agencies that supports this proposition. The NRC's enforcement standards, whether called a policy or regulation, provide for a scale of severity levels, a variety of mitigating and escalating

factors, and a

range of civil penalties from zero to hundreds of thousands of dollars and beyond, particularly for multiple or continuing violations. There is ample discretion already built into this scheme. Surely, the NRC does not wish to exercise or even claim discretion to be arbitrary or uneven in its enforcement actions. The courts have held that agency discretion is unaf-fected by whether an agency's statement is labeled a policy g/ Pacific Gas & Electric Co. v. FPC, 506 F.2d at 38-39. QI 4 7 Fed. Reg. 9 9 8 7, 9 9 8 9 (19 8 2). .!_!/ Id.

Samuel J. Chilk December 8, 1988 Page - 7 - or a substantive rule. In Pickus v. United States Board of Parole, 507 F.2d 1107 (D.C. Cir. 1974), the Court held that the Board of Parole should have utilized APA rulemaking in adopting guidelines for determining eligibility for parole. The Court found that, while room for discretion in applying guidelines existed, the substantive impact of the guidelines upon inmates did not turn upon whether they automatically produced a given result: Although [the guidelines] provide no formula for parole determination, they cannot but help but focus the decision-maker's attention on the Board-approved criteria. They thus narrow his field of vision, minimizing the influence of other factors and encouraging decisive reliance upon factors whose significance might have been differently articulated had Section 4 [of the APA] been followed. . This is not to suggest that these determinates are either unfair or undesirable, but merely that they have significant consequences.

Thus, the rules which define parole selection criteria, new and old, are subs tan ti ve agency action, for they define a fairly tight framework to circumscribe the Board's statutorily broad power..!2/

The NRC's use of escalating and mitigating factors with correlating levels of penal ties is indistinguishable from the guidelines addressed by the Court in Pickus. And, for the same reasons, we would not expect the NRC's actions to survive judicial scrutiny if challenged. For these reasons, the NRC' s adoption and continued reliance upon "policy" revisions without prior notice and opportunity for comment constitute de facto and thus illegal rulemaking. The Commission should ~longer effectuate changes in its Enforcement Policy without the procedural protection afforded by the APA, nor should the Commission persist in the erroneous belief that compliance with APA can 12./ 507 F.2d at 1113.

Samuel J. Chilk December 8, 1988 Page - 8 - be achieved by the simple expedient of labeling its enforcement criteria a "policy statement." Adherence to APA rulemaking procedures would assure that the Commission's delegated authority to enforce the Atomic Energy Act is lawfully exercisedl6/ and that licen-sees will have an opportunity to protect their rights and voice their opinions where they differ with the NRC on such issues.17 / The Commissioners should appreciate that its licensees are deeply interested in the formulation of the NRC' s Enforcement Policy and that unilateral changes to policy are a genuine source of concern. Accordingly, the Commission should rescind its prior actions and republish 10 C.F.R Part 2, Appendix C in its entirety as a proposed rule pursuant to the requirements of law under 5 C.F.R. §553. Increase in Potential Civil Penalties for Escalating Factors. Even if the Commission should decline to initiate proper rulemaking, it should reconsider and eliminate the latest increase in the amount assessed for escalating factors, which has now been raised from up to 50% to up to 100% of the base civil penalty. This particular revision, which represents yet another progression in the ratcheting upward of civil penalties assessable against NRC licensees, perpetuates the fallacy that larger penal ties will induce greater compliance. In fact, no evidence has ever been produced by the NRC to show that civil penalties have any definite -- let alone proportionate -- impact upon safety. Under the prior policy, escalation by as much as 50% of a base civil penalty could result in an increase of from $25,000 to $50,000 per violation per day.~/ In our view, See American Trucking Associations, Inc. v. F. 2d 452, 462 (5th Cir. 1981), cert. denied, 1022 (1983).

ICC, 659 460 U.S.

D._/ See Texaco, Inc. v. FPC, 412 F.2d, 740, 744 (3rd Cir. 1969).13 ~/ It should not be forgotten that the same escalating factors contained in the existing policy were initially limited to a 25% increase of the penalty assessed. See 45 Fed. Reg. 66756 (1980). No regulatory analysis has been performed to show that an increase from a 25% to a 50% escalation, much less from 50% to 100%, has improved or would improve performance.

Samuel J. Chilk December 8, 1988 Page - 9 - the potential for this escalation already maximized the economic incentive (or deterrent) for a reactor licensee to avoid the threat of an escalated civil penalty. The Com-mission should stop raising penalty limits well beyond the amount set by Congressl9/ because of some intuitive and unproven suspicion that stiffer penalties will improve compliance. Reductio ad absurdum, if this fallacy were, in fact, correct, raising the penalties to, say, one million dollars for a Severity Level 5 alleged violation and appropriately higher for Levels 1-4, should immediately eliminate all violations and create a perfect safety record for the American nuclear industry. Even accepting the hypothesis, arguendo, that civil penalties improve licensee compliance to some

extent, economic penalties for noncompliance which exceed what is necessary to get the attention of top management cannot be expected to have any further positive effect upon licensee performance.

Beyond that point, compliance with the Com-mission's regulations cannot be induced by greater fines. Other economic and non-economic incentives are far more powerful. This very point was emphasized by the Commission's own Advisory Committee for Review of the Enforcement Policy in its Report to the Commission submitted November 22, 1985. As the Advisory Committee accurately stated: .!2_/ We acknowledge the Commission's statement that escalating factors will not result in a penalty beyond the statutory maximum of $100,000 per day. See 53 Fed. Reg. at 40025. It is evident, however,~hat the Commission intends to utilize escalating factors to exceed $100,000 yet stay within the statutory limits by finding continuing violations. We do not believe Congress intended such an artifice. A continuing violation should be found only where "a licensee is aware of the existence of a condition which results in an ongoing violation and fails to initiate corrective actions." Id. Whether the licensee should have been aware of a-violation and whether the violation has added significance are already accounted for by other factors in assessing a civil penalty. Those matters should not be confused with duration of the violation. Unfortunately, the new policy perpetuates this error.

Samuel J. Chilk December 8, 1988 Page - 10 - The existing incentives for compliance are, in most contexts, quite numerous and strong. Violating an NRC requirement presumably increases the risk of an incident or accident. The consequence of such an incident or accident to the licensee may include injury to its own personnel, damage to its own

property, loss of capacity utilization, liability for injury or damage to others, and adverse impact on reputation in the financial,

labor, service, and political marketplaces.~/

Elsewhere, the Advisory Committee seriously questioned the effectiveness of large civil penalties: Sanctions, Costs, and Penal ties. To deter a particular form of behavior, it is necessary to raise its perceived cost to the actor. The penalty irnpo sed is only one part of the cost. Administrative and litigation

costs, damage to reputation, exposure to closer future surveillance and increased paperwork are additional forms of cost that can result from enforcement action.

In setting the level of any penalty, it is important to keep these other costs in mind. Often they are large enough by themselves to achieve adequate deterrence.+/-1._/ Significantly, the Advisory Committee agreed with the use of escalation and mitigation factors in assessing penalties (a proposition with which we do not quarrel), but neither the Committee's discussion of escalation nor its 23 ]:QI Report of the Advisory Cornmi ttee for Review of the Enforcement Policy at 10 (November 22, 1985). The Advisory Committee concluded that civil penalties could be used as a major supplement to an effective enforcement program where the adequacy of the incentives listed above might be uncertain. Id. at 10-11. 2:.1_/ Id. at 12.

Samuel J; Chilk December 8, 1988 Page - 11 - specific recommendations suggested the need or desirability to raise civil penalties. Thus, the Advisory Committee at least implicitly found that the prior escalation factor of 50% strikes the proper balance in providing a substantial economic incentive for compliance and not needlessly penalizing licensees. Another purpose of escalated civil penalties often cited by the NRC is to alert a licensee's management to the gravity of a problem which resulted in a violation and which could have been prevented by better management practices. Here again, the penalties which the NRC has assessed under its prior

policy, particularly taking into account assessments well into six or even seven figures for multiple or continuing violations, have been substantial enough to demonstrate to management how seriously the NRC viewed the violation.

Especially in the current regulatory environment where management must defend its actions and expenditures before state rate-making authorities and other agencies, not just before the NRC, every licensee's management is highly sensitive to any civil penalty.

Also, after years of hands-on experience in enforcement actions, management is keenly aware that the underlying violation poses serious implications for the safe and efficient operation of the plant.

It is just not necessary or even possible to drive the point home harder with stiffer penalties. On the positive side, it must be emphasized that reactor licensees share the Commission's desire for enhanced safety at their nuclear facilities. When a reactor is shut down for safety reasons, the down time entails a serious economic penalty of its own, far exceeding any possible civil penalty. Voluntary programs undertaken by licensees for internal vigilance and self-appraisal, cooperation with industry groups, and consultation with the NRC on its safety assessments (SALP reports, inspection reports, Individual Plant Evaluations, etc.) have been more useful than the threat of penalties in improved performance in reactor operations by promoting a positive attitude. toward safety. Hence, it is our considered judgment that another hike in civil penalties places undue emphasis on this particular aspect of the Commission's Enforcement Policy and will have little, if any, beneficial impact in achieving the policy's salutary objectives. We therefore respectfully request the Commission to reinstate its earlier policy on escalated penalties. Sincerely,

AGENCY: ACTION: NUCLEAR REGULATORY COMMISSION 10 CFR Part 2 Policy and Procedure for Enforcement Actions; Nuclear Regulatory Commission. Policy statement: Revision. [7590-0l]_,_,c~* ii.' U, ~ir.

• aa OCT 13 P 2 :4 5
• .,FF --

DUCK[ i ti. Po 1 icy Sta temenflh 1~v* DOCKET NUMBER PR PROA :jtiJ HULE. *-=--~---- b 3F~ t/o O t q )

SUMMARY

The NRC is publishing revisions to its Enforcement Policy (1) to provide for greater discretion in determining whether to issue a civil penalty for certain licensee-iden~ified and-corrected violations; (2) to ~rovide.for highPr civil penalties for NRC-identified violations, licensee's failures to take action in response to prior notice of concern~ at any of its faciliti~s, and multiple examples of significant violations; (3) to clarify the assessment factors for corrective action, past performance, and duration; (4) to modify t e**severity, evel examples involving violations of 10 CFR 50.59 and medical misadministrations; (5) to revise the Transportation and Safeguards supplements; and (6) to make minor deletions and language changes. The Enforcement Policy statement is intended to inform licensees, vendors, and the public of the bases for taking various enforcement actions. The policy is codified as Appendix C to 10 CFR Part 2. 'o/,J li-V (upon publication DATES: This revised statement of policy is effective in Fed. Reg.) , 1988 while comments on fb~ ~hanges are being received. 1;....1,,_ rr before (60 Days) , 1988. 1 Submit comments on or

ADDRESSEES: Send comments to: Secretary, U.S. Nuclear Regulatory Commission, Washington, DC 20555. ATTN: Docketing and Service Branch. Hand deliver comments to: One White Flint North, 11555 Rockville Pike, Rockville, MD between 7:45 a.m. to 4:15 p.m. Comments may also be delivered to the NRC Public Document Room, 2120 L Street, NW between 7:45 a.m. and 4:15 p.m. Copies of comments may be examined at the NRC Public Document Room, 2120 L Street, NW., Washingto.n, DC. FOR FURTHER INFORMATION CONTACT: James Lieberman, Director, Office of [;.fcrcement, U.S. N~clcar Rcgu1atcr.Y i-omm1'sc:ion '*'ashinnt-"n lilliii )'f

• • • • • j.,.-**, DC 20555 (301-492-0741).

SUPPLEMENTARY INFORMATION:

Background:

The Commission's Enforcement Policy was first issued on September 4, 1980. Since that time, the Enforcement Policy has been revised on a number of occasions, most recently on March 23, 1988 (53 FR 9429). Based on additional experience, the Commission has determined that it is appropriate to make additional changes in its Policy and Procedure for Enforcement Actions. The primary changes being made involve providing greater incentives for licensees to identify and correct violations by decreasing civil penalties for certain of those violations

\\, and increasing civil penal~ies where the licensee fails to identify, prevent, or correct violations, and revising the Transportation and Safeguards supplements of. the Enforcement Policy. The Enforcement Policy is codified in 10 CFR Part 2, Appendix C of the Commission's regulations to provide widespread dissemination of this policy. However, the Enforcement Policy is a policy statement and not a regulation. The Co11111ission may accordingly deviate from the Enforcement Policy as is appropriate under the circumstances of a particular case. A similar statement is being added to the Enforcement Policy to avoid any implications that codification.of the Policy in the Code of Federal Regulations indicates that the Coll1llission intends that the Enforcement Policy is a binding regulation. Revisions to the Enforcement Policy Revisions to the policy now being made are described in the following paragraphs. Only the sections to which changes were made are discussed here. The numbering of the sections tracks the section numbers,n the policy. V.A. NOTICE OF VIOLATION This section has been changed to provide the staff with the flexibility not to issue a Notice of Violation for inspection findings which involve isolated violations at a Severity Level V. Such violations are by_definition of minor regulatory concern. Documentation of the violation in an inspection report or official field notes is sufficient provided corrective action is underway before the inspection end~. "Official field notes" are an alternative to inspection reports used in the materials program for smaller 3 -

licensees. Given the minor concern with such violations, a formal reply from a licensee is not needed nor is expenditure of agency resources to prepare a Notice of Vio1ation normally warranted. A Notice of Violation may be issued if the violation was willful, if past corrective actions have not been sufficient, or if the circumstances warrant increasing the severity of Level V violations to a higher severity level. V. B CIVIL PENAL TY ___

1.

EXERCISE OF DISCRETION (SECTION V.G) The current policy in Section V.B. provides that civil penalties are imposed, absent mitigating circumstances, for Severity Level I and II violations but are ccnsidcred for Severity Level III violations. Section VIII,.Responsibilities, provides that the staff has the discretion as to whether or not it should propose a civil penalty after considering the principles in the Enforcement Policy-, the technical significance of the violations, and the surrounding circumstances. Thus, the policy as written provides the* staff with discretion as to whether or not to propose a civil penalty for a violation -at-a *severity Level III. However, the NRC practice has been that civil penalties are issued for Severity Level III violations absent mitigating circum-stances. The staff may, under appropriate circumstances, classify a violation at a Severity Level IV even if the supplements provide a similar example at a Severity Level III based on the significance and circumstances of the violation because the examples in the supplements are by the policy, examples and not controlling. However, once the 4

determination is made that a violation should be categorized ~ta Severity Level III, the violation is of significant regulatory concerni and a civil penalty is proposed absent mitigating circumstances unless the staff seeks Conmission approval not to issue a penalty. There are three Severity Level III situations where it may not be appropriate to issue civil penalties in the interest of e*ncouraging licensee identification, reporting,.and correction of violations and minimizing the potential to provide disincentives for licensees to identify and correct violations. Accordingly, the policy has been changed in Sections V.B. and V.G. to provide three additional examples for exercising discretion in not proposing civil penalties. This should increase incentives for a licensee to scrutinize its operations at its own initiative. The first example involves licensee identified aTid corrected violations where the violation was {1) not reasonably preventable by licensee action in response to a previous regulatory concern or prior notice of a problem within two years of the inspection or since the last two inspections, (2) not willful, and {3) not representative of a breakdown in management controls. This change is intended to avoid penalizing a licens~e whose current perfonnance is consistent with the objectives of the policy, i.e., identifying, reporting, and correcting violations. Under this provision the staff may exercise discretion and not propose a civil penalty for a Severity Level III violation even if the vio1ation existed for an extended duration. This provision would not be used for Severity Level III violations involving release of radioactive material or o-verexposure~ in excess of regulatory limits because of the significance of such failures. 5

l The second example involves past violations that are not likely to be identified during routine surveillance or QA activities of a licensee. Many licensees have or are embarking on major*voluntary efforts to review past activities. From a safety perspective clearly there are benefits for both a licensee and the public to have past problems such ~s those involving engineering, design, or installation identified, reported and corrected before a system with deficiencies is called upon to operate. In these cases discretion could be exercised regardless of prior notice, past perfonnance, or duration to avoid disincentives for a licensee who *is aggressively pursuing a formal program to identify and correct past problems. If a licensee's program identifies Severity Level III violations, the staff would not intend to subsequently exercise further_discretion for similar violations later identified unless the licensee's prog!am is being accelerated to provide assurance that similar significant issues do not exist. The third example involves additional occurrences of a violation for which enforcement action has been taken. This change is to encourage a licensee, as part of corrective actions, to locate additional violations with the same root cause without the concern that it may be penalized if it identifies additional violations, reports, and corrects them. In applying this example, the staff will consider the reasonableness of the licensee's action, the timeliness of the action, and whether the *later violations change the safety signif1-cance Qr character of the initial regulatory concern. 6

These examples are, as indicated, examples of where discretion may be exercised. Whether or not to exercise the discretion is dependent on the circumstances of the particular case. In addition to the three additional examples of discretion being provided, the Deputy Executive Director for Regional Operations* authority to not issue a civil penalty, as stated in Section VII of the Policy, based on the merits of the case is restated in this section. This discretion is expected to be used only where application of the guidance in the policy is unwarranted and requires advance notice to the CoD111ission.

2.

Mitigating and Escalating Factors

a.

Identification and Reporting This factor is being retitled and changed to permit a penalty to be increased if NRC identifies a violation.,This is designed to provide an additional incentive for licensees to identify violations. Given the number of licensees* employees and the limited number of NRC inspectors, Severity Level I, II, or III violations should be identified first by licensees and, therefore, NRC should not be_ identifying significant violations.- Thus, it is appropriate to increase a penalty if NRC identifies the violation. This factor has also been changed to delete the reference to the length of time the violation occurred because that is considered under the duration factor. The issue under this factor is whether a licensee should have reasonably identtfied the violation earlier. 7

b.

Corrective Action This factor is being changed to delete the term "unusually." In the past, the policy has been applied tc require corrective action to not only be prompt and extensive but to be unusually so before a full 50% mitigation is allowed for corrective action. In some cases there is nothing unusual about the corrective action even though it is clear that prompt and extensive corrective action was taken. This clarification is intended to provide the discretion for 50% mitigation when quality action is taken. Whether or not to grant 50% mitigation will be based_primariJy on the three factors stated in the policy: timeliness, initiative, and comprehensiveness. The weight to be given to each of these elements is dependent on the ci,cumstances of the particular case.

c.

Past Performance In the past the time period for assessing prior performance for a

• severity Level III or greater violation has not*been specified.

The policy has been changed to state that the past two years or the period within the last two inspections, whichever is the longer period, should be the nor1r1;,rl interval for considering past perfonnance. This time period should allow sufficient time to detennine a performance trend for applying this factor. This time period maybe longer (two past inspections rather than one past inspection) than the time period for considering civil penalties for repetitive Severity Level IV violations because some material licensees are inspected at a 8

frequency greater than one year and a longer t1me period, i.e., two past inspections, is needed to establish a performance trend for those licensees. In addition, this factor 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. With the change both overall performance and performance in the area of concern may _be.con~ider~d.

d.

Prior Notice This factor has been changed to permit a penaity to be increased up to 100% of the base penalty rather than 50%. This change is being made to provide incentives to respond to notices of safety concerns. If a licensee is put on notice of a problem by its own actions, its responsible employees, industry, or NRC and fails to take action to prevent a Severity Level III violation, then a penalty should be substantially increased. Another important change to this factor is to consider notice arising out of activities of a licensee at other facilities it controls whether or not under different licenses. This change comes out of the lessons learned from the Tennessee Valley Authority problems but i~ equally applicable to other reactors and material licensees who 9

hold more than one license or have more than one facility or location. If a licensee is aware of a significant issue at one of its facilities-that.needs corrective action, NRC expects that the licensee will consiqer the application of corrective action at all other licensed operations it controls. The failure to act in such a responsible manner will now be the basis for increasing a penalty to provide additional incentives

• for the licensee to identify and correct its problems. A licensee should not be dependent on the NRC to identify a violation once the licensee has had reasonable notice of a potential problem. This does not mean every similar violation at another facility of the licensee will be cause for escalation.

But escalation may occur if it was reasonable to expect the licensee to consider the need for corrective action at its other facilities.

e.

Multiple Examples

• This factor has been changed to permit a penalty to be increased up to 100% of the base penalty rather than 50%.

This change is being made to - be able to better reflect the added significance of multiple violations.

f.

Duration The policy has been clarified by making duration a specific factor to consider in the assessment process and to assign a percentage to be applied to the ~ase amount. This was done to provide greater ~ssurance of unifonn application of the duration factor. Section 234 of the Atomic Energy A~t of 1954, as amended, provides that continuing 10

violations may receive separate daily assessments. Whether to do so is a function of the circumstances of each case. It is clearly appropriate to have daily assessments where there is willful conduct, i.e., a licensee permitted a violation to continue. In other cases an increased assessment may be warranted based on significance. It is appropriate, for those cases for which a*penalty is not assessed on a daily basis, to be able to increase a penalty up to 100% to address the significance of the violation. It is recognized that a number of factors consider duration. Prior notice does so from the view that the n censee may have had time to avoid a violation from occurring. But that is different from the duration of a violation. When a penalty is not mitigated for licensee identification because of.the. age of the violation,. N.RC is_ focusing attention on the fact that a licensee performing as expected should have identified the violation earlier and not that the violation is more significant because of the length of time the violation-existed. Under the duration factor the issue is whether the violation is more significant because of its duration. V.D. ESCALATION OF ENFORCEMENT SANCTIONS.

• This section has been changed to delete the reference to progression based on a single license. This is an area where judgll_lE!nt and discretion are required.

The policy is changed to maximize the flexibility in this area. As described earlier, the prior notice section of*the policy is also being changed to specifically consider the issue of the failure to take 11

corrective action for similar violations* at other facilities controlled by a licensee. V.E. ENFORCEMENT ACTIONS INVOLVING INDIVIDUALS This section is being clarified to indicate that enforcement action may .be taken against an individual's license or against a corporate license that may impact an individual where the person's conduct places into question NRC's reasonable assurance that licensed activities will be properly conducted. Actionable conduct includes matters that raise integrity, competence, fitness for... duty., or.. other issues that may not. necessarily be a violation of Corranission requirements. Also added in this section is a provision to indicate that action would not be taken for a wi-llful v-io1ation 1n an emergency provided the standards-of lQ CFR 50.54(x) are met. V.6. DISCRETION In addition *to the changes already described, this section is being changed to clarify that where discretion is exercised to not issue a Notice of Violation, the violation will be described in an inspection report or official field notes. This will assist the agency in tracking repetitive concerns-for purposes of past performance. VIII~RESPONSIBILITIES The change in this section clarifies that judgment is exercised in issuing Notices of Violations as well as civil penalties. For examp~, while most - 12

violations result in at least a tJotice of Violation, discretion may ~e exercised in developing the particular citation to use including the number of examples of the violation to be in~luded in the* citation and the legal requirement violated. In addition, discretion may be exercised in determining whether there is sufficient evidence to issue a citation. Similarly, discretion may be exercised in determin.ing the appropriate severity level after considering the guidance fn the supplements which are examples and not controlling. For example, it may be appropriate to categorize an overexposure violation resulting from a "hot particle" at a lower severity level than described for the level of e~posure because of the significance __ of the partic~lar exposure. The last sentence of footnote 5 has been deleted because it is not needed ,i,n thr;_poJicy. Shol.lld the~e be~ad~Jt.io.nal,,delega_ti,qrJ. to Region~l _Offjces, I .. ~..:.i.~-r..~:.:. the policy can be changed at that time. SUPPLEMENT I - REACTOR OPERATIONS Example C.6. involving violati-0ns of 10 CFR 50.59 has been changed to clearly indicate that a licensee who violates that requirement and operates in an unanalyzed condition may be subject to a Severity Level III citation even if, after-the fact, it turns out that an unreviewed safety question or a conflict with a technical speciffcation does not exist. This is designed to capture the circumstances where a reasonable engineer would need to perform an evaluation b~fore concluding that an unreviewed safety question or a conflict with a technical specification did not exist but did not do the evaluation. 13

A change also has been made to this supplement as well as Supplements III, Safeguards, IV~ Health Physics, V,.Transportation, and VI, Fuel Cycle and Material Programs to provide an exp~ess example*of a Severity Level III problem for multiple or recurring violations that collectively reflect a potentially significant lack of attention or carelessness toward licensed responsibilities. Although the practice* of grouping a number of violations individually which may be of minor coTicern but collectively are of a significant regulatory concern is permitted under the existing Enforcement Policy, express examples illustrating this practice may be helpful. SUPPLEMENT III - SAFEGUARDS This supplement has been extensively rewritten to provide more flexibility to address the significance of safeguards violations. In addition, similar

• examples of different severity levels for types of violations have been added.

The most significant change is to address the area of access control violations which is one.of the most frequent issues, resulting in escalated enforcement action in the safeguards area. The significance of an access_ control problem is a. function of the ease of exploitation. The policy has been changed to consider.the predictability, identifiabi1ity, and ease of passage of the vulnerability demonstrated by the violation in determining the severity level of an_ access control violation. Predictability refers to a vulnerability that lasts for a long period of time (and i-s known to exist) or if it recurs with some predictable regularity or schedule, allowing the potential intruder to know when to attempt the penetration. Identifiability refers to the ease with which an observer can (f) see the opening, and (2) know.that it leads somewhere advantageo~s to a saboteur. Eas~ of passage refers to the structure of the opening, whether the 14

potential* intruder can maneuver himself/herself along the interior of the pathway to gain access to the area, and includes the environment of the opening, i.e., whether there is continuous flushing or some other environmental factor that makes the pathway inhospitable to humans. SUPPLEMENT V - TRANSPORTATION This supplement has been changed to make-the radiation levels and contamination levels more consistent with the health physics examples in Supplement IV. In addition, flexibility has been added to address violations associated with shipping papers, labeling, ~nd packaging. Examples have been added for Severity Level IV violations to indicate that failure to register as an authorized user of NRC-Certified Tra~sport packages or to assure that packages meet applicab~ require~~nts are more than a minor regulatory concern. SUPPLEMENT VI - FUEL CYCLE AND MATERIALS PROGRAM This supplement has been changed to provide that multiple errors that result in-diagnostic misadministrations or a -recurrent violation that results in a diagnostic misadministration may be categoriz~d at a Severity Level III. This change is being made to emphasize the need to comply with requirements in order to avoid unnecessary and unsuspected exposures to the public. 15

List of Subjects in 10 CFR Part 2 Administrative practice and procedure, Antitrust, Byproduct material, Classified information, Environmental protection, Nuclear materials, Nuclear power plants and reactors, Penalty, Sex discrimination, Source material, Special nuclear material, Waste treatment and disposal. For the reasons set out in the preamble and under the authority of the Atomic Energy Act of 1954, as amended, the Energy Reorganization Act of 1974, as amended, and 5 U.S.C. 552, the NRC is adopting the following statement of policy as-Appendix C to 10 CFR Part 2. Part 2 - Rules of Practice for Domestic Licensing Proceedings

1.

The authority citation for Part 2 is revised to read as follows: Authority: Secs. 161, 181, 68 Stat. 948, 953, as amended (42 U.S.C. 2201, 2231); sec. 191, as amended, Pub. L. 87-515, 76 Stat. 409 (42 U.S.C. 2241); sec. 201, 88 Stat. 1242, as amended (42 U.S.C. 5841); 5 U.S.C. 552. Section 2.101 also issued under secs. 53, 62, 63,- 81, 103, 104, 105, 68 Stat. 930, 932, 933, 935, 936, 937, 9~8, as amended (42 U.S.C. 2073, 2092, 2093, 2111, 2133, 2134, 2135); sec. 102, Pub. L. 91-190, 83 Stat. 853, as amended (42 U.S.C. 4332); sec. 301, 88 Stat. -1248 (42 U.S.C. 5871). Sections 2.102, 2.103, 2.104, 2.105, 2.721 also issued under secs. 102, 103, 104, 105, 183, 189, 68 Stat. 936, 937, 938, 954, 955, as amended (42 u.s.c.* 2132, 2133, 2134, 2135, 2233, 2239). Section 2.105 also issued under Pub. L. 97-415, 96 Stat. 2073 (42 U.S.C. 2239). Sections 16

2.200-2.206 also issued under secs. 186, 234, 68 Stat. 955, 83 Stat. 444, as amended (42 U.S.C. 2236, 2282); sec. 206, 88 Stat. 1246 (42 U.S.C. 5846): Sections*2.600-2.606 also issued under sec. 102, Pub. L. 91-190, 83 Stat. 853 as amended (42 U.S.C. 4332). Sections 2.700a, 2.719 also issued under 5 U.S.C. 554. Sections 2.754, 2.760, 2.770, 2.780 also issued under 5 U~S.C. 557. Section 2.764 and Table lA of Appendix C also issued under Sections 135, 141, Pub. L. 97-425, 96 Stat. 2232, 2241 (42 U.S.C. 10155, 10161). Section 2.790 also issued under sec. 103, 68 Stat. 936, as amended (42 U.S.C. 2133) and 5 U.S.C. 552. Sections 2.800 and 2.808 also issued under 5 U.S.C. 553. Section 2.809 also issued under 5 U.S.C. 553 and sec. 29, Pub. L. 85-256, 71 Stat. 579, as amended {42 U.S.C. 2039). Subpart K also issued under sec. 189, 68 Stat. 955 -{42 U.S.C. 2239); sec. 134, Pub. L. 97-425, 96 Stat. 2230 {42 U.S.C. 10154). Appendix A also issued under sec. 6, Pub. L. 91-580, 84 Stat. 1473 (42 U.S.C. 2135). Appendix B also issued under sec. 10, Pub. L. 99-240, 99 Stat. 1842 {42 U.S.C. 2021b et seq.).

2.

Appendix C to Part 2 is revised to read as follows: APPENDIX C - GENERAL STATEMENT OF POLICY AND PROCEDURE FOR NRC ENFORCEMENT ACTIONS The following statement of general policy and procedure explains the enforcement policy and procedur~s of the U.S. Nuclear Regulatory Coltlllission and its staff in initiatihg enforcement actions, and of presiding officers, the Atomic Safety and Licensing Appeal Boards, and the Commission in reviewing these actions. T~is statement is applicable to enforcement in matters involving the public health and safety, the common defense and security, and the environment. l/ This ll Antitrust enforcement matters will be dealt with on a case-by-case basis. 17

statement of gen~ral pqlicy and procedure is published in the Code of Federal Regulations to provide widespread dissemination of the Conunissions Enforcement _ Policy. However, this is a policy statement and not a regulation. The Co1T111lssion may deviate from this statement of policy and procedure as is appropriate under the circumstances of a particular case.

f.

• INTRODUCTION AND PURPOSE The purpose of the NRC enforcement program is to promote and protect the radiological health and safety of the public, including employees' health and safety, the cOD1110n defense and security, and the environment by:

Ensuring compliance with NRC regulations and license conditions; Obtaining prompt correction of violations and adverse quality conditions which may affect safety; Deterring future violations and occurrences of conditions adverse to qua 1 ity; and Encouraging improvement of licensee and vendor la/ perfonnance, and by example, that of industry, including the prompt identification and reporting of potential safety problems. Consistent with the purpose of this programj prompt and vigorous enforce-ment action will be taken when dealing-with licensees or vendors_who do not achieve the necessary meticulous attention to detail and the high standard of compliance which the NRC expects. Each enforcement action is dependent on the circumstances of the case and requires the exercise of la/ The term 11vendor" means a supplier of products or services to be used in an NRC-licensed facility or activity. 18

discretion after consideration of *these policies and procedures. In no case, however, will licensees who cannot achieve and maintain adequate levels of protection be permitted to conduct licensed activities. II. STATUTORY AUTHORITY AND PROCEDURAL FRAMEWORK A. STATUTORY AUTHORITY The NRC's enforcement jurisdiction is drawn from the Atomic Energy Act of 1954, as amended, and the Energy Reorganization Act (ERA) of 1974, as amended_ Section 161 of the Atomic Energy Act authorizes NRC to conduct. inspections and investigations and to issue orders*as may b~ necessary or..desirable to promote the co~n defense and security or to protect health or to minimize danger to life or property. Section 186 authorizes NRC to revoke licenses under certain circumstances (e.g., for material false statements, -- in response to conditions that would have warranted refusal of a license on an original application, for a licensee's failure to build or operate a facility in accordance with the terms of the permit or license, and for yiolatton of an NRC regu)ation). Section 234 authorizes NRC to impose civil penalties not to exceed $100,000 per violation per day for the violatiQn of certain specified licensing provisions of the Act, rules, orders, and license terms implementing these provisions, and for violations for which licenses can be revoked. In addition to the enumerated provisions in section 234, sections 84 and 147 authorize the imposition of civil penalties for violations of regulations implementing 19

those provisions. Section 232 authorizes NRC to seek injunctive or other equitable relief for violation of regulatory requirements. Section 206 of the Energy Reorganization Act authorizes NRC to impose civil penalties for knowing and conscious failures to provide certain safety information to the NRC. Chapter 18 of the Atomic Energy Act provides for varying levels of criminal penalties (i.e., monetary fines and imprisonment) for willful violations of the.Act and regulations or orders issued under Sections 65, 16l(b), 161(i), or 161(0) of the Act. Section 223 provides that criminal penalties may be imposed on certain individuals employed by firms constr.ucting or supplying basic components of any utilization facility if the individual-knowingly ana willfully violates NRC.r..equir~ments such..that a b~sic* component could be significantly impaired. Section 235 provides that criminal penalties may be imposed on persons who interfere with inspectors. Section 236 provides that criminal penalties may be imposed on persons who attempt to or cause sabotage at a nuclear facility or to nuclear fuel. Alleged or suspected criminal violations of the Atomic Energy A~t are-referred to the Department of Justice for appropriate action.

8.

PROCEDURAL FRAMEWORK Subpart B of 10 CFR Part 2 of NRC's regulations sets forth the procedures the NRC uses in exercising its enforcement authority. 10 CFR 2.201 sets forth the procedures for issuing notices of violation: 20

The procedure to be used in assessing civil penalties is set forth in 10 CFR 2.205. This regulation provides that the appropriate NRC Office Director initiates the civil penalty process by issuing a notice of violation and proposed imposition of a civil penalty. The licensee is

• provided an opportunity to contest in writing the proposed imposition of a civil pe_nalty.

After evaluation of the licensee's response, the Director may mitigate, remit, or impose the civil penalty. An opportunity is provided for a hearing if a civil penalty is imposed. The procedure for issuing an order to show cause why a license should not be modified, suspended, or revoked or why such o~her action should not be taken is set forth in 10 CFR 2.202. The mechanism for modifying a license by order is set forth in 10 CFR 2.204. These sections of Part 2 provide .,an opportunity for a hearing to the affected licensee. However, the NRC ~ ... J is authorized to make orders inmediately effective if the public health, safety or interest so requires or, in the case of an order to show cause, if the alleged violation is willful. , l III. SEVERITY OF VIOLATIONS Regulatory requirements fl have varying degrees of safety, safeguards, or environmental significance. Therefore, the relative importance of each violation must be identified as the first step in the enforcement process. fl The term 11 requirement 11 as used in this policy means a lega}ly binding requirement such as a statute, regulation, license condition, technical specification, or order. 21

Consequently, violations are categorized in terms of five levels of severity to show their relative importance within each of the following eight activity areas: I. Reactor Operations; II. Facility Construction; II I. Safeguards; IV. Health Physics;.. V. Transportation; VI. Fuel Cycle and Materials Operations; VII. Miscellaneous-Matters; and VIII. Emergency Preparedness. Licensed activities not directly covered by one of the above listed areas, e.g., export license activities, w~11*be placed in the activity area most suitable in light of the particular violation involved. - Within each activity area, Severity Level I has been assigned to violations that are the most significant and Severity Level V violations are the least significant. Severity Level I and Ii violations are of very significant regulatory concern. In general, violations that are included in these 22

severity categories involve actual or high potential impact on the publico Severity Level III violatfons are cause for significant concern. Severity Level IV violations are less serious but are of more than minor concern; i.e., if left uncorrected, they could lead to a more serious concern. Severity Level V violations are of minor safety or environmental concern. Comparisons of significance between activity areas are inappropriate. For example, the i1TD11ediacy of any hazard to the public associated with Severity Level I violations in Reactor Operations is not directly comparable to that associated with Severity Level I violations in Reactor Construction. While examples are provided in Supplements.I-through VIII for determining the appropriate severity level for violations in each of the eight activity areas, the examples are neither exhaustive nor controlling. These examples do not create new requirements. Each is designed to illustrate the significance which the NRC places on a particular type of violation of NRC requirements. Each of the examples in the supple~ents is predicated on a violation of a regulatory requirement. In each case, the severity of a violation will be characterized at the-level best suited to the significance of the particular violation. In some cases, violations may be evaluated in the aggregate and a single severity level assigned for a group of violations. The severity level of a violation may be increased if the circumsta~ces surrounding the matter involve careless disregard of requirements, deception, or other indications of willfulness. The term 11willfulness 11 as used here 23

embraces a spectrum of violations ranging from deliberate intent to violate or fals.ify to and including careless disregard for requirements. Willfulness does not include acts which do not rise to the level of careless disregard, e.g., inadvertent clerical errors in a document submitted to the NRC. In determining the specific severity level of a violation involving willfulness, consideration will be given to such factors as the position of the person involved in the violation (e.g., .first-line supervisor or senior manager), the significance of any underlying violation, the intent of the violator (i.e., negligence not amounting to careless disregard, careless disregard, or deliberateness), and the economi.c_advantage, if any, gain~ as.a result of the violation. The relative weight given to each of these factors in arriving at the appropriate severity level will be dependent on the circumstances of the violation..... The NRC expects licensees to provide full, complete, timely, and accurate information and reports. Accordingly, unless otherwise categorized in the Supplements, the severity level of a violation involving the failure to make a required report to the NRC will be based upon the significance of and the circumstances surrounding the matter that should have been reported. A licensee will not normally be cited for a failure to report a condition or event unless the 1icensee was actually aware of the condition or event which it failed to report. However, the severity level of an untimely report, in contrast to no r~port, may be reduced depending on the circumstances surrounding the matter. 24

IV. ENFORCEMENT CONFERENCES Whenever the NRC has learned of the existence of a potential violation for which a civil penalty or other escalated enforcement action may be warranted, or recurring nonconformance on the part of a vendor, the NRC will normally hold an enforcement conference with the licensee or vendor prior to taking enforcement action. The NRC may also elect to hold an enforcement conference for other violations, e.g., Severity Level IV violation which, if repeated, could lead to escalated enforcement action. The purpose of the enforcement conference is to (1) discuss the violations or nonconformance, their significance and causes, and the licensee's or vendor's corrective actions, (2) determine whether there are any aggravating or mitigating circumstances, and (3) obtain other information which will help aetermine the, appropriate enforcement action. In addition, during the enforcement conference, the licensee or vendor will be given an opportunity to explain to the NRC what corrective actions (if any) were taken or will be taken following discovery of the potential violation or nonconformance. Licensees or vendors will be told when a meeting is an enforcement conference. Enforcement conferences wi Tl not normally be open to the public.- When needed to protect the public health and safety or common defense and security, escalated enforcement actio~, such as the issuance of an immediately effective order modifying, suspending, or revoking a li~ense, will be taken pri-0r to the enforcement conference. In such cases, an 25

enforcement conference may be held after the escalated enforcement action is taken. V. ENFORCEMENT ACTIONS This section describes the enforcement sanctions available to NRC and specifies the conditions under which each may be used. The basic sanctions are notices of violation, civil penalties, and orders of various types. Additionally, related administrative mechanisms such as bulletins and confirmatory action letters, notices of nonconformance and notices of deviation are used to supplement the enforcement program. In selecting the enforcement sanctions to be applied, NRC will consider enforcement actions taken by other Federal or St.ate regulatory bodies having con-current jurisdiction, such as in transportation matters. Usually whenever a violation of NRC requirements is identified, enforcement action is taken. The nature and extent of the enforcement action is intended to reflect the seriousness of the violation involved. For the vast majority of violations, action by an NRC regional office is.appro-priate in the form of a Notice of Violation requiring a formal response from the recipient describing its corrective action~. In situations involving nonconformance on the part of vendor, a Notice of Nonconfor-mance will be issued. The relatively small number of cases involving elevated enforcement action receives substantial attention by the public, and may have significant impact on the lice~see's operationo These elevated enforcement actions. include civil penalties; orders modifying, suspending or revoking licenses; or orders to cease and desist from design~ted activities. 26

A. NOTICE OF VIOLATION A notice of violation is a written notice setting forth one or more violations of a legally binding requirement. The notice normally requires the recipient to provide a written statement describing (1) corrective steps which have been taken and the results achieved; (2) corrective steps which will be taken to prevent recurrence; and (3) the date when full compliance will be achieved. NRC may require responses to notices of violation to be under oath. Normally, responses under oath will be required only in connection with civil penalties and orders. NRC uses the notice of violation as the standard method for formalizing the existence of a violation. A notice of violation is normally the only enforcement action taken, except in cases where the criteria for civil I \\ penalties and orders, as set forth in Sections-V.~ and V.C, respe~tively, are met. In such cases, the notice of violation will be issued in conjunction with the elevated actions. Howeyer, violation findings warranting the exercise of discretion under Section V.G.1 will_g~ne~ally not result in a Notice of Violation. In adqition, for isolated Severity Level V violations, a notice of violation normally will not be issued regardless of who identifies the viol~tion provided that the licensee has iTiitiated appropriate corrective action before the inspection ends. In these situations. a formal response from the licensee is not required and the inspection report or official f1eld notes serves to document the violations and the corrective actions. However, a notice of violation will normally be issued for willful 27

violations, if past corrective actions for similar violations have not been sufficient to prevent recurrence, or if the circumstances warrant increasing the severity of Level V violations to a higher severity level. Licensees are not ordinarily cited for violations resulting from matters not within their control, such as equipment failures that were not avoidable by reasonable licensee quality assurance measures or management controls. Generally, however, licensees are held responsible for the acts of their employees. Accordingly, this policy should not be construed to excuse personnel errors. B. CIVIL PENALTY !'-, ci':n-pena1ty -is a monetary-penalty that may be* imposed for-violation of (a) certain specified licensing provisions of the Atomic Energy Act or supplementary NRC rules or orders, (b) any requirement for which a license may be revoked; or (c) reporting requirements under Section 206 of the Energy Reorganization Act. Civil penalties are*designed to emphasize the e need for lasting remedial action and to deter future violations. Civil penalties are proposed absent mitigating circumstances for Severity Level I and II violations, are considered for Severity*Level.III violations, and may be imposed fo~ Severity Level IV violations that are simi~ar ll to previous violations for which the licensee did not take effective corrective action. ll The word 11 similar, 11 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 pre~ious violation. 28

In applying this guidance for Severity Level III violations, NRC may, notwithstanding the mitigating and escalating factors in this section, refrain from proposing a civil penalty for vio_lations that warrant the exercise of discretion under Section V.G. As to Severity Level IV violations, NRC normally considers civil penalties only for similar Severity Level IV violations that occur after the date of the last inspection or within two years, whichever period is greater. Civil penalties will normally be assessed for knowing and conscious violations of the reporting requirements of Section 206 of the Energy Reorganization Act, and for any willful violation of any Co1m1ission requirement including those at any severity level * . NRC fmposes different leveJs_of penalties _f?r.. different.$ev,erity lev,el violations and different classes of licensees. Tables lA and 18 show the base civil penalties for various reactor, fuel cycle, and materials programs. The structure of these tables generaliy takes into account the gravity of the violation as a primary consideration and the ability to pay as a secondary consideration. Generally, operations involving greater nuclear material inventories and greater potential consequences to the-public and licensee employees receive higher civil penalties. Regarding the secondary factor of ability of various classes of licensees to pay the civil penalties, it is not the NRC's intention that the economic impact of a civil penalty be such that it puts a licensee out of business (orders, rather than civil penalties, are used when the intent is to terminate licensed activities) or adversely affects a licensee's ability to safely conduct licensed activities. The deterrent effect of civil penalties is 29

best served when the amounts of such penalties take into account a* licensee's "ability to pay. 11 In determining the amounts of civil penalties for licensees for whom the tables do not reflect the ability to pay, NRC will consider as necessary an increase or decrease on a case-by-case basis. NRC attaches great importance to comprehensive licensee programs for detection, correction, and reporting of problems that may constitute, or lead to, violation of regulatory requirements. This is emphasized by giving credit for effective licensee audit programs when licensees find, correct, and report problems expeditiously and effectively.... To.encourage licensee self-identification and correction of violations and to avoid potential concealment of problems of safety significance, application of the adjustment factors set forth:*below-may result in no civ-il-pena1ty being assessed for violations which are identified, reported (if required), and effectively corrected by the licensee. On the other hand, ineffective licensee programs for problem identification or correction are unacceptable. In cases involving willfulness, flagrant NRC-identified* violations, repeated poor performance in an area of concern, or serious breakdown in management controls, NRC intends to apply its full.enforcement authority where such action is warranted, includjng issuing appropriate orders and assessing-civil - penalties for continuing violations on a per day basis, up to the statutory limit of $100,000 per violation, per day. In this regard, while man~gement involvement, direct or indirect, in a violation may lead to an increase in the civil penalty, the lack of such involvement may not be used to mitigate a civil p~nalty. 30

Allowance of mitigation could encourage lack of managemen~ involvement in licensed activities and a decrease in protection of the public health and safety. NRC reviews each proposed civil penalty case on its own merits and adjusts the base civil penalty values upward or downward appropriately. Tables lA and 18 identify the base civil*penalty values for different.severity levels, activity areas, and classes of licensees. After considering all relevant circumstances, adjustments to these values may be made for the factors described below:

1.

Identification and Reporting Reduction of up to 50% of the base civil penalty shown. in Table 1 may be g_iven when_i;t Jicens.~e" id.e,nt,ifi.es t~.e viqlation.. a,n~~promptly reports the violation to the NRC. In weighing this factor, consideration will be given to, among other things, the opportunity available to discover the violation, the ease of discovery and the promptness and completeness of any required report. No consideration will be given to a reduction.in penalty if the licensee does not take immediate action to. correct the problem upon discovery. On the other hand, the base penalty may be.increased by as much as 50% if the-NRC identifies the violation provided the licensee should have reasonably discovered the violation before the NRC identified it.

2.

Corrective Action to Prevent; Recurrence Recognizing that corre*ctive action is always required to meet regulatory requirements, the promptness and extent to whi.ch the 31

licensee takes corrective action, including actiocs to prevent recurrence, may result in*up to a 50% increase or decrease in the base civil penalty shown in Table 1. For example, very extensive corrective action may result in reducing the proposed civil penalty as much as 50% of the base value shown in Table 1. On the other hand, the civil penalty may be increased as much as 50% of the base value if initiation of corrective action is not prompt or if the corrective action is only minimally acceptable. In weighing t~is factor, consideration will be given to, among other things, the timeliness of the corrective action, degree of licensee initiative, and comprehensiveness of tha corrective action--such_as whether the action is focused narrowly to the specific violation or broadly to the general area of concern.

3.

Past Performance Reduction by as much as 100% of the base civil penalty shown in Table 1 may be given for prior good perfo~mance. On the other hand, the base civil penalty may be increased as much as 100% for prior poor performance. In weighing this factor, consideration will be given to, among other thiTigs, the effectiveness of previous corrective action for similar problems-, -overa l°l performance such as Systematic Assessment of Licensee Performance (SALP) evaluations for power reactors, and prior performance including Severity Level IV and V -32

violations in the area of concern. For example, failure to implement previous corrective action for prior similar problems may result in _ an increase in the civil penalty. For.purposes of assessing past performance, violations within the past two years of the inspection at issue or the period within the last two inspections whichever is longer will be considered.

4.

Prior Notice of Similar Events The base civil penalty may be increased as much as 100% for cases where the licensee had prior knowledge of a potential problem as a result of a licensee re~iew, a_~pecific NRC or industry notifications or other reasonable indication of a potential problem, and had failed ~ to take effective preventive steps. Prior notice may include findings of NRC, the licensee, or industry made_at other facilities of the licensee where it is reasonable to expect the licensee to take action to prevent similar problems at the facility subject to the enforcement action at issue.

5.

Multiple Occurrences The base civil penalty may be increased as much as 100% where mu~tiple examples of a particular violation are identified during the inspection period.

6.

Duration The duration of a violation may also be considered in assessing

• a civil penalty. A greater civil penalty may be imposed if a violation continues for more than a day.

For example:

33.

(1) If a licensee is aware of the existence of a condition which results in an ongoing violation and fails to initiate corrective action, each day the condition existed may be considered as a separate violation and, as such, subject to a separate additional civil penalty. {2) If a licensee (a) is unaware of a condition resulting in a continuing violation, but clearly should have been aware of the condition or (b) had an opportunity to correct the condition but failed to do so, a separate violation and attendant civil penalty may_be considered for each day that the licensee clearly_ should have been aware of the condition or had an opportunity to correct the condition, but failed to do so. (3) Alternatively, whether or not a licensee is aware or clearly should have been aware of a violation that continues for more than one day, the base civil penalty may be increased as much as 100% to reflect the added significance resulting from the duration of the violation. The above factors are additive. However, in no instance will a civil penalty for any one violation exceed $100,000 per day. The Tables and the mitigating factors determine the civil penalties which may be assessed for each violation. However, to focus on the fundamental underlying causes of a problem for which enforcement action appears to be warranted, the cumulative total for all violations which contributed to or --34

were unavoidable tonsequences of that problem may be based on *the amount shown in the table for a problem of that Severity Level, as adjusted. If an evaluation of such multiple violations shows that more than one fundame~tal problem is involved, each of which, if viewed independently, could lead to civil penalty action by itself, then separate civil penalties may be assessed for each such fundamental problem. In addition, the failure to make-a required report of an event requiring such reporting is considered a separate problem and will normally be assessed a separate civil penalty, if the licensee is aware of the matter that should have been reported.

a.

b.

c.

d.

e.

f.

g.

h.

i.

j.

TABLE lA BASE CIVIL PENALTIES Plant Operations, Const, Hea 1th Physics and EP Safeguards Power Reactors $100,000 Test Reactors 10,000 Research Reactors & 5,000 Critical Facilities Fuel Fabricators 25,000 and Industrial Processors~/ Mills and Uranium 10,000 Conversion Facilities Industrial Users 10,000 of Material §_I Waste Disposal 10,000 Licensees Academic or Medical 5,000 Institutions §_I Independent spent 25,000 fuel and monitored retrievable storage i nsta 11 at ions Other Material 1,000 Licensees $100,000 10,000 5,000 100,000 ii 100,000 Transportation Type A Greater than Quantity Type A Quantity l/ or less gl $100,000 10,000 5,000 25,000 5,000 5,000 5,000 2,500 25,000 2,500 $5,000 2,000 1,000 5,000 2,000 2,000 2,000 1,000 5,000 1,000 ll Includes irradiated fuel, high level waste, unirradiated fissile material, and any other quantities requiring Type B packaging. gl Includes low specific activity waste (LSA), low level waste, Type A packages, and excepted quantities and articles. 11 Large firms engaged in manufacturing or -distribution of byproduct, -source, or special nuclear material. ii This amount refers to Category 1 licensees (as defined in 10 CFR 73.2). Licensed fuel fabricators not authorized to possess Category 1 material have a base penalty amount of-$50,000. §_I Includes industrial radiographers, nuclear ph-armacies, and other industrial users. §_I This applies to nonprofit institutions not otherwise categorized under sections 11 a 11 through "g" fo this table. 36

SEVERITY LEVEL I II II I IV V TABLE 18 BASE CIVIL PENALTIES BASE CIVIL PENALTY AMOUNT (% of Amount Listed in Table lA) 37 100% 80% 50% 15% 5%

C. ORDERS An order is a written NRC directive to modify, suspend, or revoke a license; to cease and desist from a given practice or activity; or to take such other action as may be proper (see 10 CFR 2.202 and 2.204). Orders may be issued as follows. Orders may also be issued in lieu of, or in addition to, civil penalties, as appropriate. (1) License Modification Orders are issued when some change in licensee equipment, procedures, or management controls is necessary. (2) Suspension Orders may be used: (a) To remove a ~hreat to the public health and.safety, co1T1T10n defense and security, or the environment; (b) To stop facility construction when (i) further work could preclude or significantly hinder the identification or correction of an improperly constructed safety-related system or component, or (ii) tht: li ce11see' s quality assurance program implementation is not adequate to provide confidence that construction activities are being properly carried out; (c) When the licensee has not responded adequately to other enforcement action; 38

(d) When the licensee interferes with the conduct of an inspection or investigation; or (e) For any reason not mentioned above for which license revocation is legally authorized. Suspensions may apply to all or part of the licensed activity. Ordinarily, a licensed activity is not suspended (nor is a suspension prolonged) for failure to comply with requirements where such failure is not willful and adequate corrective action has been taken. (3) Revocation Orders may be used: (a) When a licensee is*unable or unwilling to comply with NRC requirements, (b) When a licensee refuses to correct a violation, (c) When a licensee does not respond to a notice of violation where a response was required, (d) When a licensee refuses to pay_ a fee requ-ired by 10 CFR Part 170, or (e) For any other reason for which revocation is authorized under Section 186 of the Atomic Energy* Act (e.g., any condition which would warrant refusal of a license on an original ap.p_lication). 39

(4) Cease and Desist Orders are typically used to stop an unauthorized activity that has continued after notification by NRC that such activity is unauthorized. Orders are made effective i1I1T1ediately, without prior opportunity for hearing, whenever it is determined that the public health, interest, or safety so requires, or when the order is responding to a violation involving willfulness. Otherwise, a prior opportunity for a hearing on the order is afforded. For cases in which the NRC believes a basis could reasonably_exist for not taking the action as proposed, the licensee will ordinarily be afforded an opportunity to show cause why the order should not be issued in the proposed manner. D. ESCALATION OF ENFORCEMENT SANCTIONS NRC considers violations of Severity ~evel I, II, or III to be serious. If serious violations occur, NRC will, where necessary, issue orders in conjunction with civil penalties to achieve immediate corrective actions and to deter further recurrence of serious violations. NRC carefully considers the circumstance~ of each case in selecting and applying the sanction(s) appropriate to the case in accordance with the criteria described in Sections V.B and V.C. Examples of enforcement actions that could be taken for similar Severity Level I, II, or III violations are set forth in Table 2. The actual progression to be used in a particular case will depend on the

circumstances. However, enforcement sanctions will normally escalate for recurring similar violations. 41

TABLE 2 EXAMPLES OF PROGRESSION OF ESCALATED ENFORCEMENT ACTIONS FOR SIMILAR VIOLATIONS IN THE SAME ACTIVITY AREA UNDER THE SAME LICENSE Number of sim1 lar violations from the date Severity of Violation of the last inspection or with1n the previous two years (whichever period is greater) I II III

a.

Civil penalty 1st a+b a 2nd a+b+c a+b a 3rd d a+btc a+b

b.

Suspension of affected operations until the Office Director is satis-fied that there is reasonable assurance that the licensee can operate in compliance with the applicable requirements; or modification of the license, as appropriate.

c.

Show cause for modification or revocation of the license, as appropriate.

d.

Further action, as appropriate. 42

E. EtffORCEMENT ACTIONS INVOLVING I ND IV IDUALS Enforcement actions involving individuals, including licensed.operators, are significant personnel actions, which will be closely controlled and judiciously ap~lied. An enforcement action will nonnally be taken only when there is little doubt that the individual fully understood, or should have understood, his or her responsibility; knew, or should have. known, the required actions; and knowingly, or wi~h careless disregard (i.e., with more than mere negligence) failed to take required actions which have actual or potential safety significance. Most transgressions of individuals at the level of Severity level III., IV,_or V violations will be handled by citing only the facility licensee. More serious violations, including those: involving. the. integrity o.f an individual (e.g.~ lying to the NRC) concerning matters within the scope of the individual's responsibilities, will be considered for enforcement action against the individual. Action against the individual, however, will not be taken if the improper action by the individual was caused

• by management failures.

The followi'ng examples of situations illustrate this concept: 0 0 Inadvertent individual mistakes resulting from inadequate training or guidance prov-ided by the facility licensee. -Inadvertently missing an instgnificant procedural requirement when the action is routine, fairly uncomplicated, ~nd there is no unusual circumstance in~j~ating that the procedures should be referred to and followed step-by-step. 43

0 0 Compliance with an express direction of management, such as the Shift Supervisor or Plant Manager, resulted in a violation unless the individual did not express his or her concern.or objection to the direction. Individual error directly resulting from following the technical advice of an exp~rt unless the advice was clearly unreas~nable and the licensed individual should have recognized it as such. 0 Violations resulting from inadequate procedures unless the individual used a faulty procedure knowing it was faulty and had not attempted to get the-procedure corrected. Examples of situations. wh_ich.c"ould result in enforcement.. actions against individuals include, but are not limited to, violations which involve: 0 0 0 0 0 Recognizing a violation of-procedural requirements and willfully not taking corrective action. Willfully performing unauthorized bypassing of required reactor safety systems. Wi llfu.lly def eating alarms which have safety significance. Unauthorized abandoning of reactor controls. lnatt~ntion to duty such as sleeping, being intoxicated while on duty, or otherwise not meeting requirements for fitness for duty. 44

0 0 0 0 Willfully taking actions that violate Technical Specification Limiting Conditions for Operation (enforcement action for a willful violation will not be taken if the operator meets the standards of 10 CFR 50.54(x), i.e., unless the operator acted unreasonably considering all the relevant circumstances surrounding the emergency.) Falsifying records required for NRC regulations or by the facility licensee. Willfully fa i1 ing to take II ilTITlediate actions" of emergency procedures. Willfully withholding safety significant information rather than making such information known to appropriate supervisory or technical p~rsonne.l.., - Any proposed enforcement ac_tion against individuals must be done with the concurrence of the Deputy Executive Director for Regional Operatio~s. The-* opportunity for an Enforcement Conference with the individual will usually be provided. Examples of sanctions that may be appropriate against NRC-licensed operators are: 0 0 issuance of a letter of reprimand to be placed in the operator's license file, issuance of a Notice of Violation, and 45

0 suspension for a specified period, modification, or revocation of the license. The sanctions are' listed in escalating order of significance.~/ The particular sanction to be used should be determined on a case-by-case basis. In addition, NRC may take enforcement action where the conduct of the individual places in question the NRC 1 s* reasonable assurance that licensed activities will be properly conducted. The NRC may take enforcement action for reasons that would warrant refusal to issue a license on an origi-nal application. Accordingly, enforcement-act.ion may be -taken regarding matters that raise issues of integrity, competence, fitness for duty, or other matters that may not necessarily be a violation of specific* Commission requirements. In the case of an unlicensed individual, an Order modifying.the facility license to require the removal of the individual from all nuclear-related activities for a specified period of time or indefinitely may be appropriate.- F. REOPENING CLOSED ENFORCEMENT ACTIONS If significant new information is received or obtained by NRC which ii Except for individuals subject ta civil penalties under section 206 of the Energy Reorganization Act of 1974, as amended, NRC will not normally impose a civil penalty against an individual. However, section 234 of the Atomic Energy Act (AEA) gives the Commission authority to impose civil penalties for violations on "any person." "Person" is broadly defined in Section lls of the AEA to include individuals, a variety of organizations, and any representatives or agents. This gives the Commission authority to impose civil penalties on employees of licensees or on separate entities when a violation of a requirement directly imposed on them is conunitted. 46

indicates that an enforcement sanction was incorrectly applied, consideration may be given, dependent on the circumstances, to reopening a clos~d-enforcement action to increase or decrease the severity of a sanction or to correct the record. Reopening decisions will be made on a case-by-case basis, are expected to occur rarely, and require the specific approval of the Deputy Executive Director for Regional Operations. G. EXERCISE OF DISCRETION Because the NRC wants to.encourage.and support licensee initiative for self-identification and correction of problems, NRC may exercise discretion as follows:

1.

NRC may refrain from issuing a notice of violation for a violation described in an inspection report or official field notes that meets all of the following criteria:

a.

It was identified by the licensee;

b.

It is normally classified at a Severity Level IV or V;

c.

It was reported, if required;

d.

It was or will be corrected, including measures to prevent .recurrence, ~ithin a reasonable time; and 47

e.

It was not a willful violation or a violation that could reasonably be expected to have been prevented by the licensee 1s corrective action for a previous-violation.

2.

The NRC may refrain from issuing a notice of violation or a propo~ed civil penalty for violations described in an inspection report or official field notes that meet all of the following criteria:

a.

(i) The NRC has taken significant enforcement action based upon a major safety event contributing to an extended shutdown of an operating -reactor or a material licensee. (or a work stoppage-at a construction site), or the licensee is forced into an extended shutdown or work stoppage related to generally poor performance over a 1ong period.; (ii} the 1 icer.see has deve-loped and is*- --- aggressively implementing during the shutdown a comprehensive program for problem identification and correction; and (iii) NRC concurrence is needed by the *licensee prior to restart;

b.

Non-willful violations are identified by the licensee as the result of its comprehensive program, or as a result of an employee allegation to the 1icensee. If NRC identifies the violation, the NRC should determine whether enforcement action is necessary to achieve remedial action;

c.

The violations are based upon activities of the licensee prior to the events leading to the shutdown; and 48

d.

The violations would normally not be categorized as higher than Severity Level III violations under the NRC's Enforcement Policy.

3.

The NRC may refrain from proposing a civil penalty for a Severity Level III violation not involving an overexposure or release of radioactive material that meets all of the following criteria:

a.

It was identified by the licensee and reported;

b.

Comprehensive corrective-action.has been taken or is.well _ underway within a reasonable time following identification; .. _c_._. It was.not.. a.. violation that e.ither.,(t).. was.rea~onably preventable by the licensee's action in response to a previous regulatory concern identified within the past two years of the inspection or since the last two inspections which ever is longer or (ii) reasonably should have been corrected prior to the violation because the licensee had prior notice of the problem involved; and*

d.

It was not.a willful violation or indicative of a breakdown in management controls.

4.

• The NRC may refrain from proposing a civil penalty for a Severity Level III violation involving a past problem, such as in engineering,_

design, or insta_llation, that meets the following criteria: 49

a.

It was identified by a licensee as a result of a licensee's voluntary formal effort such as a Safety System Functional Inspection, Design Reconstitution Program, or other program that has a defined scope and timetable which is being aggressively implemented and reported;

b.

Comprehensive corrective action has been taken or is well underway within a reasonable time following identification; and

c.

I~ w~s not likely to be identified by routine licensee efforts such as normal surveillance or QA activifies.

5.

If the NRC i~sues an enforcement action for a violation at a Severity Level III violation and as part of the corrective action for that viola~ion, the licensee identifies other examples of the violation with the same root cause, the NRC may refrain from issuing an additional enforcement action. In determining whether to exercise this discretion, the NRC will cons1der whether the licensee acted reasonaoly and in a timely manner appropriate.to the safety significance of the initial violation, the comprehensiveness of the corrective action, whether the matter was reported, and whether the _additional violation(s) substantially change the safety significance or character of the regulatory concern arising out of the initial violation. Notwithstanding paragraphs 2, 3, 4, and 5 above, a civil penalty may be proposed ~hen judgment warrants it on the basis of the circumstances 50

of the individual case. For example, civil penalties may be warranted where multiple Severity Level III violations are discovered or where the violation is willful. In addition,. as provided in Section VIII, Responsibilities, the Deputy Executive Director for Regional Operations may refrain from issuing a civil penalty or a notice of violation for a Severity Level III violation based on the merits of the case after considering the guidance in this statement of policy and such factors as the age of the violation, the safety significance of the violation, the overall performance of the licensee, and circumstances, if any, that have changed since the violation provided prior notice has been given the Commission.. This discretion is exp.ected.to be exercised. only where application of the normal guidance in the Policy is unwarranted. H. RELATED ADMINISTRATIVE ACTIONS-* ~ -* r

• In addition to the formal enforcement mechanisms of notices of violation, civil penalties, and orders, NRC also uses administrative mechani~rns, such as-bulletins, information notices, generic letters, notices of deviation, notices of nonconformance, and confirmatory action letters to supplement its enforcement* program.
• NRC expects licensees and vendors to adhere to any obligations and cormdtments resulting from these processes and will not hesitate to issue appropriate orders to licensees to make sure that such commitments are met.

(1) Bulletins, Information Notices, and Generic Letters are written notifications to groups of licensees identifying specific problems and recommending specific actions. - 51

(2) Notices of Deviation are written notices describing a licensee's failure to satisfy a co1TU11itment where the commitment involved has not been made a legally bindi_ng requirement. A notice o'f deviation requests a licensee to provide a written explanation or statement describing corrective steps taken (or planned), the results achieved, and the date when corrective action will be completed. (3) Confirmatory Action Letters are letters confirming a licensee's or a vendor's agreement to take certain actions to remove significant concerns about health and safety, safeguards, or the environment. (4) Notices of Nonconformance are written notices describing non-licensees' failures to meet co111T1itments which have not been made legally binding requirements by NRC. An example is a commitmen~_~ade in a procurement contract with a licensee as required by 10 CFR Part 50, Appendix B. Notices of Nonconformances request non-licensees to provide written explanations or statements describing corrective s~eps (taken or planned), the results achieved, the dates when corrective actions will be completed, and measures taken to preclude recurrence. I. REFERRALS TO DEPARTMENT OF JUSTICE Alleged or suspected criminal violations of the Atomic Energy Act (and of other relevant Federal laws) are referred to the Department of Justice for investigatioA. Referral to the Department of *Justice does not preclude the NRC from taking other enforcement action under this General Statement of Policy. However, such actions will be coordinated with the Department of Justice to the extent practicable. 52

VI.* INACCURATE AND INCOMPLETE INFORMATION A violation of the regulations on submitting complete and accurate information whether or not considered a material false statement, can result in the full range of enforcement sanctions. The labeling of a c011111unication failure as a material false statement will be made on a case-by-case basis and will be reserved for egregious violations. Violations involving inaccurate or incomplete information or the failure to provide significant information identified by a licensee normally will be categorized based on the guidance herein, in Section III "Severity of Violations, 11 and in Supplement VII. The Commission recognizes that oral information may in some situations be inherently less reliable than written submittals because of the absence of an opportunity for reflection and management review. However, the Co11111ission must be able to rely on oral communications from licensee officials ~oncerning significant information. A licensee official for purposes of application of the Enforcement Policy means a first line supervisor or above as well as a licensed individual, radiation safety officer, or a person listed on a license as.an authorized user of_ licensed material. Therefore, in determining whether to take enforcement action for an oral statement, consideration may be given to such factors as (1) the degree of knowledge that the convnunicator should have had, regarding the matte~, in view of his or her position, training, and experience, (2) the opportunity and time available prior to the corrmunication to assure the accuracy or completeness of the infon11a:tion, (3) the degree of intent or negligence, if *any, involved, (4) the 53

formality of the communication, (5) the reasonableness of NRC reliance on the information, (6) the importance of the information which was wrong or not provided, and (7) the reasonableness of the e~planation for not providing complete and accurate information. Absent at least careless disregard, an incomplete or inaccurate unsworn oral statement normally will not be subject to enforcement action* unless it involves significant information provided by a licensee official. However, enforcement action may b~ taken for an unintentionally incomplete or inaccurate oral statement provided to*the NRC by a licensee official or others on behalf of a licensee, if a record was made of the oral information and provided to the licensee thereby permitting an opportunity to correct the oral information, such as if a transcript of the communication or mee~ing summary containing the error was made ~vailable to the licensee and was not subsequently corrected in a timely manner. When *a licensee has corrected inaccurate or incomplete information, the decision to issue a citation for the initial inaccurate or incomplete

• information normally will be dependent on the circumstances, including the ease of detection of the error, the timeliness of the correction, whether the NRC or the licensee. identjfied the problem with the coD111unication, and whether the NRC re*lied on the information prior to the correction. Generally, if the matter was promptly identified and corrected-by the licensee prior to reliance by the NRC, or before the NRG.raised a question about the information, no enforcement action will be taken for the initial inaccurate or incomplete information.

On t~e other hand, if the misinformation is identified after the NRC relies on 54

it, or after some question is raised regarding the accuracy of the information, then some enforcement action normally will be taken even if it is in fact corrected. However, if the initial submittal was accurate when made but later turns out to be erroneous because of newly discovered information or advance in technology, a citation normally would not be appropriate if, when the new information became available, the initial submittal was corrected. The failure to correct inaccurate or incomplete information which the licensee does not identify as significant normally will not constitute a separate violation. However, the circumstances surrounding the failure to correct may be considered relevant to the determination of enforcement action for the initial inaccurate or incomplete statement. For example, an unintentionally inaccurate or incomplete submission may be treated as a more severe matter if the licensee later determines that the initial submittal was in error and does not correct it or if there were clear opportunities to identify the error. If information not corrected was recognized by a licensee as significant, a separate citation may be made for the failure to provide significant information. In any event, in serious cases where the licensee's actions in not correcting or providiQg information raise questions about its commitment to safety or its fundamental trustworthiness, the Commission may exercise its author,ty to issue orders modifying~ suspending, or revoking the license. The CoITITlission recognizes that enforcement determinations must be made on a case-by-case basis, taking into consideration the issues described above. 55

VII. PUBLIC DISCLOSURE OF ENFORCEMENT ACTIONS In accordance with 10 CFR 2.790, all enforcement actions and licensees' responses are publicly available for inspection. In addition, press releases are generally issued for civil penalties and orders. In the case of orders and civil penalties related to violations at Severity Level I, II, or III, press releases are issued at the time of the order or the proposed imposition of the civil penalty. Press releases are not normally issued for Notices of Violation. VI I I. "RESPONSIBILITIES The Deputy Executive Director for Regional Operations (DEDRO), as the principal enforcement officer of the NRC; has been delegated the authority to issue notices of violations, civil penalties, and orders. 2/ Regional Administrators may also issue notices of violation for Severity Level IV and V violations and may sign notices of violation for Severity Level III violations with no proposed civil penalty and proposed civil penalty actions with the concurrence of the DEDRO. In recognition that the regulation of nuclear activities in many cases does not lend itself to a mechanistic treatment, the DEDRO or the Regional Administrator must 2/ The Director, Office of Enforcement, acts for the Deputy Executive _Director for Regional Operations in the latter's absence or as directed. The Directors of the Offices of Nuclear Reactor Regulation, Nuclear Material Safety and Safeguards, and Special Projects have also been delegated authority to issue orders, but it is expected that normal use of this authority by NRR, NMSS, and OSP will be confined to actions necessary in the interest of public health and safety. The Director, Office of Administration and Resources Management, has been delegated the authority to issue orders where licensees violate CoDJTiission regulations by nonpayment of license fees. 56

exercise judgment and discretion in determining the severity levels of the violations and the appropriate enforcement sanctions, including the decision to issue a Notice of Violation, or to propose or impose a civil penalty and the amount of such penalty, after considering the general principles of this statement of policy and the technical significance of the violations and the surrounding circumstances. The Commission will be provided written notification of all enforcement actjons involving civil penalties or orders. The Coamission will be consulted prior to taking action in the following situations (unless the urgency of the situation dictates immediate action): (1) An action affecting a licensee 1s operation that requires balancing the public health and safety or common defense and security implications of not operating with the potential radiological or other hazards associated with continued operation; (2) Proposals to impose civil penalties in amounts greater than 3 times the Severity Level I values shown in Table lA; (J) Any proposed enforcement action that involves a Severity Level I violation; (4) Any enforcement action that involves a finding of a material false statement; (5) Refraining from taking enforcement action for matters meeting the criteria of Section V.G.2. 57

(6) Any action the Office Director believes warrants Conmission involve-ment; or (7) Any proposed enforcement action on which the CoD111ission asks to be consulted. IX. VENDOR ENFORCEMENT The Commission's enforcement policy is also applicable to non-licensees (vendors). Vendors of products or services provided for use in nuclear activities are subject to certain requirements designed to ensure that the products or services supplied that could affect safety are of high quality. Through procurement contracts with reactor licensees, vendors are.required to have quality assurance programs that meet applicable requirements including 10 CFR Part 50, Appendix B, and 10 CFR Part 71, Subpart H. Vendors of reactor and materials licensees and Part 71 licensees are subject to the requirements of 10 CFR Part 21 regarding reporting of defects in basic components. The NRC conducts inspections of reactor licensees to* determine whether they are. ensuring that vendors are meeting their contractual obligations with regard to quality of products or services that could have an adverse effect on safety. As part.of the effort of ensuring that licensees fulfill their obligations in this regard, the NRC inspects reactor vendors to determine if they are meeting their obligations. These inspections include examination of the quality assurance programs and their implementation by ~he vendors through examination of product quality. 58

The NRC may also inspect vendors, including suppliers of Part 71 and materials licensees, to determine whether they are complying with Part 21. When inspections determine that violations of NRC requirements have occurredg or that vendors have failed to fulfill contractual commitments that could adversely affect the quality of a safety significant product or service, enforcement action will be taken. Notices of Violation and civil penalties will be used, as appropriate, for licensee failures to ensure that their vendors have pr~grams that meet applicable requirements including Part 21. Notices of Violation will be issued for vendors which violate Part 21. Civil penalties will only be imposed against individual d~rectors or responslble officers of a vendor organization who knowingly and consciously fail to provide the notice required by 10 CFR 21.21(b)(l). Notices of Nonconformance will be used for vendors which fail to meet commitm~~ts-~elated to NRC a~tiyities. SUPPLEMENT I - SEVERITY CATEGORIES REACTOR OPERATIONS A. Severity I - Violations involving for example: 1:: A Safety Limit, as defined in 10 CFR 50.36 and the Technical Specifi-cations, being exceeded;

2.

A system£/ designed to prevent or mitigate a serious safety event not £/ 11System 11 as used in these supplements, includes administrative and managerial control systems, as well as physical systems. 59

being able tq perform its intended safety function ZI when actually cal led upon to work;:

3.

An accidental criticality; or

4.

Release of radioactivity offsite greater than ten (10) times the Technical Specifications limit.~/ B. Severity II - Violations involving for example:

1.

A system designed to prevent or mitigate serious safety events not being able to perform its intended safety function; or

2.

Release of radioa~tivity offsite greater than five (5) times the Technical Specifications limit.

c.

Severity III - Violations involving for example:

1.

A significant violation of a Technical Specification Limiting Condition for Operation where the appropriate_ Action Statement was not satisfied within the time allotted by the Action Statement, such as: ZI "Intended safety function" means _the total safety function, and is not directed toward a loss of reoundancy. For example, considering a BWR's high pressure ECCS capab1lity, the violation must result in complete invalidation of both HPCI and ADS subsystems. A loss of one subsystem does not defeat the intended safety function as long as the other subsystem is operable. ~/ The Technical Specification limit as used in this Supplement (Items A.4, 8.2 and C.5) does not apply to the instantaneous release limit. 60

a. In a pressurized water reactor, in the applicable modes, having one high-pressure safety injection pump inoperable for a period in excess of that allowed by the action statement; or

b. In a boiling water reactor, one primary containment isolation valve inoperable for a period in excess of that allowed by the action statement.

2.

A system designed to prevent or mitigate a serious safety event not being able to perform its intended function under certain conditions (e.g., safety system not operable unless offsite power is available; materials or components not environmentally qualified);

3.

Dereliction of duty on the part of personnel involved in licensed activities;

4.

Changes in reactor parameters which cause unanticipated reductions in margins of safety;

5.

Release of radioactivity offsite greater than the Techni-cal Specifications limit;

6.

A significant failure to meet the requirements of 10 CFR 50.59, including a failure such that a required license amendment was not sought; 61

7.. Licensee failure to conduct adequate oversight of vendors resulting in the use of products or ~ervices which are of defective or indeterminate quality and which have safety significance; or

8.

Breakdown in the control of licensed activities involving a number of violations that are related or, if isolated, that are recurring violations that collectively represent a potentially significant lack of attention or carelessness toward licensed responsibilities. D. Severity IV - Violations involving for example:

1. A less significant violation of a Technical Specification Limiting Condition for Operation where the appropriate Action Statement was not satisfied within the time allotted by the Action Statement, such as:

a. In a pressurized water reactor, a 5% deficiency in the required volume of the condensate storage tank; or

b. In a boiling water reactor, one subsystem of the two independent MSIV leakage control surrsystems inoperable.-

2. Failure to meet the requirements of 10 CFR 50.59 that does not result in a Severity Level I, II, or III violation;

3. Failure to meet regulatory requirements that have more than minor safety or environmental significance~ or

4. Failure to make a required Licensee Event Report.

62

E. Severity Level V - Violations that have minor safety or environmental s 1 gn if i cance. SUPPLEMENT II - SEVERITY CATEGORIES PART 50 FACILITY CONSTRUCTION A. Severity I - Violations involving a structure or system that is completed 1/ in such a manner that it would not have satisfied its intended safety related purpose. B. Severity II - Violations involving for example:

1.

A breakdown in the.Quality Assurance (QA} program a,s exemplified by deficiencies in construction QA related to more than one work activity (e.g., structural, piping, electrical, foundations). Such deficiencies nor.mally involve the* licensee's failure to condu.ct adequate audits or to take prompt corrective action on the basis of such audits and-normally involve multiple examples of deficient construction or construction of unknowry quality* due to'1nadequate program implementation; or

2.

A structure or system that is completed in such a manner that it could have an adverse effect on the safety of operations. C. Severity III - Violations involving for example: 11 11completedn means completion of construction including ~eview and acceptance by the construction QA organization.

1.

A deficiency in a licensee quality assurance program for construction related to a single work activity (e.go, structural, piping, elec-trical or foundations). Such significant deficiency normally involves the licensee's failure to conduct adequate audits or to take prompt corrective action on the basis of such audits, and normally involves multiple examples of deficient construction o~ construction of unknown quality due to inadequate program implementation; 2" Failure to confirm the design safety requirements of a structure or system as a result of inadequate preoperational test program implementation; or

3.

Failure to make a required 10 CFR 50.55(e) report. D. Severity IV - Violations involving failure to meet regulatory requirements including one or more Quality Assurance Criteriqn not amounting to Severity Level I, II, or III violations that have more than minor safety or environmental significance. E. Severity V - Violations that have minor safety or environmental significance. SUPPLEMENT_!!! - SEVERITY CATEGORIES SAFEGUARDS A. Severity I - Violations involving for example: 64

1.

An act of radiological sabotage or actual theft, loss, or diversion of a formula quantity of special nuclear material lO/ in which the security system did not function as required; or.

2.

Actual undetected entry of an unauthorized individual ll/ into a vital area 121 from outside the protected area who represents a threat. B. Severity II - Violations involving for example:

1.

Actual theft, loss or diversion of special nuclear material of moderate strategic significance 131 in which the security system did not function as required;

2.

Failure or inability to control access such that an unauthorized individual could easily gain undetected access 141 into a vital area from outside the protected area; or lO/ See 10* CFR -'7'*3.2. ll/ An unauthorized individual is someone who was not authorized for entrance into the area in question, or not authorized to enter in the manner entered. 121 The phrase "vital area" includes vital areas, material access areas, and controlled access areas. 131 See 10 CFR 73.2. 141 In determining whether access can be easily gained, factors such as predictab!lity, identifiability, and ease of passage should be considered. 65

3.

Failure to have a security system aesigned or used to prevent the-theft, loss, or diversion of SNM of moderate strategic significance or greater amounts or acts of radiological sabotage. C. Severity III - Violations involving for example:

1.

Failure to conduct an adequate search at the access control point that results in the introduction to the protected area of items that may be useful in radiological sabotage or theft of SNM;

2.

Failure or inability to control access such that an unauthorized individual could easily gain undetected access into a vital area from inside the protected area or to the protected area from outside the protected area; _

3.

Significant failure of the safeguards systems designed or used to prevent or detect the theft, loss, or diversion of SNM or radiological sabotage;

4.

Failure to properly secure or protect classified or other sensitive safeguards information which would significantly assist an individual in an act of radiological sabotage or theft. of special nuclear materia 1;

5.

Significant failure to take compensatory measures for a known security situation that could easily allow unauthorized and undetected access to a protected or vital area;

66.

6.

Significant failure to respond to a suspected event in either a timely manner or with an adequat~ response force; or

7.

Breakdown in the security system involving a number of violations that are related or, if isolated, that are recurring violations that collectively reflect a potentially significant lack of attention or carelessness toward licensed responsibilities. D. Severity IV - Violations involving for example:

1.

Failure of a safeguards system designed or used to prevent or detect the theft, loss, or diversion of SNM or radiological sabotage;

2.

Failure to respond to a suspected event in either a timely manner or with an ?dequate response force;

3.

Failure to implement 10 CFR Parts 25 and 95 and information addressed under Section 142 of the Act, and the NRC approved security plan relevant to those parts;

4.

Failure to make, maintain~ or provide log entries in accordance with 10 CFR 73.?l(c) and (d); .5. Failure to conduct a proper search at the access control point; 67

6.

Failure to properly secure or protect classified or other sensitive safeguards information which ~ould not significantly assist an individual in an act of radiological sabotage or theft of special nuclear material;

7.

Failure to co*ntrol access such that an opportunity exists that could allow unauthorized and undetected access into the protected area or from the protected area into a vital area but which was not easily exploitable;

8.

Inadequate compensatory measures for a known security situation that could allow unauthorized and undetected access;

9.

Failure to properly test a security system; or

10. Other violations that have more than minor safeguards signific~nce.

E. Severity V - Violations that have minor safeguards significance such as: 9

1.

Isolated failure to log a security event in accordance with 10 CFR 73.71(c); or

2.

Other violations that have minor safeguards significance. 68

SUPPLEMENT IV - SEVERITY CATEGORIES HEALTH PHYSICS 10 CFR PART 20 15/ A. Severity I - Violations involving for example:

1.

Single exposure of a worker in excess of 25 rems of radiation to the whole bpdy, 150 rems to the skin of the whole body, or 375 rems to the feet, ankles, hands, or forearms;

2.

Annual whole body exposure of a member of the public in excess of 2.5 rems of radiation;

3.

Release of radioactive material to an unrestricted are~ in excess of ten times the limits of 10 CFR 20.106;

4.

Disposal of licensed material in quantities or concentrations in excess of ten times the limits of 10 CFR 20.303; or B.

5.

Exposure of a worker in restricted areas of ten times the limits,of 10 CFR 20.103. Severity II - Violations involving for example: Personnel overexposures and associated violations, incurred during a lifesaving effort, will be treated on a case-by-case basis. 69

1.

Single exposure of a worker in excess of 5 rems of radiation to the whole body, 30 rems to the skin of the whole body, or 75 rems to the feet, ankles, hands or forearms;

2.

Annual whole body exposure of a member of the public in excess of 0.5 rems of radiation;

3.

Release of radioactive material to an unrestricted area in excess of five times the limits of 10 CFR 20.106;

4.

Failure to make an iD1J1ediate notification as required by 10 CFR 20.403(a)(l) and 10 CFR 20.403(a)(2);

5.

Disposal of. licensed material in quantities or concentrations in excess of five times the limits of 10 CFR 20.303; or

6.

Exposure of a worker in restricted areas in excess of five times the limits of 10 CFR 20.103. C. Severity III - Violations involving for example:

1.

Single exposure of a worker in excess of 3 rems of radiation to the whole body, 7.5 rems to the skin of the whole body, or 18.75 rems to. the feet, ankles, hands or forearms; 70

2.

A radiation level in an unrestricted area such that an individual could receive greater than 100 millirem in a one hour period or 500 millirem in any seven consecutive days;

3.

Failure to make a 24-hour notification as required by 10 CFR 20.403(b) or an immediate notification required by 10 CFR 20.402(a);

4.

Substantial potential for an exposure or release in excess of 10 CFR 20 whether or not such exposure or release occurs (e.g., entry into high radiation areas, such as under reactor vessels or in the vicinity of exposed radiographic sources, without having performed an adequate survey, operation of a radiation facility with a nonfunctioning interlock system); I,,.

• r-' *..,

.o ~-

5.

Release of radioactive material to an unrestricted area in excess of the limits of 10 CFR 20.106;

6.

Improper disposal of licensed material not covered in Severity Levels I or II;

7.

Exposure of a worker in restricted areas in excess of the limits of 10 CFR 20.103;

8.

Release for unrestricted use of contaminated or radioactive material or e~uipment which poses a realistic potential for significant exposure to members of the public, or which refl_ects a progra1T1T1atic - _ (rather than isolated) weakness in the radiation control program; 71

9.

Cumulative worker exposure above regulatory limits when such cumu-lative exposure reflects a programmatic, rather than an isolated.* weakness in radiation protection;

10.

Conduct of licensee activities by a technically unqualified person;

11. Significant failure to control licensed material; or

12.

Breakdown in the radiation safety program involving a number of 9 violations that are related or, if isolated, that are recurring that collectively represent a potentially significant lack of attention or carelessness toward licensed responsibilities. D. Severity IV - Violatjons involving for example:

1.

Exposures in excess of the limits of 10 CFR 20.101 not constituting Severity Level I, II, or III violations;

2.

A radiation level in an unrestricted area such that an individual could receive greater ~han ~ millirem in a one-hour period or 100 millirem in any seven consecutive days;

3.

failure to make a 30-day notification required by 10 CFR 20.405;

4.

Failure to make a followup written report as required by 10 CFR 20.402(b), 20.408, and ~0.409; or 72

• 5.

Any other matter that has more than minor safety or environmental significance. E. Severity V - Violations that have minor safety or environmental significance. SUPPLEMENT V - SEVERITY CATEGORIES TRANSPORTATION lG/ A. Severity. I - Violations of NRC transportation requirements.involving for example:

1.

Annual who le body radiation exposure of a member of the public fo excess of 2.5 rems of radiation;

2.

Surface contamination in excess of 50 times the NRC limit; or

3.

External radiation levels in excess of 10 times the NRC limit. B. Severity II - Violations of NRC_ transportation requirements involving for example: . 1. Annual whole body exposure of a member of the public in excess of 0.5 rems of radiation;

• some-transpor-ta-t.i.on.r_e.Q.uireme_l}ts are applied to more than one licensee involved in the same activity such *a*s cf--shipper-and--a--car..rier: __ Wh.~l'!_a violati-0n of such a requirement occurs, enforcement action will be directed against the responsible licensee which, under the circumstances of the case, may be one or more of the licensees involved.

2.

Surface contamination in excess of 10, but not more than 50 times the NRC limit;

3.

External radiation levels in excess of five, but not more than 10 times the NRC limit; or

4.

Failure to make required initial notifications associated with Severity Level I or II violations. C. Severity III - Violations of NRC transportation requirements involving for example:

1.

Surface contamination in excess of five but not more than 10 times , the NRC l i mi t;

2.

External radiation in excess of one but not more than five times the NRG limit;

3.

Any noncompliance with labeling, placarding, shipping paper, packaging, loaaing, or other requirements that could reasonably result in the following:

a.

Significant failure to identify the type, quantity, or form of material;

b.

Failure of the carrier or recipient to exercise adequate controls; or 74

c.

Substantial potential for personnel exposure or contamination, or improper transfer of materfal;

4.

Failure to make required initial notification associated with Severity Level III violations; or

5.

Breakdown in the licensee's program for the transportation of licensed material involving a number of violations that are related or, if isolated, that are recurring violations that collectively reflect a potentially significant lack of attention or carelessness toward licensed responsibilities. D. Severity IV - Violations of NRC transportation requirements involving for example:

• I.

Breach of package integrity without external radiation levels exceeding the NRC limit or without contamination levels exceeding five times the NRC limits;

2.

• Surface contaminatton in excess of but not more than five times the NRC 1 imit;

3.

Failure to register as an authorized user of an NRC~Certified Transport packages;

4.

Noncomp1iance with shipping papers, marking, labeling, placarding packaging or loading not amounting to a Severity Level I, II, or III violation; 75

5.

Failure to demonstrate that pack~ges for special form radioactive material meets applicable:regulatory requirements;

6.

Failure to demonstrate that packages meet DOT Specifications for 7A Type A packages; or

7.

Other violations that have more than minor safety or environmental significance. E. Severity V - Violations that have minor safety or environmental significance. SUPPLEMENT VI - SEVERITY CATEGORIES FUEL CYCLE AND MATERIALS OPERATIONS A. Severity I -*violations involving for example:

1.

Radiation levels, contamination levels, or releases that exceed 10. times the limits specified in the license;*_

2.

A system designed to prevent or mitigate a serious safety event not being operable when actually required to perform its design function; or

3.

A nuclear criticality accident. B. Severity II - Violations involving for example: 76

1.

Radiation levels, contamination levels, or releases that exceed five times the limits specified in the license; or

2.

A system designed to prevent or mitigate a serious safety event being inoperable. C. Severity III - Violations involving for example:

1.

2.

3.

4.

Failure to control access to licensed materials for radiation purposes as specified by NRC requirements; Possession or use of unauthorized equipment or materials in the ~onduct of licensee activities which degrades safety; Use of radioactive material on humans where such use is not authorized; Conduct of licensed activities by a technically unqualified person;

5.

Radiation levels, contamination levels, or releases that exceed the limits specified *;n the license;

6.

Medical therapeutic misadministration or the failure to report such a misadministration;

7.

Multiple errors of the same or similar root cause that results in diagnostic _misadministrations over the inspection period, or a recurrent violation from the previous inspection period that results in a diagnostic misadm1nistration~ OF - 77

8.

Breakdown in the control of licensed activities involving a number of violations that are *related or, if isolated, that are recurring violations that collectively represent a potentially significant lack of attention or carelessness toward licensed responsibilities. D. Severity IV - Violations involving for example:

1.

Failure to maintain patients hospitalized who have_cobalt-60, cesium-137, or iridium-192 implants or to conduct required leakage or contamination tests, or to use properly calibrated equipment;

2.

Other violations that have more than minor safety or environmental signi~icance; or

3.

Medical diagnostic misadministration or a failure to report such a misadministration. E. Severity V - Violations that have minor safety or environmental significance. SUPPLEMENT VII - SEVERITY CATEGORIES MISCELLANEOUS MATTERS A. Severity I - Violations involving for example: 78

1.

Inaccurate or incomplete information 11.I that is provided to the NRC (a) deliberately with the knowledge of a licensee official that the information is incomplete or inaccurate, or (b) if the infifrma-tion, had it been complete and accurate at the time provided, likely would have resulted in regulatory action such as an i111T1ediate order required by the public health and safety.

2.

Incomplete or inaccurate information that the NRC requires be kept by a licensee which is (a) incomplete or inaccurate because of falsification by or with the knowledge of a licensee official, or (b) if the information, had it been complete and accurate when reviewed by the NRC, likely would have resulted in regulatory action such as an irranediate order required by public health and safety considerations;

3.

Information that the licensee has identified as having significant implications for public health and safety or the connnon defense and ~ecurity ("significant information identified by a licensee") and is deliberately withheld from the CoR1T1ission;

4.

Action by senior corporate management in violation of 10 CFR 50.7 or similar regulations against an employee; or

5.

A knowing and intentional failure to provide the notice required by Part 21. 11./ In applying the examples in this supplement regarding inaccurate or

---

i-ncomplet_e_i!lfQryw.tion and records, reference also should.be made to the guidance in Section -vI.-- -

79

B.. Severity II - Violations ir.volving for example:

1.

Inaccurate or incomplete information which is provided to the NRC (a) by a licensee official because of careless disregard for the complete-ness or accuracy of the information, or (b) if the information, had it been complete and accurate at the time provided, likely would have resulted in regulatory action such as a show cause order or a different regulatory position; L.. Incomplete or inaccurate information which the MRC requires be kept by a licensee which is (a) incomplete or inaccurate because of careless disregard for the accuracy of the information on the part of a licensee official, or {b) if the information, had it been complete and accurate when reviewed by the NRC. likel_y would have resulted in regulatory action such as a show cause order or a different regulatory position;

3.

"Significant informi\\tion identified by a licensee 11 and not provided to the Co1TBT1ission because of careless disregard on the part of a licensee - official;

4.

Action by plant management above first-line supervision in violation of 10 CFR 50.7 or similar regulations against. an employee; or

5.

A failure to provide the notice required by Part 21. C. Severity !II - Violations involving for example:

1.

Incomplete or inaccurate information w_hich is provided to the NRC (a) because of inadequate actions on the part of licensee officials 80 -

but not amounting to a Severity Level I or II violation, or (b) if the information, had it been complete and accurate at the time provided, likely would have resulted in a reconsideration of a regulatory position or substantial further inquiry such as an additional inspection or a formal request for information;

2.

Incomplete or inaccurate information which the NRC requires be kept by a licensee which is (a) incomplete or inaccurate because of inadequate actions on the part of licensee officials but not amounting to a Severity Level I or II violation, or (b) if the information, had it been complete and accurate when reviewed by the NRC, likely would have resulted in a reconsideration of a regulatory position or substantial further inquiry such as an additional inspection or a forma.l request for information;

3.

Failure to provide "significant information identified by a licensee" to the Convnission and not amounting ~9, a Severity Level I or II violation;

4.

Action by first-line supervision in violation of 10 CFR 50.7 or similar regulations against an employee; or

5.

Inadequate review or failure to review such that, if an a*ppropriate review had been made as required, a Part 21 report would have been made. D. Severity IV - Violations involving for example: 81

1.

Incomplete or inaccurate information of more than minor significance

• which is provided to the NRC but not amounting to a Severity Level I, II, or III violation;

2.

Information which the NRC requires be kept by a licensee and which is incomplete or inaccurate and of more than minor significance but not amounting to a Severity level I, II, or III violation; or

3.

Inadequate review or failure to review under Part 21 or other procedural violations associated with Part 21 with more than minor safety significance. E. Severity V - Violations of minor procedural requirements of Part 21.

1.

Incomplete or inaccurate information which is provided to the* Commission and the incompleteness -or inaccuracy is of minor significance;

2.

Information which the NRC requires be kept by a licensee which is incomplete or inaccurate and the incompleteness or inaccuracy is of minor significance; or

3.

Minor procedural" requirements of Part 21. SUPPLEMENT VIII - SEVERITY CATEGORIES EMERGENCY PREPAREDNESS A. Severity _I - Violations involving for example: - 82 e

In a general emergency, licensee failure to promptly (1) correctly classify the event, (2) make required notifications to responsible Federal, State, and local agencies, or (3) respond to the event (e.g., assess actual or potential offsite consequences, activate emergency response facilities, and augment shift staff). B. Severity II - Violations involving for example:

1.

In a site area emergency, licensee failure to promptly (1) correctly classify the event, (2) make required notifications to responsible Federal, State, and local agencies, or (3) respond to the event (e.g., assess actual or potential offsite consequences, activate emergency response facilities, and augment shift staff); or

2.

Licensee failure to meet or implement more than one emergency planning standard involving assessment or notification. C. Severity III - Violations involving for example:

1.

In an alert, licensee failure to promptly (1) correctly classify the event, (2) make required notifications to responsible Fe~eral, State, and local agencies, or (3) respond to the event (e.g., assess actual or potential offsite-consequences, activate emergency response faci-lities, and augment shift staff); or

2.

~icensee failure to meet or implement one emergency planning standard involving assessment or notification. 83

D. Severity IV - Violations involving for example: Licensee failure to meet or implement any emergency planning standard or requirement not directly related to assessment and notification. E. Severity V - Violations that have minor safety or environmental significance. Dated at Rockville, MD, this 6th day of October 1988. Regulatory Conmission. - 84}}