ML24011A224

Letter Informing That New Information Is Available to Show Inadequate Oversight by NRC Caused Damage to Other Non-Power Nuclear Facilities

ML24011A224
Person / Time
Site:	Aerotest
Issue date:	11/10/2023
From:	Slaughter D Aerotest
To:	Marian Zobler NRC/OGC
References
Download: ML24011A224 (108)

Text

AEROTEST OPERATIONS, INC.

3455 FOSTORIA WAY

• SAN RAMON, CA 94583 * (925) 866-1212

• FAX (925) 866-1716 November 10, 2023 Marian Zo ber Deputy General Counsel U.S. Nuclear Regulatory Commission Office of the General Counsel Mail Stop 0-15 D-21 Washington, DC 20555-0001

Subject:

Follow up on October 5, 2023 letter you were cc'd on addressed to Senator Cynthia Lummis and Senator Alex Padilla requesting help to I am asking you to help recover the fees paid to the NRC, the damage to the fuel because of the NRC's inadequate oversight, and my operational costs for 5 years since buying the business in 2017 as the actual reactor and operations did not match the public records available at the NRC. Requesting 4.5 million in NRC Credit and $2 Million in Cash to purchase replacement fuel Your Letter dated May 5, 2023, ADAMS ML23124A084. Denial under 10 CFR 14.37 Your claim did not reveal that you suffered any damage to or loss of property or personal injury or death caused by the negligent or wrongful act or omission of any employee of the Nuclear Regulatory Commission acting within the scope of their office or employment.

Dear NRC Deputy,

General Counsel Marian Zober:

Since my letter to you dated March 29, 2023, ADAMS ML23094A070 Requesting $2 Million in cash to replace damaged fuel and $3 Million in Credit with the NRC, new information is available to show Inadequate Oversight by the NRC caused damaged to other non-power nuclear facilities.

As the President of Aerotest Operations, I requested the investigation by the NRC OIG concerning the Aerotest Operations' circumstances and lack of effective oversight by the NRC. Their preliminary findings were also a contributing factor in calling for the special Inquiry. In the October 5, 2023, letter I attached the report entitled "Special Inquiry into the U.S. Nuclear Regulatory Commission's Oversight of Research and Test Reactors" and a copy of the memorandum report produced by the NRC OIG describing the NRC actions associated with Aerotest Operation entitled "Inadequate Oversight of Non-Power Reactor (OIG Case No. 21-0012)".

Our Damage as outlined in the October 5. 2023 letter was approx. $13 Million. I am asking you to approve that the NRC pay Aerotest operations $2 Million Cash to replace the damaged fuel and $4.5 million in NRC Fee Credit which will help me in getting the reactor recommissioned, the license renewed and to continue the business of neutron radiography interrogating critical manufactured parts and producing critical short-lived radioisotopes for medicine.

At this point, I am asking the NRC to approve payment of about 1/2 of the damages that Aerotest Operations, Inc. suffered because of Inadequate Oversight by the NRC. I am willing to take a 4.5 million dollars in credit against future NRC costs but would need 2 million cash to purchase replacement fuel. Aerotest Operations is also responsible for the damage and will purchase the remaining 2 million in fuel needs.

If the NRC does not approve this settlement before January 31, 2024, my next step will be to retain legal help and suing for the full approx. $ 13 Million plus attorney's fees.

I incorporate the following items into this letter that have been sent to you previously.

Senator Cynthia Lummis and Senator Alex Padilla letter Dated October 5, 2023, that you were cc' d on o

Enclosures:

OIG Case No.21-012 Memorandum report Special Inquiry into the U.S. Nuclear Regulatory Commission's Oversight of Research and Test Reactors ADAMS ML23272A039 Senator Cynthia Lummis and Senator Alex Padilla letter Dated June 21, 2023, that you were cc'd on ADAMS ML23 l 77A256 o

Enclosures:

OIG Case No.21-012 Case Summary Reports (4/1/21, 7/1/21, 8/25/21, 1/3/22, 4/4/22 and 7/1/22)

Senator Cynthia Lummis and Senator Alex Padilla letter Dated May 24, 2023, that you were cc'd on ADAMS ML23157A066 o Background Information 5/30/12 Nuclear Labyrinth, LLC put in an application for direct transfer of License of Aerotest Operations ARRR license R-98 7/24/13 NRC denied the Indirect Transfer 8/13/13 Aerotest Operations, Inc and Nuclear Labyrinth, LLC put in a joint demand for a hearing on the Denial (Docket 50-228-L T) 2/28/17 Order Issued Approving the Indirect Transfer (Docket id NRC-2012-0286) 7 /l 7 /17 Sales and Transfer of ownership to Nuclear Labyrinth, LLC 1/22/19 Letter to Maureen E. Wylie, NRC CFO for reimbursement for NRC fees for activities that were not performed in a satisfactory manner. (ML l 9030A581) 11/11/20 Letter to Cherish K Johnson, NRC CFO Reply to Maureen E. Wylie's letter on detailed information by invoice for activities that were not performed in a satisfactory manner.

(ML20325Al 76)

1/19/21 NRC IG Office Investigation Begins (IG's office copied on documents to NRC starting on 1/22/19) 4/30/21 Letter from Cherish K Johnson denying reimbursement of NRC Fees for activities associated with the fees that were not performed in a satisfactory manner. (ML2 l 056A317) 3/29/23 Letter to Mariam Zober, Deputy General Counsel, NRC claiming $9,836,645.97 in damages from the NRC (ML23094A070) 5/2/23 FOIA Request OIG Case 21-012 (8/17/22) 5/4/23 Letter from Mariam Zober, Deputy General Counsel, NRC denying claiming of $9,836,645.97 in damages from the NRC (ML23124A084) 5/ 12/23 Received the I G report 21-012 dated 8/ 17 /22 showing NRC's Inadequate Oversight in 5 areas.

o

Enclosures:

OIG Case No.21-012 Report dated 8-17-22 Letter to you dated March 29, 2023, ADAMS ML23094A070.

o Referenced items:

Attached thirteen-page print-out of Documents in ADAMS with ADAMS number, date, to and from information. (Attached)

Letters to Maureen E Wylie, former NRC CFO (Attached)

Letters to Cherish K. Johnson, former NRC CFO (Attached)

Adjunct hearing on Transfer of License from Former parent company Autoliv to Current Parent Company Nuclear Labyrinth, LLC (NRC has this information)

NRC IG's office investigation on wrongdoing on the NRC's part from January 2021 to Current. (Need to get information from the NRC IG Office)

Aerotest Operations Root-Cause Analysis for the Damaged Aluminum Cladded Fuel. (3-17-2018) (Attached)

If any additional information or clarification is required, please contact me at dmsraven@gmail.com or (801) 631-5919.

Respectfully,

~~\--

David M Slaughter, PhD AO President, Reactor Administrator, General Manager. NRC-RO and Manager CEO Nuclear Labyrinth LLC.

Enclosure:

Senator Cynthia Lummis and Senator Alex Padilla letter Dated October 5, 2023 CC:

l\.

Document Control Desk U.S. Nuclear Regulatory Commission Washington, DC 20555-000 I Merrick B. Garland Attorney General U.S. Department of Justice 950 Pennsylvania Avenue. NW Washington, DC 20530-000 l

AEROTEST OPERATIONS, INC.

3455 FOSTORIA WAY

• SAN RAMON, CA 94583 * (925) ~1212

• FAX (925) 866-1716 October 5, 2023 US Senator Cynthia Lummis Russell Senate Office Building Washington, DC 20510 US Senator Alex Padilla 112 Hart Senate Office Building Washington, DC 20510

Subject:

NRC's Inadequate Oversight at Aerotest Operations, Inc. (a Small Business) and Request for your Assistance in Obtaining Restitution from the NRC.

Dear Senator Lummis and Senator Padilla:

As the President of Aerotest Operations, I requested the investigation by the NRC OIG concerning the Aerotest Operations' circumstances and lack of effective oversight by the NRC. Their preliminary findings were also a contributing factor in calling for the special Inquiry. I have attached the report entitled "Special Inquiry into the U.S. Nuclear Regulatory Commission's Oversight of Research and Test Reactors" and a copy of the memorandum report produced by the NRC OIG describing the NRC actions associated with Aerotest Operation entitled "Inadequate Oversight of Non-Power Reactor (OIG Case No. 21-0012)".

As you will read, this report substantiates the NRC's inadequate oversight at Aerotest Operations, Inc. It also substantiates that the lack of adequate oversight was not just limited to Aerotest Operations, Inc. and their findings suggested a widespread problem.

Pages 17-23 have the details on the NRC's Inadequate oversight at Aerotest Operations, Inc.

I am asking you to help recover the fees paid to the NRC, the damage to the fuel because of the NRC's inadequate oversight, and my operational costs for 5 years since buying the business in 2017 as the actual reactor and opefations did not match the public records available at the NRC. I am a legitimate small business and those records in part were used in the due diligence that convinced me of the viability of the reactor operation and business. I am also asking for help in getting the reactor recommissioned, the license renewed and to continue the business of neutron radiography interrogating critical manufactured parts and producing critical short-lived radioisotopes for medicine. I am willing to take a 4.5 million dollars in credit against future NRC costs but would need 2 million cash to purchase replacement fuel. Aerotest Operations is also responsible for the damage and will purchase the remaining 2 million in fuel needs.

US Senator Letter Dated October 5, 2023 Page 1 of4

I paid fees to the NRC of $3,120,792.82 from 2005-2020 for inadequate.

oversight. This was detailed in a Letter dated November 11, 2020, to Chensh K Johnson, NRC, CFO (ADAMS ML20325Al 76)

I experienced $ 4,000,000.00 in damage to our fuel ~t could ha~e be~n prevented with the correct oversight from the NRC. This was detai.led ma letter dated March 29, 2023, to Marian Zober, NRC General Counsel (ADAMS ML23094A070)

I spend $2,980,424.97 and loss profit of $2,856,221.00 for a total loss of

$5,836,645.97 from 2019 -2023 not being able to restart the reactor as it was not as described in NRC inspections and public records. This was detailed in a letter dated March 29, 2023, to Marian Zober, NRC General Counsel (ADAMS ML23094A070)

Here are some excerpts from the report entitled Special Inquiry into the U.S. Nuclear Regulatory Commission's Oversight of Research and Test reactor."

In Findings on Page II "The agency's RTR program failed to identify and address problems with the NIST test reactor and other RTRs, specifically: (A) the NRC failed to identify problems with fuel movement, including precursors to later events; (B) the NRC's inspection practices often lacked direct observation of activities important to safety; (C) RTRs other than the NIST reactor experienced significant fuel oversight issues; and, (D) the agency's RTR program has not been substantively updated for at least two decades, and does not reflect the agency's risk-informed and safety culture positions.

The OIG's findings highlight future challenges for the agency's oversight programs for R TRs and advanced reactors."

In

SUMMARY

OF FINDINGS on Page III "A. The NRC's approach to inspections at the NIST test reactor prior to the February 2021 event resulted in the failure to identify and address fuel movement problem areas that were potential event precursors. From 2016 through 2020, the NRC inspected NIST audit reports, fuel movement records, and fuel movement procedures that had indications of potential problems. However, the NRC failed to follow up on NIST audit committee reports identifying deficiencies with safety culture and operator training and requalification that contributed to the event. The NRC also failed to identify records that revealed unlatched fuel elements and procedures that lacked adequate steps to ensure fuel elements were latched.

B. The NRC's oversight of RTRs lacked direct observation of activities important to safety. The OIG found that the NRC staff's routine inspections at NIST were scheduled primarily based on the annual frequency requirements stated in staff guidance documents, rather than by considering the timing of fuel movement or other planned activities that US Senator Letter Dated October 5, 2023 Page 2 of 4

would have allowed inspections through direct observation. As a result, the NRC had not directly observed the fuel element latch checks following fuel movement at the NIST test reactor in the five years prior to the event. An unlatched fuel element was the direct cause of the 2021 event.

C. The NRC's oversight practices were not unique to NIST and were implemented in the same manner at two other RTRs that experienced fuel issues. The OIG also found inadequate technical specifications and dated license bases that contributed to these fuel issues. Additionally, in one instance, the NRC failed to act for at least five years to address damaged fuel as described in NRC inspection reports.

D. The agency's RTR inspection program policy and guidance are outdated because they do not implement risk-informed approaches and safety culture elements. The last major revision to the safety inspection program was in 2004. Additionally, the 2004 safety inspection procedures underestimate the resources needed to complete all requirements that are defined in policy as "mandatory activities."

If any additional information or clarification is required, please contact me at dmsraven(a:;gmail.com or (801) 631-5919.

Respectfully, ~"' \--

David* M. Slaughter, PhD President

Enclosures:

OIG Case No.21-012 Memorandum report Special Inquiry into the U.S. Nuclear Regulatory Commission's Oversight of Research and Test Reactors CC:

Brooke P. Clark Secretary of the Commission U.S. Nuclear Regulatory Commission Mail Stop 0-16 B33 Washington, DC 20555-0001 Commissioners Christopher T. Hanson, Jeff Baran, David A. Wright, Annie Caputo, and Bradley R. Crowell US Senator Letter Dated October 5, 2023 Page 3 of 4

Howard K Osborne CFO U.S. Nuclear Regulatory Commission Office of the Chief Financial Officer Division of the Comptroller Labor Administration and Fee Billing Branch Mail Stop T9 850 Washington, DC 20555-0001 Marian Zober Deputy General Counsel U.S. Nuclear Regulatory Commission Office of the General Counsel Mail Stop 0-15 D-21 Washington, DC 20555-0001 US Senator Letter Dated October 5, 2023 Page 4 of4

AEROTEST OPERATIONS, INC.

3455 FOSTORIA WAY

• SAN RAMON, CA 94583 * (925) 866-1212

• FAX (925) 866-1716 May 17, 2023 Congresswoman Harriet Hageman Office 1531 Longworth Office Building Washington, DC 20515 repharriethageman@mail15.housecommunicat\ons.gov

Dear Congresswoman Hageman (and Trinity Lewis),

It is nice that the Congresswoman's office received a response from Treasury in less than a month. I tried for about 15 months to get reasonable questions answered by a US Government Department; it should not require me to contact my congresswoman for help. I appreciate your assistance, thank you.

According to the May 16, 2023, letter from the Dept of Treasury, Bureau of the Fiscal Services the NRC's CFO took almost a year from December 23, 2020 (my dispute date with the Treasury) until December 10, 2021, to respond to the Treasury Department.

The US Treasury Department sent us a letter in January 2022 stating the NRC's CFO stated the debit was valid". I sent the Treasury Department follow up letters on February 22, 2022, March 18, 2022, November 16, 2022, January 11, 2023, and March 1, 2023. In every one of those letters, I asked the same 3 questions about their investigation but only received form letters stating the NRC CFO said the charges were valid. Looking at the questions I asked, I was inspecting the Treasury department to do an investigation.

In the May 16, 2023, letter for the Dept of Treasury, Bureau of the Fiscal Services stated, "Fiscal Services does not adjudicate disputes for debts owed to other agencies." If the Treasury would have told me after my December 2020 request for them to investigate the NRC debit, I would not have spent approximately 27 months just to learn that US Treasury does not investigate financial disputes. Given that information, why did Treasury initially request and was provided information suggesting that they do? It would have been more honest if they simply stated they don 't investigate disputes owed to other agencies; we are simply acting as a collection agency.

I had more disputes with the NRC than just this disputed invoice. In January 2021 the NRC IG's office opened an investigation on NRC fees for activities that were not performed in a satisfactory manner. The IG's office has closed its case and has identified 5 areas ofNRC's inadequate oversight. We were forced to pay for substandard work. I am in the process of trying to recover damages for the NRC inadequate oversight caused to Aerotest Operations, Inc. operations and business.

The NRC original invoice was $24,047.00 Invoice# LFB 20-1849 Dated 1/15/20. I paid

$1,251.00 on Check number 20677 dated 9/15/20 for items on the invoice that were not in dispute. Although, I still dispute the charges, I paid $27,224.45 on check 21154 dated 11/15/22. I paid a total of $28,475.45 which is $4,428.45 over the original invoice amount for penalties and interest. Although the NRC and the Treasury department applied the payments first to penalties and interest, I feel the principal balance has been paid in full and the remaining amount is penalties and interest in the amount of $9,115.12 and should be forgiven. The raising penalties and interest is partly due to the time waiting for a response from Treasury (which included a delayed response from NRC to Treasury). Note the first question below, a simple response would have been appreciated such as Treasury does not investigate claims of maleficence and have any no fiduciary responsibility; Treasury merely operates as a bill collector.

Questions Asked in each letter:

1. What are the procedures the U.S. Treasury used to investigate my complaint that NRC staff was performing duplicate work which a different NRC staff member had previously performed and billed the licensee for which was current and relevant to the current NRC work? Again, the NRC said the charges were valid because the NRC staff actually worked the hours billed, my complaint was not that they did not work the hours, but the need for them to work those hours.

2. Can the U.S. Treasury Department provide me with the evidence they used in the investigation to show their how they arrived at the conclusion the charges are valid?

3. Are there policies and procedures to protect the licensee from being penalized and billed multiple times for the same already completed by a different NRC staff member which is current, relevant, and available in ADAMS? I could not find any.

Sincerely, David M Slaughter, PhD President Attachments-NRC OIG Case Number 21-012

cc:

U.S. Department of Treasury Bureau of the Fiscal Service PO Box 830794 Birmingham, AL 35283-0794 Howard K Osborne U.S. Nuclear Regulatory Commission Office of the Chief Financial Officer Division of the Comptroller Labor Administration and Fee Billing Branch Mail Stop T9 850 Washington, DC 20555-000

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August 17, 2022 TO:

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SUBJECT:

ALLEGATION INADEQUATE OVERSIGHT OF NON-POWER REACTOR (OIG CASE NO.21-012)

The Office of the Inspector General (OIG), NRC, received several allegations over the past few years regarding the Aerotest Radiography and Research Reactor (ARRR). While the aUeger also expressed concerns regarding inappropriate billing and ineffective licensing processes, the investigation focused on the allegations that the NRC failed to provide adequate regulatory oversight and inspections at the ARRR until it voluntarily ceased operations in 20 l 0.

POTENTIAL VIOLATIONS The potential violations relevant to this investigation are IO C.F.R. 20.110 I, Radiation Protection Programs; 10 C.F.R. 20.1201, Occupational Dose Limits for Adults; 10 C.F.R. 50.36, Technical Specifications; 10 C.F.R. 50.59, Changes, Tests and Experiments; 10 C.F.R. 50.90, Application

for Amendment of License, Construction Permit. or Early Site Permit; Section 104(c) of the Atomic Energy Act (AEA); Inspection Manual Chapter 2545; Research and Test Reactor Inspection Program; and Inspection Procedure 6900 I, Class II Research and Test Reactors.

OFFICIAL l-J!iiE em.\' 016 INVESTIGATION INFORMATIO~

THIS DOCIJMENT IS THE PROPltRH' 01-" 'TIIE U.S. NUCU:AR Rl:GUI.A'TOR\" C0'.\11\IISSIO:,,i, 01-FICF. Of 'fllf: INSPHTOM GENERAL (OIG). II-' LOAS£1) 1*0 A!l<OTUER AGENCY, tr AND ITS CO~TESTS ARE !'li01" l'O IJE ltEPRl)C>l'n:I> Ok.

DISTRIBl lTEb Ot.:TSIDE THE R~CEIVl:\G AGENCY WITIIOtrt OIG'S PE!t:\IISSIO~.

NKC Headquarters I 11555 Rockville Pike I Rockville, Maryland 208S2 I 301,415.5930 www,nrc:oig.overslght,11ov

OFFICIAL USE ONLY=OIG INVESTIGATION INFORMATION FINDINGS FINDING# l: THE NRC FAILED TO AOEOUA TEL Y OVERSEE DAMAGED FUEL Despite the NRC's December 2013 issuance of a Severity Level IV violation for willfully operating the reactor with damaged fuel from approximately 2006 through 2010, the OIG found the NRC failed to adequately oversee damaged fuel at the ARRR even though NRC inspection reports and an inspector follow-up item issued in 2005 identified that ARRR 's reactor fuel elements showed signs of wear typically associated with long term use. During routine inspection activities between 2000 and 2010, the NRC identified potential precursors to fuel cladding damage through records review of the ARRR's annual reports and periodic fuel element inspections. Furthermore, in 2007, the licensee identified a cracked fuel element noted in the fuel inspection records that was not reported in the NRC Inspection Report.

Figure 1: Cracked fuel element at the AAAR Source: Image obtained rom video provided by the licensee.

. FINDING #2: THE NRC FAILED TO IDENTIFY CHANGES TO THE FACILITY LICENSING BASIS The NRC staff did not identify that the licensee made several changes to the facility that may not have been in accordance with 10 C.F.R. 50.59 or 10 C.F.R. 50.90. For example, the ARRR operated with a mixed core in the 1990s or earlier, and it continued to do so between 2000 and

,2010, the time of the OIG investigation's focus.

OFFICIAL US£ ONL"J'=-OIO INVESTIGATION l~FORMA'flON nns DOCUMENT IS TUE PROPERTY m* l'IIE l!.S. !"iUCU:AR Rt:GlJL\TOR\' COMMISSIO~. O1-*nn: (W Tift: INSPtTroH CENERAL (OIG).... LOANED TO ANonn:R AGl:NC\', IT AND n-s CO~TE~TS ARE NOT *ro BE Rt:PRO0(;( 'ED OM DISTRIBUTE!) Ot;TSIDE HIE RECEIVING AGt:NC\' WITHOUT OIG'S PF.IOIISSIO:\,

2

Of't-'ICIAL USE ONl!I' om INVESTIGATION INJ.'ORMATION FINDING #3: THE NRC FAILED TO IDENTIFY THE EXCEEDANCE OF A DOSE LIMIT AND THE LICENSEE'S DEPARTURE FROM AN AS LOW AS REASONABLY ACHIEVABLE CULTURE While the reactor operated within the regulatory limits of radiation exposure, the licensee had departed from an as low as reasonably achievable (ALARA) culture. The NRC was not ~bl_e to take action in this area because the inspector did not identify a violation of federal dose hm1ts or license condition. However, the OIG's review of personnel exposure levels revealed one employee that may have been above the NRC's occupational dose limit, which could have been a violation had it been identified at the time.

FINDING #4: THE ARRR HAD INADEOUA TE TECHNICAL SPECIFICATIONS PER TITLE 10 C.F.R. 50.36 Although the regulatory framework allows licensees to operate with the technical specifications approved with the granting of the initial operating license, the OIG found the ARRR's technical specifications missed specific values or actions that would ensure safety.

FINDING #5: THE MINIMUM AMOUNT OF REGULATORY OVERSIGHT PROVIDED TO NON-POWER REACTORS CAN BE IMPROVED Although the AEA guides the NRC to provide the "minimum amount of regulation required for the NRC to fulfill its regulatory obligations, the OIG found less than adequate training, guidance documents, and subject matter experts (i.e., a non-power reactor equivalent to the project engineer for power reactors) in the NRC to assist research and test reactor (RTR) inspectors.

BASIS OF FINDINGS BACKGROUND The ARRR is a non-power reactor located in San Ramon, California, whose initial license was granted in July 1965. The ARRR used the Training, Research, Isotopes, General Atomics (TR1GA) fuel design elements inside its core. The reactor's primary use was a neutron source for neutron or N-ray" radiography and was licensed for a maximum thennal power level of 250 kilowatts. Its products and services included analysis, criticality, irradiation, non-destructive testing, and radiographic equipment. For example, neutron radiography can ensure the correct assembly and positioning of small explosive devices, detect hidden corrosion in aluminum components, inspect mechanical systems, and verify the integrity of welds. Figure 2 provides a chronology since 2000.

OFFICIAL USE ONLY OIO INVESTIGA TJON INFORMATION THIS llOCUMEm IS nu; PROPl!:RTV OF TflE U.S. :-owucu:AR REGUl,ATORY COMI\IISSI0:'11, on*1n: m* THE INSPt;croR GENERAL (OIG). IF LOA:'liED 1'0 ANOTHER AGENCY, IT AND ITS CONTE'.I.TS ARE NOT TO BE REPRODl'CED OR DL~TRIBUTED Ot:TSIDE THE RF.CEl\'l:liG AGENCY WITHOUT OIG'S PERMISSIO~.

3

OPflCIAL USE ONL't'==OIO INVESTIGATION l~FORMA110N 2000 April 2005 July2009 October 2010 February 2011 December 2011 January 2012 December 2013 November 2017 March 2019 December 2021 Figura 2: Recent chronology Autoliv, Inc., a foreign entity, acquired ARRR through intermediate acquisition of several wholly owned companies as part of a distressed asset sale.

ARRR applied timely for its license renewal in 2005, with supplemental letters to the NRC in 2008, 2009 and 2010, and continued to operate under the timely renewal provisions of 10 C.F.R. 2.109, Effect of Timely Renewal Application, after its license expired on April 15, 2005.

Due to ARRR's foreign ownership, the NRC Issued a proposed denial of the license renewal.

ARRR voluntarily ceased commercial operations.

The NRC issued confirmatory Action Letter No. NRR-2011-001.

ARRR discovered four cracked fuel elements during Its fuel element inspection.

ARRR reported cracks to the NRC and then conducted a 100 percent fuel etement inspection, which identified 22 cracked fuel elements.

The NRC issued ARRR a Notice of Violation based on the Apparent Violation, EA-13-108, for operating the reactor between 2006 and 2010 with fuel elements that had significant cracks in the cladding.

ARRR was purchased and granted a license transfer to Nuclear Labyrinth, LLC, which became the new licensee.

ARRR submits License Amendment Request to prepare for fuel storage and decommissioning activities.

The NRC issued ARRR partial approval for a Possession Only License.

The reactor is in the decommissioning process.

FINDING #I: THE NRC FAILED TO ADEOUATEL Y OVERSEE DAMAGED FUEL Our review of documents revealed that on December 18, 2013, the NRC issued the ARRR a Notification of Violation against Technical Specification 10.2 for operating the reactor "from an indeterminate period of time beginning at a point after the last full inspection in 2006 up until October 1S, 2010, when the facility ceased reactor operation, the licensee operated the reactor with significant defects in the fuel elements." The first four cracked elements were discovered in late 2011, and in a subsequent fuel inspection, 22 fuel elements were identified as having varying degrees of discoloration, blistering, swelling, and/or cracking in the aluminum cladding. These characteristics represented a significant defect in the fuel elements and the potential loss of the integrity of a fission product barrier.

OFFICIAL USf ONL't'=OIG INVESTIGATION 1:-rlFORYIA l'ION THIS DOCUMENT IS THt: PROPERTY Of' THE U.S. NUCLEAR REGUl,ATOR\' CO\IMISSIO~. OFnn: 01' 'fllE INSPEn'OH m: ER.\.L (OIG). IF LOA.'liED 1l> ANOTHER AGEISC\', IT AND ITS CO:'IITESTS ARE XOT TI> BE REPRODl'CED OR DISTRIBUTED OUTSIDE THE RECEl\'l:'liG AGENCY WITHOUT OIG'S PER)'IISSIOK 4

OfflCIAL USE ONL'l'=OIG INVESTIGATION INFORMATION NUREG/CR-2387, Credible Accident Analyses for TRIGA and TRIGA-Fueled Reactors, states on page 35:

"The usual evaluation criteria for fuel elements are based on bowing, elongation or visual changes in the cladding. These parameters are used to estimate fuel serviceability an apparently give a reliable indication of thermal gradients to which the fuel element has been subjected during its operating history. In addition, the long-term effects of fuel bumup create swelling of the fuel moderator that presumably would also be indicated by changes in fuel element dimensions. Fuel elements that have been pulsed may have cracking or fracturing of the fuel-moderator. which would not be observed during the fuel inspections."

The NRC's Technical Training Center does not provide training to RTR inspectors on fuel inspections, and any information on fuel element damage would be in Course R-800, "Perspectives on Reactor Safety." TIC staff told us that it was exceedingly rare in a non-power reactor to reach a point of damage. and it was such an unlikely event that other areas of non-power reactors were covered instead. The staff also told the OIG that if an RTR inspector was unsure about a topic not covered in training, the inspector should ensure the topic is addressed through mentoring. RTR inspectors have 3 months of basic training, and then 2 years of learning in the field before they are certified. A current RTR inspector told the OIG that the qualification process depends on the individual, but it takes at least 6 months to a year.

Inspection Procedure 69001, Class II Research and Test Reactors, is applicable to NRC inspections conducted at the ARRR. Its references include Regulatory Guide 2.3, Quality Verification for Plate-Type Uranium-Aluminum Fuel Elements for Use in Research Reactors, July 1967, and ANSI/ ANS-I S.2, Quality Control for Plate-Type Uranium-Aluminum Fuel Elements, 1974. These documents are provided to assist in the receipt of new fuel, focusing on their quality requirements, but the guidance does not address irradiated fuel inspection, similar to the criteria discussed in NUREG/CR-2387, Credible Accident Analysis for TRIGA and TRIGA-Fueled Reactors, April 1982.

The NRC RTR inspector who performed inspections at the ARRR between 2000 and 2020 said he and other R TR inspectors were not trained on damaged fuel, and he had not seen NUREG/CR-2387 before we provided it to him to review the parameters for fuel evaluation.

The RTR inspector said he was not aware of fuel damage issues when he took over the ARRR from the previously assigned inspector.

The NRC Inspection Report No. 50-228/2005-201 states the inspector reviewed data sheets for Fuel and Graphite Transfer forms for 2003, 2004, and 2005. It also states that although reactor fuel was not required to be inspected, the licensee continued to inspect 20 percent of the fuel elements annually to remain cognizant of the physical status of the fuel. The licensee noted that several fuel elements had been deformed such that they were stuck in the reactor core, making them difficult to move.

The RTR inspector stated it was the licensee's responsibility 0 to keep up with their fuel," and he 0f'f tClAL U9t! ONl'f'=-OIO INVESTIGATION l:'llf,"OR~ATION nns DOCUMENT IS TIit: PROPl!Rl"\' OF TUE U.S. !'i!UC'LEAR tu:Gl!l,ATOR'V CO'.\IMISSIO:"i. on*1n: 01: THE INSP[C'l'OK GENERAL (OIG). IF LOASED TO ANOTHER AGENCY, IT AND ITS COSTE'.'liTS ARE '.'liOT TO BE REPROOt:et:o OR DISTRIBUTED oL;TSIDE THE RECEl\'ISG AGENCY WITHOUT OIG'S PEll'.\IISSIO:\.

5

OFFICIAL USE ONLY OIG INVESTIGATION INJ-'ORMATION was aware the reactor core's older fuel had aluminum cladding and the newer fuel had stainless steel cladding. He.. thought that was unusual that they would have stuck elements." Based on this information and to ensure the defonnation was not a precursor to a more significant issue, the inspector told us he opened Inspector Follow-up Item 50-228/2005-201-02, to review the licensee's conduct of complete inspections of fuel elements in the core. However, the cover letter of the 2005 Jnspection Report. dated May 23, 2005, addressed to the licensee stated, "Based on the results of this inspection, no safety concerns or noncompliances of NRC tequirements were identified."

The NRC Inspection Report No. 50-228/2007-201 states that the inspector reviewed data sheets for Fuel and Graphite Transfer fonns for 2005, 2006, and 2007. Again, the inspection report points out that there was no requirement for the licensee to inspect the fuel, stating:

"As a result of the fuel problem, the licensee decided to remove all fuel possible from the core and conduct an inspection of all the fuel elements. In January 2006, those elements that could be removed were placed in storage. The licensee then used a moveable camera and monitor set-up to conduct an inspection of those elements that were.. stuck" in place. After that was completed, an inspection of all the remaining elements was also completed and the elements were returned to their original positions in the core. No new or unusual problems were identified."

We reviewed the Data Sheets for Fuel and Graphite Transfer for the ARRR 's 2006 inspection, finding that that 20 fuel elements and 5 graphite elements were indicated as stuck in the reactor core.

During this inspection, the RTR inspector also closed out Inspector Follow-up ltem 228/2005-201-02. In addition to referencing the licensee's 2006 inspection, he wrote:

"To further help with this problem, the licensee had developed a plan to purchase enough new fuel elements over time to replace the ones that cannot be removed from the core. Once enough fuel is on hand, the reactor core will be defueled.

Then the top grid plate will be raised slightly and the remaining "stuck" elements will be worked out of their positions and out of the core. Then the new fuel elements will be placed in their positions. This issue is considered closed."

The cover letter of the 2007 Inspection Report, dated June 22, 2007, addressed to the licensee stated, "Based on the results of this inspection, no findings of significance were identified" (2007); however, when we reviewed the 2007 Data Sheet for Fuel and Graphite Transfer, element 631 E listed.. crack" in the Comments and was removed from the core and placed into a storage rack. The NRC Inspection Report No. 50-228/2007-201 states the inspector reviewed the 2007 Data Sheet for Fuel and Graphite Transfer during that inspection. However, when the R TR inspector was shown the 2007 Data Sheet for Fuel and Graphite Tran sf er, he did not recall seeing the fuel element listed with "crack" in the comments, and if he had, he said he would have included it in his inspection report and called his branch chief and the ARRR project manager to ask how they wanted him to proceed.

OPf'IClAL USE ONL'J' OIO INVESTIGATION INFORMATION THIS l>OClll\ft:~1* IS Tm: PROPt:K1'V Of,' TIit U.S. NUCtl':AR Rl:GULATORV COMMISSIO!li. on*1n: m" TIIE INSPU*1*0M GENERAL (01(;).... LOANED TO ANO'tHtR AG[~CV, 11' AND ns CONTESTS ARE J\iOT TO DI-: RtPRODlTtD OR ms*rRtBlJTF.D OUTSIDE THE REt'ElVISG AGENC\' WITIIOllTOIG'S PEMMISSIOS.

6

OFFICIAL USE ONLY OIG INVESTIGATION INFORMATION NRC Inspection Report No. 50-228/2009-20 I states that the inspector reviewed data sheets for Fuel and Graphite Transfer forms for 2008 and 2009. The inspector repeated infonnation from prior years* inspection reports. including that the licensee was not required to inspect the reactor fuel and that the licensee had a "fuel 'sticking' problem," which prompted it to remove all fuel possible from the core and inspect those elements stuck in place in January 2006. The cover letter of the 2009 Inspection Report. dated July I, 2009, addressed to the licensee stated,.. Based on the results of this inspection, no findings of significance were identi fled."

During the ARRR 's 2011 fuel inspection, the licensee discovered four cracked fuel elements, which it reported to the NRC in January 2012. The licensee subsequently conducted a I 00 percent fuel element inspection and identified 22 cracked fuel elements. On December 18, 2013, the NRC issued the ARRR a Notification of Violation against Technical Specification 10.2 for operating the reactor with significant defects in the fuel elements during the time between the last full fuel inspection in 2006 up until October I 5. 20 I 0, when the facility ceased reactor operation.

Our review of inspection reports for the ARRR revealed there had been reports of stuck fuel rods as far back as 1980; likewise, we reviewed Data Sheets for Fuel and Graphite Transfer from 1994 to 2012 and found that of the 22 cracked elements initially identified. 7 had been stuck in the reactor core since the 1990s. Three of the initial four fuel elements to be identified by the licensee as cracked-590E. 628E, and 1201E-had been reported on the Data Sheets for Fuel and Graphite Transfer as stuck in 2003, 1994, and 1994, respectively. Of the 17 fuel elements that were inside the reactor core at the time of discovery, 14 of them had been previously indicated as stuck on the Data Sheets for Fuel and Graphite Transfer (see Exhibits I and 2).

The RTR inspector said that not acting sooner to report and resolve the stuck fuel was his "mistake," and that he should not have closed IFI-50-228/2005-201-02 until he had verified that the licensee completed its plan of action. He explained he was too reliant on.. the experience of the project manager and the people above" him when deciding how to handle issues found during his inspections. The R TR inspector did not say why no violation was issued until 2013, except that the decision would have been a consensus judgement call. The R TR inspector said,

"'Typically, if one of these research reactors has a rod that is stuck or they'te inspecting them and see a little damage of any son. they just put it aside in storage and won't re-use it. This facility was very unique in that they did not do that... So they just operated with the damaged fuel." He said that training and guidance could be improved.

FINDING #2: THE NRC FAILED TO IDENTIFY CHANGES TO THE FACILITY LICENSING BASIS Our review of annual reports revealed that NRC staff had likely not identified that the licensee's cltanges to the facility may not have been in accordance with 10 C.F.R. 50.59 or 10 C.F.R. 50.90 because they did not appear in change documentation or revisions to the license or technical specifications. Some changes include the following:

Vacuum tube rate meter to solid state rate meter; OFFICIAL USE ONL't' OIG INVESTIGATION l~FORMATION THIS l>OC:Ul\1EN1' IS Tlfll.: PROPEllTY OF THE U.S. NllCl.KAR IU:Gt:1.A*i*oR\' C0!\-11\USSIO:"i, on-,n: Ot" 'TIIE INSPt:noR GENERAL (OIG). lf1 LOANED TO ANOTHER AGENC\', IT AND trS CONTE~TS ARE NOT TO OE RtPRODl !( 'ED OR DISTRIBUTED OUTSlbE THE RECEl\'l~G AGENCY WITHOllT om*s r*:R:\IISSION.

7

Of'f'ICIAl USE ONl.'i' t>IC INVESTIGATION ISJ;ORMATION BF3 proportional counter to boron-lined proportional counter; Use of new rod drop technique; Use of TRIGA fuel with different weight percentage and cladding type; and, Operation with mixed core of fuel elements with different characteristics.

We asked the RTR inspector about these changes made to the ARRR in the I 990s or earlier before his assignment there, and he said some of these changes in his mind.. would have triggered some type of 50.59 review and/or evaluation." He explained that swapping out a component with a duplicate component is a replacement, not a change, and no JO C.F.R. 50.59 evaluation is required, but if a component is changed to something different, an evaluation must be completed to ensure the functions remain the same.

While the ARRR operated with a mixed core in the 1990s or earlier, it continued to do so during the time of our investigation's focus-between 2000 and 20 l 0. The licensing basis for the reactor was specific to a particular fuel element, and there were no NRC inspection reports identifying the receipt and use of a different fuel element. This investigation did not identify any licensing actions, inspection activities, or licensee IO C.F.R. 50.59 documentation regarding use of the different model fuel element.

The RTR inspector said he did not think that a 10 C.F.R 50.59 evaluation was required if the Hcensee merely changed the cladding of the fuel from aluminum to stainless steel, but that if the weight percent of the fuel element changed from 8.5 weight percent to something different or if the type of fuel changed, such an evaluation would need to be completed. He said that if had he noticed the ARRR was operating with a mixed core of aluminum and stainless steel and 8.5 weight percent and 12 weight percent, he would have looked for a JO C.F.R 50.59 evaluation.

The RTR inspector said the ARRR did not use the 10 C.F.R. 50.59 process often as they operated with the same equipment and same facilities for many years.

f urthermore, the OIG reviewed a May 23, 2019, letter from the licensee to Senator John Bartasso, in which the licensee reported that its operators had failed to sufficiently review repairs according to the 10 C.F.R. 50.59 requirement, even though the NRC's annual inspection reports suggest differently because they cited no violation. This letter stated that the descriptions of the corrective actions for most of the repairs were incomplete for an effective 10 C.F.R. 50.59 review and approval, that parts had been placed into service without documentation, and "in a small number of instances, unqualified parts were installed." The letter also said that most unplanned scrams were left without an explanation or resolution, and that despite NRC statrs reviews of unplanned scrams during inspections, NRC staff neither noted nor discussed the anomalies.

The RTR inspector said he thinks there is now training on JO C.F.R 50.59 evaluations in the qualification program, but the guidance he had available to him at the time was not adequate.

Inspection Procedure 6900 I does not provide guidance on this topic; rather, it refers the reader to the NRC Inspection Manual; IO C.F.R. 50.59, Changes, Tests and Experiments; and Inspection Procedure 40745, Class I Research and Test Reactor Review and Audit, and Design Change Functions. Regulatory Guide 2.8, Guidance for Implementation of 10 C.F.R. 50.59, Changes, OFFICfAf: USE ONLY=OIO INVESTIGATION JNFORMA 'tlON itJtlSiD<>a.JMENT IS TH£ PROPERl'V OI' HIE U.S. :liUCl.EAR REGl)LATOR\' COMI\U SSION. o,..,..,cE ot* Tm: INSPt:c,*oR GENERAL (OIG). IF LOASED TO ANOTHER AGENCY, 11' AND ITS CO~TENTS ARE SOT 'JfO BE REPRODU'El> OR 0ISTIUBUTED OUTSIDE THE RECEIVll'iG AGF.NC\' WITHOUT OIG'S PER~IISSI0:0-..

8

OFFICIAL USE ONL'J' OIG INVE~IIGATION ISFORMATION Tests, and Experiments at Non-Power Production or Utilization Facilities, a licensee guidance document on this topic, was not issued until February 2022.

FINDING #3: THE NRC FAILED TO IDENTIFY THE EXCEEDANCE OF A DOSE LIMIT AND THE LICENSEE'S DEPARTURE FROM AN ALARA CULTURE While the reactor operated within the regulatory limits of radiation exposure, the licensee had departed from an ALARA culture. Our review of personnel exposure levels revealed one employee may have been above the NRC's occupational dose limit. A dosimetry report for 2001 indicated that an employee's culminate dose for his whole body (TEDE) was 5,010 millirem, 10 millirem more than the annual occupational dose limit in 10 C.F.R. 20.I 201 (a)( I )(i).

The RTR inspector said that although the ARRR tended to have numbers that were higher than other licensees. they were not above regulatory limits. He did speak to the licensee about it, challenging the exposure levels. The RTR inspector acknowledged the ARRR had issues with ALARA, but because the doses did not exceed the regulatory limits, there was "nothing he could do about it."

Environmental exposure records showed that the Accounting Office ranged from the high 50s to approximately 250 millirems per quarter between October 20 IO and June 2017. The current licensee said he would not take over the license unless the previous owner disposed of radioactive waste in the storage room, which was adjacent to the Accounting Office in April 2017. Once the waste was disposed of. the readings in the Accounting Office dropped to none detected in the following quarter. The licensee said that the proximity of the waste storage room to administrative space was a violation of ALARA culture, and it was relocated. The 10 C.F.R.

20. l lOI(b) requires licensees to "use, to the extent practical. procedures and engineering controls based upon sound radiation protection principles to achieve occupational doses and doses to members of the public that are as low as is reasonably achievable." There are no additional, specific ALARA requirements or radiological dose thresholds included in ARRR's technical specifications. The RTR inspector was not aware of the ALARA issue in the Accounting Office.

FINDING #4: THE ARRR HAD INADEOUA TE TECHNICAL SPECIFJCA TIONS PER TITLE IO C.F.R. 50.36 Although the regulatory framework allows licensees to operate with the technical specifications approved with the granting of the initial operating license, the OIG found the ARRR's technical specifications missed specific values or actions that would ensure safety. However, the NRC issued Administrative Letter 98-10, Dispositioning of Technical Specifications that are Insufficient to Assure Plant Safety, to operating power reactors in 1998 to reiterate the staffs expectations regarding the correction of facility technical specifications when they are found to contain nonconservative values or specify incorrect actions. Not including non-power reactors in its letter gives an appearance that the non-power reactors' technical specifications are not as important. The non-power reactor licensee is under no obligation to update its technical Specifications until it is time to renew its license. Even if the technical specifications become inadequate, they are the standard to which the licensee is held once approved by the NRC.

O~FICIAL U~E ONLY=OIO INVESTIGATION INFORMA1'ION

THtS'l>OCUMENT IS THE PROPElrfY OF *mt U.S. NUCLEAR REGULATORY COMMISSIO~. on,1ct: 01: THE INSPt:CrOM G11.NERAL (OIG), ff LOANED TO ANffrHER AGlNCY, IT AND ITS CONTENTS ARE NOT TO BE REPRODl.:Clm OM DISTRIBUTED OUTSIDE TIIE RECEIVl!I-G AGENC\' WITHOUT OIG'S PER.\IISSlOK 9

OPFICIAI, USE ONU' OIG INVESTIGATION INFORMATION FINDING #5: THE MINIMUM AMOUNT OF REGULATORY OVERSIGHT PROVIDED ro NON-POWER REACTORS CAN BE IMPROVED The 010 learned that the NRC has statutory authority under Section 104(c) of the AEA:

.. The Commission is authorized to issue licenses to persons applying for utilization and production facilities useful in the conduct of research and development activities of the types specified in section 31 and which are not facilities of the type specified in subsection 104b. The Commission is directed to impose only such minimum amount of regulation of the licensee as the Commission finds will permit the Commission to fulfill its obligations under this Act to promote the common defense and security and to protect the health and safety of the public and wil1 permit the conduct of widespread and diverse research and development."

This investigation revealed that the minimum amount of regulatory oversight currently provided to non-power reactors could be improved. Some of the areas that would benefit from improvements to the program are training, guidance documents, and subject matter experts (i.e.,

a non-power reactor equivalent to the project engineer for power reactors) in the NRC to assist RTR inspectors. There are also knowledge gaps in the guidance readily available to the RTR Inwectors; for example, Regulatory Guide 2.8 was only recently issued, even though it is primarily a licensee guidance document. Aside from a reference to Inspection Procedure 69007 (Class I Research and Test Reactor Review and Audit Design Change Functions), there does not appear to be any 10 C.F.R. 50.59 training material specific to non-power reactors.

DISPOSITION 1be findings from this investigation will be included in the investigative report from 010 Case No. C2 l-0 16. Additional issues raised by the allegations or that arose during the investigation wiJI be referred to 010 Audits for consideration.

OPPICIAL US! ONL'J 1=et0 INVESTIGATION INFORMATION THIS DOCU:\IE:'IIT IS THV. PROPERTY m* Tllf; u.s. Nl1Cl.EAR REGUl,ATOltY COMMISSIOS, on*,n: cw TIit: INsrn*nnt GENERAL (OIG). IF LOAJll£D 1"0 ANOTHER AGtNCY, IT AND ITS COSTESTS ARE SOT 1'0 BE REPROOl 'C-Ell OR DISTRIBUTED OUTSll>F. THE RECEl\'ISG AGF.NC\' WITHOUT OJG'S PERJ\IISSIO/li, 10

OFFICIAL USE ONt't'=OIG INVESTIGATION INFORMATION Exhibit 1: Fuel elements In the ARRR core that were Indicated as stuck on fuel and graphite transfer forms between 1994 and 2006 and reported as cracked Stuck Elements from the 1990s are Highlighted in Blue 1994-628E, 1192E, and 1201E 1997 - 616E 1998 - 626E and 1255 1999 - 591 Stuck Elements from 2000-2006 are Highlighted in Green 2002 - 570E, 624E, 1056E, and 1181 E 2003-590E 2005-2281 2006-1232E Of'f'ICIAL tJSE ONL'J'=OIO INVESTIGATION I.NFORMA tlON THI 'l>OCUIHF.~1* IS THE PROPERTY Ot' THE t.:.S. ~UCU:AR RtGlJI.A TOR\' COMMISSIO~. or.-in: O.' TIIE INSPECTOR OENERAL (OIG). It' LOANED TO ANOTHER AGIN(.'\', IT AND ITS CO~TEN'TS ARE NOT TO BE REPRODl'CEll Oil DISTRIBUTED m.;TSIDt: THE RE(:EIVISG AGENC\' WITHOUT OIG'S PERMISSIO:'oi.

11

OFFICIAL USE ONLY-OIG INVESTIGATION INFORMATION Exhibit 2: Images 1 & Descriptions 2 of four TRIGA elements the ARRR reported to the NRC as cracked SJ 1201 E: Disoolored, almost straight vertical longitudinal crack along the middle section of the fuel region. The crack extends about 80% of the fuel region. This element can be pulled about one inch with a tool.

SIN 590E: Discolored,, blister on the bottom ring of the element. Three separate vertical cracks on the same side:

(starting from the bottom of the element) #1 in the lower fourth of the fuel region; #2 starts to the right of the first crack just before the first crack ends, about the same length 1 lmaaes obtained from video provided by the licensee.

2* ~riptions obtained from an ARRR lener to the NRC dated January 20, 2012 (ML I 2026A344 ).

OFFICIAL USE ONL"l=OIO INVESTIGATION INFORMATION nus bocu~l£!'olt JS nu: PMOPERTY of *rm: t;.s. NUCLEAR REGULATORY ('OMMISSI0:'11, Ot'l'ICt: Of nu: INSPt:rroR

(,tN*:RAL<OIC). ll1 LOANED to ANOTHER AGENCY, IT AND ITS CONTENTS ARE NOT TO 81-: REPRODU<:lm OR DISTRJBUTED OUTSIDE THE RECEIVING AGENC\' WITHOUT OIG'S PF..RtttlSSION.

12

OFFI.CIAL USE ONL'i'=OIG INVESTIGATION l'.'IFOR..~ATION as the first crack; #3 starts to the left of the second crack and just before the second crack ends, about three times the length of the other two cracks. This element can be pulled about 20% out with a tool.

SIN *623E:-Disoolored, very Ught-co ored crack. i the upper section of the non-fuel region. Cracks in the other elements are very dark, so this one may be just beginning. This element can be pulled about 25% out with a tool.

SIN 2281 Instrumented Element: Discolored, multiple blisters in the upper non-fuel section. Y-shaped crack in the upper fourth of the fuel section. Continuous vertical, longitudinal crack in the lower two-thirds of the fuel section.

0% of the element can be lifted with a tool.

Ofo'Flf!IAL USE ONLY=OIO INVESTIGATION INFORMATION nus 00('.llME~T IS no: PHOPt:RTY Of l'IIE u.s. NUCI.EAR REGUl,ATOR\' COMMISSION, OH'l<'E or,* 'fll[ INSPECTOR GENERAL (OIG). U: LOA~ED 1*0 AJ'iOl'HER AGENCY, IT AND m, CO'.liiTESTS ARE NOTTO BE REPRODL:C:ED OR l>ISTRIB\!TED m:TSIDE THE RECEl \-'l:",;G AGENC\' WITHOUT OJG'S PERMISSION.

13

AEROTEST OPERATIONS, INC.

3455 FOSTORIA WAY

• SAN RAMON, CA 94583 * (925) 866-1212

• FAX (925) 866-1716 May 26, 2023-Congresswoman Harriet Hagemans Office 1531 Longworth Office Building Washington, DC 20515 Congressman Mark Desaulnier' s Office 503 Cannon House Office Building.

Washington, DC 20515 Congresswomen Hageman and Congressman Desaulnier, I want to inform you, congress and the oversight committees of the NRC and the US Treasury Fiscal Services department of the recent and costly problems I've encountered with them. I would not want anyone else to go through what I had to. I'd like your assistance in getting answers to my following questions, refund of the penalties and interest I've paid and possibly a refund on the disputed charges.

Brief History The NRC billed me for duplicate work for information gathering on information they already had. I disputed the need for the NRC staff to do the work as the information was current, relevant and available in their public documents system called "ADAMS" However, the NRC's CFO said the charges were valid because the NRC staff spent the time doing the work. The Invoice was for $24,047.00. I paid $1,251.00 of the bill that was not in dispute leaving a balance of $22,796. Although I'm still disputing the charges, I paid $27,224.45 on November 15, 2022, that was shown as past due by the NRC.

However, on May 16, 2023, the letter showed that I owed $9,115.12 which I'm paying on June l, 2023, to stop the accrual of penalties and Interest.

Questions

l. NRC bills Aerotest Operations, Inc (the licensee) for all time the NRC staff spends working on the licensee's regulatory matters. I need to know what policies and procedures are in place to protect the licensee from having the NRC bill multiple times for the same work already completed by a different staff member which is current, relevant and available in ADAMS?

2. If the NRC CFO states, the charges are "valid based on the NRC Staff spending their time working on the task." What are the licensees' options to dispute the NRC was duplicating work already done by another NRC staff member?

3. Why are the Treasury and NRC payments applied to penalties and interest first?

Credit cards apply payments first to purchases, then late fees followed by interest.

According to the IRS tax topic 653, the IRS first applies the payment to tax, then penalties and then interest. Why are these agencies different? -: * **

4. If the US Treasury does not investigate disputes with other agencies, why did they request copies of documents in my dispute with the NRC be faxed tQ them?

5. When the licensee disputed the charges with the Treasurer department, why did it take almost a year for the NRC CFO to respond to the Treasury Department about licensee's dispute. What were the penalties and interest for that period of time?

Should penalties and interest be suspended will the dispute is investigated?

6. When l asked for information on what the procedures and policies the Treasury used in the dispute investigation, (that clear showed I was looking for an investigation) it took 15 months and the licensee to contacting my congresswoman to get a response from Treasury. I was shocked at the response "Fiscal Services does not adjudicate disputes for debts owed to other agencies".

Again, how much penalties and interest accrued during this period?

I certify, under penalty of perjury, that 1.) I provide or authorized all of the information in the letter and any documents submitted with it; 2) I reviewed and understand all of the information contained in this letter and submitted with it; and 3.) all of this information is complete, true and correct.

Sincerely, David M Slaughter, PhD President

Enclosures:

Department of Treasury Letter to The Honorable Harriet Hageman, Member of Congress dated May 16, 2023 Letter to Congressman Harriet Hageman Office dated May 17, 2023 NRC OIG Report C21-012 cc:

U.S. Department of Treasury Bureau of the Fiscal Service PO Box 830794 Birmingham, AL 35283-0794

Howard K Osborne CFO U.S. Nuclear Regulatory Commission Office of the Chief Financial Officer Division of the Comptroller Labor Administration and Fee Billing Branch Mail Stop T9 850 Washington, DC 20555-0001 Marian Zober Deputy General Counsel U.S. Nuclear Regulatory Commission Office of the General Counsel Mail Stop 0-15 0-21 Washington, DC 20555-0001

AEROTEST OPERATIONS, INC.

3455 FOSTORIA WAY

• SAN RAMON, CA 94583 * (925) 866-1212

• FAX (925) 866-1716 May 17, 2023 Congresswoman Harriet Hageman Oflke 1531 Longworth Office Building Washington, DC 20515 repharriethageman@mail15.housecommunications.gov

Dear Congresswoman Hageman (and Trinity Lewis),

It is nice that the Congresswoman's office received a response from Treasury in less than a month. I tried for about 15 months to get reasonable questions answered by a US Government Department; it should not require me to contact my congresswoman for help. I appreciate your assistance, thank you.

According to the May 16, 2023, letter from the Dept of Treasury, Bureau of the Fiscal Services the NRC's CFO took almost a year from December 23, 2020 (my dispute date with the Treasury) until December 10, 2021, to respond to the Treasury Department.

The US Treasury Department sent us a letter in January 2022 stating the NRC's CFO stated the debit was valid". I sent the Treasury Department follow up letters on February 22, 2022, March 18, 2022, November 16, 2022, January 11, 2023, and March 1, 2023. In every one of those letters, I asked the same 3 questions about their investigation but only received form letters stating the NRC CFO said the charges were valid. Looking at the questions I asked, I was inspecting the Treasury department to do an investigation.

In the May 16, 2023, letter for the Dept of Treasury, Bureau of the Fiscal Services stated, "Fiscal Services does not adjudicate disputes for debts owed to other agencies." If the Treasury would have told me after my December 2020 request for them to investigate the NRC debit, I would not have spent approximately 27 months just to learn that US Treasury does not investigate financial disputes. Given that information, why did Treasury initially request and was provided information suggesting that they do? It would have been more honest if they simply stated they don 't investigate disputes owed to other agencies; we are simply acting as a collection agency.

I had more disputes with the NRC than just this disputed invoice. In January 2021 the NRC IG's office opened an investigation on NRC fees for activities that were not performed in a satisfactory manner. The IG's office has closed its case and has identified 5 areas ofNRC's inadequate oversight. We were forced to pay for substandard work. I am in the process of trying to recover damages for the NRC inadequate oversight caused to Aerotest Operations, Inc. operations and business.

The NRC original invoice was $24,047.00 Invoice# LFB 20-1849 Dated 1/15/20. I paid

$1,251.00 on Check number 20677 dated 9/15/20 for items on the invoice that were not in dispute. Although, I still dispute the charges, I paid $27,224.45 on check 21154 dated 11/15/22. I paid a total of $28,475.45 which is $4,428.45 over the original invoice amount for penalties and interest. Although the NRC and the Treasury department applied the payments first to penalties and interest, I feel the principal balance has been paid in full and the remaining amount is penalties and interest in the amount of$9,l 15.12 and should be forgiven. The raising penalties and interest is partly due to the time waiting for a response from Treasury (which included a delayed response from NRC to Treasury). Note the first question below, a simple response would have been appreciated such as Treasury does not investigate claims of maleficence and have any no fiduciary responsibility; Treasury merely operates as a bill collector.

Questions Asked in each letter:

1. What are the procedures the U.S. Treasury used to investigate my complaint that NRC staff was performing duplicate work which a different NRC staff member had previously performed and billed the licensee for which was current and relevant to the current NRC work? Again, the NRC said the charges were valid because the NRC staff actually worked the hours billed, my complaint was not that they did not work the hours, but the need for them to work those hours.

2. Can the U.S. Treasury Department provide me with the evidence they used in the investigation to show their how they arrived at the conclusion the charges are valid?

3. Are there policies and procedures to protect the licensee from being penalized and billed multiple times for the same already completed by a different NRC staff member which is current, relevant, and available in ADAMS? I could not find any.

Sincerely, David M Slaughter, PhD President Attachments-NRC OIG Case Number 21-012

cc:

U.S. Department of Treasury Bureau of the Fiscal Service PO Box 830794 Birmingham, AL 35283-0794 Howard K Osborne U.S. Nuclear Regulatory Commission Office of the Chief Financial Officer Division of the Comptroller Labor Administration and Fee Billing Branch Mail Stop T9 850 Washington, DC 20555-000

DEP ARTMEN l 0 BUREAU Of I

ASHl'-IG I

~ REAS RY

, SERVIC DC 20227 May 16, 2023 The Honorable Harriet Hageman Member of Congress 100 E B Street Casper, WY 82601

Dear Representative Hageman:

Thank you for your inquiry on behalf of your constituent, Mr. David Slaughter, who contacted your office regarding a debt owed by his business, Aerotest Operations, Inc. (Aerotest), to the U.S. Nuclear Regulatory Commission (NRC).

Federal agencies are required to refer delinquent debts to the Bureau of the Fiscal Service (Fiscal Service), a bureau within the Department of the Treasury, for collection action. At the time a debt is referred for collection, federal agencies are required to certify that the debt is past due and legally enforceable in the amount submitted and that they have provided the debtor with a notice and opportunity to dispute the debt.

Our records indicate that NRC referred a debt owed by Aerotest to Fiscal Service on November 4, 2020. Fiscal Service sent a demand letter to Aerotest on November 6, 2020. The debt balance owed at that time was $31,526.51, which included principal, interest, 1 penalties, 2 and costs. 3 NRC instructed Fiscal Service to assess interest, penalties, and costs. On September 5, 2022, Fiscal Service referred this debt to the Treasury Offset Program (TOP),

which offsets certain federal and state payments to collect delinquent debts, as required by law. 4 To date, there have been no offsets to payments due to Aerotest for this debt. However, the debt remains active in TOP; therefore, future payments due to Aerotest remain subject to offset until the debt is repaid or otherwise resolved.

Our records indicate we received Mr. Slaughter's first debt dispute on December 23, 2020, in which he disputed the debt balance. The dispute was forwarded to NRC for review and response, as Fiscal Service does not adjudicate disputes for debts owed to other agencies. NRC responded to the dispute on December 10, 2021, stating that the debt is valid, and the referred balance was correct. We received two additional debt disputes from Mr. Slaughter on February 15, 2022, and 1 Agencies are generally required to charge interest on delinquent debts. 31 U.S.C. § 3717(a) and 31 C.F.R.

§ 901.9(a).

2 Agencies are generally required to charge penalties on delinquent debts. 31 U.S.C. § 3717(e)(2) and 31 C.F.R.

§ 901.9(d).

3 Agencies are generally required to assess on delinquent debts any costs of collection, including fees charged to the agency by Fiscal Service.31 U.S.C. § 3717(e)(l); 31 C.F.R. §§ 901.9(c), (f). Fiscal Service charges fees to creditor agencies, like NRC, for cost of the debt collection services it provides. E.g., 31 U.S.C. §§ 371 l(g)(6), 3716(c)(4),

3720A(d); 31 C.F.R. §§ 285.2(h), 285.4(g), 285.70), 285.120), 901.l(t).

4 See 31 U.S.C. § 3716; 31 C.F.R § 285.4.

Page 2 - The Honorable Harriet Hageman April 1, 2022. NRC responded to both disputes that the debt is valid and has indicated that it considers the matter closed, and that Aerotest is not entitled to any further agency review.

After receiving your inquiry, our office contacted NRC for an explanation of the principal balance referred to Fiscal Service. NRC advised that they received a payment of$l,251.00 from Aerotest prior to the debt referral to Fiscal Service. NRC noted, however, that the payment was applied to penalties in the amount of $721.41, administrative costs in the amount of $S6.00, and interest in the amount of $160.31. The remaining $313.28 was then applied to the principal.' Our records show that NRC also received a payment from Aerotest, in the amount of$27,224.45, which NRC forwarded to Fiscal Service on November 29, 2022. The debt continues to accrue interest, penalties, and costs. The balance as of May 15, 2023, consists of the following:

Princi al Interest Penalties Costs Total Balance

$6 691.10

$30.61

$183.68

$2 209.73

$9115.12 To address Mr. Slaughter's questions about which procedures Fiscal Service used to investigate his complaint against NRC and how Fiscal Service determined his debt is valid: Fiscal Service has no role in determining the amount or validity of a debt and does not conduct investigations.

Fiscal Service has a mandatory and non-discretionary role when collecting debts on behalf of other agencies. Fiscal Service is attempting to collect Mr. Slaughter's debt based on NRC's certification that the debt is valid, past due, and legally enforceable, and based on NRC's continued assertions after evaluating Mr. Slaughter's disputes that the debt is valid.

The debt is currently being serviced by Conserve, Inc. (Conserve), a private collection agency under contract with Fiscal Service to collect debts. The debt was previously serviced by Coast Professional, Inc. (Coast), another private collection agency under contract with Fiscal Service.

Fiscal Service, through Conserve, may offer repayment and settlement agreements if Aerotest is unable to repay the debt in one payment. Mr. Slaughter may contact Conserve at 1-866-562-3255 if he wishes to pursue this option.

As to Mr. Slaughter's claims that he has been harassed by Coast, we have found no supporting evidence. We have reviewed Coast's call recordings and letters and have found all such communications to be appropriate.

I hope this information helps you respond to your constituent.

Sincerely,

~s~

For Linda C. Chero Assistant Commissioner Disbursing and Debt Management

' Agencies are generally required to apply partial payments as set forth in 31 C.F.R. § 901.9(f).

DATE:

TO:

THROUGH:

Of'FIClAL tJSI!! 8l'~LY OtG INVESTIGATION l!'IFORMATION 1lvlE~iORAl'VDU1if August 17, 2022 Concur: Case Closed Malion A. Bartley Assistant Inspector General for Investigations

,b)(7)(C)

THROUGH: E a--(C-) _: __________ I FROM:

SUBJECT:

ALLEGATION INADEQUATE OVERSIGHT OF NON-POWER REACTOR (OIG CASE NO.21-012)

The Office of the Inspector General (DIG), NRC, received several allegations over the past few years regarding the Aerotest Radiography and Research Reactor (ARRR). While the alleger also expressed concerns regarding inappropriate billing and ineffective licensing processes, the investigation focused on the allegations that the NRC failed to provide adequate regulatory oversight and inspections at the ARRR until it voluntarily ceased operations in 20 l 0.

POTENTIAL VIOLATIONS The potential violations relevant to this investigation are IO C.F.R. 20.1 IOI, Radiation Protection Programs; IO C.F.R. 20.1201, Occupational Dose Limits for Adults; IO C.F.R. 50.36, Technical Specifications; 10 C.F.R. 50.59, Changes, Tests and Experiments; lO C.F.R. 50.90, Application for Amendment of License, Construction Permit, or Early Site Permit; Section 104(c) of the Atomic Energy Act (AEA); Inspection Manual Chapter 2545; Research and Test Reactor Inspection Program; and Inspection Procedure 6900 I, Class II Research and Test Reactors.

Of PICb\:L tl§IJ ONLY OIO INVESTIGATION l~FORMA TION THIS DOCUMEST lS THE PROPF.RT\' Of" THE U.S. SUCLEAR REGULATOR\' COMMISSIO~. 01-'FICE Of THt: INSPF.CTOR Gl-:NERAL (OIG). IF LOA."'IED 1'0 ANOTlll::R AGENCY. IT AND ITS CO:'<ITEJliTS ARE ~OT TO DE REPRODl CED OR DISTRlBUTED Ol:TSIDE THE RECEl\"l:"iG AGENCY WITHOUT OIG'S PER:\IISSIO:"i.

NRC Headquarters I 11555 Rockville Pike I Rockville, Maryl nd ao85a I 301.415.5930 www.nrcoig.ovcrslght.gov

OFflClAl. US[ ONI. "i'=OIG INVESTIGATION INFORMATION FINDINGS FINDING # 1: THE NRC FAILED TO ADEQUATELY OVERSEE DAMAGED FUEL Despite the NRC's December 2013 issuance of a Severity Level IV violation for willfully operating the reactor with damaged fuel from approximately 2006 through 2010, the OIG found the NRC failed to adequately oversee damaged fuel at the ARRR even though NRC inspection reports and an inspector follow-up item issued in 2005 identified that ARRR 's reactor fuel elements showed signs of wear typically associated with long term use. During routine inspection activities between 2000 and 2010, the NRC identified potential precursors to fuel cladding damage through records review of the ARRR's annual reports and periodic fuel element inspections. Furthermore, in 2007. the licensee identified a cracked fuel element noted in the fuel inspection records that was not reported in the NRC Inspection Report.

Figure 1: Cracked fuel element at the AAAR FINDING #2: THE NRC FAILED TO IDENTIFY CHANGES TO THE FACILITY LICENSING BASIS The NRC staff did not identify that the licensee made several changes to the facility that may not have been in accordance with IO C.F.R. 50.59 or 10 C.F.R. 50.90. For example, the ARRR operated with a mixed core in the l 990s or earlier, and it continued to do so between 2000 and 20IO, the time of the OIG investigation's focus.

OFFICIAL USE ONL't=OIG INVESTIGATION INFORMATION THIS DOCUME:,,jT IS THE PROPERTY OI' THE l'.S. NUCLEAR REGULATOR\' CO:\IMISSIO;'oj, 01-'1*'1('[ m* nu: INSPt:CTOR GENERAL (OIG). If LOASF.D TO ANOTHER AGENCY, IT AND ITS COaTESTS ARE NOT 'TO BE REPRODl'CED OR DISTRJBUTED OUTSIDE THE RECEl\'ISG AGENCY WITHOUT OIG'S PERMISSIOS.

2

OFFICIAL USE ONI.Y=OIO INVESTIGATION INFORMATION FINDING #3: THE NRC FAILED TO IDENTIFY THE EXCEEDANCE OF A DOSE LIMIT AND THE LICENSEE'S DEPARTURE FROM AN AS LOW AS REASONABLY ACHIEVABLE CULTURE While the reactor operated within the regulatory limits of radiation exposure, the licensee had departed from an as low as reasonably achievable (ALARA) culture. The NRC was not able to take action in this area because the inspector did not identify a violation of federal dose limits or license condition. However, the OIG's review of personnel exposure levels revealed one employee that may have been above the NRC's occupational dose limit, which could have been a violation had it been identified at the time.

FINDING #4: THE ARRR HAD INADEQUATE TECHNICAL SPECIFICATIONS PER TITLE 1 O C.F.R, 50.36 Although the regulatory framework allows licensees to operate with the technical specifications approved with the granting of the initial operating license, the OIG found the ARRR's technical specifications missed specific values or actions that would ensure safety.

FINPING #5: THE MINIMUM AMOUNT OF REGULATORY OVERSIGHT PROVIDED TO NON-POWER REACTORS CAN BE IMPROVED Although the AEA guides the NRC to provide the.. minimum amount of regulation" required for the NRC to fulfill its regulatory obligations, the OIG found less than adequate training, guidance documents, and subject matter experts (i.e., a non-power reactor equivalent to the project engineer for power reactors) in the NRC to assist research and test reactor (RTR) inspectors.

BASIS OF FINDINGS BACKGROUND The ARRR is a non-power reactor located in San Ramon, California, whose initial licen e was granted in July 1965. The ARRR used the Training, Research, Isotopes, General Atomics (TRIGA) fuel design elements inside its core. The reactor's primary use was a neutron source for neutron or "N-ray" radiography and was licensed for a maximum thennal power level of 250 kilowatts. Its products and services included analysis, criticality, irradiation, non-destructive testing, and radiographic equipment. For example, neutron radiography can ensure the correct assembly and positioning of small explosive devices, detect hidden corrosion in aluminum components, inspect mechanical systems, and verify the integrity of welds. Figure 2 provides a chronology since 2000.

OFFICIAL USE ONL'l'=OIG INVESTIGATION INFORMATION THIS l>OCU~IENT IS THE PROPERTY ot* TUE lt.S. NUCLEAR REGULATORY COMMISSIO:">. Ol-'flCt: OF Tift: JNSPt:C.-fOR GtNERAL (OIG). IF LOANED TO ANOTHER AGENCY, IT AND ITS CO:">TESTS ARE SOT TO BE REPRODl'("ED OR DISTRIBUTED OUTSIDE THE RECEIVL'\iG AGENCY WITHOUT OIG'S PER)IISSIOS.

3

OFFICIAL USE ONt~'=OtG INVESTIGATION INFORMATION 2000 April 2005 July 2009 October 2010 February 2011 December 2011 January 2012 December 2013 November 2017 March 2019 December 2021 Figure 2: Recent chronology Autoliv, Inc., a foreign entity, acquired ARRR through intermediate acquisition of several wholly owned companies as part of a distressed asset sale.

ARRR applied timely for its license renewal in 2005, with supplemental letters to the NRC in 2008, 2009 and 2010, and continued to operate under the timely renewal provisions of 10 C.F.R. 2.109, Effect of Timely Renewal Application, after its license expired on April 15, 2005.

Due to ARRR's foreign ownership, the NRC issued a proposed denial of the license renewal.

ARRR voluntarily ceased commercial operations.

The NRC issued Confirmatory Action letter No. NRR-2011-001.

ARRR discovered four cracked fuel elements during its fuel element inspection.

ARRR reported cracks to the NRC and then conducted a 100 percent fuel element inspection, which identified 22 cracked fuel elements.

The NRC issued ARRR a Notice of Violation based on the Apparent Violation, EA-13-108, for operating the reactor between 2006 and 2010 with fuel elements that had significant cracks In the cladding.

ARRR was purchased and granted a license transfer to Nuclear labyrinth, LLC, which became the new licensee.

ARRR submits license Amendment Request to prepare for fuel storage and decommissioning activities.

The NRC issued ARRR partial approval for a Possession Only license.

The reactor is in the decommissioning process.

FINDING #1: THE NRC FAILED TO ADEOUATEL Y OVERSEE DAMAGED FUEL Our review of documents revealed that on December 18, 2013, the NRC issued the ARRR a Notification of Violation against Technical Specification 10.2 for operating the reactor "from an indeterminate period of time beginning at a point after the last full inspection in 2006 up unti]

October 15, 2010, when the facility ceased reactor operation, the licensee operated the reactor with significant defects in the fuel elements... The first four cracked elements were discovered in late 2011, and in a subsequent fuel inspection, 22 fuel elements were identified as having varying degrees of discoloration, blistering, swelling. and/or cracking in the aluminum cladding. These characteristics represented a significant defect in the fuel elements and the potential loss of the integrity of a fission product barrier.

OFFICIAL US£ ONL~'=OIO INVESTIGATION l:'IIFORMA1'JON THIS DOCUI\U:ST IS l'HE PROl't:R'I'\' ot* THE t.S. NUCLEAR REGULATOR\' CO~IMISSIO~. Off I Ct: ot* TIit: lNSPteroR GENERAL (OIG).... LOA:"iiED TO ANOTHER AGltNC\', IT AND rrs CO~El'iTS ARE lliOT TO BE RF.PRODlTED OR DISTRIBUTED OlTSIDE THE RECEIVIXG AGENCY WITHOUT OIG'S PERMlSSIOX.

4

OFFICIAL USli! ONLY=OtG INVESTIGATION INFORMATION NUREG/CR-2387, Credible Accident Analyses for TRIGA and TRIGA-Fueled Reactors, states on page 35:

"The usual evaluation criteria for fuel elements are based on bowing, elongation or visual changes in the cladding. These parameters are used to estimate fuel serviceability an apparently give a reliable indication of thermal gradients to which the fuel element has been subjected during its operating history. In addition, the long-tenn effects of fuel bumup create swelling of the fuel moderator that presumably would also be indicated by changes in fuel element dimensions. Fuel elements that have been pulsed may have cracking or fracturing of the fuel-moderator, which would not be observed during the fuel inspections."

The NRC's Technical Training Center does not provide training to RTR inspectors on fuel inspections, and any information on fuel element damage would be in Course R-800,

• • Perspectives on Reactor Safety." TIC staff told us that it was exceedingly rare in a non-power reactor to reach a point of damage, and it was such an unlikely event that other areas of non-power reactors were covered instead. The staff also told the OIG that if an RTR inspector was unsure about a topic not covered in training, the inspector should ensure the topic is addressed through mentoring. RTR inspectors have 3 months of basic training, and then 2 years oflearning in the field before they are certified. A current RTR inspector told the OIG that the qualification process depends on the individual, but it takes at least 6 months to a year.

Jnspection Procedure 69001, Class II Research and Test Reactors, is applicable to NRC inspections conducted at the ARRR. Its references include Regulatory Guide 2.3, Quality Verification for Plate-Type Uranium-Aluminum Fuel Elements for Use in Research Reactors, July 1967, and ANSI/ANS-15.2, Quality Control for Plate-Type Uranium-Aluminum Fuel Elements, 1974. These documents are provided to assist in the receipt of new fuel, focusing on their quality requirements, but the guidance does not address irradiated fuel inspection, similar to the criteria discussed in NUREG/CR-2387, Credible Accident Analysis for TRIGA and TRIGA-Fueled Reactors, April 1982.

The NRC RTR inspector who performed inspections at the ARRR between 2000 and 2020 said he and other RTR inspectors were not trained on damaged fuel, and he had not seen NUREG/CR-2387 before we provided it to him to review the parameters for fuel evaluation.

The R TR inspector said he was not aware of fuel damage issues when he took over the ARRR from the previously assigned inspector.

The NRC Inspection Report No. 50-228/2005-20 l states the inspector reviewed data sheets for Fuel and Graphite Transfer fonns for 2003, 2004, and 2005. It also states that although reactor fuel was not required to be inspected, the licensee continued to inspect 20 percent of the fuel elements annually to remain cognizant of the physical status of the fuel. The licensee noted that several fuel elements had been deformed such that they were stuck in the reactor core, making them difficult to move.

The RTR inspector stated it was the licensee's responsibility "to keep up with their fuel," and he OFFICIAL USE ONL'"I OIO INVESTIGATION lNFORMA TION THIS DOCU~~:"IT IS THE PltOPt.:M.:J'\' Ot' 1'HE U.S. NIJCLEAR IU:GllLAl'OIO' COl\lMISSIO:'11, Ot'l'ICt.: m;* TIit.: INSPt:Cl'OR GENERAL (OIG). IF LOA.~£D TO ANOTHER AGENCY, IT AND ITS CO~TENTS ARE SOT 10 BE REPRODl'CEI> OH DISTRIBUTED OUTSIDE TUE RECl::IVl~G AGENC\' WITHOUT OIG'S PF.RMISSIOS, 5

OFFIClAL USI!! ONL't'=OIG INVESTIGATION INFORMATION was aware the reactor core's older fuel had aluminum cladding and the newer fuel had stainless steel cladding. He "thought that was unusual that they would have stuck elem~nt~... Ba~ed on this infonnation and to ensure the defonnation was not a precursor to a more s1gmficant issue, the inspector told us he opened Inspector Follow-up Item 50-228/2005-201-02, to review the licensee's conduct of complete inspections of fuel elements in the core. However. the cover letter of the 2005 Inspection Report, dated May 23, 2005, addressed to the licensee stated, "Based on the results of this inspection, no safety concerns or noncompliances ofNRC requirements were identified."

The NRC Inspection Report No. 50-228/2007-201 states that the inspector reviewed data sheets for Fuel and Graphite Transfer fonns for 2005, 2006, and 2007. Again, the inspection report points out that there was no requirement for the licensee to inspect the fuel, stating:

"As a result of the fuel problem, the licensee decided to remove all fuel possible from the core and conduct an inspection of all the fuel elements. In January 2006, those elements that could be removed were placed in storage. The licensee then used a moveable camera and monitor set-up to conduct an inspection of those elements that were.. stuck" in place. After that was completed, an inspection of all the remaining elements was also completed and the elements were returned to their original positions in the core. No new or unusual problems were identified."

We reviewed the Data Sheets for Fuel and Graphite Transfer for the ARRR's 2006 inspection, finding that that 20 fuel elements and S graphite elements were indicated as stuck in the reactor core.

During this inspection, the RTR inspector also closed out Inspector Follow-up Item 228/2005-201-02. In addition to referencing the licensee's 2006 inspection, he wrote:

"To further help with this problem, the licensee had developed a plan to purchase enough new fuel elements over time to replace the ones that cannot be removed from the core. Once enough fuel is on hand. the reactor core will be defueled.

Then the top grid plate will be raised slightly and the remaining "stuck" elements will be worked out of their positions and out of the core. Then the new fuel elements will be placed in their positions. This issue is considered closed."

The cover letter of the 2007 Inspection Report, dated June 22, 2007, addressed to the licensee stated, "Based on the results of this inspection, no findings of significance were identified" (2007); however, when we reviewed the 2007 Data Sheet for Fuel and Graphite Transfer, element 631 E listed '"crack" in the Comments and was removed from the core and placed into a storage rack. The NRC Inspection Report No. 50-228/2007-201 states the inspector reviewed the 2007 Data Sheet for Fuel and Graphite Transfer during that inspection. However, when the R TR inspector was shown the 2007 Data Sheet for Fuel and Graphite Transfer, he did not recall seeing the fuel element listed with.. crack" in the comments, and if he had, he said he would have included it in his inspection report and called his branch chief and the ARRR project manager to ask how they wanted him to proceed.

OPFICIAL US£ ONL\'=016 INVESTIGATION INFORM.A TJON THIS DOCUMENT IS THE PROPERTY ot' THE U.S. NUCLEAR REGULATORY COMMISSIO~. on:acE OF THE INSPUTOR GENERAL (OIC). IF LOA.'1i£D TO ANOTHER AGENCY, IT AND ITS COSTESTS ARE XOT TO BE REPRODl'CF.D OR 0L'HRIBLITED OUTSIDE THE R.ECEl\'l~G AGENCY WITHOUT OIG'S PER~IISSIO~.

6

6f flCIAL tl9£ ONLY=-Olt= INVESTIGATION (~FORMATION NRC Inspection Report No. 50-228/2009-20 l states that the inspector reviewed data sheets for Fuel and Graphite Transfer fonns for 2008 and 2009. The inspector repeated infonnation from prior years' inspection reports, including that the licensee was not required to inspect the reactor fuel and that the licensee had a.. fuel 'sticking* problem," which prompted it to remove all fuel possible from the core and inspect those elements stuck in place in January 2006. The cover letter of the 2009 Inspection Report, dated July l, 2009, addressed to the licensee stated, "Based on the results of this inspection, no findings of significance were identified."

During the ARRR 's 2011 fuel inspection, the licensee discovered four cracked fuel elements, which it reported to the NRC in January 2012. The licensee subsequently conducted a I 00 percent fuel element inspection and identified 22 cracked fuel elements. On December 18, 2013, the NRC issued the ARRR a Notification of Violation against Technical Specification 10.2 for pperating the reactor with significant defects in the fuel elements during the time between the last full fuel inspection in 2006 up until October l 5, 20 l 0, when the facility ceased reactor operation.

Our review of inspection reports for the ARRR revealed there had been reports of stuck fuel rods as tar back as 1980; likewise, we reviewed Data Sheets for Fuel and Graphite Transfer from 1994 to 2012 and found that of the 22 cracked elements initially identifie~ 7 had been stuck in the reactor core since the 1990s. Three of the initial four fuel elements to be identified by the licensee as cracked-590E, 628E. and 120 l E-had been reported on the Data Sheets for Fuel and Graphite Transfer as stuck in 2003, 1994, and 1994, respectively. Of the 17 fuel elements that were inside the reactor core at the time of discovery, 14 of them had been previously indicated as stuck on the Data Sheets for Fuel and Graphite Transfer (see Exhibits I and 2).

The RTR inspector said that not acting sooner to report and resolve the stuck fuel was his "mistake,.and that he should not have closed IFl-50-228/2005-201-02 until he had verified that the licensee completed its plan of action. He explained he was too reliant on.. the experience of the project manager and the people above" him when deciding how to handle issues found during his inspections. The RTR inspector did not say why no violation was issued until 2013.

except that the decision would have been a consensus judgement can. The RTR inspector said,

¥Typically, if one of these research reactors has a rod that is stuck or they're inspecting them and see a little damage of any sort, they just put it aside in storage and won't re-use it. This facility was very unique in that they did not do that... So they just operated with the damaged fuel." He said that training and guidance could be improved.

FINDING #2: THE NRC FAILED TO IDENTIFY CHANGES TO THE FACILITY LICENSING BASIS Our review of annual reports revealed that NRC staff had likely not identified that the licensee's changes to the facility may not have been in accordance with IO C.F.R. 50.59 or lO C.F.R. 50.90 because they did not appear in change documentation or revisions to the license or technical specifications. Some changes include the following:

Vacuum tube rate meter to solid state rate meter; OFFICIAL USE ONL't'=OIG INVESTIGATION INFORMATION THIS DOCU~EST IS THE PROPERTY OF Tit£ U.S. NUCLEAR Rt:Gl1LATOR\' COM~IISSIO'.'i, OFFICE OF THE INSPt:CTOR G[NERAL (OIG). IF LOANED TO ANOTHER AGENCY, IT AND ITS CO:'>JTE~'TS ARE NOT TO BE REPRODL:CED OR DISTRIBUTED OUTSIDE THE RECEIVING AGENCY WITHOUT OIG'S PER.\IISSIOJli.

7

OFFICIAL USE ONL't'=OIG INVESTIGATION l~FORMA TION BF3 proportional counter to boron-lined proportional counter; Use of new rod drop technique; Use of TRI GA fuel with different weight percentage and cladding type; and, Operation with mixed core of fuel elements with different characteristics.

We asked the RTR inspector about these changes made to the ARRR in the 1990s or earlier before his assignment there, and he said some of these changes in his mind "would have triggered some type of 50.59 review and/or evaluation." He explained that swapping out a component with a duplicate component is a replacement, not a change, and no IO C.F.R. 50.59 evaluation is required, but if a component is changed to something different, an evaluation must be completed to ensure the functions remain the same.

While the ARRR operated with a mixed core in the 1990s or earlier, it continued to do so during the time of our investigation's focus-between 2000 and 20 l 0. The licensing basis for the reactor was specific to a particular fuel clement, and there were no NRC inspection reports identifying the receipt and use of a different fuel element. This investigation did not identify any licensing actions, inspection activities, or licensee 10 C.F.R. 50.59 documentation regarding use of the different model fuel element.

The RTR inspector said he did not think that a IO C.F.R 50.59 evaluation was required if the licensee merely changed the cladding of the fuel from aluminum to stainless steel, but that if the weight percent of the fuel element changed from 8.5 weight percent to something different or if the type of fuel changed, such an evaluation would need to be completed. He said that if had he noticed the ARRR was operating with a mixed core of aluminum and stainless steel and 8.5 weight percent and 12 weight percent, he would have looked for a 10 C.F.R 50.59 evaluation.

The RTR inspector said the ARRR did not use the 10 C.F.R. 50.59 process often as they operated with the same equipment and same facilities for many years.

Furthermore, the OIG reviewed a May 23, 2019, letter from the licensee to Senator John Barrasso, in which the licensee reported that its operators had failed to sufficiently review repairs according to the l O C.F.R. 50.59 requirement, even though the NRC's annual inspection reports suggest differently because they cited no violation. This letter stated that the descriptions of the corrective actions for most of the repairs were incomplete for an effective 10 C.F.R. 50.59 review and approval, that parts had been placed into service without documentation, and "in a small number of instances, unqualified parts were installed." The letter also said that most unplanned scrams were left without an explanation or resolution, and that despite NRC staffs reviews of unplanned scrams during inspections, NRC staff neither noted nor discussed the anomalies.

The RTR inspector said he thinks there is now training on 10 C.F.R 50.59 evaluations in the qualification program, but the guidance he had available to him at the time was not adequate.

Inspection Procedure 69001 does not provide guidance on this topic; rather, it refers the reader to the NRC Inspection Manual; l O C.F.R. 50.59, Changes, Tests and Experiments; and Inspection Procedure 40745, Class I Research and Test Reactor Review and Audit, and Design Change Functions. Regulatory Guide 2.8, Guidance for Implementation of 10 C.F.R. 50.59, Changes, OFFICIAL use ONL'i=Ote. INVESTIGATION INFORMATION THJS DOCUJ\1£'.'IIT IS THE PROPERTY Of' THE L:.s. :'II UCL EAR REGULATOR\" C0MMISSI0.S. 0t-'l'ICE o** TUE INSPECTOR GENERAL (0IG). IF LOANED TO AN0TllER AGENCY, IT AND ITS C0~TE.STS ARE '.'II0T TO BE REPR0DITED OR DISTRIBUTED OUTSIDE THE RECEIVI.SG AGEl'\C\' WITHOUT OIG'S PER,HSSIO;>;.

8

OfFICIAt. USE ONL'i'=-OfG INVESTIGATION INFORMATION Tests, and Experiments at Non-Power Production or Utilization Facilitie, a licensee guidance document on this topic. was not issued until February 2022.

FINDING #3: THE NRC FAILED TO IDENTIFY THE EXCEEDANCE OF A DOSE LIMIT AND THE LICENSEE'S DEPARTURE FROM AN ALARA CULTURE While the reactor operated within the regulatory limits of radiation exposure, the licensee had departed from an ALARA culture. Our review of personnel exposure levels revealed one employee may have been above the NRC's occt,Jpational dose limit. A dosimetry report for 2001 indicated that an employee's culminate dose for his whole body (TEDE) was 5,010 millirem, 10 millirem more than the annual occupational dose limit in 10 C.F.R. 20.1201(a)(l )(i).

The R TR inspector said that although the ARRR tended to have numbers that were higher than other licensees, they were not above regulatory limits. He did speak to the licensee about it, challenging the exposure levels. The RTR inspector acknowledged the ARRR had issues with ALARA, but because the doses did not exceed the regulatory limits, there was **nothing he could do about it."

Environmental exposure records showed that the Accounting Office ranged from the high 50s to approximately 250 millirems per quarter between October 2010 and June 2017. The current licensee said he would not take over the license unless the previous owner disposed of radioactive waste in the storage room. which was adjacent to the Accounting Office in April 2017. Once the waste was disposed of, the readings in the Accounting Office dropped to none detected in the following quarter. The licensee said that the proximity of the waste storage room to administrative space was a violation of ALARA culture, and it was relocated. The l 0 C.F.R.

20.1 l0l(b) requires licensees to "use, to the extent practical, procedures and engineering controls based upon sound radiation protection principles to achieve occupational doses and doses to members of the public that are as low as is reasonably achievable." There are no additional, specific ALARA requirements or radiological dose thresholds included in ARRR *s technical sper;itications. The RTR inspector was not aware of the ALARA issue in the Accounting Office.

FINDING #4: THE ARRR HAD INADEQUATE TECHNICAL SPECIFICATIONS PER TITLE 10 C.F.R. 50.36 Although the regulatoiy framework allows licensees to operate with the technical specifications approved with the granting of the initial operating license, the OIG found the ARRR's technical specifications missed specific values or actions that would ensure safety. However, the NRC issued Administrative Letter 98-10, Dispositioning of Technical Specifications that are Insufficient to Assure Plant Safety, to operating power reactors in 1998 to reiterate the statrs expectations regarding the correction of facility technical specifications when they are found to contain nonconservative values or specify incorrect actions. Not including non-power reactors in its letter gives an appearance that the non-power reactors' technical specifications are not as important. The non-power reactor licensee is under no obligation to update its technical specifications until it is time to renew its license. Even if the technical specifications become inadequate, they are the standard to which the licensee is held once approved by the NRC.

OFFICIAL USE ONL~l=OIO INVESTIGATION INFORM.,,\ TION

• rmi, DOCUMENT IS THE PllOPlllTY OI' 'rtlE li.S. NUCLEAll llt:Gl'LA l'OR\' CO!\IMISSI0'.111, OFl'ICE Ofi' TIIE INSPECTOll GENERAL (OIG). IF LOANED TO ANOTHER AO ENCY, IT AND ITS CO~TESTS ARE NOT TO DE tU:PROOl 'C:EI> OR DISTRIBUTED Ot:TSIDE THE RECEl\'ING AGENCY WITHOUT OtG'S PER~IISSIOS.

9

OFFICIAL USE ONL"i'=OIG INVESTIGATION INFORMATION FINDING #5: THE MINIMUM AMOUNT OF REGULATORY OVERSIGHT PROVIDED TO NON-POWER REACTORS CAN BE IMPROVED The OIG learned that the NRC has statutory authority under Section 104{c) of the AEA:

"The Commission is authorized to issue licenses to persons applying for utilization and production facilities useful in the conduct of research and development activities of the types specified in section 31 and which are not facilities of the type specified in subsection 104b. The Commission is directed to impose only such minimum amount of regulation of the licensee as the Commission finds will permit the Commission to fulfill its obligations under this Act to promote the common defense and security and to protect the health and safety of the public and will permit the conduct of widespread and diverse research and development."

This investigation revealed that the minimum amount of regulatory oversight currently provided to non-power reactors could be improved. Some of the areas that would benefit from improvements to the program are training, guidance documents, and subject matter experts (i.e.,

a non-power reactor equivalent to the project engineer for power reactors) in the NRC to assist RTR inspectors. There are also knowledge gaps in the guidance readily available to the RTR Inspectors; for example, Regulatory Guide 2.8 was only recently issued, even though it is primarily a licensee guidance document. Aside from a reference to Inspection Procedure 69007 (Class I Research and Test Reactor Review and Audit Design Change Functions), there does not appear to be any 10 C.F.R. 50.59 training material specific to non-power reactors.

DISPOSITION The findings from this investigation will be included in the investigative report from OIG Case No. C2I-016. Additional issues raised by the allegations or that arose during the investigation will be referred to OIG Audits for consideration.

OFFICIAL USE ONLY=OIO INVESTIGATION l~FORMATION THI$ DOCU'.\IENT IS THE rROt>ERTY o.- THE U.S. NUCLEAK REGULATORY COMl\llSSIO~. on*1n: 01-* TII£ INSPl-:CTON GENERAL (OIG). IF LOA.lli£D TO ANOTHER AGENCY. IT AND rrs CO:"ITE1'TS ARE NOT TO BE REPRODI 'CED OR DISTRIBUT D 01.JTSIDE THE RECEl\'l:'liG AGENCY WITHOUT OIG'S PERMISSIOl'i.

10

Of'PICIAL USI!! ONL'f'=OIG INVESTIGATION INFORMATION Exhibit 1: Fuel elements In the ARRR core that were Indicated as stuck on fuel and graphite transfer forms between 1994 and 2006 and reported as cracked Stuck Elements from the 1990s are Highlighted in Blue 1994 - 628E, 1192E, and 1201E 1997 - 616E 1998 - 626E and 1255 1999-591 Stuck Elements from 2000-2006 are HlghHqhted in Green 2002-570E, 624E, 1056E, and 1181E 2003 - 590E 2005-2281 2006-1232E OFFICIAL USE ONLY=OIO INVESTIGATION INFORMA 1'10N THIS DOCUMENT IS THE PROPERTY ot* THE t:.s. NUCLEAR IU:Gl;LATORY CO~IMISSION. on*,ct: ot* THE INSPt:CTOR GENERAL (OIG). IF LOASED TO ANOTHER AGENCY, IT AND ITS CO!'ITE:'\TS ARE ~OT TO BE R.:PRODl'CED OR DISTRIBUTED Ol;TSIDE THE RECEl\'ISG AGENCY WITHOllT OIG'S PER:'tllSSIOS.

11

OFFICIAi. USE ONLY-OIG INVESTIGATION INFORMATIO~

Exhibit 2: Images 1 & Descrlptlons2 of four TRIGA elements the ARRR reported to the NRC as cracked S/NI 1201 E: o*scolored, almosf straight vertical longitudinal crack along the middle section of the fuel region. The crack extends about 80% of the fuel region. This element can be pulled about one inch with a tool.

SIN 590E: Discolored, blister on the bottom ring of the element. Three separate vertical cracks on the same side:

(starting from the bottom of the element) #1 in the lower fourth of the fuel region; #2 starts to the right of the first crack just before the first crack ends, about the same length 1 Images obtained from video provided by the licensee.

2 Descriptions obtained from an ARRR letter to the NRC dated January 20, 2012 ( ML I 2026A344 ).

OFFICIAL USE ONL\'=OIG INVESTIGATION INFORMATION

'IHIS OOCUMEm JS THE PROPERTY 01: THE l'.S. NUCLEAR REGl'LATOR\' COl\11\llSSIO'.'ol, 01-'Fl(*E m* TUE INSPt:C"rOR GENERAL (OIG). IF LOA."ED TO ANOTHER AGENCY, IT AND ITS CO'.'ITENTS ARE l"iOT TO BE REPRODl'CED OR DISTRlBUfED OUTSIDE THE RECEl\'l~G AGENCY WITHOUT OIG'S PERMISSIOS.

12

OfflClAL USE ONL'l'==OIG INVESTIGATION INFORMATION as the first crack; #3 starts to the left of the second crack and just before the second crack ends, about three times the length of the other two cracks. This element can be pulled about 20% out with a tool.

SIN 623IE: Discolored., very l19ht--colored crack in the upper section of the non-fuel region. Cracks in the other elements are very dark, so this one may be just beginning. This element can be pulled about 25% out with a tool.

SIN 2281 rnstrumented Element: Discolo ed, multiple blisters In the upper non-fuel section. Y-shaped crack In the upper fourth of the fuel section. Continuous vertical, longitudinal crack In the lower two-thirds of the fuel section.

0% of the element can be lifted with a tool.

Of'FICIAL US£ ONL't=016 INVESTIGATION l:'IIFOR.MAtlON THIS DOCUME~ IS TH[ PR0 PElln' 011 TIIE U.S. NtJCLEAlt IU:Glil,ATOll\' C0~1MISSI0'.'1, 0..-..-10: 0t' TIit INSP*:cro1t GENERAL ((>IG). IF L0ASED TO ANOTHER AGESC\', IT AND ITS C0!'-ITESTS ARF. NOT 10 BE RF.PR0Dl'l 'ED OR DISTRIBUTED OUTSIDE THE RECEl\'ISG AGENl'\' WITHOUT 0IG'S PER~USSI0S.

13

AEROTEST OPERATIONS, INC.

3455 FOSTORIA WAY

• SAN RAMON, CA 94583 * (925) 866-1212

• FAX (925) 866-1716 October 5, 2023 US Senator Cynthia Lummis Russell Senate Office Building Washington, DC 20510 US Senator Alex Padilla 112 Hart Senate Office Building Washington, DC 20510

Subject:

NRC's Inadequate Oversight at Aerotest Operations, Inc. (a Small Business) and Request for your Assistance in Obtaining Restitution from the NRC.

Dear Senator Lummis and Senator Padilla:

As the President of Aerotest Operations, I requested the investigation by the NRC OIG concerning the Aerotest Operations' circumstances and lack of effective oversight by the NRC. Their preliminary findings were also a contributing factor in calling for the special Inquiry. I have attached the report entitled "Special Inquiry into the U.S. Nuclear Regulatory Commission's Oversight of Research and Test Reactors" and a copy of the memorandum report produced by the NRC OIG describing the NRC actions associated with Aerotest Operation entitled "Inadequate Oversight of Non-Power Reactor (OIG Case No. 21-0012)".

As you will read, this report substantiates the NRC's inadequate oversight at Aerotest Operations, Inc. It also substantiates that the lack of adequate oversight was not just limited to Aerotest Operations, Inc. and their findings suggested a widespread problem.

Pages 17-23 have the details on the NRC's Inadequate oversight at Aerotest Operations, Inc.

I am asking you to help recover the fees paid to the NRC, the damage to the fuel because of the NRC' s inadequate oversight, and my operational costs for 5 years since buying the business in 2017 as the actual reactor and operations did not match the public records available at the NRC. I am a legitimate small business and those records in part were used in the due diligence that convinced me of the viability of the reactor operation and business. I am also asking for help in getting the reactor recommissioned, the license renewed and to continue the business of neutron radiography interrogating critical manufactured parts and producing critical short-lived radioisotopes for medicine. I am willing to take a 4.5 million dollars in credit against future NRC costs but would need 2 million cash to purchase replacement fuel. Aerotest Operations is also responsible for the damage and will purchase the remaining 2 million in fuel needs.

US Senator Letter Dated October 5, 2023 Page 1 of 4

I paid fees to the NRC of $3,120,792.82 from 2005-2020 for inadequate oversight. This was detailed in a Letter dated November 11, 2020, to Cherish K Johnson, NRC, CFO (ADAMS ML20325Al 76)

I experienced $ 4,000,000.00 in damage to our fuel that could have been prevented with the correct oversight from the NRC. This was detailed in a letter dated March 29, 2023, to Marian Zober, NRC General Counsel (ADAMS ML23094A070)

I spend $2,980,424.97 and loss profit of $2,856,221.00 for a total loss of

$5,836,645.97 from 2019 -2023 not being able to restart the reactor as it was not as described in NRC inspections and public records. This was detailed in a letter dated March 29, 2023, to Marian Zober, NRC General Counsel (ADAMS ML23094A070)

Here are some excerpts from the report entitled Special Inquiry into the U.S. Nuclear Regulatory Commission's Oversight of Research and Test reactor."

In Findings on Page II "The agency's RTR program failed to identify and address problems with the NIST test reactor and other RTRs, specifically: (A) the NRC failed to identify problems with fuel movement, including precursors to later events; (B) the NRC' s inspection practices often lacked direct observation of activities important to safety; (C) RTRs other than the NIST reactor experienced significant fuel oversight issues; and, (D) the agency's RTR program has not been substantively updated for at least two decades, and does not reflect the agency's risk-informed and safety culture positions.

The OIG's findings highlight future challenges for the agency's oversight programs for RTRs and advanced reactors."

In

SUMMARY

OF FINDINGS on Page III "A. The NRC's approach to inspections at the NIST test reactor prior to the February 2021 event resulted in the failure to identify and address fuel movement problem areas that were potential event precursors. From 2016 through 2020, the NRC inspected NIST audit reports, fuel movement records, and fuel movement procedures that had indications of potential problems. However, the NRC failed to follow up on NIST audit committee reports identifying deficiencies with safety culture and operator training and requalification that contributed to the event. The NRC also failed to identify records that revealed unlatched fuel elements and procedures that lacked adequate steps to ensure fuel elements were latched.

B. The NRC's oversight of RTRs lacked direct observation of activities important to safety. The OIG found that the NRC staff's routine inspections at NIST were scheduled primarily based on the annual frequency requirements stated in staff guidance documents, rather than by considering the timing of fuel movement or other planned activities that US Senator Letter Dated October 5, 2023 Page 2 of4

would have allowed inspections through direct observation. As a result, the NRC had not directly observed the fuel element latch checks following fuel movement at the NIST test reactor in the five years prior to the event. An unlatched fuel element was the direct cause of the 2021 event.

C. The NRC's oversight practices were not unique to NIST and were implemented in the same manner at two other RTRs that experienced fuel issues. The OIG also found inadequate technical specifications and dated license bases that contributed to these fuel issues. Additionally, in one instance, the NRC failed to act for at least five years to address damaged fuel as described in NRC inspection reports.

D. The agency's RTR inspection program policy and guidance are outdated because they do not implement risk-informed approaches and safety culture elements. The last major revision to the safety inspection program was in 2004. Additionally, the 2004 safety inspection procedures underestimate the resources needed to complete all requirements that are defined in policy as "mandatory activities."

If any additional information or clarification is required, please contact me at dn-~'i£~Ln'n '.cigmail.corn or (801) 631-5919.

Respectfully, ~"' \-

David M Slaughter, PhD President

Enclosures:

OIG Case No.21-012 Memorandum report Special Inquiry into the U.S. Nuclear Regulatory Commission's Oversight of Research and Test Reactors CC:

Brooke P. Clark Secretary of the Commission U.S. Nuclear Regulatory Commission Mail Stop 0-16 B33 Washington, DC 20555-0001 Commissioners Christopher T. Hanson, Jeff Baran, David A. Wright, Annie Caputo, and Bradley R. Crowell US Senator Letter Dated October 5, 2023 Page 3 of4

Howard K Osborne CFO U.S. Nuclear Regulatory Commission Office of the Chief Financial Officer Division of the Comptroller Labor Administration and Fee Billing Branch Mail Stop T9 850 Washington, DC 20555-0001 Marian Zober Deputy General Counsel U.S. Nuclear Regulatory Commission Office of the General Counsel Mail Stop 0-15 D-21 Washington, DC 20555-0001 US Senator Letter Dated October 5, 2023 Page 4 of 4

6fflCtM:: tJSE 8Ntll OIG INVESTIGATION INFORMATION DATE:

Augusf17, 2022 TO:

Concur: Case Closed Malion A Bartley Assistant Inspector General for Investigations r

b)(7)(C)

THROUGH:

THROUGH:~--

FROM:

SUBJECT:

ALLEGATION INADEQUATE OVERSIGHT OF NON-POWER REACTOR (OIG CASE NO.21-012)

The Office of the Inspector General (OIG), NRC, received several allegations over the past.few years regarding the Aerotest Radiography and Research Reactor (ARRR). While the alleger also expressed concerns regarding inappropriate billing and ineffective licensing processes, the investigation focused on the allegations that the NRC failed to provide adequate regulatory oversight and inspections at the ARRR until it voluntarily ceased operations in 2010.

POTENTIAL VIOLATIONS The potential violations relevant to this investigation are 10 C.F.R 20.1101, Radiation Protection Programs; 10 C.F.R. 20.1201, Occupational Dose Limits for Adults; IO C.F.R 50.36, Technical Specifications; 10 C.F.R. 50.59, Changes, Tests and Experiments; 10 C.F.R. 50.90, Application for Amendment of License, Construction Permit, or Early Site Permit; Section l 04( c) of the Atomic Energy Act (AEA); Inspection Manual Chapter 2545; Research and Test Reactor Inspection Program; and Inspection Procedure 69001, Class II Research and Test Reactors.

6PffCtA:L USE 8Pil:li 610 INVESTIGATION INFORMATION THIS DOCUMENT IS THE PROPERTY OF THE U.S. NUCLEAR REGULA TORY COMMISSION, OFFICE OF THE INSPECTOR CENERAL (OIG). IF LOANED ro ANOTHIR AGENC\', IT AND ITS CONTD,,'TS ARE NOT ro H REPRODUCED OR DISTRIBUTED OUTSID£ THE RECEIVING AGENCY WITHOUT OIG'S PERMISSION.

NRC Headquarters I 11555 Roekville Pike I Rockville, Maryland 20852 I 301.415.5930 www.nrcolg.oversight.gov

OFFICIAL use ONL"t'=-016 INVESTIGATION INFORMATION FINDINGS FINDING #1: THE NRC FAil,.ED TO ADEQUATELY OVERSEE DAMAGED FUEL Despite the NRC's December 2013 issuance of a Severity Level IV violation for willfully operating the reactor with damaged fuel from approximately 2006 through 2010, the OIG found the NRC failed to adequately oversee damaged fuel at the ARRR even though NRC inspection reports and an inspector follow-up item issued in 2005 identified that ARRR 's reactor fuel elements showed signs of wear typically associated with long term use. During routine inspection activities between 2000 and 2010, the NRC identified potential precursors to fuel cladding damage through records review of the ARRR's annual reports and periodic fuel element inspections. Furthennore, in 2007, the licensee identifi~ a cracked fuel element noted in the fuel inspection records that was not reported in the NRC Inspection Report.

Figure 1: Cracked fuel element at the AAAR FINDING #2: THE NRC FAILED TO IDENTIFY CHANGES TO THE FACILITY LICENSING BASIS The NRC staff did not identify that the licensee made several changes to the facility that may not have been in accordance with 10 C.F.R. 50.59 or 10 C.F.R. 50.90. For example, the ARRR operated with a mixed core in the 1990s or earlier, and it continued to do so between 2000 and 2010, the time of the OIG investigation's focus.

OFFICIAL USE ONLY=OIG INVESTIGATION INFORMATION THIS DOCUMENT IS THE PROPERTY Of' THE U.S. NUCLEAR REGULA TOR\' COMMISSION, OFFICE OF TH£ INSPECTOR GENERAL (OIG). IF LOANED TO ANOTHER AGENCY, rr AND ITS CONTI:NTS All£ NOT TO BE REPRODUCED OR DISTRIBUTED OIJTSID£ THE RECEIVING AGENCY WITHOUT OIG'S PERMISSION.

2

OFFICIAL USE ONL"l'=-OIG INVESTIGATION INFORMATION FINDING #3: THE NRC FAILED TO IDENTIFY THE EXCEEDANCE OF A DOSE LIMIT AND THE LICENSEE'S DEPARTURE FROM AN AS LOW AS REASONABLY ACHIEVABLE CULTURE While the reactor operated within the regulatory limits of radiation exposure, the licensee had departed from an as low as reasonably achievable (ALARA) culture. The NRC was not able to take action in this area because the inspector did not identify a violation of federal dose limits or license condition. However, the OIG's review of personnel exposure levels revealed one employee that may have been above the NRC' s occupational dose limit, which could have been a violation had it been identified at the time.

FINDING #4: THE ARRR HAD INADEQUATE TECHNICAL SPECIFICATIONS PER TITLE 10 C.F.R. 50.36 Although the regulatory framework allows licensees to operate with the technical specifications approved with the granting of the initial operating license, the OIG found the ARRR's technical specifications missed specific values or actions that would ensure safety.

FINDING #5: THE MINIMUM AMOUNT OF REGULATORY OVERSIGHT PROVIDED TO NON-POWER REACTORS CAN BE IMPROVED Although the AEA guides the NRC to provide the "minimum amount of regulation.. required for the NRC to fulfill its regulatory obligations, the OIG found less than adequate training, guidance documents, and subject matter experts (i.e., a non-power reactor equivalent to the project engineer for power reactors) in the NRC to assist research and test reactor (RTR) inspectors.

BASIS OF FINDINGS BACKGROUND The ARRR is a non-power reactor located in San Ramon, California, whose initial license was granted in July 1965. The ARRR used the Training, Research, Isotopes, General Atomics (TRI GA) fuel design elements inside its core. The reactor's primary use was a neutron source for neutron or "N-ray" radiography and was licensed for a maximum thermal power level of 250 kilowatts. Its products and services included analysis, criticality, irradiation, non-destructive testing, and radiographic equipment. For example, neutron radiography can ensure the correct assembly and positioning of small explosive devices, detect hidden corrosion in aluminum components, inspect mechanical systems, and verify the integrity of welds. Figure 2 provides a chronology since 2000.

OFFICIAL USE ONL"i'=OIG INVESTIGATION INFORMATION THIS DOCUMENT IS THE PROPERTY O1-" THE U.S. NUCLEAR REGULATORY COMMISSION, OFFICE m* THE INSPECTOR GENERAL (OIG). IF LOANED TO ANOTHER AGENCY, rr A."'ID rrs CONTENTS ARE NOT TO BE REPRODUCED OR DISTRIBUTED OUTSIDE THE RECEIVING AGENCY WITHOUT OIG'S PERMISSION.

3

OFFICIAL USE ONL't=-OIG INVESTIGATION INFORMATION 2000 April2005 July 2009 October 2010 February 2011 December 2011 January 2012 December 2013 November 2017 March 2019 December 2021 Figure 2: Recent chronology Autoliv, Inc., a foreign entity, acquired ARRR through intermediate acquisition of several wholly owned companies as part of a distressed asset sale.

ARRR applied timely for its license renewal in 2005, with supplemental letters to the NRC in 2008, 2009 and 2010, and continued to operate under the timely renewal provisions of 1 O C.F.R. 2.109, Effect of Timely Renewal Application, after its license expired on April 15, 2005.

Due to ARRR's foreign ownership, the NRC issued a proposed denial of the license renewal.

ARRR voluntarily ceased commercial operations.

The NRC issued Confirmatory Action Letter No. NRR-2011-001.

ARRR discovered four cracked fuel elements during its fuel element inspection.

ARRR reported cracks to the NRC and then conducted a 100 percent fuel element inspection, which identified 22 cracked fuel elements.

The NRC issued ARRR a Notice of Violation based on the Apparent V10lation, EA-13-108, for operating the reactor between 2006 and 2010 with fuel elements that had significant cracks in the cladding.

ARRR was purchased and granted a license transfer to Nuclear Labyrinth, LLC, which became the new licensee.

ARRR submits License Amendment Request to prepare for fuel storage and decommissioning activities.

The NRC issued ARRR partial approval for a Possession Only License.

The reactor is in the decommissioning process.

FINDING #1: THE NRC FAILED TO ADEQUATELY OVERSEE DAMAGED FUEL Our review of documents revealed that on December 18, 2013, the NRC issued the ARRR a Notification of Violation against Technical Specification 10.2 for operating the reactor "from an indeterminate period of time beginning at a point after the last full inspection in 2006 up until October 15, 2010, when the facility ceased reactor operation, the licensee operated the reactor with significant defects in the fuel elements." The first four cracked elements were discovered in late 2011, and in a subsequent fuel inspection, 22 fuel elements were identified as having varying degrees of discoloration, blistering, swelling, and/or cracking in the aluminum cladding. These characteristics represented a significant defect in the fuel elements and the potential loss of the integrity of a fission product barrier.

OFFICIAL USE ONLY=-OIG INVESTIGATION INFORMATION THIS DOCUME?liT IS THE PROPERTY OF THE U.S. NUCLEAR REGULATORY COMMISSIO~, OFFICE OF THE INSPECrOR GENERAL (OIG). IF LOANED TO ANOTHER AGENCY, IT AND ITS CONTENTS ARE NOT TO BE REPRODUCED OR DISTRIBUTED OUTSIDE THE RECEIVING AGENCY WITHOUT OIG'S PERMISSION.

4

OFFICIAL USE ONL'i=OIG INVESTIGATION INFORMATION NUREG/CR-2387, Credible Accident Analyses for TRIGA and TRIGA-Fueled Reactors, states on page 35:

The usual evaluation criteria for fuel elements are based on bowing, elongation or visual changes in the cladding. These parameters are used to estimate fuel serviceability an apparently give a reliable indication of thermal gradients to which the fuel element has been subjected during its operating history. In addition, the long-term effects of fuel bumup create swelling of the fuel moderator th.at presumably would also be indicated by changes in fuel element dimensions. Fuel elements that have been pulsed may have cracking or fracturing of the fuel-moderator, which would not be observed during the fuel inspections."

The NRC's Technical Training Center does not provide training to RTR inspectors on fuel inspections, and any information on fuel element damage would be in Course R-800, "Perspectives on Reactor Safety." TIC staff told us that it was exceedingly rare in a non-power reactor to reach a point of damage. and it was such an unlikely event that other areas of non-power reactors were covered instead. The staff also told the OIG that if an RTR inspector was unsure about a topic not covered in training, the inspector should ensure the topic is addressed through mentoring. RTR inspectors have 3 months of basic training, and then 2 years of learning in the field before they are certified. A current RTR inspector told the OIG that the qualification process depends on the individual, but it ta1ces at least 6 months to a year.

Inspection Procedure 69001, Class II Research and Test Reactors, is applicable to NRC inspections conducted at the ARRR. Its references include Regulatory Guide 2.3, Quality Verification for Plate-Type Uranium-Aluminum Fuel Elements for Use in Research Reactors, July 1967, and ANSI/ANS-15.2, Quality Control for Plate-Type Uranium-Aluminum Fuel Elements, 1974. These documents are provided to assist in the receipt of new fuel, focusing on their quality requirements, but the guidance does not address irradiated fuel inspection, similar to the criteria discussed in NUREG/CR-2387, Credible Accident Analysis for TRIGA and TRIGA-Fueled Reactors, April 1982.

The NRC R TR inspector who performed inspections at the ARRR between 2000 and 2020 said he and other R TR inspectors were not trained on damaged fuel, and he had not seen NUREG/CR-2387 before we provided it to him to review the parameters for fuel evaluation.

The RTR inspector said he was not aware of fuel damage issues when he took over the ARRR from the previously assigned inspector.

The NRC Inspection Report No. 50-228/2005-20 l states the inspector reviewed data sheets for Fuel and Graphite Transfer forms for 2003, 2004, and 2005. It also states that although reactor fuel was not required to be inspected, the licensee continued to inspect 20 percent of the fuel elements annually to remain cognizant of the physical status of the fuel. The licensee noted that several fuel elements had been deformed such that they were stuck in the reactor core, making them difficult to move.

The RTR inspector stated it was the licensee's responsibility "to keep up with their fuel," and he OFFICIAL USE ONL't=OIG INVESTIGATION INFORMATION nus DOCUMENT IS THE PROPERTY OF THE U.S. NUCLEAR REGULA TORY COMMISSION. 01-FICE OF THE INSPECTOR GENERAL (OIG). IF LOANED TO ANOTHER AGENCY, IT AND rrs CONTE!'tfTS ARE NOT TO BE REPRODUCED OR DISTRIBUTED OUTSIDE THE RECEIVING AGENCY WITHOUT OIG'S PER.~ISSION.

5

OFFICIAL USE ONL"t=OIG INVESTIGATION INFORMATION was aware the reactor core's older fuel had aluminum cladding and the newer fuel had stainless steel cladding. He "thought that was unusual that they would have stuck elem~n~." Bas_ed on this infonnation and to ensure the deformation was not a precursor to a more significant issue, the inspector told us he opened Inspector Follow-up Item 50-228/2005-201-02, to review the licensee's conduct of complete inspections of fuel elements in the core. However, the cover letter of the 2005 Inspection Report, dated May 23, 2005, addressed to the licensee stated, "Based on the results of this inspection, no safety concerns or noncompliances ofNRC requirements were identified."

The NRC Inspection Report No. 50-228/2007-201 states that the inspector reviewed data sheets for Fuel and Graphite Transfer forms for 2005, 2006, and 2007. Again, the inspection report points out that there was no requirement for the licensee to inspect the fuel, stating:

"As a result of the fuel problem. the licensee decided to remove all fuel possible from the core and conduct an inspection of all the fuel elements. In January 2006, those elements that could be removed were placed in storage. The licensee then used a moveable camera and monitor set-up to conduct an inspection of those elements that were "stuck" in place. After that was completed, an inspection of all the remaining elements was also completed and the elements were returned to their original positions in the core. No new or unusual problems were identified."

We reviewed the Data Sheets for Fuel and Graphite Transfer for the ARRR's 2006 inspection, finding that that 20 fuel elements and 5 graphite elements were indicated as stuck in the reactor core.

During this inspection, the RTR inspector also closed out Inspector Follow-up Item 228/2005-201-02. In addition to referencing the licensee's 2006 inspection, he wrote:

"To further help with this problem, the licensee had developed a plan to purchase enough new fuel elements over time to replace the ones that cannot be removed from the core. Once enough fuel is on hand, the reactor core will be defueled.

Then the top grid plate will be raised slightly and the remaining "stuck" elements will be worked out of their positions and out of the core. Then the new fuel elements will be placed in their positions. This issue is considered closed."

The cover letter of the 2007 Inspection Report, dated June 22, 2007, addressed to the licensee stated, "Based on the results of this inspection, no findings of significance were identified" (2007); however, when we reviewed the 2007 Data Sheet for Fuel and Graphite Transfer, element 631 E listed "crack" in the Comments and was removed from the core and placed into a storage rack. The NRC Inspection Report No. 50-228/2007-201 states the inspector reviewed the 2007 Data Sheet for Fuel and Graphite Transfer during that inspection. However, when the RTR inspector was shown the 2007 Data Sheet for Fuel and Graphite Transfer, he did not recall seeing the fuel element listed with "crack" in the comments. and if he had, he said he would have included it in his inspection report and called his branch chief and the ARRR project manager to ask how they wanted him to proceed.

OFFICIAL USE ONL"J'=OIG INVESTIGATION INFORMATION THIS DOCUMENT IS THE PROPERTY OF THE U.S. NUCLEAR REGULATORY COMMISSION. OJo"FICE OF THE INSPECTOR GENERAL (OIG). IF LOANED TO ANOTHER AGENCY, IT AND ITS CONTENTS ARE NOT TO BE REPRODUCED OR DISTRIBUTED OUTSIDE THE RECEIVI.NG AGENCY WITHOUT OIG'S PERMl~ION.

6

OFFICIAL USE ONL"t=-OIG INVESTIGATION INFORMATION NRC Inspection Report No. 50-228/2009-201 states that the inspector review~ data s~eets for Fuel and Graphite Transfer forms for 2008 and 2009. The inspector repeated mformat,on from prior years' inspection reports, including that the licensee was not required to inspect the reactor fuel and that the licensee bad a "fuel 'sticking' problem," which prompted it to remove all fuel possible from the core and inspect those elements stuck in place in January 2006. The cover letter of the 2009 lnspection Repo~ dated July 1, 2009, addressed to the licensee stated, "Based on the results of this inspection, no findings of significance were identified."

During the ARRR 's 2011 fuel inspection, the licensee discovered four cracked fuel elements, which it reported to the NRC in January 2012. The licensee subsequently conducted a 100 percent fuel element inspection and identified 22 cracked fuel elements. On December 18, 2013, the NRC issued the ARRR a Notification of Violation against Technical Specification 10.2 for operating the reactor with significant defects in the fuel elements during the time between the last full fuel inspection in 2006 up until October 15, 2010, when the facility ceased reactor operation.

Our review of inspection reports for the ARRR revealed there had been reports of stuck fuel rods as far back as 1980; likewise, we reviewed Data Sheets for Fuel and Graphite Transfer from 1994 to 2012 and found that of the 22 cracked elements initially identified, 7 had been stuck in the reactor core since the l 990s. Three of the initial four fuel elements to be identified by the licensee as cracked-590E, 628E, and 1201E-had been reported on the Data Sheets for Fuel and Graphite Transfer as stuck in 2003, 1994, and 1994, respectively. Of the 17 fuel elements that were inside the reactor core at the time of discovery, 14 of them had been previously indicated as stuck on the Data Sheets for Fuel and Graphite Transfer (see Exhibits 1 and 2).

The RTR inspector said that not acting sooner to report and resolve the stuck fuel was his "mistake," and that he should not have closed IFI-50-228/2005-201-02 until he had verified that the licensee completed its plan of action. He explained he was too reliant on "the experience of the project manager and the people above" him when deciding how to handle issues found during his inspections. The RTR inspector did not say why no violation was issued until 2013, except that the decision would have been a consensus judgement call. The RTR inspector said, "Typically, if one of these research reactors has a rod that is stuck or they're inspecting them and see a little damage of any sort, they just put it aside in storage and won't re-use it. This facility was very unique in that they did not do that... So they just operated with the damaged fuel." He said that training and guidance could be improved.

FINDING #2: TIIE NRC FAILED TO IDENTIFY CHANGES TO THE FACILITY LICENSING BASIS Our review of annual reports revealed that NRC staff had likely not identified that the licensee's changes to the facility may not have been in accordance with 10 C.F.R. 50.59 or 10 C.F.R. 50.90 because they did not appear in change documentation or revisions to the license or technical specifications. Some changes include the following:

Vacuum tube rate meter to solid state rate meter; OfflClAL USE ONLY=-OIG INVESTIGATION INFORMATION THIS DOCUMENT IS THE PROPERTY OF THE U.S. NUCLEAR REGULATORY COMMISSION, OFFICE Of THE INSPECTOR GENERAL (OIG). If LOANED TO ANOTHER AGENCY, IT AND ITS CONTENTS ARE NOT TO BE REPRODUCED OR DISTRIBUTED OUTSIDE THE RECEIVING AGENCY WITHOUT OIG'S PERMISSION.

7

OFFICIAL USE ONLY=OIG INVESTIGATION INFORMATION BF3 proportional counter to boron*lined proportional counter; Use of new rod drop technique; Use ofTRIGA fuel with different weight percentage and cladding type; and, Operation with mixed core of fuel elements with different characteristics.

We asked the RTR inspector about these changes made to the ARRR in the l 990s or earlier before his assignment there, and he said some of these changes in his mind "would have triggered some type of 50.59 review and/or evaluation." He explained that swapping out a component with a duplicate component is a replacement, not a ~han~e, and no 10 C.F -~- 50.59 evaluation is required, but if a component is changed to somethmg different, an evaluation must be completed to ensure the functions remain the same.

While the ARRR operated with a mixed core in the l 990s or earlier, it continued to do so during the time of our investigation's focus-between 2000 and 20 l 0. The licensing basis for the reactor was specific to a particular fuel element, and there were no NRC inspection reports identifying the receipt and use of a different fuel element. This investigation did not identify any licensing actions, inspection activities, or licensee JO C.F.R. 50.59 documentation regarding use of the different model fuel element.

The RTR inspector said he did not think that a IO C.F.R 50.59 evaluation was required if the licensee merely changed the cladding of the fuel from aluminum to stainless steel, but that if the weight percent of the fuel element changed from 8.5 weight percent to something different or if the type of fuel changed, such an evaluation would need to be completed. He said that if had he noticed the ARRR was operating with a mixed core of aluminum and stainless steel and 8.5 weight percent and 12 weight percent, he would have looked for a 10 C.F.R 50.59 evaluation.

The RTR inspector said the ARRR did not use the 10 C.F.R. 50.59 process often as they operated with the same equipment and same facilities for many years.

Furthermore, the OIG reviewed a May 23, 2019, letter from the licensee to Senator John Barrasso, in which the licensee reported that its operators had failed to sufficiently review repairs according to the l O C.F.R. 50.59 requirement, even though the NRC's annual inspection reports suggest differently because they cited no violation. This letter stated that the descriptions of the corrective actions for most of the repairs were incomplete for an effective 10 C.F.R. 50.59 review and approval, that parts had been placed into service without documentation, and "in a small number of instances, unqualified parts were installed." The letter also said that most unplanned scrams were left without an explanation or resolution, and that despite NRC staff's reviews of unplanned scrams during inspections, NRC staff neither noted nor discussed the anomalies.

The RTR inspector said he thinks there is now training on 10 C.F.R 50.59 evaluations in the qualification program, but the guidance he had available to him at the time was not adequate.

Inspection Procedure 69001 does not provide guidance on this topic; rather, it refers the reader to the NRC Inspection Manual; l O C.F.R. 50.59, Changes, Tests and Experiments; and Inspection Procedure 40745, Class I Research and Test Reactor Review and Audit, and Design Change Functions. Regulatory Guide 2.8, Guidance for Implementation of l O C.F.R. 50.59, Changes, OFFICIAL USE ONet=OIG INVESTIGATION INFORMATION THJS DOCUME~T IS THE PROPERTY OF THE U.S. NUCLEAR REGULATOR,' COMMISSION, ot*FicE m* THE INSPECTOR GENERAL (OIG). IF LOANED TO ANOTHER AGENCY, IT AND ITS CONTENTS ARE NOT TO BE REPRODUCED OR DISTRIBUTED OUTSIDE THE RECElnNG AGENCY WITHOUT OlG'S PERMISSION.

8

OFFICIAL USE ONL"t=-010 INVESTIGATION INFORMATION Tests, and Experiments at Non-Power Production or Utilization Facilities, a licensee guidance document on this topic, was not issued until February 2022.

FINDING #3: THE NRC FAILED TO IDENTIFY THE EXCEEDANCE OF A DOSE LIMIT AND THE LICENSEE'S DEPARTURE FROM AN ALARA CULTURE While the reactor operated within the regulatory limits of radiation exposure, the licensee had departed from an ALARA culture. Our review of personnel exposure levels revealed one employee may have been above the NRC's occupational dose limit. A dosimetry report for 2001 indicated that an employee's culminate dose for his whole body (TEDE) was 5,010 millirem, IO millirem more than the annual occupational dose limit in IO C.F.R. 20.1201(a)(l )(i).

The RTR inspector said that although the ARRR tended to have numbers that were higher than other licensees, they were not above regulatory limits. He did speak to the licensee about it, challenging the exposure levels. The RTR inspector acknowledged the ARRR had issues with ALARA, but because the doses did not exceed the regulatory limits, there was.. nothing he could do about it."

Environmental exposure records showed that the Accounting Office ranged from the high 50s to approximately 250 mi Iii.rems per quarter between October 2010 and June 2017. The current licensee said he would not take over the license unless the previous owner disposed of radioactive waste in the storage room, which was adjacent to the Accounting Office in April 2017. Once the waste was disposed of, the readings in the Accounting Office dropped to none detected in the following quarter. The licensee said that the proximity of the waste storage room to administrative space was a violation of ALARA culture, and it was relocated. The 10 C.F.R.

20.1101 (b) requires licensees to '"use, to the extent practical, procedures and engineering controls based upon sound radiation protection principles to achieve occupational doses and doses to members of the public that are as low as is reasonably achievable." There are no additional, specific ALARA requirements or radiological dose thresholds included in ARRR's technical specifications. The RTR inspector was not aware of the ALARA issue in the Accounting Office.

FINDING #4: THE ARRR HAD INADEOUA TE TECHNICAL SPECIFICATIONS PER TITLE 10 C.F.R. 50.36 Although the regulatory framework allows licensees to operate with the technical specifications approved with the granting of the initial operating license. the OIG found the ARRR's technical specifications missed specific values or actions that would ensure safety. However, the NRC issued Administrative Letter 98-10, Dispositioning of Technical Specifications that are Insufficient to Assure Plant Safety, to operating power reactors in 1998 to reiterate the staff's expectations regarding the correction of facility technical specifications when they are found to contain nonconservative values or specify incorrect actions. Not including non-power reactors in its letter gives an appearance that the non-power reactors* technical specifications are not as important. The non-power reactor licensee is under no obligation to update its technical specifications until it is time to renew its license. Even if the technical specifications become inadequate, they are the standard to which the licensee is held once approved by the NRC.

OFFICIAL USE ONLY=OIG INVESTIGATION INFORMATION THIS DOCUMENT JS THE PROPERTY OF THE U.S. NUCLEAR REGULA TORY COMMISSION, OFFICE Of THE INSPECTOR GENERAL (OIG). IF LOANED TO ANOTHER AGENCY, IT AND ITS CONTENTS ARE NOT TO BE REPRODUCED OR DISTRIBUTED OUTSIDE THE RECEIVING AGENCY WITHOUT OIG'S PER.'1JSSION.

9

OFFICIAL USE ONL't=OIG INVESTIGATION INFORMATION FINDING #5: THE MINIMUM AMOUNT OF REGULATORY OVERSIGHT PROVIDED TO NON-POWER REACTORS CAN BE IMPROVED The OIG learned that the NRC has statutory authority under Section 104(c) of the AEA:

The Commission is authorized to issue licenses to persons applying for utiliz.ation and production facilities useful in the conduct of research and development activities of the types specified in section 31 and which are not facilities of the type specified in subsection 104b. The Commission is directed to impose only such minimum amount of regulation of the licensee as the Commission finds will permit the Commission to fulfill its obligations under this Act to promote the common defense and security and to protect the health and safety of the public and will permit the conduct of widespread and diverse research and development."

This investigation revealed that the minimum amount of regulatory oversight currently provided to non-power reactors could be improved. Some of the areas that would benefit from improvements to the program are training, guidance documents, and subject matter experts (i.e.,

a non-power reactor equivalent to the project engineer for power reactors) in the NRC to assist RTR inspectors. There are also knowledge gaps in the guidance readily available to the RTR Inspectors; for example, Regulatory Guide 2.8 was only recently issued, even though it is primarily a licensee guidance document. Aside from a reference to Inspection Procedure 69007 (Class I Research and Test Reactor Review and Audit Design Change Functions), there does not appear to be any 10 C.F.R. 50.59 training material specific to non-power reactors.

DISPOSITION The findings from this investigation will be included in the investigative report from OIG Case No. C2 l-0 16. Additional issues raised by the allegations or that arose during the investigation will be referred to OIG Audits for consideration.

OFFICIAL USE ONLY=OIG INVESTIGATION INFORMATION THIS DOCUMENT IS THE PROPERTY OF THE U.S. NUCLEAR REGULA TORV COMMISSION, OFFICE OF THE INSPECTOR GENERAL (OIG). IF LOANED TO ANOTHER AGENCY, IT AND ITS CONTENTS ARE NOT TO BE REPRODUCED OR DISTRIBUTED OUTSIDE THE RECEIVING AGENCY WITHOUT OIG'S PERMJ~ION.

10

OFFICIAL USE ONL'i'=OIG INVESTIGATION INFORMATION Exhibit 1: Fuel elements In the ARRR core that were Indicated as stuck on fuel and graphite transfer forms between 1994 and 2006 and reported ** cracked Stuck Elements from the 1990s are Highlighted in Blue 1994-628E, 1192E, and 1201E 1997-616E 1998 - 626E and 1255 1999-591 Stuck Elements from 2000-2006 are Highlighted in Green 2002 - 570E, 624E, 1056E, and 1181 E 2003-590E 2005-2281 2006-1232E OFFICIAL USE ONL"f'==OIG INVESTIGATION INFORMATION THIS DOCUMENT IS THE PROPERTY OJo' THE U.S. NUCLEAR REGVLATORV COMMISSION, OFFICE OF THE INSPECTOR GENERAL (OIG). IF LOANED TO ANOTHER AGENCY, IT AND ITS CONTENTS ARE NOT TO BE REPRODUCED OR DISTRIBUTED OUTSIDE THE RECEIVING AGENCY WITHOUT OIG'S PERMISSION.

11

OFFICIAL USE ONLY-OIG INVESTIGATION INFORMATION, Exhibit 2: Images 1 & Descrtptions2 of four TRIGA elements the ARRR reported to the NRC as cracked SIN 1201 E: Discolored, almost straightvemcal longitudinal crack along the middle section of the fuel region. The crack extends about 80% of the fuel region. This element can be pulled about one inch wtth a tool.

SIN 500E: Discofored, bl1ister on the oottom ring of the element. Three separate vertical cracks on the same side:

(starting from the bottom of the element) #1 in the lower fourth of the fuel region; #2 starts to the right of the first crack just before the first crack ends, about the same length 1 Images obtained from video provided by the licensee.

2 Descriptions obtained from an ARRR letter to the NRC dated January 20, 2012 (MLI 2026A344 ).

Off'ICIAL USE ONL'"l=OIC INVESTIGATION INFORMATION THIS DOCUMENT IS THE PROPERTY OJ" THE U.S. NUCLEAR REGULATORY COMMISSION, OFFICE Of THE INSPECTOR GENERAL (OIG). If LOANED TO ANOTHER AGENCY, rr AND ITS CONTEl'fl'S ARE NOT TO BE REPRODUCED OR DISTRIBUTED OUTSIDIE ntE RECEIVING AGENCY WITHOUT OIG'S PERMJSSIO~.

• 12

Of'FICl1'.L USE ONL'l=-610 INVESTIGATION INFORMATION as the first crack* #3 starts to the left of the second crack and just before the second crack ends, about three times the length of the other two cracks. This element can be pulled about 20% out with a tool.

s '623E: Disco ored, very light-colored crack In the upper section of the non-fuel region. Cracks in the other elements are very dark, so this one may be just beginning. This element can be pulled about 25% out with a tool.

SIN 2281 lnstrurne ted Element; Discolored, multip e blisters in the upper non-fuel section. Y-shaped crack in the upper fourth of the fuel section. Continuous vertical, longitudinal crack in the lower two-thirds of the fuel section.

0% of the element can be lifted with a tool.

OfftCbtL USE ONLV~IG INVESTIGATION INFORMATION THIS DOCUMENT JS THE PROPERTY Of THE U.S. NUCLEAR REGULA TORV COMMl$1ON, OFFICE OF THE INSPECTOR GENERAL (OIC). IF LOANED TO ANOTHt:R AGENCY, rr AND ITS CONTENTS ARE NOT TO BE REPRODUCED OR DISTRIBUTED OUTSIDI: THE RECEIVING AGENCY WITHOtrr OIC'S PERMISSION.

13

DATE:

TO:

FROM:

MEMORANDUM September 29, 2023 Christopher T. Hanson Chair Robert J. Feitel Inspector General Digitally signed by Robert J.

Robert J. Feitel ::\023.09.29os,02,34

--04*00*

SUBJECT:

SPECIAL INQUIRY INTO THE U.S. NUCLEAR REGULATORY COMMISSION'S OVERSIGHT OF RESEARCH AND TEST REACTORS (OIG Case No. 12100162)

The attached report by the Office of the Inspector General (OIG), U.S. Nuclear Regulatory Commission (NRC) is furnished for whatever action you deem appropriate.

Please notify the OIG by January 29, 2024, what corrective actions, if any, the NRC will be taking based on the results of this Special Inquiry.

cc:

Commissioner Wright Commissioner Caputo Commissioner Crowell D. Dorman, EDO J. Weil, OPA NRC Headquarters I 11555 Rockville Pike I Rockville, Maryland 20852 I 301-415.5930 nrcoig.oversight.gov

Why the OIG conducted this Special Inquiry OIG Case No. l2100162 September 29, 2023 The Office of the Inspector General (OIG) initiated this Special Inquiry following a radioactive release to the environment from the National Institute of Standards and Technology (NIST) test reactor located in Gaithersburg, Maryland on February 3, 2021.

After the release, the NIST test reactor was shut down for more than two years before receiving authorization to restart from the U.S. Nuclear Regulatory Commission (NRC).

This NIST event was one of eight unscheduled incidents or events in fiscal year 2021 that the NRC determined to be significant to public health or safety.

This Special Inquiry's focus broadened from the 2021 NIST event to include consideration of the NRC's oversight of other Research and Test Reactor (RTR) facilities to assess potential systemic issues. However, this report primarily discusses the NRC's oversight of the NIST test reactor prior to,the February 2021 event because the event highlights areas in which the agency's oversight could be improved as it relates to other smaller nuclear facilities.

Findings The agency's RTR program failed to identify and address problems with the NIST test reactor and other RTRs, specifically: (A) the NRC failed to identify problems with fuel movement, including precursors to later events; (B) the NRC's inspection practices often lacked direct observation of activities important to safety; (C) RTRs other than the NIST reactor experienced significant fuel oversight issues; and, (D) the agency's RTR program has not been substantively updated for at least two decades, and does not reflect the agency's risk-informed and safety culture positions.

The OIG's findings highlight future challenges for the agency's oversight programs for RTRs and advanced reactors.

ii

SUMMARY

OF FINDINGS A The NRC's approach to inspections at the NIST test reactor prior to the February 2021 event resulted in the failure to identify and address fuel movement problem areas that were potential event precursors. From 2016 through 2020, the NRC inspected NIST audit reports, fuel movement records, and fuel movement procedures that had indications of potential problems. However, the NRC failed to follow up on NIST audit committee reports identifying deficiencies with safety culture and operator training and requalification that contributed to the event.

The NRC also failed to identify records that revealed unlatched fuel elements and procedures that lacked adequate steps to ensure fuel elements were latched.

B. The NRC's oversight of RTRs lacked direct observation of activities important to safety. The OIG found that the NRC staffs routine inspections at NIST were scheduled primarily based on the annual frequency requirements stated in staff guidance documents, rather than by considering the timing of fuel movement or other planned activities that would have allowed inspections through direct observation. As a result, the NRC had not directly observed the fuel element latch checks following fuel movement at the NIST test reactor in the five years

• prior to the event. An unlatched fuel element was the direct cause of the 2021 event.

C. The NRC's oversight practices were not unique to NIST and were implemented in the same manner at two other RTRs that experienced fuel issues. The OIG also found inadequate technical specifications and dated license bases that contributed to these fuel issues. Additionally, in one instance, the NRC failed to take action for at least five years to address damaged fuel as described in NRC inspection reports.

D. The agency's RTR inspection program policy and guidance are outdated because they do not implement risk-informed approaches and safety culture elements.

The last major revision to the safety inspection program was in 2004.

Additionally, the 2004 safety inspection procedures underestimate the resources needed to complete all requirements that are defined in policy as "mandatory activities."

iii

'I{

TABl,E OF CONTENTS I.

ALLEGATION/INCIDENT.......................................................................................... 1 II. BACKGROUND............................................................................................................ 2 III. DETAILS...................................................................................................................... 7 A.

NRC Failed to Identify and Address NIST Event Precursors................................ 7 B.

NRC's Inspection Practices Often Lacked Direct Observation of Activities Important to Safety............................................................................................... 12 C.

NRC's Inadequate Oversight Extends to Other RTRs........................................... 17 D.

RTR Inspection Program Policy and Guidance are Outdated............................. 26 IV. FUTURE LICENSEES AND NRC'S RTR PROGRAM............................................... 32 V.

CONCLUSION........................................................................................................... 34 APPENDIX........................................................................................................................ 36 TO REPORT, FRAUD, WASTE, ORA.BUSE.................................................................... 41 iv

I. ALLEGATION/INCIDENT The OIG initiated this Special Inquiry following a radioactive release to the environment from the NIST test reactor on February 3, 2021.

This report is an investigative product documenting those instances when inadequacies in NRC regulatory oversight may have resulted in a potentially adverse impact on public health and safety.

Potential violations relevant to this Special Inquiry include failure to adhere to policy or procedures stated in Inspection Manual Chapter (IMC) 2545, "Research and Test Reactor Inspection Program," and Inspection Procedure (IP) 69009, "Class I Research and Test Reactor Fuel Movement."1 This Special Inquiry discusses the NRC's oversight of the NIST test reactor prior to the 2021 event and its collateral implications for the RTR program. Additionally, this Special Inquiry includes the results of an investigation concerning the adequacy of the NRC's oversight of the Aerotest research reactor from approximately 2000 to 2010. The OIG also reviewed the NRC's oversight of the University of Texas research reactor prior to a 2022 event.

The OIG interviewed more than 30 witnesses for this report, including licensee employees and NRC principals regarded as knowledgeable about the RTR program, as well as senior executives at NRC Headquarters. The OIG also performed site visits at all five Class I and several Class II RTRs, and reviewed agency documents, such as the agency's RTR program policies and guidance, NRC inspection reports, safety evaluation reports, and agency enforcement actions, as well as licensee records.

'As stated in IMC 2545, Subsection 08.01, Class I RTRs have licensed power levels of 2 megawatts (MW) or greater.

Subsection 08.02 of IMC 2545 states that Class II RTRs have licensed power levels ofless than 2 MW.

1

II. BACKGROUND NIST Event Chronology On February 3, 2021, the NIST test reactor experienced an automatic shutdown in response to indications of high exhaust stack radiation levels during a start-up after a six-week outage for reactor refueling. Consequently, NIST staff declared an "alert" in accordance with its emergency instructions and notified the NRC as required by its emergency plan. After NIST staff members placed the reactor in a safe condition, they evacuated the reactor confinement building and the control room, but six NIST personnel had been externally contaminated. Following decontamination, the contaminated personnel were cleared to go home later that day..Although exhaust stack samples showed a release to the environment involving the presence of fission product gases, including isotopes of cesium, xenon, and krypton,2 the radiation release was less than 0.5 millirem, which is a fraction of the regulatory annual public dose limit of 100 millirem established in Title 10 of the Code of Federal Regulations (C.F.R.) Section 20.1301.

After additional analyses, NIST officials notified the NRC on March 2, 2021, that its test reactor had exceeded the fuel temperature safety limit defined in its technical specifications.

Therefore, the licensee was required to remain shut down until the NRC authorized restart of the reactor. NIST officials also determined that its licensed operators failed to ensure a fuel element was fully latched in its designated core position at the end of refueling operations on January 4, 2021. Between January 4, 2021, and February 3, 2021, the unlatched fuel element became misaligned due to NIST operators starting and stopping primary pumps to maintain required temperatures. During reactor start-up on February 3, 2021, at Figure 1: Misaligned fuel element l

Source: NRC approximately 50 percent power (10 MW), this fuel element did not receive sufficient cooling because it was not in the proper orientation to receive design cooling water flow (see Figure 1). As a result, the fuel element partially melted.

On February 9, 2021, in response to this event, the NRC dispatched a Special Inspection Team (SIT) in accordance with NRC Management Directive 8.3, "NRC Incident

• Investigation Program." The SIT was charged with conducting an onsite review of the sequence of events leading up to the radioactive release and the licensee's response to the event, assessing the consequences of the event and the adequacy of the facility's procedures, reviewing the maintenance or outage actions preceding the event, and 2 These isotopes are normal byproducts of fission in a nuclear reactor, normally contained inside fuel elements.

2 I

determining the root cause of the event and the completed or planned corrective actions to prevent recurrence.

On March 5, 2021, the NRC expanded the SIT's resources, technical expertise, and scope of chartered activities because the licensee had self-reported its violation of Safety Limit 2.1 (Greater than 450 degrees Celsius in a single fuel element).3 On October 1, 2021, NIST officials provided the NRC with a root cause analysis of the event that identified fundamental or systemic causes that permitted the development of direct and contributing causal factors.

On March 16, 2022, the SIT reported its results related to the NIST event, identifying seven apparent violations.4 The SIT also identified 14 inspection follow-up items that required additional assessment during future inspections.s These items related to equipment, procedures, processes, programs, system conditions, training, corrective actions, safety culture, and leadership.

On August 1, 2022, the NRC issued a legally binding Confirmatory Order, which NIST officials agreed would be issued as settlement of the apparent violations.6 The NIST license was modified by this order, which included the following required activities by the licensee: a nuclear safety culture assessment, a nuclear program assessment(s),

development of a problem identification and resolution program, increased attention to employee concerns, and establishment of a safety culture monitoring panel. Based on the Confirmatory Order, the NRC did not issue a Notice of Violation for the apparent violations discussed in its inspection report dated March 16, 2022, nor did the agency levy an associated civil penalty.

On March 9, 2023, NRC staff authorized the restart of the NIST test reactor.7 NIST required NRC authorization to restart its reactor since the reactor exceeded its fuel temperature technical specification safety limit during the February 3, 2021 event.

3 Revision to National Institute of Standards and Technology Test Reactor Special Inspection Team Charter (Agencywide Documents Access and Management System (ADAMS) Accession No. ML21062A301).

4 National Institute of Standards and Technology-U.S. Nuclear Regulatory Com.mission Special Inspection Report No. 05000184/2022201 (ADAMS Accession No. ML22056A361).

s IMC 0615, aResearch and Test Reactor Inspection Reports," Subsection 03.09, defines an inspection follow-up item as a matter that requires further inspection because of a potential problem, because specific licensee or NRC action is pending, or because additional information is needed that was not available at the time of the inspection.

6 National Institute of Standards and Technology, Center for Neutron Research - Confirmatory Order (ADAMS Accession No. ML22206A213).

7 National Institute of Standards and Technology - Authorization to Restart following Exceedance of the Safety Limit (ADAMS Accession No. ML23040A337).

3

Role of the NIST Test Reactor The NIST test reactor has been operating in Gaithersburg, Maryland, a suburb of Washington, DC, since 1967. NIST is an agency under the Department of Commerce.

The reactor typically operates at 20 MW 24-hours-a-day, 7-days-a-week, with a routine shutdown every 51/2 weeks.

The test reactor's neutrons can pass easily through many heavy materials, such as steel or iron, but interact strongly with light materials, particularly hydrogen. These characteristics make neutrons capable of seeing what X-rays cannot. Researchers use the neutrons to obtain a wide variety of information that can lead to improved pharmaceuticals, more efficient fuel cells for electric vehicles, and high-density data-storage systems. Approximately 3,000 researchers from over 260 organizations use the NIST test reactor annually (see Figure 2).

NIST Refueling Figure 2: Cold neutron guide hall at NIST Source: NRC NIST staff refuel the test reactor approximately eight times per year to maintain full power operation. The reactor contains 30 fuel elements, and two shifts of licensed operators work approximately 12 hours1.388889e-4 days <br />0.00333 hours <br />1.984127e-5 weeks <br />4.566e-6 months <br /> to refuel it. This process involves replacing and reshuffling fuel elements in the core. During refueling, licensed operators use "pick-up" tools positioned above each fuel element.8 Due to the reactor's design at the time of the event discussed in this report, the operators were not able to directly observe whether the fuel elements were securely latched in the reactor core. Instead, the operators had to rely on their experience using these tools and written procedures to ensure they properly latched the fuel elements in the reactor core.9 8 At times, operator trainees or other licensee staff may assist licensed operators with fuel movement activities.

Title 10 C.F.R. Section 55.13(b) does not require a license for an individual who, under the direction and in the presence of a licensed senior operator, manipulates the controls of a facility to load or unload the fuel into, out of, or within the reactor vessel.

9 Based on the corrective actions implemented following the February 2021 event, NIST operators rpust now perform visual checks using a camera, moved by the fuel transfer system, inside the reactor vessel to ensure fuel elements are securely latched.

4

NRC Regulatory Framework One of the main components of the NRC's regulatory process is the oversight of licensees' facility operations through inspections. The purpose of the agency's RTR inspection program is not to provide a systematic certification for every aspect of RTR safe operations. Rather, the NRC inspects RTRs to ensure licensees meet the requirements in NRC regulations and NRC-issued licenses. Through these inspections the NRC seeks to provide reasonable assurance the public and the environment are protected from undue nuclear risk from RTR operations.

The general basis for regulation of RTRs is in the Atomic Energy Act of 1954, as amended, Section 104, "Medical Therapy and Research and Development." Section 104(c) states:

The Commission is directed to impose only such minimum amount of regulation of the licensee as the Commission finds will permit the Commission to fulfill its obligations under this Act to promote the common defense and security and to protect the health and safety of the public and will permit the conduct of widespread and diverse research and development.

The Office of Nuclear Reactor Regulation (NRR) is the NRC office responsible for oversight of RTRs, including the RTR inspection program. The general policy for the inspection program is described in IMC 2545, "Research and Test Reactor Inspection Program." The program establishes an inspection methodology for operating, safeguards, and decommissioning activities and conditions. The program is designed to allow sufficient flexibility to optimize the use of inspection resources and provide inspection commensurate with the safety significance of the RTR.

Inspection Manual Chapter 2545, Section 07, "General Program Guidance," addresses the scheduling, conduct, and implementation of NRC inspections at RTR.s. Section 07 includes the following subsections:

07.01, Program Timeliness;

• 07.02, Performance Based Approach; 07.03, Program Feedback; 07.04, Use of Inspection Procedures; 07.05, Inspection Plans; 07.06, Management Entrance and Exit Meetings;

• 07.07, Inspection Reports; and, 07.08, Responding to Events and Event Reports.

5

Inspection Manual Chapter 2545, Subsection 08.01, provides additional guidance for Class I RTRs, which are those having licensed power levels of 2 MW or greater. For these RTRs, the NRC staff completes the operations portion of the inspection program annually using the following 11 IPs:

IP 69003, Class I Research and Test Reactor Operator Licenses, Requalification, and Medical Activities; IP 69004, Class I Research and Test Reactor Effluent and Environmental Monitoring; IP 69005, Class I Research and Test Reactor Experiments; IP 69006, Class I Research and Test Reactors Organization and Operations and Maintenance Activities; IP 69007, Class I Research and Test Reactor Review and Audit and Design Change Functions;

• IP 69008, Class I Research and Test Reactor Procedures; IP 69009, Class I Research and Test Reactor Fuel Movement;

• IP 69010, Class I Research and Test Reactor Surveillance; IP 69011, Class I Research and Test Reactor Emergency Preparedness; IP 69012, Class I Research and Test Reactors Radiation Protection; and, IP 86740, Transportation.

Finally, Inspection Manual Chapter 0615, "Research and Test Reactor Inspection Reports," Subsection 04.04.d, states that the NRC addresses enforcement-related findings in accordance with the NRC Enforcement Policy and the NRC Enforcement Manual.

6

III. DETAILS Findings: NRC's inadequate RTR oversight led to a failure to identify and address problems with the NIST test reactor and otherRTRs The NRC's inadequate RTR oversight led to a failure on the part of the agency to identify and address problems with the NIST test reactor and other RTRs.10 Specifically: (A) the NRC failed to identify problems with fuel movement, including precursors to the NIST event; (B) the NRC's inspection practices often lacked direct observation of activities important to safety; (C) other RTRs experienced significant fuel oversight issues; and, (D) the RTR program has not been substantively updated for two decades or more and does not reflect the agency's risk-informed and safety culture positions.

A. NRC Failed to Identify and Address NIST Event Precursors The OIG determined the NRC failed to identify precursors and take regulatory action to address known safety concerns prior to the NIST event. The concern areas discussed in this Special Inquiry were related to the licensee's audits, fuel movement records, and fuel movement procedures.

NRC review of licensee's audit reports NIST Technical Specification 6.2.5, "Safety Assessment Committee (SAC)," states that the committee "shall review or audit the [NIST Center for Neutron Research (NCNR)]

reactor operations and the performance of the [Safety Evaluation Committee (SEC)]. "11 The OIG determined, however, that the NRC failed to monitor and address NIST's implementation of its audit committee's recommendations. These recommendations were later determined to identify deficiencies similar in nature to many of the root causes of the February 3, 2021 event identified by NIST.

Inspection Procedure 69007, "Class I Research and Test Reactor Review and Audit and Design Change Functions," is one of the IPs that the NRC must perform annually. One of the eight requirements in Section 69007-02 is to "[d]etermine if the licensee implemented or resolved the recommendations of [its] review and audit committee as required by the technical specification and licensee administrative controls."

10 As used in this Special Inquiry, "address" refers to the agency taking steps in accordance with inspection and enforcement policies and practices. This excludes required licensee actions.

11 The NIST Center for Neutron Research is the organizational unit with responsibility for the NIST test reactor.

7

Inspection Procedure 69007, Subsection 03.01, includes the following guidance to NRC inspectors regarding review and audit committee recommendations and audit requirements:

The inspector should pay particular attention to the committee's actions and recommendations on audits and facility events, and the related follow-up actions by the committee and line management. The recommendations of the licensee's audit and review committee should have been resolved and the resolutions communicated to responsible personnel, such as operators and experimenters.

If a safety or non-compliance issue raises the need for NRC required audits, the inspector should inform appropriate management, and the NRR project manager.

Between 2016 and 2020, the NRC reported reviewing the 2015 through 2019 SAC reports during annual inspections.

In the 2016, 2017, and 2019 inspection reports, the NRC stated, "SAC audit provided good insight into the licensee's program and the committee made various worthwhile recommendations for program improvement. The licensee responded to the findings and took actions/corrective actions as needed."

• In the 2018 inspection report, the NRC stated, "The audit teams also made various observations which the licensee had addressed or was in the process of addressing. The audits appeared to be beneficial to the licensee in addressing issues that could be improved."

In the 2020 inspection report, the NRC stated, "The inspector reviewed the last audit which showed that the audit team provided an independent review of the

[NIST test] reactor operations and the performance of the SEC, as required."

However, the OIG reviewed SAC reports from 2015 through 2019 and noted the following SAC-identified concerns that the NRC did not capture in its inspection reports.

• The SAC identified at least four safety culture and/or complacency issues. For example, in 2019, the SAC noted that there was a complacency issue at NCNR and recommended a periodic Safety Conscious Work Environment (SCWE) survey be performed across the NCNR to assess the underlying safety culture and general attitude toward safety. The report stated, "NIST and the NCNR are fortunate and have not had a recent major safety incident... "

• The SAC also identified at least six issues with operator training and/or requalification. For example, the SAC noted: "The current shift rotation has the crews inadvertently phase-locked to perform the same evolution every cycle. This could affect knowledge management for some of the operations activities. The SAC recommends shifting the maintenance or shift schedules so that staff rotate through all the maintenance activities over time."

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Further, the special inspection report that the NRC issued following the February 2021 event at NIST listed the following deficiencies identified in SAC reports.

SAC audit completed October 24, 2019, identified a complacency issue at the NCNR SAC report dated March 2, 2017, identified many of the above issues and identified shift staffing issues, as well as the aging reactor management program lead needing more authority to ensure cooperation from all other NIST staff.

While that report did not list specific recommendations to improve training, it did suggest that a more structured training program would benefit the facility.

As described above, the SAC reports indicated issues with safety culture, shift staffing/rotation, training, and requalification. These reports also identified event precursors that the NRC failed to capture in its inspection reports.

An NRC principal stated that the SAC reports did indicate that there were safety culture issues. With respect to the event, this NRC principal asserted "it wasn't a coincidence that a number of those [SAC recommendations and findings] were identified as root causes... of the event... so clearly there were opportunities to fix those issues prior."

Review oflicensee's fuel handling records The OIG determined that the NRC failed to identify and address partially latched fuel element issues at NIST on several occasions.

Inspection Procedure 69009, Subsection 02.05, "Fuel Movement Problem Resolution,"

is one of the six requirements performed to "[ d]etermine whether significant fuel movement or inspection problems are identified and resolved in accordance with the licensee's procedural controls."

Inspection Procedure 69009, Subsection 03.05, provides the following guidance: "the licensee is required to resolve identified problems... to meet technical specification requirements."

Between 2016 and 2020, the NRC reported reviewing defueling/refueling logs for Core 626 through Core 652. The log sheets are used to record compliance with technical specifications. For these record reviews, the associated NRC inspection reports documented no findings with regard to fuel movements.

However, the OIG reviewed these logs and identified several fuel movement problems that the licensee recorded on the log sheets. Specifically, the licensee commented that a "universal tool" was used instead of the standard tool on more than 10 occurrences and that partially latched elements were found on 4 occurrences (see Figure 3 and Appendix A).

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Figure 3: Example of recorded fuel movement problems r1 Source: OIG generated from licensee records The OIG learned the "universal tool" was used when a fuel element was in a partially latched condition.

As discussed in the Background section of this Special Inquiry report, the NIST event followed refueling and resulted from an unlatched fuel element that partially melted.

The OIG learned that, after the event, the licensee reviewed the latch position of all 30 fuel elements and identified three additional fuel elements that were partially latched.

Additionally, licensee records showed the NIST test reactor had nine previous unlatched fuel elements from 1981 through 2009. As discussed above, licensee records also showed at least four partially latched fuel elements from 2016 through 2020.

Further, the NIST root cause investigation report states:

Video surveillance of this and all other checks shows that the latch checks were performed improperly: (1) the tool was rotated in the wrong direction, and (2) the rotation orientation check used an improper reference. In addition, the subsequent check of height of J-7 (a check to see if the tool collar was flush with the index plate) was found to be slightly high. This was attributed to the longer new tools. The effect of this improper check is uncertain but could possibly have worsened the condition of a partially latched element, rotating it towards a more fully unlatched position.12 When the OIG showed NRC principals the defueling/refueling logs with the many comments regarding issues with fuel movement, one NRC principal said they may have "missed" those comments, and another principal said that they did not follow-up with the licensee regarding those comments. One NRC principal also confirmed that the IP 69009 resource estimate is four hours and only allows for a "cursory" review of defueling/refueling logs. Both NRC principals agreed these were areas of fuel movement concern. One of the NRC principals then added, "you don't have the time to look at them as you should, in depth, and you don't have time to look at all of them, really."

Review oflicensee's fuel movement procedures The OIG determined that the NRC failed to identify and address fuel movement procedure concerns at the NIST test reactor.

12 NIST root cause investigation of the February 2021 Fuel Failure (ADAMS Accession No. ML21274Ao19).

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Inspection Procedure 69009, Subsection 02.01, "Fuel Handling Procedures," is one of six requirements performed to "[d]etermine whether the licensee's fuel handling procedures are adequate to perform intended functions."

Inspection Procedure 69009, Subsection 03.01, provides the following guidance: "[t]he licensee's fuel movement activities are governed by the licensee's procedures. The use of approved procedures is required in accordance with [technical specification] and security plan requirements. "13 NIST Technical Specification 6,4.(2), "Fuel Loading, Unloading, and Fuel Movement Within the Reactor Vessel," requires the use of written procedures for moving fuel.

NIST Operation Instruction 6.1, "Fueling and Defueling Procedure," is an example of a required licensee procedure.

In 2018, 2019, and 2020, the NRC stated in its inspection reports that it had verified the "licensee procedures and operator instructions provided approved methods to move and handle fuel consistent with the provisions of the [technical specifications] and the licensee safety analysis." The OIG identified that the NRC inspections from 2018 through 2020 included review of NIST Operation Instruction 6.1; for these annual inspections, the NRC reported no findings.

However, the OIG found the NIST root cause investigation report (referenced above) identified the inadequacies in NIST Operation Instruction 6.1 as one of the factors primarily contributing to the event. The report stated that "refueling latch-checking procedures did not capture the necessary steps to ensure that fuel elements were properly latched." Additionally, the report stated that "procedural compliance was not enforced" by licensee staff.

An NRC principal stated that record reviews of procedures primarily consist of identifying whether technical specifications require use of the procedure, verifying the licensee has a properly approved procedure, and reviewing recent changes and associated documentation. When asked about direct observation of procedure performance, this NRC principal explained they would obtain a copy of the licensee's procedure, attend the licensee's pre-job brief,14 follow along in the field while the operators perform the steps, observe how licensees disposition issues, and ask questions on observed anomalies. The NRC principal asserted that either approach satisfies the IP requirements.

13 Title 10 C.F.R. Section 50.36(c)(5), "Administrative Controls," requires, in relevant part, procedures to ensure safe operation of the facility. NIST TS 6.4, "Procedures," implements this regulatory requirement with written procedures for seven categories of activities.

14 NUREG/CR-6751, "The Human Performance Evaluation Process: A Resource for Reviewing the Identification and Resolution of Human Performance Problems," describes a pre-job brief as a meeting of workers and supervisors conducted before performing a job to communicate expectations, ensure personnel are qualified to perform the task, ensure procedures and instructions are complete and understood by personnel performing the task, verify prerequisite conditions are met before the work begins, and obtain authorization to start the task.

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This NRC principal stated, however, that they would not be able to identify errors in the NIST procedures without observing performance of the procedure, adding that NIST Operation Instruction 6.1 "seemed reasonable as it was written, but that's without actually looking at the tools and looking at the index plate. "1s The principal recalled:

One of the biggest issues with the procedure is it told you to line a mark-up and the mark didn't exist... and the only way you're really going to be able to figure that out is if you went and chatted with folks and see what they do... and somebody tells you that it's not there or you observe the evolution.

B. NRC's Inspection Practices Often Lacked Direct Observation of Activities Important to Safety The OIG determined the NRC was deficient when implementing existing requirements in the inspection policy and procedures for Class I RTRs. Specifically, the NRC performed limited direct observations of fuel movements and other licensee activities important to safety. Although the NRC met the inspection frequency requirement for Class I RTRs listed in agency policy, the OIG found the NRC did not typically coordinate inspections to coincide with licensee activities important to safety.

Limited direct observation of activities identified in inspection procedures The OIG found that from 2016 through 2020, the NRC completed most inspection activities at NIST by reviewing records instead of directly observing activities important to safety.

In 2004, the NRC revised IMC 2545 in its entirety to incorporate performance-based concepts, including an emphasis on direct observation. Specifically, Subsection 07.02, "Performance Based Approach," states:

Using a performance-based approach, inspectors focus their attention on activities important to safety. Performance-based inspection emphasizes observing activities and the results of licensee programs over reviewing procedures or records. For example, an inspector may identify an issue through observing a facility activity in progress, monitoring equipment performance, or the in-facility results of an activity (e.g., an engineering calculation), and then let the observation lead to evaluation of other associated areas. Discussions with facility personnel and reviewing documents should be used to enhance or verify performance-based observations. This approach is designed to emphasize observation of activities. Although most aspects of the inspection program are performed 15 NIST Operating Instruction 6.1 states that the index plate is positioned above the reactor to guide the positioning of tools during the refueling process.

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onsite using the performance based approach, certain activities can be conducted in the inspector's office, i.e., portions of procedure review and administrative program inspection.

NRC principals stated that it is preferable to directly observe RTR operations. They added that inspectors should "try to observe maintenance, surveillance, or some activity instead of just paperwork" and stated that direct observation should be the "norm."

NIST inspection reports showed that from 2016 through 2020 the NRC completed on average 14 direct observations for the annual inspections at NIST. Inspection procedure guidance recommends approximately 37 direct observations for annual inspections (see Table 1).

Table 1: Number of direct observations at NIST by inspection year Sample Inspection Year 2016 2017 2018 2019 2020 Documented Direct

• Observations 17 9

15 20 9

Average 14 Source: OIG generated from NRC inspection reports Additionally, an NRC principal explained that, during week-long inspections in 2022, two other Class I RTRs received between 15 and 25 percent of the direct observations listed in the IP guidance. 16 When the OIG asked another NRC principal if they knew whether NRR management preferred direct observation or record reviews, they replied that they were not aware of management's preference.

An NRC senior executive stated that, unlike a power reactor, there may be some "flexibilities" with respect to the RTRs that allow inspectors to rely on a paperwork review of completed activities, but it would be more ideal for them to "try and strategically, smartly schedule their annual reviews so they... coincide with those activities using a risk-informed approach." The senior NRC executive added, I'd expect there to be more direct observation. It just makes sense."

Limited direct observation of fuel movement at the NIST test reactor and other Class I RTRs Inspection Manual Chapter 2545, Section 06, "Policy," states that the IPs applicable to RTR inspections "were designed to gather facts to support inspection findings and conclusions," and provide guidance to inspectors. One of them, IP 69009, "Class I 16 Class I RTRs receive two one-week inspections annually to complete all IP requirements.

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Research and Test Reactor Fuel Movement," guides inspectors in determining "whether fuel was inspected, handled, and maintained as required, since the last inspection."

Table 2 lists IP 69009's six requirements.

Section 02.01 Section 02.02 Section 02.03 Section 02.04 Section 02.05 Section 02.06 Source: NRC Table 2: IP 69009-02 inspection requirements Fuel Handling Procedures. Determine whether the licensee's fuel handling procedures are adequate to perform intended functions.

Fuel Handling and Inspection. Determine whether fuel is moved and inspected consistent with the requirements of the TS and the licensee's procedures.

Radiological Controls. Determine whether fuel handling activities are conducted in accordance with 10 C.F.R. Part 20 and the licensee's procedures and programs for radiation protection.

Security Plan. Determine whether the licensee satisfied security plan requirements for fuel movement activities.

Fuel Movement Problem Resolution. Determine whether significant fuel movement or inspection problems are identified and resolved in accordance with the licensee's procedural controls.

Tests and Checks. Determine whether the licensee was within TS limits and met procedural requirements before resuming normal operation after fuel movement.

The "General Guidance" section of IP 69009 states, "Be aware of the facility's plans and schedules for refueling or other major fuel movement. It is not necessary to directly observe the entire fuel movement activity. However, observation of a portion of the fuel movement activities is desirable." Section 69009-03.02 additionally states, "If direct observation of a fuel movement activity is not possible at the time of inspection, verification of the final fuel location, the review of respective records, and discussions with personnel involved in the most recent fuel movement activity will provide an acceptable sample for inspection." (emphasis added.)

Based on discussions with licensee principals and review of licensee records, a direct observation of fuel movement at the NIST test reactor would involve sampling a portion of licensee activities over at least a 12-hour period in areas that include defueling, refueling, and latch verification. During this 12-hour period, the inspector would be in the facility observing the licensee's activities in progress and verifying they were consistent with license requirements and procedures.

From 2016 through 2020, the NRC concluded in all five NIST inspection reports, "the licensee maintained and followed procedures which effectively implemented [technical specification] requirements for fuel handling." However, review of these inspection reports and interviews with the inspectors revealed that the NRC did not directly observe fuel element latch verifications in the five years prior to the event. While one of the five inspection reports stated that "the inspector had the opportunity to observe a portion of the fuel handling operation process following the removal of four used/spent 14

fuel elements," the other four reports reflected a review of logbooks, records, and related procedures.

An NRC principal explained that "... NIST [has a] "very complicated procedure" and "direct observation is much more preferable than just reviewing paperwork." The principal added that they have advocated for more than two inspections per year "because there's so much stuff in a large facility like that to look at... you need to watch the operators as they're working." The principal stated that inspectors did not have enough time to look at everything in depth, saying "it's very hard to see, it's hard to judge where they move the fuel around."

An NRC senior executive stated, "I would expect there would have been more physical observation, especially if... the evolutions or the operations are taking place... once every 38 days... that would suggest to me that there is at least some opportunity to observe."

Additionally, the OIG found that the NIST reactor was not the only Class I RTR for which the NRC conducted limited direct observations of fuel movement. As shown in Table 3, from 2018 through 2022, the NRC directly observed approximately 5 percent of fuel movements at the other Class I RTRs.

Table 3: Direct observations of fuel movement at Class I RTRs 2018 2019 2020 2021 2022 University of Missouri -

Yes No No No No Columbia Massachusetts Institute of No No No No No TechnoloK.Y Rhode Island Atomic Energy No No No No No Commission University of California, No No No No No Da,is1, Source: OIG generated from NRC Inspection Reports Three NRC principals with RTR inspection responsibilities stated that they had yet to directly observe a Class I RTR fuel movement.

Inspection planning based on program frequency requirements Inspection Manual Chapter 2545, Section 07, "General Program Guidance," describes the scheduling, conduct, and implementation of NRC inspections at RTRs. The section has various subsections that are relevant to inspection scheduling.

Subsection 07.01, "Program Timeliness," provides that "the time allowed to complete the [inspection] program has a nominal period with a 25 percent maximum allowed 11 During the referenced timeframe, the University of California, Davis was a Class I RTR based on licensed power level. The University of California, Davis is now considered a Class II RTR due to a reduction in licensed power level following license renewal.

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period in the definitions of annual, biennial and triennial." This guidance is reflected in IMC 2545, Section 04, "Inspection Frequencies," which defines the intervals for inspections. Annual RTR inspections should be performed at least once per year, with the interval not to exceed 15 months (Subsection 04.01); biennial RTR inspections should be performed at least once every two years, with the interval not to exceed two years and six months (Subsection 04.02).

As discussed previously, IMC 2545, Subsection 07.02, "Performance Based Approach,"

provides that, "[u]sing a performance-based approach, inspectors focus their attention on activities important to safety. Performance-based inspection emphasizes observing activities and the results oflicensee programs over reviewing procedures or records."

Inspection Manual Chapter 2545, Subsection 07.05, "Inspection Plans," provides that "the inspector shall annually develop facility-specific inspection plans consistent with this Manual Chapter." Further, "[t]he results of past inspections, event evaluations, and inspector and management reviews shall be used to schedule and determine the focus of planned inspections at each facility."

Inspection procedures also provide guidance to inspectors for planning purposes. For example, IP 69009, Section 03, "Inspection Guidance," states:

Be aware of the facility's plans and schedules for refueling or other major fuel movement. It is not necessary to directly observe the entire fuel movement activity. However, observation of a portion of the fuel movement activities is desirable. Under no circumstances is the licensee to adjust schedules for these activities to fit the inspection schedule. At some facilities, the licensee may move fuel only once a year, which emphasizes the need to know the licensee's plans and schedules.

For both the NIST reactor and RTRs generally, the NRC used inspection program timeliness as the primary criterion for developing inspection schedules. The NRC's actions were contrary to the program guidance cited above, which encourages NRC staff to coordinate with licensees to determine times for observation of activities important to safety, such as fuel movement.

The NRC had opportunities to directly observe fuel movement at NIST and other Class I RTRs. From 2016 through 2020, the NRC had between three and seven opportunities per year to schedule inspections to directly observe fuel movement activities at NIST.

The NRC also had numerous opportunities per year to observe such activities at other Class I RTRs. For instance, the University of Missouri-Columbia research reactor conducts fuel movement activities approximately weekly.

An NRC principal stated, "There is no specific requirement to observe... a percentage of fuel movement or outage activities." This NRC principal could remember only one time in three years that they tried to schedule around an outage activity at a facility, but they "didn't get to actually go" because the licensee was concerned about COVID. Another NRC principal explained that some Class I RTRs move fuel more than other facilities do, 16

"so it should be easier to get there when they're moving fuel. It's just that sometimes you have scheduling problems, that this licensee can't support the inspection at this time, so you juggle that. Then you end up juggling others. I mean, there's a lot of excuses, but there's no good excuses."

C. NRC's Inadequate Oversight Extends to Other RTRs The OIG identified instances of inadequate NRC oversight involving two Class II RTRs that experienced fuel-related issues.

Example t: Aerotest The OIG initiated an investigation of the Aerotest research reactor, located in San Ramon, California, after receiving allegations that the NRC failed to provide adequate regulatory oversight and inspections at this facility while it was operating. Additionally, the alleger asserted that "the NRC inspection reports were misleading as indicated by the areas of requalification, 50.59, and fuel."

The OIG found that, between 2000 and 2010, NRC biennial inspections of Aerotest were inadequate. Specifically, the NRC did not perform direct observation of fuel movement and failed to adequately conduct oversight activities related to damaged fuel, the facility's licensing basis, its ALARA. program, and its technical specifications.18 Direct observation of fuel movement The OIG determined the NRC did not directly observe fuel movement at Aerotest.

During the 10-year period the OIG reviewed, the NRC had opportunities to directly observe fuel movements because Aerotest staff inspected 20 percent of the fuel elements annually to remain cognizant of the physical status of the fuel. An NRC principal stated,

"... [I] never was able to be there during an inspection of the fuel but look[ ed] at the records."

Inadequate oversight of damaged fuel The OIG determined the NRC did not take timely action on damaged fuel. Specifically, the NRC acknowledged the presence of precursors to fuel damage during inspections conducted in 2005, 2007, and 2009. Ultimately, in December 2013, the NRC reported 22 fuel elements as having varying degrees of damage.

In 2005, the NRC had opened an Inspector Follow-Up Item (IFI) because recent fuel inspections showed that several fuel elements had been deformed such that they were 18 Title 10 C.F.R Section 20.1003 defines ALARA [as ]ow as is reasonably achievable] as "making every reasonable effort to maintain exposures to radiation as far below the dose limits in this part as is practical consistent with the purpose for which the licensed activity is undertaken, taking into account the state of technology, the economics of improvements in relation to state of technology, the economics of improvements in relation to benefits to the public health and safety, and other societal and socioeconomic considerations, and in relation to utilization of nuclear energy and licensed materials in the public interest."

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stuck in the reactor core, making them difficult to remove. 19 The IFI stated, "To ensure that the deformation of these fuel elements is not a precursor to a more significant issue, the NRC will continue to monitor the licensee's fuel inspections and any possible indications of a fuel element cladding failure."

In 2007, during a scheduled biennial inspection, the NRC reviewed the data sheets for the Fuel and Graphite Transfer forms for 2005, 2006, and 2007. In the associated inspection report, the NRC stated:

As a result of the fuel problem, the licensee decided to remove all fuel possible from the core and conduct an inspection of all the fuel elements.

In January 2006, those elements that could be removed were placed in storage. The licensee then used a moveable camera and monitor set-up to conduct an inspection of those elements that were "stuck" in place. After that was completed, an inspection of all the remaining elements was also completed and the elements were returned to their original positions in the core. No new or unusual problems were identified.

During this inspection, the NRC also closed out the IFI. In addition to referencing the licensee's 2006 inspection, the inspection report stated:

To further help with this problem, the licensee had developed a plan to purchase enough new fuel elements over time to replace the ones that cannot be removed from the core. Once enough fuel is on hand, the reactor core will be defueled. Then the top grid plate will be raised slightly and the remaining 'stuck' elements will be worked out of their positions and out of the core. Then the new fuel elements will be placed in their positions. This issue is considered closed.

The cover letter of the 2007 NRC Inspection Report stated, "Based on the results of this inspection, no findings of significance were identified." The 2007 Inspection Report further stated that the inspector had reviewed the 2007 Data Sheet for Fuel and Graphite Transfer during that inspection.

Contrary to NRC reporting, the OIG reviewed the Aerotest Data Sheets for Fuel and Graphite Transfer for the 2007 inspection and found 20 fuel elements and s graphite elements were indicated as stuck in the reactor core. The OIG also found that one sheet listed "crack" in the Comments section for element 631E, and that this element had been removed from the core and placed into a storage rack.

The OIG's review of inspection reports for Aerotest revealed there had been reports of stuck fuel rods as far back as 1980; likewise, Data Sheets for Fuel and Graphite Transfer from 1994 to 2012 revealed that of the 22 cracked elements initially identified, 7 had been stuck in the reactor core since the 1990s. Three of the initial four fuel elements 19 IMC 0615, "Research and Test Reactor Inspection Reports," Subsection 03.09, defines an inspection follow-up item as a matter that requires further inspection because of a potential problem, because specific licensee or NRC action is pending, or because additional information is needed that was not available at the time of the inspection.

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identified by Aerotest staff as cracked had been reported on the Data Sheets for Fuel and Graphite Transfer as stuck since 1994.20 Of the 17 fuel elements that were inside the reactor core at the time of discovery, 14 had been previously indicated as stuck on the Data Sheets for Fuel and Graphite Transfer.

On December 18, 2013, approximately 3 years after Aerotest voluntarily ceased operation of the reactor, the NRC issued Aerotest a Notice of Violation against Technical Specification 10.2. The violation stated that "from an indeterminate period of time beginning at a point after the last full inspection in 2006 up until October 15, 2010, when the facility ceased reactor operation, the licensee operated the reactor with significant defects in the fuel elements." The first 4 cracked elements were discovered in late 2011, and in a subsequent inspection, 22 fuel elements were identified as having varying degrees of discoloration, blistering, swelling, and/or cracking in the aluminum cladding (see Figure 4). These characteristics represented a significant defect in the fuel elements and the loss of the integrity of a fission product barrier.

Figure 4: Aerotest cracked fuel element Source: OIG generated from video provided by the licensee When the OIG first received allegations related to Aerotest, an alleger had stated, "The very fact that a fuel element is stuck indicates that the fuel element is damaged" because the fuel rod is blistered, bowing, or swelling. They added that all these fuel damage indicators were documented in Aerotest's fuel inspection records and were "available to the NRC inspector," but "... the NRC inspection reports did not report problems... they indicated compliance."

When the OIG showed the 2007 Data Sheets to an NRC principal, the principal did not recall seeing the fuel element listed with "crack" in the comments. They added that if they had, they would have included that information in the NRC inspection report and called their NRR branch chief and the facility project manager to ask how they wanted to proceed with this issue.

20 Two of the stuck fuel elements were documented on data sheets in 1994. The remaining stuck fuel element was documented on a data sheet in 2003.

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An NRC principal with responsibility for RTR inspections said they had not been trained on damaged fuel and had not seen NUREG/CR-2387 before the OIG provided it to them to review the parameters for fuel evaluation.21 This NRC principal said they were not aware of fuel damage issues at Aerotest when they were assigned to the facility from 2000 to 2010. The NRC principal stated it was the licensee's responsibility "to keep up with their fuel," and it "was unusual that they would have stuck elements."

The principal said that not acting to report and resolve the stuck fuel was their "mistake," and that they should not have closed the IFI until they verified that Aerotest completed its plan of action. This principal also stated that they relied on "the experience of the project manager and the people above" them when deciding how to handle issues found during RTR inspections.

The NRC principal did not provide a reason why the NRC refrained from issuing a notice of violation until 2013, except to say that the decision would have been a consensus judgment call. Another NRC principal stated, "Typically, if one of these research reactors has a rod that is stuck or they're inspecting them and see a little damage of any sort, they just put it aside in storage and won't re-use it. This facility was very unique in that they did not do that... [and] just operated with the damaged fuel."

The NRC principal added, "training and guidance could be greatly improved."

Inadequate oversight of changes to the facility licensing basis The OIG found that Aerotest staff made several changes to the facility between 2000 and 2010 without required documentation or revisions to the license or technical specifications. These changes included:

Use of TRIGA (Training, Research, Isotopes, General Atomics) fuel with different weight percentage and cladding type; and,

• Operation with mixed core of fuel elements with different characteristics.

The OIG's review of licensee records and NRC reports did not identify licensing actions, inspection activities, or licensee documentation in support of these changes.22 An NRC principal advised that some of these changes "would have triggered some type of [10 C.F.R.] 50.59 review and/or evaluation." They explained that swapping out a component with a duplicate component is a replacement, not a change, and no 10 C.F.R.

50.59 evaluation is required. However, if a component is changed to something different, an evaluation must be completed to ensure the functions remain the same.

21 NUREG/CR-2387, Credible Accident Analyses for TRI GA-and TRI GA-Fueled Reactors (ADAMS Accession No. MLo83660125).

22 Title 10 C.F.R. 50.59(c)(1) states that a licensee may make changes in the facility as described in the final safety analysis report (as updated), make changes in the procedures as described in the final safety analysis report (as updated), and conduct tests or experiments not described in the final safety analysis report (as updated) without obtaining a license amendment pursuant to Section 50.90 only if a change to the technical specifications incorporated in the license is not required, and the change, test, or experiment does not meet any of the criteria in 10 C.F.R. 50.59(c)(2).

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Another NRC principal did not think that a 10 C.F.R. 50.59 evaluation was required if the licensee merely changed the cladding of the fuel from aluminum to stainless steel, but that if the weight percent of the fuel element changed from 8.5 weight percent to something different, or if the type of fuel changed, such an evaluation would need to be completed. If these differences did exist, then a 10 C.F.R. 50.59 evaluation should have been sought. The NRC principal said Aerotest staff did not use the 10 C.F.R. 50.59 process often as the licensee operated with the same equipment and same facilities for many years.

An NRC principal said that he thinks there is now training on 10 C.F.R. 50.59 evaluations in the inspector qualification program, but the guidance available at the time was inadequate. Inspection Procedure 69001 does not provide guidance on this topic; rather, it refers the reader to the NRC Inspection Manual, 10 C.F.R. 50.59, and IP 407 45, "Class I Research and Test Reactor Review and Audit, and Design Change Functions." Additionally, Regulatory Guide 2.8, "Guidance for Implementation of 10 C.F.R. 50.59, Changes, Tests, and Experiments at Non-Power Production or Utilization Facilities," an NRC document that provides guidance to licensees on this topic, was not issued until February 2022.

Inadequate oversight of ALA.RA program The OIG found the NRC may have failed to identify the exceedance of an occupational dose limit and the Aerotest facility's departure from an Al.ARA culture.

Personnel exposure levels revealed one Aerotest employee may have been above the NRC's occupational dose limit. A dosimetry report for 2001 indicated that an employee's culminate dose for his whole body (total effective dose equivalent) was 5,010 millirem, 10 millirem more than the annual occupational dose limit in 10 C.F.R. 20.1201(a)(1)(i).

An NRC principal stated that although Aerotest tended to have occupational dose numbers that were higher than other RTR licensees, they were not above regulatory limits. The principal did speak to Aerotest staff about dose numbers and challenged them to limit personnel exposure. The principal acknowledged that the Aerotest facility had issues with maintaining radiation worker doses Al.ARA. Because the doses did not exceed the regulatory limits, they could only talk with the licensee and encourage them to take action.

The Al.ARA principle in 10 C.F.R. 20.1101(b) requires licensees to "use, to the extent practical, procedures and engineering controls based upon sound radiation protection principles to achieve occupational doses and doses to members of the public that are as low as is reasonably achievable."23 z3 There were no additional, specific AI.ARA requirements or radiological dose thresholds included in Aerotest's technical specifications.

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The OIG also reviewed environmental exposure records and determined that the area radiation readings in the Aerotest Accounting Office ranged from the high sos to approximately 250 millirem per quarter between October 2010 and June 2017. The high values were due to radioactive waste in the storage room, which was adjacent to the Accounting Office in April 2017. Once the waste was disposed, the readings in the Accounting Office dropped to none detected in the following quarter. The licensee said that the proximity of the waste storage room to administrative space was a violation of ALARA culture, and the waste storage room was relocated.

An NRC principal with inspection oversight responsibilities stated that the licensee did have an ALA.RA situation but did not exceed regulatory limits. They did not recall, however, the ALA.RA situation in the Accounting Office. Given that the ALARA situation in the Accounting Office persisted for approximately seven years, it appears that the NRC would have had ample opportunity to identify and address Aerotest's lack of adherence to Al.ARA principles.

Inadequate oversight of technical specifications The NRC failed to identify that Aerotest had technical specifications that were inadequate under 10 C.F.R. 50.36.

Aerotest applied for license renewal in 2005, with supplemental letters to the NRC in 2008, 2009 and 2010. Although the facility license was never renewed based on the 2005 application, the Aerotest reactor was allowed to continue operating under the timely renewal provisions of 10 C.F.R. 2.109, "Effect of Timely Renewal Application,"

until the licensee voluntarily ceased operation of the reactor in 2010.

Although the NRC's regulatory framework allows licensees under timely renewal to continue operating with the technical specifications approved with the granting of the initial operating license, the OIG found this facility's technical specifications missed specific values or actions that would ensure safety. For example, the specifications did not contain a fuel temperature safety limit for aluminum-cladded fuel or stainless-steel cladded fuel. Further, the technical specifications did not contain other provisions required by 10 C.F.R. 50.36(c).

Example 2: University of Texas at Austin The OIG examined the NRC's oversight of a 2022 fuel-related event at the University of Texas at Austin, Nuclear Engineering Teaching Laboratory (NETL). The OIG found the NRC had determined that the University of Texas violated requirements similar to those involved with the NIST event previously discussed in this Special Inquiry report.

Specifically, an SIT reported concerns with the licensee's fuel movement activities, safety culture, and procedures. The NETL event also revealed that the NRC had failed to take action on relevant license amendment requests the University of Texas submitted between 2008 and 2012.

22

The NETL, which operates a Class II RTR, is open to domestic and international researchers, including clients and services in the fields of education and training, nuclear and radiation related research, nuclear analytical services, radioisotope production, and specialized technical services. The NRC staff also uses the facility for hands-on operations training, akin to the power reactor simulator training provided by the NRC's Technical Training Center located in Chattanooga, Tennessee.

On November 2, 2022, this licensee self-reported to the NRC that it operated with non-compliant fuel, having replaced two of its RTR's compliant stainless steel-cladded fuel elements with aluminum-cladded fuel elements in the core. The NRC dispatched an SIT, in accordance with NRC Management Directive 8.3 and branch reactive inspection guidance, to conduct an onsite review to determine: 1) what facts contributed to the loading of the aluminum-cladded fuel elements in the reactor core and the extent to which operating in an unanalyzed condition had impacted reactor components and reactor safety; and, 2) if any reactor operations with aluminum-cladded fuel elements exceeded operational limits during normal and potential off-normal conditions.

On January 25, 2023, the SIT reported its results related to the NETL event, identifying one apparent violation and one minor violation.24 In the special inspection report, the NRC listed the licensee-determined root causes that led to its reactor operating with the aluminum-cladded fuel elements. These root causes included procedures that were inadequate in identifying disqualified fuel elements and keeping them out of the core.

The licensee also identified, as contributiQ.g causes, a lack of attention to detail when selecting the elements to be used in the core, inadequate administrative and engineering controls in place to ensure disqualified fuel elements were easily identifiable, an inadequate safety conscious work environment that led to a procedure revision that was improperly implemented, and a lack of management oversight that led to a single point of failure.

On May 10, 2023, the NRC issued a notice of violation to the licensee for operating with fuel that did not meet technical specification requirements. 2s Review of NRC oversight activities at the University of Texas The OIG reviewed root and contributing causes of the NETL event; like the NIST event, these causes included safety-culture deficiencies and inadequate procedures. The OIG also found, however, missed opportunities on the part of the NRC to directly observe and potentially identify conditions relevant to the event.

Inspection Procedure 69001, Subsection 02.12, "Fuel Handling Logs and Records,"

states that NRC inspectors shall "[d]etermine whether the [licensee's] fuel handling logs or activities satisfy the [technical specifications] requirements and licensee's procedural requirements." The guidance in Subsection 03.12 (also titled "Fuel Handling Logs and Records") further states that actual observation of fuel handling, or the review of about 24 University of Texas at Austin - U.S. Nuclear Regulatory Commission Special Inspection Report No.

05000602/2022201 (ADAMS Accession No. ML:223471\311).

25 University of Texas at Austin - Notice of Violation (ADAMS Accession No. ML23129A243) 23

50 percent of the fuel handling logs since the last inspection, is an acceptable sample for this inspection requirement.

While the guidance permits either direct observation of fuel handling or a records review of fuel movement activities, the OIG determined the NRC did not directly observe fuel movement activities or the implementation of related technical-specification-required procedures at the NETL for an extended period. Specifically, the NRC did not directly observe such activities at any time during the five years preceding November 2, 2022, when the licensee self-reported to the NRC that it had operated with non-compliant fuel.

In other words, the NRC was not onsite for fuel movements related to the aluminum-cladded elements and missed an opportunity to identify conditions relevant to the licensee's noncompliance. While the NRC's inspection approach may have been permissible under existing guidance, the NETL event would appear to give the NRC reason to reconsider that guidance to the extent it has not done so already.

Review of facility licensing basis The OIG found the NRC failed to act on licensee amendment requests to update fuel-related technical specifications for aluminum-cladded fuel.

In 2004, the NRC issued an amendment to the University of Texas that increased the license limit for reactor fuel and allowed the licensee to acquire, in part, "additional regular fuel elements to compensate for fuel burnup."26 Following this license amendment, the NETL received two aluminum-cladded fuel elements during a 2004 shipment of fuel from another research reactor. The OIG found the license amendment issued by the NRC did not, however, allow for this aluminum-cladded fuel. Specifically, while the amended facility license increased and modified the limits for possession of special nuclear material and byproduct material, it did not modify the technical specifications to include aluminum-cladded fuel. If this type of fuel was intended to be used, the technical specifications for safety limits, limiting conditions for operation, surveillances, and design features should have been reviewed and updated to include any necessary provisions for aluminum-cladded fuel.

The licensee docket revealed two license amendment requests submitted by University of Texas officials, in 2008 and 2010, to update the technical specifications to account for these aluminum-cladded fuel elements.27 28 Both the 2008 and 2010 requests stated that the licensee was seeking a change in specifications that would allow for use of aluminum-cladded fuel (see Figure 5).

26 University of Texas at Austin - Amendment Re: Special Nuclear Material and Byproduct Material Possession Limits (TAC NO. MC2410) (ADAMS Accession No. MLo61320052).

27 Submission of Changes to License Technical Specifications (ADAMS Accession No. MLo80920755).

28 Request to withdraw previous Technical Specification change request and submission of new change request (ADA..'1SAccession No. ML101241147).

24

Figure 5: Excerpt from University of Texas 2008 license amendment request CHANGE2 Current Specification:

1.5 Fuel Element, Standard A fuel element is a single TRIGA element of standard type. Fuel is U-ZrH clad in stainless steel clad.

Hydrogen to zirconium ration is nominal 1.6.

Change Specification to:

1.5 Fuel Element, Standard A fuel element is a single TRIGA element of standard type. Fuel is U-ZrH ( <20% enriched uranium) clad in stainless steel or aluminum. Hydrogen to zirconium ration is nominal 1.6.

Justification:

Definition of standard element from General Atomic includes aluminum clad elements. NETL is currently in possession of two aluminum clad standard elements in storage. Second use of the word "clad" in second sentence is redundant. All fuel elements have or will have less than 20% enrichment by reactor license.

Source: OIG generated from NRC docket files The docket also showed that, from 2008 to 2012, the NRC did not conduct an acceptance review, issue requests for additional information, or render any licensing decisions regarding these amendment requests. In summary, the NRC did not act before the licensee withdrew these requests. 29 As discussed above, the licensee installed and operated with two aluminum-cladded fuel elements for 9 months before notifying the NRC. If the NRC had acted on the licensee's amendment requests, operation with or possession of these fuel elements may not have resulted in the May 2023 notice of violation.

While an NRC special inspection report concluded that there was "no fuel damage" and there were "no actual nuclear safety consequences" due to operation with the aluminum-cladded fuel elements, the report highlights that the licensee "operated with Dimits] that were less conservative than what is necessary to ensure the integrity of a fission product barrier." The report also states that the safety significance of those limits was identified "as necessary to reasonably protect the integrity of the primary barrier against the uncontrolled release of radioactivity." In addition, the report notes 2 9 The licensee ~ithdrew the 2008 amendment request in 2010. Request to withdraw previous Technical Specification change request and submission of new change request (ADAMS Accession No. ML101241147). The licensee withdrew the 2010 amendment request in 2012. Request for Change to License Technical Specifications Incorporating 2008, 2010, and 2011 Requests (ADAMS Accession No. ML12082A145).

25

that aluminum-cladded fuel elements "require a more conservative limit with regard to peak fuel temperature... to ensure the integrity of the cladding is maintained."

D. RTR Inspection Program Policy and Guidance are Outdated The agency's RTR inspection program policy and guidance are outdated because the NRC has not implemented risk-informed approaches and safety culture elements. The last major revision to the safety inspection program documents was in 2004, and the 2004 IPs underestimate the resources needed to complete all requirements.

Lack of a risk-informed approach in RTR inspection program The NRC began assessing risk insights for incorporation into the RTR oversight program as early as 1992. Several examples of the NRC's activities to risk inform the RTR program are described below:

In November 1992, the NRC published NUREG/CR-5756, "Review and Assessment of Non-Power Reactor (NPR) Inspection Schedules."3° Without site-specific quantitative PRA models available, the report authors developed qualitative risk factors to determine inspection frequencies based on the relative risk of each facility to public and occupational safety.31 In 2000, the NRC developed a risk-informed regulation implementation plan that outlined the agency's risk-informed initiatives.32 In 2006, the Commission issued a Staff Requirements Memorandum (Mo60503B) directing the staff to improve the implementation plan so that it is an integrated master plan for activities designed to help the agency achieve the Commission's goal of a holistic, risk-informed, and performance-based regulatory structure.33 In 2011, the NRC Risk Management Task Force was chartered to "develop a strategic vision and options for adopting a more comprehensive and holistic risk-informed, performance-based regulatory approach for reactors, materials, waste, fuel cycle, and transportation that would continue to ensure the safe and secure use of nuclear material."34 The task force issued its findings and recommendations in NUREG-2150, "A Proposed Risk Management Regulatory Framework," which contained several findings and recommendations for RTRs. For example, one finding and one recommendation addressed risk assessment insights for RTRs (see Figure 6).

3o RTRs are a subset of non-power reactors.

31 The qualitative risk factors included: fission products, forced outages/full power hour; number and severity of NRC violations issued, maximum individual whole body exposure (rnillirem/year), biological shield configuration changes, decay heat rate/kilogram of fuel (Curies/kilogram), whether an active/passive ECCS is required, spent fuel inventory

[kilograms U-235], refueling frequency [elements/year], and population density.

32 SECY-00-0213, Risk-Informed Regulation Implementation Plan (ADAMS Accession No. MLoo3762669).

33 SECY-07-0074, Update on the Improvements to the Risk-Informed Regulation Implementation Plan (ADAMS Accession No. MLo70890396).

34 NUREG-2150, A Proposed Risk Management Regulatory Framework (ADAMS Accession No. ML12109A277).

26

Figure 6: Excerpts regarding RTRs from NUREG-2150 Source: NRC The OIG found that the NRC has not implemented these recommendations in the RTR inspection program policy and guidance. The lack of updates to the inspection program is discussed in a later section of this Special Inquiry report. As of September 2023, the NRC's public website stated, "There are no current Risk-Informed and Performance-Based Activities in the Research and Test Reactors Sub-Arena" (see Figure 7).

Figure 7: NRC website "Current Risk Informed Activities"3s Research and Test Reactors Sub-Arena Research and test reactors comprise one of four sub-arenas that the staff of the U.S. Nuclear Regulatory Commission (NRC) identified in considering which areas of the reactor safety arena to target for greater use of risk information.

The staff will be conducting a review ofNUREG-2150, "A Proposed Risk Management Framework," that will consider how modifications to the regulatory framework could be incorporated into important agency policy documents. As part of this review, the staff will seek stakeholder input on proposed options and recommendations. The proposed options and recommendations will be included in a paper to the Commission that will identify options and make recommendations. Those options and recommendations may or may not be applicable to research and test reactors. Estimated completion of this review, including the Commission Paper, is August of 2013.

List of Risk-Informed and Performance-Based Activities There are no current Risk-Informed and Performance-Based Activities in the Research and Test Reactors Sub-Arena Page Last Reviewed/Updated Monday, June 08, 2020 Source: NRC public website 35 https:J/www.nrc.gav/about-nrc/reglilatorv/risk-informed/m/reactor--safety-rtr.html.

27

An NRC principal stated that the "risk-informed part is something that we haven't paid much or given much attention as needed" for RTRs, but that it is a "needed addition to our procedures." Several NRC principals stated that they apply engineering judgment to informally "risk-inform" their inspection activities, and that putting together some sort of group to determine the relative risks of specific facility activities would be beneficial.

For example, an NRC principal said that the NIST test reactor should be considered a priority from a risk-informed perspective.

An NRC senior executive stated:

There are activities at nuclear plants and even at research and test reactors that are more significant than others, have more potential for an adverse consequence, have more radiological implication... fuel manipulations would be one ofthose...l would expect that by using a risk-informed planning approach our inspections would be planned to cover those activities... [and] I would expect, for example, that an inspector would be probably more interested in going to observe a fuel manipulation [or] fuel loading.

The NRC senior executive added, "the amount of risk associated with these facilities is a lot less than that associated with [power] reactors.... so... there may be... a graded approach [to] what frequency these things get reviewed."

Lack of safety culture element in RTR inspection pro&ram Another process the NRC initiated in the 2011 timeframe but has not implemented into the RTR inspection program is "safety culture." The NRC defines nuclear safety culture as "the core values and behaviors resulting from a collective commitment by leaders and individuals to emphasize safety over competing goals to ensure protection of people and the environment."

In June 2011, the Commission issued the NRC's Safety Culture Policy Statement "to set forth [its] expectation that individuals and organizations establish and maintain a positive safety culture commensurate with the safety and security significance of their activities and the nature and complexity of their organizations and functions."36 This policy statement applies to all licensees.37 In 2015, the NRC updated the Implementation Plan for the Safety Culture Policy Statement.38 For example, the NRC reported that, "[s]ince 2006, the NRC's oversight of safety culture for power reactors through the [reactor oversight process (ROP)] has included guidance and procedures for inspecting and assessing aspects of licensees' safety culture." However, the NRC did not transition the RTR inspection program to reflect the new culture focus. Specifically, the 36 76 Fed. Reg. 34777 (June 14, 2011).

37 Though not developed to be used for inspection purposes, the final Policy Statement lists the following nine traits of a positive safety culture: leadership safety value and actions, problem identification and resolution, personal accountability, work processes, continuous learning, environment for raising safety concerns, effective safety communication, respectful work environment, and questioning attitude.

JS Safety Culture Policy Statement Implementation Plan Update (ADAMS Accession No. ML15180At50).

28

Future Planned Activities section of the update stated, "Research and Test Reactors:

NRR staff will continue to provide safety culture information and communication as opportunities become available."

Lack of safety inspection program updates The OIG found that the NRC has not updated the safety aspect of IMC 2545, "Research and Test Reactor Inspection Program," since 2004.39 Additionally, 10 of the 11 IPs routinely performed at Class I RTRs have not been updated since 2004.4° The lack of updates in these areas appears inconsistent with IMC 2545, Subsection 07.03, "Program Feedback," which states:

The reactor inspection program is expected to be dynamic and to respond to changes in the RTR community and operational experience. Therefore, management and inspectors are to identify problems in implementing the program, and to recommend changes to the program for consideration by the program office. Any such feedback and recommendations should be submitted to the responsible Branch Chief or Program Director.

Additionally, the OIG found that the RTR inspection program does not have a self-assessment process to determine if the program meets its established goals and intended outcomes. By contrast, for more than 20 years, IMC 0307, "Reactor Oversight Process Self-Assessment Program," has been in place to evaluate if the Reactor Oversight Process meets its established goals and intended outcomes.

NRC principals recognized the need for inspection program updates, and staff and management have committed to reviewing processes to determine "if it makes sense for us to update our procedures... [and]... just from a purely administrative standpoint they need to be updated." An NRC principal commented that there is not a program for RTRs that is analogous to the Reactor Oversight Process. While the NRC principals recognized the need for updating the inspection guidance periodically, the NRC did not implement substantive updates to reflect operational experience, feedback, and other NRC initiatives.

An NRC senior executive said that the NRC Inspection Manual and procedures should be updated more frequently to make use of the operating experience, technology, and improvements that have been made over the years. "I would expect... the procedures to be at least more up to date [than] 2004... maybe there's just not the priority given to that manual chapter as there is to others."

Inadequate resource estimates to support inspection requirements Inspection Manual Chapter 0040, "Preparation, Revision, Issuance, and Ongoing Oversight ofNRC Inspection Manual Documents," states that Section 04, "Resource 39 A March 13, 2020, update to IMC 2545 was "to support minor or conforming changes" and did not focus on substantive aspects of the RTR safety inspection program.

4o The 01 G provides a list of these 11 IPs in the Background section of this Special Inquiry report.

29

Estimate," of each inspection procedure "provides an estimate of the average time needed to complete the inspection (not including preparation and documentation time).

This estimate is for broad resource planning and is not intended as a measure for judging the inspector's or the region's performance. Actual inspections may require substantially more or less time, depending on the individual circumstances."

The OIG reviewed the 11 IPs routinely performed at Class I RTRs and determined that inspectors must verify at least 82 requirements (essential tasks that must be completed) through direct observations, interviews, or record reviews. The inspection guidance also recommends specific direct observations to complete inspection requirements, such as direct observation of the completion of a technical specification requirement using procedures. These requirements are intended to ensure the licensee's systems and techniques align with regulations and provide acceptable protection of public health and safety. Additionally, 10 of the IPs for Class I RTRs have resource estimates that total approximately 80 hours9.259259e-4 days <br />0.0222 hours <br />1.322751e-4 weeks <br />3.044e-5 months <br /> on average (see Table 4). In practice, NRC inspectors travel to these facilities twice each year to complete the 11 IPs.

Table 4: Class I RTR inspection procedure requirements and resource hours Numberof Requires Direct Resource Hour Inspection Procedure Requirements Observation Estimate (Abbreviated Title)

IP 69003, Operator Requalification 6

No 3

IP 69004, Environmental Monitoring 7

Yes 10 IP 69005, Experiments 12 Yes 6

IP 69006, Operations and Maintenance 8

Yes 8

IP 69007, Audit and Design Changes 9

No 5

IP 69008, Procedures 4

Yes 5

IP 69009, Fµel Movement 6

Yes 4

IP 69010, Surveillance 4

Yes 8

IP 69011, Emergency Preparedness 9

Yes 12 IP 69012, Radiation Protection 17 Yes 18 Totals 82 8

79 Source: OIG generated from inspection procedures An NRC principal stated that the four resourced hours to complete the six requirements in IP 69009 were "totally inadequate for a facility like NIST," because NIST's systems are "complicated" and require more time than smaller RTRs. The principal added that "a small research reactor does not have as many changes, have as many operations, and they don't do as much as NIST does." To work around the time constraint and still complete all the IPs for a facility like NIST, this NRC principal said it was necessary to "look at half of them one time and half of them the other." Another NRC principal stated that they develop a smart sample focusing on safety-significant, or the most safety-significant, issues or areas to provide reasonable assurance because "you don't have time to look at everything."

30

The OIG found that the biennial Class II RTR inspection program similarly directs the inspector to verify 57 requirements through direct observations, interviews, or record reviews (see Table 5). The IP requirements for Class II RTRs have a total resource estimate of 60 hours6.944444e-4 days <br />0.0167 hours <br />9.920635e-5 weeks <br />2.283e-5 months <br />, although individual sections of IP 69001 are not resource estimated.

Table 5: Class II RTR inspection procedure requirements Inspection Procedure Subsections IP 69001-02.01, Organization and Staffing IP 69001-02.02, Operations Logs and Records IP 69001-02.03, Procedures IP 69001-02.04, Requalification Training IP 69001-02.05, Surveillance and Limiting Conditions for Operation IP 69001-02.06, Experiments IP 69001-02.07, Health Physics IP 69001-02.08, Design Changes IP 69001-02.09, Committees, Audits and Reviews IP 69001-02.10, Emergency Planning IP 69001-02.11, Maintenance Logs and Records IP 69001-02.12, Fuel Handling Logs and Records Totals Source: OIG Generated from IP 69001 Numberof Requires Requirements Direct Observation 2

Yes 3

No 4

Yes 6

Yes 2

Yes 8

Yes 17 Yes 4

Yes 3

Yes 4

Yes 3

No 1

Yes 57 10 Furthermore, the OIG determined that inspection of all RTRs requires significant resources and planning over a six-year inspection cycle to meet NRC policy and procedure requirements.41 From 2016 through 2020, the NRR maintained an average of four qualified inspectors for all 30 operating RTRs. NRC principals stated that each RTR inspector is assigned between 6 and 13 facilities to conduct both safety and security inspections.

In response to whether the agency has enough inspectors and resources to meet program and inspection requirements, an NRC senior executive stated, "NRR allocates its resources in accordance with the number of reactors and the number and type of reactors, and the frequency of inspections called for by the procedures, and so they should be hiring accordingly. I have not been made aware of any shortage in that regard, so my understanding is that we do have the resources to [be] conducting inspections."

4 1 During a 6-year inspection cycle, the total number of safety and security inspections performed by RTR inspectors varies each year between 33 and 68 inspections.

31

I IV. FUTURE LICENSEES AND NRC'S RTR PROGRAM The NRC currently provides oversight to 30 operating RTRs; there are no indications that any of these facilities will cease operations soon. Furthermore, the NRC is anticipating advanced reactor deployments in the near future that could include additional RTRs for prototypes. This could increase the number oflicensed RTRs for which the NRC would be responsible for providing adequate oversight.

In May 2023, the NRC submitted its "Semiannual Status Report on the Licensing Activities and Regulatory Duties of the U.S. Nuclear Regulatory Commission" to Congress. The report covers NRC activities from October 1, 2022, through March 31, 2023. Within this report, the NRC refers to potential license applications for reactors that use advanced technologies:

The staff is reviewing pre-application reports and meeting regularly with vendors on potential future applications, including: X-energy, on its pebble-bed, high-temperature gas-cooled reactor; Kairos on its tri-structural isotropic particle (TRISO) fuel, fluoride-cooled high temperature commercial power reactor; Terrestrial Energy on its molten salt coolant, molten salt fuel reactor; TerraPower on its sodium-cooled fast reactor; Westinghouse Electric Company on its high temperature heat pipe microreactor; General Atomics on its high-temperature gas-cooled reactor; the University of Illinois Urbana-Champaign on its power-generating TRISO fuel research reactor; and Oklo, Inc. on its advanced reactor.

An example of a current application for an advanced reactor is Kairos Power's construction permit application for the Hermes test reactor, which Kairos submitted to the NRC in September 2021. This test reactor is being developed to support development of a fluoride salt-cooled, high-temperature reactor (KP-FHR) technology that will provide steam for electricity. The NRC staff issued their Safety Evaluation for the Hermes test reactor in June 2023, and their Environmental Impact Statement in August 2023. The Commission will render a determination on Kairos's application following completion of a mandatory hearing.

Other recent activities in the advanced-reactor arena include the August 2022 application from Abilene Christian University for a construction permit to be used with its proposed Molten Salt Research Reactor. Approximately one year 32 Figure 8: Artistic rendition of proposed University of Illinois reactor

earlier, in May 2021, the University of Illinois Urbana-Champaign had submitted to the NRC a Letter of Intent to apply for a permit to construct a demonstration high-temperature gas-cooled micro reactor on its campus (see Figure 8).

In addition, a non-power facility currently under construction is the SHINE Medical Isotope Production Facility. SHINE will irradiate and process special nuclear material to produce medical radioisotopes, such as molybdenum-99 (Mo-99), that are primarily used in cancer screening and stress tests to detect heart disease. The RTR branches in NRR have the lead for licensing and oversight of this facility.

Based on statements gathered during this Special Inquiry, the OIG learned that the agency's RTR inspection program may be implemented at some of the facilities described above, if they go forward. Therefore, addressing these problem areas in the RTR program is vital to ensuring successful oversight of new projects, such as medical isotope facilities and prospective RTRs based on advanced reactor technology, since these programs are currently planned to be reviewed under RTR policy and guidance.

33

V. CONCLl TSION The OIG found that the NRC's inadequate oversight of RTRs led to a failure to identify and address problems with the NIST reactor and other RTRs. In this report, the OIG identified the following three areas:

Inadequate Follow-Up. The NRC failed to follow up on problems identified both by licensees and its own inspectors. At NIST, the NRC failed to follow up on the licensee's audit committee reports that had already identified deficiencies with the licensee's safety culture, shift staffing and rotation, and operator training and requalification. In addition, an OIG review of licensee records showed a history of unlatched fuel elements and a failure by the NRC to ensure that the licensee took adequate steps to ensure fuel elements were latched. At the Aerotest facility, the NRC failed to act for at least five years to address damaged fuel that had been identified in previous NRC inspection reports from 2005, 2007, and 2009. According to NRC guidance in NUREG-1537, "the fuel for a non-power reactor is the most important component bearing on the health and safety of the public and the common security."

Insufficient Direct Observation. The NRC's inspection practices often lacked direct observation of activities important to safety, in part because the NRC did not typically coordinate inspections to coincide with licensee activities.

As a result, the NRC did not perform all recommended direct observations at NIST from 2016 through 2020. Additionally, from 2018 through 2022, the NRC directly observed only approximately s percent of fuel movements at the other Class I RTRs. Direct observations are, however, an important part of the NRC's regulatory oversight, as illustrated by an NRC principal's statement to the OIG that, although the fuel procedure at NIST seemed reasonable as written, direct observation of licensee activities was necessary to identify errors in the procedure.

Outdated Policy and Guidance. The agency's RTR program has not been substantively updated for at least two decades. Its inspection procedures similarly do not reflect the agency's risk-informed and safety culture policies.

Additionally, NRC principals reported that the IP resource estimates for RTR inspection are less than the time needed to meet all requirements.

As noted previously in Section IV, addressing these problem areas in the RTR program is vital to ensuring successful oversight of new projects, such as medical isotope facilities and prospective RTRs based on advanced reactor technology, since these programs are currently planned to be reviewed under RTR policy and guidance.

Additionally, during this Special Inquiry the OIG learned of a number of programmatic issues related to the RTR program from NRC and licensee principals. For example, the NRC's recent reviews of license renewal applications have ranged from 4 to 13 years for the five Class I RTRs, and three of the five RTRs have operated for more than 10 years 34

without an updated licensing basis. Several SECY papers currently before the Commission relate to the RTR program, and potentially to medical isotope facilities and prospective RTRs based on advanced reactor technology. The OIG plans to communicate on these issues separately.

An OIG audit team is reviewing the inspection program for Class II RTRs. The audit objective is to determine whether the NRC performs safety inspections at Class II RTRs in accordance with agency guidance and inspection program objectives. The OIG anticipates publishing this audit report before the end of 2023.

35

APPENDIX CONTROL ROOM CORE DEfUEL/REFUEL 840 May 18,2019 Element line From To Time SRO Comments I CM In Verified 1112 1114 1113 1115 1117 1119 14 1121 H3 1123 HS 1125 K4 1127 12 1129 H7 1131 K6 1133 LS 1135 L3.

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37

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CONTROL ROOM CORE DEFUEUREFUEL 852 Augult 31, 2020 Element Time From To Time SRO Comments Out In Verified 1136 ce F5 1138 1137 1139 1141 1143 11"6 H3 1141 18 1151 K4 1153 12 1155 H7 1157 K6 1159 LS 1181 1

L3 1163 K2 1185 H1 1167 J7 1140 1142 114' 1150 1162 C4 1154 E2 1158 F7 1158 83 C6 1180 C2 B5 1162 F1 83 1164 D7 C2 1166 A4 F1 1188 D1 07 1170 VAULT A4 1172 VAULT 01 1169 VAULT M4 1171 VAULT J1 40

TO REPORT FRACD. \\\\TASTE, OR ABUSE Please

Contact:

Email:

Telephone:

Address:

Online Form 1-800-233-3497 U.S. Nuclear Regulatory Commission Office of the Inspector General Hotline Program Mail Stop O12-A12 11555 Rockville Pike Rockville, Maryland 20852 If you wish to provide comments on this report, please email the OIG.

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