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NEI Slides for NRC Public Meeting on June 25, 2025, on NEI Proposed Framework Related to ASME CC N-883
	ML25174A125
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Site:	Nuclear Energy Institute
Issue date:	06/25/2025
From:	; Nuclear Energy Institute
To:	; NRC/NRR/DNRL
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Fabrication of ASME Code Items Prior to the Identification of an Owner/Licensee NRC Public Meeting June 25, 2025

©2025 Nuclear Energy Institute 2 New Business Model - Description and Motivation Fabrication of Safety-Related Components before an Owner (NRC Licensee) is Identified Design Standardization enables the manufacturing of components and identifying the specific owner/licensee later NRC Adv. Rx. Policy Statement encourages Design Standardization Flexibility in delivery and potential change in the sequencing of projects Markets and Customers need a pathway to manufacture components prior to identifying owner/licensee Shortens time to deployment and opens up market for time sensitive uses and customers NEI Proposal on Rapid High Volume Deployable Reactors (July 31, 2024) is dependent upon manufacturing components prior to identifying Owner/Licensee Prospective manufacturing - NEI Paper 2021 and SECY 24-0008 Currently permissible by NRC for safety-related components Not currently allowable for certain ASME Code Items Restriction is in the ASME Code cited in NRC Regulations - 10 CFR 50.55a

©2025 Nuclear Energy Institute 3 Key Differences in Traditional and Alternative Model All practices are the same, but without Owner, NRCs Oversight and Enforcement may not begin until after component is fabricated Design Application to NRC (CP/COL/ML)

Fabricate Use by Owner ASME Code Applies NRC Approval NRC Oversight Design Authority ASME Cert. Holder Owner

Physical Control Transfers from Fabricator to Owner Delivery*

Design Application to NRC (DC/SD)

Fabricate Use by Owner ASME Code Applies NRC Approval NRC Oversight Delivery*

Traditional Alternative Owner Could be Identified at any Point

©2025 Nuclear Energy Institute 4 Lack of a clear process for manufacturing components without an owner imposes undue regulatory risks Current risk of NRC acceptance imposes undue regulatory burden Unknow what NRC will or will not accept Potential for NRC to not accept component even if it meets all requirements Components are expensive, take a long time to manufacture and are critical path for owners Financial risk is much more than the cost of the component Regulatory risk is threat to viability of new business models Regulatory Risk can be minimized and even eliminated A clear process that, if followed, NRC will accept component Within the control of the Design Authority and Manufacturer Includes the Future Licensee as the ultimate Owner / Responsibility to NRC Commercial Risk is manageable with a clear regulatory process Focus on future Owners acceptance and use of components fabricated prior to Owner identification Reconciliation of Owners requirements with design requirements ASME Certificate Holders compliance with requirements, including QA and Part 21 Request: Eliminate undue Regulatory Risk.

(Industry is willing to accept commercial risk)

Purpose:

Establish an alternative model to fabricate safety-related components prior to the identification of a licensee, that ensures a consistent, efficient and predictable approach to provide reasonable assurance that products and services provided by unlicensed organizations for use in licensed activities meet applicable NRC requirements.

Use By: Future Licensee - including future applicant or Holder of a Construction Permit or Combined License Regulatory Status of Design prior to start of fabrication: Does not require any regulatory status (i.e., includes design authorities that have not submitted the design to the NRC for review), includes Applicant or Holder of a Standard Design Approval (SDA) or Design Certification (DC)

NRCs authority to conduct inspections and other enforcement Not applicable to fabrication if no licensee identified The Atomic Energy Act of 1954, as amended (the Act), does not require a license to fabricate such components and ASME Certificate Holders currently do not need to obtain NRC licenses to fabricate components under the ASME Code for use in NRC-licensed facilities. As explained below, the NRC does not have regulatory authority over ASME Certificate Holders who are unlicensed, except to the extent they are acting as contractors to or suppliers of an NRC licensee or license applicant.

(ML24204A242)

Other Statues in AEA, Energy Reorganization Act The Statutes permit the fabrication of safety-related components, including large ASME Code Items, in cases where there is no licensee.

The Statutes permit a future licensee to use those previously fabricated safety-related components, provided they meet applicable NRC requirements.

ASME Code - Not NRC Regulations - Require an Owner prior to and during Fabrication (for certain Code Items) 10 CFR 50.10 Construction (c) Requires CP, COL, ESP, or LWA prior to beginning construction activities (a) Definition of construction does not include procurement or fabrication of components or portions of facility occurring at other than final in-place location 10 CFR 50.55(a) ASME Code (b) Systems and components of LWRs must meet requirements of ASME BPV Code ASME NCA-3211 - Requires an Owner for construction Construction includes fabrication and other activities not included in NRC definition NCA-3211.19 requires Owner to provide Design Specifications upon which all other construction activities are based NCA-3211.3 requires N Certificate Holder to use the Design Specifications to comply with Section III NCA-3211.19(e)(2) provide exception for pumps and valves 4 and standard supports Exception based on business considerations and not on safety/quality concerns

NRCs Oversight and Enforcement requirements permit these activities 10 CFR Part 50, Appendix B Quality Assurance Applicable to safety-related components Applicable to Applicants and Holders of CP, COL, ESP, SDA, DC, ML Permit delegation to comply to others (e.g., contractors, agents, consultants) -

Applicant/Holder retains responsibility Cover design, purchasing, fabricating, etc.

None preclude a future applicant/licensee (i.e., Owner) from purchasing safety-related components previously fabricated under a QA program compliant with Appendix B requirements Licensee acceptance of prior fabricated components already exists, NRC requirements:

1.

Appropriate QA program established and effectively implemented 2.

Verified, e.g., through checks, audits, inspections, that activities affecting safety-related functions have been correctly performed 10 CFR Part 21 Reporting of Defects and Non-Compliance Applicable to basic components with similar definition as safety-related Reporting and Enforcement not applicable until component is delivered to purchaser NRC endorsed Guidance: NEI 24-09

©2025 Nuclear Energy Institute 9 NRC Enforcement and Inspections NRC: Vendor inspection are elective, additional, and not the foundation for ensuring compliance 10 CFR Part 2 - Subpart B - Procedure for Imposing Requirements NRC Enforcement Policy - Implementation of enforcement and inspection requirements Ensure adequate protection of public health and safety - presumed by compliance with NRC requirements Applicable to non-licensees, including applicants/licensees, their contractors and suppliers of safety-related components to NRC licensees Policy and not a requirement - The Commission may deviate from this statement of policy as appropriate under the circumstances of a particular case.

Vendor Inspections 1985 NRC decision (50 FR 47716): increase focus on vendor activities (i.e., suppliers)

Objective: Provide increased assurance that products and services provided by unlicensed organization for use in licensed activities meet NRC requirements.

Performed at vendor shops to examine whether vendor has been complying with Part 50 Appendix B and Part 21 requirements as required by procurement contracts with licensees NRC SECY 07-0150 broadened scope of NRC Vendor Inspections for new reactors Broaden scope, increase oversight, additional inspections, training and guidance

Insights Inspections focus on programs to meet requirements and not on compliance of specific components ASME Certificate Holders generally had fewer findings of lower significance than non-ASME Violations were Severity Level IV or lower: generally not considered to pose a significant risk to safety Nonconformances: did not meet contractual requirement, but did not violate NRC requirements Findings were predominately Process-Oriented Deficiencies and very few were related to end-state quality The procedural issues generally were not directly related to defects in components.

Majority of findings related to small set of topics, e.g., design control, nonconforming materials, corrective actions, Commercial-Grade Dedication (CGD), and Part 21 ASME Certification (N, NPT)

No ASME Certification Total Inspections 49 166 Inspections with Findings 22 85 Total Nonconformances 37 154 Total Violations 3

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©2025 Nuclear Energy Institute 11 Procurement Practices for Safety-Related Components Confirmation of compliance with requirements for specific services or products is not performed by the licensee, but rather is assured through passing down requirements, for which each purchaser ensures their suppliers programs are properly implementing the requirements Licensee retains ultimate responsibility for compliance with NRC requirements (e.g., QA)

Licensee performs oversight of their contractor, and contractors do so for sub-contractors Licensee oversight of contractor is to ensure contractors QA program compliance - not a verification of every component or service (since the contractors QA program does that)

Licensee not required to perform inspections of the sub-contracted fabricator (e.g., ASME Certificate Holder) to verify compliance with NRC requirements Licensee may inspect the supplier/sub-contractor to manage business risk Licensee typically delegates authority for inspections and oversight to the design authority Licensee relies on the design authoritys inspection and oversight of the fabricator as part of their delegation of authority, Licensee inspects the design authority to ensure the integrity of the quality assurance program, either directly or through third-party inspections

©2025 Nuclear Energy Institute 12 Procurement Practices for ASME Code Items Confirmation of compliance with NRC requirements for components is provided by third party inspectors, not by Owner, and can be accomplished without an Owner ASME Section III Components Permits purchase of material without a design specification and/or an Owner Prohibits construction without third-party oversight (ANI - Authorized Nuclear Inspector)

Prohibits construction without a design specification Preparation and certification of design specification responsibility of Owner Exception provided for small pumps and valves (NPS 4 and smaller) that permit Certificate holder to prepare and certify a design specification, and a reconciliation by future Owner ANI responsibilities under the ASME Code (not all inclusive)

Monitor the Certificate Holders QA program Review Certificate Holders qualification records Witness or verify in-process fabrication (e.g., must witness some RT, PT, fit-ups)

Witness final pressure tests Certify Data Reports Review drawings and inspect in accordance with the drawings Monitor the Code activities of the Owner Perform all other duties as required by QAI-1 latest Code approved edition Here construction is the ASME definition which includes fabrication, design, manufacturing.

©2025 Nuclear Energy Institute 13 ASME Code Case N-883 Developed to remove ASME Code requirements for an Owner in order to perform fabrication The ASME BPV III has developed Code Case N-883-1 Construction of Items Prior to the Establishment of a Section III, Division 1 Owner Establishes the conditions under which a Certificate Holder may construct items prior to the establishment of an Owner, and the conditions under which an Owner may utilize those components in their facility.

Intended to resolve the discrepancy between the language in §50.10(a)(2)(viii) and the ASME Code emphasis on the role of an Owner.

Regulatory Guide 1.84 Revision 39 endorsed CC N-883-1 Exception limited use to Holder of a CP, OL or COL (effectively invalidated use)

CC N-883-2 revision to address the NRC concerns that resulted in an exception Removed condition for Certificate Holders to be NRC licensee Additional changes to include Section III Division 5, other minor clarifications Process in CC N-883-2 Items are constructed by Certificate Holder, with ANI Oversight Holder prepares Design Specifications and performs Owners duties When Owner is established, Owner performs reconciliation process

©2025 Nuclear Energy Institute 14 Future Licensee Acceptance Process Minimizes regulatory risk and achieves manageable business risk Follows current practices for procurement of other safety-related components, including some ASME Code Items, that are fabricated before a licensee contract Owners Acceptance Process Perform a supplier audit to confirm suppliers programs comply with procurement requirements, including applicable NRC requirements that are passed down (e.g., Appendix B and Part 21)

Verify design requirements for component meet licensees requirements Confirm component was fabricated by ASME Certificate holder in compliance with ASME Code Case N-883 Review Cert. Holders records for component to ensure all requirements met, including third-party inspection by ANI (Design, Procurement, Fabrication, Oversight, Turnover)

Perform receipt inspection of component to verify as-fabricated component complies with applicable NRC requirements (disposition deviations as appropriate)

Upon receipt, licensee accepts ownership and subject to 10 CFR Part 21 enforcement Residual business risk: component does not meet Owners design requirements, in which case the component would not be accepted by Owner and Owner would need to find a different component that does meet their Design Specifications

©2025 Nuclear Energy Institute 15 Comparison of Traditional and Alternative Approaches Key Element Traditional Alternative NRC Approval of Design Yes Yes Manufactured by ASME Certificate Holder Yes Yes Manufactured to NRC Requirements Yes Yes Manufactured under Appendix B QA (NCA)

Yes Yes NRC Confirmation of Conformance Independent Oversight Independent Oversight Independent Oversight of Component ANI ANI Part 21 Reporting and Enforcement Begins after Delivery -

Owner Acceptance/Receipt Begins after Delivery -

Owner Acceptance/Receipt Reasonable Assurance that Component can perform Safety Function(s)

Yes Yes

1. June - Submittal of NEI 25-05 Guidance described today Includes Appendix with draft CC N-883-2 (track changes)

2. July (requested) - NRC endorsement NEI 25-05 Guidance

3. August (expected) - ASME approval Finalize Code Case N-883-2

4. Address in the Comprehensive Regulatory Review Alternatively Update R.G. 1.84 to endorse without exception ASME CC N-883-2

1. NRC Letter Request for NRC Actions to Promptly Enable Construction of ASME Code Items without an Owner, dated November 1, 2024 (ML24204A242)

2. NRC Regulatory Guide 1.84 Version 39 Design, Fabrication, and Materials Code Case Acceptability, ASME Section III (ML21181A225)

3. ASME Code Case N-883, Construction of Items Prior to the Establishment of a Section III, Division 1 Owner Section III, Division 1

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