United States Nuclear Regulatory Commission - Protecting People and the Environment

Modified Enforcement Policy Relating to 10 CFR 50.49, "Environmental Qualification of Electrical Equipment Important to Safety for Nuclear Power Plants" (Generic Letter No. 88-07)

                                UNITED STATES
                        NUCLEAR REGULATORY COMMISSION
                           WASHINGTON, D.C. 20555

                                April 7, 1988

TO ALL POWER REACTOR LICENSEES AND APPLICANTS 

SUBJECT:  MODIFIED ENFORCEMENT POLICY RELATING TO 10 CFR 50.49, 
          "ENVIRONMENTAL QUALIFICATION OF ELECTRICAL EQUIPMENT IMPORTANT TO 
          SAFETY FOR NUCLEAR POWER PLANTS" (GENERIC LETTER 88-07) 

Background: 

Generic Letters, Bulletins, and Information Notices have been issued to 
provide guidance regarding the application and enforcement of 10 CFR 50.49, 
"Environmental Qualification of Electric Equipment Important to Safety for 
Nuclear Power Plants." Generic Letter 85-15, issued August 6, 1985, and 
Generic Letter 86-15, issued September 22, 1986, provided information 
related to the deadlines for compliance with 10 CFR 50.49 and possible civil
penalties applicable to licensees who were not in compliance with the rule 
as of the November 30, 1985 deadline. Upon review, the Commission found that
the EQ Enforcement Policy promulgated in Generic Letter 86-15, could result 
in imposition of civil penalties that did not properly reflect the safety 
significance of EQ violations with respect to civil penalties imposed in the
past. In the interest of continuing a tough but fair enforcement policy, the
Commission determined that the EQ Enforcement Policy should be revised. The 
purpose of this letter is to provide a modification to the NRC's enforcement
policy, as approved by the Commission, for environmental qualification (EQ),
violations. This letter replaces the guidance provided in Generic Letters 
85-15 and 86-15. 

Modified EQ Enforcement Policy 

The details of the modified EQ enforcement policy are provided in the 
enclosure. Generally, the changes made to the policy are to: (l) aggregate 
significant EQ violations together, rather than consider each separate item 
of unqualified electrical equipment, for assessment of a civil penalty, (2) 
assess a base civil penalty according to the number of systems or components
which are affected by the unqualified equipment in a graded approach by 
assignment of the aggregate EQ problem into one of three categories, (3) 
establish a maximum EQ civil penalty of $750,000 for most cases, (4) 
maintain a minimum civil penalty of $50,000 for a significant EQ violation 
in most cases, and (5) consider mitigation or escalation of the base civil 
penalty based on the factors of identification and reporting, best efforts 
to complete EQ within the deadline, corrective actions, and duration of the 
violation. 

This modified policy should not be interpreted as a lessening of the NRC's 
intention to assure that all plans comply with EQ requirements. The modified
policy is intended to give a significant civil penalty to those licensees 
with significant EQ violations. The NRC's view is that the modified policy 
more closely reflects the relative safety importance of EQ violations with 
other enforcement issues. 

Safety Issues 

When a potential deficiency has been identified by the NRC or licensee in 
the environmental qualification of equipment (i.e., a licensee does not have
an 


Generic Letter 88-07                -2-                       April 7, 1988 

adequate basis to establish qualification, the licensee is expected to make 
a prompt determination of operability (i.e., the system or component is 
capable of performing its intended design function), take immediate steps to
establish a plan with a reasonable schedule to correct the deficiency, and 
have written justification for continued operation, which will be available 
for NRC review. 

The licensee may be able to make a finding of operability using analysis and
partial test data to provide reasonable assurance that the equipment will 
perform its safety function when called upon. In this connection, it must 
also be shown that subsequent failure of the equipment, if likely under 
accident conditions, will not result in significant degradation of any 
safety function or provide misleading information to the operator. 

The following actions are to be taken if a licensee is unable to demonstrate
equipment operability: 

     a.   For inoperable equipment which is in a system covered by plant 
          technical specifications, the licensee shall follow the 
          appropriate action statements. This could require the plant to 
          shut down or remain shut down. 

     b.   For inoperable equipment not covered by the plant technical 
          specifications, the licensee may continue reactor operation: 

          1.   If the safety function can be accomplished by other 
               designated equipment that is qualified, or 

          2.   If limited administrative controls can be used to ensure the 
               safety function is performed. 

The licensee must also evaluate whether the findings are reportable under 10
CFR 50.72 and 50.73, 10 CFR Part 21, the Technical Specifications or any 
other pertinent reporting requirement, including 10 CFR 50.9(b), 
particularly if equipment is determined to be inoperable. 

This letter does not require any response and therefore does not need 
approval of the Office of Management and Budget. Comments on burden and 
duplication may be directed to the Office of Management and Budget, Reports 
Management Room 3208, New Executive Office Building, Washington, DC 20503. 
Should you have questions on this letter, the staff contact is Howard Wong, 
Office of Enforcement. He can be reach on (301) 492-3281. 


                                   Frank J. Miraglia 
                                   Associate Director for Projects 
                                   Office of Nuclear Reactor Regulation 

Enclosure: As stated 


                                                                  ENCLOSURE 

              MODIFIED ENFORCEMENT POLICY FOR EQ REQUIREMENTS 

This enclosure provides the details of the modified enforcement policy for 
EQ requirements for those licensees who were not in compliance with 10 CFR 
50.49 as of the November 30, 1985 deadline. 

I.   Scope of the Enforcement Policy for EQ Requirements 

     If violations of the EQ rule identified at plants operating after 
     November 30, 1985 existed before the deadline and the licensee "clearly
     knew or should have known" of the lack of proper environmental 
     qualification, then enforcement action may be taken as described in 
     Sections III and IV. If the licensee does not meet the "clearly knew or
     should have known" test, no enforcement action will be taken. 

     This enforcement policy applies to violations of the EQ rule identified
     after November 30, 1985 which relate back to action or lack of action 
     before the deadline. Violations which occurred after November 30, 1985 
     (either as a result of plant modifications or because the plant was 
     licensed after November 30, 1985) will be considered for enforcement 
     action under the normal Enforcement Policy of 10 CFR Part 2, Appendix 
     C. In addition, EQ violations which are identified after the NRC's last
     first-round Inspection, 1/ approximately mid-1988, will also be 
     considered under the normal Enforcement Policy. 

II.  Application of the "Clearly Knew, or Should Have Known" Test 

     Licensees who "clearly knew" they had equipment for which qualification
     could not be established may have committed a deliberate violation of 
     NRC requirements. This situation will be evaluated on a case-by-case 
     basis. 

     The NRC will examine the circumstances in each case to determine 
     whether the licensee "clearly should have known" that its equipment was
     not qualified. The factors the NRC will examine include: 

     1.   Did the licensee have vendor-supplied documentation that 
          demonstrated that the equipment was qualified? 

     2.   Did the licensee perform adequate receiving and/or field 
          verification inspection to determine that the configuration of the
          installed equipment matched the configuration of the equipment 
          that was qualified by the vendor? 

     3.   Did the licensee have prior notice that equipment qualification 
          deficiencies might exist? 

     4.   Did other licensees identify similar problems and correct them 
          before the deadline? 


1/   First-round inspections are special team inspections to review 
     licensees' compliance with 10 CFR 50.49. 


Enclosure                          - 2 -

     In assessing whether the licensee clearly should have known of a 
     deficiency, the information provided to the licensees by the NRC and 
     the industry on specific deficiencies will be taken into consideration.
     This information, and the timeliness of it being provided to licensees 
     prior to the EQ deadline are relevant factors. If one licensee 
     determined that a specific EQ deficiency existed, it would not be 
     assumed that all licensees should have also come to the same conclusion
     unless information about the specific deficiency had been widely 
     disseminated within the industry or by the NRC. The staff will 
     carefully consider these criteria when evaluating whether a licensee 
     clearly should have known of a deficiency prior to the deadline. 

III. EQ Violations not Sufficiently Significant to Merit a Civil Penalty 
     Under the Modified Policy 

     Any failure to adequately list and demonstrate qualification of 
     equipment required by 10 CFR 50.49 may constitute a violation of the 
     rule. This does not require, however, that all violations of the rule 
     be considered for escalated enforcement or be assessed a civil penalty.
     For example, if the qualification file presented to the inspector 
     during an inspection did not demonstrate or support qualification of 
     equipment, the equipment would be considered unqualified 2/ and 10 CFR 
     50.49 requirements would be violated. However, although not in the 
     qualification file, if sufficient data exists or is developed during 
     the inspection to demonstrate qualification of the equipment or based 
     on other information available to the inspector, the specific equipment
     is qualifiable for the application in question, the qualification 
     deficiency is not considered sufficiently significant for assessment of
     civil penalties. These violations would be considered to be Severity 
     Level IV or Severity Level V violations based on a violation of 10 CFR 
     50.49 requirements at the time of the inspection. 

     Programmatic violations or problems that are identified as a result of 
     the EQ inspections that involve several EQ violations which themselves 
     would not be considered sufficiently significant to merit a civil 
     penalty under the modified EQ enforcement policy nonetheless may be 
     aggregated and evaluated for escalated enforcement action (generally 
     Severity Level III) for the failure to satisfy applicable requirements 
     of 10 CFR 50.49 and/or 10 CFR Part 509 Appendix B. The civil penalties 
     for these violations would be assessed under the normal Enforcement 
     Policy of 10 CFR Part 2, Appendix C (Supplement I). 

IV.  Basis for Determining Civil Penalties 

     A.   Base Civil Penalty 

     Significant EQ violations, for which the licensee clearly should have 
     known that they had equipment for which qualification had not been 
     established, 


2/   For purposes of enforcement, unqualified equipment" means equipment for
     which there is not adequate documentation to establish that this 
     equipment will perform its intended functions in the relevant 
     environment. 


Enclosure                          - 3 -

     are to be considered together, in the aggregate, and the base civil 
     penalty assessed in a graded approach based on the number of systems or
     components affected. 3/ 

     The base civil penalty would be determined as described below. 

          EQ Violation Category                   Base Civil Penalty 

A.   Extensive; EQ violations affecting many      $300,000 
     systems and many components. 

B.   Moderate; EQ violations affecting some       $150,000 
     systems and some components. 

C.   Isolated; EQ violations affecting a          $ 75,000 
     limited number of systems and components. 

The three EQ violation categories reflect the overall pervasiveness and the 
general safety significance of significant EQ violations. The NRC considers 
violations of EQ requirements to be safety significant because the 
electrical equipment required to be qualified were those which have 
importance to safety. The violation categories do not include those EQ 
violations which have been determined to be not sufficiently significant 
standing alone to be considered for escalated enforcement and which will be 
normally considered as Severity Level IV or V violations, as described in 
Section III. As stated in Section III, however, programmatic problems may be 
the subject of escalated enforcement action under the NRC's normal 
Enforcement Policy. 

The significance of the EQ violations is considered when the NRC evaluates 
the number of systems affected by the EQ violations and determines the EQ 
violation category. The NRC will assume, for escalated enforcement cases, 
that the unqualified equipment could affect operability of the associated 
system. The NRC will not consider refinements on the operability arguments 
such as the actual time. The equipment is required to be operable, 
administrative measures or controls available to ensure the safety function 
is accomplished, the degree to which the operability of a system is 
affected, or, that through additional analyses or testing, the equipment may 
be demonstrated to be qualified or qualifiable. This assumption is made for 
enforcement purposes in order to reduce the resources anticipated to be 
spent by licensees and the NRC to evaluate in detail whether system 
operability was in question. 




3/   The EQ violation categories (A-C) will be used rather than the severity
     levels in the normal Enforcement Policy of 10 CFR Part 2, Appendix C. 
     The base civil penalty for the violations will be applied consistent 
     with the statutory limits on civil penalties under Section 234 of the 
     Atomic Energy Act. 

Enclosure                           -4-

     Because the NRC is considering enforcement action rather than a 
     justification for continued operation and the EQ deficiencies have been
     corrected in most instances, the NRC will make a conservative judgment 
     as to the overall safety significance of the EQ violations based on the
     number of safety systems affected. This approach has the benefits of a 
     relatively quick, though conservative, view on the safety consequences 
     of unqualified equipment and will focus on the underlying cause of the 
     EQ violations. 

     Cases involving deliberate violations or very serious EQ violations 
     (More safety significant than considered in this modified enforcement 
     policy such as widespread breakdowns or clearly inoperable systems) 
     will be evaluated on a case-by-case basis and may be subject to more 
     severe sanctions than those described in this policy. 

     B.   Mitigation/Escalation Factors 

     Mitigation and escalation of the base civil penalty determined in 
     Section IV.A will be considered in the determination of the civil 
     penalty amount. The NRC will consider the EQ violations in aggregate, 
     not based on individual violations. Adjustment of the base civil 
     penalty will be considered as described below: 

Mitigation/Escalation Factors                     Maximum Mitigation/ 
                                                  Escalation Amount (from 
                                                  base civil penalty) 

     1.   Identification and prompt reporting,                      +/- 50% 
          If required, of the EQ violations 
          (including opportunities to identify 
          and correct the deficiencies). 

     2.   Best efforts to complete EQ within the                    +/- 50% 
          deadline. 

     3.   Corrective actions to result in full                      +/- 50% 
          compliance (including the time taken 
          to make an operability or qualification 
          determination, the quality of any support-
          ing analysis, and the nature and extent 
          of the licensee's efforts to come into 
          compliance). 

     4.   Duration of violation which is                            +/- 50% 
          significantly below 100 days. 

In order to be fair and equitable to those licensees who took appropriate 
actions prior to November 30, 1985 or shut down prior to this date to be in 
compliance, civil penalties generally should not be less than $50,000 to 
emphasize that a significant environmental qualification failure is 
unacceptable. 

The NRC will, however, consider full mitigation (no civil penalty) for those
EQ violations which satisfy all of the five following criteria: (1) 
violations which are isolated and affect a limited number of systems and 
components, (2) violations which are identified by the licensee, (3) 
violations which are promptly reported to the NRC, if required, (4) 
violations which are corrected and actions taken will result in full 
compliance within a reasonable time, and (5) violations for which the 
licensee has demonstrated best efforts to complete EQ within the deadline. 


Enclosure                          - 5 -


The intent of full mitigation of the civil penalty for EQ violations which 
meet all five criteria is to increase the incentive for self-identification 
of EQ deficiencies which might not otherwise be found by NRC. The NRC will 
generally issue on a Notice of Violation for violations which meet all these
criteria. 

If the licensee is able to convincingly demonstrate at the time of the 
inspection, or shortly thereafter, that an item is not required to be on the
EQ list, then the item would not be considered for enforcement action. The 
NRC does not intend to consider for enforcement purpose the results of a 
licensee's after-the-fact testing for mitigation where the licensee clearly 
should have known that its documentation was not sufficient. 
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