Announcing an NRC Inspection Procedure on Licensee Self-assessment Programs for NRC Area-of-emphasis Inspections

UNITED STATES
NUCLEAR REGULATORY COMMISSION
OFFICE OF NUCLEAR REACTOR REGULATION
WASHINGTON, D.C.  20555

March 17, 1994


NRC ADMINISTRATIVE LETTER 94-03:  ANNOUNCING AN NRC INSPECTION PROCEDURE ON
                                  LICENSEE SELF-ASSESSMENT PROGRAMS FOR NRC
                                  AREA-OF-EMPHASIS INSPECTIONS


Addressees

This administrative letter is addressed to all holders of operating licenses
or construction permits for nuclear power reactors.

Purpose

The U.S. Nuclear Regulatory Commission (NRC) is issuing this administrative
letter to inform addressees of the issuance of an NRC inspection procedure on
licensee self-assessment programs.  The inspection procedure was developed to
minimize regulatory impact and more effectively utilize NRC resources for
area-of-emphasis inspections.  This administrative letter does not transmit or
imply any new or changed NRC requirements or staff positions, and no specific
action or written response is required.

Background

The NRC has been evaluating actions to minimize regulatory impact and more
effectively utilize NRC resources and has determined that recognition of
licensee good performance in the implementation of self-assessment programs is
one method that meets these goals.  Therefore, on August 12, 1993, the NRC
incorporated NRC Inspection Procedure 40501, "Licensee Self-Assessments
Related to Area-of-Emphasis Inspections," into the NRC Inspection Manual.  The
procedure introduced a pilot program that allows the NRC to evaluate a
licensee proposal to perform a self-assessment and to determine if the scope
of that self-assessment warrants reduced NRC inspection.  The procedure
applies to area-of-emphasis inspections such as those described in Temporary
Instruction (TI) 2515/118, Revision 1, "Service Water System Operational
Performance Inspection," or TI 2515/109, "Safety-Related Motor-Operated Valve
Testing and Surveillance."  The pilot program became effective with the
issuance of the procedure.

Discussion

On August 12, 1993, the NRC issued Inspection Procedure 40501.  In that
procedure, the NRC described those areas to be evaluated by NRC regional
management to determine the suitability of a proposed licensee self-assessment
as a candidate for reduced inspection.  The procedure also contains guidance
to NRC inspection teams for evaluation of qualified licensee self-assessment
efforts.  The procedure outlines the process for monitoring a licensee
self-assessment inspection and for performing an indepth, limited-scope

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94-03                                         March 17, 1994
                                        Page 2 of 2


inspection of an area of emphasis as an alternative to the full-scope
inspection described in the related NRC temporary instruction.  The NRC
expects to expend about 25 percent of the inspection hours specified in the
applicable inspection procedure in monitoring a licensee, recognized as a good
performer, whose proposed self-assessment inspection is found to be equivalent
in scope and depth to the NRC area-of-emphasis inspection.  The NRC expects
that this process will lessen the regulatory impact of these inspections while
still ensuring that the area of emphasis is appropriately evaluated.

This voluntary process is initiated by a formal submittal from a licensee
proposing self-assessment of an area of emphasis as a basis for reduced NRC
inspection.  The NRC will review the submittal and notify the licensee by
letter whether the basis for reduced inspection is acceptable.  Details on the
information to be included in the submittal and on other aspects of the
program are in the inspection procedure (Attachment 1).

This administrative letter requires no specific action or written response.
If you have any questions about this letter, please contact the person listed
below or the appropriate Office of Nuclear Reactor Regulation (NRR) project
manager.

/s/'d by BKGrimes


                        Brian K. Grimes, Director
                        Division of Operating Reactor Support
                        Office of Nuclear Reactor Regulation

Contact:  Eugene V. Imbro, NRR
          (301) 504-2967

Attachments:
1.  NRC Inspection Procedure 40501, "Licensee Self-Assessments Related to
    Area-of-Emphasis Inspections"
2.  List of Recently Issued NRC Administrative Letters

.                                                Attachment 1
                                                AL 94-03
                                                March 17, 1994




NRC INSPECTION MANUALDRIL

INSPECTION PROCEDURE 40501


LICENSEE SELF-ASSESSMENTS RELATED TO AREA-OF-EMPHASIS INSPECTIONS


PROGRAM APPLICABILITY:  2515

SALP FUNCTIONAL AREA:  OTHER SPECIAL AREA FOR OPERATIONS (SOOTHR-O)


40501-01    INSPECTION OBJECTIVE

To provide guidance on the pilot program to evaluate a licensee's
self-assessment effort as an alternative to an extensive NRC area-of-emphasis
team inspection.


40501-02    INSPECTION REQUIREMENTS

02.01  Regional management will determine if licensee's past performance is
sufficient to warrant reduced NRC inspection.

02.02    Licensee's Proposed Self-Assessment

    a.Organization.  Evaluate the capability of the licensee's organization to
manage the self-assessment, whether it is conducted by some element of
the licensee organization or an independent organization.

    b.Assessment Team.  Ensure that the licensee's assessment team has the
necessary credentials and experience to perform a technically creditable
self-assessment.

    c.Scope of Effort.  Ensure that the scope and depth of the licensee's
program are at least equivalent to those specified in the temporary
instruction (TI) for the area-of-emphasis inspection, or that the
licensee provides an acceptable basis for reducing scope or depth.

    d.Timing.  Ensure that the timing of the licensee's proposal and
assessment is such that NRC can adequately adjust its planning for the
area-of-emphasis inspection and can review the licensee's assessment planning
and in-process implementation.

02.03    Implementation of the Licensee's Self-Assessment

    a.In-Process Inspection.  Evaluate the capability of the licensee's team
and the depth of review by monitoring the conduct of the licensee's
in-process assessment.

    b.Final Inspection.  Perform a technical inspection of the
licensee's.completed self-assessment when the licensee issues its final
report.

40501-03    INSPECTION GUIDANCE

General Guidance.    Under this pilot program, the NRC will recognize a
licensee's good performance and quality self-assessment by reducing the scope
of NRC inspection.  This reduced inspection applies to area-of-emphasis team
inspections, which are resource intensive (require more than 15 inspector-days
of onsite inspection).  This procedure outlines the process for monitoring the
licensee's self-assessment effort and for conducting a limited-scope, indepth
inspection as an alternative to a full-scope NRC inspection as specified in
the related TI.

The NRC has area-of-emphasis inspections such as Service Water System
Operational Performance Inspection (TI 2515/118, Revision 1) or other
required inspections such as Safety-Related Motor-Operated Valve Testing and
Surveillance (TI 2515/109) which could be conducted at each plant.  This
procedure is independent of Inspection Manual Chapter (IMC) 2515, Section
06.03, which provides that the regional administrator may for good cause
elect not to perform a generic area team inspection.

The NRC acceptance process should be initiated by a licensee's formal
submittal of its proposed self-assessment as a basis for reduced NRC
inspection, including the schedule, scope, level of effort, and team
qualifications.  The Director, Program Management, Policy Development and
Analysis Staff (PMAS), should formally concur in the regional letter to the
licensee in which the request for reduced inspection is approved.  The region
should formally respond to all licensee requests for reduced inspection.  If
reduced NRC inspection is conditionally approved, the letter should include
any stipulations (e.g., revised self-assessment scope) on which the approval
is conditioned.  The letter should state that the option of permitting
licensees to conduct a self-assessment in lieu of an NRC area-of-emphasis
inspection is a pilot NRC program aimed at minimizing regulatory impact and
utilizing NRC resources more efficiently. Notwithstanding the licensee's
self-assessment, the region may elect to not reduce its normal
area-of-emphasis inspection scope if there are indications that the
licensee's effort was not implemented in accordance with the licensee's
approved plan or was deficient for some other reason.

Any issues identified as a result of a licensee's self-assessment should be
considered to be licensee identified, notwithstanding that licensee effort was
initiated as a result of NRC selecting the area to inspect.  However, any
enforcement action involving an "old design issue" should be referred to the
Office of Enforcement.

The requirements in the TI pertaining to reporting requirements, completion
schedule, expiration, and technical contact should be followed.  For MIPS and
RITS purposes, the planning and inspection effort should be charged against
this inspection procedure, but the TI should be closed out with status code
"R" on the RITS form (completed by reference) when NRC inspection activities
are completed.


Specific Guidance

03.01    Regional management should consider licensee performance during prior
major area-of-emphasis inspections, relevant NRC inspections, periodic plant
performance reviews, and SALP ratings.  Licensees recognized by NRC
senior.management as good performers should be considered as automatic
candidates. Requests from other licensees should be evaluated on a
case-by-case basis. Licensees placed on the "watch list" would not be
eligible for reduced NRC inspection.

03.02. Licensee's Proposed Self-Assessment

a.Organization.  The NRC review should consider if the backlog of
activities for the licensee's organization could preclude effective
management of the self-assessment.  The technical qualifications of the
involved licensee personnel should be evaluated.

b.Assessment Team.  The design reviewers should have hands-on design
experience, such as that of a supervisory engineer in an architect-engineer
organization.  The  reviewers in other than design areas should have
appropriate technical and plant experience.

c.Scope of Effort.  Deviations from the scope of the area-of-emphasis
inspection will be treated on a case basis with appropriate
justification.  For example, it may be appropriate for the licensee's
assessment not to include areas evaluated during recent NRC
inspections.

d.Timing.  Licensee self-assessments should be completed in a timeframe
that is sufficient to allow the NRC to complete a final inspection of the
licensee's effort before the expiration date of the TI.  It is desirable
that licensee proposals be made sufficiently in advance of both the
implementation of the self-assessment and the planned NRC area-of-emphasis
inspection (generally at least 90 days).  This is to ensure that the region
has sufficient time to evaluate the proposal (Section 02.02) and align its
resources as appropriate to monitor in-process conduct of the licensee's
self-assessment (Section 02.03.a).   Although the intent is not to penalize a
licensee who does not give the region sufficient lead time before the
self-assessment, it is obviously more efficient for the licensee to resolve
NRC comments on the inspection scope, depth, and so forth before initiating
the self-assessment.  In addition, it is impractical for NRC to be notified
of a licensee request for reduced NRC inspection under this IP after the NRC
inspection has proceeded substantially in the planning stage.

To ensure timely self-assessment proposals, regions should provide
advance notification of area-of-emphasis inspection by as much as 9
months, consistent with the latitude in IMC 0300, "Announced and
Unannounced Inspections."  This advance notification should advise the
licensee of the self-assessment option and of the possibility of
obtaining a copy of this inspection procedure if requested.

03.03    Implementation of the Licensee's Self-Assessment

a.In-Process Inspection.  Generally, a regional team leader and/or senior
inspector qualified for conducting the specific area-of-emphasis
inspection should conduct the in-process inspection.  Generally, this
will require more than one individual because of the several disciplines
involved, but not as many as required for the final inspection of the
licensee's effort.  The in-process inspection should last up to 5 days
and be implemented when the self-assessment is approximately 50 percent
complete.  During this inspection, the scope and depth of the licensee's
self-assessment, including the objectivity and independence of the
self.-assessment team should be evaluated.  The evaluation should also
include a review of the process for addressing operability concerns and the
process for developing corrective actions and ensuring their appropriateness.
If the licensee's organization primarily responsible for the areas of the
self-assessment has demonstrated good performance (e.g., SALP Category 1) and
the licensee's implementation of its self-assessment appears to be effective,
NRC effort during the final inspection may be reduced.

b.Final Inspection.  This inspection should be performed when the licensee
has completed its self-assessment, specified corrective actions to be
implemented, and issued a final summary report.  The regional technical
inspection of the completed self-assessment should be led by a regional
team leader and include appropriate multidiscipline expertise, including
contractor specialists.  Wherever possible, personnel who participated in
the in-process inspection (Section 03.03.a above) should be on the team.
The team should parallel the disciplines for the normal area-of-emphasis
inspection, with appropriate reductions made in areas where one inspector
can cover several disciplines.  The inspection scope and team size should
be predicated on the TI, findings from other inspections, results from
the NRC in-process inspection, site-specific characteristics, and the
licensee's past performance.

The NRC inspection scope should include areas covered by the self-assessment
to evaluate the completeness of the licensee's reviews, but minimal resources
should be expended in areas where the licensee had adequately addressed
significant findings.  For areas within the scope of the TI reviewed during
the self-assessment on a sampling basis, the NRC inspection should include
items both reviewed and not reviewed during the licensee's self-assessment.
For example, if the self-assessment did not include a review of the thermal
performance of all service water system heat exchangers, the NRC inspectors
would need to reach a conclusion on whether the self-assessment sample
provided a reasonable basis to support a licensee conclusion regarding the
performance of the heat exchangers not reviewed.  The NRC scope should also
include any significant areas of the TI not addressed by the self-assessment.

During the NRC inspection, the corrective actions proposed by the
licensee for the more significant assessment findings as well as for
generic findings and the licensee's handling of any operability concerns
should be evaluated.  It may be appropriate for the region to follow up
on the licensee's implementation of the corrective actions for
significant findings.


40501-04    RESOURCE ESTIMATE

The goal for the total NRC oversight effort should be no more than 25 percent
of the normal preparation and inspection effort for the area-of-emphasis
inspection. Inspection duration and scope and team size and composition will
be determined by the regional office on a case-by-case basis.  Normally, the
25 percent goal can be achieved by reducing both team size and inspection
duration to half the normal level.


END