Manual Chapter 0305

Operating Reactor Assessment Program

0305-01 Purpose
0305-02 Objectives
0305-03 Applicability
0305-04 Definitions
0305-05 Responsibilities And Authorities
0305-06 Basic Requirements

0305-01 Purpose

The Reactor Oversight Process integrates the NRC's inspection, assessment, and enforcement programs. The Operating Reactor Assessment Program evaluates the overall safety performance of operating commercial nuclear reactors and communicates those results to licensee management, members of the public, and other government agencies.

The assessment program collects information from inspections and performance indicators (PIs) in order to enable the agency to arrive at objective conclusions about the licensee's safety performance. Based on this assessment information, the NRC determines the appropriate level of agency response, including supplemental inspection and pertinent regulatory actions ranging from management meetings up to and including orders for plant shutdown. The assessment information and agency response are then communicated to the public. Follow-up agency actions, as applicable, are conducted to ensure that the corrective actions designed to address performance weaknesses were effective.

0305-02 Objectives

02.01	To collect information from inspection findings and PIs.
02.02	To arrive at an objective assessment of licensee safety performance using PIs and inspection findings.
02.03	To assist NRC management in making timely and predictable decisions regarding appropriate agency actions used to oversee, inspect, and assess licensee performance.
02.04	To provide a method for informing the public and soliciting stakeholder feedback on the NRC's assessment of licensee performance.
02.05	To provide a process to follow up on areas of concern.

0305-03 Applicability

This manual chapter applies to all operating commercial nuclear reactors except those sites that are under IMC 0350, "Oversight of Operating Reactor Facilities in Shutdown Condition with Performance Problems". The contents of this manual chapter do not restrict the NRC from taking any necessary actions to fulfill its responsibilities under the Atomic Energy Act of 1954 (as amended).

0305-04 Definitions

04.01	Annual Assessment Cycle. A 12 month assessment period from January 1 through December 31 of each year. For CY 2001, the assessment cycle consists of only three quarters (April 1 through December 31). For inspection planning purposes, the inspection period associated with annual assessment cycle ends on the last Saturday of the calender year. However, since the PIs end on the last calendar day of the month, the quarterly assessment periods also ends on the last day of March, June, September, and December.
04.02	Assessment Inputs. As used in this manual chapter, assessment inputs are the combination of PIs and inspection findings for a particular plant that are combined in the assessment process in order to determine appropriate agency actions.
04.03	Assessment Period. A rolling 12 month period that contains 4 quarters of performance indicators and inspection findings. An inspection finding is normally carried forward in the assessment process for a total of four calender quarters and a performance indicator is re-calculated on a quarterly basis.
04.04	Degraded Cornerstone. A cornerstone that has two or more white inputs or one yellow input.
04.05	Inspection Manual Chapter (IMC) 0350 Process. An oversight process that oversees licensee performance, inspections, and restart efforts for plants in shutdown conditions with significant performance problems.
04.06	Multiple Degraded Cornerstones. Two or more cornerstones are degraded in any one quarter.
04.07	Old Design Issue. A finding involving a past problem in the engineering calculations or analysis, associated operating procedure, or installation of plant equipment that does not reflect a performance deficiency associated with existing licensee programs, policy, or procedure. As discussed in section 06.06.a, some old design issues may not be considered in the assessment program.
04.08	Parallel Performance Indicator Inspection Finding. An inspection finding issued at the same significance level of a safety-significant performance indicator when the supplemental inspection reveals a substantial inadequacy in the licensee's evaluation of the root causes of the original performance deficiency, determination of the extent of the performance problems, or the actions taken or planned to correct the issue. See section 06.06.d for more details.
04.09	Plant Performance Summary. A document (see exhibit 7) prepared by the regional offices and used by the participants during the Mid-Cycle Review, End-of-Cycle Review, and Agency Action Review (if applicable) meetings. This document is prepared for those plants that: 1) for any quarter during the assessment period have been in the degraded cornerstone, multiple/repetitive degraded cornerstone, or unacceptable performance column of the Action Matrix OR 2) have a current substantive cross-cutting issue.
04.10	Repetitive Degraded Cornerstone. A single cornerstone that is degraded (2 white inputs or 1 yellow input) for five or more consecutive quarters. This designation only applies to a single cornerstone when there are at least two separate safety significant PIs or inspection findings during this period.
04.11	Safety-Conscious Work Environment (SCWE). An environment in which employees feel free to raise safety concerns, both to their management and to the NRC, without fear of retaliation.
04.12	Safety-Significant Finding/ Performance Indicator. An inspection finding with a safety significance greater than green or a performance indicator that is greater than green.
04.13	Significance Determination Process (SDP). A risk characterization process that is applied to inspection findings. Using the results of the SDP, the overall licensee performance assessment process can compare and evaluate the findings on a significance scale similar (i.e. white, yellow, red) to the performance indicators.
04.14	Substantive Cross-Cutting Issue. As used in this chapter, a common performance theme (i.e. related causal factor) as evidenced by a significant number of current inspection findings in the cross-cutting areas of human performance, problem identification and resolution, and safety-conscious working environment. See section 06.06.h for more details.

0305-05 Responsibilities And Authorities

05.01	Executive Director for Operations (EDO
	a.	Oversees the activities described in this manual chapter.
	b.	Approves all deviations from the Action Matrix
05.02		Director, Office of Nuclear Reactor Regulation (NRR)
	a.	Implements the requirements of this manual chapter within NRR.
	b.	Develops assessment program policies and procedures.
	c.	Ensures uniform program implementation and effectiveness.
05.03	Regional Administrators
	a.	Implements the requirements of this manual chapter within their respective regions.
	b.	Develops and issues assessment letters to each licensee.
	c.	Conducts assessment reviews and directs allocation of inspection resources within the regional office based on the Action Matrix.
	d.	Establishes a schedule and determines a suitable location for the annual public meeting with each licensee to ensure a mutual understanding of the issues discussed in the Annual Assessment Letter.
	e.	Suspends the end-of-year performance review for those plants that have been transferred to the Inspection Manual Chapter 0350 process (see IMC 0350).
	f.	Chairs the End-of-Cycle Review meetings.
05.04	Director, Office of Public Affairs. Issues press releases following the completion of the mid-cycle and end-of-cycle reviews.
05.05	Chief, Inspection Program Branch (NRR/DIPM/IIPB)
	a.	Develops assessment program guidance.
	b.	Collects feedback from the regional offices and assesses execution of the Operating Reactor Assessment Program to ensure consistent application.
	c.	Recommends, develops, and implements improvements to the Operating Reactor Assessment Program.
	d.	Provides oversight of the Mid-Cycle and End-of-Cycle review meetings.
	e.	Concurs on proposals by the regional offices to not count an old design issue in the assessment program in accordance with section 06.06.a.
	f.	Concurs on proposals by the regional office to extend an inspection finding in the assessment process beyond the normal four quarters in accordance with section 06.06.d.
	g.	Concurs on proposals by the regional office to initiate a parallel inspection finding in accordance with section 06.06.d.
05.06	Regional Division Directors
	a.	Chairs the Mid-Cycle Review meeting.
	b.	Approves proposals by the regional offices to not count an old design issue in the assessment program in accordance with section 06.06.a.
	c.	Approves proposals by the regional office to extend an inspection finding in the assessment process beyond the normal four quarters in accordance with section 06.06.d.
	d.	Approves proposals by the regional office to initiate a parallel inspection finding in accordance with section 06.06.d.
05.07	Agency Allegations Advisor. Provides any significant insights from the allegations program to the regional offices in preparation for the mid-cycle and end-of-cycle reviews.
05.08	Director, Office of Enforcement. Provides any significant insights from the enforcement program to the regional offices in preparation for the end-of-cycle reviews.
05.09	Director, Office of Investigations. Provides any significant insights from the office of Investigations to the regional offices in preparation for the end-of-cycle reviews.
05.10	Director, Office of Research. Provides any significant insights from the office of Research to the regional offices in preparation for the end-of-cycle reviews.
	a.	Provide program direction for management and implementation of the SDP to activities performed by the Regional Office.
	b.	Provide representatives as necessary to support the Significance Determination Process and Enforcement Review Panel in order to ensure consistent application of the process.
	c.	Within the guidance of the Reactor Oversight Program, apply inspection resources, as necessary, to determine the significance of specific inspection findings.

0305-06 Basic Requirements

06.01	Overall Assessment Process. Licensee performance is reviewed over a 12-month period through the operating reactor assessment process (exhibits 3 and 4).
	A preliminary significant (i.e. preliminary white, yellow, or red) issue is not considered a safety-significant inspection finding and therefore not considered in the assessment process until after the final determination of significance is made through the SDP and the licensee informed of the decision. The safety-significant inspection finding will then be considered in the assessment process as of the quarter in which the preliminary significance was first documented (i.e., usually the end date of the pertinent inspection report). If an unresolved item was documented in an inspection report prior to the report that documented the preliminary significance (i.e. preliminary white, yellow, or red), use the end date of the inspection report that documented the preliminary finding for the date to consider the issue in the assessment process after the final significance is determined. A safety-significant inspection finding is carried forward from the quarter in which it was discovered for four calender quarters or until the requirements of the appropriate supplemental inspection procedure have been completed, whichever is greater.
	Example: A preliminary white inspection finding in the second calendar year (CY) quarter whose final safety significance was determined to be white (low to moderate safety significance) during third CY quarter, would be considered a white finding in CY quarters 2, 3 and 4 plus the first quarter of the next CY.
	The inspectors normally use the SDP to evaluate inspection findings for safety significance. In addition, the NRC's enforcement policy may apply to issues which the SDP process can not evaluate for safety significance (e.g., violations that may impact the NRC's ability to provide oversight of licensed activities and violations that involve willfulness, including discrimination). These issues should be considered when determining the range of agency actions within the appropriate column of the Action Matrix. Additionally, if applicable, the underlying technical issue should be separately evaluated using the Significance Determination Process and the results considered in the assessment program.
06.02	Performance Reviews. The assessment process consists of a series of reviews which are described below.
	a.	Continuous Review. The Resident Inspectors and Branch Chiefs in each regional office continuously monitor the performance of their assigned plants using the results of the performance indicators and inspection findings. Inspections are conducted on a continuous basis in accordance with IMC 2515 and performance indicators are reported quarterly by the licensee.
		The Region may issue an Assessment Follow-Up Letter (exhibit 8) and address the issue in accordance with the Action Matrix between the normal quarterly assessments if, 1) a safety significant inspection finding is finalized or 2) If a performance indicator will cross a performance threshold at the end of the quarter based on current inputs.
	b.	Quarterly Review. Each region conducts a quarterly review utilizing PI data submitted by licensees and inspection findings compiled over the previous twelve months. This review is conducted within five weeks after the conclusion of each quarter of the annual assessment cycle (see exhibit 4). The most recent quarter of performance indicators and inspection findings shall be considered in determining agency actions per the Action Matrix.
		The responsible DRP Branch Chief reviews the most recently submitted PIs (which should be submitted 21 days after the end of the quarter) and the inspection findings contained in the plant issues matrix (PIM) to identify any performance trends. The Branch Chief shall utilize the Action Matrix to help identify where there are NRC actions that should be considered which are not already embedded in the existing inspection plan. Assessment Follow-up letters are normally issued within two weeks after the quarterly review for any new safety significant PIs or inspection findings.
		If based on the continuous review, as discussed above, the region issued an Assessment Follow-Up letter for inspection findings or performance indicators during the past quarter, a subsequent quarterly Assessment Follow-Up letter would not be necessary if its only purpose is to re-iterate any issues that had been previously addressed to the licensee.

Note: The regional office should still perform a supplemental inspection procedure even if a PI returns to the green band prior to conducting the supplemental inspection.

Due to the fact that inspection findings count in the assessment process for four quarters, the staff may become aware that a plant will reach a repetitive degraded cornerstone categorization prior to five consecutive quarters actually being completed. If this occurs, the agency should consider engaging the licensee regarding the appropriate actions for the Multiple/Repetitive Degraded Cornerstone column of the Action Matrix at each subsequent quarterly review.

Additionally, for plants whose performance is in the Multiple/Repetitive Degraded Cornerstone column of the Action Matrix, consideration shall be given at each quarterly review for engaging senior licensee and agency management in discussions associated with 1) transferring the plant to the IMC 0350 process, 2) declaring licensee performance to be unacceptable in accordance with the guidance contained within this manual chapter, and 3) taking additional regulatory actions (as appropriate). If there are significant changes in the inspection plan for a plant in the Multiple/Repetitive Degraded Cornerstone column of the Action Matrix, the regions should issue a separate Assessment Follow-Up letter in order to ensure the licensee is aware of these changes.

	c. Mid-Cycle Review. Each regional office conducts a Mid-Cycle Review utilizing the most recent quarterly performance indicators and inspection findings compiled over the previous twelve months. This review incorporates activities from the quarterly review after the conclusion of the second quarter of the annual assessment cycle. The output of this review is a Mid-Cycle Letter (exhibit 9) for every plant instead of an Assessment Follow-Up Letter. Additional activities include planning inspection activities through September 30^th of the next year as well as discussing any insights into potential substantive cross-cutting issues (problem identification and resolution, human performance, and safety-conscious work environment). The Action Matrix is used to determine the scope of agency actions in response to the assessment inputs. The Mid-Cycle Review will be completed within six weeks of the end of the second quarter of the annual assessment cycle.
	In preparation for the mid-cycle reviews, the regional offices shall develop a meeting agenda as well as provide the plant issues matrix, the results of the PIs, and the proposed inspection plan for all plants. Exhibit 6 provides the areas that should be addressed by the regional offices for all plants except those that are required to prepare a Plant Performance Summary. A written exhibit 6 for each plant is not required to be prepared for the meeting. The regional offices shall develop a Plant Performance Summary (see exhibit 7) for those plants whose performance has been in the degraded cornerstone column, multiple/repetitive degraded cornerstone column, or unacceptable performance column of the Action Matrix during any quarter of the past twelve months. A Plant Performance Summary shall also be developed for those plants that the regional offices considers to have current substantive cross-cutting issues that should be included in the mid-cycle letter. The Plant Performance Summary packages will assist the regional offices in conducting the meeting and will form the basis for the Mid-Cycle letters as well as providing input to the next End-of-Cycle Meeting. The Plant Performance Summary should include an operating summary, a performance overview (current overall assessment and previous assessment results), inspection and PI results by cornerstones, other issues (i.e. cross-cutting issues, PI verification, and non-SDP enforcement actions of at least severity level III), as well as a proposed inspection plan.
	The Mid-Cycle Review meeting is chaired by a Division of Reactor Projects (DRP) or Division of Reactor Safety (DRS) Division Director (DD). The DRP Branch Chiefs responsible for their plants should take the lead in presenting the overall results of the review to the Division Director. The DRS Branch Chiefs shall coordinate with the appropriate DRP Branch Chiefs to provide adequate support for the presentation and the development of the inspection plan. Other participants shall include applicable regional and resident inspectors, a representative from the Inspection Program Branch (IIPB), the regional Allegations Coordinator or the Agency Allegations Advisor, and any other additional resources deemed necessary by the regional offices. A Senior Reactor Analyst (SRA) is not required to attend the meeting if their insights on safety significant performance issues have been provided before the meeting. The Agency Allegations Advisor will provide any significant insights to the regional offices at least one week in advance of the mid-cycle meeting. The average time allocated for each plant review is intended to be between 20 minutes and one hour. The time allotted per review should be consistent with the number and significance of plant issues.
	The output of the mid-cycle review is a Mid-Cycle Letter (exhibit 9). This letter shall be issued within three weeks of the completion of the mid-cycle reviews. The three week requirement begins when all of the regional offices complete their mid-cycle reviews. This letter shall contain:
	A summary of safety significant PIs and inspection findings for the most recent quarter as well as discussion of previous action taken by the licensee and the agency relative to these issues. Performance issues from previous quarters may be discussed if: (a) The agency's response to an issue had not been adequately captured in previous correspondence to the licensee. (b) These issues, when combined with assessment inputs from the most recent quarter, result in increased regulatory action per the Action Matrix that would not be apparent from reviewing only the most recent quarter's results. A discussion of any deviations from the Action Matrix during the assessment period. A qualitative discussion of substantive cross-cutting issues, if applicable. Safety-conscious work environment (SCWE) issues shall only be discussed if the agency has previously engaged the licensee via a meeting or docketed correspondence regarding a potential or actual SCWE concern or issue. A discussion of the licensee's progress in addressing a substantive cross-cutting issue, if documented in the previous annual assessment letter. A discussion of non-SDP (severity level III or greater) enforcement actions. A statement of any actions to be taken by the agency in response to safety significant issues, as well as any actions taken by the licensee. An inspection plan consisting of approximately 12 months of activities. The inspection plan will consist of report 22 from the Reactor Program System (RPS).
	d. End-of-Cycle Review. Each regional office conducts an End-of-Cycle Review utilizing the most recent quarterly PIs and inspection findings compiled over the previous 12 months. This review incorporates activities from the quarterly review after the conclusion of the annual assessment cycle. The output of this review is an Annual Assessment Letter (exhibits 10,11,12,13 and 14) for every plant instead of an Assessment Follow-Up Letter. Additional activities include planning inspection activities through March 31^st of the next year, discussing any potential substantive cross-cutting issues (problem identification and resolution, human performance, and safety-conscious work environment), and developing an input (if applicable) to support the Agency Action Review Meeting. The End-Of-Cycle Review meeting should be held within six weeks of the end of the assessment cycle. The Action Matrix will be used to determine the scope of agency actions in response to assessment inputs.
	In preparation for the End-of-Cycle reviews, the regional offices shall develop a meeting agenda as well as provide the plant issues matrix, the results of the PIs, and the proposed inspection plan for all plants. Exhibit 6 provides the areas that should be addressed by the regional offices for all plants except those that are required to prepare a Plant Performance Summary. A written exhibit 6 for each plant is not required to be prepared for the meeting. The regional offices shall develop a Plant Performance Summary (see exhibit 7) for those plants whose performance has been in the degraded cornerstone column, multiple/repetitive degraded cornerstone column, or unacceptable performance column of the Action Matrix during any quarter of the past twelve months. A Plant Performance Summary shall also be developed for those plants that the regional offices consider to have current substantive cross-cutting issues that should be discussed in the annual assessment letter. The Plant Performance Summary packages will assist the regional offices in conducting the meeting and will form the basis for the annual assessment letters. These packages will also be used at the End-of-Cycle Summary Meeting as well as providing input to the Agency Action Review Meeting (if applicable). The Plant Performance Summary should include an operating summary, a performance overview (current overall assessment and previous assessment results), inspection and performance indicator results by cornerstones, other issues (i.e. cross-cutting issues, PI verification, and non-SDP enforcement actions of at least severity level III), as well as a proposed inspection plan.
	Additional material for the End-of-Cycle Review will be provided to the regional offices by exception from each of the participating headquarters office representatives. To facilitate this, the Inspection Program Branch (IIPB) will issue a memorandum to the participating headquarters offices requesting that significant insights be provided to the regional offices at least one week prior to the End-of-Cycle Review meeting. IIPB should issue this memorandum at least 10 days before the end of the annual assessment cycle. This memorandum includes the schedule of plant discussions which will be provided to IIPB by the regional offices.
	The End-of-Cycle Review Meeting is chaired by the Regional Administrator or his/her designee. The regional Division Directors and/or Branch Chiefs present the results of the annual review to the Regional Administrator (or designee). Other routine participants should include DRP and DRS Branch Chiefs, applicable regional and resident inspectors, a representative from the Inspection Program Branch (IIPB), the regional Allegations Coordinator or the Agency Allegations Advisor, and any other additional participants deemed necessary by the regional offices. The following representatives should also participate if there are pertinent performance issues that should be factored into the performance for a particular plant: senior representatives from the Division of Licensing Project Management, Office of Investigations, Office of Enforcement, and Office of Research. The role of the various headquarters participants during the End-of-Cycle meeting is to provide: 1) an opportunity for these offices to share any significant insights into license performance over the course of the annual assessment period, 2) an independent validation of the regional office's assessment of licensee performance from their office's perspective, and 3) clarifying or ancillary remarks regarding ongoing or current issues under their cognizance. A Senior Reactor Analyst (SRA) is not required to attend the meeting if their insights on safety significant performance issues have been provided before the meeting. The average time allocated for each plant review is intended to be between 20 minutes and one hour. The time allotted per review should be consistent with the number and significance of plant issues.
	An End-of-Cycle (EOC) Summary meeting may be necessary at the conclusion of the End-of-Cycle meeting to summarize the results of the End-of-Cycle review with the Director of NRR (or another member of the NRR Executive Team). The regional staff will summarize the results of the end-of-cycle review for those plants whose performance over the past twelve months has been in the degraded cornerstone column, multiple/repetitive degraded cornerstone column, or unacceptable performance column of the Action Matrix. The regional staff will also present the results for those plants that the regional office considers to have current substantive cross-cutting issues that would be included in the annual assessment letter. The EOC Summary meetings for each of the regions will be scheduled simultaneously on the third Wednesday of February. This meeting will occur after the completion of all the EOC meetings but before the issuance of the annual assessment letters.
	During the EOC Summary meeting, the Director of NRR (or another member of the NRR Executive Team) will preside over the meeting while each Regional Administrator will lead the discussion for his region. The EOC Summary meeting is an informational meeting vice a decision-making meeting. In preparation for the meeting, IIPB will develop an agenda for the meeting with input from the regional offices. The regional offices should provide their input to IIPB three working days prior to the meeting. This purpose of this meeting is for regional management to engage headquarters management on those discussion plants in order to ensure awareness of the plants to be discussed at the AARM and those agency actions already taken in response to plant performance.
	The output of the End-of-Cycle Review is the Annual Assessment Letter (exhibits 10,11,12,13, and 14). This letter shall be issued within three weeks of the completion of the end-of-cycle reviews. The three week requirement begins when all of the regional offices complete their end-of-cycle reviews. This letter shall contain:
	A summary of safety significant PIs and inspection findings for the most recent quarter as well as discussion of previous action taken by the licensee and the agency relative to these issues. Performance issues from previous quarters may be discussed if: (a) The agency's response to an issue had not been adequately captured in previous correspondence to the licensee. (b) These issues, when combined with assessment inputs from the most recent quarter, result in increased regulatory action per the Action Matrix that would not be apparent from reviewing only the most recent quarter's results. A discussion of any deviations from the Action Matrix during the assessment period. A qualitative discussion of substantive cross-cutting issues, if applicable. Safety-conscious work environment (SCWE) issues shall be discussed only if the agency has previously engaged the licensee via a meeting or docketed correspondence regarding a potential or actual SCWE concern or issue. A discussion of the licensee's progress in addressing a substantive cross-cutting issue, if documented in the previous annual assessment letter. A discussion of non-SDP (severity level III or greater) enforcement actions. A statement of any actions to be taken by the agency in response to safety significant issues, as well as any actions taken by the licensee. An inspection plan consisting of approximately 12 months of activities. The inspection plan will consist of report 22 from the Reactor Program System (RPS).
06.03	Program Reviews
	a. Agency Action Review. An Agency Action Review Meeting is conducted several weeks after issuance of the annual assessment letters (see exhibit 4). This meeting is attended by appropriate senior NRC managers and is chaired by the Executive Director for Operations (EDO) or designee. This meeting is a collegial review by senior NRC managers of 1) the appropriateness of agency actions for plants with significant performance issues using data compiled during the End-of-Cycle review, 2) trends in overall industry performance, and 3) the results of the reactor oversight process self-assessment. Plants with significant performance weaknesses are those plants that are in the Multiple/Repetitive Degraded Cornerstone or Unacceptable Performance columns of the Action Matrix. This meeting is more completely described in Management Directive 8.14 "Agency Action Review Meeting".
	b. Commission Meeting. The EDO will brief the Commission annually to convey the results of the Agency Action Review Meeting. The Commission should be briefed within four weeks of the Agency Action Review Meeting.
06.04	Annual Meeting with Licensee
	a. Scheduling. A public meeting with the licensee is scheduled within 16 weeks of the end of the assessment period to discuss the results of the NRC's annual assessment of the licensee's performance. The meeting should be conducted no earlier than 1 week after the Annual Assessment letters are issued in order to allow time for the licensee to review the contents of the letter . The 16 week requirement may occasionally be exceeded to accommodate the licensee's schedule or regional scheduling conflicts. The meeting is conducted onsite or in the vicinity of the site and should be scheduled to ensure that it is accessible to members of the public. The regional offices should use this meeting as an opportunity to engage interested stakeholders on the performance of the plant and the role of the agency in ensuring safe plant operations. NRC management, as specified in the Action Matrix, conducts the public meeting. The appropriate level of NRC management to chair this meeting is determined by the most significant column of the Action Matrix that the plant has been in over the assessment cycle.
	b. Meeting Preparation. The region shall notify those on distribution for the annual assessment letters of the meeting with the licensee. The region shall notify the media and State and local government officials of the meeting with the licensee and the issuance of the annual assessment letter. Commensurate with the level of historical interest and/or performance issues, the regional offices should use the following additional tools to inform members of the public of the meeting, as appropriate: press releases, advertisements in local newspapers, or letters soliciting attendance to known interested parties. Further guidance on preparation and implementation of these meetings will be provided by IIPB.
	c. Conduct of Licensee Meeting. The annual public meeting is intended to provide a forum, between the NRC and the licensee, for discussion of issues related to the licensee's performance. NRC management, as specified in the Action Matrix, will discuss the agency's evaluation of licensee performance as documented in the annual assessment letter.
	The annual assessment letters provide the minimum information that should be conveyed to the licensee in the annual public meeting. However, this does not preclude the presentation of additional plant performance information when placed in the proper context. The licensee should be given the opportunity to respond at the meeting to any information contained in the Annual Assessment Letter. The licensee should also be given the opportunity to present to the NRC any new or existing programs that are designed to maintain or improve their current performance.
	The annual meeting will be a public meeting with the exception that the meeting must be closed for such portions which may involve matters that should not be publicly disclosed under Section 2.790 of Title 10 of the Code of Federal Regulations (10 CFR 2.790). Members of the public, the press, and government officials from other agencies are considered as observers during the conduct of the meeting. However, attendees should be given the opportunity to ask questions of the NRC representatives after the conclusion of the meeting.
06.05	NRC Responses to Licensee Performance
	a. Description of the Action Matrix. The Action Matrix (exhibit 5) was developed with the philosophy that, within a certain level of safety performance (e.g., the licensee response band), that licensees would address their performance issues without additional NRC engagement beyond the baseline inspection program. Agency action beyond the baseline inspection program will occur only if assessment input thresholds are exceeded. The Action Matrix identifies the range of NRC and licensee actions and the appropriate level of communication for varying levels of licensee performance. The Action Matrix describes a graded approach in addressing performance issues. A few terms are used throughout the discussion of the Action Matrix. These are:
	Regulatory Performance Meetings. Regulatory performance meetings are held between licensees and the agency to discuss corrective actions associated with safety significant inspection findings. Each safety significant assessment input shall be discussed in one of the forums listed below in order to arrive at a shared understanding of the performance issues, underlying causes, and planned licensee actions. These meetings may take place at periodic inspection exit meetings between the agency and the licensee, conference calls, or public meetings. This meeting should be documented in an inspection report or a public meeting summary, as appropriate. Licensee Action. Anticipated actions by the licensee in response to overall performance indicated by the appropriate column of the Action Matrix. If these actions are not being taken by the licensee then the agency may consider expanding the scope of the applicable supplemental inspection to appropriately address the area(s) of concern. This would not be considered a deviation from the Action Matrix in accordance with section 06.06.f of this manual chapter. NRC inspection. The range of NRC inspection activities in response to performance indicated by the appropriate column of the Action Matrix. Regulatory actions. Range of actions that may be taken by the agency in response to performance indicated by the appropriate column of the Action Matrix. Communication. Communication between the licensee and the NRC is based on a graded approach. For declining licensee performance, higher levels of agency management will review and sign the assessment letters and conduct the annual public meeting.
	b. Expected Responses for Performance in each Action Matrix Column. The Action Matrix lists expected NRC and licensee actions based on the inputs to the assessment process. Actions are graded such that the agency becomes more engaged as licensee performance declines. Listed below are the range of expected NRC and licensee actions for each column of the Action Matrix:
	Licensee Response Column. All assessment inputs are green. The licensee will receive only the baseline inspection program and identified deficiencies will be addressed through the licensee's corrective action program. Regulatory Response Column. Assessment inputs result in no more than one white input in any cornerstone and no more than two white inputs in any strategic performance area. The licensee is expected to place the identified deficiencies in its corrective action program and perform an evaluation of the root and contributing causes. The licensee's evaluation will be reviewed during inspection procedure 95001, "Supplemental Inspection for One or Two White Inputs in a Strategic Performance Area." Following completion of the inspection, the Branch Chief or Division Director should discuss the performance deficiencies and the licensee's proposed corrective actions with the licensee. The regulatory performance meeting will normally occur at an inspection exit meeting or a conference call between the licensee and the appropriate Branch Chief (or Division Director).
	3. Degraded Cornerstone Column. Assessment inputs result in a degraded cornerstone or 3 white inputs to any Strategic Performance Area. The licensee is expected to place the identified deficiencies in its corrective action program and perform an evaluation of the root and contributing causes for both the individual and the collective issues. The licensee's evaluation will be reviewed during inspection procedure 95002, "Supplemental Inspection For One Degraded Cornerstone Or Any Three White Inputs in a Strategic Performance Area." Also, an independent assessment of the extent of condition will be performed by the region using appropriate inspection procedures chosen from the tables contained in Appendix B to Inspection Manual Chapter 2515. Following completion of the inspection, the Division Director or Regional Administrator should discuss the performance deficiencies and the licensee's proposed corrective actions with the licensee. The regulatory performance meeting will normally consist of a public meeting between the licensee and the appropriate Division Director (or Regional Administrator).
	4. Multiple/Repetitive Degraded Cornerstone Column. Assessment inputs result in a repetitive degraded cornerstone, multiple degraded cornerstones, multiple yellow inputs or a red input. The licensee is expected to place the identified deficiencies in its corrective action program and perform an evaluation of the root and contributing causes for both the individual and the collective issues. This evaluation may consist of a third party assessment. Inspection procedure 95003, "Inspection for Repetitive Degraded Cornerstones, Multiple Degraded Cornerstones, Multiple Yellow Inputs, or One Red Input," will be performed to determine the breadth and depth of the performance deficiencies. Following the completion of the inspection, the EDO or his designee, in conjunction with the Regional Administrator and the Director of NRR, will decide whether additional agency actions are warranted. These actions could include additional supplemental inspection, a demand for information, a confirmatory action letter, or issuance of an order, up to and including a plant shutdown. The Regional Administrator should document the results of this meeting in a letter to the licensee. These regulatory actions may also be considered prior to the completion of inspection procedure 95003, if warranted. The regulatory performance meeting will normally consist of a public meeting between the licensee and the Regional Administrator (or Executive Director for Operations).

Note: The regulatory actions listed in this column of the Action Matrix are not mandatory. However, the regional office should consider each of these regulatory actions when significant new information regarding licensee performance becomes available.

5. Unacceptable Performance Column. Licensee performance is unacceptable and continued plant operation is not permitted within this column. In general, it is expected that entry into the multiple/repetitive degraded cornerstone column of the Action Matrix and completion of supplemental inspection procedure 95003 will precede consideration of whether a plant is in the Unacceptable Performance Column. The Commission will meet with senior licensee management in a regulatory performance meeting to discuss the licensee's degraded performance and the corrective actions which will need to be taken before operation of the facility can be resumed. The NRC oversight of plant performance will also be placed under the guidance of IMC 0350. Unacceptable performance represents situations in which the NRC lacks reasonable assurance that the licensee can or will conduct its activities without undue safety to public health and safety. Examples of unacceptable performance may include:

(a) Multiple significant violations of the facility's license, technical specifications, regulations, or orders.

(b) Loss of confidence in the licensee's ability to maintain and operate the facility in accordance with the design basis (e.g., multiple safety significant examples where the facility was determined to be outside of its design basis, either due to inappropriate modifications, the unavailability of design basis information, inadequate configuration management, or the demonstrated lack of an effective problem identification and resolution program).

(c) A pattern of failure of licensee management controls to effectively address previous significant concerns to prevent the recurrence.

Note: If the agency determines that a licensee's performance is unacceptable then a shutdown order will be issued.

06.06	Additional Action Matrix Guidance
	a.	Treatment of old design issues in the assessment process. The NRC may refrain from considering safety significant inspection findings in the assessment program for a finding in the engineering calculations or analysis, associated operating procedure, or installation of plant equipment that meets all of the following criteria:
		It was licensee-identified as a result of a voluntary initiative such as a design basis reconstitution. For the purposes of this manual chapter, self-revealing issues are not considered to be licensee-identified. Self-revealing issues are those deficiencies which reveal themselves to either the NRC or licensee through a change in process, capability or functionality of equipment, or operations or programs. It was or will be corrected, including immediate corrective action and long term comprehensive corrective action to prevent recurrence, within a reasonable time following identification (this action should involve expanding the initiative, as necessary, to identify other failures caused by similar root causes). It was not likely to be identified by routine licensee efforts such as normal surveillance or quality assurance activities. The finding does not reflect a current performance deficiency associated with existing licensee programs, policy, or procedure.
		The finding would be brought to a Significance and Enforcement Review Panel (SERP) and a Regulatory Conference, if applicable. The finding would be discussed in the appropriate assessment letter and displayed on the NRC's web site with its actual safety significance. The assessment letter should state that the finding is being considered for treatment as an old design issue pending the completion of the supplemental inspection. The regional office would conduct the appropriate follow-up supplemental inspection to determine if the conditions for treatment as an old design issue is warranted. As stated in the supplemental inspection procedures, the regional offices may take credit for previous inspection effort in completing the requirements of the procedure. If all of these conditions were met, the finding would not aggregate in the Action Matrix for the purpose of determining the appropriate level of agency response. This determination should be discussed at the supplemental inspection procedure exit meeting and documented in the inspection report cover letter.
		The purpose of this approach is to place a premium on licensees initiating efforts to identify and correct safety-significant issues that are not likely to be identified by routine efforts before degraded safety systems are called upon to work. The assessment program evaluates current performance issues and this approach excludes old design issues from consideration of overall licensee performance in the Action Matrix. The DRP or DRS Division Director will authorize this option with the concurrence of the Inspection Program Branch Chief. This is not considered a deviation from the Action Matrix in accordance with section 06.06.f of this manual chapter.
	b.	"Double-Counting"of performance indicators and inspection findings. Some issues may result in simultaneously crossing a performance indicator threshold and generating a safety significant inspection finding. This would result in two assessment inputs combining to cause increased regulatory action per the Action Matrix. For example, two white assessment inputs in the mitigating systems cornerstone would result in increased regulatory action per the degraded cornerstone column of the Action Matrix.
		Issues with the same underlying causes should not be "double-counted" in the assessment program. However, the most conservative significance characterization related to the performance indicator and the inspection finding (i.e., yellow vs. white) shall be used to determine the appropriate agency action according to the Action Matrix.
		Another example may include an inoperability of a support system that causes a white inspection finding as well as several performance indicators to cross the green/white threshold. Because the SDP characterization of the finding pertains to the same underlying issue, this should be considered a single white issue within a cornerstone and not "double-counted" in the assessment program. These examples are not considered a deviation from the Action Matrix as defined in section 06.06.f of this manual chapter.
	c.	Timeframe for "counting" inspection findings in the assessment program. The date used for consideration in the assessment program is the date of the end of the pertinent inspection period for the finding. After final determination of the significance of an inspection finding the regional office shall refer back to the appropriate date discussed above to determine if any additional action would have been taken had the significance of the inspection finding been known at that time.
		For example, the performance indicator for Unplanned Scrams was white (low to moderate safety significance) for the second quarter of the assessment cycle. Additionally, there was an inspection finding from the second quarter of the assessment cycle whose final safety significance was determined to be white (low to moderate safety significance) but this was not identified until the third quarter of the assessment cycle. In this case, the appropriate action would be to perform supplemental inspection procedure 950002 vice 95001. This would be communicated to the licensee in an Assessment Follow-Up Letter.
	d.	Timeframe for including performance indicators and inspection findings in the assessment program. There may be instances in which the corresponding supplemental inspection reveals substantive inadequacies in the licensee's evaluation of the root causes of the original performance deficiency, determination of the extent of the performance problems, or the actions taken or planned to correct the issue. Significant weaknesses in the licensee's evaluation of the performance issue (performance indicator or inspection finding) may be subject to additional agency action, including additional enforcement actions or an expansion of the supplemental inspection procedure as necessary to independently acquire the necessary information to satisfy the inspection requirements. Also, for inspection findings, the original performance issue will remain open and will not be removed from consideration in the assessment process until the weaknesses in the evaluation are addressed and corrected. The regional offices must convey the specific weaknesses that the licensee needs to address in order to remove this finding from consideration in the assessment process. The finding will be removed from consideration of future agency actions (per the Action Matrix) when the inadequacies in the licensee's efforts to address the issue have been corrected and four quarters of consideration of the original finding in the assessment program has been completed. This notification should be included in the cover letter of the supplemental inspection report and the finding will be removed from consideration in the assessment process at the end of that quarter.
		The correspondence to the licensee describing the extension of an inspection finding in the assessment process, beyond the normal four quarters, must be authorized by the appropriate regional Division Director with concurrence of the Inspection Program Branch (IIPB) Chief.
		For significant weaknesses in the licensee's evaluation of a performance issue that are associated with a performance indicator, a parallel performance indicator inspection finding will be opened and given the same color as the performance indicator. However, this finding will not be double-counted in the assessment process. The finding should be discussed at a Significance and Enforcement Review Panel (SERP) prior to notifying the licensee of the issuance of a parallel performance indicator inspection finding. In electing this option, there must be a strong causal link between the original performance deficiency and the ineffective corrective actions. The regional offices must convey the specific weaknesses that the licensee needs to address in order to remove this finding from consideration in the assessment process. The finding will be removed from consideration of future agency actions (per the Action Matrix) when the inadequacies in the licensee's efforts to address the issue have been corrected. This notification should be included in the cover letter of the supplemental inspection report and the finding will be removed from consideration in the assessment process at the end of that quarter. The correspondence to the licensee describing the parallel inspection finding must be authorized by the appropriate regional Division Director with concurrence of the Inspection Program Branch (IIPB) Chief.
		If this approach is taken by the agency, the regions should issue a violation under 10 CFR Part 50, Appendix B, Criterion XVI, "Corrective Action", if applicable.
	e.	Additional Supplemental Inspection Guidance. Generally, the supplemental inspection procedure associated with the most significant applicable column of the Action Matrix should only be performed on one occasion. One exception (see section 06.06.d for more details) is when the regional office has determined that the licensee has taken ineffective corrective action associated with a risk significant PI or inspection finding.
		Supplemental inspection procedure scopes should include all white, yellow, or red performance issues in the associated degraded cornerstone or strategic performance area. For example, if a 95002 inspection is being performed due to a yellow PI in the mitigating systems cornerstone, the inspection scope should also include any white PIs and inspection findings in that cornerstone. If a 95002 procedure is being performed due to three white findings in the reactor safety strategic performance area, the inspection scope should include any white PIs and inspection findings in the reactor safety strategic performance area.
		If a white finding or PI subsequently occurs in an unrelated cornerstone or strategic performance area, the associated supplemental inspection should be conducted at the appropriate level. For example, two white findings are discovered in the initiating events cornerstone which the region inspects using IP 95002. Additionally, a white inspection finding is discovered in the physical protection cornerstone. The regional office should inspect this finding using IP 95001.
	f.	Deviations from the Action Matrix. There may be rare instances in which the regulatory actions dictated by the Action Matrix may not be appropriate. In these instances, the agency may deviate from the Action Matrix (which is described in section 06.05.a of this manual chapter) to either increase or decrease agency action. A deviation is defined as any regulatory action taken that is inconsistent with the range of actions discussed in section 06.05 of this manual chapter. Deviations from the Action Matrix shall be documented in the appropriate letter to the licensee (i.e., assessment follow-up letter, mid-cycle or annual assessment letter). The Executive Director for Operations (EDO) shall approve all deviations from the Action Matrix. Memorandums requesting deviations from the Action Matrix should be initiated by the regional office to the EDO via the applicable Regional Administrator. Any deviations from the Action Matrix shall be documented in the Mid-Cycle or Annual Assessment Letter.
		Examples of when deviations from the Action Matrix may be considered are: 1) multiple examples of non-SDP Severity Level III or greater enforcement actions, or 2) A type of finding unanticipated by the SDP that results in an inappropriate level of regulatory attention when entered into the Action Matrix.
	g.	Transitioning to the IMC 0350 Process. The normal criteria for considering a plant for the IMC 0350 process is 1) plant performance is in the Multiple/Repetitive Degraded Cornerstone column or the Unacceptable Performance column of the Action Matrix, (2) the plant is shutdown to address these performance issues (whether voluntary or via an agency order to shutdown), (3) a regulatory hold is in effect, such as a Confirmatory Action Letter (CAL) or an agency order, and (4) an agency management decision is made to place the plant in the IMC 0350 process. Management considerations in placing a plant under the IMC 0350 process are discussed in IMC 0350. At this point, periodic assessment (quarterly, mid-cycle, and end-of-cycle) of licensee performance is no longer under the auspices of this manual chapter but is now under the IMC 0350 process. This process is more completely described in IMC 0350.
		The following are examples of the appropriate level of regulatory engagement between the agency and a licensee once a plant has entered the Multiple/Repetitive Degraded Cornerstone column of the Action Matrix and how IMC 0350 may be applied:
		Plant A continues to operate and regulatory engagement is dictated by the Multiple/Repetitive Degraded Cornerstone column of the Action Matrix. The agency performs supplemental inspection procedure 95003 (if not already performed) and the plant remains under the level of oversight dictated by this manual chapter and is not transferred to the IMC 0350 process. Plant B performs a voluntary shutdown to address performance issues. The agency performs supplemental inspection procedure 95003 (if not already performed) and issues a confirmatory action letter (CAL) to document licensee commitments to the agency. The plant remains under the level of oversight dictated by this manual chapter and is not transferred to IMC 0350 process. Plant C performs a voluntary shutdown to address performance issues. The agency issues a CAL to ensure a common understanding of licensee commitments to address the underlying performance deficiencies. The entry conditions for IMC 0350 have been met and agency management determines that this process should be implemented using the criteria in IMC 0350. At this point, periodic assessment of licensee performance is no longer dictated by this manual chapter and is transferred to the IMC 0350 process. Plant performance is not determined to be unacceptable. Plant D voluntarily shuts down to address performance issues. The agency determines that one of the criteria in paragraph 06.05.b for unacceptable performance is met. The plant is considered to be in the Unacceptable Performance column of the Action Matrix and a shutdown order is issued by the agency. The plant is transferred to the IMC 0350 process.
		5. Plant E, which is operating, is issued an order by the agency to shutdown because it is considered to have met one of the criteria in paragraph 06.05.b. The licensee's performance is declared to be unacceptable and the plant will be transferred to IMC 0350.
	h.	Substantive Cross-Cutting Issue. The ROP was developed with the presumption that plants which had significant performance issues with cross-cutting areas would be revealed through the existence of safety-significant PIs or inspection findings. Accordingly, there must be a significant level of concern in the licensee's ability or progress in addressing the cross-cutting area performance deficiency if the agency believes that there is a substantive cross-cutting issue at a plant. Therefore, the regions should only consider including a description of the cross-cutting deficiency in the Mid-Cycle or Annual Assessment letter if both of the following conditions are met:
		There are multiple green or safety significant inspection findings within the assessment period with documented causal factors in the areas of human performance, problem identification and resolution, or safety conscious work environment. The causal factors have a common theme. Examples would be when there are numerous instances of green findings in areas such as operations department personnel failure to follow procedures, ineffective evaluation of performance deficiencies, or inadequate system engineering support of operability determinations. Generally, a substantive cross-cutting issue should be corroborated by the existence of a significant number of causally linked findings in more than one cornerstone. However, it is recognized that given the significant inspection effort applied to the Mitigating Systems cornerstone, that a substantive cross-cutting issue may be observed through inspection findings associated with only this one cornerstone.
		The assessment letter should summarize the specific substantive cross-cutting issue including: identifying the number of examples in the various cornerstones, placing the cross-cutting issue into the proper safety perspective, describing the agency's action in the baseline program to monitor the issue, and stating the agency's assessment of the licensee's ability to address the substantive cross-cutting issue or the licensee's progress to correct the issue.
		If a substantive cross-cutting issue is discussed in a Mid-Cycle or Annual Assessment letter, then the next Annual or Mid-Cycle assessment letter should either state that the issue has been satisfactorily resolved or summarize the agency's assessment of the licensee's progress in addressing the issue.
	i.	Problem Identification and Resolution (PI&R) Inspections. Each time a facility enters the Degraded Cornerstone Column of the Action Matrix, the region should assess the benefit of performing an additional PI&R team inspection in accordance with IP 71152. A maximum of one additional inspection should be considered for the two year period following the quarter in which the facility reached the Degraded Cornerstone Column of the Action Matrix. In those instances where an additional inspection is deemed appropriate, the region should provide the basis for its decision to conduct the inspection in the appropriate assessment letter (Annual Assessment letter, Mid-Cycle letter, or Assessment Follow-up letter) to the licensee.

END

Exhibits: