In response to reports from the NRC’s Office of Inspector General (OIG) and a tasking order from the NRC's executive director of operations (EDO) directing a review of NRC oversight of “counterfeit, fraudulent, and suspect items” (CFSI) in all regulated activities, the directors of the NRC's Offices of Nuclear Reactor Regulation (NRR) and Nuclear Material Safety and Safeguards (NMSS) jointly issued a memorandum on March 4 concluding that “there is no evidence that CFSIs have adversely challenged the safety of reactor facilities” or any licensed activities. However, the NRC Staff's activities evaluating whether program improvements are necessary to address the risks posed by CFSI remain ongoing, with a final report expected in mid-April.
Ultimately, the OIG’s findings regarding the potential for CFSI at a nuclear reactor and its challenge to the NRC’s oversight of CFSI issues may prompt calls for changes from the NRC, Congress, and/or the public, notwithstanding that the NRC Staff found no threats to safety. The ongoing NRC Staff efforts to evaluate program improvements in response to the OIG's reports also present an opportunity for stakeholders to engage with the NRC on the necessary steps to address the potential impacts from CFSI.
Background
In mid-February, the OIG issued two reports regarding CFSI in US nuclear power plants. The first report focused on the NRC's oversight and identification of CFSI-related issues, while the second report focused on alleged incidents involving CFSI in the US nuclear reactor fleet.
With respect to nuclear reactors, 10 CFR Part 50, Appendix B (Appendix B) establishes “quality assurance requirements for the design, manufacture, construction, and operation” of specific nuclear items to provide “adequate confidence that [they] will perform satisfactorily in service.” A commercial grade dedication process also exists to ensure that items not designed specifically for nuclear use also will meet Appendix B requirements.
Similar quality assurance requirements are found in 10 CFR Part 70 (nuclear fuel cycle facilities), 10 CFR Part 71 (transportation of nuclear material), and 10 CFR Part 72 (storage of spent nuclear fuel and high-level waste), as well as requirements that licensees perform integrated safety reviews and evaluate operating experience that might identify CFSI trends. Entities constructing, owning, operating, or supplying items relied on for safety are required to report defects that could create a substantial safety hazard under 10 CFR Part 21.
OIG Reports on CFSI
The OIG reports highlight that known issues involving CFSI at nuclear power plants are rare; however, the threat posed by CFSI warrants vigilance. In the first report, the OIG examined the NRC's vendor inspection program, oversight of licensee programs (including the corrective action programs at licensee sites), and reliance on third-party organizations to help ensure Appendix B requirements are met. In sum, the OIG found that improvement is needed with respect to how the NRC “collects, assesses, and disseminates information” regarding CFSI at nuclear power reactors.
The second report included an investigation into allegations of CFSI being used in US nuclear power plants and found that (1) CFSI have been used on three occasions in a US nuclear power plant; (2) NRC licensees do not track CFSI issues in their corrective action programs; and (3) the NRC has not processed allegations involving CFSI in its allegation program for several years. The OIG stated that the NRC Staff had also identified potential gaps in the reporting requirements associated with CFSI.
The OIG’s findings from its first report resulted in several recommendations to the NRC, including, but not limited to, the following:
- Develop processes and guidance to collect, process, and disseminate CFSI information
- Develop an NRC-wide approach to address issues involving CFSI
- Include allegations involving CFSI in the NRC’s Allegation Management System
- Develop inspection guidance on CFSI issues in inspection procedures
- Develop training on CFSI issues for NRC inspectors
NRC Staff Response to OIG Reports
In response to the OIG reports, the EDO issued a memorandum tasking a prompt review of whether there are near-term safety concerns. Longer term, EDO directed the NRR, NMSS, and Offices of Nuclear Security and Incident Response, Enforcement, and Investigations to jointly “assess the risk posed by CFSI and provide recommendations, that may be warranted, on the current oversight program or related agency processes for CFSI,” including the basis for the recommendations or decisions whether changes are necessary. Finally, the EDO directed the Office of Enforcement to review the allegations cited in the OIG's report to verify proper handling of the cases and whether the allegation process needs to be revised.
The NRR and NMSS reported on March 4 that for facilities regulated by the NRR, “there is no evidence that CFSIs have adversely challenged the safety of reactor facilities,” noting that “defense-in-depth measures at reactor facilities are adequate to mitigate potential failures introduced by CFSIs; and failure introduced from any potential CFSIs in [systems, structures, and components (SSCs)] would have an overall small increase in risk, minimal impact on safety margin, and negligible impact on the public health and safety.” Similarly, the NMSS concluded that “CFSI hazards are adequately minimized or mitigated” and that adherence to NRC “requirements and the defense-in-depth measures provides confidence that CFSI will either be prevented, identified, and addressed or mitigated in a timely manner if issues arise.”
With respect to nuclear reactors, the NRR concluded that data collected from licensees “does not support the existence of CFSI in SSCs that could adversely impact plant safety,” such that the “issue can be characterized as having very low safety-significance.” Indeed, the NRR concluded that the change in core damage frequency risk due to the potential CSFI-caused failure of a safety-related SSC was less than one in 10,000 per year for the most likely type of components that the NRC Staff inferred would be impacted in the OIG's report. The NRR explained that this core damage frequency risk change would have only a “negligible impact on the safety margin.” The NRR also stated that although the NRC's regulations do not define CFSI, its regulatory guidance on 10 CFR Part 21 defect evaluations “does clarify the need to consider counterfeit and suspect items as a deviation that should be evaluated.”
Similarly, the NMSS concluded that “the existence of CFSI in materials and waste program facilities that could present immediate safety concerns or areas of increased risk significance are not supported by information available and assessed.” The NMSS also concluded that it had “reasonable assurance that the existing measures implemented in the materials and waste program provide the tools to prevent, mitigate, and respond to the presence of potential CFSI.”
The OIG reports’ findings may attract attention from the NRC, Congress, or the public as well as calls for changes that could impact nuclear power plant operators and their suppliers. Morgan Lewis will continue to follow this issue and provide updates.