Attachment 5

TECHNICAL BASIS FOR ENFORCEMENT

CONTENTS

[1 INTRODUCTION 2](#introduction)

[2 ENFORCEMENT AND THE SIGNIFICANCE DETERMINATION PROCESS
3](#enforcement-and-the-significance-determination-process)

[3 THE ENFORCEMENT APPROACH 4](#the-enforcement-approach)

[3.1 Violations Assessed using the SDP
4](#violations-assessed-using-the-sdp)

[3.2 Violations Subject to Traditional Enforcement Actions
5](#violations-subject-to-traditional-enforcement-actions)

[3.3 The Role of Enforcement Discretion Under the ROP
5](#the-role-of-enforcement-discretion-under-the-rop)

[3.4 Accuracy and Completeness of Performance Indicator Data
6](#accuracy-and-completeness-of-performance-indicator-data)

[4 SUMMARY OF CHANGES 6](#summary-of-changes)

[4.1 Section III, Responsibilities 7](#section-iii-responsibilities)

[4.2 Section IV, Assessing Significance
7](#section-iv-assessing-significance)

[4.4 Section VI, Disposition of Violations
8](#section-vi-disposition-of-violations)

[4.5 Section VI.B, Notice of Violation
8](#section-vi.b-notice-of-violation)

[4.6 Section VI.C, Civil Penalty 8](#section-vi.c-civil-penalty)

[4.7 Section VII.A, Escalation of Enforcement Sanctions
8](#section-vii.a-escalation-of-enforcement-sanctions)

[4.8 Section VII.B, Mitigation of Enforcement Sanctions
8](#section-vii.b-mitigation-of-enforcement-sanctions)

[4.9 Supplement I‑‑Reactor Operations
9](#supplement-ireactor-operations)

[4.10 Supplement VII‑‑Miscellaneous Matters
9](#supplement-viimiscellaneous-matters)

# 1 INTRODUCTION

As described in NUREG‑1600 (Ref. 23), the purpose of the NRC enforcement
program is to support the NRC\'s overall safety mission in protecting
the public health and safety and the environment. NRC requirements were
developed to ensure adequate protection or no undue risk to public
health and safety through design, construction operation, maintenance,
modification, and quality assurance measures. Consistent with that
purpose, enforcement actions have been used as a deterrent to emphasize
the importance of compliance with these requirements and to encourage
prompt identification and prompt, comprehensive correction of
violations.

Historically, the Enforcement Policy provided vigorous enforcement
sanctions when dealing with licensees, contractors, and their employees
who did not achieve the high standard of compliance with NRC
requirements. The enforcement program: (1) assesses the significance of
individual inspection findings and events, (2) formulates the
appropriate agency response to these findings and events, (3) emphasizes
good performance and compliance, (4) provides incentives for performance
improvement, and (5) provides public notification of the NRC's views on
licensees' performance and actions. It is noteworthy that while there
have been substantial changes to the enforcement program since 1980, the
basic theory of enforcement using sanctions, including the use of civil
penalties to deter noncompliance, has been used by the Commission for
almost thirty years. In sum, escalated enforcement actions have been
used to provide regulatory messages in the context of sanctions to
encourage licensees to improve their performance.

However, the enforcement program was not designed to be integrated with
the performance assessment process. This may have resulted in mixed
regulatory messages regarding the NRC's assessment of licensee
performance and improvement initiatives. The development of the Reactor
Oversight Process (ROP) with a more structured performance assessment
process, including a process to evaluate the significance of individual
violations with more predictable regulatory responses through its Action
Matrix, provided an opportunity to integrate assessment and enforcement.
In adopting this approach to enforcement, the staff's goal was to
provide a more predictable and scrutable ROP, a greater agency focus on
risk and performance, and to address the improved overall performance
exhibited as a result of the maturing of the industry. This was
identified as an opportunity to implement an approach to enforcement
that would better integrate with the overall ROP. The ROP was intended
to provide functions similar to the traditional enforcement program. For
example both:

-   evaluate individual compliance findings for significance.

-   result in formulating agency responses to violations and performance
    issues, the traditional enforcement program through sanctions such
    as citations and penalties and the ROP through citations and the
    Action Matrix. Both use meetings to discuss deteriorating
    performance, 50.54(f) letters, Demands for Information, Confirmatory
    Action Letters, and Orders.

-   provide incentives to improve performance and compliance as they
    provide measures of deterrence since licensees normally strive to
    avoid regulatory actions and enforcement sanctions.

-   provide the public with the NRC views on the status of licensees'
    performance and compliance.

Given the similarities in the purposes of the two processes, it was
determined that the assessment process should complement the enforcement
program by focusing on individual violations. The agency response to
declining performance, whether caused by violations or other concerns,
is dictated by the Action Matrix. The result was to be a unified
approach within the agency for determining and responding to performance
issues of a licensee that: (a) maintained a focus on safety and
compliance, (b) was more consistent with predictable results, (c) was
more effective and efficient, (d) was easily understandable, and
(e) decreased unnecessary regulatory burden. It should, therefore,
promote openness in the regulatory process.

# 2 ENFORCEMENT AND THE SIGNIFICANCE DETERMINATION PROCESS

The Significance Determination Process (SDP) was developed as the
predominant agency method for characterizing the significance of power
reactor inspection findings or performance deficiencies on the basis of
their risk significance to ensure a consistent approach between the
enforcement program and the assessment process. In order to achieve
optimum levels of integration between assessment and enforcement, the
enforcement program was modified to utilize the final significance
determination from the SDP as a means of characterizing the significance
of the associated violation.

The significance of a finding under the new assessment process may
differ from that under the traditional enforcement program because of
program focus shifts and the new methodologies developed for the SDP.
The traditional enforcement program focuses on the cause of violations,
as well as the consequence resulting from the violations. In some cases,
the root cause was perceived to be more significant than the
consequence. The SDP for three of the seven safety cornerstones uses
risk analysis to calculate the effect of equipment degradation on the
ability of the licensee to mitigate an accident and the resulting change
in core damage frequency (ΔCDF). Each performance deficiency is
evaluated to determine its risk significance and formulate an input to
the assessment process. Performance deficiencies in a risk range of
greater than 10^‑6^ ΔCDF are evaluated as \"significant\" and are
assigned the color White, Yellow, or Red for assessment purposes.
Performance deficiencies evaluated at less than 10^‑6^ ΔCDF are not be
considered significant and are assigned the color Green. Within the
remaining four cornerstones (occupational radiation safety, public
radiation safety, physical protection, and emergency preparedness),
performance deficiencies are analyzed to categorize the significance of
findings using a set process.

To make the ROP significance determination results consistent with the
enforcement policy, the significance categories were determined to
relate approximately as follows:

-   Green ‑ Severity Level IV

-   White ‑ Severity Level III

-   Yellow ‑ Severity Level II

-   Red ‑ Severity Level I

An assessment process that was based on severity levels with sanctions
similar to the traditional enforcement program could have been used.
Although this option would preserve a more traditional approach to
enforcement, there were a number of questions as to whether it was a
viable approach. The SDP often requires a case specific risk analysis
that relies on a unique set of inputs and assumptions. The lack of
standards for the development of inputs, assumptions, and methodologies
for these types of risk assessments, and the lack of fidelity in
Probabilistic Risk Assessments (PRAs), made decisions to cite a
deficiency at a particular severity level difficult to defend when
confronted with a licensee's differing inputs, assumptions, and risk
assessment methodology. Further, mixed messages could occur as
enforcement action resulting from the traditional enforcement approach
could be inconsistent with the actions called for in the Action Matrix,
which has the ability to assign actions based on the significance of
multiple inspection findings in both related and unrelated areas.

# 3 THE ENFORCEMENT APPROACH

The assessment process provides many of the functions and objectives
inherent in the traditional enforcement program. In light of the
maturing of the industry and overall improved performance of licensees,
a new enforcement approach was developed to complement the assessment
process. In developing this new approach, the staff identified the
following objectives:

-   Enforcement needs to be consistent with the safety philosophy of the
    assessment process.

-   Enforcement needs to maintain an emphasis on compliance.

-   Enforcement needs to be simplified and predictable to create an
    efficient and effective process.

-   Enforcement needs to support openness in the NRC regulatory process.

-   Enforcement should neither create nor perpetuate unnecessary
    regulatory burdens.

The current enforcement program divides violations into two groups,
violation whose significance can be evaluated under the SDP and those
violations outside the capability of the SDP. The second group would
consist of willful violations, violations that may impact the NRC's
ability for oversight of the regulatory process, and violations which
result in actual safety consequences, such as overexposure, loss of
radioactive material, core damage, or loss of significant safety
barriers.

## 3.1 Violations Assessed using the SDP

Initially, violations are evaluated to determine the appropriate
significance, which will determine whether formal or informal
enforcement action should be taken. Normally, this evaluation would
result in a preliminary severity level. For performance deficiencies
evaluated using the SDP, however, a color would be identified rather
than a severity level. Performance deficiencies determined not to be
significant from a risk perspective (assigned the color Green) are
inputs into the assessment process in the licensee response band in the
Action Matrix. Such violations are considered for informal enforcement
and treated as Non‑Cited Violations (NCVs) consistent with the criteria
in the Enforcement Policy for reactor Severity Level IV violations. For
reactor cases, a Notice of Violation (NOV) would normally not be issued
for a Severity Level IV violation or Green finding unless: (1) the
licensee fails to restore compliance within a reasonable time after the
violation was identified, (2) the licensee fails to place the violation
into the corrective action program to address recurrence, (3) the
violation was willful, or (4) the violation was repetitive as a result
of inadequate corrective action and unidentified by the NRC. Note: This
exception does not apply to violations associated with Green SDP
findings. The last criterion applies to traditional enforcement only. In
other words, under the ROP, if a finding associated with a violation is
determined to be of very low safety significance, the violation will be
treated as an NCV, regardless of the number of times the violation is
repeated.

Performance deficiencies that are evaluated using the SDP as risk
significant are assigned a preliminary color related to their
significance (White, Yellow, or Red) and are considered for escalated
enforcement action. As a result of being risk‑significant, a formal NOV
will normally be issued requiring a formal written response unless
sufficient information is already on the docket. Although this approach
may have some of the same concerns as noted above by using
non‑standardized assumptions and methodologies for assessing risk, it is
expected to be easier to determine whether a violation is
risk‑significant (i.e., at least White) than to determine and defend a
severity level based on the specific color assigned (i.e., White,
Yellow, or Red). The enforcement approach is based on the significance
of the violation independent of the overall Action Matrix response band
that the licensee is in at the time.

The Action Matrix is used to formulate the agency response and to
emphasize the need to improve performance for safety‑significant
performance deficiencies. Regulatory performance meetings and other
actions as determined by the Action Matrix are held, if called for in
the Action Matrix based on the specific performance deficiency or the
overall performance of the licensee. Use of the Action Matrix with its
escalating responses, (e.g., increased inspection, regulatory attention,
and regulatory actions) should provide appropriate incentives and should
deter licensee's from being in the increased regulatory response band.
This approach is expected to result in enforcement complementing
assessment, maintaining consistency, and promoting a predictable and
unified regulatory message. If consistently applied, it should build
openness.

## 3.2 Violations Subject to Traditional Enforcement Actions

The traditional enforcement program is used with the second group of
violations, those involving: (1) willfulness, including discrimination,
(2) actions that may impact the NRC's ability for oversight of licensee
activities[^1], and (3) situations which result in actual safety
consequences, such as overexposure, loss of radioactive material, core
damage, or loss of significant safety barriers. A more traditional
enforcement approach is warranted for deterrence. This approach would
retain the four severity levels and civil penalties under the current
Enforcement Policy.

## 3.3 The Role of Enforcement Discretion Under the ROP

The Enforcement Policy has been modified to clarify that the mitigation
discretion addressed in Sections VII.B.2 ‑ VII.B.6 (e.g., violations
identified during shutdowns, involving past enforcement actions, old
design issues, certain discrimination issues, or special circumstances)
does not normally apply to violations associated with issues evaluated
by the SDP. The ROP will use the Action Matrix to determine the agency
response to performance issues. The Action Matrix has provisions to
consider extenuating circumstances that were previously addressed
through enforcement mitigation. However, the Commission has reserved the
right to use enforcement discretion for particularly significant
violations (e.g. an accidental criticality) to assess civil penalties in
accordance with Section 234 of the Atomic Energy Act of 1954.

## 3.4 Accuracy and Completeness of Performance Indicator Data

The staff proposed a unique approach for addressing the accuracy and
completeness of performance indicator (PI) data. In order to fulfill its
regulatory obligations, the NRC is dependent upon its licensees for
complete and accurate information. The Commission uses the requirements
of 10 CFR 50.9 as the primary means of enforcing its expectations for
complete and accurate information from reactor licensees. The staff's
proposed approach maintains this focus. Unlike previous practice with
respect to 10 CFR 50.9 violations, the proposed approach does this
through both the Action Matrix and enforcement sanctions. The proposed
severity level categorizations of 10 CFR 50.9 violations for inaccurate
or incomplete PI data recognizes that an enforcement sanction is one
part of the overall regulatory response to the change in PI data. The
Action Matrix will cause the staff to consider specific regulatory
responses based upon the corrected PI data. An enforcement sanction is
appropriate because the inaccurate PI data prevented or delayed the
appropriate NRC actions which would have taken place had accurate
information been provided. The staff recognized that the use of
thresholds in the ROP result in a situation where errors of the same
magnitude may not receive identical enforcement treatment. However,
under the ROP, the magnitude of the error in and of itself is not
critical, but rather it is the impact on the regulatory process that is
important. Inaccurate or incomplete PI data that prevented the proper
entry into the Yellow or Red performance band (i.e., required regulatory
response, unacceptable performance, respectively) is more significant
than an error that prevented entry into the White band (increased
regulatory response). Thus, there is an appropriate distinction between
Severity Level III and IV. The staff believes that a Severity Level III
enforcement action is a significant action and in combination with the
Action Matrix provisions places a strong emphasis on accuracy and
completeness of information. The ROP actions might include increased PI
verification inspections, Demands for Information, or Orders.
Enforcement sanctions greater than Severity Level III are not necessary
for non‑willful violations because once the PI data error is corrected,
the agency will initiate actions in accordance with the Action Matrix.
If a licensee is not capable of reporting accurate and complete data,
the NRC will consider other ROP actions. In addition, there is no need
to distinguish between the errors that prevented the proper entry into
either the Yellow or Red performance bands in terms of enforcement
severity levels because the agency response (Action Matrix and
enforcement action) will now address the differences in significance
through an approach that integrates various escalating regulatory tools
of which enforcement is but one. The ROP and the Enforcement Policy
provide a strong incentive for licensees to submit complete and accurate
PI data.

# 4 SUMMARY OF CHANGES

The following are some of the more significant changes made to the
Enforcement Policy in response to implementation of the ROP. The last
complete revision that was issued as a NUREG series publication
(NUREG-1600) was dated May 1, 2000. Changes to this policy are published
in the Federal Register. (Ref. 24).

## 4.1 Section III, Responsibilities

The term \"escalated enforcement action\" has been expanded to include
an NOV associated with an inspection finding that the SDP evaluates as
low to moderate (White), or greater safety significance. These actions
warrant consideration as escalated actions given the risk significance
associated with the violations.

## 4.2 Section IV, Assessing Significance

This section has been modified to address violations associated with
inspection findings evaluated through the SDP. The NRC will continue to
assess significance by considering: (1) actual safety consequences;
(2) potential safety consequences, including the consideration of risk
information; (3) potential for impacting the NRC's ability to perform
its regulatory function; and (4) any willful aspects of the violation.
Paragraph (5) has been added to recognize that with implementation of
the ROP, the NRC will rely on inputs from the SDP to address violations
associated with inspection findings evaluated through the SDP.
Consistent with the guidance previously included in the Interim Policy,
violations associated with findings that the SDP evaluates as having
very low safety significance (i.e., Green) will normally be described in
inspection reports as NCVs. The finding will be categorized by the
assessment process within the licensee response band. However, a NOV
will be issued if the issue meets one of the three applicable exceptions
in Section VI.A.1. Violations associated with findings that the SDP
evaluates as having low to moderate safety significance (i.e., White),
substantial safety significance (Yellow), or high safety significance
(Red) will normally be cited in an NOV requiring a written response
unless sufficient information is already on the docket. The finding will
be assigned a color related to its significance for use by the
assessment process. Violations associated with issues that do not lend
themselves to a risk analysis (i.e., potential for impacting the NRC's
function and willfulness), will be evaluated in accordance with the
guidance in paragraphs (1) through (4) of this section. The guidance
also notes that the Commission reserves the use of discretion for
particularly significant violations (e.g. an accidental criticality) to
assess civil penalties in accordance with Section 234 of the Atomic
Energy Act of 1954, as amended.

4.3 Section V, Predecisional Enforcement Conferences

This section has been modified to address the relationship between
Regulatory Conferences and the enforcement program. The ROP uses
Regulatory Conferences as opportunities for the NRC and licensees to
discuss the significance of findings evaluated through the SDP whether
or not violations are involved. The Enforcement Policy has been revised
to state that Regulatory Conferences may be conducted in lieu of
predecisional enforcement conferences if violations are associated with
potentially significant findings under the ROP. While the primary
function of a Regulatory Conference is on the significance of findings,
the significance assessment from the SDP provides an input into the
enforcement program in terms of whether escalated enforcement action
(i.e., an NOV associated with a White, Yellow, or Red finding) should be
issued. Given this process, a subsequent predecisional enforcement
conference is not normally necessary.

## 4.4 Section VI, Disposition of Violations

This section has been renamed and modified by consolidating all of the
guidance on the normal approach for dispositioning violations. Depending
on the significance and circumstances, violations may be considered
minor and not subject to enforcement action, dispositioned as NCVs,
cited in NOVs, or issued in conjunction with civil penalties or orders.
The NCV guidance has been moved out of Section VII.B.1 of the Policy
that discusses special types of mitigation discretion and into this
section because issuance of an NCV is a routine method for
dispositioning Severity Level IV violations and violations associated
with Green SDP findings. For consistency, the guidance in Section VI.A.8
for dispositioning Severity Level IV violations for all licensees other
than power reactor licensees has been reworded to express the guidance
in terms of conditions when an NOV should be issued rather than criteria
for dispositioning a violation as an NCV.

## 4.5 Section VI.B, Notice of Violation

This section has been modified to state that the NRC may require that a
response to an NOV be under oath if the violation is associated with a
low to moderate, or greater safety significant finding as evaluated by
the SDP. This is consistent with the agency's existing practice of
requiring that an NOV response be under oath for Severity Level I, II,
or III violations.

## 4.6 Section VI.C, Civil Penalty

This section has been modified to state that civil penalties are also
considered for violations associated with inspection findings evaluated
through the ROP's SDP that involved actual consequences, such as an
overexposure to the public or plant personnel above regulatory limits,
failure to make the required notifications that impact the ability of
Federal, State and local agencies to respond to an actual emergency
preparedness event (site area or general emergency), transportation
event, or a substantial release of radioactive material. This is
consistent with the Interim Policy, in that civil penalties will not be
proposed for violations associated with low to moderate, or greater
safety significant findings absent actual consequences.

## 4.7 Section VII.A, Escalation of Enforcement Sanctions

Consistent with the Interim Policy, this section has been modified to
recognize that the NRC may also exercise discretion and assess civil
penalties for violations associated with significant findings evaluated
by the ROP's SDP that the NRC believes warrant penalties. Exercise of
this discretion is expected to be rare.

## 4.8 Section VII.B, Mitigation of Enforcement Sanctions

This section has been modified by adding footnote 10 to clarify that the
mitigation discretion addressed in Sections VII.B.2 ‑ VII.B.6 does not
normally apply to violations associated with issues evaluated by the
SDP. The revised ROP will use the Action Matrix to determine the agency
response to performance issues. The Action Matrix has provisions to
consider extenuating circumstances that were previously addressed
through enforcement mitigation.

## 4.9 Supplement I‑‑Reactor Operations

Examples C.9, C.10, D.5, and E involving changes, tests, and experiments
(i.e., 10 CFR 50.59) have been modified. The previous examples were
developed in conjunction with the final rule for 10 CFR 50.59 and were
based on the \"change acceptability\" criterion, i.e., whether the
changes would be found acceptable by the Commission. Before publication
of the final rule, the NRC determined that the change acceptability
criterion was not conducive to efficient or effective enforcement or
regulation. The inefficiency stemmed from the fact that, in many
instances, the acceptability of a change could not be determined without
having the type of information that would be provided with the formal
submission of a license amendment. Taking enforcement action after the
often lengthy evaluation of a license amendment was not considered
effective. The examples have been modified by basing the significance of
the 10 CFR 50.59 or related violation on the resulting physical,
procedural, or analytical change to the facility as evaluated through
the SDP. This will ensure a consistent approach for significance
determinations. Violations will be categorized at Severity Level III if
the resulting change were evaluated by the SDP as having low to
moderate, or greater safety significance (i.e., White, Yellow, or Red
finding). Violations will be categorized at Severity Level IV if the
resulting change were evaluated by the SDP as having very low safety
significance (i.e., Green finding). Violations will be considered minor
if there was not a reasonable likelihood that the change requiring 10
CFR 50.59 evaluation would ever require Commission review and approval
prior to implementation. Violations of 10 CFR 50.71(e) will be
considered minor if the failure to update the Final Safety Analysis
Report would not have a material impact on safety or licensed
activities.

## 4.10 Supplement VII‑‑Miscellaneous Matters

New examples (C.3, D.3, and E) have been added to address inaccurate or
incomplete PI data from the ROP. Inaccurate or incomplete PI data that
would have caused a PI to change from Green to White are categorized at
Severity Level IV. Inaccurate or incomplete PI data that would have
caused a PI to change from Green to either Yellow or Red; White to
either Yellow or Red; or Yellow to Red are categorized at Severity Level
III. Inaccurate PI data that would not have caused a PI to change color
are considered minor. Consistent with existing policy, enforcement
action is not taken for minor violations.

Revision History For IMC 0308, Attachment 5

+--------+-------+--------------------+------+----------+--------------+
| Comm   | Issue | Description of     | Trai | Training | Comment      |
| itment | Date  | Change             | ning | Co       | Resolution   |
| Tr     |       |                    | Ne   | mpletion | Accession    |
| acking |       |                    | eded | Date     | Number       |
| Number |       |                    |      |          |              |
+--------+-------+--------------------+------+----------+--------------+
| N/A    | 10/   | This IMC has been  | None | N/A      | N/A          |
|        | 16/06 | revised to         |      |          |              |
|        |       | incorporate        |      |          |              |
|        | CN    | comments from the  |      |          |              |
|        | 0     | Commission in      |      |          |              |
|        | 6-027 | which the term     |      |          |              |
|        |       | public confidence  |      |          |              |
|        |       | has been change to |      |          |              |
|        |       | openness           |      |          |              |
+--------+-------+--------------------+------+----------+--------------+
|        |       |                    |      |          |              |
+--------+-------+--------------------+------+----------+--------------+
|        |       |                    |      |          |              |
+--------+-------+--------------------+------+----------+--------------+
|        |       |                    |      |          |              |
+--------+-------+--------------------+------+----------+--------------+
|        |       |                    |      |          |              |
+--------+-------+--------------------+------+----------+--------------+

[^1]: Violations that involve actions that may impact the regulatory
    oversight process include those associated with reporting issues,
    failure to obtain NRC approvals such as for changes to the facility
    as required by 10 CFR 50.59, 10 CFR 50.54(a), 10 CFR 50.54 (p), 10
    CFR 50.54 (q), and failure to provide the NRC with complete and
    accurate information or to maintain accurate records.