**ATTACHMENT 0609.02**

**PROCESS FOR APPEALING NRC CHARACTERIZATION**

**OF INSPECTION FINDINGS**

**(SDP APPEAL PROCESS)**

1\. Purpose

To define the process by which a licensee may appeal the staff=s final
significance determination of an inspection finding documented in an NRC
inspection report or final significance determination letter as White,
Yellow, or Red. Consistent with the intent of the significance
determination process (SDP) to assess significance in a timely manner
using the best available information, the staff should be cautious to
ensure that the appeal process does not become a protracted review
requiring extensive staff resources.

2\. Prerequisites

It is assumed that prior to issuing the final significance
determination, Acoloring@ the finding, and documenting this in an
inspection report, including the SDP basis for significance, the staff
would have completed the following:

a.  Applying the best available information, the responsible inspector
    would have established the licensee=s performance deficiency and
    characterized the finding as potentially greater than Green. Using
    the applicable SDP Appendix, the inspector/analyst would have
    determined the proposed preliminary color for the finding (White,
    Yellow, Red, or Greater Than Green).

b.  Each finding that the staff=s significance determination has
    preliminarily characterized AWhite, Yellow, Red, or Greater Than
    Green@ would have been presented to and reviewed by the NRC
    Significance and Enforcement Review Panel (SERP). Subsequently, the
    staff would have informed the licensee of the preliminary
    characterization of the issue in a choice letter which included an
    invitation for the licensee to present additional information.

c.  If the licensee opted for an opportunity to present additional
    information to the staff either by meeting with regional management
    at a Regulatory Conference or by submitting additional information
    in writing on the docket, such information would have been reviewed
    and dispositioned by the staff.

d.  The staff has sent the licensee a letter which states the staff=s
    final significance determination and broadly responds to the
    information provided by the licensee.

3\. Limitations

Once the above prerequisites have been met, licensee appeals to reduce
the significance of an inspection finding will be considered as having
sufficient merit for review by this appeal process only if the
licensee=s contention falls into one of the following categories:

a.  The staff=s significance determination process was inconsistent with
    the applicable SDP guidance or lacked justification. Issues
    involving the staff=s choice of probabilistic risk modeling
    assumptions used in the SDP will not be considered appealable under
    this process, provided the staff documented its justification in
    those cases where the licensee presented a different point of view.

b.  Actual (verifiable) plant hardware, procedures, or equipment
    configurations, identified by the licensee to the NRC staff at the
    Regulatory Conference or in writing prior to the staff reaching a
    final significance determination, was not considered by the staff.

c.  A licensee submits new information which was not available at the
    time of the Regulatory Conference. New information will only be
    considered if the licensee informed the NRC during the Regulatory
    Conference, or in their written response to the preliminary
    significance determination that specify additional information was
    under development. It must be provided within the 30 day appeal
    period discussed below and it must be complete at the time of the
    submittal.

4\. Inspection Report Cover Letter Transmitting Final Significance
Determination

The following statement will be added to each inspection report cover
letter or other official correspondence that transmits an inspection
finding of White, Yellow, or Red significance:

> AYou have 30 calendar days from the date of this letter to appeal the
> staff=s determination of significance for the identified
> \[white/yellow/red\] finding\[s\]. Such appeals will be considered to
> have merit only if they meet the criteria given in NRC Inspection
> Manual Chapter 0609, Attachment 2.@

5\. Appeal Process

a.  The licensee must submit its letter of appeal to the Regional
    Administrator (RA) within 30 calendar days of the date of the
    transmittal letter.

b.  The RA should determine within 30 calendar days of the receipt of
    the licensee=s appeal request whether the appeal meets the above
    merit guidelines. Following the determination, but still within the
    30 calendar days, the RA should inform the licensee in writing of
    the decision and its basis. NRR or NSIR (for Security and emergency
    planning), should concur on the decision to accept the appeal.

c.  If the appeal is accepted, the associated review and written
    notification to the licensee stating the results of the appeal
    review should be limited to 30 calendar days following the
    acceptance of the appeal. The RA will appoint an appeal panel
    consisting of, at a minimum, two technical experts in the
    cornerstone being discussed and an enforcement specialist. The RA
    may also request representation by the Office of General Counsel.
    The cornerstone experts for initiating events, mitigation systems,
    and barriers will be two persons with risk analysis experience (one
    from the RA=s regional office and one from headquarters). Other
    persons with related technical expertise may also be appointed from
    any regional or headquarters office. At least one panel member will
    not have had prior involvement with the significance determination
    under appeal. The principal purpose of the panel is to arrive at a
    consensus regarding the validity of the licensee=s appeal.

d.  The appeal panel will review the inspection finding, its
    significance characterization and basis, any new information that
    was being developed at the time of the Regulatory Conference, and
    the licensee=s points of contention. The panel will conduct its
    review based only on docketed information either provided by the
    licensee, issued by the staff, or otherwise publicly available. The
    panel may recommend one of the following:

    1.  No further action and the significance determination is
        unchanged, or

    2.  more detailed justification of the basis for the significance
        determination is required, or

    3.  change the significance determination (either increase or
        decrease), as appropriate.

> The panel may also recommend changes to the SDP, regardless of whether
> such changes would affect the outcome of the appeal under review.

e.  The appeal panel will provide their conclusions to the SERP in
    writing. Within 10 working days of the date of the appeal panel=s
    conclusions, the SERP will consider the results of the appeal panel.
    The SERP will provide the results of their review to the RA, and to
    the Director of NRR, or the Director of NSIR (for security or
    emergency planning), within 5 working days.

f.  Within five working days of receiving the final recommendation
    memorandum, the RA and the Director of NRR, or the Director of NSIR
    (for security or emergency planning) will confer and jointly agree
    on the final decision. Subsequently the RA will notify the licensee
    in writing of the final agency position.

g.  The results of the appeal process are final with no further avenues
    for appeal within the significance determination process.

END

ATTACHMENT 1

Revision History For IMC0609.02, ASDP Appeal Process.@

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| Comm   | Issue | Description of      | Tr     | Tra   | Comment      |
| itment | Date  | Change              | aining | ining | Resolution   |
| Tr     |       |                     | Needed | Compl | Accession    |
| acking |       |                     |        | etion | Number       |
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| N/A    | CN    | editorial, such as  | No     | N/A   | N/A          |
|        | 0     | title changes for   |        |       |              |
|        | 5-030 | concurring          |        |       |              |
|        |       | managers,           |        |       |              |
|        | 11/22 | redefining          |        |       |              |
|        | /2005 | limitations.        |        |       |              |
+--------+-------+---------------------+--------+-------+--------------+
| N/A    | CN    | This revision       | > No   | N/A   | ML080280240  |
|        | 0     | provides additional |        |       |              |
|        | 8-004 | detail for          |        |       |              |
|        |       | considering SDP     |        |       |              |
|        | 01/   | appeals. The        |        |       |              |
|        | 31/08 | addition of a       |        |       |              |
|        |       | Prerequisites       |        |       |              |
|        |       | section,            |        |       |              |
|        |       | establishment of    |        |       |              |
|        |       | new time limits, 30 |        |       |              |
|        |       | calendar days for   |        |       |              |
|        |       | merit determination |        |       |              |
|        |       | plus additional 30  |        |       |              |
|        |       | calendar days for   |        |       |              |
|        |       | completion. Lastly, |        |       |              |
|        |       | the appeal panel=s  |        |       |              |
|        |       | recommendations     |        |       |              |
|        |       | will go to SERP and |        |       |              |
|        |       | the final decision  |        |       |              |
|        |       | will be signed by   |        |       |              |
|        |       | the regional        |        |       |              |
|        |       | administrator and   |        |       |              |
|        |       | Director, NRR or    |        |       |              |
|        |       | NSIR (for Security  |        |       |              |
|        |       | or Emergency        |        |       |              |
|        |       | Preparedness).      |        |       |              |
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|        |       |                     |        |       |              |
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