UNITED STATES

NUCLEAR REGULATORY COMMISSION

WASHINGTON, D.C. 20555-0001

OFFICE OF THE

INSPECTOR GENERAL

May 22, 2014

MEMORANDUM TO: Mark A. Satorius

Executive Director for Operations

FROM: Stephen D. Dingbaum /RA/

Assistant Inspector General for Audits

SUBJECT: AUDIT OF NRC’S OVERSIGHT OF RECIPROCITY 

LICENSEES (OIG-14-A-16)

The Office of the Inspector General (OIG) conducted an audit of the U.S. Nuclear 

Regulatory Commission’s (NRC) oversight of reciprocity licensees. The objective of the 

audit was to determine whether NRC provides adequate oversight of Agreement State 

licensees operating in NRC jurisdiction under reciprocity. 

Overall, NRC provides adequate oversight to Agreement State licensees performing 

regulated activities in NRC jurisdiction. Therefore, OIG makes no recommendations.

BACKGROUND

Reciprocity Defined

Reciprocity is NRC recognition of certain Agreement State1 licenses for work performed 

in areas of NRC jurisdiction. Areas of NRC jurisdiction include non-Agreement States, 

areas of exclusive Federal jurisdiction, and offshore waters. The term reciprocity is also

 1 An Agreement State is any State with which NRC has entered into an agreement under subsection 

274b of the Atomic Energy Act of 1954, as amended, that gives the State the authority to license and 

inspect byproduct, source, and noncritical quantities of special nuclear materials used or possessed 

within its borders.
Audit of NRC’s Oversight of Reciprocity Licensees

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used in Agreement States to identify Agreement State recognition of an NRC license 

and licenses from other Agreement States for work performed in their jurisdiction. 

Reciprocity authorizes Agreement State licensees to work in NRC jurisdiction for short 

periods of time without having to obtain a specific license. Thus, NRC regulations 

provide that any person who holds a specific license from an Agreement State is 

granted a general license2 to conduct the same activity in NRC jurisdiction. Being 

granted a general license by NRC is recognition of the Agreement State license and is 

referred to as reciprocity recognition. 

Some types of activities conducted under reciprocity include radiography, portable 

gauge use, medical procedures, well-logging, leak-testing, and calibration. 

NRC Offices Responsible for Reciprocity 

The NRC regional offices – in particular, Regions I, III, and IV3 – are primarily 

responsible for the implementation of reciprocity. Regional offices have the 

responsibility to review documents submitted by Agreement State licensees to ensure 

the proposed activities are in accordance with NRC regulations. The regional offices 

also schedule, conduct, and track inspections to achieve the overall objectives of the 

inspection program. The following table presents the number of Agreement State 

licensees authorized to work in NRC jurisdiction.

Table 1: Reciprocity Licensees by NRC Region

Source: NRC data found in the Reciprocity Tracking System in Web-based 

Licensing

 2 A general license is authorized by a regulation that sets forth the terms of the license. The reciprocity 

general license is defined in 10 CFR 150.20. In contrast, specific licenses are issued to named 

individuals who have filed an acceptable application to use certain types or quantities of radioactive 

materials.

3 In October 2003, all radioactive materials licensing and inspection functions in Region II were 

transferred to Region I.

Calendar Year 

2013

Calendar Year 

2012

Calendar Year 

2011

Total 

Reciprocity 

Licensees

214 242 213

Region I 77 89 87

Region III 27 34 24

Region IV 110 119 102
Audit of NRC’s Oversight of Reciprocity Licensees

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Further, the Office of Federal and State Materials and Environmental Management 

Programs (FSME) assists the regions’ implementation of reciprocity. Specifically, 

FSME has the responsibility to maintain the Reciprocity Tracking System, which the 

regions use to track reciprocity activities. FSME is also responsible for maintaining 

guidance documents regarding reciprocity. 

OBJECTIVE

The audit objective was to determine whether NRC provides adequate oversight of 

Agreement State licensees operating in NRC jurisdiction under reciprocity. 

RESULTS

OIG determined that NRC provides adequate oversight to Agreement State licensees 

performing regulated activities in NRC jurisdiction. Therefore, OIG makes no 

recommendations. 

OIG identified and reviewed the following aspects of NRC oversight of Agreement State 

licensees operating in NRC jurisdiction under reciprocity: 

• Verification of information submitted. 

• Communication with licensees and communication among NRC regions 

responsible for oversight. 

• Inspections. 

• Enforcement of NRC regulations. 

A. Reciprocity Recognitions Are Processed in Accordance With NRC Regulations

An Agreement State licensee planning to work in NRC jurisdiction must submit 

information prior to conducting work in NRC jurisdiction. At least 3 days prior to 

commencing work, the licensee must submit NRC Form 241, a copy of the valid

Agreement State license, and a fee to the NRC Regional Administrator. NRC Form 241 

requests information that must be completed by the Agreement State licensee, including 

activities to be conducted, dates scheduled to work, and number of work days. 
Audit of NRC’s Oversight of Reciprocity Licensees

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NRC regional staff review reciprocity recognitions in accordance with NRC regulations 

(10 CFR 150.20), Inspection Manual Chapter (IMC) 1220, and NUREG-1556, Volume 

19. Additionally, regional staff sometimes take additional measures to verify the 

information submitted by the Agreement State licensee. For example, some regional 

staff contact the Agreement State when there are questions about a license. NUREG1556, Volume 19, which is guidance for licensees and NRC staff, has been revised and 

provides more clarity regarding reciprocity oversight. IMC 1220 was issued in May 

2003 and the agency could benefit from an update to IMC 1220 so that it parallels the 

updates in the NUREG. 

B. NRC Communicates With Agreement State Licensees and Regional Offices 

Communicate With One Another

Reciprocity oversight requires NRC to communicate with Agreement State licensees. 

IMC 1220 requires NRC regions to distribute regional procedures letters by January 1 to 

Agreement State licensees that filed for reciprocity in the previous year. The purpose is 

to annually provide Agreement State licensees, who filed for reciprocity in the previous 

calendar year, with procedures and applicable guidelines and regulations. Regions III 

and IV distribute the regional procedures letters as prescribed by IMC 1220. Region I 

does not distribute the regional procedures letters. Instead, Region I requests that 

Agreement State licensees apply for reciprocity prior to the time necessary for 

distribution of the regional procedures letters. NRC also provides the information on 

reciprocity through other means. For example, IMC 1220 and NUREG-1556,

Volume 19, are available on NRC’s public Web site. Additionally, NRC summarizes 

Agreement State licensee violations of its regulations in a newsletter. Because these 

sources that explain reciprocity procedures, and applicable guidelines and regulations,

are publicly available, NRC should consider whether to continue requiring distribution of 

regional procedures letters when updating IMC 1220. 

NRC guidance requires regional staff to communicate with one another regarding 

inspections. Regional staff enter licensee information in the Reciprocity Tracking 

System, which was recently integrated into Web-based Licensing.

4 Regional staff also 

distribute submitted copies of NRC Form 241 to the NRC regional office in the location 

where the Agreement State licensee intends to conduct work. The licensee information 

entered into the Reciprocity Tracking System includes licensee name, Agreement State, 

dates of work, and location of work. Regional offices communicate with one another if 

an applicant submits documentation to the incorrect region. The recent incorporation of 

 4 Web-based Licensing is a materials licensing system that supports NRC and Agreement States in 

managing the licensing information of businesses that use radioactive materials.
Audit of NRC’s Oversight of Reciprocity Licensees

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the Reciprocity Tracking System into Web-based Licensing improved communication 

among the regions. Another way for NRC to improve communication would be to 

enhance the functionality of the Reciprocity Tracking System in Web-based Licensing to 

allow inspectors in one region to know whether another region already conducted an 

inspection of a given licensee. NRC should consider whether improvements to Webbased Licensing could be made to assist regional staff by providing full access to 

information across regions.

C. Regions Conduct Inspections To Ensure Safety and Security

The NRC regions conduct inspections to ensure the safety and security of activities 

conducted under reciprocity. IMC 1220 establishes a metric to guide planning 

reciprocity inspections and to assist with integrating reciprocity inspections into NRC’s 

routine inspection program. The metric is based on a pool of eligible candidates. The 

pool is determined through a risk-informed process based on inspection frequency as 

laid out in IMC 2800.5

 NRC must inspect 20 percent of the Priority 1, 2, and 3 program 

codes each year. If NRC has inspected the reciprocity licensee in the last calendar 

year, and the licensee has not had escalated enforcement or a significant Nuclear 

Materials Events Database6 event in the past 2 years, then the reciprocity licensee is 

not considered a candidate for inspection. The table below presents the number of 

Agreement State licensees authorized to conduct Priority 1, 2, and 3 activities in NRC 

jurisdiction and the number inspected by NRC. 

Table 2: Priority 1, 2, and 3 Reciprocity Licensees and Inspections Across NRC

All NRC Regions Calendar Year

2013

Calendar Year 

2012 Calendar Year 2011

Total Reciprocity 

Licensees 214 242 213

Priority 1, 2, 3 

Licensees 75 83 76

Priority 1, 2, 3 

Inspections 19 20 13

Source: NRC data found in Reciprocity Tracking in Web-based Licensing, and

OIG Analysis of Inspection Reports

 5 Frequency or Priority Codes are assigned to radioactive materials program activities. Priority code 1, 2, 

3, or 5 indicates the interval between routine inspections, expressed in years. The priority represents the 

relative risk of radiation hazard. Priority Code 1 represents the greatest risk to the health and safety of 

workers, members of the public, and the environment, while Priority Code 5 represents the lowest risk. 

6 The Nuclear Materials Events Database contains records of events involving nuclear material reported 

to NRC by NRC licensees, Agreement States, and non-licensees.
Audit of NRC’s Oversight of Reciprocity Licensees

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In the aggregate, the regions meet the inspection metric in IMC 1220, although there is 

variation among regions and from year to year. For example, sometimes a region might 

not meet the metric in a given calendar year. While the inspection metric is not always 

met each year by each region, an Agreement State licensee does not go uninspected. 

The Agreement State licensee is inspected as part of the State’s routine inspection 

program. Additionally, Agreement State licensees engaged in the highest risk activities 

within NRC jurisdiction may be inspected in any year because these licensees must 

request reciprocity every calendar year. 

The regions face several challenges in meeting the inspection metric. Agreement State 

licensees may work in remote locations, across a wide geographic area, or frequently 

change the days that they plan to do work. The regions have taken steps to address 

some of the challenges. One region approves proposed work days only 1 month at a 

time to reduce failed inspection attempts. Another region created a tool to assist in 

tracking changing work dates for inspection planning. Although the regions have 

developed methods to meet the metric, NRC should consider whether the 20-percent 

inspection requirement is appropriate when updating IMC 1220. 

D. NRC Takes Enforcement Against Agreement State Licensees 

As a regulator, NRC should take enforcement against Agreement State licensees who 

(1) fail to request reciprocity as required by NRC regulations, and (2) violate those 

regulations while conducting work in NRC jurisdiction. Enforcement is issuing sanctions 

to licensees who violate NRC regulations and is a key component to NRC’s oversight. 

NRC uses three primary enforcement sanctions: 

• Notice of Violation. A Notice of Violation identifies a requirement and how it was 

violated and normally requires a written response. 

• Civil Penalties. A civil penalty is a monetary fine. 

• Orders. Orders modify, suspend, or revoke licenses or require specific actions 

by licensees or persons. 

NRC issues enforcement sanctions against Agreement State licensees that fail to 

request reciprocity as required by NRC regulations. The failure to file for reciprocity 

prevents NRC from knowing that activities were being conducted within its jurisdiction 

and, therefore, from performing inspections to assure that licensed material was being 

used safely and in accordance with NRC requirements.
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NRC also issues enforcement sanctions against Agreement State licensees that violate 

NRC regulations while conducting activities in NRC jurisdiction. If a violation occurs 

within NRC jurisdiction, NRC handles Agreement State licensees the same as an NRC 

licensee. 

AGENCY COMMENTS

An exit conference was held with the agency on May 7, 2014. Prior to this meeting, 

after reviewing a discussion draft, agency management provided comments that have 

been incorporated into this report, as appropriate. As a result, agency management 

stated their general agreement with the results in this report and opted not to provide 

formal comments for inclusion in this report.

SCOPE AND METHODOLOGY

The audit focused on reviewing the oversight of Agreement State licensees operating in 

NRC jurisdiction under reciprocity. We conducted this performance audit at NRC 

headquarters (Rockville, MD) from December 2013 to March 2014. Internal controls 

related to the audit objective were reviewed and analyzed. Throughout the audit, 

auditors were aware of the possibility or existence of fraud, waste, or abuse in the 

program. 

OIG reviewed NRC regulations, inspection procedures, and enforcement policies to 

identify criteria for this audit, including, but not limited to:

• 10 Code of Federal Regulations (10 CFR) 150.20, “Recognition of Agreement 

State Licenses.” 

• NUREG-1556, Volume 19, “Consolidated Guidance About Materials Licenses: 

Guidance for Agreement State Licensees About NRC Form 241, ‘Report of 

Proposed Activities in Non-Agreement States, Areas of Exclusive Federal 

Jurisdiction, or Offshore Waters’ and Guidance for NRC Licensees Proposing To 

Work In Agreement State Jurisdiction (Reciprocity).”

• IMC 1220, “Processing of NRC Form 241, ‘Report of Proposed Activities in NonAgreement States, Areas of Exclusive Federal Jurisdiction and Offshore Waters,’

and Inspection of Agreement State Licensees Operating Under 10 CFR 150.20.”

• IMC 2800, “Materials Inspection Program.” 
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• NRC Enforcement Manual.

OIG also identified and reviewed inspection reports issued from 2011 through 2013 and 

enforcement actions issued from 2009 through 2013 related to Agreement State 

licensees conducting activities under reciprocity in NRC jurisdiction. These reports and 

actions were found on NRC’s Agencywide Documents Access and Management 

System and the NRC public Web site.

OIG also identified and reviewed events related to reciprocity in the Nuclear Materials 

Events Database. 

OIG interviewed NRC staff and management to gain an understanding of roles and 

responsibilities as they relate to how NRC oversees Agreement State licensees 

operating in NRC jurisdiction under reciprocity. Auditors interviewed staff from FSME, 

the Office of the General Counsel, and NRC Regions I, III, and IV. OIG auditors also 

accompanied NRC staff on a reciprocity inspection. 

We conducted this performance audit in accordance with generally accepted 

Government auditing standards. Those standards require that we plan and perform the 

audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that the evidence 

obtained provides a reasonable basis for our findings and conclusions based on our 

audit objectives. This audit was conducted by Sherri Miotla, Team Leader; Levar Cole, 

Audit Manager; Kevin Nietmann, Senior Technical Advisor; Kristen Lipuma, Senior 

Management Analyst; Amy Hardin, Auditor; and Taylor Butch, Management Analyst.