April 8, 2005

EA-05-051

Gregg R. Overbeck, Senior Vice 

 President, Nuclear

Arizona Public Service Company

P.O. Box 52034

Phoenix, AZ 85072-2034

SUBJECT: NOTICE OF VIOLATION AND PROPOSED IMPOSITION OF CIVIL PENALTY -

$50,000 (NRC SPECIAL INSPECTION REPORT 2004-014, PALO VERDE

NUCLEAR GENERATING STATION)

Dear Mr. Overbeck:

The NRC’s January 5, 2005, inspection report described the results of a special inspection that

followed up on your discovery in July 2004 that a significant section of containment sump safety

injection piping at all three Palo Verde Nuclear Generating Station (PVNGS) units was void of

water. The report discussed two findings that were being evaluated for further NRC action

under the NRC’s Significance Determination Process or NRC Enforcement Policy. This letter

provides you the final results of our enforcement deliberations on one of the findings, the

apparent violation of 10 CFR 50.59 identified in the special inspection report, and addresses

your denial of one example of a violation of 10 CFR 50.59 documented as a non-cited violation

(NCV) in the same report. In separate correspondence, we are providing you our evaluation

and final significance determination for the second finding, a design control finding that was

processed under the NRC’s Significance Determination Process.

The apparent violation of 10 CFR 50.59 [1992 version] involved making a change in June 1992

to Surveillance Procedure 41ST-1SI09, "ECCS (emergency core cooling system) Leak Test,"

which drained, and left empty, a portion of the containment sump safety injection recirculation

piping. As described in the inspection report, the apparent violation was based on the NRC’s

preliminary conclusion that the change modified the facility as described in the Updated Final

Safety Analysis Report (UFSAR). The UFSAR states, in part, that safety injection piping will be

filled with water. This procedural change also affected the available net positive suction head

analysis described in the UFSAR for the containment spray and high pressure safety injection

pumps, which assumed that pump suction piping would be filled with water.

NRC’s evaluation of this apparent violation considered the fact that Arizona Public Service

Company (APS) discovered this condition at PVNGS in July 2004, following notification from

another facility where a similar problem had been identified. On July 31, 2004, APS reported

this condition to NRC under the provisions of 10 CFR 50.72(b)(3)(v), noting that the voided

section of piping had the potential to prevent the fulfillment of the safety function to remove

residual heat and mitigate the consequences of a loss-of-coolant accident. In early August,
Arizona Public Service Company -2-

Palo Verde took corrective action to fill the voided piping in all three units, completing those

actions by August 4, 2004. 

At your request, a Regulatory and Predecisional Enforcement Conference was held on

February 17, 2005, to provide APS an opportunity to provide its perspective on this apparent

violation before NRC made a final enforcement decision. At the conference, the APS staff

contested the apparent violation of 10 CFR 50.59 described above, claiming that the procedural

change made in 1992 did not change the facility as described in the UFSAR because the

design requirements described in the UFSAR had never been implemented. The APS staff

also contended that the change to the surveillance test procedure would not be expected to be

evaluated under 10 CFR 50.59 because it resulted in returning the affected section of piping to

its as-found condition by removing demineralized water that was used to perform the ECCS

leak test. Following the conference, you submitted letters dated February 24 and 28, 2005,

which summarized your views on this and other issues discussed in the inspection report.

Rather than viewing this as a violation of 10 CFR 50.59, the APS staff indicated that the change

to the procedure represented a missed opportunity to identify and correct design and licensing

basis deficiencies that had existed since plant startup. At the conference and in your February

24, 2005, letter, you made the following points:

1) No design output document was found that specified a design requirement to

maintain the emergency core cooling system (ECCS) sump suction lines filled,

and no procedural requirement was established to maintain the ECCS sump

suction piping filled for system operability purposes.

2) Prior to the 1992 procedural change, the section of piping that was left filled with water

at the conclusion of the ECCS leak test was drained of water during quarterly valve

stroke testing, supporting the view that system design requirements were not

recognized. Interviews of operations personnel indicated a general understanding that

the ECCS sump suction lines were maintained empty.

3) The UFSAR actually states “To minimize the potential for water hammer, the safety

injection piping will be maintained filled with water.” Water hammer is a discharge piping

phenomenon.

4) The net positive suction head calculations referenced in the inspection report refer to the

expected conditions in the system after fully developed flow from the sump is

established. No statements in the calculations define the initial conditions.

Based on the information developed during the special inspection, and the information that APS

provided during and subsequent to the conference, the NRC has determined that the failure to

perform a safety evaluation and receive prior NRC approval of the change to Procedure

41ST-1SI09 was a violation of 10 CFR 50.59. We concluded that the procedure change should

have been subjected to an evaluation in accordance with the requirements of 10 CFR 50.59 in

existence in 1992, and that had an evaluation been performed, it would have led to a conclusion

that the change was contrary to the description of the facility in the UFSAR and that it created

an unreviewed safety question. The primary bases for the NRC’s conclusion follow:
Arizona Public Service Company -3-

1) Whether or not a specific procedure existed to implement the design basis, the fact is

that prior to 1992, the ECCS leak-test procedure resulted in leaving the affected section

of piping filled with water, which was consistent with the description of the system in the

UFSAR.

2) The 1992 change to Procedure 41ST-1SI09 resulted in intentionally draining the system

piping, a change to the original procedure and a change to the facility as described in

the UFSAR. 

3) The 1992 procedure change increased the probability of a malfunction of equipment

important to safety because it had the potential to affect the ability of the containment

spray and high pressure safety injection pumps to perform their intended safety function

in the containment sump recirculation mode.

We also considered your statements pertaining to the reference to “water hammer”

considerations in the UFSAR, net positive suction head requirements in the UFSAR, and plant

staff’s knowledge of the design basis requirements for this section of piping. None of these

issues affected our determination that a violation of 10 CFR 50.59 occurred. With regard to

“water hammer,” we conclude that voided conditions in pump suction piping may lead to a water

hammer condition in discharge piping and that it is unreasonable to assume that UFSAR

statements regarding the filling of piping with water is limited to the discharge side of the

pumps. With regard to net positive suction head calculations, we conclude that such

calculations are completed to evaluate the range of operating configurations of safety related

equipment, including transition periods between suction sources. In this case, the net positive

suction head calculations assumed the system was water filled. With regard to plant staff’s

knowledge of the design basis, we note that plant records of the 1992 procedure change

indicate that a shift manager questioned the change because of the potential impact voided

suction piping would have on the operability of the ECCS systems. Also, the APS staff

acknowledged during the conference that some of the engineering staff understood that the

system was to be maintained in a water filled condition.

The NRC also evaluated this violation against the current 10 CFR 50.59 requirements, because

NRC policy is to exercise discretion for violations of 10 CFR 50.59 that predate the current rule

if the involved circumstances do not indicate that the current rule would have been violated. 

The current rule states that a licensee shall obtain a license amendment pursuant to 10 CFR

50.90 prior to implementing a proposed change, test, or experiment if the change, test, or

experiment would result in more than a minimal increase in the likelihood of occurrence of a

malfunction of a structure, system or component important to safety previously evaluated in the

final safety analysis report (as updated). We conclude that the 1992 change also would have

violated the current rule, because changes to Surveillance Procedure 41ST-1SI09, "ECCS Leak

Test" resulted in more than a minimal increase in the likelihood of occurrence of a malfunction

of a structure, system or component important to safety.

Based on the analysis described above, the 1992 violation of 10 CFR 50.59 is cited in the

enclosed Notice of Violation (Notice), and the circumstances surrounding it were described in

more detail in the subject inspection report. The safety significance of this violation is based

largely on the risk significance of the associated change to the facility, as discussed in

Supplement I of the NRC Enforcement Policy. The policy provides an example of a Severity
Arizona Public Service Company -4-

Level III violation as, “A failure to obtain prior Commission approval required by 10 CFR 50.59

for a change, in which the consequence of the change, is evaluated as having low to moderate,

or greater safety significance (i.e., white, yellow, or red) by the SDP.” Because the risk

significance of the related design control violation was determined to be Yellow, this violation

has been classified at Severity Level III, in accordance with the "General Statement of Policy

and Procedure for NRC Enforcement Actions" (Enforcement Policy), NUREG-1600.

In accordance with the Enforcement Policy in existence in 1992, a base civil penalty in the

amount of $50,000 is considered for a Severity Level III violation. Because the Palo Verde

facility has not been the subject of escalated enforcement action under the Enforcement Policy

within the last 2 years, the NRC considered only whether credit was warranted for Corrective

Action in accordance with the civil penalty assessment process in Section VI.C.2 of the

Enforcement Policy. While you took prompt action to fill the affected portions of the ECCS

piping with water following the discovery of this condition in July 2004, and have taken actions

to address other deficiencies in your program for implementing 10 CFR 50.59 at your facility, it

is not apparent that you have taken actions to address the specific causes or prevent similar

violations from occurring. For example, you have not assessed how “non-intent” changes to

maintenance and test procedures were screened to assure they do not affect the facility design

and may therefore require a 10 CFR 50.59 evaluation, and you have not assessed whether

similar changes in the past should have been evaluated under the 10 CFR 50.59 process. APS

has not taken corrective actions in response to this violation consistent with NRC requirements

for “significant conditions adverse to quality” in 10 CFR Part 50, Appendix B, Criterion XVI,

Corrective Action. The actions you have taken to address 10 CFR 50.59 problems would not,

in our view, preclude the repetition of similar implementation problems. Thus, the NRC has

determined that Corrective Action credit is not warranted, resulting in an assessment of a civil

penalty at the base value, or $50,000.

Therefore, to emphasize the importance of evaluating changes to the facility that may impact

safety, and the importance of taking corrective actions that are comprehensive in correcting

significant noncompliances, I have been authorized, after consultation with the Director, Office

of Enforcement, to issue the enclosed Notice of Violation and Proposed Imposition of Civil

Penalty (Notice) in the base amount of $50,000.

At the conference, the APS staff also contested one example of a violation of 10 CFR 50.59

that was documented in the same inspection report as an NCV. The example involved leaving

a 10-20 cubic foot section of piping voided after you identified this condition in July 2004. The

NRC’s determination in the inspection report was that the decision to leave a portion of piping

voided should have been subjected to a 10 CFR 50.59 evaluation. At the conference and in

your February 24, 2005 letter, you stated that this was not the final corrective action for this

condition, that the final corrective action was to fill the piping with borated water, and that a 10

CFR 50.59 evaluation was not required. The APS staff supported the APS position with

references to NRC and industry guidance documents. After evaluating the information in the

inspection report, and the information that you provided during and after the conference, the

NRC has determined to withdraw this example of the non-cited violation of 10 CFR 50.59

documented in the report.

You are required to respond to the Notice and should follow the instructions specified in the

enclosed Notice when preparing your response. The NRC will use your response, in part, to
Arizona Public Service Company -5-

determine whether further enforcement action is necessary to ensure compliance with

regulatory requirements.

In accordance with 10 CFR 2.390 of the NRC's "Rules of Practice," a copy of this letter, its

enclosure, and your response will be made available electronically for public inspection in the

NRC Public Document Room or from the NRC’s document system (ADAMS), accessible from

the NRC Web site at http://www.nrc.gov/reading-rm/adams.html. The NRC also includes

significant enforcement actions on its Web site at www.nrc.gov; select What We Do,

Enforcement, then Significant Enforcement Actions.

Sincerely,

//RA//

Bruce S. Mallett

Regional Administrator

Docket Nos. 50-528; 50-529; 50-530

License Nos. NPF-41; NPF-51; NPF-74

Enclosures:

1. Notice of Violation and Proposed Imposition of Civil Penalty, EA-05-051

2. NUREG/BR-0254 Payment Methods (Licensee only)

cc w/Enclosure 1 only:

See next page
Arizona Public Service Company -6-

Steve Olea

Arizona Corporation Commission

1200 W. Washington Street

Phoenix, AZ 85007

Douglas K. Porter, Senior Counsel

Southern California Edison Company

Law Department, Generation Resources

P.O. Box 800

Rosemead, CA 91770

Chairman

Maricopa County Board of Supervisors

301 W. Jefferson, 10th Floor

Phoenix, AZ 85003

Aubrey V. Godwin, Director

Arizona Radiation Regulatory Agency

4814 South 40 Street

Phoenix, AZ 85040

M. Dwayne Carnes, Director

Regulatory Affairs/Nuclear Assurance

Palo Verde Nuclear Generating Station

Mail Station 7636

P.O. Box 52034

Phoenix, AZ 85072-2034

Hector R. Puente

Vice President, Power Generation

El Paso Electric Company

310 E. Palm Lane, Suite 310

Phoenix, AZ 85004

Jeffrey T. Weikert

Assistant General Counsel

El Paso Electric Company

Mail Location 167

123 W. Mills

El Paso, TX 79901

John W. Schumann

Los Angeles Department of Water & Power

Southern California Public Power Authority

P.O. Box 51111, Room 1255-C

Los Angeles, CA 90051-0100

John Taylor

Public Service Company of New Mexico

2401 Aztec NE, MS Z110

Albuquerque, NM 87107-4224

Cheryl Adams

Southern California Edison Company

5000 Pacific Coast Hwy. Bldg. DIN

San Clemente, CA 92672

Robert Henry

Salt River Project

6504 East Thomas Road

Scottsdale, AZ 85251

Brian Almon

Public Utility Commission

William B. Travis Building

P.O. Box 13326

1701 North Congress Avenue

Austin, TX 78701-3326
Enclosure 1

NOTICE OF VIOLATION AND PROPOSED IMPOSITION OF CIVIL PENALTY

Arizona Public Service Company Docket Nos. 50-528; 50-529; 50-530

Palo Verde Nuclear Generating Station License Nos. NPF-41; NPF-51; NPF-74

EA-05-051

During an NRC inspection completed December 8, 2004, a violation of NRC requirements was

identified. In accordance with the "General Statement of Policy and Procedure for NRC

Enforcement Actions," NUREG-1600, the NRC proposes to impose a civil penalty pursuant to

Section 234 of the Atomic Energy Act of 1954, as amended (Act), 42 U.S.C. 2282, and 10 CFR

2.205. The particular violation and associated civil penalty are set forth below:

10 CFR 50.59(a)(1) [1992 version] states, in part, that the holder of a license authorizing

operation of a production or utilization facility may: (1) make changes in the facility as

described in the safety analysis report, (2) make changes in the procedures as

described in the safety analysis report, and (3) conduct tests or experiments not

described in the safety analysis report, without prior Commission approval, unless the

proposed change, test, or experiment involves a change in the Technical Specifications

incorporated in the license or an unreviewed safety question. A proposed change, test,

or experiment shall be deemed to involve an unreviewed safety question: (1) if the

probability of occurrence or the consequences of an accident or malfunction of

equipment important to safety previously evaluated in the safety analysis report may be

increased; (2) if a possibility for an accident or malfunction of a different type than any

evaluated previously in the safety analysis report may be created; or (3) if the margin of

safety as defined in the basis for any Technical Specification is reduced. 

The Palo Verde Nuclear Generating Station Updated Final Safety Analysis Report

(UFSAR), Section 6.3, "Emergency Core Cooling System," states, in part, that the safety

injection piping will be maintained filled with water, and that during recirculation mode,

the available net positive suction head for the containment spray and high pressure

safety injection pumps is 25.8 feet and 28.8 feet, respectively (values that assume the

pump suction piping is filled with water).

Contrary to the above, on June 22, 1992, the licensee made a procedural change which

resulted in a change to the facility as described in the UFSAR that increased the

probability of a malfunction of equipment important to safety previously evaluated in the

safety analysis report, and the licensee failed to perform a written safety evaluation and

obtain Commission approval prior to implementing the change. Specifically, a change

was made to Surveillance Procedure 41ST-1SI09, "ECCS Leak Test," which drained,

and left empty, a portion of the containment sump safety injection recirculation piping at

the conclusion of the leak test. This change also affected the available net positive

suction head analysis described in the UFSAR for the containment spray and high

pressure safety injection pumps, which are important to safety, since these analyses

assumed the pump suction piping would be filled with water.

This is a Severity Level III violation (Supplement I).

Civil Penalty - $50,000
-2-

Pursuant to the provisions of 10 CFR 2.201, Arizona Public Service Company (Licensee) is

hereby required to submit a written statement or explanation to the Director, Office of

Enforcement, U.S. Nuclear Regulatory Commission, within 30 days of the date of this Notice of

Violation and Proposed Imposition of Civil Penalty (Notice). This reply should be clearly marked

as a "Reply to a Notice of Violation, EA-05-051” and should include for each alleged violation:

(1) admission or denial of the alleged violation, (2) the reasons for the violation if admitted, and

if denied, the reasons why, (3) the corrective steps that have been taken and the results

achieved, (4) the corrective steps that will be taken to avoid further violations, and (5) the date

when full compliance will be achieved. Your response may reference or include previous

docketed correspondence, if the correspondence adequately addresses the required response. 

If an adequate reply is not received within the time specified in this Notice, an order or a

Demand for Information may be issued as to why the license should not be modified,

suspended, or revoked or why such other action as may be proper should not be taken. 

Consideration may be given to extending the response time for good cause shown. Under the

authority of Section 182 of the Act, 42 U.S.C. 2232, this response shall be submitted under oath

or affirmation.

Within the same time as provided for the response required above under 10 CFR 2.201, the

Licensee may pay the civil penalty proposed above, in accordance with NUREG/BR-0254 and

by submitting to the Director, Office of Enforcement, U.S. Nuclear Regulatory Commission,

Washington, DC 20555, a statement indicating when and by what method payment was made,

or may protest imposition of the civil penalty in whole or in part, by a written answer addressed

to the Director, Office of Enforcement, U.S. Nuclear Regulatory Commission. Should the

Licensee fail to answer within the time specified, an order imposing the civil penalty will be

issued. Should the Licensee elect to file an answer in accordance with 10 CFR 2.205

protesting the civil penalty, in whole or in part, such answer should be clearly marked as an

"Answer to a Notice of Violation, EA-05-051" and may: (1) deny the violation listed in this

Notice, in whole or in part, (2) demonstrate extenuating circumstances, (3) show error in this

Notice, or (4) show other reasons why the penalty should not be imposed. In addition to

protesting the civil penalty, in whole or in part, such answer may request remission or mitigation

of the penalty.

In requesting mitigation of the proposed penalty, the factors addressed in Section VI.C.2 of the

Enforcement Policy should be addressed. Any written answer in accordance with 10 CFR

2.205 should be set forth separately from the statement or explanation in reply pursuant to 10

CFR 2.201, but may incorporate parts of the 10 CFR 2.201 reply by specific reference (e.g.,

citing page and paragraph numbers) to avoid repetition. The attention of the Licensee is

directed to the other provisions of 10 CFR 2.205, regarding the procedure for imposing a civil

penalty. 

Upon failure to pay any civil penalty due which subsequently has been determined in

accordance with the applicable provisions of 10 CFR 2.205, this matter may be referred to the

Attorney General, and the penalty, unless compromised, remitted, or mitigated, may be

collected by civil action pursuant to Section 234c of the Act, 42 U.S.C. 2282c.

The response noted above (Reply to Notice of Violation, statement as to payment of civil

penalty, and Answer to a Notice of Violation) should be addressed to: Frank Congel, Director,

Office of Enforcement, U.S. Nuclear Regulatory Commission, One White Flint North, 11555
-3-

Rockville Pike, Rockville, MD 20852-2738, with a copy to the Regional Administrator, U.S.

Nuclear Regulatory Commission, Region IV, 611 Ryan Plaza Drive, Suite 400, Arlington, TX

76011, and a copy to the NRC Resident Inspector at the Palo Verde Nuclear Generating

Station.

Because your response will be made available electronically for public inspection in the NRC

Public Document Room or from the NRC's document system (ADAMS), to the extent possible,

it should not include any personal privacy, proprietary, or safeguards information so that it can

be made available to the public without redaction. ADAMS is accessible from the NRC Web

site at http://www.nrc.gov/reading-rm/adams.html. If personal privacy or proprietary information

is necessary to provide an acceptable response, then please provide a bracketed copy of your

response that identifies the information that should be protected and a redacted copy of your

response that deletes such information. If you request withholding of such material, you must

specifically identify the portions of your response that you seek to have withheld and provide in

detail the bases for your claim of withholding (e.g., explain why the disclosure of information will

create an unwarranted invasion of personal privacy or provide the information required by 10

CFR 2.390(b) to support a request for withholding confidential commercial or financial

information). If safeguards information is necessary to provide an acceptable response, please

provide the level of protection described in 10 CFR 73.21.

In accordance with 10 CFR 19.11, you are required to post this Notice within two working days.

Dated this 8th day of April 2005
Arizona Public Service Company - EA-05-051

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DOCUMENT NAME:ML051010006.wpd

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SANBORN PRUETT HOWELL FULLER CLARK

/RA/ /RA/ /RA/ /RA/ /RA/

3/14/2005 3/15/2005 3/17/2005 3/21/2005 3/17/2005

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