June 27, 2001

EA-01-088

Mr. John Paul Cowan

Senior Vice President

Nuclear Management Company, LLC

27780 Blue Star Highway

Covert, MI 49043

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

$55,000 (NRC Inspection Report No. 50-255/01-06 (DRP))

Dear Mr. Cowan:

This refers to the baseline inspection completed on March 31, 2001, at the Palisades Nuclear

Generating Plant (Palisades). The results of this routine baseline inspection were transmitted

to you on April 19, 2001, in NRC Inspection Report No. 50-255/01-06(DRP) and identified an

apparent violation of NRC requirements for failing to provide the Commission complete and

accurate information in letters dated February 16, 2000, and February 18, 2000.

In a letter to the NRC dated May 2, 2001, your staff provided clarification regarding your

February 2000 letters. Additionally, on May 8, 2001, a predecisional enforcement conference

was conducted in the Region III office with members of your staff to discuss the apparent

violation, its significance, the root causes, and your corrective actions.

Based on the information developed during the inspection, the information that you provided in

your May 2, 2001, letter and the information that you provided during the conference, the NRC

has determined that a violation of NRC requirements occurred. The violation is cited in the

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

detail in the subject inspection report. The violation involved the failure to provide complete and

accurate information in letters dated February 16, 2000, and February 18, 2000, requesting a

Notice of Enforcement Discretion (NOED) and an exigent Technical Specification (TS) change

request, respectively. The requests involved the abandonment of the underground (backup)

steam supply line to the Turbine Driven Auxiliary Feedwater (TDAFW) Pump P-8B. Your staff

stated in the requests that the Post-Fire Safe Shutdown Analysis indicated that a fire in the

Southwest Cable Penetration Room was the only case where use of the underground (backup)

steam supply line was considered available to help the plant achieve safe (cold) shutdown. 

Based, in part, on this information, the NRC granted the NOED, which allowed plant startup

from a maintenance outage, and subsequent operation without compliance with a surveillance

requirement for the underground (backup) steam supply valve to Pump P-8B. The TS change

removed the surveillance requirement for this valve. 

Subsequently, in January 2001, the resident inspectors identified that Section IV of the Fire

Protection Program Report, ìPost-Fire Safe Shutdown Analysisî credited the underground

(backup) steam supply line as available to help the plant achieve safe (cold) shutdown

conditions for a fire in the Turbine Building. Therefore, your submittals in February 2000 for the
J. Cowan -2-

NOED and TS change request failed to identify that the underground steam supply line was

credited in your fire protection program for a fire in the Turbine Building. The NRC staff is

satisfied that the failure to provide complete and accurate information was the result of an

oversight on the part of members of your staff and not a deliberate act to withhold information

material to the NRC's decision making process.

The failure to provide complete and accurate information affected the NRCís ability to perform

its regulatory function. The NRC granted the NOED and an exigent TS change with an

incomplete understanding of the potential safety impact to the plant. With complete information

the NRC would have reconsidered issuing the NOED and the exigent TS change or would have

had substantial further inquiry and considered additional compensatory actions before making a

regulatory decision. Therefore, this violation has been categorized in accordance with the

"General Statement of Policy and Procedure for NRC Enforcement Actions" (Enforcement

Policy), NUREG-1600, May 1, 2000, at Severity Level III.

In accordance with the Enforcement Policy, a base civil penalty in the amount of $55,000 is

considered for a Severity Level III violation. Because your facility has not been the subject of

escalated enforcement actions within the last two years, the NRC considered whether credit

was warranted for Corrective Action in accordance with the civil penalty assessment process in

Section VI.C.2 of the Enforcement Policy. During our May 8, 2001, enforcement conference,

your staff discussed corrective actions taken and planned, including improved management

oversight of the corrective action process, implementation of a validation process for NRC

submittals and commitments, and sharing of lessons learned. Your staff stated that the errors

in the basis documents were corrected and your staff provided clarification to your 

February 2000 submittals in a letter to the NRC dated May 2, 2001. The NRC evaluated the

corrective actions and determined that your staff failed to recognize the importance of

remedying this condition in a timely manner after it was identified by the NRC. Additionally,

your staff failed to promptly correct the incomplete and inaccurate information after the NRC

staff identified that this information was relevant to the bases for a regulatory decision. 

Specifically, in January 2001, the resident inspectors informed your staff of the apparent

inaccurate information and your staff subsequently initiated a condition report on January 23,

2001, documenting the issue. During the inspection exit meeting on April 9, 2001, the NRC

again informed your staff of the apparent violation. However, it was not until May 2, 2001, when

your staff provided to the NRC the information required to assess the significance of the

incomplete and inaccurate information and initiate corrections to the licensing bases. 

Therefore, the NRC has concluded that credit for corrective action is not warranted in

accordance with the guidance in Section VI.C.2 of the Enforcement Policy.

The NRC must be able to rely on licensees to provide complete and accurate information on

matters involving licensing actions, especially when those matters are related to timely NRC

actions such as granting NOEDs or emergency or exigent TS change requests. To emphasize

the importance of accurate and complete information and of prompt correction of violations, 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 $55,000 for the Severity Level III violation. 
J. Cowan -3-

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

enclosed Notice when preparing your response. The NRC will use your response, in part, to

determine whether further enforcement action is necessary to ensure compliance with

regulatory requirements.

In accordance with 10 CFR 2.790 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 Publicly Available Records (PARS) component of

NRCís document system (ADAMS). ADAMS is accessible from the NRC Web site at

http://www.nrc.gov/NRC/ADAMS/index.html (the Public Electronic Reading Room).

Sincerely, 

/RA/ James Caldwell for

J. E. Dyer

Regional Administrator 

Docket No. 050-255

License No. DRP-20

Enclosure: Notice of Violation 
J. Cowan -4-

Distribution:

ADAMS (PARS)

SECY

OCA

W. Travers, EDO

W. Kane, DEDRP

F. Congel, OE

J. Dyer, RIII:RA

L. Chandler, OGC

D. Dambly, OGC 

S. Collins, NRR

Enforcement Coordinators

 RI, RII and RIV

S. Wong, NRR

C. Nolan, OE

J. Lennartz, SRI:Palisades

S. Gagner, OPA

H. Bell, OIG

G. Caputo, OI

D. Dandois, OCFO/DAF/LFARB

RIII:OAC

J. Strasma, RIII

R. Lickus, RIII

J. Lynch

State of Michigan

OEMAIL

OEWEB

DOCUMENT NAME:C:\Program Files\Adobe\Acrobat 4.0\PDF Output\01-088 SLIII PALI steam sup~.wpd

To receive a copy of this document, indicate in the box: "C" = Copy without enclosures "E" = Copy with enclosures "N" = No copy

OFFICE RIII N RIII N D:OE N RIII N

NAME Clayton Grant FCongel Dyer

DATE 6/222/01 6/25/01 6/22/01 6/26/01

OFFICIAL RECORD COPY
NOTICE OF VIOLATION

AND

PROPOSED IMPOSITION OF CIVIL PENALTY

Consumers Energy Company Docket No. 050-255

Palisades Nuclear Generating Plant License No. DRP-20

EA-01-088

During an NRC inspection completed on March 31, 2001, a violation of NRC requirements was

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

Enforcement Actions," NUREG-1600, May 1, 2000, 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 50.9 (a), requires, in part, that information provided to the Commission by the licensee

shall be complete and accurate in all material respects.

Contrary to the above, the licensee failed to provide the NRC complete and accurate

information in its letters, dated February 16, 2000 and February 18, 2000, requesting

enforcement discretion and an exigent Technical Specification change. Specifically, the letters

stated that only one case existed where use of the underground steam supply through Control

Valve CV-0522A was considered as available in the Post-Fire Safe Shutdown Analysis to help

the plant in achieving safe (cold) shutdown. This case was a fire in the Southwest Cable

Penetration Room. However, the inspectors identified on January 23, 2001, that the Post-Fire

Safe Shutdown Analysis also credited the underground steam supply through CV-0522A as

available to help the plant in achieving safe (cold) shutdown for a fire in the Turbine Building. 

This inaccurate information was material, in that, the NRC relied on the information provided by

the licensee to grant the requested Notice of Enforcement Discretion to startup and operate the

plant without complying with the surveillance requirements for the underground (backup) steam

supply line, and to remove the surveillance requirements from the Technical Specifications.

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

Civil Penalty - $55,000. 

Pursuant to the provisions of 10 CFR 2.201, Consumers Energy 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" 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 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. 
Notice of Violation and Proposed -2- 

 Imposition of Civil Penalty

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 or the cumulative amount of the civil

penalties if more than one civil penalty is proposed, in accordance with NUREG/BR-0254 and

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

30 days of the date of this Notice of Violation and Proposed Imposition of Civil Penalty, 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" and may: (1) deny the

violation(s) 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 that 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

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

Nuclear Regulatory Commission, Region III, 801 Warrenville Road, Lisle, IL 60532ñ4351 and a

copy to the NRC Resident Inspector at the facility that is the subject of this Notice.

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

Public Document Room or from the Publicly Available Records (PARS) component of NRCís

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/NRC/ADAMS/index.html (the Public Electronic Reading Room). 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
Notice of Violation and Proposed -3- 

 Imposition of Civil Penalty

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 2.790(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 may be required to post this Notice within two working

days. 

Dated this 27th day of June 2001.