`

UNITED STATES

NUCLEAR REGULATORY COMMI SSI ON

REGION IV

611 RYAN PLAZA DRIVE, SUITE 400

ARL INGTON, TEXAS 76011-4005

October 19, 2007 

EA-07-162 

Randall K. Edington 

Senior Vice President, Nuclear 

Mail Station 7602 

Arizona Public Service Company 

P.O. Box 52034 

Phoenix, AZ 85072-2034

SUBJECT: CONFIRMATORY ORDER MODIFYING LICENSE (EFFECTIVE 

IMMEDIATELY) [OFFICE OF INVESTIGATIONS REPORT NO. 4-2007-009] 

Dear Mr. Edington: 

The enclosed Confirmatory Order is being issued to Arizona Public Service Company (APS) as 

a result of a successful alternative dispute resolution (ADR) mediation session. The enclosed 

commitments were made by APS as part of a settlement agreement between APS and the NRC 

concerning the falsification, by a qualified senior reactor operator, at the Palo Verde Nuclear 

Generating Station (PVNGS), of a record related to a steam generator blowdown. Our concerns 

about an apparent deliberate violation of 10 CFR 50.9 were described to you in our letter dated 

July 12, 2007. A Factual Summary of the OI investigation was enclosed with that letter. 

In response to our July 12 letter, you requested ADR to address the apparent violation. 

Subsequently, an ADR mediation session was conducted on August 27, 2007, at which time a 

preliminary settlement agreement was reached. The elements of the preliminary agreement are 

contained in the enclosed Order. 

As part of the settlement agreement, APS agreed to take a number of actions. In recognition of 

these actions, and those corrective actions already completed, the NRC is satisfied that its 

concerns will be addressed by these actions that will be made legally-binding through the 

enclosed Confirmatory Order. Therefore, the NRC has agreed not to pursue any further 

enforcement action in connection with the issues described in our July 12, 2007, letter to APS. 

We will evaluate the implementation of your commitments during future inspections. 

As evidenced by your signed “Consent and Hearing Waiver Form” (copy enclosed) dated 

October 17, 2007, you agreed to issuance of this letter and Confirmatory Order. 

Pursuant to Section 223 of the Atomic Energy Act of 1954, as amended, any person who 

willfully violates, attempts to violate, or conspires to violate, any provision of this Order shall be 

subject to criminal prosecution as set forth in that section. Violation of this Order may also 
Arizona Public Service Company - 2 -

subject the person to civil monetary penalties. You are not required to respond to this letter. 

However, if you choose to provide a response, please provide it to me within 30 days at the 

address listed in the letterhead. 

If you have any questions or comments concerning this letter, please contact Mr. Michael 

Vasquez, Senior Enforcement Specialist, at 817-860-8121, or Ms. Karla Fuller, Regional 

Counsel and Team Leader for the Allegation Coordination and Enforcement Staff, at 

817-860-8271. 

To the extent possible, any response you provide should not include any personal privacy, 

proprietary, or safeguards information so that it can be made available to the Public without 

redaction. A copy of this letter and its enclosures will be made available electronically for public 

inspection in the NRC Public Document Room or from the NRC’s document system (ADAMS). 

ADAMS is accessible from the NRC Web site at http://www.nrc.gov/reading-rm/adams.html. The 

NRC will also include this letter, and the attached Confirmatory Order, at

http://www.nrc.gov/about-nrc/regulatory/enforcement.html; then select Significant 

Enforcement Actions. Your response to the Confirmatory Order will be made available 

electronically for public inspection in the NRC Public Document Room or from the NRC’s 

document system (ADAMS). 

Sincerely, 

 /RA/ 

 Elmo E. Collins 

 Regional Administrator 

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

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

Enclosures: 

1. Confirmatory Order 

2. Consent and Hearing Waiver Form 

 

cc w/enclosures: 

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 
Arizona Public Service Company - 3 -

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 

Scott Bauer, Acting General Manager 

Regulatory Affairs and 

 Performance Improvement 

Palo Verde Nuclear Generating Station 

Mail Station 7636 

P.O. Box 52034 

Phoenix, AZ 85072-2034 

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 

Geoffrey M. Cook 

Southern California Edison Company 

5000 Pacific Coast Hwy, Bldg. N50 

San Clemente, CA 92672 

Robert Henry 

Salt River Project 

6504 East Thomas Road 

Scottsdale, AZ 85251 
Arizona Public Service Company - 4 -

Brian Almon 

Public Utility Commission 

William B. Travis Building 

P.O. Box 13326 

1701 North Congress Avenue 

Austin, TX 78701-3326 

Karen O'Regan 

Environmental Program Manager 

City of Phoenix 

Office of Environmental Programs 

200 West Washington Street 

Phoenix, AZ 85003 

Matthew Benac 

Assistant Vice President 

Nuclear & Generation Services 

El Paso Electric Company 

340 East Palm Lane, Suite 310 

Phoenix, AZ 85004 

Chief, Radiological Emergency Preparedness Section 

National Preparedness Directorate 

Technological Hazards Division 

Department of Homeland Security 

1111 Broadway, Suite 1200 

Oakland, CA 94607-4052 
Arizona Public Service Company - 5 -

Electronic distribution by RIV: 

DISTRIBUTION: 

RIDSSECYMAILCENTER RIDSOCAMAILCENTER 

RIDSEDOMAILCENTER RIDSOEMAILCENTER 

RIDSOGCMAILCENTER RIDSNRROD 

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RIDSOCFOMAILCENTER RIDSRGN1MAILCENTER 

RIDSRGN2MAILCENTER RIDSRGN3MAILCENTER 

RIDSNRRDIPMIIPB OEWEB 

Regional Administrator 

DRP Director DRS Director 

DRS Deputy Director Senior Resident Inspector (GXW2)

Branch Chief, DRP/D Branch Chief DRS/OB

Senior Project Engineer, DRP/D (RLN1) Senior Project Engineer, DRP/D (GEW)

Team Leader, DRP/TSS (CJP) RITS Coordinator (MSH3) 

DRS STA (DAP) V. Dricks, PAO (VLD)

DRP Deputy Director D. Pelton, OEDO RIV Coordinator (DLP1)

PV Site Secretary (PRC) M. Ashley, NRR 

K. D. Fuller, RC/ACES (KDF) J. Wray, OE 

C. A. Carpenter, D:OE (CAC) C. Maier, RIV 

OE:EA File (RidsOeMailCenter) R4ALLEGATION

D. Starkey, OE B. Tindell, DRS/OB 

M. Vasquez, RIV W. Maier, RIV 

M. Haire, RIV D. White, OI 

SUNSI Review Completed: _GMV_ ADAMS: X Yes □ No Initials: _GMV_ 

Publicly Available** Non-Publicly Available Sensitive Non-Sensitive 

DOCUMENT NAME: S:\RAS\ACES\ENFORCEMENT\EA Cases – Open\Palo Verde – 

Deliberate SRO/Conf_Order-from-ADR\Draft_APS-Conf_Order.doc 

RIV:SES:ACES OB RPBD DD:DRP D:DSP RC/ACES 

GMVasquez ATGody TWPruett ATHowell DDChamberlain KDFuller 

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

09/15/07 9/25/07 9/20/07 9/24/07 9/26/07 9/26/07 

DRA OE OGC RA 

TPGwynn N Hilton M Clark EECollins 

/RA/ /RA/ by E NLO by E /RA/ 

10/2/07 10/15/07 10/11/07 10/19/07 

OFFICIAL RECORD COPY T=Telephone E=E-mail F=Fax 
Enclosure 1 

 

UNITED STATES OF AMERICA 

NUCLEAR REGULATORY COMMISSION 

In the Matter of ) 

 ) Docket Nos. 50-528, 50-529, 50-530 

Arizona Public Service Company ) License Nos. NPF-41, NPF-51, 

 NPF-74 

Palo Verde Nuclear Generating Station ) EA-07-162 

CONFIRMATORY ORDER MODIFYING LICENSE 

(EFFECTIVE IMMEDIATELY) 

I 

Arizona Public Service Company (APS) (Licensee) is the holder of reactor operating licenses, 

License Nos. NPF-41, NPF-51, NPF-74, issued by the Nuclear Regulatory Commission (NRC or 

Commission), pursuant to 10 CFR Part 50, on June 6, 1985, April 24, 1986, and November 25, 

1987. The licenses authorize the operation of Palo Verde Nuclear Generating Station (PVNGS) 

in accordance with conditions specified therein. The facility is located on the Licensee’s site in 

Buckeye, Arizona. This Confirmatory Order is the result of an agreement reached during an 

alternative dispute resolution (ADR) mediation session conducted on August 27, 2007. 

II 

On November 20, 2006, the NRC Office of Investigations (OI) began an investigation (OI Case 

No. 4-2007-009) at PVNGS. As a result of the staff’s review of the information, the NRC was 

concerned that a senior reactor operator (SRO), stationed as a reactor operator, appeared to 

have engaged in deliberate misconduct. Specifically, on November 8, 2006, the SRO had 
Arizona Public Service Company 

 

Enclosure 1 

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mistakenly entered an incorrect blowdown constant into the plant computer and subsequently 

attempted to conceal the mistake by falsifying the blowdown record. The NRC’s preliminary 

findings were discussed in a letter to APS dated July 12, 2007. That letter identified an 

apparent violation of 10 CFR 50.9 that was being considered for escalated enforcement action, 

and identified the NRC’s concern that the SRO actions may have involved willfulness in the form 

of deliberate misconduct. A predecisional enforcement conference had been scheduled to 

discuss the apparent violation. However, prior to the conference, APS requested ADR in an 

attempt to resolve the issue. ADR is a general term encompassing various techniques for 

resolving conflict outside of court using a neutral third party. The technique that the NRC has 

decided to employ is mediation. 

On August 27, 2007, the NRC and APS met in an ADR session mediated by a professional 

mediator, arranged through Cornell University’s Institute on Conflict Resolution. At the 

conclusion of the ADR session, APS and the NRC did reach an Agreement in Principle. This 

Confirmatory Order is issued pursuant to the agreement reached during the ADR process. 

III 

During that ADR session, a preliminary settlement agreement was reached. Pursuant to 

the NRC’s Alternative Dispute Resolution program (ADR), the following are the terms and 

conditions agreed upon in principle by APS and the NRC relating to the issues described in the 

NRC’s letter to APS dated July 12, 2007. 

Whereas, APS and the NRC agree that there were two issues: (1) a licensed operator 

failed to self-report an error he made in entering data into a plant computer, and 
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Enclosure 1 

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subsequently he attempted to conceal his error, and (2) a failure by APS to promptly 

notify other licensees of a potential access authorization issue with respect to this 

individual, in violation of NRC requirements; 

 

Whereas, the actions of this licensed operator, though unacceptable, were of very low 

significance from a nuclear safety perspective; 

Whereas, the actions of this licensed operator were identified by APS and APS promptly 

informed the NRC; 

Whereas the access authorization issue is of very low safety significance; 

Whereas, APS has completed corrective actions to address the issues described in the 

July 12, 2007, letter issued by the NRC to APS, including actions to correct the initial 

error made by the plant licensed operator, to reduce the likelihood of similar errors in the 

future, to improve Independent Verifications, to further improve the safety culture in the 

plant Operations Department, and to improve APS’ processes for ensuring that pertinent 

information regarding personnel access authorization is appropriately communicated to 

other nuclear power plant licensees; and 

Whereas, these terms and conditions shall not be binding on either party until 

memorialized in a confirmatory order issued by the Nuclear Regulatory Commission to 

APS relating to this matter. 
Arizona Public Service Company 

 

Enclosure 1 

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APS planned to complete additional corrective and improvement actions with respect to 

these issues, and agrees to take the following actions, which will be included in a 

Confirmatory Order from the NRC to APS: 

1. APS will develop training on these issues, using a case study. The training will 

focus on the importance of self-reporting errors, the importance of performing good 

independent verifications, and deterring individuals from concealing mistakes. APS will 

provide this training to its Operations Department within 6 months of the date of the 

Confirmatory Order. 

2. APS will perform assessments of its independent verification processes in the 

Operations and Maintenance Departments. The assessments will be completed within 

12 months of the date of the Confirmatory Order, and applicable actions resulting from 

the assessment will be tracked for completion. In addition, within this same time period, 

APS will incorporate in a Quality Assurance (QA) audit plan a follow-up assessment to 

ensure the actions to improve the independent verification processes were effective. 

3. Within 12 months of the date of this Confirmatory Order, APS will provide training 

on both issues identified above to its leaders and managers. The intent of this training 

will be to focus leaders and managers on the importance of balancing accountability with 

encouraging workers to self-report errors and on the importance of communicating this 

with their workers, and on ensuring that potential access authorization issues are 

promptly addressed. 
Arizona Public Service Company 

 

Enclosure 1 

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4. Within 12 months of the date of the Confirmatory Order, APS will utilize the case 

study identified in Item 3 in evaluating its training for new leaders with a goal towards 

ensuring that new leaders are sensitized to balancing accountability with encouraging 

workers to self-report errors, on the importance of communicating this with their workers, 

and on ensuring that potential access authorization issues are promptly addressed. 

5. Within 6 months of the date of the Confirmatory Order, APS will conduct a followup safety culture review of its Operations Department, in order to determine the 

effectiveness of its actions to improve the safety culture in the Operations Department, 

and applicable actions resulting from the review will be tracked for completion. 

6. Within 30 days of the date of the Confirmatory Order, APS will provide the NRC 

with written communication regarding the weaknesses found in its process for identifying 

potential access authorization issues to other licensees through the Personnel Access 

Data System (PADS). APS will describe its corrective actions in this letter, and will send 

the letter to the Document Control Desk with a copy to the Regional Administrator, NRC 

RIV and to the Resident Inspector at the Palo Verde Nuclear Generating Station. 

7. Within 6 months of the date of the Confirmatory Order, APS will develop a 

generic communication for the industry in the form of an Operating Experience report 

regarding weaknesses it found in its process for informing other licensees of potential 

access authorization issues concerning individuals who resign from the plant before any 

disciplinary action is taken against them. 
Arizona Public Service Company 

 

Enclosure 1 

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The NRC agrees not to pursue any further enforcement action in connection with the 

issues described in the NRC’s July 12, 2007, letter to APS, including the access 

authorization issue described in that letter, and will not count these matters as previous 

enforcement for the purposes of assessing potential future enforcement action civil 

penalty assessments in accordance with Section VI.C of the Enforcement Policy. 

The NRC agrees to provide APS with 48 hours notice prior to issuance of the 

Confirmatory Order described in this agreement. 

On October 17., 2007, APS consented to issuing this Order with the commitments, as described 

in Section V below. APS further agreed that this Order is to be affective upon issuance and that 

it has waived its right to a hearing. 

IV 

Since APS has agreed to take additional actions to address NRC concerns, as set forth in 

Section III above, the NRC has concluded that its concerns can be resolved through issuance of 

this Order. 

I find that the Licensee’s commitments as set forth in Section V are acceptable and necessary 

and conclude that with these commitments the public health and safety are reasonably assured. 

In view of the foregoing, I have determined that public health and safety require that the 

Licensee’s commitments be confirmed by this Order. Based on the above and the Licensee’s 

consent, this Order is immediately effective upon issuance. 
Arizona Public Service Company 

 

Enclosure 1 

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V 

Accordingly, pursuant to Sections 104, 161b, 161i, 161o, 182, and 186 of the Atomic Energy 

Act of 1954, as amended, the Commission’s regulations in 10 CFR 2.202, and 10 CFR 

Part 50, IT IS HEREBY ORDERED, EFFECTIVE IMMEDIATELY, THAT LICENSE Nos. 

NPF-41, NPF-51, NPF-74 ARE MODIFIED AS FOLLOWS: 

1. APS will develop training on the issues described in the apparent violation identified in 

the NRC’s letter to APS dated July 12, 2007, using a case study. The training will focus 

on the importance of self-reporting errors, the importance of performing good 

independent verifications, and deterring individuals from concealing mistakes. APS will 

provide this training to its Operations Department (permanent employees and 

contractors scheduled to work in the Operations Department for 1-year or more) within 

6 months of the date of the Confirmatory Order. 

2. APS will perform assessments of its independent verification processes in the 

Operations and Maintenance Departments. The assessments will be completed within 

12 months of the date of the Confirmatory Order, and applicable actions resulting from 

the assessment will be tracked for completion. In addition, within this same time period, 

APS will incorporate in a QA audit plan a follow-up assessment to ensure the actions to 

improve the independent verification processes were effective. 

3. Within 12 months of the date of this Confirmatory Order, APS will provide training to its 

leaders and managers on the two issues in this case: (1) a licensed operator failed to 
Arizona Public Service Company 

 

Enclosure 1 

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self-report an error he made in entering data into a plant computer, and subsequently he 

attempted to conceal his error, and (2) a failure by APS to promptly notify other 

licensees of a potential access authorization issue with respect to this individual, in 

violation of NRC requirements. The intent of this training will be to focus leaders and 

managers on the importance of balancing accountability with encouraging workers to 

self-report errors and on the importance of communicating this with their workers, and on 

ensuring that potential access authorization issues are promptly addressed. 

4. Within 12 months of the date of the Confirmatory Order, APS will utilize the case study 

identified in Item 3 in evaluating its training for new leaders with a goal towards ensuring 

that new leaders are sensitized to balancing accountability with encouraging workers to 

self-report errors, on the importance of communicating this with their workers, and on 

ensuring that potential access authorization issues are promptly addressed. 

5. Within 6 months of the date of the Confirmatory Order, APS will conduct a follow-up 

safety culture review of its Operations Department, in order to determine the 

effectiveness of its actions to improve the safety culture in the Operations Department, 

and applicable actions resulting from the review will be tracked for completion. 

6. Within 30 days of the date of the Confirmatory Order, APS will provide the NRC with 

written communication regarding the weaknesses found in its process for identifying 

potential access authorization issues to other licensees through the Personnel Access 

Data System (PADS). APS will describe its corrective actions in this letter, and will send 

the letter to the Document Control Desk with a copy to the Regional Administrator, NRC 

RIV, and to the Resident Inspector at PVNGS. 
Arizona Public Service Company 

 

Enclosure 1 

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7. Within 6 months of the date of the Confirmatory Order, APS will develop a generic 

communication for the industry in the form of an Operating Experience report regarding 

weaknesses it found in its process for informing other licensees of potential access 

authorization issues concerning individuals who resign from the plant before any 

disciplinary action is taken against them. 

The Regional Administrator, NRC Region IV may, in writing, relax or rescind any of the above 

conditions upon demonstration by the Licensee of good cause. 

VI 

Any person adversely affected by this Confirmatory Order, other than APS, may request a 

hearing within 20 days of its issuance. Where good cause is shown, consideration will be given 

to extending the time to request a hearing. A request for extension of time must be made in 

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

Washington, DC 20555, and include a statement of good cause for the extension. Any request 

for a hearing shall be submitted to the Secretary, U.S. Nuclear Regulatory Commission, ATTN: 

Rulemakings and Adjudications Staff, Washington, DC 20555-0001. Copies also shall be sent 

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

20555-0001, to the Assistant General Counsel for Materials Litigation and Enforcement at the 

same address, to the Regional Administrator, NRC Region IV, 611 Ryan Plaza Drive, Suite 400, 

Arlington, Texas 76011, and to APS. Because of the possible disruptions in delivery of mail to 

United States Government offices, it is requested that answers and requests for hearing be 

transmitted to the Secretary of the Commission either by means of facsimile transmission to 
Arizona Public Service Company 

 

Enclosure 1 

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301-415-1101 or by e-mail to hearingdocket@nrc.gov and also to the Office of the General 

Counsel either by means of facsimile transmission to 301-415-3725 or by e-mail to 

OGCMailCenter@nrc.gov. If such a person requests a hearing, that person shall set forth with 

particularity the manner in which his interest is adversely affected by this Order and shall 

address the criteria set forth in 10 CFR § 2.309 (d) and (f). 

If a hearing is requested by a person whose interest is adversely affected, the Commission will 

issue an Order designating the time and place of any hearing. If a hearing is held, the issue to 

be considered at such hearing shall be whether this Confirmatory Order should be sustained. 

In the absence of any request for hearing, or written approval of an extension of time in which to 

request a hearing, the provisions specified in Section V above shall be final 20 days from the 

date of this Order without further order or proceedings. If an extension of time for requesting a 

hearing has been approved, the provisions specified in Section V shall be final when the 

extension expires if a hearing request has not been received. AN ANSWER OR A REQUEST 

FOR HEARING SHALL NOT STAY THE IMMEDIATE EFFECTIVENESS OF THIS ORDER. 

FOR THE NUCLEAR REGULATORY COMMISSION 

 /RA/ 

 ___________________________________________ 

Elmo E. Collins, Regional Administrator 

Dated this 19th day of October 2007