NUREG-0302

Rev. 1

REMARKS PRESENTED

(QUESTIONS/ANSWERS DISCUSSED)

AT PUBLIC REGIONAL MEETINGS

TO DISCUSS REGULATIONS (10 CFR PART 21)

FOR REPORTING OF

DEFECTS AND NONCOMPLIANCE

July 12 - 26, 1977

U. S. Nuclear Regulatory Commission
Available from

National Technical Information Service

Springfield, Virginia 22161

Price: Printed Copy $8.00; Microfiche $3.00

The price of this document for requesters outside

of the North American Continent can be obtained

from the National Technical Information Service.
NUREG-0302

Rev. 1

REMARKS PRESENTED

(QUESTIONS/ANSWERS DISCUSSED)

AT PUBLIC REGIONAL MEETINGS

TO DISCUSS REGULATIONS (10 CFR PART 21)

FOR REPORTING OF

DEFECTS AND NONCOMPLIANCE

July 12 - 26, 1977

Manuscript Completed: September 1977

Date Published: October 1977

Office of Inspection and Enforcement

U. S. Nuclear Regulatory Commission

Washington, D. C. 20555
FOREWORD

In enacting the Energy Reorganization Act of 1974, Congress included

Section 206 which requires the reporting of defects and noncompliances

directly to the Nuclear Regulatory Commission (NRC). This congressional

action required that the NRC promulgate rules and regulations, as necessary, to assure appropriate implementation of Section 206. In response

to this mandate, the NRC drafted a new regulation. Following a period

of public comment and revision, the regulation identified as 10 CFR

Part 21, Reporting Defects and Noncompliance, was published in a Federal

Register Notice on June 6, 1977.

To assist NRC licensees and other firms and organizations covered

by the new Part 21 regulation, public regional meetings were conducted

by staff representatives to explain the rule. At these meetings the

staff presented prepared remarks and answered questions on the meaning

and application of the rule. Staff remarks contained in the original

publication of this document were also provided to those in attendance.

At each meeting the staff received a request for the questions and

answers discussed by the staff to be made available for use as guidance

by the nuclear industry covered by the rule. It was announced that a

consolidation of the staff position question/answer guidance would be

made available to each organization or firm attending these meetings and

for others where a request is made in accordance with the directions

printed inside the front cover of this document. The staff will be

guided in its implementation and enforcement of Part 21 by the positions

set forth in this document.

This revision of NUREG-0302 includes the following three parts

relating to 10 CFR Part 21: 1) remarks presented by staff representatives; 2) Federal Register Notice material; and 3) a consolidation of

questions and answers from the public regional meetings.
PUBLIC REGIONAL MEETINGS

(DALLAS, ATLANTA, SAN FRANCISCO, CHICAGO, PHILADELPHIA)

TO DISCUSS REGULATIONS (10 CFR PART 21)

FOR REPORTING OF DEFECTS AND NONCOMPLIANCE

July 12-26, 1977

TABLE OF CONTENTS

I. Remarks Presented at Public Regional Meetings

1. Remarks by Regional Director

. Welcome Keynote Address

2. Remarks by Representative of the Office of Executive Legal

Director

Legislative and Legal Aspects of Part 21

3. Remarks by Representative of the Office of Standards Development

Development of the Part 21 Regulations

4. Remarks by Representative of the Office of Nuclear Reactor

Regulation

How Part 21 Impacts Reactor Licensing, Licensees

and Suppliers

5. Remarks by Representative of the Office of Nuclear Material

Safety and Safeguards

* The Impact of Part 21 on Material and Fuel Cycle

Licensees and Suppliers

6. Remarks by Representative of the Office of International

Programs

. Part 21 and its Effects on Exporters

7. Remarks by Representatives of the Office of Inspection and

Enforcement

. The Inspection and Enforcement of Part 21
TABLE OF CONTENTS (Continued)

II. Federal Register Notice Material Relating to 10 CFR Part 21

1. Copy of Federal Register Notice 42FR28891-28896 of June 6, 1977

2. Copy of Federal Register Notice 42FR34886 of July 7, 1977

3. Copy of Federal Register Notice 42FR36803 of July 18, 1977

III. Consolidation of Questions/Answers From Public Regional Meetings

1. Questions/Answers Relating to the Preamble to 10 CFR Part 21

2. Questions/Answers Relating to 10 CFR Part 21
Part I - Remarks Presented at Public Meetings
Remarks by Regional Directors

Office Inspection and Enforcement

To Public Regional Meetings on 10 CFR Part 21 July 12-26, 1977

Boyce H. Grier, Region I

Norman C. Moseley, Region II

James G. Keppler, Region III

E. Morris Howard, Region IV

Robert H. Engelken, Region V

Welcoming Keynote Address

Good morning, ladies and gentlemen. Welcome to this meeting. I

appreciate the opportunity to meet with you here today in one of the

five Regional Workshop Sessions that the Nuclear Regulatory Commission

is sponsoring to explain and discuss the provisions of its new regulation,

10 CFR Part 21, "Reports to the Commission Concerning Defects and

Noncompliance".

I'm sure that most of you are aware of the major provision of Part 21.

It has been the subject of considerable review, discussion, comment,

revision and refinement since the proposed rule was first published in

the Federal Register in March 1975. It is no secret that it has been

one of the most controversial rules ever promulgated by the Commission

and it has potentially significant implications for all members of the

nuclear community, from power plant operators, nuclear steam suppliers,

architect engineers and constructors to consultants and component

vendors. I am certain that even the regulators will face a learning

period concerning some of the legal and technical nuances of this rule

as they become more involved in the enforcement of it in the months

ahead. I sincerely hope that our discussions today will help us all

develop a clear and common understanding of the objectives and requirements of this important new rule.

As the objective of Part 21 is to implement Section 206 of the Energy

Reorganization Act, I believe stating the specific words of Section 206

will be helpful in establishing the background for the panel discussions

that will follow. Section 206, as enacted, reads as follows:

"NONCOMPLIANCE

Sec. 206.(a) Any individual director, or responsible officer of a firm

constructing, owning, operating, or supplying the components of any

facility or activity which is licensed or otherwise regulated pursuant

to the Atomic Energy Act of 1954, as amended, or pursuant to this Act,

who obtains information reasonably indicating that such facility or

activity or basic components supplied to such facility or activity--
-2-

(1) fails to comply with the Atomic Energy Act of 1954, as

amended, or any applicable rule, regulation, order, or license

of the Commission relating to substantial safety hazards, or

(2) contains a defect which could create a substantial safety

hazard, as defined by regulations which the Commission shall

promulgate,

shall immediately notify the Commission of such failure to comply, or

of such defect, unless such person has actual knowledge that the

Commission has been adequately informed of such defect or failure to

comply.

(b) Any person who knowingly and consciously fails to provide the

notice required by subsection (a) of this section shall be subject to

a civil penalty in an amount equal to the amount provided by Section

234 of the Atomic Energy Act of 1954, as amended.

(c) The requirements of this section shall be prominently posted on

the premises of any facility licensed or otherwise regulated pursuant

to the Atomic Energy Act of 1954, as amended.

(d) The Commission is authorized to conduct such reasonable inspections

and other enforcement activities as needed to insure compliance with the

provisions of this section."

In approving 10 CFR Part 21 as the means for implementing Section 206

of the Energy Reorganization Act of 1974, the Commission is requiring

directors and responsible officers of certain firms and organizations

building, operating or owning NRC-licensed facilities, or conducting

NRC-licensed activities, to report any defects in components and

failures to comply with NRC requirements that could result in a

substantial safety hazard. Directors and responsible officers may

designate an employee to notify the NRC on their behalf but they may

not be relieved of the responsibility for notification of the NRC.

The reporting requirement is intended to assure that the NRC receives

prompt notification concerning defects or failures to comply with NRC

requirements for facilities or activities licensed by the Commission

which could present a substantial safety hazard. The purpose of this

reporting requirement is to further enhance our "defense in depth"

measures for assuring public health and safety and protection of the

environment.

Now I'm sure that even from your reading of the rule and from this brief

discussion you have made some important observations. For instance, you

have no doubt noted that, unlike provisions of the Atomic Energy Act

which impose obligations on licensees, Section 206 imposes obligations

on firms and organizations who are involved in the nuclear industry as

well as on firms and organizations who are NRC licensees and, further,

imposes these obligations as a direct liability on certain individuals
-3-

in these firms and organizations. No doubt you are also pondering some of

the other important issues and questions that were considered by the staff

and commented upon profusely by many of you during the years that this

rule has been in preparation. Questions, for example, like:

1. What levels of individuals in an organization are required to notify

the Commission on defects and noncompliance?

2. How is a defect defined?

3. How does the Commission define a "basic component," i.e., how far

down the tiers of suppliers should Part 21 be applied?

4. How should a supplier be advised of the applicability of Part 21?

5. Should reporting individuals be required to identify all facilities

or activities, including exported facilities, at whicIF a defect or

failure to comply may exist?

Well, that's precisely why we are all here today - to discuss such

questions. I hope that our workshop discussions today will provide

answers to most, if not all, of these questions so that we can all

approach the implementation of this important new rule with a common

understanding of what the law requires of us.

Thank you for meeting here with us today. I hope that your visit hear

will be both enjoyable and profitable.
REMARKS BY

THE OFFICE OF THE EXECUTIVE LEGAL DIRECTOR

TO PUBLIC REGIONAL MEETINGS ON 10 CFR PART 21

BY

JAMES K. ASSELSTINE

MARC R. STAENBERG

JULY 12-26, 1977

The Legislative and Legal Aspects of Part 21

The Regional Director, in his keynote address, explained the relationship

of Section 206 of the Energy Reorganization Act to the new Part 21 and

the basic purpose of the rule. It is interesting to note that Section

206 was not part of the Act as it was passed by the House of Representatives. This section was added by the Senate committee. The purpose of

the section as explained by the Senate committee in its report was:

to upgrade the system of detecting and anticipating

the defects that increasingly have plagued the nuclear

power industry and threatens its safety record on a

daily basis. The application of this provision to

component suppliers is intended to benefit electric

utilities in particular, which usually have no way

of knowing that a sealed, prefabricated part is

defective until it triggers a shutdown costing tens of

thousands of dollars a day in lost generating capacity.

In addition, Section 206 as enacted by the Congress was made expressly

applicable to all facilities and activities which are licensed or

otherwise regulated pursuant to the Atomic Energy.Act of 1954, as

amended, and the Energy Reorganization Act of 1974, as amended.

Section 206 in its final form was a substitute added by the Joint House

Senate conference committee on the Energy Reorganization Act. Of interest

is the fact that, as originally drafted, a failure to report could have

resulted in criminal prosecution. The criminal penalties were dropped

in the House Senate conference in favor of civil penalties.

Section 206 is a broadly worded statute by which Congress intended to

give the NRC responsibility to flesh out the bare bones of the statutory

language and to develop workable definitions of terms and a workable

implementation program. Part 21 is the result of the Commission's

efforts in this regard and, of necessity, goes into considerable detail

in many areas where the statute did not. But even as the final rule

was published on June 6, 1977, the Commission recognized that future

experience and further information might warrant clarifying or other

changes to the rule. It is thus not possible in these short remarks

to anticipate and answer every circumstance which might arise.
-2

With this in mind, several things about Section 206 are particularly

worthwhile emphasizing. First, it imposes obligations on individuals.

The language of the section refers specifically to individual directors

or responsible officers, and these terms are further defined in the

Commission's Part 21. Thus, under Part 21, it is individuals who may

be subject to civil penalties. Our Office of Standards Development

representative will be providing examples of who these individuals are.

The statute is silent on the question whether an individual director or

responsible officer who has been compelled to pay a civil penalty may be

reimbursed by his employer. Unlike the proposed rule, the effective

Part 21 does not address the reimbursement question. The explanation

which accompanied publication of the rules in the Federal Register

indicates that the matter of reimbursement would be governed by State

law. Second, the section clearly applies to persons not licensed or

previously directly regulated by the Nuclear Regulatory Commission.

Section 206 specifically mentions suppliers of components. Third,

Section 206 is not unique. Other statutes impose sanctions for failure

to report defects or hazards; for example, the Federal Boat Safety Act

of 1971, the Consumer Product Safety Act and the National Traffic and

Motor Vehicle Safety Act.

Part 21 becomes effective and binding insofar as the obligation to

provide the required notification is concerned on August 10, 1977..

Should any of you have the misfortune to be cited for a civil penalty

under Part 21, the opportunities available to you to argue for different

language in the Part in the enforcement proceeding against you will

likely be very limited. Thus, if you have questions, it is better to

raise them now rather than later. While the rule goes into effect

shortly, you have a right under federal law to petition the Nuclear

Regulatory Commission to amend the rule. The rule also provides that an

exemption may be granted by the Commission upon application of an interested person when the Commission determines that such exemption is

authorized by law and will not endanger life or property or the common

defense and security and is otherwise in the public interest. A person

may also seek an interpretation from the General Counsel of a particular

section or matter covered by the rule, thereby indicating areas of

concern to him. These avenues wouldn't relieve you of the obligationto

comply with the Part before the petition or request was acted upon, but

they would be the proper way to get your concerns before the Nuclear

Regulatory Commission.
REMARKS BY

THE OFFICE OF STANDARDS DEVELOPMENT

TO PUBLIC REGIONAL MEETINGS ON 10 CFR PART 21

BY

W. E. CAMPBELL, JR

JULY 12-26, 1977

Development of the Part 21 Regulations

My objective is to provide information concerning the Part 21 rule making

and related amendments to other Parts of Title 10. These amendments concern some exemptions that will be discussed by the representative of the

Office of Nuclear Material Safety and Safeguards. It may be helpful if

you have available your copy of the Federal Register notice concerning

this effective rule making because I and other speakers will be making

some references to various sections. The Federal Register notice has

two parts. One is the "Statement of Considerations" or Preamble. For

Federal Register notice 42FR28891 this is all the material on the first

three pages down to "Part 2 - Rules of Practice". It is similar to the

"legislative history" and does not have the force of law or regulation.

The remaining portions of the notice will be incorporated into the Code

of Federal Regulations.

As a result of the enactment of the Energy Reorganization Act of 1974,

the Nuclear Regulatory Commission was required to promulgate new regulations to implement Section 206. It was decided to prepare one new

Part to cover all aspects of the regulations required under Section 206

instead of preparing a separate Part for each type of license that we

issue; for example, a Part 30 License or a Part 40 License or a Part 50

License. The rule making required under Section 206 of the Energy

Reorganization Act could have been accomplished by making appropriate

changes to the present Parts 30, 40, 50 etc., but it was felt that a

better way to do it would be to have one new Part. The proposed rule

was published on March 3, 1975. We received a large number of comments

on the proposed rule. My first illustration-indicates the source of

the comments on this proposed rule.
-2-

PROPOSED PART 21

COMMENT SOURCE

1 JAN 1976

UTI LITY 35

NUCLEAR STEAM

SUPPLIER SYSTEM 4

INDIVIDUALS 4

LAW FIRMS 4

EDUCATIONAL 3

ARCH ITECT/

ENGINEER 10

CONSTRUCTOR .10

SUPPLIER 16

SOCIETY/

ASSOCIATION 5

CONSULTANTS 4

GOVERNMENTAL 4

TOTAL COMMENTS' 134

Of these comments, 114 were received prior to the expiration of the

extended comment period. When the comment period closed the review and

resolution of these comments commenced. This review and resolution

included consideration of both the comments that were on time and those

that were late. To proceed to an effective rule a number of courses

were available.

1) Enter into a rule making hearing.

2) Revise the rule taking into account the comments received and

publish the rule again as a proposed rule for comment.

3) Revise the rule taking into account the comments received and

publish as an effective rule.

Because the significant issues regarding the proposed rule were

adequately discussed in the many comments received a hearing was not

deemed necessary. For the same reason it was not considered appropriate to publish the rule for comment again. The staff proceeded,

with Commission approval, to draft an effective regulation. As you

are aware the rule has been noticed on June 6, 1977. On July 7 and

18 correction notices were published. On July 7 a notice was published which delayed the effectivity of some portions.
-3-

In attempting to achieve an effective rule that was responsive to

Section 206 of the Energy Reorganization Act a number of major and

minor issues were addressed. One of these issues was:

"What level of individuals in an organization should be required

to notify the Commission of defects and noncompliance?"

The notice of proposed rule making requested specific comments in this

regard. This illustration shows a "typical utility organization (see

next page). It is indicative of the organization of most licensees in

that there are numerous tiers and numerous titles but in very few

organizations would the titles in one organization relate to the functional descriptions in other organizations where the same title was

used.

As used in Part 21, "director" was defined as an individual appointed

or elected according to law who is authorized to manage and direct the

affairs of a corporation, partnership or other entity. In the case of

an individual proprietorship, that individual is the director. Responsible officer was defined to mean the president, vice president or other

individuals in the organization of a corporation, partnership or other

entity who is vested with executive authority over activities subject to

Part 21. Activities such as design, construction, operation are included.

An officer, for example the Vice-President in Charge of Community Affairs

may not be a responsible officer in regardto Part 21. An individual

subject to this part may designate another individual to provide notification to NRC for him but the individual subject to Part 21 will remain

responsible for compliance with Part 21.

Another issue was:

"How should a defect be defined?"

The Energy Reporganization Act uses the phrase "defect which could create

a substantial safety hazard." It is necessary that important substantial

defects be differentiated from the inconsequential defects. We have

attempted to do this in the Part 21 definitions. Deviation and defect

are interrelated. For example, a procurred item is required to meet

certain requirements. If the item does not meet its prescribed requirements a deviation exists. Some deviations can create a substantial

safety hazard and others can not. The deviations that exists at time

of delivery or become known after delivery must be evaluated to determine ability to create a "substantial safety hazard". If the deviation

could create a substantial safety hazard then a defect exists. These

relationships will be discussed more fully as the remarks are presented.
VICE PRESIDENT

CONSTRUCTION

AND

ENGINEERING

VICE PRESIDENT

PROCUREMENT

VICE PRESIDENT

LEGAL AFFAIRS I

VICE PRESIDENT

COMPTROLLER

OFFSITE

I ONSITE

I

I

- FUNCTIONAL

- - - -COMMUNICATIONS
-5-

Part 21 has provided four definitions of defect as follows: first, a

defect is a deviation in a basic component delivered to a purchaser

where on the basis of an evaluation the deviation could create a substantial safety hazard (This defintion is primarily directed at the

offsite supplier) or second, a defect means the installation, use or

operation of a basic component containing a defect as defined above.

(This definition is primarily directed at the recipient, that is user,

of the component or service) or third, a defect is a deviation in a

portion of a facility subject to the construction permit or manufacturing licensing requirements of Part 50 provided the deviation could,

on the basis of an evaluation, create a substantial safety hazard and

the portion of the facility containing the deviation has been offered

to the purchaser for acceptance (This definition is primarily directed

at the on-site supplier) or fourth, a defect is a condition or circumstance involving a basic component that could contribute to the exceeding

of a safety limit, as defined in the technical specifications of a

license for operation issued pursuant to Part 50 (This definition is

primarily directed at a specific class of licensees).

It should be noted that the definitions applicable to suppliers are

pertinent only upon delivery of fabricated component. Deviations that

are identified by a supplier when the product is within his control,

by definition are not a defect unless they remain uncorrected upon

delivery of the defective component or service.

The Procurement Document is defined in Part 21 as "A contract that

defines the requirements which facilities or basic components must

meet in order to be considered acceptable by the purchaser."

The definition includes both an inter-organizational and an intraorganizational document that defines the technical requirements. This

document is the vehicle by which a supplier is informed that the procurement action comes under Part 21. To a responsible pressure vessel

supplier it should be obvious his product has significant safety importance and thus is within the scope of the regulation. To a supplier of

nuts and bolts, however, the safety significance is not clear; thus the

applicability of Part 21 may not be known without the procurement

document notification.

Section 206 of the Energy Reorganization Act used the term "basic

component."

Another issue was:

"How should the Commission define a "basic component"; for

example, how far down the tiers of suppliers should Part 21

be applicable?"
-6-

Since specific guidance in relationship to safety significant items in

the reactor field exists, that is, Regulatory Guide 1.29, it was decided

to take advantage of it in defining basic component.

UTILITY LICENSEE

(PART 50)

CONSULTANT/ CONTRACTOR N. S.S. S.

DESIGNER

BOLTS -RECOMMENDATIONS - U SII LN NUTS PUMP SUPPLIER SERVICES

ARCHITECT/ -PLATE I

ENGINEER MOTOR SUPPLIER REBAR

-DESIGN PAPER R -,WIRE •CONCRETE

-RECOMMENDATIONS V F RAME

DECISIONS -NUTS

S SERVICES L CONTROLLERS

This illustration shows the numerous items, organization, activities and

products that are used in the design and construction of a nuclear power

reactor. It is realized that all organizations, activities and products

are not such that they "could create a substantial safety hazard."

"Basic component" as applied to nuclear power reactors means a plant

structure, system, component of part thereof necessary to assure (1)

integrity of the-reactor coolant pressure boundary or (2) the capability

to shut down the reactor and maintain it in a safe shut down condition

or (3) the capability to prevent or mitigate the consequences of accidents which could result in potential offsite exposures comparable to

those referred to in Section 100.11 of Title 10. When applied to other

regulated activities it means a component, structure, system or part

thereof that is directly procured by the licensee of the facility or

activity subject Part 21 and in which a defect or failure to comply

could create a substantial safety hazard. The services of design,

inspection, test or consultion associated with a basic component are

within the scope of Part 21. These definitions will be discussed

further by representatives of other offices.
-7-

Another issue was:

"How should substantial safety hazard be defined."

Substantial safety hazard means the loss of a safety function to the

extent that there is a major reduction in the degree of protection

provided to public health and safety. Applicable criteria for the

determination of substantial safety hazard are given in the statement

of considerations. These include a) moderate exposure to, or release of,

licensed material b) major degradation of essential safety-related

equipment and c) major deficiencies involving design, construction,

inspection, test or use. These will be discussed more by the representatives of the Office of Nuclear Reactor Regulation and Nuclear

Material Safety and Safeguards.

Another issue was:

"What types of business that are not licensed or otherwise

regulated are within the scope of Part 21?"

The legislation is explicit in regard to owning, constructing, operating

and supplying the components. Due to the diverse nature of this industry

there are many "build to print" contracts and many "design and build,"

"design only" or "consult only" contracts. The entire supply chain

involved in the production of a basic component for a power reactor

that could create a substantial safety hazard, because of a defect in

the component, is within the scope of Part 21. The safety-related operations of constructing, owning, operating and supplying components each

have within them safety-related activities, that is, consultating,

design, inspection and test. The definition of "basic component"

and "operation" have been defined so as to include these safety-related

activities. This aspect of the proposed rule was the subject of numerous

comments.

The relationship of one person subject to Part 21 to another from a

different organization, who was also subject to Part 21, received

many comments. Also the relationship of individuals not subject to

this part was also the source of many comments.

Another issue was:

"Should an officer or director of a organization responsible for

procuring or producing a component be required to make a Part 21

notification to the Commission concerning either a defect or noncompliance not within responsibility of his organization?"
-8-

If an individual or individuals subject to Part 21 becomes aware of a

defect that is not within the responsibility of his organization he

is not required by Part 21 to submit a notification. In such cases,

the individual that gains the knowledge of a defect in an item outside

his organization's area of responsibility would be encouraged to report

but would not be subject to a civil penalty if he did not report it.

An individual, such as employee, who is not subject to the Part 21 is

not required to make a Part 21 notification when he gains information

concerning a defect or noncompliance and therefore is not subject to

civil penalties. It is anticipated that the organizations within the

scope of Part 21 will establish, if they have not already done so, a

management concept such that the individual will feel free to identify

his safety-related concerns in house.

You will note that Section 21.2 states:

"§ 21.2 Nothing in these regulations should be deemed to preclude

an individual not subject to the regulations in this part from

reporting to the Commission a known or suspected defect or failure

to comply and, as authorized by law, the identity of anyone so

reporting will be withheld from disclosure."

This policy is in line with the long standing Commission policy for

securing safety-related information. The statement of considerations

includes the following:

"Moreover, a longstanding Commission policy encourages individuals

not subject to the Commission's regulations to report to the

Commission a known or suspected defect or failure to comply; as

authorized by law, the identity of anyone so reporting will be

withheld from disclosure."

The time of notification is another subject of concern. The sequence of

events and timing subsequent to deviation identification, evaluation and

providing information to the responsible officer or director is shown on

this illustration.
-9-

DIRECTOR/RESPONSIBLE OFFICER

OBTAINS INFORMATION

FI I I INITIAL NOTIFICATION INITIAL NOTIFICATION

NON-WRITTEN -WITHIN 2 DAYS WRITTEN • WITHIN 2 DAYS I WRITTEN NOTIFICATION

WITHIN 5 DAYS

ORIGINAL REPORT TO

INSPECTION & ENFORCEMENT HEADQUARTERS

OR REGIONAL OFFICE I

THREE COPIES TO INSPECTION &

ENFORCEMENT HEADQUARTERS

I I INSPECTION & ENFORCEMENT MANAGEMENT INFORMATION

AND PROGRAM CONTROL

APPROPRIATE LICENSING

OFFICE

*INDIVIDUAL SUBMITTING MAY CHOOSE

The rule presently is silent in regard to the time from when identification

of a deviation occurs to the time of notification to the Nuclear Regulatory

Commission. At present we consider this time period to be unquantifiable

for all facets of the activities regulated by NRC. The times identified

are those after the responsible officer or director receives the information of the evaluation. In the event that the time between identification of the deviation and notification is provided to NRC must be

quantified then it will be the subject of future regulatory action.

Part 21 is not the "last word" in the prevention of safety hazards. It

will not cure the problem of an inadequate procurement document, or an

inspector who doesn't inspect or faulty design. This rule is only one

of a number of the reporting and notification tools presently utilized

by the Nuclear Regulatory Commission to insure that we have the

necessary safety-related information.

I would like at this time to call to your attention the stated Commission

intentions regarding Part 21 as indicated in the statement of considerations and as discussed by the representative of the Office of the Executive

Legal Director.
- 10 -

"The Commission intends to examine closely the implementation of

Part 21 with the view to making any clarifying or other changes

that may be warranted in the light of expericence. In particular,

insufficient experience has been accumulated to permit the writing

of a detailed regulation at this time that would provide a precise

correlation of all factors pertient to the question of what is a

significant safety hazard. Part 21 is intended in this regard as

an initial effort to identify a number of the factors involved with

the question of significant safety hazard."
REMARKS BY

THE OFFICE OF NUCLEAR REACTOR REGULATION

TO PUBLIC REGIONAL MEETINGS ON 10 CFR PART 21

BY

WILLIAM T. RUSSELL

JULY 12-26, 1977

HOW PART 21 IMPACTS

REACTOR LICENSING, LICENSEES AND SUPPLIERS

My name is William Russell and I am a Project Manager in the Office of

Nuclear Reactor Regulation's Division of Operating Reactors. My objective is to provide some insight as to the scope of reactor activities

to which Part 21 applies, the general criteria that we will be using in

our evaluation of reported Part 21 items and how we will factor this

information into the reactor licensing process. I will also discuss

the impact of this new rule on reactor licensees, vendors, contractors

and consultants.

Background

The Energy Reorganization Act of 1974, which established the Nuclear

Regulatory Commission, provided a specific review function to include "monitoring, testing and recommending upgrading of systems designed to

prevent substantial health or safety hazards." In partial fulfillment

of this, NRC reviews operating experience, including reports from NRC

inspectors, reactor licensees and vendors. We also review information

obtained from NRC research and from foreign exchange agreements. As

new technical information and operating experience become available

the Office of Nuclear Reactor Regulation determines whether such

information could significantly alter previously determined levels of

reactor safety. When we conclude that the level of safety has been or

may be degraded, timely licensing action is taken. The action taken

varies based upon the potential hazard to the public health and safety. These actions can range from an order to shut down a reactor to a request that affected licensees determine the effect of the new technical

information or operating experience upon their facilities. Through this process of identifying and resolving technical issues and applying this information to operating reactors, a data base of experience is

evolving that is having a positive impact on new plant designs.
-2

Typical Part 21 Report Scenario

The reporting of defects and noncompliance pursuant to 10 CFR Part 21

will be incorporated into the reactor licensing process in a similar

manner. A typical scenario for a safety-related defect reported by a

basic component supplier for a power reactor. facility may start with

the discovery that a basic component already furnished by that supplier

deviates from the procurement document specifications. The supplier

would evaluate the deviation or would report the deviation to the purchaser to allow the purchaser to determine if a substantial safety hazard

is involved. It is expected that in most instances the supplier's evaluation would require discussion with the purchaser. If, based upon this

evaluation, it is concluded that the deviation could create a substantial

safety hazard then the deviation must be reported as a defect to the NRC.

Before describing how the NRC evaluates and uses Part 21 reports, I will

discuss a substantial safety hazard.

The general criteria which we will use in evaluating a substantial safety

hazard are identified in the statement of consideration which was published

with the new rule. These criteria include: moderate exposure to, or

release of, licensed material; major degradation of essential safety- related equipment; and major deficiencies in design, construction,

inspection, test or operation. For a power reactor, Regulatory Guide

1.29, identifies the essential safety-related equipment which must remain

functional during the Safe Shutdown Earthquake. These safety-related

equipments are necessary to ensure (1) the integrity of the reactor

coolant pressure boundary, (2) the capability to shutdown the reactor

and maintain it in a safe shutdown condition and (3) the capability to

prevent or mitigate the consequences of accidents which could result in

potential offsite exposure comparable to the guideline exposure of 10 CFR

Part 100. Under the new rule these essential safety-related equipments

are defined as "basic components." Major degradation of such basic components, or a condition or circumstance involving a basic component

that could contribute to exceeding a safety limit is considered a substantial safety hazard. In the case of a redundant basic component, a

condition, circumstance or deviation which could cause a failure of that

component must be evaluated to determine if there maybe a loss of safety

function for the affected basic component or a major reduction in the

degree of protection provided to public health and safety. Therefore; a

defect in a basic component, even though a redundant component exists,

could be reportable under Part 21.

The Office of Inspection and Enforcement will perform the initial

evaluation of the safety significance of the reported defect or noncompliance and will evaluate the action being taken by the supplier
-3-

and licensee. I&E also determines whether an unreviewed safety issue

may exist, if a licensing action is required or if inspection or enforcement action is necessary. If a licensing action or unreviewed safety

issue is involved, the Office of Nuclear Reactor Regulation (NRR) would

be advised and would assume lead responsibility for further NRC action.

Within NRR, the Division of Operating Reactors has the responsibility to

collect and evaluate experience with operating reactors to assure that

appropriate and timely corrective action is taken and to feed back

information to other NRR divisions conducting evaluations of proposed

reactor facilities. The reported defect is also evaluated to determine

if it is common to several reactor facilities. Our review may require the affected reactor licensees to submit additional information and

analysis. Interim licensing action may be taken to assure the public health and safety during our review. The interim licensing action could

be an order to shutdown, reduce power or other restrictions or conditions on reactor operation pending final resolution of the problem. The

final licensing action could require replacement of the defective component or appropriate restrictions on reactor operation. The scenario I

have just described is an example of the feedback of reports of defects

and noncompliance into reactor licensing.

Impact on Reactor Licensees and Supplier Organizations

I would like to shift gears for a moment to discuss the impact of the

new rule on reactor licensees and upon private industry involved in

design, construction, test, inspection and consultation for nuclear

reactors. For several years we have been requiring permit holders to

report significant deficiencies and deviations discovered which could

adversely affect the safety of future operation. This reporting is

required as a condition of the facility construction permit under

10 CFR 50.55(e). Similarly, the Technical Specifications issued as

a part of every power reactor operating license require the reporting of significant failures, malfunctions, degradation and deviations as

Licensee Event Reports., Regulatory Guide 1.16 identifies the type of

information to be reported in Licensee Event Reports. Therefore, for

the power reactor licensee, the notification requirements of the new

rule are different only in scope from reporting requirements which are

already in place. Duplicate reporting under Part 21 is not required. For example, a Licensee Event Report, which includes all appropriate information required for a Part 21 Notification, would satisfy the

requirement that the licensee's director or responsible officer has

actual knowledge that the Commission has been adequately informed and

a separate Part 21 Notification would not be required. Most research

and test reactor licensees are subject to similar reporting requirements

as conditions of their construction permits and their operating license

Technical Specifications.
-4-

The notification of defects and noncompliance which could create a

substantial safety hazard is necessary to insure that potential reactor

safety hazards are promptly identified, evaluated and resolved. It is

for this reason that the notification requirements of Part 21 include

organizations supplying safety-related equipment and safety-related

services. Safety-related services include design, engineering, testing

inspecting and consulting services which could, if they contained defects,

create a substantial safety hazard. Examples of these types of safetyrelated services and software are:

* Nondestructive examination of safety-related welds,

* Design of safety-related pipe hangers and supports,

. Seismic and geologic surveys for a reactor site,

• Specification of safety-related hardware characteristics,

* Computer codes for reactor analysis,

• Emergency procedures, and

• Fire protection inspections by fire consultants

Organizations providing these types of safety-related services, as well

as licensees and firms that physically construct facilities or supply

basic components, must establish procedures to identify deviations from

technical requirements and must provide for evaluations to determine if

defects exist. These procedures must also assure that directors and

responsible officers are informed of the existence of defects in delivered products. For some organizations the implementation of new internal

procedures for evaluation of deviations will not be required to accommodate

Part 21. Company procedures for the evaluation of deviations which were

previously performed as part of good engineering and management practice

may be sufficient. Records in connection with design, manufacture,

fabrication, placement, erection, test and inspection of basic components and facilities, sufficient to insure compliance with the new

rule shall be maintained. The records required to be kept under the

quality assurance programs specified under 10 CFR Part 50 Appendix B

should satisfy the record keeping requirements of the new rule.

Tie-In With Safeguards Rule

Before I conclude I would like to address one additional item. When

Part 21 was published in the Federal Register, the statement of considerations addressed failures to comply or defects in a security system.
-5

The NRC recently adopted a new regulation which identified additional

requirements for the physical security of nuclear power reactors. The

primary safeguards concern for nuclear power reactors is for potential

acts of sabotage or terrorism. Such acts are of concern because they could lead to the release of significant amounts of radioactive material

which could endanger the public health and safety. Therefore, failures

to comply or defects in a security system can contribute to the creation

of a substantial safety hazard and are within the scope of Part 21. For

example, a defect or noncompliance which allows or could allow an unauthorized individual to gain access to a vital area of a nuclear power plant without being detected by means other than visual surveillance,

including remote visual-electronic surveillance, is considered to be a

substantial safety hazard and is therefore reportable under Part 21.

Conclusion

In conclusion, I have outlined the basic method by which operating experience including reports of defects and noncompliance are reviewed

and as appropriate fed back into the licensing process. I have also

discussed the impact of the notifications and record keeping requirements of the new rule upon both reactor licensees and others in the

nuclear reactor industry. The process of identifying deviations, conducting evaluations and notifying the NRC of substantial safety hazards

will require additional effort and some additional costs. However, the

long term benefit of being able to anticipate potential safety problems

is substantial.
REMARKS BY

THE OFFICE OF NUCLEAR MATERIAL SAFETY AND SAFEGUARDS

TO PUBLIC REGIONAL MEETING ON 10 CFR PART 21

BY

W. A. NIXON

J. E. ROTHFLEISCH

JULY 12-26, 1977

The Impact of Part 21 on Material

and Fuel Cycle Licensees and Suppliers

As a staff member of the Office of Nuclear Material Safety and Safeguards,

I am going to describe, briefly, how the new regulation, Part 21, applies

to material and fuel cycle licensees.

When the proposed version of Part 21 was first published, I believe many

people thought it applied only to nuclear reactors. In fact, Part 21

applies, with a few exemptions I will describe later, to:

1) all byproduct material licenses issued under Parts 30

through 36

2) source material licenses issued under Part 40

3) special nuclear material licenses covered by Part 70

4) the packaging of radioactive material for transport, Part 71 and

5) fuel cycle facilities licensed under Part 50.

In earlier talks this morning, the history and legal aspects of Part 21

were discussed and the application of Part 21 to nuclear power reactors

described. Rather than repeat information already presented on the

general content and applicability of the rule, I will concentrate on the

specific aspects of the rule that are important for determining how the

rule is applied to material and fuel cycle licensees. The definition of

basic component as it applies to material and fuel cycle licensees is

extremely important. Basic component, for these licensees, is defined

in paragraph 21.3 as "a component, structure, system or part thereof

that is directly procured by the licensee of a facility or activity

subject to the regulations in this part and in which a defect or failure

to comply with any applicable regulation in this chapter, order or

license issued by the Commission could create a substantial safety

hazard." This definition limits the supplier organizations subject to

Part 21 to those that directly supply the licensee. Let me repeat this,

responsibility for complying with Part 21 does not, in the case of

organizations supplying material and fuel cycle licensees, extend past

the first tier of suppliers. The term basic component does include

design, inspection, testing or consulting services important to safety

that are associated with component hardware, and organizations supplying

such services directly to the licensee would be subject to Part 21.
-2-

Other aspects of the new rule apply to material and fuel cycle licensees

and first tier suppliers just as they do to power reactor licensees and

suppliers. Of particular importance are the requirements for posting,

notification, procurement documents and inspection and records. We

believe that most evaluations of deviations and reports to the Commission of defects will be made by licensees, because many suppliers

would not have all of the information needed to evaluate the significance

of a deviation. As indicated in the Statement of Considerations, appropriate criteria for determination of the existance of a substantial

safety hazard include:

'Moderate exposure to, or release of, licensed material

*Major degradation of essential safety related equipment or

*Major deficiencies involving design, construction, inspection,

test, or use of licensed materials or facilities.

To the extent that failures to comply or defects in a security system

could contribute to a substantial safety hazard, such failures and

defects could be within the scope of Part 21. Components of security

systems that do not meet performance standards or which fail could

present the potential for safety hazards. When such anomalies are

noted to exist they should be evaluated pursuant to Part 21.

I mentioned earlier that there were a few exemptions from Part 21. These

exemptions are for some uses of radioactive materials authorized by General

Licenses in 10 CFR Parts 31, 35, and 40. The exemptions in Part 31 apply

to small quantity uses in safety devices, gauges, ice detection equipment

and clinical or laboratory testing. The exemption in Part 35 applies to

medical use of specified quantities of byproduct material. Under Part 40,

users of small quantities of source material and the use of depleted

uranium in certain industrial products or devices are exempt. The

specific exemptions are identified in changes to the regulations

associated with the adoption of Part 21.

That completes my formal presentation. We will be available this

afternoon to answer any questions you may have. Thank you.
REMARKS BY

THE OFFICE OF INTERNATIONAL PROGRAMS

TO PUBLIC REGIONAL MEETINGS ON 10 CFR PART 21

AT SAN FRANCISCO, CHICAGO AND PHILADELPHIA

BY

DR. J. D. LAFLEUR, JR.

JULY 19-26, 1977

Part 21 and its Effect on Exporters

As you know, Section 206 requires reporting of defects and non-compliance

in "licensed" facilities and activities.

The first version of the rule was quite worrisome to many exporters, who

seemed to be placed in the role of having to report to NRC on defects

in certain foreign nuclear power plants. It is not the intent of NRC

to assume the responsibility for the safety of nuclear energy overseas,

nor do we intend to make U. S. vendors, who happen to know about safety

problems overseas, report them to us, if these problems do not affect

safety in the United States.

Under international agreements we now receive a large amount of important

nuclear safety information, on facilities similar to US facilities, from

foreign regulatory authorities. Exporters, who also happen to have the

safety responsibility for similar US plants, are, of course, involved in

the analysis and correction of any defects and non-compliances in the

affected US plants. Most of these foreign governments do not make early

announcements of all safety problems that occur in their nuclear facilities,

and they do not wish to have NRC make premature announcements of those

foreign problems for them. We do not wish to lose these foreign sources

of important safety information, nor do we wish to antagonize these

friendly governments. Nor do we wish to make US vendors the source of

information of foreign plants against the will of the foreign governments

involved, if such information is not necessary for domestic safety. The

new rule, and the Federal'Register notice announcing it, contain clarification in regard to the applicability of Part 21 to the licensed activity

of exporting. Persons who are only licensed to export nuclear facilities

or materials, and who do not otherwise construct or operate facilities or

activities or supply components, are not subject to the new part.

Individuals subject to this part need report only defects or failures to

comply which could create a substantial safety hazard in facilities and

activities within the United States. In other words, they must.report

on defects or failures to comply in the U. S. facilities for which they

are responsible parties, not in overseas plants they happen to know

about. Further, any notification submitted in accordance with Part 21

may be withheld from public disclosure if the notification falls within

one of the exemptions of the Freedom of Information Act, or if withholding

is otherwise authorized by law.
-2--

Let's look at a specific example:

Suppose a U. S. vendor has a contract to do work in a foreign country

(or possibly is an exporter of a foreign plant). In the course of this

overseas work, that vendor learns of a defect in a foreign plant that

reflects a similar defect in a U. S. domestic plant. Suppose, also,

that that vendor is a "responsible" party under 21, for the domestic

plant. This vendor reports to NRC the defect in the domestic reactor,

but does not provide certain details about the applicable foreign

experience because his overseas client or the foreign government has

not given him permission to disclose the information publicly.

First, does the vendor have to supply these details?

No, he does not, providing enough explanation is given to NRC to make

the information usable in NRC safety work.

This leads to another question: If this vendor requests that information

about the foreign experience not be publicly disclosed, will NRC honor

this request? Yes, if the information is exempt from public disclosure

under U. S. law, and the NRC determines that it is in the public interest

to protect it.

I have two examples of such information that could be exempt from public

disclosure under the U. S. Freedom of Information Act:

a) If the information is proprietary information, that is, information

given in confidence, the disclosure of which would do substantial harm

to the vendor's competitive position, the documents containing that

information could be withheld under Exemption 4 of Freedom of Information Act.

b) If there is a clear statement from the involved foreign government

that the information can be given to NRC only under condition that it

be protected from public disclosure, that information may be withheld

under either Exemption 4 or Exemption 1 of Freedom of Information Act.
REMARKS BY

OFFICE OF INSPECTION AND ENFORCEMENT

TO PUBLIC REGIONAL MEETINGS ON 10 CFR PART 21

BY

G. W. REINMUTH

JULY 12-26, 1977

The Inspection and Enforcement of Part 21

In the past, when a new rule or requirement was written into our

regulations, we have noted that those who must apply the rule to their

activities will often have difficulty in translating the requirement in

the intended manner. Frequently the user will react to one extreme or

the other, depending upon whether the company is the buyer or the seller.

As an example, when the 10 CFR Part 50, Appendix B quality assurance

criteria were initially applied, we felt licensees frequentlyresponded

by asking more of their suppliers than was intended. On the other hand,

when we inspected the licensee's own QA programs and those of his

principal contractors, we noted the tendency to require less of

themselves than was called for. I suppose this a normal reaction

and is the consequence of writing a good portion of our rules in the

form of criteria rather than in specification-type requirements.

From the words that you have heard this morning, you are by now aware

that Part 21 will probably also present problems in application. It

was a difficult rule to write - parts of it includewords such as

reasonably indicating, responsible officer, could create a substantial

safety hazard, etc. Any time one has to apply these kinds of words to

a specific work action, reasonable men will differ in their understandings

of precisely what the words mean. The message I'm trying to convey is

that Part 21 is a complex rule that must be read, studied, comprehended,

judgment applied and perhaps more than a reasonable effort put forth to

live with it in our everyday affairs.

With respect to the Office of Inspection and Enforcement's role in

*inspecting against the rule, we do not intend setting up a special new

inspection program identified as the Part 21 Inspection Program. We

look upon this rule as another requirement which must be covered by our

current inspection programs. Those programs cover both reactor and

material licensees, and the inspection of reactor contractors and vendors.

Basically, Part 21 is a reporting requirement, thus our inspectors will

not only be investigating and evaluating those things that are reported,

but will be looking for situations or conditions which may not have been

reported but should have been.
-2-

Obviously, there are other specific requirements in the rule which can

and will require verification - such things as:

• Proper posting of requirements.

• Preparation and implementation of administrative procedures to

assure that Part 21 type events are appropriately identified,

evaluated and reported.

• Inclusion of Part 21 requirements in procurement documents.

• Maintenance of records,

and others. These, of course are the relatively easy items to address.

With respect to our enforcement of Part 21 matters, again we do not see

the need for modifying our present criteria. For those of you not

familiar with our practices, we define noncompliance as a failure to

comply with a regulatory requirement whether that requirement is a 10 CFR

regulation, a license condition or any other form of requirement.

Noncompliance items are further categorized into three categories of

severity: violations, infractions, and deficiencies, with a violation

being the most severe category. By definition, failure to report

constitutes a violation. Sanctions applied to noncompliance items are

again imposed according to severity threholds. These same rules and

criteria will be applied to activities falling within the scope of

Part 21.

You may note that the rule permits a six month delay in implementation

of the posting requirements, the preparation of internal administrative

procedures and inclusion of Part 21 provisions in procurement documents.

This delay was intended to allow sufficient time for planning and

preparation. I must emphasize however, that after January 6, 1978, my

office is obligated to enforce the rule as written, therefore our

inspectors will expect to see these provisions in place after that date.

In my view, the real difficulty with Part 21 will be to decide what is

or what isn't reportable under the rule. It is impossible for any of

us on this panel or you in the audience to anticipate all the conditions

or situations which might be reportable - or even typical ones. None

of the reportable events will be black or white cases - each will

required a substantial application of sound engineering judgment and

evaluation - on your part and on ours. For guidance, reactor licensees

may wish to review their existing procedures currently applied to the

reporting of 10 CFR 50.55(e) type deficiencies, since the administrative

controls that are necessary to assure satisfaction of those requirements

might also be used to satisfy the Part 21 requirements. Keep in mind,

however, that Part 21 covers a much broader range of activity, unlike

50.55(e) which is limited to holders of construction permits only.
-3-

For those companies not directly licensed by the NRC, but nevertheless

subject to Part 21, may I suggest that you establish with your customers

and suppliers a clear understanding of how you intend to administer your

affairs in order to comply with the rule. Even though compliance with

Part 21 may not be a requirement of current in-house contracts and may

not show up in new contracts during the next several months, since

this provision of the rule is not fully effective until January 6, 1978,

defined suppliers of nuclear products and services should be aware that

they are still subject to the Part 21 requirements. Further, the

responsibility for reporting cannot automatically be delegated or assumed

to be the sole responsibility of the buyer.

Since the Office of Inspection and Enforcement is the designated

receiving office for Part 21 reports, I would like to point out the key

details of the reporting requirements and the mechanics for doing so.

This information is shown in Attachment A.

Also the names, titles, addresses and phone numbers of our Headquarters

and Regional Directors are provided for your convenience in Attachment B.

We hope that your need for them will be negligible.

In summary, I would like to re-emphasize that Part 21 represents a new

rule - broad in its implications - but mandated by Congress. Therefore,

it is in your interest to assure yourselves that you are familiar with

it, difficult as it might be. We, on the other hand, are obliged to

inspect for compliance and enforce its provisions.
-4-

Attachment A

When and how

To whom

By whom

Detail required

Part 21 Reporting Requirements

Within two days following receipt of information.

(Written or other)

Written report within five days.

Director, Office of Inspection and Enforcement

Regional Director, Office of Inspection and

Enforcement

Individual director, responsible officer or

authorized individual.

See Part 21, Paragraph 21.21(b)(3)

Other as requested by Commission Paragraph 21.21(c).
- 5-

Attachment B

Office of Inspection and Enforcement

Mailing Addresses and Phone Numbers

Ernst Volgenau, Director

Office of Inspection and

U. S. Nuclear Regulatory

Washington, D. C. 20555

(301) 492-7397

Enforcement

Commission

Boyce H. Grier, Director, Region I

Office of Inspection and Enforcement

U. S. Nuclear Regulatory Commission

631 Park Avenue

King of Prussia, Pennsylvania 19406

James P. O'Reilly, Director, Region II

Office of Inspection and Enforcement

U. S. Nuclear Regulatory Commission

230. Peachtree Street, N. W., Suite 1217

Atlanta, Georgia 30303

James G. Keppler, Director, Region III

Office of Inspection and Enforcement

U. S. Nuclear Regulatory Commission

799 Roosevelt Road

Glen Ellyn, Illinois 60137

E. Morris Howard, Director, Region IV

Office of Inspection and Enforcement,

U. S. Nuclear Regulatory Commission

611 Ryan Plaza Drive, Suite 1000

Arlington, Texas 76012

Robert H. Engelken, Director, Region V

Office of Inspection and Enforcement

U. S. Nuclear Regulatory Commission

1990 N. California Boulevard, Suite 202

Walnut Creek, California 94596

(215) 337-1150

(404) 221-4503

(312) 858-2660

(817) 334-2841

(415) 486-3141
Part II - Federal Register Notice Material

Relating to 10 CFR Part 21

With the original printing only the one available Federal

Register Notice was included in NUREG-0302. This revision contains

two additional Federal Register Notices which provide information

on a change in the effective date for providing the Commission with

notifications of a failure to comply, or a defect and editorial

revisions to the 10 CFR Part 21 regulation.
RULES AND REGULATIONS 28891

ADDITIONAL MATERIAL

Title 0-Energy

CHAPTER I--NUCLEAR REGULATORY

COMMISSION

Reports to the Commission Concerning Defects and Noncompliance

AGENCY: U6S. 'Nuclear Regulatory

Commission.
28892 PREAMBLE RULES AND REGULATIONS

ACTION: Final rule.

SUMMARY: The Nuclear Regulatory

Commission is amending Its regulations

to requiredirectors and responsible officers of firms and organizations building,

operating or owning NRC-licensed facilities, or conducting NRC-licensed activities, to report failures to comply with

regulatory requirements and defects in

components which may result in a substantial safety hazard. Also covered under the new regulations are directors

and. responsible officers of firms and

organizations supplying safety-related

components, including safety-related

design, testing, inspection and consulting

services.

NRC licensees and other firms and.

organizations covered by the new regulations must adopt internal procedures to

assure that safety-related defects and

noncompliance are brought to the attention of responsible officers and directors.

Those individuals, in turn, will be required to notify the Commission within

two days, and file a written report within

five days, of learning of the defect or noncompliance. Directors and responsible officers may designate an employee to

provide on their behalf 'the notification

to NRC.

EFFECTIVE DATE: July 6, 1977. Certain

obligations under the effective rule are not imposed until January 8, 1978.

FOR FUR7HER INFORMATION CONTACT:

Mr. W. E. Campbell, Jr., Office of

Standards Development, U.S. Nuclear

Regulatory Commission, Washington,

D.C. 20555. Phone 301-443-6917.

SUPPLEMENTARY INFORMATION:

On March 3, 1975. the Nuclear Regulatory Commission published In the FPrRA.AL REGISTER (40 FR 1832) for public

comment proposed amendments to 10

CPR Parts 2, 31, 35, and 40 of its regulations and a proposed new Part 21 to Its

regulations, "Reporting of Defects and

Noncompliance."

The purpose of these proposed amendments and the new proposed Part 21 Is to

implement section 206 of Pub. L. 93-438,

the Energy Reorganization Act of .1974,

as amended.

Section 206 of the Energy Reorganization Act of 1974 as amended, reads as follows: "NONCOMPLsUANCE

Sec. 208. (a) Any Individual director, or

responsible officer of a firm constructing,

owning, operating, or supplying the components of any facility or activity which Is licensed or otherwise regulated pursuant to

the Atomic Energy Act of 1954, as amended,

or pursuant to this Act, who obtains information reasonably indicating that such

facility or activity or basic components supplied to such facility or activity- . (1) Fails to comply with the Atomic Energy Act of 1954. as amended, or any applicable rule, regulation. *order. or license of

the Commission relating to substantial

safety hazards, or

(2) Contains a defect which could create

a substantial safety hazard, as defined by

regulations which the Commission shall

promulgate. shall immediately notify the

Commission of such.failure to comply,-or of

such defect, unless such person has actual

knowledge that the Commission has been

adequately informed of such defect or failure to comply.

(b) Any person who knowingly and consciously fails to provide the notice required

by subsection (a) of this section shall be

subject to a civil penalty in an amount equal

to the amount provided by section 234 of

the Atomic Energy Act of 1954, as amended.

(c) The requirements of this section shall

be prominently posted on the premises of

any facility licensed or otherwise regulated

pursuant to the Atomic Energy Act of 1954.

ar amended.

(d) The Commission is authorized to conduct such reasonable inspections and other

enforcement activities as needed to Insure

compliance with the provisions of this section."

The new Part 21 requires that the directors and responsible officers of organizations that construct, own, operate or supply components of a facility or activity that is licensed or otherwise regulated by the Nuclear Regulatory Commission inform the Commission If they obtain information reasonably Indicating that such facility, activity or basic

component fails to comply with regulatory requirements relating to substantial

safety hazards or that such facility, ac- tivity, or basic component contains a defect which could create a substantial

safety hazard. Part 21 additionally re- quires that these organizations establish

procedures to evaluate deviations from

the technical requirements of the procurement documents or Inform the purchaser concerning the deviation in order

that the purchaser evaluate the deviation .or have It evaluated. The organiza- tions subject to the regulations in Part

.21 may be many procurement tiers away

from the holder of a license to construct or operate a nuclear power reactor. If

the license is other than to construct or operate a nuclear power reactor, then

the organizations subject to the regulations are those organizations that directly supply the licensee of the facility or activity. The directors and responsible officers of these organizations will be

subject to a fine of up to $5,000 for each

deliberate failure to notify the Commission of the existence of such a defect or noncompliance. The organizations subJect to Part 21 regulations must also

maintain records, post copies of specific documents, inform procurement subtler

suppliers of their responsibility under

Part 21 and allow Inspection of their

premises, facilities and activities by duly

authorized representatives of the Commission.

The Commission requires that a num- ber of reports and notifications be submitted by licensees, These include licensee's report of incidents required by 10

CFR 1.20.403, permit holder's notification of design or construction deficiencies required by 10 CP §50.55(e) (1),

and licensee's report of theft or attempted theft of special nuclear material

required by 10 CFR 1 70.52. Other Commission regulations provide for receipt of

various kinds of requests or information.

For example, 10 CPR § 2.802 provides for

petitions to issue, amend or rescind regulations, and 10 CFR § 19.16 provides for

notifications from workers in regard to

radiological hazards. These communications from licensees snd the public are methods of securing information con- cerning the implementation effectiveness

of Commission regulations. This information Is an essential ingredient of sound

regulation. The regulations in Part 21

add another required notification. Moreover, a longstanding Commission policy

encourages individuals not subject to the

Commission's regulations to report to the

Commission a known or suspected defect or failure to comply; as authorized by

law, the identity of anyone so reporting

will be withheld from disclosure.

The Commission intends to exgmine

closely the implementation of new Part

21 with a view to making any clarifying or other changes that may be warranted

in light of experience. In particular, insufficient experience has been accumu- lated to permit the writing of a detailed

regulation at this time that would provide a precise correlation of all factors

pertinent to the question of what Is a significant safety hazard. *Part 21 is intended in this regard as an initial effort

to identify a number of the factors involved with the question of significant

safety hazard. Further, additional guid- ance in the form of regulatory guides

may be developed should experience with

the application of Part 21 indicate the

need for such guidance. In this regard, we expect that the implementation efforts of the staff and those subject to the

rule, and the views of interested mem- bers of the public, should provide the

necessary data base for such further

guidance.

During the development of the Energy

Reorgainization Act, Congress Identified a need for an effective means to "antici-

.pate problems before the event." Section

208 was developed to fill that need.

Interested persons have been afforded an opportunity to participate In the development of Part 21 and the associated

amendments. The more important

changes made to Part 21 are listed below

and are based largely, on consideration

of public comments.

(1) The individuals subject to the no- tification requirement of Part 21 have

been restricted to. (a) directors and (b)

officers vested with executive authority over activities subject to this part. These

individuals may Identify an individual

that is authorized to provide notification

to the Commission.

This new part is only one of many of

the reporting channels that concerns defects or noncompliance, e.g., 10 CFR

50.55(e). Individuals that are subject to

the requirements of this part that be- come aware of a defect or noncompliance

that is outside the responsibility of their

organization and individuals that are not subject to the requirements of any

part of Title 10 are encouraged, but not

required, .to report to the Commission

known or suspected defects or failure to

comply. As authorized by law, the identity of anyone so reporting will be withheld from disclosures.

(2) Part 21, as adopted, does not specify whether firms may reimburse directors or responsible officers Zor civil

Penalties imposed pursuant to these regulations, and Instead allows this question

FEDERAL •iEGISTER, VOL 42, NO. 108-MONDAY, JUNE 6, 1977
to be resolved in accordance with applicable state law.'

(3) The definition of "defect," as applied to components themselves, has been

restricted to include those deviations in

delivered coniponents from technical requirements included in the procurement

document that could, on the basis of an

evaluation, create a substantial safety

hazard. Defect also includes a deviation

in a portion of the facility subject to the

construction permit or manufacturing

licensing requirement of Part 50 provided the deviation could, on the basis of an

evaluation, create a substantial safety

hazard and the portion of the facility

containing the deviation has been offered to the purchaser for acceptance.

Whether such deviation could result in

a substantial safety hazard is determined

during the deviation evaluation. Defect

also includes, for facilities licensed for

operation under Part 50, any condition or circumstance involving a basic component that could contribute to the ex- ceeding of a safety limit as set forth in

the operating license technical specifications.

(4) The definition of basic components

has been divided into two parts: one part

is applicable to power reactors licensed

under Part 50 and the second part is

applicable to activities licensed pursuant

to Parts 30. 40, 70 or 7i and to other

Part 50 facilities. For power reactors the

definition is based on the guidance given

in Regulatory Guide 1.29. For other facilities and activities, basic component

has been defined as components that are directly procured by a licensee.

(5) Substantial safety hazard has been

defined in terms of a major reduction in

the degree of protection provided to the

public health and safety. Criteria that are appropriate for determination of

creation of a substantial safety hazard

include:

Moderate exposure to, or release of, licensed material.

Major degradation of essential safetyrelated equipment.

SWh Ile agreeing with all other aspects of

this Notice. Commissioner Ollinaky believes

firms should be barred from reimbursing directors or responsible officers for civil penalties imposed pursuant to Part 21. on grounds

that Section 206 of the Energy Reorganization Act is designed to impose personal re- sponsibility, a goal undermined by corporate

indemnification. The Commission majority

believes that. in accordance with the general

'practice of federal regulatory bodies in analogous matters, the question of the reimbursability of such penalties should be governed

by applicable state law. It notes that the ad- verse publicity attendant on being subjected

to a civil penalty for knowingly concealing

significant safety information would be a major incentive to compliance, irrespective of whether the person so penalized was later

reimbursed by the company. The majority

also recognizes the serious practical difficulty

in attempting to dilfferentiate between a properly awarded salary increase or bonus

and an improper reimbursement. If Part 21

does not in practice appeal to be accomplishIng its purpose, the Commission will, of

course, propose changes deemed appropriate

in light of experience.

RULES AND REGULATIONS

Major deficiencies involving design.

construction, Inspection, test or use of

licensed facilities or material.

To the extent that failures to comply

or defects in a security system can contribute to a substantial safety hazard.

such failures and defects are within the

scope of Part 21.

(6) Clarification has been added in

regard to which organizations are subject

to the regulations in this part. In order

that the implementation of Section 206

may be responsive to anticipation of

problems before the event, a broad interpretation of "firm constructing, owning, operating or supplying the components" has been used. This interpretation

includes not only licensees and organizations that physically construct facilities and physically supply components

but also includes organizations that only

supply safety-related services such as design, inspection, testing or consultation:

e.g., site geological Investigations.

This interpretation is intended to

bring within the regulations in this part

those various organizations that can

create a substantial safety hazard considering the various methods available

for consultation, procurement, design,

construction, testing, inspection and operation. These methods include not only

the option where design anoi construction are accomplished by one organization but also the option where one organization does safety-related consultation. another safety-related design and

another the actual construction. Each of

these organizations has the capability to

generate a defect and a potential for falling to comply.

If a basic component-is fabricated by

one organization using a design from another organization, the possibility of

creating a substantial safety hazard,

based upon a faulty design, exists upon

the delivery of the design that fails to

comply or contains a defect. A substantial safety hazard, based upon faulty

fabrication, exists upon- delivery of the

item that fails to comply or contains a

defect. In many Instances the competent

fabricating organization possesses

neither the capability nor the responsibility for design.

It is realized that during the activities

of design and consultation there may be

a stage of conceptual design or consultation in regard to feasibility. Only when

such a design or consultation can result

in the creation of a substantial safety

hazard is it appropriate to specify the

applicability of Part 21 in the procurement document.

(7) The organizations subject to this

part must establish procedures to provide for correction of deviations, or

evaluation* of deviations or informing

purchasers of the deviation so the purchaser may evaluate the deviation.

These procedures must also provide for

informing a responsible officer or director of the organization of any resulting

defect or failure to comply.

(8) The provisions of Part 21 imposing requirements that procurement

documents state, when applicable, that

Part 21 applies would be applicable only

to future procurements of facilities,

28893

components or services: i.e., procured on or after six months after the effective

date of Part 21.

The effective date of § 21.6 dealing

with posting requirements, § 21.21(a)

dealing with adopting procedures, and

§21.51 dealing with maintenance of

records has been deferred until January 6. 1978, to allow organizations to

establish and implement procedures.

(9) The organizations subject to the

regulations in Part 21 are required to

prepare records in connection with their

activities to assure compliance with this

part. Prior to destruction of such records

they shall be offered to the purchaser.

It is not anticipated that these documentation requirements will necessitate

any change in the documentation procedures of organizations that are presently complying with 10 CFR 50 Appendix

B, "Quality Assurance Criteria."

(10) Clarification has been added in

regard to the applicability of Part 21 to

the licensed activity of exporting. Per- sons who are only licensed to export

nuclear facilities or materials and who

do not otherwise construct or operate

facilities or activities or supply components are not subject to the new part.

Individuals subject to this part need re- port only defects or failures to comply

which bould create a substantial safety

hazard in facilities and activities within

the United States. Further, any notification submitted In accordance with

Part 21 may be exempt from public disclosure as authorized by law.

After consideration of the comments

received and other factors, the Commission has adopted the amendments to

Parts 2, 31, 34. 35, 40, and 70, and the new Part 21 set forth below.

" Pursuant to the Atomic Energy Act of

1954, as amended, the Energy Reorganization Act of 1974, as amended, and sec- tions 552 and 553 of title 5 of the United

States Code, the following new Part 21 of

Title 10, Chapter I of the Code of Federal

Regulations, .and amendments to Parts

2, 31, 34. 35, 40, and 70 are published as a

document subject to codification to be

effective on July 6, 1977.

PART 2-RULES OF PRACTICE

Paragraph (b) of § 2.200 is amended to

read as follows:

§ 2.200 Scope of subpart.

(b) This subpart also prescribes the

Procedures In cases Initiated by the staff

to impose civil -penalties pursuant to section 234 of the Act and section 206 of the

Energy Reorganization Act of 1974.

2. A new Part 21 is added toread as follows:

PART 21-REPORTING OF DEFECTS AND

NONCOMPUANCE

GENERAL PROVISIONS

aet.

21.1

21.2

21.3

21.4

21.5

21.6

21.7

Purpose.

Scope.

Definitions.

Interpretations.

C, imunications.

Posting requirements.

Exemptions.

FEDERAL REGISTER, VOL. 42, NO. 108-MONDAY, JUNE 6, 1977
98894 RULES AND REGULATIONS

NOT.IICATION

21.21 'Notification of failure to comply or existence of a defect.

PRoc•R•-NT DoctmExTs

21.31 Procurement documents.

INSPECTIONS, RECORDS

21.41 Inspections.

21.51 Maintenance of records.

ENFORCEMENT

21.61 Failure to notify.

Atrrmoarry: Sec. 161, Pub. L. 83-703, 68

Stat. 948; sec. 234, Pub. L. 91-161, 83 Stat.

444; sec. 206, Pub. L. 93-438, 88 Stat. 1246

(42 U.S.C. 2201, 2282, 5846).

GENERAL PROVISIONS

§ 21.1 Purpose.

The regulations in this part establish

procedures and requirements for implementation of section.206 of the Energy

Reorganization Act of 1974. That section

requires any individual director or responsible officer of a firm constructing,

owning, operating or supplying the components of any facility or activity which

is licensed or otherwise regulated pursuant to the Atomic Energy Act of 1954,

as amended, or the Energy Reorganization Act of 1974, who obtains information

reasonably indicating: (a) That the facility, activity or basic component suppiled to such facility or activity falls to

comply with the Atomic Energy Act of

1954, as amended, or any applicable rule,

regulation, order, or license of the Commission relating to substantial safety

hazards or (b) that-the facility, activity,

or basic component supplied to such facility or activity contains defects, which

could create a substantial safety hazard,

to Immediately notify the Commission of

such failure to comply or such defect.

unless he has actual knowledge that

the Commission has been adequately Informed of such defect or failure to

comply.

§ 21.2 Scope.

The regulations in this part apply, except as specifically provided otherwise In

Parts 31, 34, 35. 40, or 70 of this chapter,

to each individual, partnership, corporation, or other entity licensed pursuant to

the regulations in this chapter to possess,

use, and/or transfer within the United

States source, byproduct and/or special

nuclear materials, or to construct, manufacture, possess, own, operate and or

transfer within the United States, any

production or utilization facility, and to

each director (see 121.3(f) ) and responsible officer (see §21.3(J)) of such a licensee. The regulations in this part apply

also to each Individual, corporation,

partnership or other entity doing busi- ness within the United States, and each

director and responsible officer of such

organization, that constructs (see J 21.3

(C)) a production or utilization facility

licensed for manufacture, construction

or operation (see 1 21.3(h)) pursuant to

Part 50 of this chapter or supplies (see

1 21.3(1)) basic components (see § 21.3

(a)) for a facility or activity licensed,

other than for export, under Parts 30.

40, 50, 70, or 71. Nothing in these regulations should be deemed to preclude an

individual not subject to the regulations'

in this part from reporting to the Commission a known or suspected defect or

failure to comply and, as authorized by

law, the identity of anyone so reporting

will be withheld from disclosure.2

§ 21.3 Definitions.

As used in this part, (a) "Basic component," when applied to nuclear power reactors means 'a plant structure, system,

component or part thereof necessary to

assure (1) the integrity of the reactor

coolant pressure boundary, (2) the capability to shut down the reactor and maintain it in a safe shutdown condition, or

(3) the capability to prevent or mitigate

the consequences of accidents which

could result In potential offsite exposures

comparable to those referred to in

§ 100.11 of this chapter: "Basic component," when applied to other facilities

and when applied'to other.activities licensed pursuant to Parts 30, 40, 50, 70 or 71 of this chapter, means a-component, structure, system, or part thereof

that is directly procured by the licensee

of a facility or activity subject to the

regulations in this part and In which

a defect (see I 21.3(d)) or failure to

comply with any applicable regulation

in this chapter, order, or license issued

by the Commission could create a substantial safety hazard (see 121.3(k)).

In all cases "basic component" includes

design, inspection, testing, or consulting

services important to safety that are

'associated with the component hard- ware. whether these services are performed by the component supplier or

others.

(b) "Commission" means the Nuclear

Regulatory Commission or its duly authorized representatives.

(c) "Constructing" or "construction"

means the design, manufacture, fabrication, placement, erection, installation,

modification, inspection, or testing of a

facility or activity which Is subject to the

regulations in this part and consulting

services related to the facility or activity

that are important to safety.

(d) "Defect" means:

(1) A deviation (see §21.3(e)) is a

basic component delivered to a purchaser

for use in a facility or an activity subject

to the regulations in this part If. on the

basis of an evaluation (see § 21.3(g) ),the

deviation could create a substantial

safety hazard; or (2) The installation, use. or operation

of a basic component containing a defect

SNRC Regional Offices will accept collect

telephone calls from individuals who wish

to speak to NRC representatives concerning

nuclear safety-related problems, The location and telephone numbers '(for nights and

holidays as well as regular hours) are listed

below:

Region:

I (Philadelphia) ----- (215) 337-1150

nl (Atlanta) -------- (404) 221-4503

III (Chicago) ------- (312) 858-2660

IV (Dallas) --------- (817) 334-2841

V (San Francisco)_. (415) 486-8141

as defined in paragraph (d)(1) of this

section; or

(3) A deviation in a portion of a facility subject.to the constrizction permit

or manufacturing licensing requirements

of Part 50 of this chapter provided the

deviation could, on the basis of an evaluation, create a substantial safety hazard and the portion of the facility containing the deviation has been offered to

the purchaser for acceptance; or

(4) A condition or circumstance involving a basic component that could

contribute to the exceeding of a safety

limit, as defined in the technical specifications of a license for operation Issued

pursuant to Part 50 of this chapter.

(e) "Deviation" means a departure

from the technical requirements included

in a procurement document (see § 21.3

(I)).

(f) "Director" means an individual.

appointed or elected according to law,

who is authorized to manage and direct

the affairs of a corporation, partnership

or other entity. In the case of an individual proprietorship, "director" means

the individual.

(g) "Evaluation" means the process

accomplished by or for a licensee to determine whether a particular deviation

could create a substantial safety hazard.

(h) "Operating" or "operation" means the operation of a facility or the conduct

of a licensed scrivity which is subject to

the regulations In this part and consulting services related to operations thai, are

Important to safety.

(I) "Procurement document" means a

contract that defines the requirements

which facilities or basic components must

meet in order to be considered acceptable by the purchaser.

(jW "Responsible officer" means the

president, vice-president or other Individual in the organization of a corp.ration, partnership, or other entity

who is vested with executive authority

over activities subject to this part.

(k) "Substantial safety hazard" means

a loss of safety function to the extent

that there is a major reduction in the degree of protection provided to public

health and safety for any facility or activity licensed, other than for export,

pursuant to Parts 30.'40, 50, 70 and 71.

(1) "Supplying" or "supplies" means

contractually responsible for a basic

component used or to be used in a faclity or activity which is subject to the

regulations in this part.

§ 21.4 Interpretations.

Except as specifically authorized by

the Commission in writing, no interpretation of the meaning of the regulations

in this part by any officer or employee

of the Commission other than a written

interpretation by the General Counsel

will be recognized to be binding upon

the Commission.

§ 21.5 Communications.

Except where otherwise specified in

this part. all communications and reports concerning the regulations in this

part should be addressed to the Director.

FEDERAL REGISTER, VOL 42, NO. 08.--MONDAY, JUNE 6, 1977
Office of Inspection and Enforcement,

U.S. Nuclear Regulatory Commission,

Washington, D.C. 20555, or to the Director of a Regional Office at the address

specified id Appendix D of Part 20 of

this chapter. Communications and reports .lso may be delivered in person at

the Commission's offices at 1717 H Street

NW., Washington, D.C.; at 7920 Norfolk

Avenue, Bethesda, Md.; or at a Regional

Office at the location specified in Appendix D of Part 20 of this chapter.

§ 21.6 Posting requirements.

Each individual partnership, corporation or other entity subject to the regulations in" this part, shall post current

copies of the following documents in a

conspicuous position on any premises.

within the United States where the activities subject to this part are conducted

(1) the regulations in this part, (2) Section 206 of the Energy Reorganization

Act of 1974, and (3) procedures adopted

pursuant to the regulations in this part.

If posting of the regulations in this

part or the procedures adopted pursuant

to the regulations in this part Is not practicable, the licensee, or firm subject to

the regulations in this part may, in addition to posting section 206, post a notice which describes the regulations/

procedures, including the name of the individual to whom reports may be made,

and states where they may be examined.

The effective date of -this section has

been deferred until January 6, 1978.

§ 21.7 Exemptions.

The Commission may, upon application

of any interested person or upon its own

initiative, grant such exemptions from

the requirements of the regulations in

this part as it determines are authorized

by law and will not endanger life or

property or the common defense and

security and are otherwise in the public

interest.

NOTIFICATION

§ 21.21 Notification of failitre to comply or existence of a defect.

(a) Each individual, corporation, partnership or other entity subject to the

regulations in this part shall adopt appropriate procedures to (1) provide for

(1) evaluating deviations or (ii) informing the licensee or purchaser of the deviation In order that the licensee or purchaser may cause the deviation to be

evaluated unless the deviation has been

corrected; and (2) assure that a director or responsible officer is informed if the

construction or operation of a facility, or activity, or a basic component supplied

for such facility or activity:

(I) Fails to comply with the Atomic

Energy Act of'1954, as amended, orfany

applicable rule, regulation, order or license of the Commission relating to a substantial safety hazard, or (ii) Contains a defect. The effective

date of this paragraph has been deferred

until January 6, 1978.

(b) (1) A director or responsible officer

subject to the regulations of this part or a designated persdn shalf notify the

Commission when he obtains information

RULES AND REGULATIONS

reasonably indicating a failure to comply

or a defect affecting (I) the construction

or operation of a facility or an activity

within the United States that is subject

to the licensing requirements under Parts

30, 40, 50, 70 or 71 and that is within his

organization's responsibility or (ii) a

basic component that is within his organization's responsibility and is supplied for a facility or an activity within

the United States that is subject to the

licensing requirements under Parts 30,

40, 50,.70 or 71. The above notification

is not required if such individual has

actual knowledge that the Commission

has been adequately Informed of such defect or such failure to' comply.

(2) Initial notification required by this

paragraph shall be made within two

days following receipt of the information.

Notification shall be made to the Director. Office of Inspection and Enforcement, or to the Director of a Regional

Office. If initial notification is by means

other than written communication, a written report shall be submitted to the

appropriate Office within 5 days after the

information Is obtained. Three copies of

each report shall be submitted to the

Director, Office of Inspection and Enforcement.

(3) The written report required by this

paragraph shall Include, but need not be

limited to, the following information, to

the extent known:

(I) Name and address of the individual or individuals informing the

Commission.

(it) Identification of the facility, the

activity, or the basic component supplied

for such facility or such activity within

the United States which fails to comply

or contains a defect.

(iII) Identification of the firm con- structing the facility or supplying the

basic component which fails to comply or contains a defect.

(iv) Nature of the defect or failure to

comply and the safety hazard which is

created or could be created by such defect or failure to comply.

(v) The date on which the information

of such defect or failure to comply was

obtained.

(vi) In the case of a basic component

which contains a defect or fails to com- ply, the number and location of all such

components in use at, supplied for, or being supplied for one or more facilities or activities subject to the regulations

In this part.

(vii) The corrective action which has

been, Is being; or will be taken; the name of the individual or organization responsible for the action; and the length of

time that has been or will be taken to

complete the action.

(viii) Any advice related to the defect or failure to comply about the facility.

activity, or basic component that has

been. Is being, or vill be given to purchasers or licensees.

(4) The director or responsible officer

may authorize an individual to provide

the notification required by this paragraph, provided that, this shall not re- lieve the director or responsible officer

of his or her responsibility under this

paragraph. (c) Individuals subject to paragraph

(b) may be required by the Commisaion

to supply additional information related

to the defect or failure to comply.

PROCUREMENT DOCUMENTS

6 21.31 Procurement documents.

Each individual, corporation, partnership or other entity subject to the regulations in this part shall assure that

each procurement document for a facility, or a basic component issued by

him, her or It on or after January 6, 1978

specifies, when applicable, that the provisions of 10 CFR Part 21 apply.

INSPECTIONS, RECORDS

§ 21.41 Inspections.

Each individual, corporation, partnership or other entity subject to the regulations in this part shall permit duly

authorized representatives of the Commission. to inspect its records, premises,

activities, and basic components as nec- essary to effectuate the purposes of this

part.

§ 21.51 Maintenance of records. "(a) Each licensee of a faýllty or activity subject to the regulations in this

part shall maintain such records in

connection with the licensed facility or activity as may be required to assure

compliance with the regulations in this

part.

(b) Each individual, corporation, partnership, or other entity subject to the

regulations in this part shall prepare

records In connection with the design,

manufacture, fabrication, placement,

erection, installation, modification, inspection, or testing of any facility, basic

component supplied for any licensed facility or to be used in any licensed ac- tivity sufficient to assure compliance with

the regulations in this part. After delivery of the facility or component and

prior to the destruction of the records

relating to evaluations (see § 21.3(g)) or notifications to the Commission (see

121.21), such records shall- be offered

to the purchaser of the facility or com- ponent. If such purchaser determines any

such records:

(1) Are not related to the creation of a substantial safety hazard, he may au- thorize such records to be destroyed, or (2) Are related to the creation of a

substantial safety hazard, he shall cause such records to be offered to the organization to which he supplies basic com- ponents or for which he constructs a facility or activity.

If such purchaser is unable to make the

determination as required above then the

responsibility for making the determination shall be transferred to the Individual, corporation, partnership, or other

entity subject to the regulations in this

part that issued the procurement document to the purchaser. In the event that

the determination cannot be made at

that level then the responsibility shall

be transferred in a similar manner to

another individual, corporaioln, partner28895

FEDERAL 'REGISTER, VOL 42, NO. 108--MONDAY, JUNE 6, 1977
28896 RULES AND REGULATIONS

ship, or other entity subject to the regulations In this part, until. if necessary,

the licensee shall make the determination.

(c) Records that are prepared only

for the purpose of assuring compliance

with the regulations in this part and are not related to evaluations or notifications

to the Commission may be destroyed

after delivery of the facility or com- ponent.

(d) The. effective date of the section

has been deferred until January 6, 1978.

ENFORCgMENT

§ 21.61 Failure to notify.

Any director or responsible officer subJect to the regulations in this part who

knowingly and consciously fails to provide the notice required by § 21.21 shall

be subject to a civil penalty in an amount

not to exceed $5.O00 for each failure to

provide such notice and a total amount

not to exceed $25,000 for all failures to

provide such notice occurring within any

period of thirty consecutive days. Each

day of failure to provide the notice re- quired by 1 21.21 shall constitute a separate failure for the purpose of computing

the applicable civil penalty.

NorE.-The reporting and record keeping

requirements contained in this part have

been approved by the General Accounting OMce under B-180225 (P. 448).

PART 31-GENERAL LICENSES FOR

BYPRODUCT MATERIAL

§§ 31.2, 31.5, 31.7, 31.8, 31.10, and 31.11

[Amended]

3. In 10 CFR Part 31, § 31.2(a) is

amended by changing the words "Parts

19, 20, and 36" to read "Parts 19, 20, 21.

and 36."

4. In 10 CFR Part 31, §§ 31.5(c) (10).

31.7(b), 31.8(c), 31.10(b) (3). and 31.11

(f) are amended by changing the words

"Parts 19 and 20" to read "Parts 19, 20,

and 21."

PART 34--LICENSES FOR RADIOGRAPHY

AND RADIATION SAFETY REQUIREMENTS FOR RADIOGRAPHIC OPERATIONS

§ 34.31 [Amended]

5. In 10 CFR Part 34. § 34.31(a) (2) is

amended by changing the words 'Tarts

19 and 20" to read "Parts 19, 20, and

21."

PART 35-HUMAN USES OF BYPRODUCT

MATERIAL

§ 35.31 [Amended]

6. In 10 CFR Part 35, § 35.31(e) is

amended by changing the words "Parts

19 and 20" to read "Parts 19, 20, and

21."

PART 40-LICENSING OF SOURCE

MATERIAL

§§ 40.22 and 40.25 [Amended]

7. In 10 CFR Part 40, § 40.22(b) is

amended by changing the words "Parts

19 and 20" to read "Parts 19, 20, and

21."

8. In 10 CFR Part 40, § 40.25(e) is

amended by changing the words 'Tart

20" to read "Parts 20 and 21."

PART 70-SPECIAL NUCLEAR MATERIAL

§ 70.19 [Amended]

9. In 10 CFR Part 70, § 70.19(c) is

amended by changing the words "Parts

19 and 20" to read "Parts 19, 20, and

21."

Dated at Washington. D.C., this 1st

day of June 1977.

For the Nuclear Regulatory Commission.

SAMUEL J. CMILK,

Secretary of the Commission.

IFR Doc.77-15987 Filed 6-3-77;8:45 am]

FEDERAL REGISTER, VOL 42, NO. 108-MONDAY, JUNE 6, 1977
34886

Title 1O-Energy

CHAPTER I-NUCLEAR REGULATORY

COMMISSION

PART 21-REPORTING OF DEFECTS

AND NONCOMPLIANCE

Reports to the Commission Concerning

Defects and Noncompliance

Correction

In FR Doc.77-15987 appearing in the

issue for Monday, June 6, 1977 on page

28891. on page 28894 § 21.3(d) (1) should

read as follows:

§ 21.3 Definitions.

(1) A deviation (see 521.3(e)) In a

basic component delivered to a purchaser

for use in a facility or an activity subject

to the regulations in this part-. on the

basis of an.evaluation (see § 21.3(g)).

the deviation could create a substantial

safety hazard; or

RULES AND REGULATIONS

of its recently published regulations

which require directors and responsible

officers of firms and organizations building. operating or owning NRC-licensed

facilities, or conducting NRC-licensed

activities, or supplying safety related

components to report failures to comply with regulatory requirements and defects

in components which may result in a

substantial safety hazard. No change is

being made in those portions of the reg- ulations now subject to the deferred

effective date of January 6. 1978. This

change in effective date will give persons subject to the rule additional time to

establish implementing procedures.

EFFECTIVE DATE: August 10, 1977.

Certain obligations under the effective

rule are not imposed until January 6,

1978.

FOR FURTHER INFORMATION CONTACT:

Mr. W. E. Campbell, Jr., Office of

Standards Development, U.S. Nuclear Regulatory Commission, Washington, D.C. 20555. (phone: 301-443-

6917).

SUPPLEMENTARY . INFORMATION:

On June 6, 1977, the Nuclear Regulatory Commission published in the FEDERAL

REGISTER (42 FR 28891-28896, FR Doc.

77-15937) amendments to 10 CFR Parts

2. 31, 34. 35. 40 and 70 of its regulations and a new Part 21-Reporting of Defects

and Noncompliance to implement section 206 of the Energy Reorganization Act of 1974, as amended (Public Law 93-

438, 88 Stat. 1246-1247). As stated in the

FEDERAL REGISTER notice, the effective

date of the final rule was July 6, 1977,

thirty days after the date of publication.

except for certain portions of the rule for

which the effective date was specifically deferred until.January 6. 1978. The purpose of the deferred effective date was

to allow organizations to establish and

implement procedures to comply with

certain provisions of the rule. On June

9. 1977. the NRC staff announced that

five public meetings, hosted by each of

its five regional offices, would be held

during the period July 12 through July 26, 1977. for the purpose of explaining the provisions of the rule and answering

any questions which might be raised 6oncerning its implementation. As the effective date of the rule approached, several

organizations expressed concern that

they would not be able to have adequate interim procedures in place before the

rule became effective, that they needed

clarification of certain provisions of the

rule and that it would be particularly helpful If the effective date of the rule

were deferred for a period of approxi- mately sixty days after the date of the

last scheduled regional meeting. As noted In the recently expanded delegation of authority to the Commission's

Executive Director for Operations (42

FR 33390-33391, June 30, 1977, FR Doc.

77-18988) there are at the present time

only two qualified members of the Nuclear Regulatory Commission. Since the

Commission lacks a quorum for the

transaction of business, the requests of

organizations to postpone the effect date

of 10 CFR Part 21 must be addressed, if

they are to be addressed at all, by the

Executive Director for Operations. Upon

review of the final rule in the light of

the concerns expressed and after consultation with the incumbent Commission- ers in accordance with the provisions of

his delegated authority, the Executive

Director for Operations has determined

that it would be in the public interest

to postpone the effective date of the final

rule until August 10. 1977. This extension would give persons and organizations affected by the rule an additional

fifteen days after the date of the last

1RC public informational meeting in

which to put interim implementing pro- cedures in place. The Executive Director

for Operations has also determined that

this change In the effective date of the

final rule is a minor amendment which

does not substantfally modify existing

regulations affecting the public health

and safety, the common defense and se- curity, or substantive or procedural

rights and that he has been delegated authority to issue it. Since the purpose

of this change in the effective date of the

final rule -is to allow organizations to obtain more information about its provisions prior to implementation, the Executive Director for Operations also finds

that notice and public procedure there- on are contrary to the public interest

and that there is good cause to make this

change in the effective date of the final

rule effective immediately upon publica- tion in the FEDERAL REGISTER without the

customary thirty day notice.

Pursuant to the Atomic Energy Act of

1954, as amended, the Energy Reorganization Act of 1974, as amended, and sections 552 and 553 of title 5 of the United

States Code, the following change in the

effective date of Title 10, Code of Federal

Regulations, Part 21 is published as a

document subject to codification.

1. In FR Doc. 77-15937 appearing at

page 28891 in the FEDERAL REGISTER Of

June 6, 1977, the Ecective Date paragraph appearing on page 28892 in columni

1 is revised to read as follows:

EFFECTIVE DATE: August 10, 1977.

Certain obligations under the effective

rule are not Imposed until January 6.

1978.

(See. 161, Pub. L. 83-703, 68 Stat. 948 (42

U.S.C.'2201): Sec. 201, as amended, Pub. L.

93-438. 88 Stat. 1242, Pub. L. 94-79. 89 Stat.

413 (42 US.C. 5841).)

Dated at Bethesda, Md., this 6th day of

July 1977.

For the Nuclear Regulatory Commission.

LEE V. GOSSICK.

Executive Director for Operations.

IFR Doc.77-19559 Filed 7-G-77; 10:47 amI

* *

PART 2-RULES OF PRACTICE

PART 21-REPORTING OF DEFECTS AND

NONCOMPLIANCE

PART 31--GENERAL LICENSES FOR

BYPRODUCT MATERIAL

PART 34-LICENSES FOR RADIOGRAPHY

AND RADIATION SAFETY REQUIRE- MENTS FOR RADIOGRAPHIC OPERATIONS

PARt 35-HUMAN USES OF BYPRODUCT

MATERIAL

PART 40-LICENSING OF SOURCE

MATERIAL

PART 70-SPECIAL NUCLEAR MATERIAL

Reports to the Commission Concerning

Defects and Noncompliance; Extension

of Effective Date

AGENCY: U.S. Nuclear Regulatory Commission.

ACTION: Change of effective date of

final rule.

SUMMARY: The Nuclear Regulatory

Commission Is changing from July 6,

1977 to August 10, 1977, the effective date

FEDERAL REGISTER, VOL. 42, NO. 130-THURSDAY, JULY 7. 1977
RULES AND REGULATIONS 36803

REPORTS TO THE COMMISSION CONCERNING DEFECTS AND NONCOMPLIANCE

Correction

In FR Doe. '77-15987 appearing on

page 28891 In the issue for Monday. June

6, 1977, on page 28894, 121.3 (a)(3) should read as follows:

(3) the capability to prevent or mitigate the consequences of accidents which

could result in potential offsite exposures comparable to those referred to in

I 100.11 of this chapter.

Section 21.3(d) (1) should read as follows:

§ 21.3 Definitions.

(d) "Defect" means:

(1) A deviation (see §21.3 (e)) in a

basic component delivered to a purchaser for use in a facility or an activity subject to the regulations In this part if, on the

basis of an evaluation .(see 121.3(g)), the deviation could create a substantial

safety hazard; or * a a a

FEDERAL ItGISTER, VOL 42, NO. 137-MONDAY, JULY 18, 1977
Part III - Consolidation of Questions/Answers

from Public Regional Meetings

The answers to numerous questions contained in this part represent

the NRC staff's position on questions discussed at the public regional

meetings. The staff has also attempted to include representative

answers for all presubmitted questions received by each Regional

Office prior to the day of the public meeting.

This material is structured so that the questions and answers

follow the sequence in which the Preamble and Part 21 regulations were

published in the Federal Register. For the convenience of the user,

further separation of the question/answer material has been accomplished

by division of certain subsections.
QUESTIONS/ANSWERS RELATING TO THE

PREAMBLE TO 10 CFR PART 21

Questions/answers relating to the Preamble published in the Federal

Register with 10 CFR Part 21 which have not been answered by similar

questions asked on the Part 21 regulations are included below.

1. Section 206(a) was changed during the legislative drafting from

S...officer of a firm..." to "...responsible officer of a firm."

Which officers of a firm are not responsible?

Response:

"Responsible officer," as defined by the rule means the president, vice-president or other individual in the organization of a

corporation, partnership, or other entity who is vested with

executive authority over activities subject to this part.

Therefore, officers with no executive authority over activities

subject to Part 21 are not required to provide notification. For

example, an officer that is not a "responsible" officer would be

the Vice President in Charge of Community Affairs. During the

legislative drafting of the Energy Reorganization Act of 1974 the

words director, officer, agent, employee and responsible officer

were used. During the Conference Committee proceedings the word

"employees" was struck and the word "responsible" added in front

of "officer."

2. Section 206(a) of the Energy Reorganization Act of 1974, as

amended, imposes a reporting responsibility upon directors or

responsible officers of firms "constructing, owning, operating,

or supplying the components of any facility or activity licensed

or otherwise regulated pursuant to this Act." By what authority

does the Commission apply Part 21 to persons who provide only

design, inspection, testing or consulting services to firms which

construct, own or operate an NRC licensed facility or activity?

Response:

Section 206 is a broadly worded statute by which the Congress

intended to give the NRC responsibility to flesh out the bare

bones of the statutory language and to develop workable definitions

of terms and a workable implementation program. Part 21 defines

the general terms "constructing," "operating," and "basic component"

P-1
which are used in the statute to include design, inspection,

testing and consulting services associated with construction,

operation and basic components that are important to safety.

3. What particular actions are required by a director, responsible

officer or entity subject to Part 21 during the period of July 6,

1977 and January 6, 1978 since there are different dates in

various portions of Part 21.

Response:

By 42 FR 34886 the July 6, 1977 date was changed to August 10,

1977. Between this date and January 6, 1978, entities subject to

Part 21 should be accomplishing actions so they will be in full

compliance by January 6, 1978. In the event that a director or

responsible officer after August 10, 1977 obtains information

reasonably indicating a defect or failure to comply, such individual

is required to notify the Commission.

4. The Preamble states that Part 21 requires that organizations

establish procedures to perform evaluations or inform the purchaser

in order that the purchaser evaluate the deviation or have it

evaluated. Do We have an option to establish procedures "or"

inform the purchaser?

Response:

It is the staff's view that the evaluation should be accomplished

at the lowest level where such capability to evaluate exists.

5. The Preamble states that "The organizations subject to the regulations in Part 21 may be many procurement tiers away from the

holder of a license to construct or operate a nuclear power

reactor."

a. Does this mean that the licensee plus all tiers of suppliers

would be responsible for and accountable to the Commission

for any fines deemed necessary by the Commission?

b. If the answer is yes, will the fine levied be duplicated to

all involved parties or will only the "responsible" individual

be held liable for the fine?

Response:

a. Yes. For power reactor§, all tiers who have organizational

responsibility for the failure to comply or defect would be

subject to enforcement action.

P-2
b. Any director or responsible officer subject to Part 21 who,

after obtaining information reasonably indicating failure to

comply or a defect, fails to notify the Commission is subject

to enforcement action.

6. The Act states that the identity of anyone reporting will be

withheld from disclosure, as authorized by law. Would not the

Sunshine law allow these names to be released to whoever requests?

Response:

Not necessarily. The Act does not discuss nondisclosure. The

regulation states in §21.2, that as authorized by law the identity

of anyone not subject to the Act who provides notification will

be withheld from disclosure. Exemption 7 of the Freedom of

Information Act permits an agency to protect the identity of

confidential sources in law enforcement investigations.

7. Do you plan to issue a Regulatory Guide on the subject of Part

21.

Response:

As indicated in the Preamble, additional guidance in the form of

regulatory guides may be developed should experience with the

application of Part 21 indicate the need for such guidance.

8. How many occurrences do you expect to happen each year in design,

construction, and operation that would be reported under Part 21?

Response:

The NRC expects that between 50 to 60 Part 21 notifications per

year will be investigated, followed-up and substantiated.

9. Has the Commission made any attempt to estimate the financial and

schedular impact of Part 21 on the nuclear program?

Response:

Resource allocations for NRC implementation of Part 21 have been

estimated. The compliance burden for the implementation of Part

21 (record keeping and notification) has been considered. NRC

has not estimated the compliance burden of meeting the overall

requirements of Part 21; e.g., establishment of procedures.

P-3
10. With regard to reimbursement for civil penalties, the regulations

leave the resolution of this matter to "applicable state law."

Does this pertain to the state in which the organization involved

is registered, the state in which the defect occurred or the

state in which the licensed facility is located?

Response:

The question of which state has jurisdiction regarding remuneration

of civil penalties is itself a question of state law. Part 21

does not in any way make this determination nor does it impact

upon the determination. In other words, whether an organization

may reimburse one of its employees for civil penalty under Part

21 is a matter for the determination by that organization and not

by the Commission.

11. The Preamble uses the words "on the basis of an evaluation." Who

is responsible for the evaluation, and, if it is the licensee or

supplier, could not the NRC disagree with the technical evaluation?

Response:

Whether or not he has information reasonably indicating a failure

to comply or a defect is initially a matter of judgment for the

directors and responsible officers in question. Of course, any

judgment that there does not exist a reportable defect or failure

to comply is reviewable by NRC. Nevertheless, provided that the

NRC determines that there is a reasonable basis for their judgment

that a reportable defect or failure does not exist, the responsible

officers and directors would not be subject to a civil penalty

for knowingly and consciously failingto notify the Commission

even if their determination was later found to be incorrect.

12. The terms "moderate exposure," "major degradation" and "major

deficiencies" provide little guidance in determining whether a "substantial safety hazard" exists. Does "moderate exposure"

mean a fraction of 10 CFR Part 100 limits? Does "major degradation"

mean loss of redundancy? Does "major deficiency" mean loss of

function or exceeding stress allowables?

Response:

"Moderate exposure" is discussed in the Commission's Policy

Statement for Abnormal Occurrence Reports and was published in

the Federal Register (42 FR 10950) on February 23, 1977. This

information is also included in Appendix A, "Report to Congress

on Abnormal Occurrences, NUREG-0090." Exposure in excess of 25

rem whole body and exposure to an individual in an unrestricted

area of 0.5 rem are guidelines for determining "moderate exposure."

P-4
"Major degradation" is considered to be a loss of redundancy if,

in conjunction with a single failure, a required safety function

could not be performed.

"Major deficiency" means a condition or circumstance which under

normal operating conditions or anticipated transient could contribute

to exceeding a safety limit or cause an accident or in the event

of an accident due to other causes could, considering an independent

single failure, result in a loss of safety function necessary to

mitigate the consequences of the accident.

13. The Preamble Section (5) contains a definition of substantial

safety hazard which includes: "Moderate exposure to, or release

of, licensed material." Is there an interpretation of the word "moderate" as used here that might be comparable to the provisions

of 10 CFR Part 20?

Response:

Yes. Moderate exposure to, or release of, licensed material,

reportable under the provisions of §20.403(a)(1) or §20.403(b)(2)

or the exposure of any individual in an unrestricted area to a

dose to the whole body in any period of one calendar year in

excess of 0.5 rem (§20.105) would constitute "substantial safety

hazards."

14. What does "Moderate exposure to, or release of, licensed material,"

mean in milling application?

Response:

In milling applications, moderate exposure to, or release of,

licensed material, means:

a. Release of licensed materials which could produce whole body

exposures to individuals in unrestricted areas approaching

or exceeding the permissible dose of 500 mrem in one calendar

year (10 CFR 20.105(a)) or;

b. Release of radioactive materials in concentrations which, if

averaged over a period of 24 hours, would exceed 500 times

the limits specified for such materials in Appendix B,

Table II, 10 CFR Part 20 (10 CFR 20.403(b)).

Defects in scrubbers or dust collection systems used to

control releases from ore crushing and grinding operations

or yellowcake drying operations might lead to releases of

radioactive materials large enough to be considered substantial

safety hazards.

P-5
15. Is the site security system to be deemed "safety related" in

accordance with this regulation?

Response:

As stated in item (5) of the Preamble to Part 21, "To the extent

that failures to comply or defects in a security system can

contribute to a substantial safety hazard, such failures and

defects are within the scope of Part 21."

In the case of a power reactor, the rationale is that an act of

sabotage or terrorism could result in potential offsite exposure

comparable to that which could occur-as a result of an accident.

An example of a defect or noncompliance in a security system is

one which could allow access of an unauthorized individual to a

vital area without being detected by the security system. Detection

of the unauthorized individual by random visual surveillance or

by remote visual electronic surveillance does not provide a

continuous capability for initial detection and therefore is not

considered to be a detection by the security system. The staff

view is that this represents a major reduction in the degree of

protection to public health and safety and is therefore a substantial

safety hazard and would require notification to the NRC.

16. What is the relationship between requirements for "security

systems" as regards Part 21 and the implementation schedule for

10 CFR Part 73?

Response:

The Preamble published with the effective rule indicated that

failures to comply or defects in security systems can contribute

to a substantial safety hazard. These deficiencies and noncompliance

must be evaluated pursuant to Part 21 to determine if a notification

to the Commission is required. The implementation schedule for

recently promulgated rules addressing physical security at nuclear

power plants does not affect the requirements of Part 21. Licensees

are required to comply with those portions of §73.55 which are,

in effect, to comply with their approved security plans and to

evaluate deficiencies in their approved security systems. The

new safeguard regulation's relationship to Part 21 is no different

than the relationship of any other regulation to Part 21.

17. The Preamble discusses that the organization subject to Part 21

must also maintain records. Are records maintained in accordance

with our internal procedures?

Response:

The procedures for maintenance of records would be in accordance

with the organization's internal procedures but must comply with

§21.51.

P-6
18. How does Part 21 interact with an approved Quality Assurance

Program which is the established mechanism to control defects and

deviations?

Response:

A quality assurance program, for example, in accordance with

Appendix B to Part 50, should be the mechanism whereby assurance

is provided that deviations and noncompliances do not occur and,

where they do occur, they are detected and properly dispositioned.

As stated in the Preamble to the effective Part 21, it is not

anticipated that the records required by Part 21 to assure compliance

with this Part will necessitate any change in the documentation

procedures of organizations that are presently complying and

remain in compliance with 10 CFR Part 50, Appendix B, Quality

Assurance Criteria for Nuclear Power Plants and Fuel Reprocessing

Plants. Part 21 does contain some special requirements for

records relating to evaluations and notifications required by

Part 21, which are in addition to the records required by Appendix B.

19. The preamble stated in the July 7, 1977 notice in the Federal

Register (42 FR 34886) extending the date for implementation of

certain provisions until August 10, 1977 in order that "interim

implementing procedures" are required to be in place by August 10,

1977. This appears to be a new requirement not mentioned in

Part 21, as promulgated. We are interested in a discussion of

the NRC's basis for such interim procedures and the contemplated

scope of such procedures.

Response:

Some organizations that were within the scope of Part 21 saw the

need to have in place "interim procedures" between July 6, 1977

and January 6, 1978, and they requested that the July 6 date be

delayed about 3 months. The Commission, by 42 FR 34886, delayed

the date to August 10, 1977, in order that those organizations

could "put interim implementing procedures in place." Part 21

does not require the adoption of implementing procedures until

January 6, 1978.

P-7
QUESTIONS/ANSWERS RELATING TO 10 CFR PART 21

§21.1 Purpose

The regulations in this part establish

procedures and requirements for implementation of section 206 of the Energy

Reorganization Act of 1974. That section

requires any individual director or re- sponsible officer of a firm constructing.

owning, operating or supplying the components of any facility or activity which

Is licensed or otherwise regulated pursuant to the Atomic Energy Act of 1954.

as amended, or the Energy Reorganization Act of 1974, who obtains information

reasonably indicating: (a) That the facility, activity or basic component supplied to such facility or activity fails to

comply with the Atomic Energy Act of

1954, as amended, or any applicable rule.

regulation, order, or license of the Commission relating to substantial safety hazards or (b) that the facility, activity.

or basic component supplied to such facility or activity contains defects, which

could create a substantial safety hazard.

to immediately notify the Commission of

such failure to comply or such defect.

unless he has actual knowledge that

the Commission has been adequately informed of such defect or failure to

comply.

1. In section 21.1(a), what is meant by "activity"?

Response:

The term "activity" used in 21.1(a) means any activity, except

those specifically exempted, which is licensed or otherwise

regulated pursuant to the Atomic Energy Act of 1954, as amended,

or the Energy Reorganization Act of 1974, as amended. For

example, these include activities regulated under 10 CFR Part 50,

other licensed activities such as medical radiation therapy,

industrial radiography and activities specifically included by

the §21.3(a) definition for basic component.

21.1-1
2. Which sections of the Atomic Energy Act of 1954, as amended, and

which of the Commission's rules and regulations does the Commission

see as being related to a substantial safety hazard so that

noncompliance with such provisions is reportable? (A list of

sections and regulations would be desirable.)

Response:

While all Commission rules and regulations are publicly available

through the FEDERAL REGISTER, and for the most part relate to the

prevention of substantial safety hazards, it is not practical to

prepare a specific list or even a precise correlation of all

factors which could contribute to a substantial'safety hazard.

21.1-2
§21.2 Scope

The regulations in this part apply, ex- cept as specifically provided otherwise in

Parts 31. 34, 35. 40, or 70 of this chapter,

to each Individual, partnership, corporation. or other entity licensed pursuant to

the regulations in this chapter to possess.

use, and/or transfer within the United

States source, byproduct and/or special

nuclear materials, or to construct, man- ufacture, possess, own, operate and or transfer within the United States, any

production or utilization facility, and to

each director (see I 21.3(f)) and responsible officer (see § 21.3(J)) of such a licensee. The regulations in this part apply also to each individual, corporation,

partnership or other entity doing busi- ness within the United States, and each

director and responsible officer of such

organization, that constructs (see § 21.3

(c)) a production or utilization facility

licensed for manufacture. constru!!tion or operation (see § 21.3(h) ) pursuant to

Part 50 of this chapter or supplies (see

§ 21.3(1)) basic components (see § 21.3

(a) for a facility or activity licensed.

other than for export, under Parts 30.

40, 50, 70, or 71. Nothing in these regu- lations should be deemed to preclude an

individual not subject to the regulations

in this part from reporting to the Commission a known or suspected defect or failure to comply and, as authorized by

law, the identity of anyone so reporting

will be withheld from disclosure.!

1. Since Section 206(a) refers only to "firms," why. does Part 21

apply to organizations that are not firms; e.g., licensees like

the National Bureau of Standards and TVA?

Response:

In reviewing the legislative history of Section 206 it, appears

that the use of the terms "firm owning" and firm operating" were

used for ease in drafting the legislation. If the term "licensee"

were used, it would have to be in addition to the present terms

since some licensees construct, own, and operatewhile others

just operate. Section.206 uses "firm" in a broad manner so as to

include organizations owned wholly or in part by Federal, State

or local governments and educational institutions, as well as

private businesses.

21.2-1
2. How does Part 21 relate to activities considered under Section

274 of the Atomic Energy Act, "Cooperation with States"? For

example, a teletherapy machine produced in an Agreement State and

used in a licensed activity in a non-Agreement State. An opposite

example should aso be discussed.

Response:

Part 21 applies (unless there exists a specific exemption) to the

directors and responsible officers of organizations that construct,

own, operate, or supply components of a facility or activity

licensed or otherwise regulated by the Nuclear Regulatory Commission

pursuant to the regulations in Title 10 of the Code of Federal

Regulations. Thus the provisions of Part 21 would not apply

directly to those facilities or activities which, under Section

274 of the Atomic Energy Act of 1954, as amended, and the applicable

state agreement, are the regulatory responsibility of the Agreement

State.

This means, in the case of the-example given, that the producer

of the teletherapy machine who is located in an Agreement State

would not be required as a licensee to notify the Commission of a

failure to comply or a defect in the construction or operation of

the machine or its components which otherwise would be reportable

under Part 21, although he is certainly encouraged to do so. The

producer of the teletheraphy machine may nevertheless be required

to report under Part 21 a defect or failure to comply in the

machine in his capacity as a component supplier. If the producer

directly supplies the machine to a licensee or purchaser which is

subject to Part 21 such as, for example, a licensee in a nonAgreement State, the producer of the machine would be required to

notify NRC if he has information of a defect or failure to comply

in the machine. The user of the teletherapy machine, who is

located in a non-Agreement State and who therefore is licensed or

regulated by NRC, would be subject in all cases to the reporting

requirements and enforcement provisions of Part 21.

Reversing the example, the producer of the machine in a nonAgreement State would be required to notify NRC of any failure to

comply or any defect in the construction or operation of the

machine which is reportable under Part 21, but the user of the

machine who is located in an Agreement State would not be subject

to these reporting requirements, although, again, he would be

encouraged to report such defects or failures to comply to the

Commission.

3. Are Agreeement States compelled to adopt 10 CFR Part 21 or to

comply with it through licensing modifications?

21.2-2
Response:

No. The Commission has not forwarded Part 21 to the Agreement

States for compatibility review and Agreement States are not

compelled to adopt Part 21 *or similar requirements.

4. What is the applicability of Part 21 to items whose fabrication

is not licensed; that is, packaging (Part 71) and radiographic

exposure devices (Part 34) that are utilized in a licensed activity?

Response:

If the fabrication is not licensed and the item is a "basic

component" as defined in §21.3, then it is within the scope of

Part 21. "Packaging," as.defined in Part 71,..and "radiographic

exposure devices," as defined in Part 34, are in general procured

by the activity licensee and wouldtherefor6.ebe within the scope

of Part 21.

5. What is the authority for the Commission's application of Part 21

to persons who are not Commission licensees?

Response:

Section 206 of the Energy Reorganization-A'ct-of1-.974, as amended.

Section 206(a) imposes reporting responsibility -o'n directors and

responsible officers of firms constructing, ownfng, operating or

supplying the components of any facility or activity which is

licensed or otherwise regulated pursuant to the Atomic Energy Act

of 1954, as amended, or the Energy Reorganization Act of 1974, as

amended. In other words, the thrust of Section 206 goes beyond

those entities licensed or previously regulated by the Commission

to all entities which engage in the activities described in the

statute.

The terms "constructing" and "supplying" are defined in Sections

21.3(c) and (1) of Part 21. Specifically, the Commission has

interpreted the term "constructing" to include the design, manufacture,

fabrication, inspection, or testing of a facility or activity

which is subject to Part 21 and consulting services related to

the facility or activity that are important to safety. The term ''supplying" has been defined to mean any entity which is contractually

responsible for a basic component used or to be used in a facility

or activity which is subject to Part 21.

6. Are non-radiological hazards covered by Part 21? Example, chemicals

released to streams or rivers.

21.2-3
Response:

No. Part 21 applies only to radiological health and safety.

7. Does Part 21 apply to applicants for 10 CFR Part 50 licenses as

well as to NRC licensees and licensed activities?

Response:

It is the NRC staff position that Part 21 applies to applicants

for 10 CFR Part 50 licenses as well as licensees. Section 21.2

is intended to specify those types of activities associated with

the facilities and activities subject to licensing and regulation

by the Commission which are covered by Part 21. Applicants for

10 CFR Part 50 licenses or permits, to the extent that they

engage in the specified activities, are subject to Part 21. This

intent is further evident in Section 21.21(b) which requires that

a director or responsible officer notify the Commission when he

obtains information reasonably indicating a failure to comply or

a defect affecting (1) the construction or operation of a facility

or activity within the United States which is subject to the

licensing requirements of 10 CFR Parts 30, 40, 50, 70 or 71, or

(2) a basic component for such facility or activity.

8. Please identify the threshold point at which such applicability

commences in the case of a project not yet licensed (e.g., one

which is in hearings regarding the issuance of a construction

permit).

Response:

The NRC staff takes the view that an entity becomes subject to

Part 21 at that point when it first engages in the activities

subject to Part 21 which are described in Section 21.2. Thus, a

utility would be subject to Part 21 when it first engages in the

enumerated construction activities, including safety-related.

design work, for a 10 CFR Part 50 facility. This is similar to

the requirements for a quality assurance program as specified by

10 CFR Part 50, Appendix B, in that the requirements are effective

prior to tendering an application.

9. What are the duties and responsibilities of co-owners of a facility

under Part 21 where the co-owners (a) are financial partners

only, or (b) have some operational or construction responsibility

for the facility?

21.2-4
Response:

A director or responsible officer of a co-owner organization

which is a financial partner only and which has delegated all

responsibility for constructing and operating the facility or

activity to another owner would not have responsibility for

notifying the Commission of defects or failures to comply because

the facility or activity is not within his organization's responsibility

Nevertheless, the rule, as presently drafted, requires the coowner organization to meet certain other requirements of Part 21,

including adopting internal procedures under Section 21.21(a),

which are scheduled to take effect on January 6, 1978. The NRC

staff recognizes that this result would be incongruous and is

therefore considering possible modifications to Part 21 which

would remove this incongruity.

Co-owners who have retained some responsibility for constructing

or operating the facility or activity are subject to the reporting

requirements of Section 21.21(b) and will be subject to other

requirements of Part 21 on January 6, 1978.

10. Is a holding company subject to Part 21 where it holds stock in a

subsidiary company which owns and operates a nuclear facility?

Response:

No. Holding companies which are not themselves licensed and

which do not themselves engage in constructing or operating the

facility would not be subject to Part 21.

11. Why was 10 CFR 20 not included along with Parts 2, 31, 34, 35,

40, and 70?

Response:

NRC does not license any facility or activity under Part 20.

12. Are general licensees (Section 31.5) exempted from Part 21?

Response:

Some general licensees, including those licensed only under §31.5, are exempt from Part 21. See item 4 on page 42 FR 28896.

13. Are firms who supply Health Physics service to a power plant

subject to Part 21?

21.2-5
Response:

Yes - if the failure to provide the required service could create

a substantial safety hazard.

14. Are medical physicists who provide consulting services such as

calibration of teletherapy machines subject to Part 21? If a

hospital determines that this medical physicist provided incorrect

calibration charts which resulted in a substantial safety hazard,

should the hospital report this under Part 21?

Response:

a. Yes - if the services of such an individual are directly

procured by the licensee.

b. Yes.

15. How is Part 21 applicable to industrial radiography?

Response:

Pursuant to Section 21.1 of Part 21, the regulations apply to

each entity licensed to possess, use, and/or transfer within the

United States source, byproduct and7or special nuclear materials,

etc. Pursuant to Section 34.31, the licensee (using sealed

sources in radiography) shall not permit any person to act as a

radiographer until such person "has received copies and instructions

in the regulations contained in this part and the applicable

sections of Parts 19, 20 and 21 of this chapter...."

In practice, each entity licensed to use radioisotopes for radiographic

inspection is required, in accordance with the provisions of Part

21, to evaluate whether a deviation in a basic component delivered

for use in the licensed activity is in effect a defect which

could create a substantial safety hazard to operating personnel

or others and, if so, to notify the Commission of such defect

pursuant to §21.21. In addition, failure to comply with safety

procedures or licensed conditions would also be reportable under

the provisions of Part 21 if such failure could create a substantial

safety hazard.

16. Are firms who supply waste disposal service subject to Part 21?

Response:

Yes - if the failure to provide the required service could create

a substantial safety hazard.

21.2-6
17. Does Part 21 apply to "carriers?"

Response:.

Part 21 does not apply to "carriers." Carriers do not fall

within the definitions of licensees or suppliers as used in 21.2

and 21.3(l) of the regulation. However, suppliers and licensees

at both ends of the carrier transaction, that is the entity that

delivers a component to a carrier and the entity that receives

the component, may be subject to Part 21.

18. Are carriers who have approved physical security plans under 10

CFR Part 73 subject to Part 21?

Response:

No. They are not licensed by NRC nor do they provide basic

components as defined in Part 21.3(a). These services differ

from services defined in §21.3(a) since they are not services

associated with component hardware. However, if a licensee

obtains information indicating a defect in a physical security

plan which is within his area of responsibility, he is required

to report.

19. Does Part 21 apply to nuclear safety programs of fuel fabricators?

Response:

Yes. Fuel fabricators are subject to Part 21 both as material

licensees and in general as suppliers to reactor licensees.

20. Does Part 21 apply to Federal, State and local governments?

Response:

If an entity of the Federal government or a State or local government

engages in the activities described in Section 21.2, then it is

subject to Part 21.

21. Do the provisions of Part 21 apply to an educational institution

which possesses a license for a research reactor or to possess

byproduct or special nuclear material?

Response:

Part 21 applies not only to reactor licensees but also to source,

byproduct and special nuclear material licensees. Educational

institutions, as a licensee under 10 CFR Part 50 for a research

21.2-7
reactor or as a licensee for byproduct or special nuclear material,

are within the scope of Part 21. Therefore, the provisions of

Part 21 apply to the institution and to its first tier suppliers

of basic components.

22. Is it planned to incorporate the requirements of 10 CFR Part 21

into the Technical Specifications of Operating Reactors?

Response:

No.

23. Is there a statute of limitations for a knowing and conscious

failure to notify of a substantial safety hazard and if so, is

this governed by the applicable law of the state in which the

nuclear facility is located?

Response:

The imposition of a civil penalty under Part 21 for a knowing and

conscious failure to notify the Commission of a reportable defect

or failure to comply is subject to a general Federal statute of

limitation for Federal fines and civil penalties. That statute

(28 U.S.C. 2462) requires that Federal civil penalties be imposed

within five years from the date when the claim first accrued.

State statutes of limitations would not apply to Part 21.

24. Does an organization's obligation to comply with these rules

terminate for each facility when its contractual services are

completed for that facility?

Response:

No. Obligations to comply with Part 21 do not end when contractual

services are completed. If after a service has been performed,

an organization discovers a deviation from the contractual requirements

then it must evaluate it or inform the purchaser of the deviation

and if the evaluation determined that a defect exists a notification

is required.

25. In 1975 the release by the NRC of information received in confidence

from a foreign source caused major problems and the NRC indicated

that it would take steps to correct such problems.

What actions have been taken by the NRC to protect against infringement on the practices of foreign countries related to defect

reporting in the U.S.?

21.2-8
Response:

First, the new Part 21 requires reporting of defects in U.S.

reactors, not defects in foreign reactors unless such information

is necessary for the full reporting of defects and noncompliances

in similar U.S. reactors. Second, in press releases and answers to

questions about U.S. reactor problems, it is now our practice to

avoid mention of similar foreign reactor problems. Third, NRC has

advised the concerned foreign officials that NRC will take all

appropriate steps to protect information which NRC receives in

confidence from them.

26. Is the NRC obligated by existing agreements with foreign governmental

authorities to disclose information obtained in confidence from

foreign sources? If so, what is the basis for such obligations. Can

the obligation be changed?

Response:

The spirit and intent of our international agreements require

sharing such information. When NRC learns of defects in a U.S.

reactor that reflect probable defects in similar foreign reactors,

we routinely advise the foreign authorities of these possible

safety problems.

NRC would normally not have to identify the foreign reactor which

was the source of our original advice. If the foreign government,

on hearing of the defect in a U.S. reactor, asked for more information

involving the source of our advice, the staff would coordinate with

the source concerning providing such information. Incidentally,

our international agreements provide that the foreign government

will likewise honor this commitment to non-disclosure of any information NRC does give them in confidence.

27. In the event of a Freedom of Information Act request, is the NRC

confident that it can prevent disclosure of information received in

confidence from foreign sources?

Response:

U.S. law provides for exemption from public disclosure of information

which is "commercial confidential" or trade secrets ("proprietary"),

including information which a foreign government gives us, or

allows us to receive, under the condition that it be protected from

disclosure (See 10 CFR 2.790(d)(2)).

28. If a request for information received in confidence from foreign

sources is received in a licensing hearing, what means are available

to protect the information from disclosure to intervenors?

21.2-9
Response:

The protection of proprietary information in a licensing hearing

is the responsibility of the presiding officer. If it is found

that the information sought is relevant and not otherwise available

to the requesting party, then the presiding officer is empowered

to order the disclosure of such information under appropriate

protective condition, such as disclosure in camera, or under

protective seal.

If the information sought is being protected, under international

obligation at the request of a foreign government, then the

protection of the national security laws may also apply.

29. Does Section 21.21(b)(3) require the identification of the source

of foreign information or is the reporting requirement limited to

identification of activities in the U.S. which fail to comply or

caused a defect?

Response:

Part 21 requires only reporting on the U.S. plants involved - not

identification of the source of foreign information.

30. How are the interests of the foreign utilities protected so that

operational information from foreign utilities will continue to

flow into the United States and not cease as a result of this

regulation?

Response:

The protection described above applies to foreign utilities as

well as to U.S. parties.

31. Will it be required to report defects which occur in foreign

plants to the same depth and scope as defects which occur in U.S.

facilities? If the nature of the defect report makes the identity

of the foreign plant obvious, what procedures will the Commission

use to assure that disclosure of the information will not be at

variance or contrary to the practices of the foreign country?.

Response:

No. Part 21 requires only sufficient information from foreign

experience, which reflects a defect in a U.S. plant, to make the

notification useable in NRC safety work. Any information given

which is confidential will be protected as described above.

21.2-10
32. What type of security clearance, if any, will be required by

U.S. suppliers in order to communicate defect information to the

NRC for defect information received from foreign facilities?

Response:

To notify NRC of foreign proprietary information, no clearance is

required. Those few persons who had to receive this proprietary

information would have to sign agreements of confidentiality.

In any discussions involving confidential foreign information,

which NRC has decided to protect by classifying (or to recognize

foreign classification), representatives of U.S. suppliers would

need security clearances at the appropriate level.

33. Does Part 21 apply to foreign manufacturers of basic components

or their subcomponent parts? Does this regulation prohibit

purchases of basic components from non-U.S. suppliers?

Response:

Under certain circumstances Part 21 would apply to component

suppliers located outside of the United States. Section 21.2

states that Part 21 applies to each individual, corporation,

partnership or other entity doing business within the United

States which supplies basic components for a facility or activity

licensed other than for export under Parts 30, 40, 50, 70 or 71

of the Commission's regulations. Although the phrase "doing

business within the United States" is not defined specifically in

the regulation, similar terminology has been interpreted, in

other contexts, to include a foreign manufacturer who contracts

to sell his product to a United States purchaser. This could

mean that a foreign entity which contracts with a U.S. purchaser

to supply a basic component for a facility or activity covered by

Part 21 would be subject to the requirements of the rule to the

extent that the United States has jurisdiction over the foreign

entity and its officers. The rule does not prohibit purchases

from non-U.S. suppliers of basic components.

34. Can the penalties for noncompliance be enforced upon foreign

suppliers?

Response:

The penalties for noncompliance with Part 21 can be enforced on

foreign suppliers only where the United States has jurisdiction

over the foreign entity and its officers.

35. May individuals other than those required to provide notifications,

including members of the general public, provide information concerning known or suspected defects or failures to comply? If

yes, how?

21.2-11
Response:

Yes. The rule specifically states that nothing in these regulations

should be deemed to preclude an individual, including members of

the general public, not subject to Part 21 from reporting to the

Commission a known or suspected defect or failure to comply. In

the case of an employee of an organization subject to Part 21, it

is anticipated first that this individual will bring the information

to light within the organization for which he works. In the

event that this channel is not available or is deemed to be

ineffective to the person possessing the information, such person

can call the regional office collect. Phone numbers are contained

in the rule itself, therefore, there is a vehicle via which an

individual may communicate the information to the Nuclear Regulatory

Commission. If anonymity is requested, it will be granted

within the limits allowed by-law.

36. Who is responsible for performing evaluations of suspected defects

which are reported to NRC by a member of the general public?

Response:

NRC will investigate, or cause to be investigated, reports of

defects which are made pursuant to Part 21.

21.2-12
21.3 Definitions

§21.3(a) Basic Component

As used in this part, (a) "Basic component." when applied to nuclear power re- actors means a plant structure, system.

component or part thereof necessary to assure (1) the integrity of the reactor

coolant pressure boundary, (2) the capability to shut down the reactor and maintain it in a safe shutdown condition, or

(3) the capability to prevent or mitigate

the consequences of accidents which

could result in potential offsite exposures

comparable to those referred to in

§ 100.11 of this chapter: "Basic component," when applied to other facilities

and when applied to other activities licensed pursuant to Parts 30, 40, 50, 70 or 71 of this chapter, means a component. structure, system, or part thereof

that is directly procured by the licensee

of a facility or activity subject to the

regulations in this part and in which

a defect (see § 21.3(d)) or failure to

comply with any applicable regulation

in this chapter, order, or license issued

by the Commission could create a substantial safety hazard (see I 21.3(k) ).

In all cases "basic component" includes

design, inspection, testing, or consulting

services important to safety that are associated with the component hardware, whether these services are performed by the component supplier or

others.

1. How is "safe shutdown" to be interpreted?

Response:

The term "safe shutdown" appears in the definition of basic

component in Section 21.3(a), wherein it states that basic components

include plant structure, systems and components "necessary to

assure. . . (2) the capability to shutdown the reactor and maintain

it in a safe shutdown condition. . .". Maintenance of a safe

shutdown condition refers to the ability to achieve and maintain

the reactor in the cold shutdown condition for an indefinite

period. RegulatoryGuide 1.29 provides additional guidance which

may be utilized in determining which basic components are necessary

to assure "safe shutdown."

2. Does Part 21 apply to only "safety related" items?

21.3(a)-I
Response:

Yes. Part 21 applies to any defects and noncompliance which

could create a substantial safety hazard in activities that are

within the regulatory authority of the Nuclear Regulatory Commission;

therefore only those items which are "safety related" are within

the scope of Part 21.

3. The definition of a "basic component" is not clear, for example,

does it apply to a valve supplied to a pump manufacturer for

inclusion on the pump? An instrument supplied to the valve

manufacturer? An electrical component (switch, relay, etc.)

supplied to the above instrument supplier? How far down toward

items such bolts, nuts and "raw material" does Part 21 apply in

this case?

Response:

In the case of power reactors additional guidance on basic components

is provided in Regulatory Guide 1.29. Additionally, each applicant

for a power reactor operating license or construction permit must

in his safety analysis report identify those systems, components

and structures which are seismic Category I (FSAR Section 3.2.2).

These equipments, components, and structures, as well as their

design and safety related services, are defined as basic components

in Part 21. Basic component, when applied to other regulated

activities, means a component, structure system or part thereof

that is directly procured by the licensee of the facility or

activity subject to Part 21, in which a defect or failure to

comply could create a substantial safety hazard. As applied to

nuclear power reactors basic component goes down all tiers of the

supply or procurement chain to all activities within the chain

who have the capability to create a substantial safety hazard.

4. A plant manufactures commercial products which the power industry

purchases for use in both fossil and nuclear applications:

a. We are not a qualified supplier to ASME Code 3 requirements.

b. We supply products meeting 10 CFR 50 Appendix B and are

listed under CASE (Coordinating Agency for Supplier Evaluation).

Do we fall under the rules of Part 21?

Response:

Yes, you do come under Part 21 if the products which you furnish

for use in nuclear applications are basic components,

21.3(a)-2
as defined in §21.3(a), which could create a substantial safety

hazard, as defined in §21.3(k).

5. Does Part 21 also apply to suppliers of consumables such as

welding material and services such as calibration.

Response:

Yes. Where the consumable or calibration service is related to a

basic component and a deviation from specified requirements of a

procurement document, or failure to comply, could create a substantial safety hazard.

6. Are purchased "off-the-shelf" items ýuch as material obtained

from a distributor or a material supplier or items such as switches,

pumps, respirators and filters subject to 10 CFR 21?

Response:

Yes, if the off-the-shelf item is within the definition of basic

component as defined in §21.3(a).

7. Is a hospital using a teletherapy machine subject to Part 21? If

an interlock switch (an "off the shelf" item) fails after a

period of time does the hospital have to report it. under.Part:21

if the switch could have resulted in a substantial".s.afety.hazard?

If the answer is "yes", what parts of a teletheraphy machine are

considered to be subject to Part 21?

Response:

A hospital licensed by NRC.touse.a teletherapy machine is subject

to Part 21. A failure in any part of the machine (including offthe-shelf item) Would be.a*reportable defect if: 1) the part that failed did not.conform to'the technical requirements. included

in the procurement documen .(921.3(e)); 2) the part that failed

was a basic component (§21.3(a)); and 3) the failure could, based

on an.evaluation, create a substantial safety hazard.

8. Which ".off-the-shelf" items used by a manufacturer of teletherapy

machines.(examples: on-off indicators., lead, etc.) are considered

to be basic components? If.l0O switches.are purchased by this

manufacturer as ".off-the-shelf" items does the procurement document

have to state that these parts are subject to Part 21?

21.3(a)-3
Response:

Any components procured directly by an NRC licensee in which a

defect or failure could create a substantial safety hazard are

basic components. If any of the 100 switches is to be used as a

basic component then the procurement document must state that

Part 21 applies.

9. Consider a licensee whose licensed activities are only incidental

to the products/services it supplies in which case the products

and/or services themselves are not licensed. Is it proper to

assume that Part 21 is applicable to these products and/or

services only when so stated in procurement documents?

Response:

If the product or service constitutes a basic component within

the meaning of Part 21, then the licensee is subject to Part 21

as a supplier of basic components. Where the licensee is supplying

a basic component, it is subject to the reporting requirements

whether or not the procurement document indicates that Part 21

applies.

10. As used in Section 21.3(a) does "failure to comply" require that

an evaluation be done in order to determine whether a substantial

safety hazard is created?

Response:

Section 21.21(b)(1) requires that failures to comply which relate

to a substantial safety hazard be reported. The rule is silent

on how to determine if a failure to comply is related to a substantial

safety hazard.

11. In Section 21.3(a) what is the meaning of "component hardware?"

Is a consultant service which provides dosimetry services (TLD

dosimeters and film badges) providing component hardware that is

subject to Part 21?

Response:

As used in §21.3(a), "component hardware" would include all physical

elements included by the term basic component, such as: plant,

structure, system, component or part of a licensed facility.

No, dosimetry services do not constitute design, inspection,

testing or consulting services important to safety that are

associated with a basic component as defined in section 21.3(a).

21.3(a)-4
Reporting under Part 21 would be required, however, if, in

connection with the dosimetry service, there existed a failure to

comply with an applicable rule, regulation, order or license of the

Commission relating to a substantial safety hazard.

12. §21.3 states -- In all cases "basic component" includes design,

inspection, testing, or consulting services "important to safety...".

Clarify the meaning of this statement.

Response:

The broad scope of Section 206 activities of construction, operation,

owning and supplying in themselves include activities such as

design, consultation or inspection that are important to safety

and are associated with component hardware. Thus, such activities

which could in themselves result in creating or identifying a

defect in associated hardware, system or structure are included

in the definition of basic component. An organization may accomplish

all of these activities in-house or may choose to authorize

others to do some of the safety-related activities; e.g., consultation,

design, inspection or tests, for it. When such contractural

arrangements are made for safety-related services the organization

accomplishing the service is within the scope of Part 21.

13. In paragraph 21.3(a) the last sentence seems to imply the Directors

and Responsible Officers of an Authorized Nuclear Inspector

organization fall under the purview of Part 21. Is this a proper

assumption?

Response:

Yes, Part 21 does apply to suppliers of services or items performing

activities within the scope of the definition for "basic components."

This does include the contracted services of an Authorized Nuclear

Inspector.

14. As background to the questions asked below, property insurance

coverage for a nuclear facility can be for Fire and Extended

Coverage and/or Boiler and Machinery Coverage. Such policies of

insurance reportedly do not require the insurer to make inspections

of an insured facility for purposes of loss prevention, but can

so allow such inspections to be made if the insurer so desires.

Such loss prevention inspections of an insured facility are for

various purposes such as, determining the underwriting risk,

calculation of premiums and loss prevention. A general question

with specific examples, concerning the applicability of Part 21 to

such services is presented as follows:

21.3(a)-5
Is an insurance company which insures an NRC licensed facility

and, as a part of its insurance contract, includes and makes

regularly scheduled inspections of these licensed facilities and,

as a result of these inspections offers written advice to the

insured concerning fire, explosion, pressure vessel and machinery

breakdown protection considered to be within the category of

organizations supplying safety related design, testing, inspection

and consulting services? Specific examples are:

a. For Fire and Extended Coverage inspections made but not

required by the insurance policy- are defects, deviation,

or deficiencies which are uncovered that could result in a

"substantial safety hazard" to be reported to the NRC by the

insurance company as outlined in Part 21?

b. Same questions as (1), except substitute "Boiler and Machinery

Coverage" for "Fire and Extended Coverage."

c. Same questions as (1) and (2), except that inspections are

made because of insurance participation in MAERP or NEL-PIA.

Response:

If the information is given gratuitously by the insurance company

as merely a part of its own protection in supplying insurance, in

contrast with a customer contract requirement, then it does not

fall within the cateogry of organizations that supply safetyrelated services. Where the information offered by the insurance

company includes the indentification of a possible failure to

comply or a defect - the insurance company is not required to

report to the NRC. However, licensees receiving such information

would need to address in their procedures whether it will be

necessary to conduct an evaluation to determine if, indeed, a

substantial safety hazard does exist. If, hoWever, a licensee

contracts for these services then the insurance company would be

subject to Part 21.

15. Are insurance companies performing contracted inspections associated

with basic components required to report under Part 21.

Response:

The insurance company is not required to report under §21.21b if

the insurance company identified in his report to his purchaser

all deviations from established requirements discovered during

the inspection he was contracted to conduct.

21.3(a)-6
If, after delivery of the completed inspection report, the insurance

company was to become aware of a deviation in a basic component

that was not reported the insurance company would a) be responsible

for conducting an evaluation and reporting to the NRC if a

defect which could create a substantial safety hazard did exist,

or b) if not able to perform the evaluation - to inform the

purchaser of the deviation which requires further evaluation

under 10 CFR Part 21.

16. If the insurance or testing agency company declines to "approve"

a piece of equipment for a reason which might result in a "substantial

safety hazard" if the equipment were used in a NRC licensed

facility, must the company notify NRC as outlined in Part 21?

Response:

No.

17. Does Part 21 apply to a consultant who conducts site investigations

to establish geologic and seismic data for engineering analysis

and design of nuclear power plant foundations and structures? If

it does, give an example of a site-related defect.

Response:

The rule notes that a consulting service for a facility or activity

important to safety is subject to the rule. Therefore, a consultant

who conducts site investigations and prepares data on safetyrelated site characteristics is subject to Part 21. 10 CFR Part

100, Appendix A, Seismic and Geologic Siting Criteria for Nuclear

Power Plants, is the governing rule.

The discovery and evaluation of a new site feature, such as a

fault or area of unstable ground which could present a substantial

safety hazard, would be reportable under Part 21 only after the

originally contracted data is delivered to the purchaser and the

evaluation of the new condition identifies the existence of a

defect in the original data which, if used, will substantially

reduce the safety function of the facility.

21.3(a)-7
Definitions

§21.3(d) Defect

(d) "Defect" means:

(1) A deviation (see § 21.3 (e)) in a basic component delivered to a purchaser for use in a facility or an activity subject

to the regulations in this part if, on the

basis of an evaluation (see §21.3(g)).

the deviation could create a substantial

safety hazard; or

(2) The installation, use. or operation

of a basic component containing a defect as defined in paragraph (d)Qi of this

section: or

(3) A deviation in a portion of a facility subject to the construction permit or manufacturing licensing requirements

of Part 50 of this chapter provided the

deviation could, on the basis of an evaluation, create a substantial safety hazard and the portion of the facility con- taining the deviation has been offered to

the purchaser for acceptance; or

(4) A condition or circumstance involving a basic component that could

contribute to the exceeding of a safety

limit, as defined in the technical specifications of a license for operation issued

pursuant to Part 50 of this chapter.

1. Please define or discuss the term "delivered to a purchaser for

use" as used in subsection 21.3(d)(1). Does this mean that a

deviation can only be classified as a defect if it was not detected

by a receiving inspection? Discuss the situation where a deviation

is detected by receiving inspection and a Nonconformance Report is

issued. Is this a potential defect: i.e., the component was

"delivered for use" by the supplier, but not "delivered for use" to

the constructor or owner.

Response:

-Section 21.3(d)(1) defines a reportable defect as a deviation in a

basic component delivered to a purchaser for use in a facility or

activity subject to Part 21 where it is determined that the deviation

could create a substantial safety hazard. In determining whether a

basic component has been delivered, the basic element, in the

staff's view, is when the purchaser has taken control over the

item. Normally, this would occur when the purchaser or its agent

(e.g., a shipper) receives the component. However, the purchaser

may be entitled, either through contractual provision or ordinary

commercial practice, to conduct a receiving inspection before

taking final acceptance of the component.

21.3(d)-I
In that case, it is the staff's position that "delivery" would not

occur, and therefore no notification to NRC by the purchaser would

be required, where the purchaser conducts the authorized receipt

inspection and rejects and returns the component to the supplier

within a reasonable period of time after receipt of the component.

In this same situation, the supplier who receives the rejected

component would be required to evaluate the deviation and report an

identified defect if he had delivered components with similar

deviations to other facilities or activities subject to Part 21.

2. Is a nonconforming item, discovered after release by a supplier,

which upon evaluation could create a substantial safety hazard but

which will be reworked to full compliance with the procurement

documents reportable under Part 21?

Response:

If a deviation -- that is, a departure from the technical requirements included in the procurement document for a basic component -- is identified in that basic component which has been delivered to a

purchaser, then an evaluation must be performed. If the evaluation

identifies a defect, then it must be reported even though the

purchaser or supplier may subsequently rework the component to full

compliance with the procurment document.

3. Does the concept of "delivered" in §21.3(d)(1) require that the

basic component be turned over from one corporation or separate

entity to another corporation or entity or could something be

delivered within a single corporation? Suppose the fabricator of

the component is also the licensee of the reactor -- at what point

is there delivery so that there could be a "defect?"

Response:

The rule makes no distinction between inter and intra entity delivery

of components as long as the transaction occurs pursuant to a

procurement document. In determining whether a component has been

delivered, the basic element is when the purchaser has taken control

over the item.

4. Are we operating within the intent of 10 CFR Part 21 by definingi

for purposes of compliance with this regulation, the term delivery

to mean:

a. that point after receipt of materials from a supplier when an

inspection report, indicating acceptability of the materials

for fabrication, is issued:

21.3(d)-2
b. that point, after fabrication and shipment to the site where

erection will be performed by a third party when an acceptance

is issued by the erector;

c. that point, after fabrication and shipment to the site where

the fabricator will also perform the erection, that the

fabrication is offered to the client as completed.

Response:

Yes, but see response to 1 above in regard to applicability of

receipt inspection.

5. If our customer purchases a nuclear plate to the requirements of

the Code including ultrasonic testing to the material requirements

of A578 level 1, then upgrades by test to their customer's specification which is tighter than the ASME Code and finds a rejectable

indication under their customer's specification, are we responsible

to report to the Commission?

Response:

No. The delivered basic component did not deviate from the procurement document specification (A578 level 1), therefore no

defect exists.

6. It is the opinion of the QA Manager that Part 21 requires no

change in QA Manual or procedures nor additional action. The

controlled manufacturing system described in our QA Manual will

prevent our offering an N-Stamped product for customer acceptance

with known conditions that could:

1. Create substantial safety hazard;

2. Deviate from technical requirements included in the procurement;

or

3. Contribute to exceeding a license designated safety limit.

Therefore, we believe there is no need to notify employees or

vendors of Part 21 again because of our compliance with provisions

of an approved QA Manual. Is this correct?

Response:

The assumption appears to be made that because a company has a

controlled manufacturing system in accordance with their QA

Manual,

21.3(d)-3
there is no possibility that any deviation could exist in a

delivered component. Therefore, the provisions of Part 21, such

as the requirements of sections 21.6 and 21.31, would not apply.

This assumption is incorrect. Any organization supplying a basic

component as defined in Section 21.3(a) is subject to Part 21.

7. Is it the intent of Part 21 that findings currently treated under

the Operational Quality Assurance Program (audit reports, nonconformance reports) may be reported to the NRC? A specific example of

a nonconforming item is a power reactor is a spare part that was

returned to the vendor because it did not satisfy some feature in

the purchase requirements. Is this action reportable under

Part 21?

Response:

A spare part received at a power reactor facility which is returned

as a result of the initial receipt inspection would not be reportable

under Part 21 by the purchaser. The supplier would be required

to report the item if he has delivered similar defective parts to

others. A defect in a spare part which is found after it is

under the control of the purchaser, that is after delivery, and

receipt inspection and acceptance by the purchaser, would be

reportable under Part 21.

8. If a deviation is discovered after delivery, but before installation,

who do we notify? Our buyer? Owner/Operator? Do we need to

notify NRC in this case?

Response:

If the supplier identifies a deviation in a delivered basic

component and has evaluated the deviation and by evaluation he

has determined that it could cause a substantial safety hazard,

he is required to report the deviation, which is now a defect,

directly to the NRC. If the supplier does not evaluate the

deviation capability, then he is required to report the deviation

to his buyer.

9. If in the course of fabrication, our purchaser recuts a plate and

opens up a lamination that is either repairable or rejectable,

whose responsibility, if any, is it to report the incident to the

Commission?

Response:

It is the responsibility of the purchaser to evaluate the deviation

(i.e., lamination) and if it could create a substantial safety

hazard, to report the defect to the Commission.

21.3(d)-4
10. When are construction activities delivered for purposes of Part 21?

Do deviations related to construction, modification or repair

activities discovered as a result of planned post-installation,

preoperational or startup testing at a nuclear power plant require

evaluation and 10 CFR 21 reporting if the portion of the plant

under test was released to the permit holder or licensee with the

understanding that testing would be the proof of acceptability

and that deviations would be referred back to that organization

for remedy followed by subsequent tests?

Response:

Section 21.3(d)(3) identifies those deviations in a portion of a

facility subject to the construction permit or manufacturing

license requirements of Part 50 of the Commission's regulations

which are reportable defects under Part 21. Offer for acceptance

of the portion of the facility containing a deviation, within the

meaning of Section 21.3(d)(3), would occur when the supplier

offers control over the portion of the facilities to the owner.

Thus, where a purchaser is offered responsibility for a portion

of the facility for testing purposes, the purchaser would be

required-to evaluate any deviations in that portion of the facility

and to report any defects.

11. The terminology in paragraph 21.3(d)(3) indicates that a basic

component containing a deviation has been offered by the purchaser

for acceptance.' Many contracts for basic components of nuclear

power reactors include provisions that "final acceptance" is not

complete until some warranty period has expired. This warranty

period may be as long as one year after commercial operation.

The warranty provisions for major equipment normally require the

manufacturer to be responsible for the correction of any defects

that appear through the warranty period. Please discuss the

interpretation of the point in time when acceptance is accomplished

by the purchase.

Response:

Section 21.3(d)(3) identifies those deviations in a portion of a

facility subject to the construction permit or manufacturing

license requirements of Part 50 of the Commission's regulations

which are reportable defects under Part 21. Offer for acceptance

of the portion of the facility containing a deviation, within the

meaning of Section 21.3(d)(3), would occur when the supplier

offers control over the portion of the facility to the purchaser.

Thus, a warranty which requires the supplier to correct deficiences

for a period of time would not postpone the applicability of

21.3(d)-5
Part 21 to the purchaser. Whenever the purchaser is offered

control over the portion of the facility containing the defect,

he would be required to report the defect under Part 21.

12. Please discuss for design documentation, reports prepared by

consultants, or similar "software" when they are considered as

"delivered." Most design documents are "delivered" several times

to different organizations for various purposes. A design document

may be "delivered" from a design organization to the licensee for

the purposes of review. This delivery is a contractually binding

requirement for a design organization to provide documents for

review. The design documents then may be also utilized as portions

of or incorporated in procurement documents. The design documents

are again "delivered" to an organization who will be providing

fabrication based upon the procurement document. Do changes or

modifications to design documents that have once been "delivered"

to a fabricator constitute a second delivery?

Response:

With respect to design, Part 21 is only applicable when such

design (or consultation) can result in the creation of a substantial

safety hazard. During the activities of design and consultation

there may be stages of conceptual design in regard to feasibility.

Conceptual designs are not subject to Part 21. However a "defect"

in a design which is used in a procurement document is reportable

under Part 21. Therefore, a design document, consultation or

"other software" should be considered "delivered" for purposes of

reporting defects under Part 21 when it has been communicated to

another party which will use it in design, manufacturing or in

preparing a document for the manufacturing of any basic component.

13. It is obvious that this rule requires reporting of defects related

to basic components. Under what circumstances would the following

design considerations be reportable under this rule:

a. A situation wherein an analysis error is discovered.

b. A situation wherein an analytical method is changed.

c. A situation wherein the data base for the design or performance

evaluation is changed.

d. A situation wherein a basic criterion is changed.

21..3(d)-6
Response:

An analysis error, modeling error or data input error could be reportable under Part 21 where such an error is detected after delivery of the analysis data to the purchaser. In these instances,

an evaluation would have to be performed to determine the significance of the error --- that is the reduction in degree of protection provided to public health and safety. For example, an ECCS

related error which results in a calculated change of peak clad

temperature of less than specified value, that is 201⁄4F, is not considered to be a substantial safety hazard. Regarding a change in a basic criterion, if a criterion used for the design of a basic component is changed such as to potentially result in a

major reduction in the degree of protection provided for the public health and safety, then such a change would be reportable if the design data has been delivered for use in final design, the SAR or in procurement documents.

14. It is understood that the correction of defects that are found

within the normal course of the application of a quality assurance

program complying with 10 CFR Part 50 Appendix B are not included

in reporting requirements. These detections and corrections of nonconformance or defects, that occur on a day-to-day routine

basis because of reviews, inspections, tests, nondestructive

examinations do not appear to be within the definition of the

reporting requirements of Part 21. Those items that are not

detected within the normal course of the conduct of a quality

assurance program and are contained in "delivered basic components"

appear to be subject to evaluation and/or reporting requirements of Part 21. Please discuss the interrelationships of defect, nonconformance corrective action, repairs that are required by Appendix B of Part 50 and those definitions used for reporting requirements of "substantial safety hazards" in Part 21.

Response:

Your interpretation that detections and corrections of nonconformances or defects, that occur on a day-to-day routine basis

because of reviews, inspections, tests, nondestructive examinations, "before a basic component has been delivered or offered for

acceptance" would not come within the reporting requirements of

Part 21 is correct. It is only after delivery of a basic component containing a deviation and the determination, by an evaluation, that the deviation is a defect that a Part 21 report need be made. Part 21 has given special meanings to "defect" and "deviation."

These same terms are used in Criterion XVI, Corrective Action, of Appendix B to 10 CFR Part 50. Although the special meanings of

Part 21 were not developed for the Appendix B use of the terms, the meaning of Criterion XVI of Appendix B is not changed and is

consistent with the special meaning of these terms as used in

Part 21.

21.3(d)-7
15. Is receipt of a defective component reportable under Part 21, if

the evaluation indicates that the component would not effect

plant safety because quality assurance and quality control procedures

would have prevented the component's installation?

Response:

Quality assurance inspections or tests performed by the licensee

cannot be counted upon to prevent installation of defective basic

components. In evaluating deviations the assumption which must

be made is that the component is installed in the facility, then

if it could create a substantial safety hazard it must be reported

to the NRC as a defect.

16. Is it possible to classify defects or noncompliance prior to

occurrence to eliminate the need for "evaluation?"

Response:

It is acceptable for an organization to specify, within their

internal procedures, the general types of deviations, with appropriate

evaluations, which could create substantial safety hazards and

which therefore are reportable defects. However, each specific

deviation must be individually evaluated. This evaluation could

utilize the previously evaluated categories of deviations which

are reportable as defects if the specific deviation can be categorized

into one of the general types of deviations which have been

previously evaluated.

17. If all technical requirements of a procurement document are

verified as having been met prior to placing an item in operation,

then by Part 21, would the only reportable defect involve those

conditions or circumstances relating to a basic component that

could contribute to the exceeding of a safety limit?

Response:

Yes. If the procurement document is not defective and all technical

requirements are verified as having been met including any performance

and reliability requirements, then the only defect reportable

under Part 21 would relate to conditions or circumstances relating

to a basic component that could contribute to exceeding a safety

limit.

18. Clarification is needed regarding "conditions and circumstances."

Are these referring to operating conditions?

21.3(d)-8
Response:

The term "condition or circumstances" referred to appears in

§21.3(d)(4), which states, "A condition or circumstance involving

a basic component that could contribute to the exceeding of a

safety limit as defined in the technical specifications of a

license for operation issued pursuant to Part 50 of this chapter."

"Condition or circumstance" refers to those which the basic

component may experience at any time. It does not refer only to

reactor operating conditions. The time at which the potential

exists for exceeding of a-technical specification safety limit

occurs after the operating license is issued and refers to reactor

operating conditions in its broadest sense, in that it must

include the shutdown and refueling modes.

19. Does the "safety limit" criteria have specific implications for

licensees other than those related to operating reactors?

Response:

Any fuel reprocessing or enrichment facilities licensed pursuant to

10 CFR 50 would also use the "safety limit" criteria.

20. To what degree of contingency should the words "could contribute"

in §21.31(d)(4) be carried?

Response:

The "condition or circumstances" should be evaluated for normal

operation and anticipated transients, considering a single failure

in addition to the condition or circumstance being evaluated in

order to determine if a safety limit could be exceeded.

21. If the condition or circumstances in question does not, without

intervening cause, reach a safety limit does it become a reportable

defect?

Response:

Anticipated transients must be considered as "intervening causes."

Then, if the condition or circumstance would not contribute to

exceeding a safety limit, itwould not be a reportable defect.

22. If the component or system is redundant or multiply redundant,

when the safety limit does not reduce such degree of redundancy,

would the deviation be a reportable defect?

21.3(d)-9
Response:

Assuming that the question intended to address "condition or

circumstance involving a basic component" it would be necessary

to consider a single failure in a redundant component or system

and the condition or circumstances would have to be reported if a

safety limit could be exceeded.

21.3(d)-10
Definitions

§21.3(f) Director

(f) "Director" means an individual.

appointed or elected according to law,

who Is authorized to manage and direct

the affairs of a corporation, partnership or other entity. In the case of an individual proprietorship. "director" means the individual.

1. Please identify some situations in which a director of a corporation,

in his or her capacity as director (i.e., through reports made by

management at board meetings) might become personally liable under

Part 21? Shouldn't the definition of "director" in §21.3(f) reflect

the fact that only the board of directors, and no individual

director, has authority to manage and direct the affairs of a corporation, or did NRC mean to restrict liability only to those "directors"

who single-handedly possess such authority?

Response:

If a director obtains information reasonably indicating a defect or

failure to comply such as, for example, through reports made by

management at board meetings, and fails to make the required notification to the NRC, he would be personally liable. The definition of

"director" should be read to include each individual member of the

board of directors and not just those directors who single-handedly

possess authority to manage and direct the affairs of the corporation.

2. Does the term "director" include outside members of the Board of

Directors?

Response:

The term "director" does apply to outside members of the Board of

Directors if they are authorized to manage and direct the affairs of

the corporation, partnership or other entity. If they have actual

knowledge themselves, they have a duty to comply.

21.3(f)-1
Definitions

§21.3(i) Procurement Document

(i) "Procurement document" means a contract that defines the requirements

which facilities or basic components must

meet in order to be considered acceptable by the purchaser.

1. Please explain what the "procurement'document" is for consultant

services or for a design so that it can be determined when a "deviation"

has occurred. Can a "procurement document" itself be defective

(i.e., contain incorrect specifications)?

Response:

A procurement document for consultant services is the same as a

procurement document for hardware, that is a contract that defines

the requirements which facilities or basic components must meet to

be considered acceptable by the purchaser. A procurement document

can itself be defective. For example, the specifications for the

basic component could be defective.

2. Does the concept "procurement document", defined in Section 21.3(i),

include purchase orders of off-the-shelf or catalogue items, which

are not covered by contractually-required quality assurance procedures,

manufacturing codes or specifications?

Response:

Yes, provided they fall within the definition of "basic component"

contained in Section 21.3(a) of the rule.

21.3(i)-I
Definitions

§21.3(j) Responsible Officer

(J) "Responsible officer" means the

president. vice-president or other individual in the organization of a cor- piration, partnership, or other entity

who is vested with executive authority

oicr activities subJect to this part.

1. For a corporation, is the definition of responsible officer

(Section 21.3(j)) limited to only those officers duly elected or

appointed in accordance with state laws and corporate bylaws?

Response:

No. "Responsible officer" as defined in §21.3(j) includes other

individuals in the organization of a corporation, partnership or

other entity "who are vested with executive authority over activities

subject to this part." (Emphasis added). It is possible that

individuals vested with executive authority over activities

subject to Part 21 may not be included in the list of officers in

the Articles or By-Laws.

2. The definition of responsible officer includes "...other individual...

vested with executive authority over activities subject to this

part." Who is included by the words "other individuals"?

Response:

President and vice president are two titles that are identified

in the rule. The "other individuals who are vested with executive

authority over activities subject to this part" would be those

personnel identified in the organization's procedures and have

comparable authority to that of a president or vice president.

3. The definition of "responsible officer" published on June 6, 1977

deleted persons with "management authority" from the definition

originally proposed March 3, 1975. See, 40 Fed. Reg. 8832 (1975).

Should this deletion be interpreted as excluding from the definition

of "responsible officer" those persons who have only managerial

authority (and who may have a title, such as "vice president"),

but are not corporate officers?

21.3(j)-1
Response:

Not necessarily. If the individual with managerial authority, whether

or not he is identified as a corporate officer, is also vested with

executive authority over an activity which is subject to Part 21, then

he would be a responsible officer within the meaning of Section 21.3(j).

4. In the case of a corporation is the definition of "Responsible

Officer" meant to include individuals such as project managers

and QA managers?

Response:

No, it is not meant to include individuals such as project managers

and QA managers. These individuals are not ordinarily vested

with executive authority.

5. Can an entity subject to Part 21 designate one "responsible

officer," as defined in Section 21.3(j), to the exclusion of

other individuals in the entity who have executive authority over

activities subject to Part 21? Is it possible, as in the case of

a matrix management system where all aspects of construction,

design and operation of a nuclear power plant are under the

control of a single individual, that only one individual will be

a "responsible officer?"

Response:

An entity may not exclude any individual in its organization who

is vested with executive authority over activities subject to

Part 21 from the requirements of Part 21. This should be distinguished from Section 21.21(a) which is to assure that the entity

informs one director or responsible officer of defects or failures

to comply which are identified.

It is possible, however, that within the entity's organization,

such as in a matrix management system, only one individual will

be vested with executive authority over activities subject to

Part 21.

6. What mechanism or means exists for mutual agreement to be reached

before-the-fact between the licensee and the NRC as to which

individuals in a given organization are to be considered "responsible officers"?

21.3(j)-2
Response:

None. Consistent with §21.21(a)(2), procedures shall provide for

informing the director or the responsible officer designated by

each organization as having the required "executive authority"

over activities subject to Part 21. NRC's first observations to

ascertain compliance with Part 21 will occur during inspections

conducted by the Office of Inspection and Enforcement.

7. Would an officer who has executive authority over only a small

class of activities covered by Part 21 (e.g., plant security,

personnel, stores) be liable for failing to make a report concerning

a defect or noncompliance arising outside of his area of executive

authority?

Response:

Any responsible officer or director with executive authority over

activities subject to Part 21 would be liable for failing to make

a report concerning a defect or noncompliance concerning a basic

component that is within his organization's responsibility.

21.3(j)-3
Definitions

§21.3(k) Substantial Safety Hazard

(k) "Substantial safety hazard" means a loss of safety function to the extent

that there is a maJor reduction In the degree of protection provided to public

health and safety for any facility or ac- tivity licensed, other than for export.

pursuant to Parts 30. 40. 50. 70 and 71.

1. Please elaborate on the definition of "Substantial Safety Hazard" as

used in Part 21. For instance, give examples of what the NRC

would consider to be a "major reduction in the degree of protection

provided to public health and safety."

Response:

Appendix A to NUREG-0090-7, Report to Congress on Abnormal Occurrences,

June 1977 lists a number of events that may help to illustrate the

NRC concept of "Substantial Safety Hazard." Specific illustrations

of what we would consider to be "major reduction in the degree of

protection provided to public health and safety" include:

. Exposure in excess of 25 rems, whole body (10 CFR 21.403(a)(1))

Exposure of an individual in an unrestricted area to more than

0.5 rem in one calendar year (10 CFR 20.105(a))

Release of radioactive material to an unrestricted area in

excess of 500 times the limit of Appendix B, Table II, 10 CFR

Part 20 (10 CFR 20.403(b))

Exceeding a safety limit as defined in the facility technical

specifications

A deficiency which seriously compromised the ability of a

confinement system to perform its designated function

2. Are defects in redundant components reportable under Part 21?

Response:

A deviation (i.e., a departure from a procurement document specification) which, based upon an evaluation, causes or could cause the

21.3(k)-1
failure of a redundant basic component is a reportable defect under

Part 21. The loss of safety function of a basic component is considered

a major reduction in the degree of. protection provided to the public

health and safety. It is possible that the defect might also exist in

the redundant basic component which could result in a loss of safety function. The existence of a defective basic component, considering a

single failure of its counterpart redundant basic component, could

result in a loss of safety function. Actually, the counterpart component need not fail. It could be removed from service for other

reasons such as routine preventive maintenance or inspection.

3. Facility technical specifications may allow continued operation

for short periods of time with a redundant component inoperable.

For example, one emergency diesel generator-may be inoperable for

up to 72 hours, provided the other diesel generator is demonstrated

to be operable in accordance with the Technical Specification

action statements.

During the period of operation with one emergency diesel generator

inoperable, the "single failure" criterion of 10 CFR 50, Appendix

A cannot be met. Does this represent a substantial hazard as

defined in Part 21?

Response:

No, operation in a degraded mode; that is, operation with less

than the normal minimum number components operable, but within

the action statement of the limiting condition for operation of

the Technical Specification, has been evaluated and found acceptable. Operation in such a mode is not considered to be a substantial

safety hazard as defined in Part 21. A failure which results in

operation in a degraded mode is reportable as a licensee event

report.

It is also possible that the failure could identify a deviation,

i.e., a departure from the techincal requirements of the procurement document under which the component was purchased. If a

deviation is identified it would have to be evaluated pursuant to

Part 21.

4. Are all or some of the present Prompt Reportable Occurrences

defined by operating plant technical specifications or environmental specifications considered "substantial safety hazards"?

21.3(k)-2
Response:

No, not all. For example, some prompt reportable occurrences

result from a failure to meet action statements which are required

by Technical Specification limiting conditions for operation and

would not be reportable under Part 21.

5. To what degree would a deficiency in a plant security system

constitute a "substantial safety hazard"?

Response:

In the case of a power reactor, the rationale is that an act of

sabotage or terrorism could result in potential offsite exposures

comparable to those which could occur as a result of an accident.

An example of a defect or noncompliance in a security system is

one which could allow access of an unauthorized individual to a

vital area without being detected by the security system. Detection

of the unauthorized individual by random visual surveillance or

by remote visual electronic surveillance is not considered to be

a detection by the security system. The staff view is that this

represents a major reduction in the degree of protection to

public health and safety and is, therefore, a substantial safety

hazard and would require notification to the NRC.

6. Does the "substantial safety hazard" definition include "employee

safety" or does it apply to "public safety" only?

Response:

The term "public" in Section 21.3(k) includes all individuals --

that is both employees at a facility or activity-licensed or

otherwise regulated by the Commission and members of the general

public. Of course, the degree of protection afforded and the

criteria for determining whether a substantial safety hazard

could be created will vary for different types of individuals

(e.g., radiation workers as opposed to members of the general public) depending on whether the event is a low probability major

accident or a more probable occurrence, and whether the potential

release is to a restricted or an unrestricted area.

7. In paragraph 21.3, Item (d)(4), why is not the condition or

circumstance tied to a substantial safety-hazard as in paragraph

21.3(d)(1) and (d)(3)?

21.3(k)-3
Response:

This definition is specifically directed toward the safety limits

which are a part of the Technical Specifications issued with the

facilities operating license. An evaluation is implicit with

this definition in order to determine if a safety limit could be

exceeded and is considered a substantial safety hazard.

8. Is it permissible, in the procedures established by each organization, to define what is interpreted to be "a substantial safety

hazard" for the basic components provided by that organization?

It would appear to be helpful to employees of an organization to

be provided with guidance in the interpretation of "substantial

safety hazards" as they relate to the given basic components

provided any organization. A "substantial safety hazard" within

a design organization would be significantly different than a

substantial safety hazard defect in a pump manufacturing

organization.

Response:

Each organization subject to the rule is required to adopt procedures to "provide for evaluating deviations". It is permissible

to incorporate into these procedures specific guidance, applicable

to the organization, on those activities which the organization

performs which could create a substantial safety hazard. This

guidance could then be utilized in evaluating specific deficiencies.

9. What is the difference between a "substantial safety hazard" and "affect safe operation" in accordance with 10 CFR 50.55(e)?

Response:

"Substantial Safety Hazard" originates in Section 206 of the

Energy Reorganization Act of 1974 (ERA). The ERA required that

the Commission promulgate a definition of substantial safety

hazard. Part 21 defines substantial safety hazard as a "loss of

safety function to the extent that there is a major reduction in

the degree of protection provided to public health and safety

.... " The intent of "affect adversely the safety of operation"

as used in §50.55e(l) refers to deficiencies which if they were

to remain uncorrected could adversely affect safe operation.

Specifically these deficiencies are related to (1) quality assurance

programs, (2) design deficiencies which do not conform to the

safety analysis, (3) construction deficiencies or damage to

structure, and (4) deviation from performance specifications.

21.3(k)-4
10. If defects are reported, that in the opinion of the Commission

are not "substantial", will the formal resolution between the NRC

and the reporter still be required?

Response:

Items which are reported pursuant to Part 21 which the Commission

feels are not substantial will be so identified in the NRC's

Computer File of Licensee Event Reports and Part 21 Reports. As

the NRC gains experience with the implementation of Part 21,

additional guidance will be provided if a significant number of "non-substantial" defects are reported.

21.3(k)-5
§21.4 Interpretations

Except as specifically authorized by

the Commission in writing, no interpretation of the meaning of the regulations

in this part by any officer or employee

of the'Commission other than a written

interpretation by the General Counsel

will be recognized to be binding upon

the Commission.

1. Is a written transcript of the regional meetings available?

Response:

No written transcript was made of the five public meetings on Part

21.

2. Do the published staff responses constitute official interpretations

of the rule as provided for in Section 21.4? If not, can the published answers be relied upon for implementation guidance?

Response:

These responses and the responses given at the regional meetings do

not constitute interpretations of the rule by the General Counsel,

as provided for in Section 21.4. However, the staff will be guided

in its implementation and enforcement of the rule by the position

set forth in this document. Such information is provided with the

intent that persons subject to Part 21 would rely upon it for

guidance. Official interpretations by the General Counsel may be

requested in accordance with Section 21.4.

3. How will interpretation of 10 CFR Part 21 made by the General

Counsel be communicated to all organizations subject to this part?

Response:

Interpretations of 10 CFR Part 21 by the General Counsel will be

published in the Federal Register.

4. How and when will the results of these regional meetings be reflected in 10 CFR Part 21?

Response:

While the Commission has no immediate plans to amend Part 21 to

take into consideration comments arising at the regional meetings,

21.4-1
the Commission indicated in the preamble accompanying Part 21 that it

"intends to examine closely the implementation of new Part 21 with a

view to making any clarifications or other changes that may be warranted

in light of experience". Such a reexamination by the staff is presently underway and may result in proposal of some clarifying amendments

in the near future.

21.4-2
§21.5 Communications

Except where otherwise specified in

this part. all communications and reports concerning the regulations In this

part should be addressed to the Director.

Office of Inspection and Enforcement.

U.S. Nuclear Regulatory Commission.

Washington. D.C. 20555, or to the Director of a Regional Office at the address

specified in Appendix D of Part 20 of

this chapter. Communications and reports also may be delivered in person at

the Commission's offices at 1717 H Street

NW.. Washington, D.C.; at 7920 Norfolk

Avenue. Bethesda, Md.; or at a Regional

Office at the location specified in Appendix D of Part 20 of this chapter.

1. How will Part 21 reports be filed and distributed for NRC licensees

and non-licensees and how will these reports be used?

Response:

We plan for copies of Part 21 reports submitted to the NRC by a

licensee or nonlicensee to be placed in appropriate docket files

in the public document room. Proprietary information will be

protected in accordance with 10 CFR Part 2.

NRC will utilize the Part 21 reports to evaluate the implications

of reported defects, including generic implications, to assure

that corrective measures are taken as appropriate for regulated

activities to protect the health and safety of the public.

2. How will the Commission handle reports received that later are

determined to be "non-reportable"?

Response:

All Part 21 reports will be transcribed into a computer retrievable file. The reports will be evaluated by IE, and if appropriate

by NRR or NMSS. If a determination is made that a report should

not have been submitted, we plan to indicate action in the computer

file.

21.5-1
§21.6 Posting Requirements

Each individual partnership, corporation or other entity subject to the regulations in this part. shall post current

copies of the following documents in a

conspicuous position on any .premises.

within the United States where the ac- tivities subject to this part are conducted

(1) the regulations in this part, (2) Section 206 of the Energy Reorganization

Act of 1974. and (3) procedures adopted

pursuant to the regulations in this part.

If posting of the regulations In this

part or the procedures adopted pursuant

to the regulations in this part i not practicable. the licensee or firm subject to

the regulations in this part may. In addition to posting section 206, post a no- tice which describes the regulations/

procedures, including the name of the individual to whom reports may be made.

and states where they may be examined.

The effective date of -this section has

been deferred until January 6, 1978.

1. Who is subject to the posting requirements and when do the posting

requirements become effective?

Response:

Posting requirements become effective on January 6, 1978, and are

applicable to all entities subject to the regulations in this

Part, including licensees and suppliers of licensees.

2. What locations at a facility should be posted in order to comply

with the posting requirements in Section 21.6?

Response:

Every premise where activities subject to Part 21 are conducted,

must be posted in a conspicuous location. The number of posting

locations that is adequate should be judged on the normal access

of the individuals to the premises.

3. Will a form for Part 21 posting requirements similar to NRC-3,

"Notice to Employees," be available from NRC?

21.6-1
Response:

Presently, NRC does not have plans to make available a Part 21

form for posting similar to the NRC-3 form.

21.6-2
§21.7 Exemptions

The Commission may. upon application

of any Interested person or upon its own

initiative, grant such exemptions from

the requirements of the regulations In

this part as It determines are authorized

by law and will not endanger life or property or the common defense and

security and are otherwise in the public

interest.

1. What relief is available to a utility if a sole source supplier

refuses to accept a purchase order with the 10 CFR Part 21 provisions?

Response:

It should be pointed out that Part 21 applies to sole source suppliers

of basic components for licensed nuclear facilities or activities

regardless of whether the procurement document specifies Part 21

applicability or not. Should the questioned situation occur, the

purchaser could request an exemption from the requirements of the

rule pursuant to Section 21.7. The Commission may grant such exemp- tions if it determines that they are authorized by law and will not

endanger life or property or the common defense and security and

that they are otherwise in the public interest.

2. How does a company get an exemption to Part 21?

Response:

Pursuant to §21.7 company can request the Commission to grant an

exemption by filing a request directly with the Commission and

stating clearly the reasons why the exemption should be granted.

3. Will notifications submitted to the NRC in accordance with 10 CFR

Part 21 be exempt from public disclosure?

Response:

If the information in the notification is identified as proprietary

information--the disclosure of which will do substantial harm to an

organization's competitive position--the notification could be

withheld from disclosure under a Freedom of Information Act request

if the Commission determines that it is in the public ihterest to

withhold it (Exemption 4).

21.7-1
21.21(a) of - Notification of failure to comply or existence of a defect

(a) Each individual, corporation, partnership or other entity subject to the

regulations in this part shall adopt appropriate procedures to (1) provide for

(M) evaluating deviations or (ii) informing the licensee or purchaser of the deviation in order that the licensee or purchaser may cause the deviation to be

evaluated unless the deviation has been

corrected; and (2) assure that a director or responsible officer is informed if the

construction or operation of a facility, or

activity, or a basic component supplied for such facility or activity: (I) Fails to comply with the Atomic

Energy Act of 1954, as amended, or' any

applicable rule, regulation, order or li- cense of the Commission relating to a substantial safety hazard, or (iH) Contains a defect. The effective

date of this paragraph has been deferred

until January 6, 1978.

1. Does the term "individual" as used in §21.21(a) (also §21.6, §21.31,

§21.41, §21.51(b)) refer solely to a sole proprietorship business

entity which must have procedures, keep records, etc., or does it

also refer to individuals who are directors or responsible officers

of corporations? The term "individual . . . subject to the regulations

in this part" would seem to include directors and responsible officers

of corporations. Must directors and responsible officers also have

procedures, post copies of regulations, keep records, etc.?

Response:

The term "individual" used in the above referenced sections of the

rule means individual proprietorship. Directors and responsible

officers are not required to have procedures, post copies, etc.

2. What is meant by "appropriate procedures"? Does the NRC expect to

issue a Regulatory Guide, or will each company be on its own?

Response:

"Appropriate procedures" means procedures that are sufficient to

provide effective implementation of fart 21 as described in section

.21.21(a). At this time, NRC does not expect to issue a Regulatory

Guide oh this subject. Should experience with the application of

Part 21 indicate the need for additional guidance in this area, it

is expected that a Regulatory Guide will be developed.

21.21(a)-1
3. Is it a correct interpretation of Section 21.21(a) that appropriate

procedures for evaluating deviations, informing the licensee or

purchaser of deviations, and for assuring that a director or

responsible officer is notified of defective conditions, need not

be incorporated until January 6, 1978?

Response:

It is correct that these procedures need not be adopted until

January 6, 1978.

4. What effect does the delayed effective date of the requirement to

adopt "evaluation" procedures under §21.21(a) have on §21.21(b)

notification requirements?

Response:

In the event that a responsible officer or director obtains

information after August 10, 1977, and prior to January 6, 1978,

reasonably indicating a failure to comply or a defect, such a

responsible officer or director is required to notify the Commission.

This reporting requirement is effective even though formal pro- cedures for performing the evaluations are not in effect.

5. How detailed should procedure for "Evaluation of Deviations" be?

Response:

The procedure for evaluation - and the record for evaluation -

should include the following:

a. review of information sufficient to describe the deviation

b. an analysis of the effect of such a deviation in a basic

component if used in a facility or activity subject to Part

21

c. a conclusion based on the analysis as to whether the deviation could create a substantial safety hazard.

6. When is the earliest time that a utility needs to establish

procedures required by §21.21(a).

Response:

A utility must begin to establish procedures as required by

Section 21.21(a) when it first engages in any of the construction

21.21(a)-2
activities, including safety-related design work, referenced in

Section 21.2 and defined in Section 21.3(c) of the rule.

7. Please discuss to what extent a responsible officer should go to

insure that defects are identified and reported. The specific

concern here is upper level management people, such as Boards of

Directors or Partnership Committees, who are not involved in dayto-day operations.

Response:

The extent to which a responsible officer must go to insure that

deviations are identified is to be determined by each company

subject to Part 21. Once a deviation is identified, the company

must follow the procedures it has established to promptly evaluate

deviations and to inform a responsible officer or director. Once

.a director or responsible officer obtains information reasonably

indicating that a defect exists, he must inform the Commission

unless he knows that the Commission has already been adequately

informed. This applies regardless of whether a director is

involved in the day-to-day operations of the company if a director

obtains reportable information.

8. Are other procedures required to be formally adopted under §21.21(a)

besides those enumerated there? Specifically, must a licensee

establish formal procedures to correct deviations (see 42 Fed.

Reg. 28891, 28893, (7)) or to identify deviations?

Response:

Part 21 requires only those procedures required by §21.21(a) to be

established. Other portions of NRC regulations, for example, 10

CFR Part 50, Appendix B, requires that procedures be established

to identify and correct deviations, nonconformances, defects,

etc.

9. In regard to procedures:

a. Who is responsible to verify that the procedures fulfill the

requirements of Part 21; and, therefore, who accepts the

liability?

b. Should Part 21 procedures be covered in the respective QA

Manuals?

c. What are acceptable procedures and criteria for auditing to

ensure that all actions are in conformance with this aspect

of Part 21?

21.21(a)-3
Response:

a. Each organization is responsible and must assure itself that

appropriate procedures are established.

b. Part 21 procedures need not-be covered in QA Manuals.

c. Normal management controls are an acceptable means to verify

conformance to Part 21. Quality assurance type audits are

not required to verify that appropriate procedures are in

effect.

10. If able to do so, is the organization which issued the procurement

document obligated to perform the evaluation?

Response:

Section 21.21(a) states that each organization shall establish

procedures for evaluating deviations or assuring that deviations

are evaluated by another organization that can perform the

evaluation. It is expected that each organization discovering a

deviation will perform the evaluation if it has the capability to

do so. If the firm is unable to evaluate, then the information

of the deviation should be passed up the tier of purchaser/supplier

organizations in order that the evaluation can be performed.

Procedures developed by any organization should also cover the

aspects of how they will handle receipt of information concerning

deviations forwarded by their suppliers when the supplier is

unable to evaluate the deviation.

11. Does 10 CFR 21 allow for a period of evaluation between the time

a potential safety concern is identified and when it must be

reported to NRC? If so, what period of time is considered

reasonable?

Response:

The rule presently is silent in regard to the time from when the

deviation is identified to the time of notification to NRC. This

time is presently considered to be unquantificable for all facets

of facilities and activities regulated by NRC and needs to be

determined on a case-by-case basis.

12. What is the answer to the following questions:

a. Once a director or responsible officer has reported a deviation

according to the appropriate internal procedure so that

21.21(a)-4
"evaluation" has commenced, must the director or responsible

officer follow through with the evaluation to see that it is

conducted properly?

b. How could the typical corporate director or an officer with

executive authority over only a small class of activities

covered by Part 21 be expected to evaluate a defect that is

outside of his area of expertise or authority?

Response:

a. No. It is not anticipated that a director or responsible

officer will be involved in identifying "deviations."

b. He is not required to evaluate it himself. Procedures

established under §21.21(a) to ensure that evaluations are

performed and at least one director or responsible officer

is informed of any defects or reportable failures to comply

must be established by the organization.

13. The new Part 21 implies that an analysis is necessary in each

instance to determine whether a significant safety hazard could

have existed if a defective component had been installed in a

reactor facility. Does this analysis requirement extend to

components that never become the property of the reactor facility?

Who should perform this analysis? How is the analysis best

documented? What benefit is derived by the conduct of this

analysis?

Response:

The evaluation of a deviation in a basic component that is delivered

to a purchaser must be evaluated to determine whether a substantial

safety hazard could be created if the component were installed in

the facility even though the purchased item is rejected and never

installed in a plant system.

The organization discovering the deviation should perform the

evaluation or cause the evaluation to be performed by another

organization. For example, for a deviation discovered by a supplier, the evaluation should be performed by the supplier, if he

has the capability, or by the purchaser if the supplier doesnot

have the capability.

In addition to'the normal 10 CFR 50 Appendix B type records

required for analysis of safety-related items, the Part 21 documentation of evaluations which involve a substantial safety hazard and

records of notifications to the Commission, will satisfy Part 21

recordkeeping requirements.

21.21(a)-5
In regard to the benefit derived in conducting evaluations of

items which are never installed, the identification of a defect

in a basic component that is never installed in one plant may

result in identifying generic items having the same defect installed

in other plants.

14. What is the utility's responsibilities when only the fuel supplier

can properly evaluate the consequences of a fuel deviation to

determine if a "defect" exists?

Response:

If the utility is unable to evaluate, the deviation, it must

consult with thesupplier or use other outside consultants for

the evaluation.

15. If an organization declines to adopt procedures for evaluating

deviations but instead establishes procedures for informing the

licensee or purchaser of such deviations, so that they may perform

the evaluation, are the directors or responsible officers of the

organization thereby relieved of the responsibility for notification of defects? Do these directors or responsible officers

have any obligation to determine the results of the evaluation

within the specified time period required for notification?

Response:

Procedures are to be adopted to evaluate deviations. For those

cases where the organization does not perform the evaluation,

procedures are to be adopted to inform the purchaser of the

deviation so that he, or others, may perform the evaluation. The

responsibility for notification resides with the organization

that performs the evaluation.

16. In the situation where a licensee contracts with an agency of the

United States to supply nuclear components and where the licensee

can not adequately evaluate whether a substantial safety hazard

exists and does not know the stresses to which the components are

to be subjected, what does the licensee do when a deviation is

discovered after delivery?

Response:

If the U.S. agency is a licensee then the agency would be responsible for performing the evaluation. If the agency receiv.ing

supplies is not licensed, then the supplier is not subject to

Part 21 unles-the unlicensed agency's facility uses the components

to supply a firm within the chain of suppliers to a reactor

licensee. If the unlicensed purchasing agency does do this, then

the supplier becomes one of several tiers of suppliers subject to

21.21(a)-6
Part 21. If the supplier is subject to Part 21 and discovers a

deviation it must evaluate the deviation or inform the purchaser

of the deviation so it can evaluate it.

17. Will subcontractors be required to report under similar circumstances to the above question, when supplying subcomponents or

materials to be incorporated into nuclear components ultimately

to-be supplied to an agency of the U.S.?

Response:

A subcontractor must evaluate, and, if it discovers a defect,

report or it must inform the purchaser if a.) it is one of a tier

of suppliers supplying components to a reactor licensed by the

Commission, or b.) it is a direct supplier of a materials licensee.

18. Are component suppliers obligated for notification requirements

under Part 21 even though the procurement documents make no

reference to Part 21?

Response:

Yes. Component suppliers who knowingly supply basic components

are subject to Part 21 notification requirements even if Part 21

is not referenced in their contract with the purchaser.

19. -If a director hears or is told (e.g., telephoned by a disgruntled

former employee) of a problem which is a defect or which may be a

defect, but the director has no personal knowledge of the defect

and its possible safety implications:

a. Might the director be liable under Part 21 if he failed to

report to the NRC if, in fact, it was later determined that

.there was a reportable defect (i.e., is hearsay sufficient

information to require reports)?

b. Would it make any difference if the director believed it was

a crank call?

c. If the director reported what he had heard concerning a

potential failure to comply or defect to the appropriate

responsible officer according to the corporation's procedures

under §21.21(a) and the responsible officer told the director

there was no substantial safety hazard according to the

"evaluation", could thedirector rely upon the results of

the "evaluation" as told to him by the responsible officer?

21.21(a)-7
Response:

a&b. Section 21.21(b) requires a director or responsible officer to

* report to NRC if he has information reasonably indicating a

defect or failure to comply which could create a substantial

safety hazard. The rule recognizes, however, that in most

instances some evaluation will be required to determine whether

a deviation is a reportable defect, or whether a failure to

comply could create a substantial safety hazard. Section

21.21(a) requires that appropriate procedures be developed for

conducting such evaluations. It is expected that appropriate

procedures would include the requirement for an evaluation

where there is reason to believe that a deviation exists.

c. Whether there is reason to believe that a deviation exists is

a matter of some judgment. But if there is a basis for believing

that a deviation exists, the procedures should provide for

notifying those within the organization who are responsible

for conducting the evaluations. For the two examples given,

it seems that a telephone call from a former employee would be

a reasonable basis for believing that a deviation exists.

20. Would you comment on the amount of independence of a review group

from the line authority over an individual who raises an alleged

defect.

Response:

The amount of independence to be given to a review group to evaluate

a potential defect is to be determined by the organization establishing

evaluation procedures.

21. Do you expect other outside organizations such as NSSS vendors to

be involved in the evaluation of an alleged defect?

Response:

Yes. The evaluation is performed, if possible, by the organization

that discovered the deviation in the delivered basic component. If

that organization is a supplier who is unable to technically perform

the evaluation, then the information concerning the deviation is

passed to the purchaser such as the Nuclear Steam System Supplier

(NSSS) who performs the evaluation. If necessary, the forwarding

of a deviation for evaluation continues through the supply tiers

until, if necessary, it reaches the licensee.

21.21(a)-8
22. Is it proper to construe Section 21.21(a)(ii) to mean that if the

responsible officer learns of an already corrected defect or

deviation that would otherwise have been reportable, no report is

required?

Response:

Section 21.21(a) specifies procedures to be developed to ensure

that potential defects are fully evaluated. An evaluation of a

potential defect is not required where the deviation has already

been corrected in all basic components to which it is applicable

when knowledge of the deviation is received.

In regard to reporting requirements for Part 21, they are stated in

Section 21.21(b). That section, by implication, requires the

reporting of defects which will be or are being corrected after the

effective date of the rule. Specifically, Section 21.21(b)(3)(vii)

requires that NRC be informed of the corrective action which will

be or is being taken on a particular defect or failure to comply.

23. Paragraph 21.21(a)(1)(ii) implies that any deviation that has been

corrected need not be reported to the purchaser for evaluation

against the requirements of 10 CFR Part 21. Please clarify.

Response:

If at the time the deviation is identified, it has not been corrected, then the supplier, or where he is unable to do so, the

licensee or purchaser, must evaluate the deviation and, if it is

determined to be a defect, make the necessary report to NRC. This

means that even if the supplier, or licensee or purchaser, believes

that the deviation has been corrected after the Part 21 evaluation

has begun, he must complete the evaluation and report if a defect

exists.

24. On August 10, 1977 must reports be made of events or occurrences

which occurred prior to the effective date of the regulation and

which were previously corrected?

Response:

No.

25. Are defects which are repaired prior to delivery or final acceptance

of a component or service covered by Part 21 reportable?

Response:

A deviation in a basic component cannot be a defect until that

basic component has been delivered to a purchaser.

21.21(a)-9
A deviation which occurs in a basic component of a portion of a

facility, however, can be a potential defect subject to evaluation

when the portion of the facility containing the known or undiscovered

deviation is offered to the purchaser for acceptance.

26. Licensees must adopt internal procedures to assure that safetyrelated defects and noncompliance are brought to the attention of

responsible officers and directors. Does this mean that each

director and responsible officer must be notified?

Response:

Procedures must provide for notification of "a director or responsible officer." This procedural designation, however, does not

absolve other directors or responsible officers from reporting if

he obtains information reasonably indicating a failure to comply or

a defect.

27. Persons subject to Part 21 are required also to report failures to

comply with ". the Atomic Energy Act of 1954, as amended, or

any applicable rule, regulation, order, or license of the Commission

relating to substantial safety hazard, 1 0" CFR Section 21.21(a)(2)(i'

and (b).

a. Does this provision mean if a rule, regulation, order or

license as a whole relates to a "substantial safety hazard,"

that the violation of any particular provision is covered by

Section 21.21(b), even though that provision does not itself

relate to any "substantial safety hazard"? To cite an extreme

example: the failure to provide antitrust information as

required by Part 50.

b. Does the language in Section 21.21(a)(2)(i) mean that an

individual must report (a) generic or (b) non-generic items

previously reported to the NRC prior to July 6, 1977., in

accordance with other regulatory requirements or license

provisions?

c. Must an individual also report under Section 21.21(a) or (b)

incidents which he must report under other regulatory requirements or license provisions?

Response:

a. To have a failure to comply under Part 21, one must fail to

comply with a particular provision covered by Section 21.21(b)

and such failure must itself be related to a substantial

safety hazard.

21.21(a)-10
b. If they have actual knowledge that the Commission has been

adequately informed prior to the effective date, then no

additional notification is required.

c. If he knows that the Commission has been adequately informed

of the defect or failure to comply under another regulatory

requirement or licensing provision, he need not report under

Part 21.

28. Please relate the phrases "failure to comply" and "substantial

safety hazard" to a Part 70 licensee. Discuss 21.21(a)(2)(i) in

terms of the details of rules, regulations, orders or license and

the licensee's implementing procedures. Also discuss your interpretation of the phrase "relating to a substantial safety hazard" in

this paragraph.

Response:

Under Section 21.21(a), a director or responsible officer must be

notified of any failure to comply on the part of a Part 70 licensee

with the Atomic Energy Act of 1954, as amended, or with any applicable

rule, regulation, order or license of the Commission relating to a

substantial safety hazard. It is not possible to identify the

specific rules, regulations, or orders which could be applicable in

a particular case.

The term "substantial safety hazard" is defined in Section 21.3(k)

of the rule, and additional guidance is provided in the preamble to

the rule and in the Commission's policy statement on abnormal

occurrence reporting criteria which was published in the Federal

Register on February 24, 1977 (42 F.R. 10959).

29. How broad is the definition of "applicable rule, regulation, order

or license" in 21.21(a)(2)(i)? Would this include industry standards

such as the ASME Code?

Response:

Industry codes that are not a part of an NRC rule, regulation

order, or license are not within the scope of Part 21. Some

portions of the ASME code are related to the creations of a substantial

safety hazard, and are within the scope of Part 21, because it has

been invoked by Section 50.55a.

30. Answer the following:

a. Does a utility have responsibility for making reports under

Part 21 relative to problems or deviations in parts or systems

that have not yet been delivered to it or accepted by it?

21.21(a)-11
b. Is this the case even though Part 21 might require the A/E or

the NSSS to make a report? (e.g., a defective component is

delivered by the NSSS to the A/E and a responsible officer of

the utility becomes aware of the defect.)

Response:

a. No

b. Yes

21.21(a)-12
21.21(b)(l) of - Notification of failure to comply or existence of a defect

(b) (1) A director or responsible officer

subject to the regulations of this part or a designated pers6n shall notify the

Commission when he obtains information

reasonably indicating a failure to comply

or a defect affecting (it the construction or operation of a facility or an activity

within the United States that is subject

to the licensing requirements under Parts

30. 40, 50. 70 or 71 and that is within his

crganization's re:;ponsibility or (ii) a

basic component that is within his organization's responsibility and is supplied for a facility or an activity within

the United States that is subject to the

licensing requirements under Parts W•0.

40. 50. 70 or 71. The above notification

is not required if such individual has

actual knowledge that the Commission

has been adequately informed of such defect or such failure to comply.

1. If a supplier or holder of a permit or license complies with

applicable NRC regulations, orders, or licenses of the Commission,

would the supplier or licensee not automatically comply with the

safety provisions of the Atomic Energy Act of 1954, as amended? If

not, what other safety requirements should the licensee look for in

the Act to assure compliance?

Response:

The Atomic Energy Act of 1954, as amended, establishes a broad

standard for providing adequate protection to the public health and

safety. In applying the broad safety standard of the Atomic Energy

Act to the specific situations the Commission has adopted regulations and has imposed, through the adjudicatory process, licensing

requirements and conditions. Compliance with individual Commission

regulations and licensing requirements would assure compliance with

the broad safety requirements of the Act. There could exist a

reportable defect under Part 21 which would not necessarily be a

violation of a specific Commission regulation or lic'ensing

requirement.

2. Does the NRC have a recommended internal procedure for licensees to

insure compliance with 10 CFR Part 21?

Response:

No. As stated by the preamble to the rule, if guidance is needed

development of a Regulatory Guide will be considered.

21 .21 (b) (I1)-l
3. What means will be used to eliminate conjecture, supposition and

faulty reasoning in risk - benefit judgment?

Response:

This question seems to be asking what can be done to eliminate

uncertainties in applying the rule. It was impossible to identify

specifically each instance in which the reporting requirements

would apply, and certain judgments must be made by those individuals

subject to the rule and by NRC in reviewing compliance with the

requirements of the rule. For example, an individual must exercise

some judgment in determining whether a deviation is a defect which

could create a substantial safety hazard. Nevertheless, the rule

does provide guidance, as does the preamble, on the various requirements of the rule. The standard for determining whether to report

a possible defect or failure to comply under Section 21.21(b) is

"information reasonably indicating a failure to comply or a defect."

Thus, if there is some doubt in your mind about whether a particular

problem is reportable, it would probably be best to report it under

Part 21.

4. Must a director or responsible officer make the judgment that

information he receives "reasonably indicates" a failure to comply

or a defect in the context of his own knowledge of the subject, or

is he either entitled to rely on or under an affirmative duty to

solicit expert guidance from others who might have more detailed

knowledge of the subject?

Response:

He is entitled to rely on expert guidance from others w b might

have more detailed knowledge of the subject.

5. Is it possible that a director or responsible officer not actually

obtaining certain knowledge could be held liable for not reporting

it, if, for example, he should have obtained information and did

not, or had an agent obtain it? Specifically, if a director or

responsible officer authorizes a person to make notification for

him pursuant to §21.21(b)(4), does the fact that such authorization

does not relieve the director or responsible officer of his responsibility to notify the Commission impute knowledge "obtained" by

the designee to the director or responsible officer even though he

has not actually "obtained" it?

21.21 (b)(l)-2
Response:

No. Part 21 does not impute knowledge to the director or responsible officer. Rather, it imposes obligations on directors and

responsible officers who have knowledge of defects or failures to

comply.

6. Is it the intent of Part 21 to require, in the procedures adopted

in accordance with §21.21(a), a method for responsible officers

or directors to introduce questions to the organization they head

to obtain an analysis with regard to safety significance?

Response:

No. That is not the intent of Part 21. However, the procedures

required by §21.21(a) should provide for evaluation of deviations

which are brought to the attention of the organization regardless

who identifies the deviation.

7. Is the NRC the sole judge of when information received "reasonably" indicated a "substantial" defect or that the defect

was "outside" the responsibility of the organization?

Response:

Whether or not he has information reasonably indicating a failure

to comply or a defect within his organization's responsibility is

initially a matter of judgment for the directors and responsible

officers in each situation. Of course, any judgment that there

does not exist a reportable defect or failure to comply is reviewable by NRC. Nevertheless, if the NRC determines that there is a

reasonable basis for the judgment that a reportable defect or

failure does not exist, the responsible officers and directors

would not be subject to a civil penalty for failing to notify the

Commission even if the evaluation was later found to be incorrect.

8. Suppose there is an internal disagreement, within an organization

subject to Part 21 over whether a defect is reportable under 10

CFR Part 21, who makes the definitive determination? How is this

determination to be documented?

Response:

The determination as to whether a deviation is a defect is made

in accordance with the procedures required to be adopted per

Section 21.21(a). These procedures should provide for making an

evaluation in spite of internal disagreements.

21.21(b)(1)-3
9. Under §21.21(b)(l), is it correct to say that a person does not

have "information reasonably indicating a failure to comply or a

defect" which requires reporting until: (1) he knows of the

deficiency or the noncompliance; and (2) he has evaluated, or

received someone else's evaluation, that the deficiency or noncompliance relates to a substantial safety hazard? Also, as

written, is it correct that no director or responsible officer

has any Part 21 responsibility until after the evaluation? What

duty or time limit applies to the evaluation?

Response:

The answer to the first part is yes. While there is no time

limit on evaluations, within two days after the director or

responsible officer obtains the information reasonably indicating

a defect or failure to comply, he must report.

10. Are reports pursuant to Part 21 on subcontracted items reported

to the customer, or are they reported directly to NRC with a copy

submitted to the customer?

Response:

The organization which made the evaluation as defined in Part 21

is responsible for reporting the defect to NRC. It is expected

that, in many cases, the subcontractor or vendor will not have

sufficient information or expertise to make the evaluation to

determine whether a particular deviation could create a substantial

safety hazard. That is the reason that Section 21.21(a) states

that the subcontractor or vendor can either evaluate the deviation

or inform the licensee or purchaser of the deviation in order

that the licensee or purchaser may cause the deviation to be

evaluated.

11. To whom do foreign suppliers submit reports pursuant to Part 21,

i.e., directly to NRC or to the U.S. purchaser?

Response:

Foreign suppliers who are subject to the requirements of Part 21

would be expected to notify NRC directly. It is also anticipated

in these cases that the contractual arrangements between the

purchaser and the supplier could provide for notification to the

purchaser of defects identified by the foreign supplier.

12. If-a firm identified a potential deviation and reports it to the

responsible licensee for evaluation, is the initiating firm still

responsible for reporting under Part 21?

21.21(b)(I)-4
Response:

The organization that makes the evaluation has notification

responsibility. In the specific case cited, the initiating firm

is not responsible for reporting under Part 21 to NRC.

13. Does a licensee have an obligation to provide a Part 21 notification

if the reportable conditions are discovered by the licensee in

the course of performance of licensed activities where the conditions

are in the product or service of a third party?

Response:

If the licensee is procuring the product or service of the third

party during licensed activities it would be within the licensee's

responsibility, and therefore notification would be required.

14. Explain the difference between the reporting requirements listed

below as applied to production or utilization facility licensed

under Part 50: a) 50.36, b) 50.55e, c) licensee event reports,

d) abnormal occurrences per section 208 of the Energy Reorganization Act, and e) Regulatory Guide 1.16.

Response:

The major difference is that the scope of Part 21 is broader,

both as to whom it applies and to the nature of the activities

covered. Part 50.55(e) is limited to construction permit holders

and defined construction deficiencies.

Detailed dicussion of NRC reporting requirements (Part 21, 50.55(e),

Licensee Event Reports, Abnormal Occurrences-Section 208) presented

at each public regional meeting is repeated as follows.

Discussion at July 12-26, 1977 Public Regional Meetings on Part

21 on the Comparison of NRC Reporting Requirements - Figures 1-7

A subject which attracted many questions was the reporting requirements of Part 21 as they relate to similar requirements of other

regulations. To show the similarities and differences of comparable requirements, a sequence of figures has been put together to

assist in differentiating between the various reporting requirements.

It is pointed out that most the information presented applies to

reactors or Part 50 licensees - rather than material licensees or

activities regulated under other parts of 10 CFR.

21.21(b)(1)-5
Figure 1 below lists four similar types of events which are required

to be reported and the source of those requirements. The fourth

event - abnormal occurrences - is not a requirement imposed directly

upon the industry - rather it is one imposed by Congress upon the

NRC; however, it is included since the basic source of information

for reports in this case is derived from the previous three categories.

Also, the criteria the NRC uses in determining what a reportable

abnormal occurrence is can be used as general guidance in determining

what a "substantial safety hazard" might be under Part 21.

FIGURE 1

INCIDENT OR EVENT TYPE

NRC REPORTING REQUIREMENTS

TYPE SOURCE OF INFORMATION

DEFECTS AND NONCOMPLIANCE

CONSTRUCTION DEFICIENCIES

REPORTABLE OCCURRENCES

(LICENSEE EVENT REPORTS)

ABNORMAL OCCURRENCES

ENERGY REORGANIZATION ACT OF 1974

SECTION 206

10 CFR PART 21

10 CFR PART 50

PARAGRAPH 50.55(e)

10 CFR PART 50

PARAGRAPH 50.36

ENERGY REORGANIZATION ACT OF 1974

SECTION 208

Figure 2 below shows the parties to whom the various reporting

requirements apply. The significant point to note is that Part 21

is the first regulation to directly apply to not only NRC licensees

but also organizations and individuals that are not licensed. Part 21

can also apply to activities performed by these parties before a

CP is issued if the activity becomes associated with a licensed

facility, or is otherwise regulated and could prove to be the cause

of a substantial safety hazard at a later time.

21.21(b)(1)-6
FIGURE 2

APPLICABILITY OF REPORTING REQUIREMENTS

PART 21 NRC LICENSEE ORGANIZATIONS (ALL)

NON-LICENSEE ORGANIZATIONS SUPPLYING

NUCLEAR COMPONENTS AND SERVICES

INDIVIDUALS (DIRECTOR OR RESPONSIBLE

OFFICER)

CONSTRUCTION DEFICIENIES HOLDER OF A CONSTRUCTION PERMIT

REPORTABLE OCCURRENCES LICENSEE OF A PRODUCTION OR UTILIZATION

FACILITY (PART 50)

ABNORMAL OCCURRENCES NRC REGULATED FACILITIES AND

ACTIVITIES

Figure 3 shows the relationship of reporting requirements to the

classes of subject areas requiring reporting; namely, noncompliances

and defects that could create substantial safety hazards in Part 21

and the four types of construction deficiencies reportable under

50.55(e). Obviously, there is some overlap between these two

reporting requirements.

Overlap between Part 21 and reportable occurrences can also occur;

however, the reporting threshold for reportable occurrences is

considerably lower for the latter.- thus, most operational type

events would probably be reported to the Commission under these

requirements, which appear in most operating license Technical

Specifications, under Part 50, instead of under the Part 21

umbrella. In those cases where the Commission has been notified of

an event via a Licensee Event Report (LER), and subsequently it is

determined the event was of a type which could create a substantial

safety hazard, no Part 21 report would be required where the initial

reporting method has provided the information necessary in order

that the Commission is adequately informed.

21.21(b)(l)-7
FIGURE 3

SUBJECT(S) REQUIRING REPORTING

PART 21 FACILITY, ACTIVITY OR BASIC

COMPONENT SUPPLIED THAT:

(1) FAILS TO COMPLY WITH ATOMIC

ENERGY ACT OF 1954, OR ANY

APPLICABLE NRC REQUIREMENT; OR

(2) CONTAINS A DEFECT WHICH COULD

CREATE A SUBSTANTIAL SAFETY

HAZARD

CONSTRUCTION DEFICIENCIES (1) BREAKDOWN IN QA

REPORTABLE OCCURRENCES

(LICENSEE EVENT REPORTS)

ABNORMAL OCCURRENCE

(2) SIGNIFICANT DESIGN DEFICIENCY

(3) SIGNIFICANT CONSTRUCTION

DEFICIENCY OR DAMAGE

(4) SIGNIFICANT DEVIATION FROM

PERFORMANCE SPECIFICATIONS

OPERATIONAL EVENTS (9 CLASSIFICATIONS

IDENTIFIED IN REGULATORY GUIDE 1.16)

AN UNSCHEDULED INCIDENT OR EVENT

ASSOCIATED WITH ANY LICENSED

FACILITY OR ACTIVITY THAT THE

COMMISSION DETERMINES IS SIGNIFICANT

FROM THE STANDPOINT OF PUBLIC

HEALTH AND SAFETY.

Since many questions asked that a comparison be made between 50.55(e)

type events and Part 21, Figures 4 and 5 are provided to illustrate

this relationship.

Figure 4 (on a following page) shows the sequence of steps and the

considerations that must be performed in determining whether a

construction deficiency is reportable. There are several similarities;

however, two points to emphasize are that 50.55(e) specifically

says that the CP holder should assume that a deficiency is reportable

on the basis that "were it not corrected" it would have adversely

21.21(b)(1)-8
Figure - 4

10 CFR 50.55(e)

DEVIATION FROM

PERFORMANCE

SPECIFICATIONS

I I

AND

DEFICIENCY ADVERSELY AFFECTS SA

AND

I DEFICIENCY IS SIGNIFICANT

AND

Ir

DEFCIECY S I DEIGNOR CONTUTO

LICENSEE ACTION REQUIRED]

21.21 (b)(1 )-9
Figure - 5 - PART 21

REPORTING REQUIREMENTS IN BASIC COMPONENTS IN POWER REACTORS

IDENTIFIED PROBLEM I

BASIC COMPONENT

BAICOPNN

o

I

NECESSARY TO ASSURE

INTEGRITY OF REACTOR

COOLANT BOUNDARY'

[21.3(a)(1)]

ORL

I

CAPABILITY TO SHUT

DOWN REACTOR AND

MAINTAIN

[21.3(a)(2)]

CAPABILITY TO PREVENT

OR MITIGATE CONSEQUENCES

OF ACCIDENTS

[21.3(a)(3)]

I

OR

!

.

OR

I

C €ONTAINSPOTENTIAL DEFECT]

I

A DEVIATION IN

A DELIVERED

COMPONENT

[21.3(d)(1)]

ORI

I

INSTALLATION,

USE OR

OPERATION OF

DEFECTIVE

COMPONENT

[21.3(d)(2)]

ORI

I

DEVIATION IN A

PORTION OF A

FACILITY OFFERED

FOR ACCEPTANCE

[21.3(d)(3)]

OR

I

CONDITION OF

BASIC COMPONENT

THAT COULD

CONTRIBUTE TO

EXCEEDING OF

SAF TY LIMIT

[21.3(d)(4)]

I

OR

a

ATD

EVALUATION SHOWS DEFECT

COULD CREATE A SUBSTANTIAL

SAFETY HAZARD- [21.3(k)]

IREPORTING AND CORRECTIVE

ACTION REQUIRED

21.21 (b) (1-10
affected the safety of operation. Part 21 is not as specific as

that but uses the words "could create a substantial safety hazard"

which generally implies that the same assumption should be made.

The second important point under 10 CFR 50.55(e) is the use of the

word "significant". What is significant? To determine that, CP

holders under Part 50.55(e) are required to evaluate the event or

condition to determine whether it is or is not significant. Some

guidance is provided within 50.55(e) but again judgment is required.

Under Part 21 we specifically state that an evaluation of a deviation

must be made to determine whether the deviation is a defect that

could create a substantial safety hazard. So in this context the

two rules are similar, but based on criteria established for each in

determining whether the matter is "significant" or "could create a

substantial safety hazard," the threshold levels of reporting vary

greatly, with Part 21 the more restrictive.

Figure 5 (on the preceding page) shows a block diagram of the steps

and considerations for determining reportability under Part 21. You

should note the differences from the previous slide. Obviously, in

putting diagrams like Figure 5 together, it is impossible to include

all the detail such as the following two points which you should not

overlook. The first is that Part 21 covers two phases or principal

subject areas, one being defects in basic components which could

create a substantial safety hazard and the second being noncompliances

relating to substantial safety hazards. Figure 5 primarily addresses

the defects in basic components rather than'noncompliances, since

the questions received in this area were greater in number, more

complex and the relationships appear least understood. Next, when

one talks about basic component, the first impression most of us

get is that it means hardware. In the case of Part 21, specifically

in paragraph 21.3(a), it states:

"In all cases 'basic component' includes design, inspection,

testing or consulting services important to safety that are

associated with the component hardware, whether these services

are performed by the component supplier or others."

Thus, with the very broad definition of basic component, any company

providing services or activities which have a safety relationship to

a defined basic component are subject to the rule. Referring to

Figure 5, first, one has to have a problem which involves a basic

component. Basic component is further defined by the three categories

shown. Then, of course, one has to have a potential defect in the

basic component which may not be a defect unless it fits one of the

four categories shown following - potential defect, i.e.,

21.21(b)(1)-11
either the defect must exist in a delivered component

or

the defective component must have been installed, used, or

operated

or

in the case of on-site work or software, the deviation was

associated with a portion of a facility offered for acceptance

or

the conditions of the potentially defective component could

have contributed to exceeding a safety limit.

Should the situation pass this far through the qualifying matrix,

we arrive at the key consideration of Part 21, the evaluation as to

whether the defect could, if uncorrected, create as substantial

safety hazard.

Next on Figure 6, "Abnormal Occurrences," are events that NRC must

report quarterly to Congress under Section 208 of the Reorganization

Act of 1974.

The basic criteria used by NRC is shown in Figure 6. Note: the

same words are used here as in Part 21's definition of a substantial

"safety hazard," namely, "a major reduction in the degree of protection to the public health and safety. This information can be

found in Appendix A of the referenced document (NUREG-0090-6, or

subsequent quarterly issues of these reports to Congress) along

with examples of the types of events which are considered to fall

in the category of a major loss of protection to the health and

safety of the public. The quarterly NUREG-0090 documents are

available from the National Technical Information Service, Springfield,

Virginia 22161. The present price is $3.50.

Figure 7 below lists the nine categories that are listed in operating

reactor Technical Specifications and in Regulatory Guide 1.16 which

is available to the licensee as guidance in reporting Licensee

Event Reports (LER). Since LERs are an important source of information that will be reviewed by the NRC in determining which of these

events will fit the limiting criteria for reporting of abnormal

occurrences to Congress, this information may also provide, useful

guidance to the industry.

21.21(b)(1)-12
FIGURE 6

CRITERIA FOR EVALUATION

ABNORMAL OCCURRENCE (NRC POLICY STATEMENT - NUREG-0090-6)

EVENTS INVOLVING A MAJOR REDUCTION IN THE DEGREE OF PROTECTION TO

PUBLIC.

(1) MODERATE EXPOSURE TO OR RELEASE OF, RADIOACTIVE MATERIAL

LICENSED BY OR OTHERWISE REGULATED BY THE COMMISSION,

(2) MAJOR DEGRADATION OF ESSENTIAL SAFETY-RELATED EQUIPMENT, OR

(3) MAJOR DEFICIENCIES IN DESIGN, CONSTRUCTION, USE OF, OR

MANAGEMENT CONTROLS FOR LICENSED FACILITIES OR MATERIALS.

21.21(b)(1)-13
FIGURE 7

CRITERIA FOR EVALUATION

LICENSEE EVENT REPORTS (REGULATORY GUIDE 1.16)

(1) FAILURE OF THE REACTOR PROTECTION SYSTEM OR OTHER SYSTEMS TO

INITIATE THE REQUIRED PROTECTIVE FUNCTION IN THE APPROPRIATE

TIME.

(2) OPERATION (UNIT OR SYSTEM) WHEN ANY PARAMETER IS LESS CONSERVATIVE

THAN LIMITING CONDITION ESTABLISHED IN THE TECHNICAL SPECIFICATIONS.

(3) ABNORMAL DEGRADATION IN FUEL CLADDING, REACTOR COOLANT PRESSURE

BOUNDARY OR PRIMARY CONTAINMENT.

(4) REACTIVITY ANOMALIES.

(5) COMPONENT FAILURE OR MALFUNCTION WHICH PREVENTS OR COULD

PREVENT FUNCTIONAL PERFORMANCE IN ACCIDENT SITUATIONS ANALYZED

IN SAR.

(6) PERSONNEL ERROR OR PROCEDURAL INADEQUACY WHICH PREVENTS OR

COULD PREVENT FUNCTIONAL PERFORMANCE OF SYSTEMS IN ACCIDENT

SITUATIONS ANALYZED IN SAR.

(7) NATURAL OR MAN-MADE CONDITIONS OR EVENTS THAT REQUIRE SHUTDOWN

OR OTHER PROTECTIVE MEASURES IN ACCORDANCE WITH-TECHNICAL

SPECIFICATIONS.

(8) ERRORS DISCUSSED IN SAR ANALYSES OR BASES FOR TECHNICAL

SPECIFICATIONS.

(9) PERFORMANCE OF STRUCTURE, SYSTEMS, OR COMPONENTS THAT REQUIRE

CORRECTIVE MEASURES TO PREVENT OPERATION IN LESS CONSERVATIVE

MANNER THAN THAT ASSUMED IN SAR ANALYSES OR TECHNICAL

SPECIFICATIONS BASES.

21.21(b)(1)-14
In summary, it can be generally concluded that a Part 21 report

is not required to report a "defect" where one of the other

reporting methods has been used. However, before reaching this

conclusion one should certainly consider the much broader scope

and notification requirements of Part 21 carefully before concluding

that a Part 21 report or related information required to adequately

inform the Commission is not required. This concludes the discussion relating to Figures 1-7.

15. Must items reported as Significant Deficiencies (under 50.55(e))

or Reportable Occurrences (under 50.36) also be reported as

required in 10 CFR 21?

Response:

Duplicate reporting is not required. Care should be exercised,

however, to assure "that the Commission has been adequately

informed" (§21.21b) and that the information specified in §21.21(b)(3)

is provided should the reporting party's evaluation show that a

notification is required.

16. How do we determine when to report a "problem" under the provisions

of 50.55(e) vs the provisions of Part 21?

Response:

§50.55(e) requires initial reporting in 24 hours of the time

licensee or his agent first identifies a significant deficiency.

A followuo report is required in 30 days. If evaluation requires

substantial time to complete, interim report(s) are acceptable.

§21.21(b)(1) requires reporting within two days of when the

director or responsible officer obtains information reasonably

indicating a failure to comply or a defect" with a written report

required within five days.

In all cases, the exercise of reasonable judgment is expected in

reporting potentially reportable problems to avoid the severe

penalties, which could be imposed should the problem turn out to

be reportable.

17. 10 CFR 50.55(e), Conditions of Construction Permits, requires

that the holder of a permit notify the Commission of certain

designs and construction deficiencies which are also the subject

of 10 CFR 21. Why has not 10 CFR 50.55(e) been deleted?

21.21(b)(1)-15
Response:

§50.55(e) requires reporting that would not be reported under Part

21. For example, 1) significant damage to a basic component following

delivery to the site is reportable under 50.55(e) and not under Part

21; and 2) a significant break down in quality assurance is reportable

under 50.55(e) and not under Part 21.

18. Is the determination of a "defect" based on the same criteria as

provided in Part 50.55(e) and/or the requirements for technical

specifications for operating plants?

Response:

No. In the case of the permit holder, however, a defect reportable

under Part 21 would also be reportable under 10 CFR 50.55(e). In

the case of the licensee some items could be reportable under Part

21 that are not reportable as LER.

19. Can the time period for written reports required by 10 CFR 21 be

increased to be comparable to that for operation plant technical

specifications (14 days)?

Response:

A petition for rulemaking is the proper vehicle to request a change

to the rule.

20. The reporting requirements of 10 CFR Part 21 appear to be more

comprehensive than the reporting requirements of reactor technical

specifications or 10 CFR Part 20. Is it the intent of this regulation to impose reporting requirements whose scope exceeds those

already in place?

Response:

It is the intent of Part 21 to require reporting of defects and

noncompliance which "could" create Substantial Safety Hazards. The

Congressional intent in drafting Section 206 of the Energy Reorgaization Act of 1974 was to anticipate significant safety problems

before they occur. Actual "malfunctions" which are safety-related

are reported in accordance with 10 CFR 50.36 and the license technical specifications. Defects, noncompliance and conditions which

"could" contribute to a substantial safety hazard are reported in

accordance with 10 CFR 21.21.

21.21(b)(1)-16
21. For possible problems noted under 10 CFR 50.55(e) we report to

the Commission "possible significant deficiencies." Will we be

allowed to report "possible defects and noncompliances" under the

requirements of 10 CFR Part 21?

Response:

Yes, a report may be made during the evaluation before the conclusion is reached that the deviation is a defect. A report is

not required, however, until 2 days after the responsible officer

or director is informed of the conclusion reached as a result of

the evaluation.

22. It appears to us that there will be more reports filed with the

Commission under the requirements of 10 CFR Part 21 than under 10

CFR 50.55(e). Does the Commission have this same belief?

Response:

No. The majority of items subject to reporting under 50.55(e)

would not fit the definition in Part 21 for a "defect" involving

a "substantial safety hazard." For those cases where both 50.55(e)

and Part 21 reporting requirements may apply, it is expected that

permit holders will report only under 50.55(e) as long as they

include the information required by Part 21 to adequately inform

the Commission.

23. Will we be required to issue reports specifically addresssing 10

CFR 21 if the reportable item is currently covered by other

regulatory requirements?

Response:

No. Information required by Part 21 notification requirements

can be included in other reports submitted to satisfy other

regulatory requirements.

24. Explain the relationship, including examples, between 10 CFR 21

reporting requirements and other reporting requirements such as

Licensee Event Reports imposed on operating reactor licenses.

Response:

In most instances, an item which is reportable by a licensee

under Part 21 is also reportable by a licensee event report. Two

examples of items reportable under Part 21 that are not required

to be reportable by a licensee event report follow. First is the

21.21(b)(1)-17
report required for a defect in a basic component delivered to a

licensee which the licensee discovers after initial receipt inspection

which has not been installed in the facility. In this instance, a

licensee event report would not be required. The second is a report

required for a defect or noncompliance in a security system.

25. Will you please give a couple examples of noncompliance under

Part 20 and/or 34 that would require disclosure and notification

under Part 21.

Response:

An example of noncompliance under Part 20 that could require

notification under Part 21 is a failure to provide appropriate

personnel monitoring equipment such that the occurrence creates a "substantial safety hazard."

An example of noncompliance under Part 34 that would require

notification under Part 21 would be a failure to properly control

access to an area where radiography is conducted so that a "substantial safety hazard" is created.

21.21(b)(1)-18
21.21(b)(2) of - Notification of failure to comply or existence of a defect

t2) Initial notification required by this

paragraph shall be made within two

days following receipt of the information.

Notification shall be made to the Director, Office of Inspection and Enforcement, or to the Director of a Regional Office. If initial notification is by means other than written communication, a written report shall be submitted to the

appropriate Office within 5 days after the

Information is obtained. Three copies of

each report shall be submitted to the

Director, Office of Inspection and Enforcement.

1. What constitutes "actual knowledge" that a defect has been

reported, given the fact that individuals within a corporation

must commonly rely on other individuals within the corporation to

perform the requisite evaluations or to see that a letter gets

mailed? If a director or responsible officer is negligent and

fails to see that the proper report is made or the evaluation is

done properly, wouldn't he or she be insulated from personal

liability by the "knowingly and consciously" language of §21.61?

Response:

A director or responsible officer would beliable under §21.61

for a failure to notify if he has information reasonably

indicating a defect or failure to comply and does not have actual

knowledge that the Commission has been adequately informed.

Actual knowledge is more than a good faith belief. A director or

responsible officer would not be personally liable if he does not

receive information of the existence of a defect because the

evaluation is done improperly.

2. Please discuss further what constitutes adequate verification by

a responsible officer that a report has been made to the NRC.

For example, does receipt of a record of a telephone conversation

with an NRC regional office making the initial notification (made

by the person designated as responsible for making such initial

notifications) constitute adequate verification?

Response:

Yes. Though the Commission does not require it, it would be wise

for an organization to set up a procedure whereby any contacts

21.21(b) (2)-l
which would qualify as adequate Part 21 notification would be

documented. Where the notification was oral, a record of the

conversation should be forwarded to a director or responsible

officer who should also receive copies of the written report.

3. Where an extensive evaluation of a defect is required to determine

whether it constitutes a substantial safety hazard, what provisions

are made for notification time extensions?

Response:

As the terms are defined in Part 21, initial notification to NRC

must be made to NRC within two days of when a director or responsible officer obtains information. There is no time limit in

Part 21 for performing an evaluation of a deviation to determine

whether it is a defect.

4. Is the 48-hour time period for "initial notification" to the

Director, Office of Inspection and Enforcement, or to the Director

of the Regional Office under Section 21.21(b) intended to allow

for evaluation of deviations under 10 CFR Section 21.21(a)(1)(i)?

Response:

The 48-hour time period for initial notification does not begin

to run until the evaluation has been completed and the director

or responsible officer has been informed.

5. May we assume that reports made to the NRC Regional Director, or

to his designated alternates, are acceptable in the absence of

the Director himself? (Specifically the concern is for reports

which must be made during vacations, holidays and weekends.)

Response:

Yes. Reports made to the Director, or to a responsible member of

the Director's staff, will satisfy this requirement.

6. Do the two and five-day time limits on reporting refer to calendar

days or working days?

Response:

The two and five days are calendar days, not working days.

21.21(b)(2)-2
7. Does 10 CFR 21 allow for a period of evaluation between the time

a potential safety concern is identified and when it must be.

reported to NRC? If so, what period of time is considered reasonable?

Response:

Yes. The rule presently is silent in regard to the time from

when the concern is identified and the time of report to NRC.

This time is presently considered to be unquantifiable for all

facets of facilities and activities regulated by NRC.

21.21(b)(2)-3
21.21(b)(3) of - Notification of failure to comply or existence of a defect

(3) The written report required by this

paragraph shall include, but need not be

limited to. the following information, to

the extent known:

(i) Name and address of the individual or individuals informing the

Commission.

(it) Identification of the facility, the

activity, or the basic component supplied

for such facility or such activity within

the United States which fails to comply or contains a defect.

(iii) Identification of the firm con- structing the facility or supplying the

basic component which fails to comply or contains a defect.

(iv) Nature of the defect or failure to

comply and the safety hazard which is

created or could be created by such defect or failure to comply.

(v) The date on which the information

of such defect or failure to comply was obtained.

(vi) In the case of a basic component

which contains a defect or fails to com- ply. the number and location of all such

components in use at, supplied for, or being supplied for one or more facilities

or activities subject to the regulations

in this part.

(vii) The corrective action ýwlich has

been. is being, or will be taken; the name of the individual or organization responsible for the action; and the length of

time that has been or will be taken to

complete the action.

(viii) Any advice related to the defect or failure to comply about the facility,

activity, or basic component that has

been, is being, or will be given to purchasers or licensees.

1. §21.21(b)(3)(vi) states "In the case of a basic component which

contains a defect or fails to comply, the "number and location"

of all such components in use at, supplied for, or being supplied

for one or more facilities or activities subject to the regulations

in this part." After we identify a defect it may be difficult or

impossible to trace "all" such components in use or supplied for

use in the United States. Clarify our responsibility in this

regard.

21.21(b)(3)-1
Response:

The director or responsible officer would be expected to provide

information on the number and location of other delivered components with similar defects to the extent that this information

is known by him or his organization.

21.21(b)(3)-2
21.21(b)(4) of - Notification of failure to comply or existence of a defect

(4) The director or responsible officer

may authorize an individual to provide

the notification required by this paragraph, provided that, this shall not re- lieve the director or responsible officer

of his or her respow-ibility under this

paragraph.

1. These regulations provide that, "Directors and responsible officers

may designate an employee to provide on their behalf the notification to NRC." Can this designated employee also file the

written report within five (5) days? (Permission for this is not

specifically addressed in the regulations, but I believe it was

intended.)

Response:

The designee may accomplish the notification which includes the

written report and the initial notification by means other than

written communication.

2. When a director or responsible officer designates a subordinate

to provide notification and the subordinate fails to comply, who

is to be cited for the infraction?

Response:

The director or responsible officer would be cited for the infraction if he has information reasonably indicating a defect or

failure to comply and he did not have actual knowledge that the

Commission has been adequately informed.

3. How is the individual who is designated to provide the notification to function in relation to the responsible officer or

director?

Response:

It is solely a delegation of the notification authority but the

director or responsible officer retains the responsibilities.

4. The Preamble states: "The individuals subject to the notification

requirements of Part 21 have been restricted to a) directors and

b) officers vested with executive authority over activities subject

to this Part. These individuals may identify an individual who

21.21(b)(4)-I
is authorized to provide notification to the Commission." The first

sentence quoted apparently restricts the notification requirements

to "...a) directors and b) officers vested with executive authority...,"

and the second sentence states that an individual may be authorized

by the above individuals. Does this mean that by designating an

A/E as the representative (to be "...authorized and empowered to

decide all matters...the execution and progress of the work," as

stated in the licensee's Contract Documents) that the A/E will

assume all liability under 10 CFR Part 21?

Response:

No. An "A/E" is not generally an individual. Further, within

the A/E there will also be individuals subject to Part 21; for

example, the "individual director or responsible officer" of the

A/E.

21.21(b)(4)-2
21.21(c) of - Notification of failure to comply or existence of a defect

Ic) Individuals subject to paragraph (bi may be required by the Comjiiisgion

to supply additional riformation related

to the defect or failure to comply.

1. Will the Commission ever require the purchaser, in the course of

investigations for cause and corrective action, to divulge additional

information on the supplier's activities which may lead to a

determination of failure to comply with notification requirements

of 10 CFR Part 21?

Response:

NRC can request the responsible individual to provide all necessary

information consistent with §21.21(b)(3).

21.21(c)-1
21.31 Procurement Documents

Each individual. corporation. partnership or other entity subject to the regulations in this part shall assure that

each procurement document for a facility. or a basic component issued by

him. her or it on or after January 6, 1978

specifies, when applicable, that the provisions of 10 CFR Part 21 apply.

1. Current contracts and purchase orders do not have to be updated to

require compliance by them. We are assuming that the NRC will take

responsibility for their notification. Further, if component suppliers

are obligated for notification requirements under Part 21 even though

the procurement documents make no reference to Part 21, what is the

purpose of requiring that procurement documents include a provision

that Part 21 applies?

Response:

The final rule has been published in the Federal Register and NRC has

made substantial efforts, including scheduling of public meetings, to

promote industry and public awareness and understanding of the applicability of Part 21. Beyond that, NRC does not intend to notify each

supplier individually of the requirements of these regulations. As

the question recognizes, component suppliers are obligated to comply

with Part 21 even though the procurement documents make no reference

to Part 21. The notification requirements apply where a director or

responsible officer subject to the regulations obtains information

reasonably indicating a failure to comply or a defect. Specification

in the procurement document that Part 21 applies is designed to aid

component suppliers in determining whether or not the component being

supplied is a basic component within the meaning of Part 21.

2. Contracts and purchase orders issued after January 6, 1978, require

clauses indicating that Part 21 is applicable. Will it

21.31-1
be considered sufficient by the NRC if a simple statement to the

effect that "Part 21 is applicable" is included in the contract or

purchase order, or will licensees or constructors be required to

identify the specific application of 10 CFR 21 in contracts and purchase

orders?

Response:

The simple statement that Part 21 is applicable to a specific basic

component is sufficient, but the purchaser may, if he desires, be more

specific.

3. In the judgment of the Commission, should purchase orders for safetyrelated material such as miscellaneous structural steel, anchor bolts,

etc., include the requirements of 10 CFR Part 21 or should the

requirements be limited to purchase orders for major safety-related

equipment such as pumps and valves?

Response:

"Basic component, when applied to nuclear power reactors means a plant

structure, system, component or part thereof . . ." Each procurement

document for a "basic component" must specify that the provisions of

Part 21 apply. Therefore, purchase orders for structural steel or

anchor bolts, if they are basic components or parts of basic components,

must specify that Part 21 applies.

4. What if the initial issuer of a procurement document fails to specify

that Part 21 applies? Is the organization subject to fine for failure

to specify that the provisions of 10 CFR Part 21 apply?

Response:

The issuer of the procurement document is not subject to a fine under

Part 21, but could be subject to a fine under Part 2, Subpart B, if he

fails to specify in a procurement document for a "basic component,"

that Part 21 applies. Applicability of a fine via Part 2, Subpart B,

will be determined on a case-by-case basis.

5. Are contractors subject to Part 21 if Part 21 is not referenced in

their contracts? If the answer is yes, how does an organization know

when it becomes subject to Part 21?

Response:

Contractors who knowingly supply basic components are subject to Part

21 even if Part 21 is not referenced in their contracts. Part 21 has

21.31-2
been published in the Federal Register and states the entities to

which it applies. Furthermore, the Commission has engaged in public

informational meetings to further assure that the persons covered by

Part 21 are aware of the rule's applicability.

6. Other than insertion of a contractual provision pursuant to 10 CFR §21.3

is the licensee responsible for assuring that contractors, suppliers,

consultants, etc., comply with this regulation? Are quality assurance

audits required of those organizations to audit compliance with Part

21? Does this responsibility track back to the supplier of each

component and part thereof?

Response:

The licensee's responsibility for insuring compliance with the provisions of Part 21 by its contractors, suppliers, and consultants is

limited to the requirement that each procurement document for a facility

or basic component specifies that the provisions of 10 CFR Part 21

apply, when applicable. This same requirement applies to all other

organizations which are subject to Part 21. The Energy Reorganization

Act of 1974 authorizes the Commission to conduct such reasonable

inspections and other enforcement activities as needed to assure

compliance with the provisions of Section 206. Organizations, which

are subject to Part 21, are not required to perform quality assurancetype audits on suppliers specifically for the purpose of insuring

compliance with Part 21.

7. Does a purchaser have an obligation to apply 10 CFR Part 21 to longterm contracts issued prior to January 6, 1978?

Response:

A purchaser does not have an obligation to amend existing long-term

contracts to specify that Part 21 applies. However, Part 21 applies

to contracts which are in existence on or after August 10, 1977, if

the contract is to supply a "basic component."

8. Where an NRC licensed activity has established "open orders" for spare

parts with a supplier, will it be necessary to impose 10 CFR Part 21

although the order was placed prior to January 6, 1978?

Response:

Section 21.31 requires that each procurement document issued on or

after January 6, 1978, specify the applicability of Part 21. Although

Part 21 does not require that each procurement document already in

existence on January 6 be revised to specify Part 21 applicability,

the specification should be added to any subsequent amendments or

orders which are issued after January 6, 1978.

21.31-3
9. Paragraph 21.31 requires assurance that the provisions of Part 21

shall apply to each procurement document. In item (6) of the Commission',

comments on the regulations, the fourth paragraph states that during a

stage of conceptual design or consultation in regard to feasibility it

is appropriate to specify the applicability of Part 21 in the procurement document only when such a design or consultation can result in

the creation of a substantial safety hazard. This interpretation will

have an insulating effect on certain consultants. We believe it is

also important to provide some protection to small equipment supply

shops whose owners do not have an understanding of the law in this

area and may decide to avoid the nuclear industry due to potential

liability under Part 21. When adequate receipt inspection criteria

can be established and subsequent inspection can be effectively conducted

by the purchaser in conformance with Part 50, Appendix B, "Quality

Assurance Criteria," is it necessary to specify the applicability of

Part 21 in the procurement document?

Response:

If the equipment is a "basic component," then Part 21 applicability

must be specified in the procurement document.

10. Is failure to comply with 21.31 subject to the reporting requirements

of Part 21?

Response:

No. A failure to comply with section 21.31 is not subject to the

reporting requirements of Part 21 because the failure to comply with

these requirements is not related to the creation of a substantial

safety hazard.

21.31-4
§21.41 Inspections

Each individual, corporation, partnership or other entity subject to the regulations in this part shall permit duly

authorized representatives of the Commission, to inspect its records, premises.

activities, and basic components as necessary to effectuate the purposes of this

part.

1. What type of inspection and other enforcement action is the NRC

proposing for enforcement of Part 21? Will inspections be

conducted prior to notification?

Response:

Inspection and enforcement of Part 21 will be incorporated as an

additional requirement into our current reactor, material and

vendor inspection programs and will include both announced and

unannounced inspections.

2. What steps are being taken to communicate a consistent position

within the NRC to ensure consistent application, interpretation,

and inspections?

Response:

Criteria for Part 21 inspections are being developed for incorporation into existing inspection procedures for use by all the

Regional Offices. These criteria will be consistent with the positions

set forth in this document.

3. What constitutes demonstration of compliance at a facility which

has not had a defect or failure to comply requiring notification

under Part 21?

Response:

Inspections of the posting requirements of Section 21.6, procedures

required by §21.21(a), and maintenance of records under §21.51,

when those provisions of Part 21 take effect, will be conducted

to determine compliance with Part 21.

4. Will the NRC inspector expect to find in the supplier's QA Manual

reference to and a procedure for reporting defects?

21.41-1
Response:

The corporate procedures should provide for the identification of

deviations, (§21.3(e)) and, as appropriate, their proper

disposition. This includes evaluation and notification to NRC

of the defects (K21.3(d)). These procedures do not necessarily

have to be included in a QA Manual.

5. What will the nature and scope of the NRC inspections be at a

component manufacturer? Will they be specific investigations to

assure that no components with defects as defined by Part 21,

have been delivered or will they also include verification of

ASME Section III Quality System impl*ementation? If they include

Section III verification, it would seem that this is a further

burden and redundancy over and above inspections already being

performed by the ASME, local Authorized Nuclear Inspection

Agencies, Architect-Engineers, utilities and NSSS's.

Response:

The NRC's program of vendor inspection is designed to verify

conformance to the 10 CFR Part 50 Appendix B criteria. These

criteria, along with ASME code requirements (50.55a), are imposed

upon nuclear reactor vendors and suppliers by the licensee

through normal commercial procurement documents. The NRC generally

depends upon licensees or their agents to verify compliance with

these requirements. However, the NRC reserves the right of

independent verification to assure protection of the health and

safety of the public. As stated in question 1 above, Part 21 is

an additional requirement which will be included within the scope

of the current NRC inspections.

21.41-2
21.51 Maintenance of Records

(a) Each licensee of a facility or activity subject to the regulations in this

part shall maintain such records in

connection with the licensed facility or

activity as may be required to assure

compliance with the regulations in this

part. (b) Each Individual, corporation, part- nership, or other entity subject to the

regulations in this part shall prepare records in connection with the design, manufacture, fabrication, placement, erection, Installation. modification, Inspection, or testing of any facility, basic

component supplied for any licensed facility or to be used in any licensed activity sufficient to assure compliance with

the regulations in this part. After delivery of the facility or component and

prior to the destruction of the records

relating to evaluations (see § 21.3 (g) ) or

notifications to the Commission (see A 21.21), such records shall be offered

to the purchaser of the facility or component. If such purchaser determines any such records:

(1) Are not related to the creation of

a substantial safety hazard, he may authorize such records to be destroyed, or

(2) Are related to the creation of a

substantial safety hazard, he shall cause

such records to be offered to the organi- zation to which he supplies basic components or for which he constructs a f acility or activity.

If such purchaser is unable to make the

determination as required above then the

responsibility for making the determination shall he transferred to the individual, corporation, partnership, or other

entity subject to the regulations in this

part that Issued the procurement document to the purchaser. in the event that

the determination cannot be made at

that level then the responsibility shall

be transferred In a similar manner to

another individual, corporation. partnership, or other entity subject to the reg- ulations in this part, until, If necessary. the licensee shall make the determnination.

(ci Records that are prepared only for the purpose of assuring compliance with the regualations in this part and are

not related to evaluations or notifications

to the Commission may be destroyed after delivery of the facility or component.

id) The effective date of the section

has been deferred until January 6. 1978.

1.Discuss type of records required by Part 21 for Part 50 licensees

and their suppliers.

.21.51-1
Response:

As stated in the preamble to the effective Part 21, it is not

anticipated that the records required by Part 21 to assure compliance with this Part will necessitate any change in the documentation procedures of organizations that are presently complying and

remain in compliance with 10 CFR Part 50, Appendix B, Quality

Assurance Criteria for Nuclear Power Plants and Fuel Reprocessing

Plants.

In addition, records should include the following:

a. Information sufficient to describe the deviation.

b. An analysis of the effect of such deviation in a basic component

if used in a facility or activity subject to Part 21.

c. A conclusion based on this analysis as to whether the deviation

could create a substantial safety hazard.

2. Is there a time limit for the transfer of records under 10 CFR

Section 21.51?

Response:

No.

3. At what point can records related to evaluations and modifications

be destroyed under Paragraph 21.51(a)?

Response:

Records related to evaluations and notifications that are not

related to the actual creation of a substantial safety hazard can

be destroyed after authorized by the purchaser, as explained in

Section 21.51(b). Records relating to evaluations and notifications

which are related to the actual creation of a substantial safety

hazard should be retained for the life of the basic component to

which the record refers.

4. Please clarify the following statement. "If such purchaser is

unable to make the determination as required above then the responsibility for making the determination shall be transferred to the

individual, corporation, partnership, or other entity subject to

the regulations in this part that issued the procurement document

to the purchaser."

21.51-2 •
Response:

The intent of this part of the rule is that, in those cases where

the supplier or purchaser cannot make the determination, the

responsibility for making the determination on record retention

be passed up the purchaser/supplier chain to the organization

which can make the determination.

5. Are supplier related requirements of Section 21.51(b) satisfied

if all the documentation is turned over to the purchaser/licensee

without making any determination as to whether portions of the

documentation are, or are not, related to the creation of a

substantial safety hazard?

Response:

Yes, supplier related requirements of 21.51b have been satisfied.

6. Paragraphs 21.6, 21.21(a), 21.31, and 21.51 are effective January 6,

1978, and the remainder are effective July 6, 1977. Paragraph

21.51 pertains to the maintenance of records and Paragraph 21.21(b)

pertains to notification and written reports. Are records of

notification and written reports that are required between July 6,

1977, and January 6, 1978, to be maintained in accordance with

Paragraph 21.51?

Response:

It is the staff's position that an entity required to maintain

records under 21.51 should maintain records of notifications and

written reports made to the Commission.

21.51-3
21.61 Enforcement

Any director or responsible officer subject to the regulations in this part who

knowingly and consciously fails to provide the notice required by § 21.21 shall

be subject to a civil penalty in an amount

not to exceed $5,000 for each failure to

provide such notice and a total amount

not to exceed $25.000 for all failures to

provide such notice occurring within any

period of thirty consecutive days. Each

day of failure to provide the notice required by § 21.21 shall constitute a separate failure for the purpose of computing

the applicable civil penalty.

1. Does failure to notify within the requirements of Section 21.21

of 10 CFR Part 21 place all directors and responsible officers at

risk of civil penalty?

Response:

Failure to notify places at risk of civil penalty all directors

and responsible officers who had obtained information reasonably

indicating a failure to comply, or a defect, and who knowingly

and consciously failed to report such information. Any director

or responsible officer who did not have such information is not

subject to a penalty for failure to report.

2. What is the applicability of a civil penalty under Part 21 in the

following instances?

a. If an organization clearly should have specified applicability of Part 21 in the procurement document but failed to

do so, will the "responsible officer or director" be liable

for a civil penalty?

b. If an organization fails to properly comply with the posting

requirements, will a "responsible officer or director" be

liable for a civil penalty?

c. If an evaluation of a deviation is either not conducted or

is not adequately conducted, will the "responsible officer

or director" be liable for a civil penalty?

d. If the evaluation determines that a substantial safety

hazard, in fact, does exist but the "responsible officer or

director" is not informed, will such "responsible officer or

director" be liable for a civil penalty?

21.61-1
e. Can the failure of an employee to inform a director or

responsible officer of noncompliance or a defect pursuant to

procedures adopted under §21.21(a)(2) result in liability

being incurred by the director'or responsible officer?

Response:

In all of the above cases, the responsible officer or director

will not be liable for a civil penalty under Part 21.

3. Since the fines are only for knowing and conscious failure to

report defects, what are the sanctions for other violations of

these regulations?

Response:

The enforcement of the requirements. of Part 21, other than a

knowing and conscious failure to report a defect or failure to

comply, would be initiated, as determined appropriate on a caseby-case basis under Part 2, Subpart B, of the Commission's

regulations.

4. Would an employee be subject to NRC enforcement action for failing

to inform a director or responsible officer of noncompliance or a

defect pursuant to procedures adopted under §21.21(a)(2)?

Response:

No.

5. Section 21.61 provides that any director or responsible officer

subject to Part 21 who knowingly and consciously fails to provide

the notice required by Section 21.21 shall be subject to a civil

penalty. May a civil penalty for failure to notify be assessed

upon a person at any level of the executive chain of command who,

as a result of an honest and reasonable error in judgment or

interpretation, fails to notify the Commission of an event which

is subsequently deemed reportable?

Response:

If the director or responsible officer has been informed, based

on the evaluation, that the deviation or failure does not constitute a defect or failure to comply which is reportable under

Part 21, and if there is a reasonable basis for this determination,

he would not be subject to a civil penalty for knowingly and

21.61-2
consciously failing to notify the Commission even if this determination was later found to be incorrect. Thus, honest and

reasonable errors in judgment or interpretation,if there exists a

reasonable basis for the interpretation or judgment, could not

subject the director or officer to a civil penalty under Section

21.61.

6. If new acceptance criteria are introduced after it has been

determined that a defect does not exist based on our technical

evaluation, will this action constitute a knowing and conscious

failure to notify the Commission on our part?

Response:

No.

7. Is the NRC the sole judge of whether a failure to report was done

"knowingly and consciously"?

Response:

Whether or not he has information reasonably indicating a failure

to comply or a defect, is initially a matter of judgment for the

directors and responsible officers in each situation. Of course,

any judgment that there does not exist a reportable defect or

failure to comply is reviewable by NRC. Nevertheless, if there

is a reasonable basis for their judgment that a reportable defect

or failure does not exist, the responsible officers and directors

would not be subject to a civil penalty for knowingly and consciously failing to notify the Commission even if their determination was later found to be incorrect.

8. Does the maximum fine of $25,000 for any 30 consecutive days

continue to accumulate after the first consecutive 30-day period?

Response:

A $25,000 fine is the maximum permissible fine for 30 consecutive

days. However, for each month the director or officer fails to

report, a $25,000 fine can be levied. Thus, one event that was

not reported for 60 days could amount to a $50,000 fine. Also,

if more than one director or responsible officer knowingly and

consciously fails to report, each may be subject to a $25,000

fine for each 30-day period of failure to report.

9. How does the NRC plan to enforce the 10 CFR 21 reporting

requirements on vendors of safety-related equipment or service

who may not be licensees?

21.61-3
a. Is the NRC responsible for interpreting the requirements of 10

CFR Part 21 to such vendors of safety-related equipment or

services who are not NRC licensees, when questions related to

these requirements arise from such vendors?

b. How will the NRC accomplish this task?

Response:

*a. Each person or entity subject to the rule is expected to keep

reasonably informed of the requirements within their scope of

activity. NRC personnel will assist in clarifying the requirements when requested.

b. NRC will respond to requests for interpretations and guidance.

NRC inspectors will be periodically available to answer

questions during routine inspections, and the Regional Offices

can be contacted by telephone. NRC enforcement of Part 21

reporting requirements will be accomplished consistent with

presently established procedures.

10. Can an organization be cited under Part 21 for not conducting

training on procedures required by Part 21?

Response:

Part 21 does not include a requirement for training.

11. How many times has a situation come up in the past where NRC

believes they would have imposed these penalties on someone?

Response:

There has been no NRC evaluation of how many past situations-would

have been covered by Part 21.

12. Will the enforcement actions for Part 21 be separate and distinct

from normal enforcement and compliance visits or will Part 21 be an

extension of the normally scheduled and practiced enforcement and

compliance inspections utilized under Part 50?

Response:

Inspection and Enforcement activities for Part 21 will be conducted

as part of our current routine planned and reactive inspection

21.61-4
program. Unless experience indicates otherwise, no separate

inspection and enforcement program for Part 21 will be implemented.

13. What are the events which would be involved in imposing a civil

penalty under 10 CFR Part 21?

Response:

The Director, Office of Inspection and Enforcement, would first

serve a written Notice of Violation upon the person charged. The

Notice of Violation will identify the basis for the charge, the

amount of the penalty which the Office Director proposes to

impose, and the opportunities available to the person charged to

protest the charge. The person charged may then either pay the

penalty in the amount proposed or answer the Notice of Violation

within the time specified in the Notice. If the person charged

elects to answer, the Office Director, after considering the

answer, will issue an Order dismissing the proceeding or imposing,

mitigating, or remitting the civil penalty.

The person charged may then request a hearing. If the person

requests a hearing, the Commission will issue an Order for Hearing

before an Atomic Safety and Licensing Board or an Administrative

Law Judge. After the hearing, an Order will be issued dismissing

the proceeding or imposing, mitigating, or remitting the civil

penalty. Opportunity for review of the Board's or presiding

officer's Order by an Atomic Safety and Licensing Appeal Board

and the Commission may be available. If payment of a civil

penalty is not made within the specified time period, the matter

may be referred to the Attorney General for collection.

21.61-5
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