AUDIT REPORT

Audit of NRC’s Use of Orders

OIG-12-A-19 September 25, 2012

All publicly available OIG reports (including this report) are accessible through

NRC’s Web site at: 

http:/www.nrc.gov/reading-rm/doc-collections/insp-gen/
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EXECUTIVE SUMMARY

BACKGROUND

The U.S. Nuclear Regulatory Commission (NRC) is authorized to enforce its 

regulatory requirements by imposing sanctions, such as orders, against licensees 

or other persons subject to the Commission’s jurisdiction who are in violation of 

requirements. An order is a written NRC directive to modify, suspend, or revoke a 

license; to cease and desist from a given practice or activity; or to take such other 

action as may be proper. The Commission's order issuing authority under the 

Atomic Energy Act of 1954, as amended (AEA), Section 161 extends to any area of 

licensed activity that the Commission deems necessary to promote the common 

defense and security or to protect health or to minimize danger to life or property.

The enforcement program supports the agency’s overall safety and security 

mission, and the NRC Enforcement Policy and NRC Enforcement Manual

(Manual)—maintained by the Office of Enforcement—are the primary sources of 

guidance for NRC staff implementing the enforcement program. According to the 

Manual, order-issuing authority resides in several offices and regions and order 

followup is dependent upon the type of order, and may consist of inspection activity, 

tracking, and order closure. 

OBJECTIVE

The audit objective was to evaluate the efficiency and effectiveness of NRC’s 

documentation, verification, and closure process for issued orders.

RESULTS IN BRIEF

Based on the Office of the Inspector General’s (OIG) review of followup for selected 

orders, OIG did not identify instances where the agency did not follow up on the 

recipients’ implementation of the requirements stipulated in orders. However, the 

efficiency and effectiveness of NRC’s documentation, verification, and closure 

process for issued orders can be improved. Specifically, opportunities exist to:

1. Enhance agency guidance defining order types and for the followup, 

tracking, and closure of orders. 
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2. Obtain updated documented delegations of authority for issuing orders 

for selected offices. 

ORDER GUIDANCE

Guidance for following up on orders should be clear and comprehensive; yet, this is 

not the case for all types of NRC orders. This is because some offices have not 

identified, documented, and coordinated order followup, tracking, and closure 

requirements. Improvements to the guidance on orders would support NRC’s 

knowledge management efforts and would better inform licensees and the public of 

NRC’s order process.

DELEGATIONS OF AUTHORITY

Commission authorities, including the authority to issue orders, may be delegated 

as per the AEA. The delegations of authority to issue orders for three key officers—

including the Office of International Programs (OIP) Director, the Executive Director 

for Operations (EDO), and the Chief Financial Officer (CFO)—is documented 

inconsistently. Specifically, the CFO’s authority to issue orders was delegated via a 

Chairman’s memo, whereas agency staff have been unable to locate a similar 

document for the OIP Director and the EDO. Agency staff have not sought a similar 

updated documented delegation of authority for the OIP Director and the EDO to 

issue orders. Absent an updated documented delegation of authority to issue 

orders, the agency could face delays in pursuing enforcement of orders in the event 

of noncompliance by an order recipient.

RECOMMENDATIONS

This report makes recommendations to improve the agency’s use of orders. A 

consolidated list of these recommendations appears on page 10 of this report.
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AGENCY COMMENTS

On August 28, 2012, OIG issued the discussion draft of this report to the EDO. OIG 

met with NRC management and staff on September 6, 2012, at an exit conference 

to discuss the draft report content. At this meeting, the agency provided informal 

comments, which OIG subsequently incorporated into the draft report as 

appropriate. NRC management and staff reviewed the revised draft report and 

opted not to provide formal comments for inclusion in this final report.
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ABBREVIATIONS AND ACRONYMS

AEA Atomic Energy Act of 1954, as amended 

CFO Chief Financial Officer

CFR Code of Federal Regulations

EDO Executive Director for Operations

Manual NRC Enforcement Manual

NRC Nuclear Regulatory Commission

OEDO Office of the Executive Director for Operations

OGC Office of the General Counsel

OIG Office of the Inspector General

OIP Office of International Programs
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TABLE OF CONTENTS

EXECUTIVE SUMMARY ............................................................................ i

ABBREVIATIONS AND ACRONYMS........................................................iv

I. BACKGROUND................................................................................. 1

II. OBJECTIVE ...................................................................................... 3

III. FINDINGS.......................................................................................... 3

A. ORDER GUIDANCE............................................... .......3

B. DELEGATIONS OF AUTHORITY ............................................... 7

IV. CONSOLIDATED LIST OF RECOMMENDATIONS........................ 10

V. AGENCY COMMENTS.................................................................... 11

APPENDIX

A. OBJECTIVE, SCOPE, AND METHODOLOGY......................... 12
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I. BACKGROUND

The U.S. Nuclear Regulatory Commission (NRC) is authorized to enforce 

its regulatory requirements by imposing sanctions, such as orders, against 

licensees or other persons subject to the Commission’s jurisdiction who are 

in violation of requirements. An order is a written NRC directive to modify, 

suspend, or revoke a license; to cease and desist from a given practice or 

activity; or to take such other action as may be proper. The Commission's 

order issuing authority under the Atomic Energy Act of 1954, as amended 

(AEA), Section 161 extends to any area of licensed activity that the 

Commission deems necessary to promote the common defense and 

security or to protect health or to minimize danger to life or property.1 

Commission regulations provide that orders may be issued to nonlicensees, including holders of NRC approvals (e.g. NRC certificates of 

compliance, early site permits, standard design certifications, quality 

assurance program approvals), applicants for NRC approvals, and nonlicensed individuals and their employees, including contractors and 

subcontractors. 

The enforcement program supports the agency’s overall safety and 

security mission, and the NRC Enforcement Policy and NRC Enforcement 

Manual (Manual)—maintained by the Office of Enforcement—are the 

primary sources of guidance for NRC staff implementing the enforcement 

program. According to the Manual, order-issuing authority resides in the 

Offices of Enforcement, New Reactors, Nuclear Reactor Regulation, 

Nuclear Material Safety and Safeguards, Federal and State Materials and 

Environmental Management Programs, the Chief Financial Officer, and the 

regional offices. The Office of International Programs (OIP) has issued 

orders. The Offices of Nuclear Security and Incident Response, the 

General Counsel, and Investigations are not order-issuing offices, however, 

these offices may provide supportive roles in preparing and drafting orders, 

the hearing process, and following up on orders after issuance. 

Order followup is dependent upon the type of order, and may consist of 

inspection activity, tracking, and order closure. NRC issues various types 

 

1 NRC implements AEA Section 161 through Title 10, Code of Federal Regulations (10 CFR), Part 2, 

“Rules of Practice for Domestic Licensing Proceedings and Issuance of Orders.” 10 CFR Part 2, Subpart 

B, “Procedure for Imposing Requirements by Order, or for Modification, Suspension, or Revocation of a 

License, or for Imposing Civil Penalties,” describes the formal procedures that NRC uses to implement its 

enforcement authority.
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of orders such as transfer, security, safety, and nonpayment of license and 

inspection fee orders; the type of order and/or language in the order 

determines the level of followup needed. Some program and regional 

offices have responsibilities to follow up on orders. For example, the 

regions are responsible for tracking, inspection, and followup of actions 

contained in Alternative Dispute Resolution confirmatory orders involving 

wrongdoing cases for their region. 
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II. OBJECTIVE

The audit objective was to evaluate the efficiency and effectiveness of 

NRC’s documentation, verification, and closure process for issued orders. 

Appendix A of this report contains information on the audit scope and 

methodology.

III. FINDINGS

Based on the Office of the Inspector General’s (OIG) review of followup for 

selected orders, OIG did not identify instances where the agency did not 

follow up on the recipients’ implementation of the requirements stipulated in 

orders. However, the efficiency and effectiveness of NRC’s 

documentation, verification, and closure process for issued orders can be 

improved. Specifically, opportunities exist to:

1) Enhance agency guidance defining order types and for the followup, 

tracking, and closure of orders. 

2) Obtain updated documented delegations of authority for issuing 

orders for selected offices. 

A. ORDER GUIDANCE

Guidance for following up on orders should be clear and comprehensive; 

yet, this is not the case for all types of NRC orders. This is because some 

offices have not identified, documented, and coordinated order followup, 

tracking, and closure requirements. Improvements to the guidance on 

orders would support NRC’s knowledge management efforts and would 

better inform licensees and the public of NRC’s order process. 

Order Guidance Should Be Clear and Comprehensive

To be effective, agency guidance should be clear and comprehensive. 

During an agencywide project to revise the NRC’s management directive 

system, NRC stakeholders—including staff who review, author, or use 

NRC guidance—confirmed the importance of an effective system of 
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guidance to help them understand and carry out their responsibilities. To 

be truly effective, guidance must be high-profile, easily accessible, trusted, 

user-friendly, current, accurate, and comprehensive. Guidance that is 

more specific than the management directives—including guidance on 

NRC’s followup process for orders—should also be concise and specific, 

and clearly communicate NRC’s intent and expectations to facilitate staff in 

implementing a fully successful process for following up on orders. 

Guidance for Followup of Orders Is Not Clear and Comprehensive

The guidance for order followup is not clear and comprehensive in that not 

all program and regional offices that follow up on orders cited relevant 

guidance needed to document the order followup, tracking, and closure 

process described by agency staff. Not all offices and regions provided 

OIG with guidance describing their respective process for following up on 

orders. Some offices reported having no relevant guidance for followup of 

orders. For those offices that did provide guidance, the guidance ranged 

from a verbal description of the process to various types of documents 

including office instructions, inspection procedures, memoranda, and/or 

agencywide enforcement procedures that do not include specific 

information needed to document their followup, tracking, and closure of the 

various order types described by agency staff.

Followup Requirements and Expectations Have Not Been Documented 

and Coordinated 

Guidance on order followup is not clear and comprehensive because some 

offices have not identified, documented, and coordinated the requirements 

of the followup process—including inspection activity, and order tracking 

and closure—for the types of orders for which they are responsible. 

In some instances, when asked about the process for following up on 

orders, staff members stated that orders are used for high-profile or 

significant agency actions and, therefore, staff members are already aware 

of the followup needed for the issued orders. Additionally, staff members 

stated that under some circumstances, they do not have to follow up on 

orders. However, NRC has not documented this expectation. Other 

offices reference the Manual as their source for order followup guidance, 

but concepts—such as the applicability of followup options, tracking, and 

closure—are not addressed in the Manual. The Manual does not provide 
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followup procedures and expectations for all program and regional offices. 

For example, the Manual is silent on whether all, some, or none of the 

different types of orders require followup; the extent of verification needed 

for followup on orders; and whether orders need to be tracked for purposes 

of monitoring the recipient’s progress in meeting the requirements of the 

order.

The Office of Enforcement is responsible for maintaining the Manual; 

however, Office of Enforcement staff stated that they cannot address 

requirements and expectations for all order types, followup, tracking, and 

closure without coordination with and input from other NRC offices. In fact, 

the Manual only addresses followup for a single type of order, the 

Alternative Dispute Resolution related order. The Manual mentions other 

types of orders—including security, safety, and non-enforcement related 

orders—yet does not consistently provide clear definitions of each type or 

any delineation between the types of followup expected for each. For 

example, staff explained that transfer orders do not require additional 

followup or closure, whereas security and safety related orders may require 

regional inspections to verify the recipients’ implementation of items in the 

orders. 

Impact on Knowledge Management and Agency Accountability 

Without clear and comprehensive guidance on how NRC follows up on 

orders, NRC may not be able to meet its knowledge management goals, 

and places licensees and the public at a disadvantage with regard to 

understanding NRC’s processes for order followup.

Knowledge management consists of a continuous, disciplined, and timely 

process of identifying, collecting, and using information to better 

accomplish NRC activities. Without a documented process of followup for 

all the various types of orders NRC issues, NRC must rely on experienced 

staff to teach them the process. During the audit, staff also explained that 

they had to figure out how to follow up on orders without the benefit of any 

documentation of the process.

NRC promulgates “Openness,” stating, “Nuclear regulation is the public's 

business, and it must be transacted publicly and candidly.” Essentially, 

openness helps the licensees and the public hold public officials 

accountable. Full disclosure and transparency of the agency’s process for 
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followup on orders—which are predominantly issued to licensees and/or 

the public—assists in this accountability. Until the agency provides a 

documented process for followup for all the various types of orders NRC 

issues, licensees and the public will be left to accept on good faith NRC’s 

representation of the process at the time the process is ongoing.

Recommendations

OIG recommends that the Executive Director for Operations:

1. Identify and document order followup requirements and/or revise 

the NRC Enforcement Policy, as appropriate, and Manual to 

include, for each type of order, descriptions of the order type, 

definitions, and expectations for order followup, tracking, and 

closure.

OIG recommends that the Chief Financial Officer:

2. Identify and document order followup requirements for Chief 

Financial Officer issued orders and/or coordinate with Office of 

Enforcement staff to revise the NRC Enforcement Policy, as

appropriate, and Manual to include definitions, and expectations 

for order followup, tracking, and closure.

OIG recommends that the Director, Office of International Programs:

3. Identify and document order followup requirements for Office of 

International Programs issued orders and/or coordinate with 

Office of Enforcement staff to revise the NRC Enforcement 

Policy, as appropriate, and Manual to include definitions, and 

expectations for order followup, tracking, and closure.
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B. DELEGATIONS OF AUTHORITY

Commission authorities, including the authority to issue orders, may be 

delegated as per the AEA. The delegations of authority to issue orders for 

three key officers—OIP Director, Executive Director for Operations (EDO), 

and Chief Financial Officer (CFO)—is documented inconsistently. 

Specifically, the CFO’s authority to issue orders was delegated via a 

Chairman’s memo, whereas agency staff have been unable to locate a 

similar document for the OIP Director and the EDO. Agency staff have not 

sought a similar updated documented delegation of authority for the OIP 

Director and the EDO to issue orders. Absent an updated documented 

delegation of authority to issue orders, the agency could face delays in 

pursuing enforcement of orders in the event of noncompliance by an order 

recipient. 

Commission Authorities May Be Delegated 

The AEA grants the Commission various authorities, including the authority 

to issue orders, and provides for the delegation of Commission authorities 

to agency staff. Section 161 of the AEA, General Provisions, states that; 

In the performance of its functions the

Commission is authorized to establish by rule,

regulation, or order, such standards and

instructions to govern the possession and use of

special nuclear material, source material, and

byproduct material as the Commission may deem

necessary or desirable to promote the common

defense and security or to protect health or to

minimize danger to life or property.

The AEA further describes how the Commission may, in turn, delegate its 

authorities in Section 161(n): the Commission is authorized to, “delegate to 

the General Manager or other officers of the Commission any of those 

functions assigned to it under this Act.”
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Documentation of Authorities for Issuing Orders Is Inconsistent Among 

Offices

OIG auditors sought assistance from agency staff in locating the 

Commission’s delegation of authority to three primary officers—including 

the OIP Director, the EDO, and the CFO—and found the documented 

authorities to be granted inconsistently. Staff located a January 1997

memorandum from the Chairman to the CFO that delegated various 

authorities to the CFO. Among these authorities was one that specifically 

delegated the authority to issue orders to revoke or suspend a license for 

nonpayment of license fees. However, staff were unable to locate a similar 

memo or documentation for OIP Director and EDO.

Despite the staff’s inability to locate a Commission or Chairman

memorandum or similar document granting order-issuing authority to the 

OIP Director and EDO, the NRC’s Office of the General Counsel (OGC) 

stated that the OIP Director and EDO have a legal authority to issue 

orders. As such, OGC provided legal analyses of various regulations, 

Management Directives, and other documents that OGC asserts 

demonstrates this authority.

Offices Have Not Sought Updated Documentation

Two offices—OIP and Office of the Executive Director for Operations 

(OEDO)—have not sought an updated documented delegation of authority 

from the Commission to issue orders. Historically, with years of practice 

issuing orders, OIP and OEDO did not recognize the need for seeking an 

updated documented delegation of authority from the Commission.

Risks for NRC

Absent an updated, documented delegation of authority from the Chairman 

or Commission to the OIP Director and the EDO to issue orders, the 

agency could face delays in pursuing enforcement of orders issued by OIP 

and OEDO in the event of noncompliance by an order recipient. Given that 

OGC’s analysis of the legal authority to issue orders is based on multiple 

documents, agency managers and staff stated that the authority could be 

made clearer. From a documentation perspective, the agency would be 

better served by having updated documentation similar to the Chairman’s 

1997 memorandum to the CFO. 
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Recommendations

OIG recommends that the Director, Office of International Programs:

4. Seek an updated, documented delegation of authority to issue 

orders from the Chairman and/or Commission. 

OIG recommends that the Executive Director for Operations:

5. Seek an updated, documented delegation of authority to issue 

orders and to re-delegate that authority from the Chairman 

and/or Commission. 
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IV. CONSOLIDATED LIST OF RECOMMENDATIONS

OIG recommends that the Executive Director for Operations:

1. Identify and document order followup requirements and/or revise the 

NRC Enforcement Policy, as appropriate, and Manual to include, for 

each type of order, descriptions of the order type, definitions, and 

expectations for order followup, tracking, and closure.

OIG recommends that the Chief Financial Officer:

2. Identify and document order followup requirements for Chief Financial 

Officer issued orders and/or coordinate with Office of Enforcement 

staff to revise the NRC Enforcement Policy, as appropriate, and 

Manual to include definitions, and expectations for order followup,

tracking, and closure.

OIG recommends that the Director, Office of International Programs:

3. Identify and document order followup requirements for Office of 

International Programs issued orders and/or coordinate with Office of 

Enforcement staff to revise the NRC Enforcement Policy, as 

appropriate, and Manual to include definitions, and expectations for 

order followup, tracking, and closure.

OIG recommends that the Director, Office of International Programs:

4. Seek an updated, documented delegation of authority to issue orders 

from the Chairman and/or Commission. 

OIG recommends that the Executive Director for Operations:

5. Seek an updated, documented delegation of authority to issue orders 

and to re-delegate that authority from the Chairman and/or 

Commission.
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V. AGENCY COMMENTS

On August 28, 2012, OIG issued the discussion draft of this report to the EDO.

OIG met with NRC management and staff on September 6, 2012, at an exit 

conference to discuss the draft report content. At this meeting, the agency 

provided informal comments, which OIG subsequently incorporated into the draft 

report, as appropriate. NRC management and staff reviewed the revised draft 

report and opted not to provide formal comments for inclusion in this final report.
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Appendix A

OBJECTIVE, SCOPE, AND METHODOLOGY

OBJECTIVE

The audit objective was to evaluate the efficiency and effectiveness of 

NRC’s documentation, verification, and closure process for issued orders. 

SCOPE

This audit focused on reviewing the management and internal controls over 

the agency’s followup of orders, including the documentation, verification,

and closure process, issued between 2005 and 2011. We conducted this 

performance audit at NRC headquarters in Rockville, MD, from February 

2012 to July 2012. Internal controls related to the audit objectives were 

reviewed and analyzed. Throughout the audit, auditors were aware of the 

possibility or existence of fraud, waste, or misuse in the program.

METHODOLOGY

To accomplish the audit objective, OIG reviewed Federal and internal 

agency guidance, including the AEA, as amended, the Code of Federal 

Regulations, the NRC Enforcement Policy, and the NRC Enforcement 

Manual. OIG also reviewed various management directives, inspection 

manual chapters and procedures, and office-specific guidance on orders. 

To evaluate the agency’s followup of issued orders, OIG selected a 

judgmental sample of orders issued between 2005 and 2011 and reviewed

order followup for 38 of 703 orders that 11 offices and regions indicated 

NRC issued during that period. Furthermore, OIG interviewed agency 

staff, including all program and regional office points-of-contact identified 

by the agency, to obtain staff insights into the agency’s use of orders. 

We conducted this performance audit in accordance with generally 

accepted Government auditing standards. Those standards require that 

we plan and perform the audit to obtain sufficient, appropriate evidence to 

provide a reasonable basis for our findings and conclusions based on our 

audit objectives. We believe that the evidence obtained provides a
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reasonable basis for our findings and conclusions based on our audit 

objectives. 

The work was conducted by R.K. Wild, Team Leader; Vicki Foster, Audit 

Manager; Kevin Nietmann, Senior Technical Advisor; Andrea Ferkile, 

Senior Analyst; Ziad Buhaissi, Senior Auditor; and Dana Furstenau, 

Student Analyst.