Issue Date: 01/31/89 - 1 - 10 CFR 50.55(e)

NRC INSPECTION MANUAL ILPB

PART 9900: 10 CFR GUIDANCE

50_55E.CFR

10 CFR 50.55(e)

CONSTRUCTION DEFICIENCY REPORTING

A. PURPOSE

Deficiency reporting based on the requirements of Part 50.55(e) is

designed to provide the NRC staff with prompt notification and

timely information of deficiencies encountered during construction

of nuclear power plants. The intent of the Rule is to provide a

basis for evaluation on the part of the NRC with respect to

potential safety consequences of deficiencies and the need for

further action by NRC.

B. DISCUSSION - GENERAL

The conditions of construction permits are contained in 10 CFR

50.55. Subpart 10 CFR 50.55(e) imposes a reporting requirement on

construction permit (CP) holders to report each deficiency found in

design and construction which if it were to have remain uncorrected

could have adversely affected the safety of operations of the

nuclear facility at any time throughout the expected lifetime of the

plant. Reporting is limited to deficiencies which meet certain

other requirements as discussed below.

C. RESTATEMENT OF THE REGULATION

The entire subsection of 10 CFR 50.55(e) is included here for

convenience.

1. If the permit is for construction of a nuclear power plant,

the holder of the permit shall notify the Commission of each

deficiency found in design and construction, which, were it

to have remained uncorrected, could have affected adversely

the safety of operations of the nuclear power plant at any

time throughout the expected lifetime of the plant, and which

represents:

a. A significant breakdown in any portion of the quality

assurance program conducted in accordance with the

requirements of Appendix B; or
10 CFR 50.55(e) - 2 - Issue Date: 01/31/89

b. A significant deficiency in final design as approved and

released for construction such that the design does not

conform to the criteria and bases stated in the safety

analysis report or construction permit; or
Issue Date: 01/31/89 - 3 - 10 CFR 50.55(e)

c. A significant deficiency in construction of or significant damage to a structure, system, or component which

will require extensive evaluation, extensive redesign, or

extensive repair to meet the criteria and bases stated in

the safety analysis report or construction permit or to

otherwise establish the adequacy of the structure,

system, or component to perform its intended safety

function; or

d. A significant deviation from performance specifications

which will require extensive evaluation, extensive

redesign, or extensive repair to establish the adequacy

of a structure, system, or component to meet the criteria

and bases stated in the safety analysis report or

construction permit or to otherwise establish the

adequacy of the structure, system, or component to

perform its intended safety function.

2. The holder of a construction permit shall within 24 hours

notify the appropriate Nuclear Regulatory Commission Regional

Office of each reportable deficiency.

3. a. The holder of a construction permit shall also submit, as

specified in §50.4, a written report on a reportable

deficiency within 30 days.

b. The report must include a description of the deficiency,

an analysis of the safety implications and the corrective

action taken, and sufficient information to permit

analysis and evaluation of the deficiency and of the

corrective action. If sufficient information is not

available for a definitive report to be submitted within

30 days, an interim report containing all available

information shall be filed, as specified in §50.4,

together with a statement that indicates when a complete

report will be filed.

4. Remedial action may be taken both prior to and after notification of the Division of Inspection and Enforcement subject to

the risk of subsequent disapproval of such action by the

Commission.

D. APPLICABILITY

Subsection 10 CFR 50.55(e) applies to the CP holder and his

contractors. The CP holder is responsible for reporting each

deficiency in accordance with the criteria and requirements of 10

CFR 50.55(e). The regulation applies to design and construction and

encompasses all of the activities inherent in design and construction even though they may be performed by agents, contractors,

subcontractors or consultants. The CP holder must establish and

implement a system that assures all reportable deficiencies are

identified and reported and the reporting requirement must be

imposed on his agents, contractors and subcontractors.
10 CFR 50.55(e) - 4 - Issue Date: 01/31/89

E. CRITERIA FOR REPORTING

1. Deficiency

a. must have been identified, i.e., found

b. related to activities conducted as authorized by a

construction permit holder (design, construction or

notification)

c. could adversely affect the safe operation of a facility

if it were not corrected, i.e., it is significant

d. significant deficiency relates to one or more of the

following:

(1) breakdown in QA program

(2) design released for construction

(3) damage to a structure, system or component

(4) construction of a structure, system, or component

(5) deviation from performance specifications

2. Timeliness

a. Initial report - within 24 hours

b. Written report - within 30 days (initial or final)

c. Supplemental written report(s) as necessary to provide

all information.

3. Reporting Organization. The CP holder is responsible for

implementing instructions which will provide for licensee

reporting of all reportable deficiencies identified by

organizations authorized by him to conduct construction phase

activities.

F. CLARIFICATION OF 50.55(e) PHRASES

1. Could adversely affect. If a deficiency meets all the

criteria and it could affect adversely safe operations of the

facility, it is reportable. "Could" does not imply that it

would absolutely adversely affect safe operations. It implies

a probability that safe operations may be adversely affected

if the proper conditions existed. "At any time" means that

all service and accident conditions of operation must be

considered.

The fact that a deficiency is obvious and could not possibly

go uncorrected and therefore could not adversely affect safe
Issue Date: 01/31/89 - 5 - 10 CFR 50.55(e)

operation does not negate the requirement to formally report

the deficiency if it meets the criteria of 50.55(e).

2. Significance. To be reportable under 10 CFR 50.55(e) a

deficiency must be significant. Significant is interpreted

as having an effect or likely to have an effect on, or

influence, the safe operation of the facility in an adverse

manner.

Although "significant" is not defined in 50.55(e), it is not

the intent that trivia be reported. Significance primarily

pertains to operational safety and not to the cost of the

corrective action. However, as indicated below, the cost to

repair or redesign provides an indicator of the term "extensive." Trivial situations such as cosmetic defects are not

reportable.

The test of significance includes but is not limited to safety

related items/activities as discussed below.

a. It is important to note that the regulation does not

specifically state that 50.55(e) applies only to safety

related structures, systems and components although this

may be inferred from the wording.

The 50.55(e) requirement applies to any structure, system

or component (SSCs) if it contains a deficiency which

were it to have remained uncorrected could have affected

adversely the safety of operation of the facility. This

includes those SSCs that, even if not classified as

safety related, could cause or contribute to the degradation of integral plant safety as a result of an adverse

interaction with safety related SSCs. Primary examples

of this are undesirable conditions or failures in a

nonsafety system, structure, or component which could

impact or degrade safety systems or a safety function.

The inspector must use caution in applying 50.55(e) to

nonsafety SSCs and must satisfy himself that the licensee

has considered the interactions that a deficiency in a

nonsafety SSC could create.

b. If a deficiency involves inadequate management reviews,

it may be significant.

3. Extensive. An item is reportable if it requires extensive

evaluation to determine if it is adequate to perform its

intended safety function or will not impair the accomplishment

of a safety function through adverse interaction.

Extensive means the expenditure of resources (time, manpower,

money) to a degree disproportionate with the original design,

test or construction expenditure. The inspector should use

caution - this requires judgement and experience. For

example, the lack of extensive evaluation may be used as a

justification for not reporting. But it also may indicate an
10 CFR 50.55(e) - 6 - Issue Date: 01/31/89

inadequate evaluation due to expense involved or a failure to

consider interactions and therefore should be considered

suspect.

Redesign may appear to be not extensive; the inspector should

verify that all interactions and interfaces have been

considered and that sufficient design margin is available.

4. Significant Breakdown in Quality Assurance. A breakdown in

the QA program related to any criteria in 10 CFR 50, Appendix

B, may be a reportable deficiency depending upon its significance. This applies to those design and construction

activities affecting the safety of plant operations, including

activities such as design verification, inspection, and

auditing. For example, QA program breakdown may result from

an improper identification system for safety related materials. More specifically, the implementing procedures may be

incomplete or otherwise inadequate, or the execution of

adequate procedures may be incomplete, improper or completely

ignored. In the latter case, not following established

procedures to assure that specified quality related requirements are met, for example, may constitute a breakdown in the

QA program that is reportable.

Similarly, an inadequate record keeping system that makes it

impossible on a broad scale to determine whether quality

requirements have been met, is another example. In such a

case extensive evaluation and testing may be required to

establish that applicable requirements have been met.

Conversely, occasional, incomplete or otherwise inadequate

records that do not indicate a significant breakdown in the

QA program nor an unsafe condition are not considered

reportable. For example, if during site construction,

delivery times (from mixing to placing) of a few of many

truckloads of concrete are not recorded as required, and it

can be shown by other records that requirements important to

safety have been met, the matter would not be reportable.

These other records may be related concrete truck trip

tickets, batch plant records or acceptable test results of

concrete samples representing concrete from these trucks. The

lack of complete records in this example would not lead to

unsafe plant operation, nor would it constitute a significant

breakdown in the QA Program.

5. Notification and Reporting

a. Notification - Reportable Deficiency. 10 CFR 50.55(e)(2)

specifies that the CP holder shall notify the appropriate

NRC Regional Office within 24 hours of each reportable

deficiency. Notification means: (1) telephone report;

(2) telegraphic report; and (3) verbal report to the NRC

Regional Office after becoming aware of a reportable

deficiency, excluding holiday or weekend elapsed times.

A notification to a NRC representative present at the CP

holder's facilities does not satisfy the regulation.
Issue Date: 01/31/89 - 7 - 10 CFR 50.55(e)

The threshold for notification (not reporting) is

considered to be within 24 hours after licensee (CP

holder) becomes aware of the reportable deficiency (or

potentially reportable deficiency as clarified below).

Aware of the deficiency means that any cognizant licensee

individual has knowledge of the deficiency as a result

of:

(1) observation of condition

(2) a formal submittal by any organization involved in

the design, construction, evaluations or inspection

of the facility

(3) an informal report, or allegation, by any organization or person.

b. Notification - Potentially Reportable Deficiency. All of

the reportability criteria of 50.55(e) may not be

satisfied when a deficiency is initially discovered. It

is not always possible for the licensee to decide

promptly during an evaluation whether the identified

deficiency is reportable. However, in most cases,

significance can be partially satisfied, or sound

judgement will indicate potential significance. In these

cases, it should be considered that the deficiency is a

potentially reportable deficiency, and the Regional

Office should be notified. The CP holder should specify

that it is a potentially reportable deficiency.

The following NRC position has been established to

alleviate the apparent conflict between prompt notification and necessary evaluation time for those cases where

an extended period of time could lapse in completing a

adequate evaluation of the identified deficiency:

Notification by telephone to the Regional Office

within 24 hours after a cognizant licensee individual

becomes aware of a potentially reportable deficiency

is considered acceptable. A potentially reportable

deficiency is considered to exist when: (1) an

initial prompt review of available information

indicates that the problem could be significant

(i.e., partial significance is established) but, for

various reasons, additional time is required to

complete the evaluation; and (2) the deficiency may

be considered significant, but neither a prompt

review or full evaluation can be completed within 14

days due to lack of specific information.

For example, an extensive evaluation period may exist

when the licensee cannot determine without testing

and analysis whether the physical properties relative

to the material used for a section of reactor coolant

piping were met, the licensee should promptly notify

the Regional Office of this matter. If the results
10 CFR 50.55(e) - 8 - Issue Date: 01/31/89

of the above analysis indicates that the material is

not acceptable, extensive evaluation and/or rework

may be required. If this is the case, it is clearly

a reportable deficiency. Conversely, if the analysis

in the above example confirms acceptability of the

material, the licensee should document these results

in his records and notify the Regional Office that

this deficiency was determined not to be significant

based on the results of further analysis or investigation. Consequently, some matters which require

notification may not, subsequently, require a written

report.

In summary, the intent is to require a prompt

notification in cases where a potentially reportable

deficiency has been identified but the formal

evaluation required to confirm whether the item is

reportable can not be completed immediately.

c. Interim Report. The CP holder may meet the 30 day

written report requirement by submitting an interim

report in lieu of the complete report if sufficient

information is not available for a definitive report.

The interim report should specify:

(1) the potential problem and reference the notification

(2) approach to resolution of the problem

(3) status of proposed resolution

(4) reasons why a final report will be delayed

(5) projected completion of corrective action and

submittal date of the complete report.

d. Complete Report. The regulation requires that the CP

holder submit a written report to the appropriate

Regional office within 30 days after initial notification. If an interim report is submitted the final report

shall be due on the date committed in the interim report.

The complete report shall contain:

(1) description of the deficiency

(2) analysis of the safety implications. This should

include an identification of interfacing systems and

possible interactions.

(3) corrective actions taken. Corrective actions should

be sufficient to correct the deficiency and prevent

future identical or similar occurrences. To prevent

future occurrences, the causes of the deficiency must

be fully explored and identified.
Issue Date: 01/31/89 - 9 - 10 CFR 50.55(e)

(4) sufficient information to permit analysis and

evaluation of the deficiency and of the corrective

action.

G. ENFORCEMENT

If a CP holder is aware of a reportable deficiency and it can be

shown by objective evidence that he has not met the time reporting

requirements, then he is in noncompliance with the reporting

requirement of 50.55(e) and enforcement action should be taken.

The licensee should be encouraged to discuss "reportability" with

the responsible inspector whenever he has a question or doubt

regarding this matter. It is appropriate for the inspector to

indicate his views on whether a particular matter is reportable, but

the licensee should understand that the ultimate responsibility

remains with the licensee, and the inspector's judgement may change

during a future inspection wherein he has an opportunity to fully

review the circumstances associated with the matter.

Another aspect of this regulation related to reportability

determination pertains to judgement--judgement used by the licensee

in determining whether a matter is reportable. The licensee has to

make a judgement based on his (or others) evaluation/analysis. If

the licensee decides, on the basis of the above, that a matter is

not reportable, he may have satisfied the intent of this part of the

regulation. However, the inspector can exercise his option and

challenge the licensee's decision of nonreportability. A challenge

may be valid if:

1. the evaluation is clearly faulty by way of omission of facts

2. engineering or other calculations are in error

3. the evaluation is not supported by adequate records

4. the evaluation has not considered interactions

5. past NRC experience (including that of the inspector) provide

a basis as precedent for reportability

6. the licensee has established a trend or pattern of habitually

evaluating deficiencies as non-reportable

7. evaluation is performed by a person(s) or organization without

expertise in the subject.

The inspector has the right and the responsibility to examine the

technical validity of the licensee evaluation and if an inappropriate or unsupported decision of nonreportability has been made by the

licensee, enforcement action should be considered. Regional

management should review and, when valid, determine the appropriate

enforcement action to take. If there is evidence that superficial

evaluations are being made to procedurally satisfy or bypass NRC
10 CFR 50.55(e) - 10 - Issue Date: 01/31/89

requirements, strong escalated enforcement action should be

considered.

H. RELATION TO APPENDIX B REQUIREMENTS

10 CFR 50, Appendix B, requires procedures to be established and

records maintained to handle required actions relative to resolution

of identified deficiencies. Procedures and records (as in (1) and

(2) below) are required to assure prompt notification and adequate

reporting under 50.55(e). As long as such procedures and records

exist, it is not critical under which heading, Appendix B or

50.55(e), they are found. Note, however, that Appendix B requires

procedures and records related to Criterion XV for the notification

to affected organizations of nonconforming items, and Criterion XVI

for corrective actions, including reporting to appropriate levels

of management.

1. Implementing Procedures. Although the specific requirements

of 50.55(e) are few (notify, evaluate, report), implementing

procedures to assure that these requirements are met should

be established by the CP holder. For example, some means

(such as procedures or instructions) are required to assure

that deficiencies found in design and construction activities

delegated by the licensee to others are handled properly and

reported in a timely manner to the CP holder. The procedures

should assure that the evaluation of the significance of the

deficiency to the safety of plant operations is performed by

a person(s) with adequate expertise in the subject and that

adequate management review is provided.

2. Records. The licensee should maintain records to demonstrate

that adequate evaluation/analysis of all deficiencies was made

regarding the impact on safe operations. It is appropriate

for the inspector to inform the licensee that without such

records the appropriate licensee management cannot establish

whether such evaluations were made or whether the NRC

requirements associated with this activity were overlooked.

I. RELATIONSHIP TO 10 CFR 21 REPORTING

Reporting of Defects and Noncompliances (10 CFR 21) imposes a

reporting requirement on licensees and permit holders to immediately

notify the Commission of defects, in basic components or the

facility which could create a substantial safety hazard. There are

certain situations which can result in duplicate reporting of the

same defect under 50.55(e) and Part 21 requirements. Guidance that

duplicate reporting is not the intent of the NRC regulations has

been promulgated via NUREG-0302, Rev. 1 and in correspondence

supplied to the Atomic Industrial Forum. This guidance is

reproduced below:
Issue Date: 01/31/89 - 11 - 10 CFR 50.55(e)

1. NUREG-0302 Rev. 1 Guidance

Q. 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?

A. Duplicate reporting is not required. Care should be

exercised, however, to assure "that the Commission has

been adequately informed" (§21.21b) and the information

specified in §21.21(b)(3) is provided should the reporting party's evaluation show that a notification is

required.

Q. How do we determine when to report a "problem" under the

provisions of 50.55(e) vs the provisions of Part 21?

A. §50.55(.e) requires initial reporting in 24 hours of the

time licensee or his agent first identifies a significant

deficiency. A follow-up 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 judgement is

expected in reporting potentially reportable problems to

avoid the severe penalties, which could be imposed should

the problem turn out to be reportable.

Q. 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?

A. §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.

Q. 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?

A. 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.
10 CFR 50.55(e) - 12 - Issue Date: 01/31/89

Q. 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?

A. 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.

Q. 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?

A. 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.

2. Supplemental Guidance Supplied to Atomic Industrial Forum on

Q/A 15 and 16 Under 21.21(b)(1) of NUREG 0302, Rev. 1. The

regions are authorized to use the enclosed staff positions on

10 CFR Part 21 in communications with licensees. These

positions were prepared in response to inquiries from AIF and

supplement those of NUREG 0302, Rev. 1. In particular, until

pertinent reporting regulations are amended, the staff

position response to AIF should be used in answering licensee

questions on how and when 50.55(e) reporting may be used in

lieu of dual reporting under both 50.55(e) and Part 21.

When a combined 50.55(e)/Part 21 event is reported by a

licensee to the regional office by telephone, the region

should use §50.55(e)(3) and §21.21(b)(3) information requirements for guidance to assure that the Commission is "adequately informed." Where an event is reported under 50.55(e)

and it is (subsequently) established that the event is also

reportable under Part 21 the licensee should be informed that

it is acceptable for the licensee to provide the information

required under §21.21(b)(3) via a supplement to the initial

50.55(e) report. (From N. Moseley to Reg. Director memo of

5/8/79 forwarding 4/26/78 letter sent to AIF)

It is the staff's position that the licensee is not required

to report under Part 21 an occurrence that falls within the

scope of either Part 21 or 50.55(e) or Reg. Guide 1.16 if that

occurrence is reported in accordance with 50.55(e) or Reg.

Guide 1.16 requirements. In such cases, it is also the

staff's position that the time requirements (oral, 24 hours

under 50.55(e) and R.G. 1.16) of the reporting method used
Issue Date: 01/31/89 - 13 - 10 CFR 50.55(e)

would be controlling and, for the licensee, the Part 21

reporting times would not be applicable. (Does not change

prior staff position relative to information (21.21(b)(3))

requirements)

However, a director or responsible officer of a non-licensee

organization upon receiving information of a reportable defect

would be subject to Part 21 reporting time requirements unless

he has actual knowledge the Commission has been adequately

informed. Therefore, in those cases where a non-licensee has

provided the licensee, or licensees (i.e., the defect is

generic in nature) with the reportable information and that

information is in fact reported by the licensee(s), the

non-licensee is not required to duplicate the reporting. In

this instance it is also the staff's position that the

non-licensee must have actual knowledge that the reporting was

executed prior to expiration of applicable Part 21 reporting

time requirements before he would be relieved of reporting the

defect.

It should also be noted that non-licensees are not relieved

of reporting until the Commission is "adequately informed."

Your attention is specifically directed to §21.21(b)(3)(vi).

If licensee 50.55(e) report(s) do not adequately address the

generic applicability, i.e., information on all such components, which the non-licensee may be uniquely qualified to

provide, the Part 21 reporting responsibility would remain

with the non-licensee for providing that part of the unreported information.

The reverse is not true because Section 50.55(e) does not have

a provision like that included under §21.21(b) (last sentence)

to relieve the licensee of reporting under 50.55(e) where he

had actual knowledge that the Commission has been adequately

informed via a Part 21 report. However, the staff has stated

that where the Part 21 report includes all information

required for 50.55(e) reporting it would be acceptable for the

licensee's 50.55(e) report to simply reference the previously

submitted Part 21 report.

3. Additional Guidance - Information Notice 79-30. "The staff

position permitting alternate reporting via 50.55(e) or LER

of a defect was intended to avoid duplicate reporting of the

same event. The use of alternate reporting methods by a

licensee does not relieve him from assuring compliance with

10 CFR Part 21. Therefore, each licensee must maintain a

system which will assure compliance with all requirements of

10 CFR Part 21 and, in particular, in cases where the

deficiency being reported under an alternate method is also

a `defect', to assure that all information required under Part

21 is forwarded to the NRC via the initial or a followup

written report."

J. 10 CFR 50.55(e) EVENT FLOW DIAGRAMS
10 CFR 50.55(e) - 14 - Issue Date: 01/31/89

The flow diagrams on the following pages illustrate the sequence of

steps and considerations relative to determining whether an

identified construction deficiency is reportable.

Figure 1 is a duplication of the guidance previously made available

to licensees via NUREG-0302, Rev. 1.

Figure 2 incorporates the NRC position for assuring prompt reporting

of reportable and potentially reportable deficiencies.

END
Issue Date: 01/31/89 - 15 - 10 CFR 50.55(e)

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10 CFR 50.55(e) - 16 - Issue Date: 01/31/89

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