OIG/98A-10 - NRC'S Efforts with Licensees on the Year 2000 Issue

August 14, 1998

MEMORANDUM TO:	Chairman Jackson
FROM:	Thomas J. Barchi Assistant Inspector General for Audits
SUBJECT:	NRC'S EFFORTS WITH LICENSEES ON THE YEAR 2000 ISSUE

The Office of the Inspector General has completed its initial work involving NRC's efforts with licensees on the Year 2000 (Y2K) issue. (A similar survey is in process reviewing NRC's internal Y2K program.) On August 13, we briefed officials from the Offices of the Executive Director for Operations, the Chief Information Officer, Nuclear Reactor Regulation (NRR), Nuclear Material Safety and Safeguards (NMSS), and International Programs. The briefing document distributed to those officials is attached.

Because of the pressing deadline for completing Y2K programs, we worked closely with agency officials in improving their programs to ensure that licensee efforts are adequate to protect public health and safety. We provided information and suggestions to the agency throughout our review, rather than completing our work and reporting the results in a formal report. We believe this approach produced improvements in NRC's efforts in a timely and cooperative manner.

As outlined in the briefing paper, we believe that NRR and NMSS are generally pursuing appropriately aggressive efforts. However, both offices need to resolve some issues associated with their programs. These issues were discussed as they were identified during our review and also at the August 13 briefing.

It is expected that OIGs will continue to closely monitor their agencies' progress in addressing Y2K issues. We have discussed our planned future activities in this area with NRR and NMSS officials and will continue to monitor their progress and/or participate in their efforts to some degree, as appropriate.

If I can provide any additional information, please call me at 415-5915.

Attachment: As stated

cc:	Commissioner McGaffigan Commissioner Diaz A. Galante, CIO J. Funches, CFO L. Callan, EDO

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Office of the Inspector General
Nuclear Regulatory Commission

August 13, 1998

Introduction

In June 1997, the Office of the Inspector General (OIG) issued a Special Evaluation report regarding the U.S. Nuclear Regulatory Commission's (NRC) progress on the Year 2000 (Y2K) issue.⁽¹⁾ We identified several actions that the agency could take to improve its Year 2000 program. NRC initiated action relating to each of our suggestions, made other changes, and substantially improved its program. However, the issue continues to garner significant attention from Congress, the Office of Management and Budget, the United States General Accounting Office (GAO), the Executive Office, and others. As a result, we initiated two follow-up surveys of NRC's progress on the issue to help ensure that NRC will continue to meet its established goals. This survey focused on NRC's efforts to ensure that its licensees address safety-related year 2000 issues. The other is focusing on the adequacy and accuracy of NRC's progress reporting and the agency's contingency planning for mission-critical and other systems. Both efforts are part of our FY 1998 Annual Plan.

The time left to complete Y2K programs is rapidly disappearing. As a result, we wanted to work closely with agency officials in ensuring that licensee efforts are adequate to protect public health and safety. Therefore, our focus was on providing information and suggestions to agency officials as quickly as possible through meetings rather than complete our work and then report to management through a formal document.

We pursued our work through three avenues: (1) interviews with a wide variety of sources, (2) review of and comment on NRC and other documents related to Y2K programs, and (3) information sharing to facilitate quickly implementing improvements and to promote awareness through our office.

OIG's Work

1. Interviews

We conducted interviews with the following: NRR (Instrumentation & Controls Branch, Division of Systems Safety and Analysis, Non-Power Reactors and Decommissioning Project Directorate); NMSS (Division of Fuel Cycle Safety and Safeguards, Division of Industrial and Medical Nuclear Safety); the Office for the Analysis and Evaluation of Operational Data (Technical Training Center); the Office of State Programs; NRC's four Regional offices; NRC's nuclear reactor owner's groups representatives; the Nuclear Energy Institute; GAO; Senator Bennett's Special Committee on the Year 2000 Technology Problem; Oyster Creek Nuclear Power Plant (NPP); the Atomic Energy Control Board of Canada (AECB); the Rx2000 Solutions Institute;⁽²⁾ and various vendors and manufacturers.

2. Review and Comment

We reviewed and provided comments on:

NRR: Generic Letter to power plants; Temporary Instruction for sample audits at power plants; Resident Inspector questionnaire; Oyster Creek and Cooper NPPs Y2K program plans

NMSS: Generic Letter to Fuel Cycle facilities; Information Notices to material and fuel cycle licensees and certificate holders; Revisions to inspection procedures; Inspection interviews and reports for fuel cycle facilities

3. Information Sharing and Awareness

We conducted an active information exchange with NRR, NMSS, AECB, Senator Bennett's Y2K Committee, the Rx2000 Solutions Institute, and others.

Overall Results

1. The Process

We believe that we were successful in working closely with both NRR and NMSS officials. All parties worked effectively in making use of shared information and NRR and NMSS were effective in acting quickly to implement improvements.

2. General Observation

The President's February 4, 1998, Executive Order titled Year 2000 Conversion, states, in part, that Executive Branch agencies will cooperate with the private sector operators of critical national and local systems in addressing the Y2K problem. This includes the public health system and the electric power generation system. In conjunction with its mission to ensure the protection of public health and safety, NRC should attempt to provide such assistance as is possible to its licensees.

3. NRR

We believe that NRR is pursuing an appropriately aggressive program with power plant licensees. Cooperation with the industry has been very beneficial in this effort. However, we believe that several important factors should be kept in mind as NRR performs Y2K sample audits at power plants:

• The sample audits should be completed before the end of calendar year 1998.

• Because plants can test some systems only when off line, plant outage schedules are critical factors in their ability to address Y2K problems. Information gained from the audits may provide valuable insights that plants need to be aware of in order to effectively plan Y2K-related work during outages.

• We identified 39 units with outages scheduled from January - June 1999. Delay of the audits into the next calendar year could mean these plants will not be able to make use of relevant audit results.

• Regional Offices (including Resident Inspectors) may need guidance from Headquarters if they are to be effectively involved in the effort.

• While some NRR officials believe that licensees could be cited for Y2K deficiencies (related to licensing basis), it is not clear that senior management is supportive of that position. As NRC has publicly stated that it can and will shut plants down for Y2K deficiencies, agreement should be reached on the agency's position in this regard.

• NRR should ensure that licensees are addressing the problems identified with vendor certifications (industry experience is that 50 percent are proving to be unreliable) and the difficulties associated with identifying and remediating embedded systems.

4. NMSS

NMSS must contend with a much larger and more varied group of licensees in its effort. As a result, we believe that they must be more aggressive in ensuring that problems are identified and communicated effectively to other licensees. While power plants benefit from the information exchange of owner's groups and other types of organizations, materials licensees generally have not developed similar working groups.

Our work with NMSS officials indicated that, as issues arise, they quickly take effective steps to address them. The number and variety of their licensees calls for a more aggressive approach. We have a couple of comments on the NMSS program:

• We located an interest group working in the health care field - the Rx2000 Solutions Institute. Our participation in one of their special interest group meetings was invaluable. At this meeting we became clearly aware of the problems that exist with vendor certifications and embedded systems. Our contact with Rx2000 led to officials of the Institute participating in a hearing conducted by Senator Bennett's committee in July 1998. We encourage NMSS participation in such efforts as Rx2000 and information exchange with Senator Bennett's committee.

• We conducted a survey of Priority 3 licensees (mostly in the medical arena) using information from the agency's License Tracking System (LTS). Priority 3 licensees are inspected roughly once every 3 years so that more than 900 would probably not be inspected by NRC personnel before year 2000. In addition to identifying or confirming Y2K-related problems with some types of equipment, our survey disclosed a disturbing lack of Y2K awareness among Radiation Safety Officers. NMSS is currently seeking a way to address this problem. We believe that direct contact along similar lines with additional licensees would be beneficial. That avenue is also being pursued by NMSS staff.

• We also found that some of the LTS data in our sample was inaccurate. We brought such discrepancies to the attention of NMSS officials. Some of the discrepancies, viewed as significant, were immediately addressed by NMSS staff.

• Our observation of a Y2K fuel cycle inspection disclosed a typical problem - technically oriented personnel may not appropriately focus on the management side of Y2K when reviewing a licensee's program. Because of the scope of Y2K programs, it is typical that management of a Y2K program is a bigger problem than the associated technical issues. We provided a list of areas we believe should be addressed in a Y2K review and those have been incorporated where needed into the last few fuel cycle inspections.

• We met with AECB officials in Canada to discuss the Y2K issue and again found the information exchange to be highly valuable. NMSS has since initiated a dialogue with AECB.

5. Legal Issues

• The issue of potential conflict between NRC and FDA regarding jurisdiction over licensees in the medical area was resolved to our satisfaction by OIG Counsel. NRC has the authority to act aggressively on its own if problems are identified.
• We also concluded that NRC's actions related to Agreement State Y2K efforts with licensees are appropriate but limited by law.
• Because of the Y2K issues existing with materials licensees, we informed Senator Bennett's committee of NRC's lack of regulatory authority with Agreement State licensees.

Future Work

It is expected that OIGs will continue to closely monitor their agencies' progress in addressing Y2K responsibilities. We have discussed the nature and extent of our future involvement with each office and we will continue to monitor their progress and/or participate in their efforts to some degree.

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1. OIG/97E-13, NRC's Progress on the Year 2000 Issue, June 26, 1997.

2. The Rx 2000 Solutions Institute was formed in November 1996, as an independent, nonprofit organization to assist the $1.8 trillion health care industry in addressing and resolving Y2K issues. The Institute's mission is to provide: (1) training, services, and information by drawing on the resources of the health care coalition or organization to cooperatively address industry-wide Y2K issues, and (2) industry-wide recognized standards, criteria and procedures for addressing Y2K challenges.