This summer, the NRC's Executive Director for Operations denied Southern Nuclear Company's appeal of a staff decision to impose a compliance backfit at the Hatch Nuclear Plant regarding the plant's degraded voltage protection scheme. In 1991, the NRC issued a Notice of Violation on the issue, and in 1995, the staff granted a license amendment to allow Hatch to rely on administrative controls and manual actions as part of the site's voltage protection configuration. However, during a 2009 inspection, the NRC questioned the previously agreed-upon scheme and concluded that it did not meet regulatory requirements. Therefore, the NRC imposed a backfit on the plant but did not perform a cost-benefit analysis on the grounds that the "compliance exception" to the backfit rule rendered the analysis unnecessary. Southern appealed the NRC's backfit determination, arguing that the NRC staff knew full well of the regulatory requirements when it granted Hatch the deviation under the 1995 license amendment. The NRC disagreed. Instead, it concluded that the 1995 license amendment was approved in error because it did not comply with NRC requirements. The Backfit Appeal Panel determined that to have properly approved the 1995 license amendment, the licensee would have had to request, and the NRC would have needed to grant, an exemption from the regulatory requirements, which did not occur. Thus, Hatch must come into compliance with degraded voltage requirements, even though its approach was previously approved by the NRC.
Although the NRC is not reopening the 1991 enforcement matter, this example illustrates the challenges with the compliance exception to the backfit rule.
The backfit rule was intended to promote regulatory stability by minimizing changes that a facility would have to make after it had been granted a license. But liberal application of the compliance exception to the rule can effectively render the rule's protections meaningless. The message in the Hatch case is that licensees rely on the regulator's word at its own peril, especially in the context of resolution of a disputed matter. Subsequent NRC staff members may differ in their interpretation of a regulatory requirement, in which case, it makes no difference whether the NRC had previously reviewed and approved a licensee's approach to compliance, as long as the current staff decides that the previous interpretation amounted to an "omission or mistake." Cases like these, and the statement from the recent report of the NRC's Committee to Review Generic Requirements that "[d]uring the current 12-month assessment period, the committee reviewed 28 proposed new or revised generic actions and identified no backfits (unintended or otherwise)" is sure to leave the industry less than confident in the backfit rule's purported protections.