[Federal Register Volume 59, Number 204 (Monday, October 24, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-25707]


[[Page Unknown]]

[Federal Register: October 24, 1994]


                                                   VOL. 59, NO. 204

                                           Monday, October 24, 1994

NUCLEAR REGULATORY COMMISSION

10 CFR Part 21

RIN 3150-AF01

 

Procurement of Commercial Grade Items by Nuclear Power Plant 
Licensees

AGENCY: Nuclear Regulatory Commission.

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: The Nuclear Regulatory Commission (NRC) is proposing to amend 
its regulations in 10 CFR Part 21 to clarify and add flexibility to the 
process of procuring commercial grade items for safety-related service 
by nuclear power plant licensees. The proposed rule expands the scope 
of commercial grade items to encompass all items procured for use in 
safety-related service that are not designed and/or manufactured as 
basic components. This proposed rule is necessary to ensure that the 
procurement of commercial grade parts and their subsequent dedication 
are performed in a manner that avoids unnecessary delay and expense 
while maintaining an adequate level of plant safety. The proposed rule 
responds to a petition for rulemaking from the Nuclear Management and 
Resources Council (NUMARC), which is now incorporated into the Nuclear 
Energy Institute (NEI).

DATES: Submit comments by January 9, 1995. Comments received after this 
date will be considered if it is practical to do so, but the Commission 
is able to assure consideration only for comments received on or before 
this date.

ADDRESSES: Send comments to: Secretary, U.S. Nuclear Regulatory 
Commission, Washington, DC 20555. Attn: Docketing and Service Branch.
    Hand deliver comments to: 11555 Rockville Pike, Rockville, 
Maryland, between 7:45 a.m. and 4:15 p.m. on Federal workdays.
    Examine comments received and the regulatory analysis at: The NRC 
Public Document Room, 2120 L Street NW. (Lower Level), Washington, DC.
    Obtain single copies of the regulatory analysis from: M.L. Au, 
Office of Nuclear Regulatory Research, U.S. Nuclear Regulatory 
Commission, Washington, DC 20555, telephone (301) 415-6181.

FOR FURTHER INFORMATION CONTACT: M.L. Au, Office of Nuclear Regulatory 
Research, U.S. Nuclear Regulatory Commission, Washington, DC 20555, 
telephone (301) 415-6181.

SUPPLEMENTARY INFORMATION:

Background

    The Commission issued 10 CFR Part 21 on June 6, 1977 (42 FR 28893), 
to implement Section 206 of the Energy Reorganization Act of 1974. One 
of the purposes of 10 CFR Part 21 is to provide for the evaluation of 
deviations, and reporting of defects and failures to comply in safety-
related parts and services for use in nuclear power plants. 10 CFR Part 
21 is implemented in conjunction with 10 CFR Part 50, Appendix B, which 
contains the quality assurance criteria to be applied to design, 
fabrication, construction, and testing of safety-related structures, 
systems, and components in nuclear power plants.
    On October 14, 1993 (58 FR 53159), the Commission published a 
notice of receipt of a petition for rulemaking (PRM-21-2) from the 
Nuclear Management and Resources Council (NUMARC), which is now 
incorporated into the Nuclear Energy Institute (NEI). The NUMARC 
petition was docketed by the NRC on June 22, 1993.
    The petitioner requested that the Commission amend 10 CFR Part 21 
to clarify and add flexibility to the process of procuring commercial 
grade items for safety-related service by nuclear power plant 
licensees. Specifically, the petitioner requested that 10 CFR Part 21 
be amended to:
    (1) Replace the existing definition of commercial grade item with a 
more inclusive definition;
    (2) Include a flexible generic process for dedication of commercial 
grade items for safety-related use; and
    (3) Clarify that the entity performing the dedication of a 
commercial grade item is responsible for discovering and evaluating 
deviations, and reporting defects and failures to comply as required by 
10 CFR Part 21.

Basis for Petition

    The petitioner contends that many of the original equipment 
manufacturers and suppliers no longer maintain programs that meet the 
requirements in 10 CFR Part 50, Appendix B, due to the high cost of 
maintaining and implementing these programs relative to the diminishing 
demand for plant parts. Thus, an increasing number of safety-related 
parts are being purchased from manufacturers and suppliers who no 
longer maintain quality assurance programs pursuant to 10 CFR Part 50, 
Appendix B. Because, this is a relatively small market, the petitioner 
states that many vendors are unwilling to develop and maintain 
evaluation and notification procedures that meet 10 CFR Part 21 
reporting requirements. With fewer vendors agreeing to comply with 
these requirements, the petitioner claims that it is becoming difficult 
for nuclear power plant licensees to procure an increasing number of 
items and services for safety-related applications.
    10 CFR Part 21 currently provides an exemption for a subclass of 
components called ``commercial grade.'' These components are defined as 
items that are (1) not subject to nuclear-unique design or 
specification requirements; (2) used in applications outside the 
nuclear industry; and (3) ordered on the basis of specifications set 
forth in the manufacturer's published product description (for example, 
a catalog).
    The petitioner believes that the discussions in 10 CFR Part 21 that 
relate to commercial grade items, the dedication of these items for use 
in safety-related applications, and the reporting requirements 
associated with these items are unworkable and ineffective and 
consequently may adversely affect safety. Furthermore, the petitioner 
believes that the effect of these provisions has been to discourage 
vendors from maintaining programs that meet NRC requirements and to 
even refuse to provide parts to licensees. To alleviate these problems, 
the petitioner proposes the following three changes to 10 CFR Part 21:
    First, the petitioner suggests that the NRC broaden the definition 
of ``commercial grade item'' in 10 CFR 21.3 to read as follows: 
``Commercial grade item means any item that has not been dedicated for 
use as a basic component.'' This definition essentially would include 
any item obtained on the open market. The petitioner believes that 
allowing commercially available items to qualify as commercial grade 
items would result in more reasonable prices and delivery times with no 
adverse impacts on safe plant operations.
    Second, the petitioner suggests a more flexible generic definition 
of ``dedication'' in 10 CFR 21.3: ``Dedication is the evaluation 
process undertaken to provide reasonable assurance that a commercial 
grade item to be used as a basic component will perform its intended 
function.'' According to the petitioner, dedication methods could 
include testing and/or inspection, surveying the commercial grade 
supplier to determine that the appropriate quality control is in place, 
observing the manufacturing process, and analyzing the historical 
record of the item for acceptable performance. The petitioner also 
proposes that the dedicating entity maintain documentation of the 
dedication process for the purpose of an audit or inspection.
    The petitioner believes that the benefits of establishing this 
process are that the utility or third party performing the dedication: 
(1) Understands the safety significance and function of the proposed 
component; (2) is able to identify the characteristics necessary to 
perform its intended function better than the manufacturer; and (3) 
would be responsible for the quality of the commercial grade item. This 
would require the party performing the dedication to determine the 
suitability of the component by analyzing the effect of its performance 
in a safety-related application.
    Third, the petitioner suggests that the responsibility for 
reporting defects and failures to comply for commercial grade items 
should reside with the entity responsible for performing the dedication 
process. The petitioner suggests that the following language be added 
to 10 CFR 21.21(b): ``The entity that performs the dedication is 
responsible for identifying, evaluating and reporting the deviations 
and failures to comply associated with substantial safety hazards of a 
commercial grade item.'' The petitioner believes that it is appropriate 
to clarify that the responsibility for reporting defects and failures 
to comply for commercial grade items falls on the entity performing the 
dedication process because the suppliers and sub-tier suppliers do not 
necessarily know whether a commercial grade item is destined for a 
safety-related application.

Public Comments and Responses

    The NRC received 23 letters in response to the publication of the 
notice of receipt of the petition. All but one letter supported the 
petition and called for a revision of the NRC's regulations consistent 
with the proposed amendments set forth in the petition.
    Of the 22 letters that supported the petition, 17 supported the 
proposed amendments without any qualification. Fifteen of these letters 
were from nuclear utilities and two from nuclear vendors.
    The five other supportive letters recommended minor changes to the 
specific language of the proposed amendments. With respect to the 
definition of dedication, one commenter recommended replacing 
``intended function'' with ``intended safety-related function.'' The 
intent here is to make it clear that a dedicating entity must focus on 
safety-related functions in determining whether an item will be 
suitable as a basic component. During the comment period, NUMARC 
indicated its support for this change. The NRC also concurs that this 
is an appropriate clarification. In addition, three commenters offered 
a clarifying second sentence that would establish the point in time 
that an item is considered dedicated. The sentence would indicate that, 
when dedication of a commercial grade item has been completed, the item 
may be used as a basic component. One of these commenters also 
recommended that the term ``evaluation'' be eliminated from the first 
sentence because the definition of ``evaluation'' is currently provided 
in 10 CFR 21.3 and has a different intent than its use here. The NRC 
supports inclusion of the additional sentence. The NRC also agrees with 
the commenter regarding removal of the term ``evaluation.'' This term 
will continue to be used only in conjunction with a substantial safety 
hazard determination.
    Two commenters recommended changes to the notification requirement 
to prevent confusion regarding the application of 10 CFR Part 21 only 
to basic components. The NRC agrees with the substance of the comment 
to provide for the notification of defects and failures to comply only 
subsequent to successful dedication of the commercial grade item as a 
basic component.
    One commenter expressed concern that a supplier's responsibility 
for procurement documentation is not clear. The commenter recommended 
that procurement documents specify that an item is commercial grade, 
that dedication would be performed by the purchaser, and that 
provisions of 10 CFR Part 21 would not apply to the supplier. The NRC 
believes 10 CFR 21.31 clearly states that only procurement documents 
for the purchase of basic components and commercial grade items which 
have been designated for use as basic components through the dedication 
process must adhere to the provisions of 10 CFR Part 21.
    The one letter in opposition to the petition was submitted by a 
private individual. This commenter believes that commercial grade 
dedication requires each utility to perform a comprehensive evaluation 
and to establish the appropriate engineering and quality requirements 
utilizing the provisions of 10 CFR Part 50, Appendix B. Further, this 
commenter also states that 10 CFR Part 21 should not be used as an 
instructional guide for the engineering analysis and procurement of 
items. The NRC believes that proposed revisions to 10 CFR Part 21 will 
reflect the current procurement situation faced by utilities while 
enhancing the requirement for ensuring proper qualification of 
commercial grade items used in safety-related applications.

Basis for Commission's Decision

    The NRC has carefully reviewed the arguments presented by the 
petitioner and the public comments that were submitted on the petition. 
The NRC is proposing to grant the petition in part with regard to 10 
CFR Part 50 licensees by initiating this rulemaking. The proposed rule 
incorporates the petition in part, and modifies the petitioner's 
suggested language as indicated in the following discussion.

Commercial Grade Item (CGI)

    The NRC agrees in principle with the petitioner that the definition 
of a commercial grade item as it relates to 10 CFR Part 50 needs to be 
expanded to allow for a broader range of parts and services. In October 
1978, when the NRC issued an immediately effective rule defining 
commercial grade item, it was for the purpose of exempting these items 
from the reporting requirements of 10 CFR Part 21 until their 
dedication as basic components. The NRC argued that this amendment was 
needed for safety reasons. Problems such as the inability to obtain 
needed supplies or to use the most qualified suppliers, and excessive 
delays in procurements were all cited as detriments to safety. The NRC 
believes that similar concerns are again present to some extent because 
the availability of basic components has declined and the current 
definition of commercial grade item is now unnecessarily restrictive.
    The petitioner proposes that a commercial grade item be defined as 
any item that has not been dedicated for use as a basic component. 
Thus, any commercial grade item could be subject to a dedication 
process to assure its qualification as a basic component. The 
Commission maintains that not all safety-related items can be properly 
dedicated after the manufacturing process is completed. For certain 
items, quality assurance is an integral part of the manufacturing 
process and cannot be attested to after the fact. The NRC believes that 
if the complexity of the design and/or manufacturing process of an item 
is such that dedication cannot reasonably assure the absence of a 
defect which could affect one or more critical characteristics of the 
item, the item must be designed and manufactured as a basic component. 
Items in this category include complex assemblies which generally have 
nuclear unique requirements and applications and where the design   
and/or manufacturing process requires many in-process inspections and 
verifications to assure that defects are identified and corrected. 
Specific examples include, but are not limited to, fuel and control rod 
assemblies and pressure vessels. Thus, the NRC believes that commercial 
grade items cannot encompass the full spectrum of items envisioned by 
the petitioner.
    10 CFR Part 21 currently defines a commercial grade item as an item 
that is: (1) Not subject to nuclear-unique design or specification 
requirements; (2) used in applications outside the nuclear industry; 
and (3) ordered on the basis of specifications set forth in the 
manufacturer's published product description. This set of conditions 
results in very limited use of the commercial grade item designation. 
The NRC is proposing that, for 10 CFR Part 50 licensees, an item would 
qualify as a commercial grade item if it is not designed and/or 
manufactured as a basic component. This would effectively preclude 
inclusion of items whose quality assurance is an integral part of the 
manufacturing process and whose acceptance is based primarily on the 
vendor's certification of compliance with specific design requirements. 
For facilities and activities licensed pursuant to 10 CFR Parts 30, 40, 
60, 61, 71, or 72 the existing definition is retained, although 
proposed revisions to 10 CFR Part 21 for non-reactor licensees are 
under development in a separate rulemaking.
    The NRC's proposed definition of ``Commercial Grade Item,'' when 
applied to facilities and activities licensed pursuant to 10 CFR Part 
50, means a structure, system, component, or part thereof that is not 
designed   and/or manufactured as a basic component. A commercial grade 
item is not a basic component or part of a basic component, until the 
dedication process has been completed.

Basic Component

    Because the NRC is now proposing a definition of commercial grade 
item for 10 CFR Part 50 licensees in terms of the standards involved 
during its design and manufacture, it is also appropriate to define 
basic component in a similar manner. Therefore, the NRC proposes to add 
the following sentence to its definition of ``basic component'':
    ``This definition includes items designed and/or manufactured under 
a program complying with 10 CFR Part 50, Appendix B, and commercial 
grade items which have been successfully dedicated to be used as basic 
components pursuant to the dedication process described in this part.''

Dedication Process

    Dedication is an inspection and acceptance process by which a 
commercial grade item is designated for use as a basic component. By 
expanding the scope of commercial grade items for 10 CFR Part 50 
licensees, it is anticipated that an increasing number of safety-
related items will be procured as commercial grade items as opposed to 
basic components. This should result in increased reliance on 
dedication by licensees or third-party dedicating entities in lieu of 
the quality assurance programs of manufacturers and suppliers. Although 
such a transfer may be beneficial in some instances, the NRC needs 
greater assurance that 10 CFR Part 50 licensees or dedicating entities 
are performing meaningful and substantive dedication processes. In all 
cases, the licensee using the dedicated item is responsible for 
ensuring that the dedication process includes the identification and 
verification of critical characteristics and is to be conducted in 
accordance with the applicable provisions of 10 CFR Part 50, Appendix 
B. The critical characteristics are those design, material, and 
performance characteristics that, when verified, will provide 
reasonable assurance that the item will perform its intended safety-
related function. As a result, the NRC believes that the rule needs to 
specify the key elements of such a dedication process. Specifically, 
the NRC maintains that this process must be performed in accordance 
with the applicable provisions of 10 CFR Part 50, Appendix B, and 
encompass inspections, tests, and/or analyses performed by the licensee 
or a third-party dedicating entity after delivery, supplemented as 
necessary, by a combination of commercial grade surveys, product 
inspections or witness/holdpoints, and analysis of historical records 
for acceptable performance. The four acceptance methods described in 
EPRI NP-5652, ``Guidelines for the Utilization of Commercial-Grade 
Items in Nuclear Safety-Related Applications (NCIG-07),'' as 
conditionally endorsed by NRC Generic Letter 91-05, ``Licensee 
Commercial-Grade Procurement and Dedication Programs,'' may be utilized 
as guidance for the dedication of commercial grade items for safety-
related applications.
    The petitioner also requested that the entity performing the 
dedication process be responsible for 10 CFR Part 21 evaluation and 
reporting requirements. The NRC concurs with this recommendation as it 
will add needed flexibility in the procurement of replacement parts. 
Further, the NRC believes that the dedicating entity would be the most 
qualified party to assume the responsibility for 10 CFR Part 21 
requirements because in many cases the commercial grade supplier does 
not know the end application or safety function of the item. The 
dedicating entity will generate the necessary quality records during 
the dedication process, and should have a full understanding of the 
items's safety function to enable that entity to perform the deviation 
evaluation and defect reporting functions required under 10 CFR Part 
21.
    The dedicating entity, i.e., either (1) the manufacturer, (2) 
third-party entity, distributing a commercial grade item which it has 
successfully dedicated, or (3) licensee which has successfully 
dedicated a commercial grade item for its own use, would be subject to 
NRC enforcement action for failure to identify and evaluate deviations, 
failure to report defects and failures to comply, or failure to 
maintain auditable records. In addition, if the dedicating entity 
identifies a defect which previously was not identified and which is 
attributable to a flaw in the dedication process, any known recipients 
of similar dedicated items using this process must be notified or 
included in the dedicating entity's notification to the Commission as 
currently required under the provisions of Part 50, Appendix B, 
Criterion XV.

Critical Characteristics

    The NRC definition of the dedication process includes the term 
``critical characteristics.'' Given its import, the NRC believes it 
should be defined so as to assure proper and complete identification of 
those characteristics which need to be examined. Therefore, a 
definition of the term ``critical characteristics'' has been added. As 
noted in the proposed definition, the characteristics to be examined 
are selected design, material and performance characteristics.

Dedicating Entity

    The NRC definition of the dedication process also includes the term 
``dedicating entity.'' Because the dedication process begins with the 
dedicating entity, the NRC believes that it is important to clearly 
identify the party and its responsibilities for the requirements 
associated with this process. Therefore, the NRC is proposing a 
definition of ``dedicating entity.''

Notification, Inspection, and Reporting Responsibilities

    Section 21.21(c) (1) and (2) have been added to clarify that the 
dedicating entity of a commercial grade item is responsible for 
identifying and evaluating deviations, and reporting defects and 
failures to comply as required by 10 CFR Part 21, as well as 
maintaining auditable records of the dedication process.
    Sections 21.21, 21.41, and 21.51 contain the NRC's requirements for 
notification, inspections, records, and maintenance and inspection of 
records, respectively. The NRC proposes, for clarification purposes, 
that these sections explicitly identify dedicating entities as being 
subject to the regulations in these sections. The phrase, ``(including 
dedicating entities)'' has been added to Secs. 21.6(a), 21.21(a), 
21.31, 21.41, and 21.51 (a) and (b). In addition, minor editorial 
changes have been made in Sec. 21.51(b).

Environmental Impact: Categorical Exclusion

    The NRC has determined that this proposed regulation is the type of 
action described in the categorical exclusion in 10 CFR 
51.22(c)(3)(iii). Therefore, neither an environmental impact statement 
nor an environmental assessment has been prepared for this proposed 
regulation.

Paperwork Reduction Act Statement

    This proposed rule does not contain a new information collection 
requirement subject to the Paperwork Reduction Act of 1980 (44 U.S.C. 
3501 et seq.). Existing requirements were approved by the Office of 
Management and Budget under approval number 3150-0035.

Regulatory Analysis

    The Commission has prepared a draft regulatory analysis on this 
proposed regulation. The analysis examines the costs and benefits of 
the alternatives considered by the Commission. The draft analysis is 
available for inspection in the NRC Public Document Room, 2120 L Street 
NW. (Lower Level), Washington, DC. Single copies of the analysis may be 
obtained from M.L. Au, Office of Nuclear Regulatory Research, U.S. 
Nuclear Regulatory Commission, Washington, DC 20555, telephone (301) 
415-6181.
    The Commission requests public comment on the draft analysis. 
Comments on the draft analysis may be submitted to the NRC as indicated 
under the ADDRESSES heading.

Regulatory Flexibility Certification

    In accordance with the Regulatory Flexibility Act of 1980 (5 U.S.C. 
605(b)), the Commission certifies that this rule, if promulgated, will 
not have a significant economic impact on a substantial number of small 
entities. The proposed rule primarily impacts nuclear power plant 
licensees because they are expected to assume a greater role in the 
dedication process. The companies that own these plants do not fall 
within the scope of the definition of ``small entities'' set forth in 
the Regulatory Flexibility Act or the Small Business Size Standards set 
out in regulations issued by the Small Business Administration at 13 
CFR Part 121. In addition, the rule, if promulgated, would potentially 
allow small entities to more effectively compete in providing 
components and services to nuclear power plants, and to the extent this 
occurs, the rule is advantageous to them.

Backfit Analysis

    The Commission has determined that the backfit rule, 10 CFR Part 
50.109, does not apply to this proposed rule. These amendments do not 
involve any provision that would impose additional requirements 
requiring a backfit analysis as defined in 10 CFR Part 50.109(a)(1).

List of Subjects in 10 CFR Part 21

    Nuclear power plants and reactors, Penalties, Radiation protection, 
reporting and recordkeeping requirements.

    For the reasons set out in the preamble and under the authority of 
the Atomic Energy Act of 1954, as amended, the Energy Reorganization 
Act of 1974, as amended, and 5 U.S.C. 553, the NRC is proposing to 
adopt the following amendments to 10 CFR Part 21.

PART 21--REPORTING OF DEFECTS AND NONCOMPLIANCE

    1. The authority citation for Part 21 continues to read as follows:

    Authority: Sec. 161, 68 Stat. 948, as amended, sec. 234, 83 
Stat. 444, as amended (42 U.S.C. 2201, 2282); secs. 201, as amended, 
206, 88 Stat. 1242, as amended, 1246 (42 U.S.C. 5841, 5846).

    Section 21.2 also issued under secs. 135, 141, Pub. L. 97-425, 
96 Stat. 2232, 2241 (42 U.S.C. 10155, 10161).

    2. Section 21.3 is amended by removing the paragraph designations 
from each of the defined terms and arranging the definitions in 
alphabetical order; revising the terms Basic component, Commercial 
grade item and Dedication; and adding the terms Critical 
characteristics and Dedicating entity to read as follows:


Sec. 21.3  Definitions.

    Basic component. (1) When applied to facilities and activities 
licensed pursuant to 10 CFR Part 50 of this chapter, this definition 
includes items designed and/or manufactured under a quality assurance 
program complying with 10 CFR Part 50, Appendix B, and commercial grade 
items which have been successfully dedicated to be used as basic 
components pursuant to the dedication process described in this part. 
This means a plant structure, system, component or part thereof 
necessary to assure:
    (i) The integrity of the reactor coolant pressure boundary,
    (ii) The capability to shut down the reactor and maintain it in a 
safe shutdown condition, or
    (iii) The capability to prevent or mitigate the consequences of 
accidents which could result in potential offsite exposures comparable 
to those referred to in Sec. 100.11 of this chapter.
    (2) When applied to other facilities and when applied to other 
activities licensed pursuant to 10 CFR Parts 30, 40, 60, 61, 70, 71, or 
72 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 Sec. 21.3) 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 Sec. 21.3).
    (3) In all cases, basic component includes safety related design, 
analysis, inspection, testing, fabrication, replacement parts, or 
consulting services that are associated with the component hardware 
whether these services are performed by the component supplier or 
others.
    Commercial grade item. (1) When applied to facilities and 
activities licensed pursuant to 10 CFR Part 50, means a structure, 
system, component, or part thereof that is not designed and 
manufactured as a basic component. A commercial grade item is not a 
basic component, or part of a basic component, until the dedication 
process has been completed.
    (2) When applied to facilities and activities licensed pursuant to 
10 CFR Parts 30, 40, 60, 61, 70, 71, or 72, means an item that is
    (i) Not subject to design or specification requirements that are 
unique to those facilities or activities,
    (ii) Used in applications other than those facilities or 
activities, and
    (iii) To be ordered from the manufacturer/supplier on the basis of 
specifications set forth in the manufacturer's published product 
description (for example a catalog).
* * * * *
    Critical characteristics. When applied to facilities and activities 
licensed pursuant to 10 CFR Part 50, are those important design, 
material, and performance characteristics of a commercial grade item 
that, once verified, will provide reasonable assurance that the item 
will perform its intended safety function.
    Dedication. (1) When applied to facilities and activities licensed 
pursuant to 10 CFR Part 50, is an inspection and acceptance process 
undertaken to provide reasonable assurance that a commercial grade item 
to be used as a basic component will perform its intended safety-
related function and, in this respect, is equivalent to an item 
designed and manufactured under a 10 CFR Part 50, Appendix B quality 
assurance program. This assurance is achieved by a combination of 
commercial grade surveys, product inspections or witness/holdpoints at 
the manufacturer's facility supplemented as required by additional 
inspections or tests, or analyses of acceptable historical performance 
by the purchaser or a third-party dedicating entity after delivery. In 
all cases, the licensee using the dedicated item is responsible for 
ensuring that the dedication process includes the identification and 
verification of critical characteristics and is conducted in accordance 
with the applicable provisions of 10 CFR Part 50, Appendix B. The 
process is considered complete when the item is designated for use as a 
basic component. Due to the complexity of their design and/or 
manufacturing process, certain items must be designed and manufactured 
as basic components since the dedication process cannot reasonably 
assure the successful performance of the safety function (i.e., one or 
more critical characteristic of the item cannot be verified). Items in 
this category include complex assemblies which generally have nuclear 
unique applications and where the design and/or manufacturing process 
requires many in-process inspections and verifications to assure that 
defects or failures to comply are identified and corrected. Specific 
examples include, but are not limited to, fuel and control rod 
assemblies and pressure vessels.
    (2) When applied to facilities and activities licensed pursuant to 
10 CFR Parts 30, 40, 60, 61, 70, 71, or 72, occurs after receipt when 
that item is designated for use as a basic component.
    Dedicating entity. When applied to facilities and activities 
licensed pursuant to 10 CFR Part 50, means the organization that 
performs the dedication process to qualify a commercial grade item as a 
basic component. Dedication may be performed by either the manufacturer 
of the item, a third party dedicating entity, or the licensee itself. 
The dedicating entity, pursuant to Sec. 21.21 (c) of this part, is 
responsible for identifying and evaluating deviations, reporting 
defects and failures to comply for the dedicated item, and maintaining 
auditable records for the dedication process. NRC enforcement action 
can be taken for failure to identify and evaluate deviations, failure 
to report defects and failures to comply, or failure to maintain 
auditable records.
* * * * *
    3. In Section 21.6, paragraph (a) is revised to read as follows:


Sec. 21.6  Posting requirements.

    (a) Each individual, partnership, corporation or other entity 
(including dedicating entities) 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.
* * * * *
    4. In Section 21.21, the introductory text of paragraph (a) is 
revised, paragraphs (c) and (d) are redesignated as paragraphs (d) and 
(e) respectively and new paragraph (c) is added to read as follows:


Sec. 21.21  Notification of failure to comply or existence of a defect 
and its evaluation.

    (a) Each individual, corporation, partnership or other entity 
(including dedicating entities) subject to the regulations in this part 
shall adopt appropriate procedures to--
* * * * *
    (c) A dedicating entity is responsible for (1) identifying and 
evaluating deviations, and reporting defects and failures to comply 
associated with substantial safety hazards for dedicated items; and (2) 
maintaining auditable records for the dedication process.
* * * * *
    5. Section 21.31 is revised to read as follows:


Sec. 21.31  Procurement documents.

    Each individual, corporation, partnership or other entity 
(including dedicating entities) subject to the regulations in this part 
shall assure that each procurement document for a facility, or a basic 
component issued on or after January 6, 1978 specifies, when 
applicable, that the provisions of 10 CFR Part 21 apply.
    6. Section 21.41 is revised to read as follows:


Sec. 21.41  Inspections.

    Each individual, corporation, partnership or other entity 
(including dedicating entities) subject to the regulations in this part 
shall permit the Commission to inspect records, premises, activities, 
and basic components as necessary to accomplish the purposes of this 
part.
    7. In Section 21.51 the introductory text of paragraph (a) and 
paragraph (b) are revised to read as follows:


Sec. 21.51  Maintenance and inspection of records.

    (a) Each individual, corporation, partnership, or other entity 
(including dedicating entities) subject to the regulations in this part 
shall prepare and maintain records necessary to accomplish the purposes 
of this part, specifically--
* * * * *
    (b) Each individual, corporation, partnership, or other entity 
(including dedicating entities) subject to the regulations in this part 
shall permit the Commission the opportunity to inspect records 
pertaining to basic components that relate to the identification and 
evaluation of deviations, and the reporting of defects and failures to 
comply, including any advice given to purchasers or licensees on the 
placement, erection, installation, operation, maintenance, 
modification, or inspection of a basic component.

    Dated at Rockville, Maryland, this 7th day of October 1994.

    For the Nuclear Regulatory Commission.
James M. Taylor,
Executive Director for Operations.
[FR Doc. 94-25707 Filed 10-21-94; 8:45 am]
BILLING CODE 7590-01-P