1. Office of Nuclear Materials Safety and Safeguards
NRC’s Response to GAO Materials Licensing Audit and Update on Licensing and Security Initiatives
Duncan White
Office of Nuclear Materials Safety and Safeguards
November 7, 2016

2. Topics GAO’s 2007 Material Licensing Investigation
GAO’s 2016 Material Licensing Audit and Investigation
NRC’s Initial Response to Current GAO Investigation
Current Activities - Working Groups
COMJMB

3. GAO 2007 Licensing Investigation GAO-07-0138T
Obtained valid NRC license using fake company
Withdrew Agreement State application due to State’s plans for a site visit
Ordered sufficient devices to obtain category 3 quantity of material
Report and testimony July 12, 2007
Three recommendations by GAO
Improve guidance for screening new applicants
Conduct periodic oversight of license reviewers
Prevent the counterfeiting of NRC licenses
NRC considers all the recommendations closed

4. Actions in Response to 2007 Audit
Pre-Licensing Guidance
Interim Guidance issued June 12, 2007
Final Guidance issued September 2008
SECY
GAO Action Plan August 25, 2007
SRM issued September 18, 2007
IERP report issued March 11, 2008
MPWG report issued October 23, 2008

5. Status of NRC Actions from 2007 GAO Audit
94 individual tasks identified
87 tasks completed and closed via memo with management review
7 tasks still open
6 related to completion of NUREG-1556 revisions
1 related to completion of Management Directives 5.6, 5.9 and 5.10
Open tasks related to long term projects with other drivers

6. 2016 GAO Audit - Timeline
Determine if vulnerabilities identified during 2007 investigation were addressed by the regulatory framework and improvements
Started April 2014
Investigation portion conducted February to October 2015
GAO notified NRC of investigation results in October 2015
NRC reviewed Statement of Facts in December 2015
Draft report provided: May 9, 2016
NRC provided comments: June 14, 2016
Final Report released: July 15, 2016

7. Recommendations from GAO-16-330
Take steps needed to include Category 3 sources in NSTS and add Agreement State category 3 licenses as quickly as reasonably possible
At least until such time that category 3 sources can be verified using LVS, require that transferors of Category 3 quantities confirm the validity of the recipient’s license with the appropriate regulatory agency before the transfer until such time such verification can be done using LVS
Consider requiring that an onsite security review be conducted for all unknown applicants of category 3 licenses to verify that the applicant is prepared to implement the required security measures before taking possession of licensed radioactive materials

8. Initial NRC Response to GAO Investigation October 2015
Notified affected parties
Regions
OAS and Agreement States
Requested Agreement State that issued license to GAO:
Revoke license
Requested notification of vendors of revoked license
Conduct self-assessment and root cause analysis
Briefed Commissioner’s Chiefs of Staff
Briefed Agreement States

9. Initial NRC Response to GAO Investigation November 2015
Received preliminary self-assessment/root cause analysis from Agreement State that issued license
Held two webinars on pre-licensing guidance, site visits, RSRM checklist for Regional staff
Met with GAO to provide additional responses to their additional questions

10. Initial NRC Response to GAO Investigation December 2015
Briefed Executive Director of Operations
Issued Commissioner’s Assistants Note to Commission
Briefed Commissioner Material TAs and Chiefs of Staff
Requested NRC and Agreement State members for working groups to address GAO concerns
Provided draft charters
Reviewed GAO’s draft Statement of Facts and provided detail comments

11. Initial NRC Response to GAO Investigation December 2015
Held third webinar on pre-licensing guidance, site visits, RSRM checklist for Agreement State staff
Agencies subject to investigation discussed experiences with GAO application and site visit
Met with GAO to discuss individual comments on Statement of Facts and provided additional information

12. Long Term NRC Response to GAO Investigation - 2016
Two working groups to address GAO concerns
Enhancements to Pre-Licensing Guidance
License Verification and Transfer of Category 3 Sources
Working groups met January to June 2016
Draft reports reviewed in July 2016
Final reports reviewed in October 2016
Issued temporary guidance on RSRM checklist
Revision of RSRM checklist still in progress

13. NRC Response to Release of GAO Report July 2016 to present
Notifications
Issued portions of NRC communication plan to Agreement States
Blog post
Public webpage
Links to public version of working group charters
Q&As
Responded to media inquiries
September 19, 2006 Letter from Chairman to Congress on NRC’s plan of action
COMJMB issued July 15, 2016

14. Enhancements to Pre-Licensing Guidance
Perform gap analysis based on self-assessments and other information
Revise the pre-licensing guidance
Identify practices to minimize opportunities for malevolent intent
Delivering of licenses combined with site visit
Require Category 3 applications to have all security and safety equipment in place
Practicality of issuing a license for calibration/testing
Improvements to Training

15. Pre-Licensing Guidance - Enhancements Under Consideration
Several revisions to pre-licensing checklist
Complete license review prior to site visit
Discontinue hand delivery of licenses
Enhance training during TTC training courses and qualification process
Track denied/voided/withdrawn applications of “unknown” applications
Require safety and security equipment in place prior to issuing license for unknown applicants

16. License Verification and Transfer of Category 3 Sources
Enhancement Strategies
Change presumption of validity of license
Require validation of licenses in LVS or issuing regulatory agency
Inventory tracking of category 3 sources
Implementation Strategies
Interim measurements
Rulemaking
Compatibility and enforcement requirements
Guidance development
Any problems created with only one valid license

17. License Verification and Transfer of Category 3 Sources – Enhancements Under Consideration
Require verification of Category 3 licenses through LVS or regulatory agency.
Include all Category 3 Agreement State licenses in WBL to facilitate electronic verification of licenses through LVS.
Enhance Category 3 source accountability through NSTS or other method.

18. Commission Direction: COMJMB-16-001
Addresses all Category 3 source security and accountability efforts underway
License process enhancements
Pre-licensing guidance and RSRM checklist
Require safety and security equipment in place prior to license
License verification and transfer of sources
License verification through LVS or regulator
Category 3 sources in WBL and NSTS
Part 37 program review
Security measures for category 3 sources
Reevaluation of aggregation definition

19. Specific Recommendations from COMJMB-16-001
Methods for verification of license’s validity
Category 3 sources in NSTS
Address GAO recommendations on source accountability
Vulnerability assessment
Regulatory impact analysis of cost/benefit
Discussion on actions that do not require regulatory changes and monitoring their implementation through IMPEP
Any other factors

20. Action Plan for COMJMB-16-001
Additional direction
Use Part 37 program review to inform evaluation
Assess the risk of aggregation of category 3 sources into category 2 quantities
Collaborate with all affected stakeholders
NRC/Agreement State working group
Commission Paper due August 2017.