The privately held company, located in Erwin about 120 miles northeast of Knoxville, touted the annual review by the Nuclear Regulatory Commission as "an excellent indication that NFS performance has improved and that safety is an overriding priority."

However, NRC regional administrator William Travers said in an Aug. 31 letter accompanying the report that inspectors still found "multiple instances where facility personnel failed to implement and-or follow procedures" designed to fix previous problems.

For that reason, Travers said, "We will continue to monitor your performance through enhanced oversight activities, beyond the NRC core inspection program" and may not wait a full year before conducting the next annual evaluation.

The latest review will be discussed by NRC and NFS officials in a public meeting Sept. 17 at the NFS training center in Erwin. It will be the first public forum involving NFS since 2004.

NFS has been under a three-year veil of secrecy because of a government policy intended to protect national security. The NRC recently reversed the policy as too stringent and ordered its staff to review for return to its public archives some 1,900 regulatory documents involving NFS and the BWX Technologies Inc. plant in Lynchburg, Va.

Both plants make nuclear fuel for the U.S. Navy. The Tennessee plant also converts or "downblends" surplus bomb-grade uranium into commercial reactor fuel for the Tennessee Valley Authority.

Nine gallons of highly enriched uranium leaked in the NFS downblending operation on March 6, 2006. Disclosing the incident more than a year later, the NRC said only luck prevented the spill from collecting and exposing workers to a deadly dose of radiation.

The latest review covers a period beginning a few months after the spill. It covers Oct. 14, 2006, through July 28, 2007. The review found NFS complied with NRC requirements in four of five areas -- safety operations, radiological controls, licensing activities and safeguards.

The company was found lacking in a fifth category -- facility support. The NRC said workers didn't follow procedures involving environmental sampling, fire protection, backup power supply and uranium equipment safeguards.

"During this review period, NFS continued to maintain safety and security for its workers and the public," Travers wrote. "There were fewer NRC-identified violations in this period than the previous two (annual) periods."

However, he said there were no new startups or expansions of processes at NFS during the period that might have tested the company's "efforts to improve performance."

Still, NFS spokesman Tony Treadway said the company did redesign the downblending operation during the review period and successfully ran it with salaried personnel and then retrained hourly workers after a five-month labor strike.

"Since that time, there have been no significant NRC issues ... and the process has set records for safety and productivity," Treadway said.