[Federal Register Volume 61, Number 64 (Tuesday, April 2, 1996)]
[Notices]
[Pages 14583-14585]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-7952]



=======================================================================
-----------------------------------------------------------------------

NUCLEAR REGULATORY COMMISSION

[Docket No. 150-00032 License No. (General License) EA 95-101]


TESTCO, Inc. Greensboro, North Carolina; Order Imposing Civil 
Monetary Penalty

I

    TESTCO, Inc. (TESTCO or Licensee), located in Greensboro, North 
Carolina, holds Byproduct Materials License No. 041-0894-1 issued by 
the State of North Carolina under an agreement with the Nuclear 
Regulatory Commission (NRC or Commission) pursuant to subsection 274b 
of the Atomic Energy Act of 1954, as amended. The license permits the 
possession and use of byproduct material for industrial radiography 
activities in accordance with the conditions specified therein.

II

    On September 9, 1992, while conducting an inspection of another NRC 
licensee, an NRC inspector obtained information which indicated that 
TESTCO had performed radiographic activities in areas under NRC 
jurisdiction. A review of NRC records revealed that TESTCO did not 
possess an NRC specific license pursuant to 10 CFR 30.3, nor had TESTCO 
notified the NRC of its activities by filing an NRC Form-241 as 
required by 10 CFR 150.20(b)(1).
    The requirement that an Agreement State licensee must file Form-241 
before conducting a licensed activity in a non-Agreement State allows 
NRC to be informed of the location and duration of the activity and 
permits NRC to inspect licensed activities as appropriate. Since August 
9, 1991, NRC has required a fee for the filing of Form-241.
    Between November 16, 1992 and April 25, 1995, an investigation was 
conducted by the NRC Office of Investigations (OI) to determine whether 
TESTCO performed radiography in non-Agreement States and deliberately 
withheld notification from the NRC by failing to file Form-241s. In 
addition, an inspection of the Licensee's performance of activities in 
areas of NRC jurisdiction was conducted on August 31 and September 6, 
1994. The results of the inspection and investigation indicated that 
the Licensee had not conducted its activities in full compliance with 
NRC requirements. Specifically, OI concluded that TESTCO, Inc., while a 
State of North Carolina radioactive materials licensee, performed 
radiographic services in Virginia, a non-Agreement State, and its 
Radiation Safety Officer deliberately withheld notification to the NRC 
by his failure to file the required NRC Form-241s regarding those 
activities. A written Notice of Violation and Proposed Imposition of 
Civil Penalty (``Notice'') was served upon the Licensee by letter dated 
October 31, 1995. The Notice stated the nature of the violation, the 
provisions of the NRC's requirements the Licensee had violated, and the 
amount of the civil penalty proposed for the violation.
    The Licensee responded to the Notice in letters dated December 20 
and 21, 1995 (``Reply''). In its Reply, the Licensee denied the 
violation and requested a hearing. As the basis for the Licensee's 
denial, the Licensee contended that prior to October 3, 1994, which the 
Licensee described as the date of ``the issue of NRC Manual Chapter 
1220,'' the NRC did not have a tracking method in place for processing 
NRC Form-241s and that TESTCO had located copies of NRC Form-241s filed 
prior to that time.
    By letter dated December 28, 1995, NRC responded to the Licensee's 
request for a hearing, indicating that a request for a hearing on this 
issue was premature and requesting that TESTCO provide to Mr. James 
Lieberman, Director, NRC Office of Enforcement, at the address 
specified, any additional documentation that was relevant to the case 
by January 27, 1996. The NRC letter further advised that even if the 
documentation was incomplete, TESTCO should still provide whatever 
documentation it had to support its position. During a telephone 
conference held on January 31, 1996, as confirmed by letter dated 
February 1, 1996, NRC granted an extension giving TESTCO until February 
7, 1996, to provide to the NRC Office of Enforcement any documents that 
it had in its possession or control which might rebut the October 31, 
1995 Notice, including any NRC Form-241s and any checks for reciprocity 
fees regarding work performed in Virginia from January

[[Page 14584]]
1992 to January 1994. As further discussed in the Appendix to this 
Order, TESTCO did submit some information in a facsimile communication 
on March 5, 1996, but did not provide documentation addressing the 
dates and locations of work stated in the Notice, as NRC had requested. 
As of the date of this Order, TESTCO has not provided the documentation 
(copies of Form-241) that TESTCO claimed it had located in its Reply 
denying the violation.

III

    After consideration of the Licensee's Reply, the statements of 
fact, explanation, and argument for mitigation contained therein, and 
the lack of further response, the NRC staff has determined, as set 
forth in the Appendix to this Order, that the violation occurred as 
stated and that the penalty proposed for the violation designated in 
the Notice should be imposed.

IV

    In view of the foregoing and pursuant to Section 234 of the Atomic 
Energy Act of 1954, as amended (Act), 42 U.S.C. 2282, and 10 CFR 2.205, 
it is hereby ordered that:
    The Licensee pay a civil penalty in the amount of $5,000 within 30 
days of the date of this Order, by check, draft, money order, or 
electronic transfer, payable to the Treasurer of the United States and 
mailed to Mr. James Lieberman, Director, Office of Enforcement, U.S. 
Nuclear Regulatory Commission, One White Flint North, 11555 Rockville 
Pike, Rockville, MD 20852-2738.

V

    The Licensee may request a hearing within 30 days of the date of 
this Order. Where good cause is shown, consideration will be given to 
extending the time to request a hearing. A request for extension of 
time must be made in writing to the Director, Office of Enforcement, 
U.S. Nuclear Regulatory Commission, Washington, D.C. 20555, and include 
a statement of good cause for the extension. A request for hearing 
should be clearly marked as a ``Request for an Enforcement Hearing'' 
and shall be addressed to the Director, Office of Enforcement, U.S. 
Nuclear Regulatory Commission, Washington, D.C. 20555, with a copy to 
the Commission's Document Control Desk, Washington, D.C. 20555. Copies 
also shall be sent to the Assistant General Counsel for Hearings and 
Enforcement at the same address and to the Regional Administrator, NRC 
Region II, 101 Marietta Street, Suite 2900, Atlanta, Georgia 30323.
    If a hearing is requested, the Commission will issue an Order 
designating the time and place of hearing. If the Licensee fails to 
request a hearing within 30 days of the date of this Order (or if 
written approval of an extension of time in which to request a hearing 
has not been granted), the provisions of this Order shall be effective 
without further proceedings. If payment has not been made by that time, 
the matter may be referred to the Attorney General for collection.
    In the event the Licensee requests a hearing as provided above, the 
issues to be considered at such hearing shall be:
    (a) Whether the Licensee was in violation of the Commission's 
requirements as set forth in the Notice referenced in Section II above, 
and
    (b) Whether, on the basis of such violation, this Order should be 
sustained.

    Dated at Rockville, Maryland this 14th day of March 1996.

    For the Nuclear Regulatory Commission.
James Lieberman,
Director, Office of Enforcement.

Appendix--Evaluation and Conclusion

    On October 31, 1995, a Notice of Violation and Proposed Imposition 
of Civil Penalty (``Notice'') was issued for a violation identified 
during an NRC inspection and investigation. TESTCO, Inc. (the Licensee) 
responded to the Notice in letters dated December 20 and 21, 1995 
(``Reply''). The Licensee denied the violation. The NRC's evaluation 
and conclusion regarding the Licensee's denial are as follows:

Restatement of Violation

    10 CFR 30.3 requires in relevant part, that no person shall possess 
or use byproduct material except as authorized by a specific or general 
license issued by the NRC.
    10 CFR 150.20(a) provides in part that any person who holds a 
specific license from an Agreement State is granted an NRC general 
license to conduct the same activity in non-Agreement States subject to 
the provisions of 10 CFR 150.20(b).
    10 CFR 150.20(b)(1) requires, in part, that any person engaging in 
activities in non-Agreement States shall, at least 3 days before 
engaging in such activity, file four copies of Form-241, ``Report of 
Proposed Activities in Non-Agreement States,'' with the Regional 
Administrator of the appropriate NRC regional office.
    Contrary to the above, between January 7, 1992 and January 22, 
1994, TESTCO, Inc. performed radiography using Iridium-192 in Virginia, 
a non-Agreement State, at the following locations on the indicated 
dates without a specific license issued by the NRC and without filing 
any copies of Form-241 with the NRC:
    1. Yorktown, on or about January 7 and 13, 1992;
    2. Goochland, on or about March 20, 1992;
    3. Lynchburg, on or about March 24, 1992;
    4. Yorktown, on or about September 9 and 11, 1992;
    5. Franklin, on or about February 4, 1993;
    6. Boydton, on or about April 12, 1993;
    7. Craney Island, on or about August 13 and 27, 1993; and
    8. Hillsville, on or about January 22, 1994
    This is a Severity Level III violation (Supplements VI and VII). 
Civil Penalty--$5,000.

Summary of Licensee's Response to Violation

    In its Reply, the Licensee denied that the violation occurred as 
stated and requested a hearing on the matter. The Licensee claimed as 
the basis for its denial that before October 3, 1994, which the 
Licensee describes as the date of ``the issue of NRC Manual Chapter 
1220,'' the NRC did not have a tracking method in place for processing 
NRC Form-241s and revisions. In addition, the Licensee stated that it 
had located TESTCO, Inc.'s copies of NRC Form-241s which were filed 
prior to October 3, 1994.

NRC Evaluation of Licensee's Response

    By letter dated December 28, 1995, the NRC responded to the 
Licensee's request for hearing. The NRC informed TESTCO, Inc. that a 
hearing in this matter was premature in that a civil penalty only had 
been proposed and not yet imposed by Order. Further, the NRC requested 
that the Licensee provide to Mr. James Lieberman, Director NRC Office 
of Enforcement, at the address specified, by January 27, 1996, any 
additional documentation that it had to show that it had filed Form-
241s and paid the appropriate fees for the dates and locations of work 
stated in the Notice. In the letter, the NRC indicated that even if the 
documentation was incomplete, the Licensee should still provide 
whatever documentation it had to support its position. During a 
telephone conference on January 31, 1996, and as confirmed by NRC 
letter dated February 1, 1996, an extension was granted giving the 
Licensee until

[[Page 14585]]
February 7, 1996 to provide to the NRC Office of Enforcement any 
documents that it may have in its possession or control which might 
rebut the October 31, 1995 Notice, such as any NRC Form-241s and any 
checks for reciprocity fees regarding work performed in Virginia from 
January 1992 to January 1994.
    Since the February 7, 1996 NRC letter, the NRC has received two 
additional communications from the Licensee and/or its attorneys:
    (1) In a February 13, 1996 letter concerning settlement, addressed 
to Mr. James Lieberman, Director of NRC's Office of Enforcement, the 
Licensee and its attorneys contended that the civil penalty amount 
should not have been determined in accordance with the NRC Enforcement 
Policy that became effective June 30, 1995 (NUREG 1600), because the 
violations occurred before that date. However, the NRC staff chose to 
use the newer Enforcement Policy because by doing so, the civil penalty 
amount was reduced, thus producing a result that was advantageous to 
the Licensee.1

    \1\ Under the current Enforcement Policy (NUREG-1600), the civil 
penalty was calculated by increasing the base civil penalty of 
$5,000 by 100% to $10,000, considering the factors of Identification 
and Corrective Action, and in view of the willful nature of the 
violation. Then, after consulting with the Commission, the NRC staff 
applied enforcement discretion, based in part on the small size of 
the Licensee, to reduce the amount of the civil penalty from $10,000 
to $5,000. Under the Enforcement Policy in effect at the time that 
the violation was occurring (10 CFR Part 2, Appendix C), the base 
civil penalty of $5,000 could have been increased by 300% to 
$20,000, considering the factors of Identification, Corrective 
Action, Multiple Occurrences, and Prior Notice, and in view of the 
willful nature of the violation.
---------------------------------------------------------------------------

    (2) In a March 5, 1996 facsimile communication to Mr. David Collins 
of the NRC Region II Office, Mr. J. L. Shelton, the Licensee's 
president, included some documentation concerning work performed in the 
Fall of 1994, but that documentation is not relevant to the dates and 
locations of work that are set forth in the Notice. In the facsimile, 
Mr. Shelton also made an assertion that a listing of dates and 
locations of work performed by TESTCO, Inc. in NRC jurisdictions, 
compiled by NRC's Office of Investigations (OI), ``appears to have 
locations * * * that Testco, Inc., or J. L. Shelton has never worked 
at.'' Thus, while the Licensee did submit some additional information, 
the Licensee has not provided the documentation, as requested by NRC, 
that the Licensee claimed it had located in its Reply denying the 
violation (i.e., copies of Form-241 relevant to the dates and locations 
of work that are set forth in the Notice). The Licensee also has not 
provided any other documentation that specifically addresses the dates 
and locations of work stated in the Notice. The NRC believes that the 
listing of dates and locations of work performed in NRC jurisdictions, 
as set forth in the Notice, is reliable because it is based on 
documentary evidence, including work records and invoices.
    In its Reply, the Licensee questioned the reliability of NRC's 
findings due to what the Licensee claims was the lack of an NRC Form-
241 tracking system prior to October 3, 1994. However, NRC Manual 
Chapter 1220, ``Processing of NRC Form-241, `Report of Proposed 
Activities in Non-Agreement States,' and Inspection of Agreement State 
Licensees Operating Under 10 CFR 150.20,'' has been in effect since 
March 1988. The October 3, 1994 date that the Licensee relies on is 
merely the date that a revision of Manual Chapter 1220 was effected.
    Beginning in March 1988, in accordance with Manual Chapter 1220, 
each Region was required to maintain records of NRC Form-241 activities 
including the reports received, the reciprocity activities conducted, 
inspections performed, and noncompliances identified. Hardcopy 
information was, and continues to be, retained in the NRC Region II 
Docket Files, the repository for official records related to NRC Region 
II materials licensing and inspection activities. Moreover, from 
January 1991 through January 1994, the NRC Region II Office did have in 
place a method to track the filing of Form-241s by a log maintained on 
a computer. Prior to that time, Region II tracked the filing of Form-
241s manually by using a log book. After that time, an NRC agency-wide 
computerized system was used to document and track the filing of Form-
241s.
    Further, at the predecisional enforcement conference held with 
TESTCO, Inc. on July 27, 1995, the Licensee indicated it had additional 
information to support its contention that NRC Form-241s were filed. 
Since that time, no such information has been provided.
    In the absence of additional documentation from TESTCO, Inc., as 
was requested, to support its position and refute the facts disclosed 
by NRC, the NRC concludes that the violation occurred as stated.

NRC Conclusion

    The NRC has concluded that this violation occurred as stated and no 
adequate basis for withdrawal of the violation or mitigation of the 
civil penalty has been provided by the Licensee. Consequently, the 
proposed civil penalty in the amount of $5,000 should be imposed.

[FR Doc. 96-7952 Filed 4-1-96; 8:45 am]
BILLING CODE 7590-01-P