[Federal Register Volume 62, Number 78 (Wednesday, April 23, 1997)]
[Notices]
[Pages 19816-19818]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-10524]
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NUCLEAR REGULATORY COMMISSION
[Docket No. 030-30266; License No. 30-23697-01E EA 96-135]
21st Century Technologies, Inc. successor Licensee to Innovative
Weaponry, Inc., Fort Worth, Texas, Order Imposing Civil Monetary
Penalty
I
Innovative Weaponry, Inc. [of New Mexico] was the former holder of
Materials License No. 30-23697-01E issued by the Nuclear Regulatory
Commission (NRC or Commission) and which was amended on April 3, 1995
to name Innovative Weaponry of Nevada (Licensee) as the licensee. The
license was subsequently amended to change the name to 21st Century
Technologies, Inc., and reissued to reflect a move to Fort Worth,
Texas. The license authorized the Licensee to distribute luminous
gunsights or weapons containing luminous gunsights in accordance with
the conditions specified therein.
II
An investigation of the Licensee's activities was conducted from
May 9, 1995 through March 22, 1996. The results of this investigation
indicated that the Licensee had not conducted its activities in full
compliance with NRC requirements. A written Notice of Violation and
Proposed Imposition of Civil Penalty (Notice) was served upon the
Licensee by letter dated May 15, 1996. The Notice states the nature of
the violations, the provisions of the NRC's requirements that the
Licensee had violated, and the amount of the civil penalty proposed for
the violations.
The Licensee responded to the Notice in a Reply and an Answer, both
dated October 1, 1996. In its responses, the Licensee admitted that the
events that constitute the violations occurred, but denied that these
were violations of lawful exercise of regulatory authority under the
Atomic Energy Act, asserted that the penalty would cause financial
hardship, and disagreed with other aspects of the enforcement process.
III
After consideration of the Licensee's response and the statements
of fact, explanation, and argument for mitigation contained therein,
the NRC staff has determined, as set forth in the Appendix to this
Order, that the violations occurred as stated and that the amount of
the proposed penalty for the violations designated in the Notice should
be mitigated by $5,000 and a civil penalty of $2,500 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 $2,500 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 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
[[Page 19817]]
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 a 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 IV, 611 Ryan Plaza Drive, Suite
400, Arlington, Texas 76011.
If a hearing is requested, the Commission will issue an Order
designating the time and place of the 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 those violations, this Order should be
sustained.
Dated at Rockville, Maryland this 10th day of April 1997.
For the Nuclear Regulatory Commission.
James Lieberman,
Director, Office of Enforcement.
Appendix--Evaluation and Conclusion
On May 15, 1996, a Notice of Violation and Proposed Imposition
of Civil Penalty (Notice) was issued for violations identified
during an NRC investigation. Innovative Weaponry, Inc. (Licensee)
responded to the Notice on October 1, 1996. The Licensee admitted
that the events that were described in the Notice occurred, but
denied that these were violations of lawful exercise of regulatory
authority under the Atomic Energy Act, asserted that the penalty
would cause financial hardship, and disagreed with other aspects of
the enforcement process. The NRC's evaluation and conclusion
regarding the licensee's requests are as follows:
Restatement of Violations
A. License No. 30-23697-01E authorizes the licensee to
distribute SRB Technologies, Inc., Model PRH-800/G/200 sealed light
sources.
Contrary to the above, from June to August 1995, the licensee
distributed tritium sealed light sources from a manufacturer not
authorized in the license. (01013)
B. License Condition 10 of License No. 30-23697-01E authorizes
the licensee to distribute sealed light sources in specified
gunsights and in specified configurations.
Contrary to the above, from July to September 1995, the licensee
distributed tritium sealed light sources in configurations not
specified or otherwise authorized in the license. (01023)
These violations represent a Severity Level III problem
(Supplement VI). Civil Penalty--$7,500.
Summary of Licensee's Response to Violations
In its October 1, 1996 ``Reply to Notice of Violation,'' the
Licensee admitted that it distributed tritium sealed sources from a
manufacturer not mentioned in the license but denied that that was a
violation of a lawful exercise of regulatory authority under the
Atomic Energy Act of 1954, as amended. The Licensee did not
specifically admit or deny the violation of distribution of tritium
sealed light sources in configurations not specified or otherwise
authorized in the license, but implied admission of that act by use
of statements such as ``[t]he reason for both actions was
inadvertent error'' and ``[t]he distribution of configurations
mentioned [sic] in the license was also made without direct
knowledge of corporate management,'' and further discussed those
acts in the context of admitting that the acts occurred. The
Licensee denies that either of these activities constitutes a
violation of a lawful exercise of regulatory authority under the
Atomic Energy Act and relevant case law. The Licensee further argues
that the provisions of the license requiring ``designation of
manufacturers'' and ``description of the configuration of the
gunsights as a condition precedent to distribution'' are unlawful
because they are beyond the jurisdiction of the NRC to regulate.
In its October 1, 1996 ``Answer to Notice of Violation,'' the
Licensee denied the violations to the extent and for the reasons set
out in its ``Reply to Notice of Violation,'' and enumerated the
following as extenuating circumstances: (1) The NRC lacks
jurisdiction, (2) there were no adverse consequences to public
health and safety, (3) the alleged acts were not intentional and
were not [sic] without prior knowledge of management, (4) the
alleged acts were self-identified, (5) management attempted to
correct the situation immediately on discovery, (6) the Licensee
realized no appreciable profit, (7) no accepted philosophy of
enforcement is well served by imposing the civil penalty. In
addition, the Licensee contended that the acts are of only minor
concern rather than ``significant regulatory concern.''
NRC Evaluation of Licensee's Response to Violations
The Licensee's Reply specifically admitted that the Licensee had
distributed tritium sources from a manufacturer who was not
mentioned in the license. As to the second violation, distribution
of sources in configurations not authorized, the only logical
inference that can be drawn from the language of the October 1, 1996
Reply is that the Licensee also admits the facts of that violation.
In addition, at the April 23, 1996 Predecisional Enforcement
Conference the Licensee conceded that the events described in the
Notice had occurred. The Licensee has not challenged the NRC's
findings that the unauthorized distributions occurred and has not
provided any facts to support such a challenge. Thus, there is no
need to further address the factual determinations.
As to the assertion that the conditions or restrictions
contained in the license are unlawful due to their failure to ensure
public health and safety, the regulations controlling radioactive
materials are promulgated under the Act to protect health and
minimize danger to life by assuring that licensees will do what is
required. The regulations require that sufficient information
concerning the sources and the product be submitted prior to
issuance of a license, to demonstrate that the product will meet the
safety criteria set forth in the regulations for that type of
product. Thus, if a licensee manufactures products in unapproved
configurations, the NRC has no way of knowing if the product poses a
threat to public health and safety. The provisions concerning the
specific source and gunsight models listed in IWI's license were not
imposed by the NRC; rather, the list of authorized source models,
designation of suppliers of tritium sources, and the specific
configurations of gunsights came directly from information submitted
by IWI to the NRC during the licensing process.
The thrust of the Licensee's disagreement goes to the agency's
jurisdiction and the licensing system promulgated under 10 CFR Part
30. Section 81 of the Atomic Energy Act (AEA or Act) provides in
part that a person may not transfer or receive, own, or possess any
byproduct material except as authorized pursuant to the AEA.
The NRC's jurisdiction under Section 81 of the Act to regulate
use of sealed sources containing byproduct material is long-
established. Regulations controlling radioactive materials are
promulgated under the Act to protect health and minimize danger to
life by endeavoring to ensure that licensees will do what is
required to prevent adverse impacts on public health and safety. As
noted in the General Statement of Policy and Procedure for NRC
Enforcement Actions, (NUREG-1600), Section I (Enforcement Policy),
licensees are expected to exercise meticulous attention to detail
and maintain a high standard of compliance with NRC requirements.
This standard applies even in cases such as this, in which no
adverse consequences to public health and safety actually occurred
in this matter.
Further, regardless of whether violations were committed with or
without the knowledge of Licensee management, a licensee committing
a violation is subject to enforcement action. In this case, the
Licensee did not make a sufficient effort to be aware of the
applicable requirements and ensure that they were met. Section VI.B.
of the
[[Page 19818]]
Enforcement Policy states: ``Although management involvement, direct
or indirect, in a violation may lead to an increase in the civil
penalty, the lack of management involvement may not be used to
mitigate a civil penalty.''
The claim that the Licensee realized no appreciable profit from
the transactions is not relevant to the fact that the licensee
violated its license. As to whether this civil penalty serves the
purposes of the NRC's enforcement program, it clearly does so. In
cases such as this, an NRC enforcement action is used, in part, as a
deterrent to emphasize the importance of management being aware of
license requirements, and where there is a question as to the
meaning of a requirement, of the need to seek clarification. If a
licensee believes that license conditions are unwarranted, the
licensee should seek an amendment, and comply with the license until
the amendment is granted.
Summary of Licensee's Request for Mitigation
The Licensee contends that the enforcement action imposes a
severe financial hardship on the Licensee, that the NRC standards
for imposing civil penalties are too vague to meet standards of due
process, and that the penalty should not be imposed because the
basic information on which the decision is being made has not been
made available to the Licensee in preparation of its defense.
NRC Evaluation of Licensee's Request for Mitigation
The Licensee sought mitigation complaining that the NRC
standards for imposing civil penalties are too vague to meet the
standards of due process but did not provide further argument or
explanation of that claim. The Congress has provided the Commission
with the discretion to issue civil penalties of up to $110,000 per
day per violation. The NRC has for almost 15 years provided publicly
available guidelines for developing enforcement actions, including
civil penalties. These guidelines are published in the Enforcement
Policy.
As to the Licensee's claim that the basic information on which
the action was taken was not made available to the Licensee,
although the OI Report had not yet been provided to the Licensee
because the Licensee had not paid the required charges,1
the discussion at the Predecisional Enforcement Conference centered
on these violations and how they occurred. Further, during the OI
investigation the NRC obtained copies of records from the Licensee,
including purchase documents for luminous sources and sales
documentation. The nature of the violations cited is such that these
documents and the personal knowledge of Licensee employees were
clearly the basis for the citations and were available to the
Licensee.
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\1\ The OI Report was provided to the Licensee on October 16,
1996.
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The staff has reviewed the assessment of the civil penalty,
including the exercise of discretion which escalated the civil
penalty to $7,500. In assessing a civil penalty, the NRC weighs both
the potential safety significance and the regulatory significance.
While the safety concerns in this matter may not be significant, the
regulatory concerns are significant because Licensee management
failed to apply the meticulous attention to compliance with license
conditions that is required of a licensee. While the NRC remains
concerned about management involvement in these violations, the
civil penalty has been reconsidered in light of the safety
significance of the actual violations. The civil penalty is,
therefore, being mitigated by $5,000.
As to alleged financial hardship, the NRC's Enforcement Policy
provides: ``. . . it is not the NRC's intention that the economic
impact of a civil penalty be so severe that it puts a licensee out
of business (orders, rather than civil penalties, are used when the
intent is to suspend or terminate licensed activities) or adversely
affects a licensee's ability to safely conduct licensed
activities.''
Therefore, to balance these considerations and to be responsive
to the potential financial hardship to the Licensee, the NRC will
allow the Licensee, if it wishes, to pay the civil penalty in
monthly installments.
NRC Conclusion
The NRC has concluded that the violations occurred as stated and
that the Licensee provided an adequate basis for mitigation of the
civil penalty. However, full mitigation is not warranted because of
the importance of emphasizing the role of management in ensuring
that it understands regulatory requirements and that these
requirements are implemented. Here, the new management did not make
sufficient effort to ensure compliance. Consequently, a civil
penalty in the amount of $2,500 should be imposed. However, to be
responsive to the potential for further financial hardship, the NRC
will permit the Licensee to pay the civil penalty in monthly
installments.
[FR Doc. 97-10524 Filed 4-22-97; 8:45 am]
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