[Federal Register Volume 63, Number 206 (Monday, October 26, 1998)]
[Notices]
[Pages 57142-57143]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-28583]


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NUCLEAR REGULATORY COMMISSION

[Docket No. 030-32176 License No. 15-27070-01 EA 98-124]


In the Matter of The Terracon Companies, Inc. Lenexa, Kansas; 
Order Imposing Civil Monetary Penalty

I

    The Terracon Companies, Inc. (Terracon or the Licensee), is the 
holder of Materials License No. 15-27070-01, Amendment 7, issued by the 
Nuclear Regulatory Commission (NRC or Commission) on April 21, 1997. 
The license authorizes the Licensee to possess and utilize moisture/
density gauges containing sealed sources in accordance with the 
conditions specified therein.

II

    An inspection of the Licensee's activities was completed on 
February 26, 1998. The results of this inspection 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, 1998. The Notice stated the nature of the violation, the provisions 
of the NRC's requirements that the Licensee had violated, and the 
amount of the civil penalty proposed for the violation.
    The Licensee responded to the Notice in an Answer to Notice of 
Violation and a Reply to Notice of Violation, both dated June 9, 1998. 
The Licensee states that the actions of the technician who caused the 
violation constituted ``careless disregard of security protocols by a 
properly trained individual who knowingly violated Terracon policies 
and NRC regulations,'' that Terracon had done all that was required by 
its license, and that the NRC's enforcement action should have been 
focused on the technician, not Terracon. Terracon also challenges the 
rationale for the proposed civil penalty as contradictory, in that the 
NRC gave Terracon credit for its corrective actions in assessing the 
civil penalty, but cited the need to prevent similar events from 
occurring.

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 violation occurred as stated and that the penalty 
proposed for the violation designated in the Notice should be imposed 
by Order.

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 $2,750 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 for extension of 
time must be made in writing to the Director, Office of Enforcement, 
U.S. Nuclear Regulatory Commission, Washington, DC 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 Secretary, U.S. Nuclear Regulatory 
Commission, Attn: Rulemakings and Adjudications Staff, Washington, DC 
20555. Copies also shall be sent to the Director, Office of 
Enforcement, U.S. Nuclear Regulatory Commission, Washington, DC 20555, 
to the Deputy Assistant General Counsel for 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 
issue to be considered at such hearing shall be:
    Whether, on the basis of the violation admitted by the Licensee, 
this Order should be sustained.

    Dated at Rockville, Maryland, this 19th day of October 1998.

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

Appendix--Evaluation and Conclusion

    On May 15, 1998, a Notice of Violation and Proposed Imposition 
of Civil Penalty (Notice) was issued for a violation identified 
during an NRC inspection. The Terracon Companies, Inc. (Terracon or 
the Licensee) responded to the Notice by an Answer to Notice of 
Violation and a reply to Notice of Violation, both dated June 9, 
1998. In its responses, the Licensee admitted the violation, but 
protested the proposed civil penalty. The NRC's evaluation and 
conclusion regarding the Licensee's response are as follows:

Restatement of Violation

    10 CFR 20.1802 states, in part, that the licensee shall control 
and maintain constant surveillance of licensed material that is in 
an unrestricted area and that is not in storage. As defined in 10 
CFR 20.1003, unrestricted area means an area to which access is 
neither limited nor controlled by the licensee.
    Contrary to the above, on January 23, 1998, the licensee did not 
control and maintain constant surveillance of licensed material in 
an unrestricted area. Specifically, the licensee did not maintain 
adequate control or constant surveillance of a CPN Model MC1-DR 
portable nuclear moisture/density gauge containing a nominal 8-
millicurie cesium-137 sealed source and a nominal 40-millicurie 
americium-241 sealed source. The licensee failed to secure a padlock 
on the gauge container, resulting in the theft of the gauge from a 
vehicle parked at a restaurant. (01013)

Summary of Licensee's Request for Mitigation

    Terracon states that the actions of the technician who caused 
the violation constituted ``careless disregard of security protocols 
by a properly trained individual who knowingly violated Terracon 
policies

[[Page 57143]]

and NRC regulations,'' that Terracon had done all that was required 
by its license, and that NRC's enforcement action should have been 
focused on the technician, not Terracon.
    Terracon also challenges the rationale for the proposed penalty 
as contradictory, in that the NRC gave Terracon credit for its 
corrective actions in assessing the civil penalty, but cited the 
need to prevent similar events from occurring as one of the reasons 
for the penalty.

NRC Evaluation of Licensee's Request for Mitigation

    First, the technician informed the NRC inspector during the 
inspection that he had placed a nuclear moisture/density gauge in 
its case, had chained and locked the gauge case to the bed of the 
truck, and had placed a padlock in the hasp of the gauge case, but 
inadvertently had failed to secure the padlock. The inspection's 
findings are reflected in the NRC's May 15, 1998 Notice. The NRC did 
not conduct an investigation to determine whether the technician 
willfully violated NRC requirements. Had the NRC conducted an 
investigation and concluded that the technician willfully failed to 
secure the moisture/density gauge from unauthorized removal, the 
enforcement sanction against Terracon could have been more 
significant. Regardless of the cause of the technician's action 
(i.e., inadvertent error or willful act), a failure to secure NRC-
licensed material in a public area is of significant concern to the 
NRC because of the potential for radiation exposures to members of 
the public.
    Second, as Terracon notes, the ``General Statement of Policy and 
Procedure for NRC Enforcement Action'', NUREG-1600 (Enforcement 
Policy), provides at Section VIII that enforcement actions may be 
taken against individuals when their conduct is willful and when 
they fail to take required actions which have actual or potential 
safety significance. However, the Enforcement Policy also provides 
that ``[M]ost transgressions of individuals at the level of Severity 
Level III or IV violations will be handled by citing only the 
facility licensee. More serious violations, including those 
involving the integrity of an individual (e.g., lying to the NRC) 
concerning matters within the scope of the individual's 
responsibilities, will be considered for enforcement action against 
the individual as well as against the facility licensee.'' 
Terracon's suggestion that the technician, and not Terracon, should 
not be held responsible for the Severity Level III violation, 
especially when the integrity of the technician was not involved, is 
contrary to the Enforcement Policy.
    Third, notwithstanding the issue of willfulness, the Licensee is 
responsible for violations caused by its employees, whether arising 
from inadvertent error or willful acts. The Commission has formally 
resolved the issue of a licensee's responsibility for violations 
caused by licensee employees. In Atlantic Research Corporation, CLI-
80-7, 11 NRC 413 (March 14, 1980), the Commission held that ``a 
division of responsibility between a licensee and its employees has 
no place in the NRC regulatory regime which is designed to implement 
our obligation to provide adequate protection to the health and 
safety of the public in the commercial nuclear field'' and that the 
licensee is ``accountable for all violations committed by its 
employees in the conduct of licensed activities.'' Id. at 418. The 
licensee uses, and is responsible for the possession of, licensed 
material. The licensee hires, trains, and supervises its employees. 
All licensed activities are carried out by employees of the licensee 
and, therefore, all violations are caused by employees of the 
licensee. A licensee enjoys the benefits of good employee 
performance and suffers the consequences of poor employee 
performance. To not hold the licensee responsible for the actions of 
its employees, whether such actions result from incompetence, 
negligence, or willfulness, is tantamount to not holding the 
licensee responsible for its use and possession of licensed 
material. If the NRC were to adopt such a regime, there would be no 
incentive for licensees to assure compliance with NRC requirements.
    Finally, the NRC finds no contradiction between giving Terracon 
credit for its corrective actions and citing the need to prevent 
recurrence of the violation as a reason to propose a civil penalty. 
In the civil penalty assessment process, the NRC routinely considers 
whether the licensee should be given credit for identification of 
the violation 1 and for corrective actions, in 
determining whether a civil penalty should be assessed and, if so, 
the size of the penalty. See Enforcement Policy, Section VI.B.2. 
Because the violation in this case was self-disclosing, (e.g., the 
violation was apparent as a result of the theft of the gauge), 
credit for identification was not warranted. Id. at Section 
VI.B.2.b. The Licensee was, however, given credit for its corrective 
actions. Consideration of the identification and corrective action 
factors yielded a civil penalty of 100% of the base penalty for this 
Severity Level III violation. The NRC staff found no reason to 
exercise its discretion to either mitigate or escalate the civil 
penalty yielded by standard application of the identification and 
corrective action factors. Nor has the Licensee presented any reason 
to mitigate the penalty. Once it had been determined that a civil 
penalty was warranted, there was nothing contradictory about noting 
that a civil penalty would serve the purpose of preventing similar 
incidents from occurring. The Enforcement Policy specifies that one 
of the purposes of civil penalties is to deter future violations. 
Id. at Section V.B. In short, the NRC followed the assessment 
process of the Enforcement Policy in determining the civil penalty 
proposed in the Notice.
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    \1\ The identification factor is considered if a licensee has 
been the subject of enforcement action for Severity Level III 
violations within in the past two years or previous two inspections. 
See Enforcement Policy, Section VI.B.2. Since Terracon had 
previously been the subject of enforcement action in 1997 for a 
Severity Level III violation (EA 97-425), the identification factor 
was considered in this case.
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NRC Conclusion

    The NRC concludes that Terracon is responsible for the violation 
caused by its technician, and that the proposed civil penalty was 
properly assessed in accordance with the NRC's Enforcement Policy. 
The Licensee has not presented a basis for withdrawal of the 
violation nor for mitigation of the civil penalty. Consequently, the 
proposed civil penalty in the amount of $2,750 should be imposed by 
Order.

[FR Doc. 98-28583 Filed 10-23-98; 8:45 am]
BILLING CODE 7590-01-P