[Federal Register Volume 64, Number 19 (Friday, January 29, 1999)]
[Notices]
[Pages 4723-4725]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-2134]


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NUCLEAR REGULATORY COMMISSION

[Docket No. 030-17711 License No. 52-19438-01 EA-99-014]


In the Matter of NDT Services, Inc., Caguas, Puerto Rico; Order 
Modifying License (Effective Immediately)

I

    NDT Services, Inc. (Licensee or NDTS) is the holder of Material 
License No. 52-19438-01 (License) issued by the Nuclear Regulatory 
Commission (NRC or Commission) pursuant to 10 CFR Part 30. The License 
authorizes possession and use of up to 100 curies of Iridium 192 in 
sealed radiography sources and up to 20 curies of Cobalt 60 in sealed 
sources for performing radiography. The license was originally issued 
on August 21, 1980, was most recently amended on December 12, 1995, and 
is due to expire on January 31, 2002.

II

    On March 27, 1998, the NRC issued an Order Suspending License 
(Effective Immediately) to NDTS based on the seriousness of issues 
identified during inspections conducted on August 6 and October 4, 
1997, and February 6, 1998, and the initial evidence gathered during an 
investigation conducted by the NRC Office of Investigations (OI). The 
Order of March 27, 1998, required, among other things, that NDTS 
immediately suspend all radiographic operations authorized by its 
license and ensure that the licensed material was placed in locked, 
safe storage.
    In response to the Order of March 27, 1998, NDTS immediately 
suspended all radiographic operations and secured all licensed material 
in locked, safe storage at the location specified in Condition 10 of 
the license. This facility is owned by Crossland Boilers Sales and 
Service, Inc. (Crossland Boilers).
    Pertinent to this issue is the current corporate status of NDTS and 
Crossland Boilers. Although no corporate relationship exists between 
NDTS and Crossland Boilers, they have a common owner, Mr. Thomas B. 
Crossland. On July 24, 1998, the NRC Region II Office received 
information that Crossland Boilers had filed for Chapter 11 Bankruptcy 
on May 22, 1998. First Bank of Puerto Rico, a secured lender of 
Crossland Boilers, provided security to protect some of the assets of 
Crossland Boilers, which are subject to liquidation in favor of the 
Bank. The licensed material is in the same building as these assets.
    The security of the sources and continued compliance with the Order 
of March 27, 1998, was verified during NRC inspections conducted on 
March 30, June 3, July 16, and August 19, 1998. These inspections 
confirmed that the licensed material was being maintained inside a 
fenced building. The fence contained a gate to allow access, and access 
to the building interior was controlled by a door with a lock. The 
building contained a vault located on the second floor which has a 
metal cabinet with three cubicles. Each cubicle possessed a separate 
lock, and contained two radiographic exposure devices containing 
Iridium 192 per cubicle (six radiographic exposure devices in total). 
An additional radiographic exposure device containing a Cobalt 60 
source was also located inside the vault (not inside a cubicle). Each 
radiographic exposure device also contained its own locking device to 
control licensed material removal and exposure. NRC inspections 
confirmed that the licensed material and locking devices, including all 
keys, were under the control of Clarence David Vaughn, President and 
Radiation Safety Officer (RSO) of NDTS. The inspection of August 19, 
1998, confirmed that representatives of First Bank had arranged for a 
contractor to provide for 24-hour security at the facility. The RSO 
indicated during the June 3, 1998, inspection his understanding and 
willingness to contact the NRC should the RSO determine that he can no 
longer maintain adequate control of the licensed material.
    On January 11, 1999, an NRC inspector, accompanied by the RSO, 
attempted to determine the security of the sources and continued 
compliance with the Order of March 27, 1998. The RSO informed the 
inspector at that time that on September 24, 1998, in response to 
Hurricane Georges, he had conducted an inspection of the facility and 
confirmed the security and safe storage of the licensed material. 
During the January 11, 1999 inspection, the NRC and the RSO were unable 
to gain access to the building as the lock which secured access to the 
building had been changed. The NRC learned shortly thereafter that a 
representative of First Bank maintained the key to this lock. After 
subsequent contact with a First Bank representative, on January 14, 
1999, the NRC, the RSO, and Mr. Sergio Olivero, Assistant Vice 
President for

[[Page 4724]]

First Bank, gained access to the building. The NRC determined the 
status and security of the licensed material on January 14, 1999 to be 
as follows:
    The building perimeter was accessible via the building yard gate. A 
building truck bay door, used to load and unload equipment/materials, 
was observed to be significantly damaged such that access to the 
building interior could easily be accomplished through the bay door. 
After entry through the building access door, the NRC noted that 
someone had entered the building previously and had vandalized and 
ransacked the building interior. The security lock to the vault that 
housed the licensed material was sheared. A new lock had been placed on 
the vault; however, the key to the new lock was in close proximity, was 
visible, and accessible to anyone desiring to gain entry. The NRC, RSO, 
and the First Bank representative accessed the vault with the key, and 
found that the locks for the three cubicles which housed the six 
radiographic devices containing the Iridium 192 licensed material were 
also sheared. The radiographic device containing the Cobalt 60 licensed 
material was found to be inside the vault, where the RSO had last 
verified this device to be (during his September 24, 1998 inspection in 
the aftermath of Hurricane Georges). The NRC confirmed that all seven 
radiographic devices remained intact and verified the position of the 
radiation sources inside the devices by taking local radiation 
readings. The NRC recommended that the RSO obtain a new lock for the 
vault and a new lock for the building yard gate. The First Bank 
representative obtained two new locks. As of January 15, 1999, the NRC 
has confirmed that these locks were in place. The RSO only has control 
of the vault lock key, while the RSO and a First Bank representative 
have control of the building yard gate lock key.
    The NRC also observed during the January 14, 1999, inspection that 
a security guard, who was onsite to monitor the facility, was 
inattentive to duties and appeared to be sleeping. The NRC subsequently 
learned that 24-hour security for the building was not maintained, but 
rather security was provided by First Bank on Mondays through 
Saturdays, from 7:00 a.m. to 3:00 p.m.
    The NRC also learned that the RSO did not have knowledge or 
accountability of the new vault lock, was unaware that the vault 
cubicle locks had been sheared, was unaware that the building interior 
could be easily accessed, and was unaware that the building interior 
had been vandalized since his inspection of September 24, 1998.
    Discussions with the RSO during the NRC inspections of January 11 
and 14, 1999, and during previous NRC inspections as discussed above, 
identified the following pertinent information:

--The RSO is not currently and has not been financially compensated by 
Mr. Crossland for his efforts in controlling the security and access to 
the licensed material, although he has made a good faith effort to do 
so.
--The RSO does not have access to NDTS corporate monies to initiate 
transfer of the sources to an authorized recipient.
--The RSO is not authorized by Mr. Crossland to transfer and/or dispose 
of the sources.
--The RSO has indicated that he may not remain in the Commonwealth of 
Puerto Rico much longer.
--The RSO, though aware of his inability to access the facility, failed 
to notify the NRC of his inability to verify the status of the licensed 
materials.
--NDTS is not currently performing any income generating work.
--Actions initiated following the January 14, 1999, inspection to 
ensure the security of the licensed material were at the initiative of 
the NRC, not the RSO.

    Mr. Crossland currently is not present in the Commonwealth of 
Puerto Rico. As of the date of this Order, attempts to contact Mr. 
Crossland to discuss the status and security of licensed material have 
been unsuccessful.

III

    The observed lack of security of licensed material presents a 
hazard to public health and safety and is in violation of Section V.A 
of the March 27, 1998, Order Suspending License (Effectively 
Immediately) and 10 CFR 20.1801, which requires that the licensee 
secure from unauthorized removal or access licensed materials that are 
stored in controlled or unrestricted areas. In addition, the corporate 
and financial status of the licensee, and the uncertainties associated 
with the ability of the RSO to continue to maintain adequate control 
over the licensed material, call into question the ability of the 
licensee to maintain adequate long-term security controls of the 
licensed material.
    Consequently, I lack the requisite reasonable assurance that the 
Licensee's current operations can be conducted under License No. 52-
19438-01 in compliance with the Commission's requirements and that the 
health and safety of the public will be protected. Therefore, the 
public, health, safety and interest require that License No. 52-19438-
01 be modified immediately to require both the relocation of the 
licensed material to a location where acceptable security can be 
maintained, and subsequent transfer of the licensed material to an 
authorized recipient. Furthermore, pursuant to 10 CFR 2.202, I find 
that the significance of the conditions described above is such that 
the public health, safety and interest require that this Order be 
immediately effective.

IV

    Accordingly, pursuant to sections 81,161b, 161i, 161o, 182 and 186 
of the Atomic Energy Act of 1954, as amended, and the Commission's 
regulations in 10 CFR 2.202, 10 CFR 30.3, 10 CFR Parts 30 and 34, It is 
hereby ordered, Effective immediately, That LICENSE NO. 52-19438-01 Is 
modified as follows:
    A. Within 24 hours of receipt of this Order, the Licensee shall, 
(1) take immediate measures to maintain and ensure adequate security of 
licensed material stored at your facility located at Rio Canas 
Industrial Park, Lots 1 and 2, Caguas, Puerto Rico; and (2) identify an 
interim safe storage location within NDTS control to which the licensed 
material will be transferred. Within the same 24 hours, the licensee 
shall contact Mr. Douglas Collins, Director, Division of Nuclear 
Materials Safety, NRC Region II, at telephone number (404) 562-4700 or 
through the NRC Operations Center (24-hours a day) at 301-816-5100, to 
inform him of the actions which have been taken in response to Item (1) 
above and the proposed interim storage location identified in response 
to Item (2). Items (1) and (2) are subject to NRC approval. A written 
response documenting this information shall be submitted under oath or 
affirmation to the Regional Administrator, NRC Region II, Atlanta 
Federal Center, 61 Forsyth Street, SW, Suite 23T85, Atlanta, Georgia 
within 10 days of this Order.
    B. Within seven days of receiving NRC approval of the proposed 
storage location, the Licensee shall: (1) complete leak tests pursuant 
to 10 CFR Part 34.27(c), to confirm the absence of leakage of 
radioactive materials and to establish the levels of residual 
radioactive contamination; (2) submit the results of the leak tests in 
writing to the NRC Region II office; and (3) transfer the licensed 
material to the approved storage location. Mr. Douglas Collins, or

[[Page 4725]]

his designee, shall be notified immediately following the transfer.
    C. Within 30 days of the date of this Order, the Licensee shall 
cause all licensed material in its possession to be transferred to an 
authorized recipient in accordance with 10 CFR 30.41 and submit for NRC 
approval a completed Form NRC 314. This information should be submitted 
to the Regional Administrator, NRC Region II, at the address given in 
Paragraph A above.
    D. At least two working days prior to the date of the transfer of 
the licensed material, the License shall notify Mr. Douglas M. Collins, 
NRC Region II, at one of the telephone numbers given in Paragraph A 
above, so that the NRC may observe the transfer of the material to the 
authorized recipient.
    The Regional Administrator, Region II, may, in writing, relax or 
rescind any of the above conditions upon demonstration by the Licensee 
of good cause.

V

    In accordance with 10 CFR 2.202, the Licensee must, and any person 
adversely affected by this Order may, submit an answer to this Order, 
and may request a hearing on this Order, within 20 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. The answer may consent to 
this Order. Unless the answer consents to this Order, the answer shall, 
in writing and under oath or affirmation, specifically admit or deny 
each allegation or charge made in this Order and set forth the matters 
of fact and law on which the Licensee or any persons adversely affected 
relies and the reason as to why the Order should not have been issued. 
Any answer or request for a hearing shall be submitted to the 
Secretary, U.S. Nuclear Regulatory Commission, ATTN: Chief, 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 II, Atlanta Federal Center, 61 Forsyth 
Street, S.W., Suite 23T85, Atlanta, Georgia 30303-3415 and to the 
Licensee if the answer or hearing request is by a person other than the 
Licensee. If a person other than the Licensee requests a hearing, that 
person shall set forth with particularity the manner in which his 
interest is adversely affected by this Order and shall address the 
criteria set forth in 10 CFR 2.714(d).
    If a hearing is requested by the Licensee or a person whose 
interest is adversely affected, the Commission will issue an Order 
designating the time and place of any hearing. If a hearing is held, 
the issue to be considered at such hearing shall be whether this Order 
should be sustained.
    Pursuant to 10 CFR 2.202(c)(2)(i), the Licensee, may, in addition 
to demanding a hearing, at the time the answer is filed or sooner, move 
the presiding officer to set aside the immediate effectiveness of the 
Order on the ground that the Order, including the need for immediate 
effectiveness, is not based on adequate evidence but on mere suspicion, 
unfounded allegations, or error.
    In the absence of any request for hearing, or written approval of 
an extension of time in which to request a hearing, the provisions 
specified in Section IV above shall be final 20 days from the date of 
this Order without further order or proceedings. If an extension of 
time for requesting a hearing has been approved, the provisions 
specified in Section IV shall be final when the extension expires if a 
hearing request has not been received. An answer or a request for 
hearing shall not stay the immediate effectiveness of this Order.

    Dated at Rockville, Maryland this 15th day of January 1999.

    For the Nuclear Regulatory Commission.
Malcolm R. Knapp,
Deputy Executive Director for Regulatory Effectiveness.
[FR Doc. 99-2134 Filed 1-28-99; 8:45 am]
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