[Federal Register Volume 69, Number 173 (Wednesday, September 8, 2004)]
[Notices]
[Pages 54324-54326]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-20299]
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NUCLEAR REGULATORY COMMISSION
[Docket Nos. 030-36567, 030-34261; License Nos. 27-23914-01E, 42-23850-
02E, EA-03-187]
In the Matter of 21st Century Technologies, Inc., Las Vegas, NV;
Order Imposing Civil Monetary Penalty
21st Century Technologies, Inc. (Licensee) is the holder of Exempt
Distribution License No. 27-23914-01E, issued by the Nuclear Regulatory
Commission (NRC or Commission) on May 19, 2004.\1\ The license
authorizes the Licensee to distribute products containing byproduct
material (i.e., tritium) in accordance with the conditions specified
therein.
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\1\ Prior to May 19, 2004, the company held License No. 42-
23850-02E, Docket No. 030-34261, and was based in Haltom City,
Texas.
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An inspection and investigation of the Licensee's activities were
completed in October 2003. The results of the inspection and
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
issued to the Licensee by letter dated April 13, 2004. The notice
stated 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 violation ($6,000).
The Licensee responded to the notice in a letter dated May 11,
2004. In its response, the Licensee admitted the violations, provided
qualifying information with respect to several of the examples,
contested the classification of the violations as a Severity Level III
problem, contested the NRC's application of its civil penalty
assessment process, and requested remission or mitigation of the
proposed civil penalty. The licensee's letter also described 21st
Century's plans to correct and prevent recurrence of the violations.
After consideration of the Licensee's response, and for the reasons
discussed in the Appendix to this Order, the NRC concludes that the
severity level of the violations was appropriately determined, that the
civil penalty assessment process was correctly followed, and that the
licensee has not provided a basis for reducing the severity level of
the violations or for mitigating the proposed civil penalty. Therefore,
the NRC concludes that the civil penalty proposed for the violations
designated in the notice should be imposed by Order.
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 $6,000 within
30 days of the date of this Order, in accordance with the payment
methods described in NUREG/BR-0254. In addition, at the time of
making the payment, the licensee shall submit a statement indicating
when and by what method payment was made, to the Director, Office of
Enforcement, U.S. Nuclear Regulatory Commission, One White Flint
North, 11555 Rockville Pike, Rockville, MD 20852-2738.
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 submitted 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 Assistant General Counsel for Materials Litigation and
Enforcement at the same address, and to the Regional Administrator, NRC
Region IV, 611 Ryan Plaza Drive, Suite 400, Arlington, Texas 76011.
Because of continuing disruptions in delivery of mail to United States
Government offices, it is requested that requests for hearing be
transmitted to the Secretary of the Commission either by means of
facsimile transmission to 301-415-1101 or by e-mail to
[email protected] and also to the Office of the General Counsel
either by means of facsimile transmission to 301-415-3725 or by e-mail
to [email protected].
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.
[[Page 54325]]
In the event the Licensee requests a hearing as provided above, the
issues to be considered at such hearing shall be:
Whether on the basis of the violations admitted by the Licensee,
this Order should be sustained.
Dated this 30th day of August 2004.
For the Nuclear Regulatory Commission.
Frank J. Congel,
Director, Office of Enforcement.
Appendix To Order Imposing Civil Monetary Penalty--EA-03-187 Evaluation
and Conclusion
On April 13, 2004, a Notice of Violation and Proposed Imposition
of Civil Penalty (notice) was issued to the Licensee for violations
identified during an NRC inspection and investigation. The Notice
stated 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 ($6,000).
The Licensee responded to the notice in a letter dated May 11,
2004. In its response, the Licensee admitted the violations that
resulted in the civil penalty, provided qualifying information with
respect to several of the examples, contested the classification of
the violations as a Severity Level III problem, contested the NRC's
application of its civil penalty assessment process, and requested
remission or mitigation of the proposed civil penalty.
The NRC's evaluation of the licensee's response, and conclusions
regarding the licensee's requests are as follows:
Summary of Licensee's Response & Request for Remission or
Mitigation of the Penalty
1. Severity Level III should not be assigned to actions where
there is no clear knowledge on a licensee's part that the actions
taken are in violation of the license and the licensee has a
rational basis for conducting licensing activities, even though
those activities turn out to be outside the scope of the license.
Licensee contends that five of the seven examples included in the
violations assessed a civil penalty are due to misinterpretation and
misunderstanding of the license provisions, and states that
reasonable minds can differ on these issues notwithstanding the fact
that the NRC has the final word.
2. The licensee takes exception to NRC's statement that ``The
number of examples of these violations, and the extended time period
over which they occurred, represent a programmatic concern with the
potential to impact radiological safety.'' The licensee cites a
reference in NRC's Enforcement Policy to not citing licensees for
failing to report events the licensee is unaware of, and draws a
parallel here by stating ``A licensee should not be cited for a
programmatic failure unless the licensee was actually aware that it
was not following the licensing program or if licensee believed in
good faith that it was following the licensing program.''
3. The licensee understands the NRC staff to have previously
agreed that none of the license infractions impacted or potentially
impacted public health and safety. This appears to be inconsistent
with the letter of April 13 where it expressed ``a programmatic
concern with the potential to impact radiological safety.''
4. The licensee acknowledges that two examples of the violations
assessed a civil penalty were not the result of misinterpretation
and misunderstanding of license provisions, but argues that these do
not support a finding of a programmatic failure because they are too
few in number and because they may have been the result of employee
sabotage.
5. The NRC should not have considered ``Identification'' credit
in the civil penalty assessment process because the standard of
considering previous escalated enforcement during the past 2 years
or past 2 inspections, whichever is longer, is directed toward
nuclear power plant inspections or inspections that occur on an
annual or near annual basis, and not to situations involving
inspections that occur every 5 years.
6. Although the NRC identified the violations in this case,
credit for identification should be given to the licensee because,
under the circumstances, the licensee's actions related to
identification were not unreasonable.
7. Licensee should be given credit for prompt and comprehensive
action because it took immediate actions necessary upon discovery of
each violation to assure compliance with the license, and, in a
timely manner, developed and is implementing the lasting actions
designed to prevent recurrence of the violations at issue, actions
that are appropriately comprehensive to prevent occurrence of
violations with similar root causes.
8. The licensee states that special circumstances exist that
warrant the exercise of discretion to reduce the severity level of
the violations. These include the significance of the violations,
the clarity of the requirement, the overall sustained performance of
the licensee, and other relevant circumstances. The licensee repeats
many of its previous arguments, including its assertion that it was
operating in good faith relative to compliance with the license, and
that it has taken extensive corrective action to assure long-term
compliance. The licensee states, ``Licensee believes that there is a
sufficient lace (sic) of clarity about the license requirements to
justify a reduction of the assignment of Severity Level III to Level
IV and elimination of the fine for civil penalty.''
NRC Evaluation of Licensee's Responses & Request for Remission or
Mitigation of Penalty
1. The licensee is essentially saying that Severity Level III
should not be assigned where the licensee did not know it was
violating NRC requirements. If the NRC had been able to show the
licensee knew it was violating NRC requirements, and continued to do
so, the NRC could have characterized the violations as willful non-
compliances, and could have considered assigning a higher severity
level to the violations, in accordance with Section IV.A.4 of the
Enforcement Policy. The specific severity level example that NRC
relied upon (Enforcement Policy, Supplement VI, C.8) does not
reference willfulness and supports a Severity Level III
determination without regard to willfulness. In addition, in
determining severity level, the NRC also considered the fact that
the violations impacted the ability of the NRC to perform its
regulatory function, in accordance with Section IV.A.5 of the
Enforcement Policy.
The alleged ``lack of clarity'' in the license does not justify
a reduction in the assigned Severity Level III. The NRC staff does
not agree that reasonable minds would differ as to the meaning of
License Condition 10. The licensee asserted that it relied on
Attachment 16 to the license as authorizing distribution of several
products which the NRC found in this action to have been distributed
in violation of the license. License Condition 10 authorized certain
types of products and explicitly referred to specified attachments
for details regarding the authorized products. The license, however,
nowhere referenced Attachment 16 with respect to any authorized
product. License Condition 10 was crafted and submitted by 21st
Century as a license amendment after discussions between the former
21st Century President and NRC staff. The former President of 21st
Century stated at the predecisional enforcement conference that he
had misunderstood the license and that he was ``guilty of probably
not being real smart in reading licenses''. 21st Century had every
opportunity to seek clarification from the NRC as to what the
license allowed prior to modifying its products and distributing
them. Moreover, 21st Century was the subject of prior escalated
enforcement in 1996, and as a result was well aware that only those
products explicitly authorized by the license could be distributed
by the company. The appropriate response to any perceived lack of
clarity in the license was for the licensee to obtain clarification.
Instead, the licensee failed to have systems in place to assure
compliance with the license, and failed to seek any necessary
clarification prior to modifying its products and distributing them.
2. The licensee is responsible for assuring that it is complying
with the conditions of the license. In addition, a programmatic
concern does not rest on whether the licensee was aware it was
operating in noncompliance. As discussed in item 1 above, if the NRC
had been able to show that the licensee was aware it was operating
in noncompliance, the violations could have been characterized as
willful non-compliances, and the NRC could have considered assigning
a higher severity level. Adopting the licensee's views would
encourage licensees to remain ignorant of NRC requirements.
3. NRC has acknowledged that the violations did not result in
any actual safety consequences. NRC has not stated, however, that
there were no potential safety consequences. As we stated at the
predecisional enforcement conference, the NRC has a responsibility
to assure that licensees who distribute radioactive material to
members of the public, do so in a manner which provides reasonable
confidence that the products are safe. NRC reviews the engineering
designs and safety features of
[[Page 54326]]
such products before allowing them to be distributed. By
distributing products that had not been reviewed and approved by
NRC, 21st Century circumvented the very process that is designed to
assure safety, and thereby created a potential for safety
consequences.
4. The NRC's Office of Investigations (OI) conducted a
comprehensive investigation into the violations. OI found no
evidence of employee sabotage and the licensee has not provided any
such evidence. If the NRC had found evidence of employee sabotage as
the cause of the violations, we would have held 21st Century
accountable nonetheless, and could have considered assigning a
higher severity level to the violations, in accordance with Section
IV.A.4 of the Enforcement Policy. NRC licensees are accountable for
the violations committed by their employees, and appropriate
enforcement action may be taken therefor. Advanced Medical Systems,
Inc., 39 NRC 285, 311-12 (1994), aff'd. Advanced Medical Systems,
Inc. v. NRC, 61 F. 3d 903 (6th Cir. 1995). See also Enforcement
Policy, Section VII.B.6.
5. The ``two years or two inspection'' criterion was added to
the civil penalty assessment process in 1995. In the June 30, 1995
Federal Register notice announcing this and other Enforcement Policy
changes, the NRC said this particular change was made to focus
additional attention on ``situations of greater concern (i.e., where
a licensee has had more than one significant violation in a 2-year
or two-inspection period ....'' The two-inspection period interval
was adopted in recognition of the fact that some licensees, such as
21st Century Technologies, Inc., are inspected at intervals that
exceed two years.
6. There is no basis to agree with the licensee's assertion that
it should be given credit for ``Identification'' as the licensee did
not in fact identify any of the violations itself. Moreover, 21st
Century was the subject of previous escalated enforcement action in
1996 for unauthorized distribution of licensed material, and was
repeatedly told verbally and in writing that no products could be
distributed that were not explicitly authorized by the license.
Despite that previous enforcement action, the licensee failed to put
a program in place to identify non-compliances.
7. While the licensee has laid out an extensive set of long-term
corrective actions, the point the NRC made in denying credit for
prompt and comprehensive corrective action was that the licensee was
still developing these corrective actions at the time of the
enforcement conference, about two years after NRC became involved in
pointing out the violations to the licensee. While the licensee may
have taken timely short-term actions to stop the violations as they
were identified, the licensee did not consider long-term
comprehensive action to improve its oversight of licensed activities
until it hired a consultant just prior to the predecisional
enforcement conference. Accordingly, the licensee's corrective
actions overall were not prompt.
8. There is no basis to grant 21st Century's request for
mitigation and a reduction in the severity level of the violations,
due to the claimed ``special circumstances'' of significance of the
violations, lack of clarity of the requirement, overall sustained
performance of the licensee, ``good faith'' (non-willful) nature of
the violations, or extensive corrective action. The significance of
the violations does not justify mitigation because the Severity
Level III classification was appropriate and in accordance with the
Enforcement Policy. See Items 1-4, above. There was no lack of
clarity in the pertinent license condition. The licensee's admitted
failure to understand its own license does not reduce the
significance of the violations. See Item 1, above. The licensee's
assertion that its overall sustained good performance justifies
mitigation is not supported by the facts or the Enforcement Policy.
The 1996 enforcement action in conjunction with the subject current
violations indicates the opposite of sustained good performance.
Moreover, the Enforcement Policy nowhere states that the assigned
severity level may be reduced because of sustained good performance.
The licensee's assertion that it deserves mitigation because the
violations were committed in ``good faith'' (no willfulness) is
unjustified. See Items 1-2, above. Nor would any corrective actions
justify a reduction in the assigned Severity Level III. Corrective
actions are considered in determining whether the base civil penalty
should be increased or decreased. See Enforcement Policy, Section
VI.C.2.c. The NRC staff did consider the licensee's corrective
actions and appropriately determined that credit for prompt and
comprehensive corrective actions was not warranted. See Item 7,
above.
NRC Conclusion
The NRC concludes that the severity level of the violations was
appropriately determined, that the civil penalty assessment process
was correctly followed, and that the licensee has not provided a
basis for reducing the severity level of the violations or for
mitigating the proposed civil penalty. Therefore, the staff
recommends that the civil penalty proposed for the violations in the
notice should be imposed by Order.
[FR Doc. 04-20299 Filed 9-7-04; 8:45 am]
BILLING CODE 7590-01-P