EA-03-079 - IBS of America Corporation

September 15, 2003

EA-03-079

IBS of America Corporation
ATTN: Mr. Harry Ritter
Vice President
3742 Cook Boulevard
Cavalier Industrial Park
Chesapeake, Virginia 23323

SUBJECT:

NOTICE OF VIOLATION AND PROPOSED IMPOSITION OF CIVIL PENALTY - $7,500 (NRC INSPECTION REPORT NO. 45-25435-01/03-01)

Dear Mr. Ritter:

This refers to the inspection conducted on March 20, 2003, at your facility located in Chesapeake, Virginia, and subsequent telephone conversations through May 6, 2003. The inspection was an examination of activities as they relate to safety and compliance with the Nuclear Regulatory Commission's (NRC) rules and regulations and with the conditions of your license. The results of the inspection, including four apparent violations, were discussed with you and transmitted on June 6, 2003. The letter transmitting the inspection findings also provided you the opportunity to either respond to the apparent violations in writing or request a predecisional enforcement conference. The NRC confirmed your desire not to attend a predecisional enforcement conference, and by letters dated June 27 and July 24, 2003, you provided IBS of America Corporation's (IBS) response to the apparent violations and addressed the causes and corrective actions to prevent recurrence. We have reviewed your response and conclude that sufficient information is available to determine the appropriate enforcement action in this matter.

Based on the information developed during the inspection and the information you provided in your responses, the NRC has determined that three violations of NRC requirements occurred. The violations are cited in the enclosed Notice of Violation and Proposed Imposition of Civil Penalty (Notice), and the circumstances surrounding them are discussed in detail in the subject inspection report.

The two violations comprising Part I of the Notice involve: (A) the failure to verify, prior to transfer, that an individual being sent licensed material was authorized to receive such material as required by 10 CFR 30.41 and 30.42; and (B) the failure to control and maintain constant surveillance of licensed material from unauthorized removal or access as required by 10 CFR 20.1801 and 20.1802.

The NRC's regulations for the proper transfer/receipt and the control of licensed byproduct material provide the NRC and public with adequate assurance that licensed material is being handled safely by individuals who are properly qualified and authorized. In this case, on three separate occasions the NRC had no such assurance, nor was there adequate assurance that the gauge, and the licensed material it contained, would be properly controlled after shipment. Based on the interrelationship of the violations cited in Part I of the Notice, violations I.A and I.B have been categorized collectively as a Severity Level III problem, in accordance with the "General Statement of Policy and Procedure for NRC Enforcement Actions" (Enforcement Policy), NUREG-1600.

Your responses of June 27 and July 24, 2003, documented IBS's views regarding certain aspects of the enclosed violations. Regarding violation I.A, you indicated that IBS rented the gauge from Tamfelt, Inc. After completing its use of the gauge, IBS shipped the gauge back to the individual from whom it was received at Tamfelt. IBS indicated that it erred in failing to determine whether the Tamfelt representative was licensed to receive the gauge. With respect to violation I.B, IBS disagreed with the inspection report finding that the gauge was shipped to a hotel stating instead that it was shipped to an IBS employee staying at the hotel. Upon delivery to the hotel, the gauge was to be delivered to the IBS employee.

Based on the information provided in your letters of June 27 and July 24, 2003, the NRC has concluded that violations I.A and I.B occurred as stated in the enclosed Notice. The NRC acknowledges the sequence of events as clarified and IBS's explanation of the cause of violation I.A. However, this information does not change NRC's conclusion that IBS sent licensed material to individuals without verifying that the individuals to whom the materials were sent were authorized to receive it. In those instances where licensed material was shipped to hotels, IBS did not take any actions to assure that the material would be transferred directly from the carrier to the IBS employee. Therefore, notwithstanding NRC's agreement with IBS' chronology of events, the fact remains that the gauge was transferred to a hotel employee to hold until the IBS employee took possession of the gauge. As such, IBS failed to control and maintain constant surveillance of licensed material from unauthorized removal or access. The NRC holds licensees responsible for assuring that licensed material is controlled and under constant surveillance.

The violation identified in Part II of the Notice involved the failure to amend the license to change the Radiation Safety Officer (RSO).

Regarding Violation II.A, your letter of July 24, 2003, indicated that the NRC sent IBS a Form-664, General Licensee Registration, on or about January 4, 2002. IBS further advised that a correction was made to change the RSO on the Form returned to the NRC on February 5, 2002. You also indicated that since the NRC inspection, an amendment to the license had been issued designating a new RSO. However, our review of this information indicates that IBS was required to amend the specific license to designate the new RSO, which was not done until after the inspection. As such, the NRC concluded that the violation occurred as stated in the enclosed Notice.

Your responses of June 27 and July 24, 2003, document your disagreement with Violation II.B., the fourth apparent violation transmitted to you on June 6, 2003. After additional review, the NRC will not pursue the issue involving a report to the Director of Nuclear Material Safety and Safeguards regarding the transfer of the device from a general licensee to a specific licensee.

In accordance with the Enforcement Policy, a base civil penalty in the amount of $7,500 is considered for a Severity Level III problem (violations I.A and I.B). Because your facility has not been the subject of escalated enforcement action since the last two NRC inspections or within the last two years, the NRC considered whether credit was warranted for corrective action in accordance with the civil penalty assessment process in Section VI.C.2 of the Enforcement Policy. Your corrective actions included improving your understanding of NRC requirements governing the transfer and control of NRC licensed material, committing to strictly adhere to these requirements in the future, and communicating with all IBS employees on the procedures for shipping the gauge. The NRC also notes IBS' plans to ship the gauge to a mill RSO to be locked in his/her office until the IBS operator has arrived to perform work, or the gauge will be shipped and held by the common carrier until it can be picked up by a licensed IBS operator. We wish to remind IBS that a specifically licensed gauge must be shipped to an individual or entity who possesses a specific license, or who is otherwise authorized under the IBS license. Based on this and the fact that the gauge is now in the licensee's possession, the NRC has determined that credit was warranted for corrective actions.

Application of the normal civil penalty assessment process would not result in a civil penalty in this case. However, the revised Enforcement Policy published December 18, 2000, (effective February 16, 2001), provides that, notwithstanding normal application of the civil penalty assessment process, a civil penalty of at least the base amount should normally be proposed in cases of improper transfer to reflect the significance of the violation and to emphasize the importance of maintaining control of licensed material (see Section VII.A.1(g) of the Enforcement Policy). The base civil penalty values in the Enforcement Policy were developed to correspond to approximately three times the average cost of disposal. Application of the civil penalty assessment process, as reflected in Tables 1A.f.2 and 1B of the Enforcement Policy, would result in a civil penalty of $7500 in this case. Therefore, I have been authorized, after consultation with the Director, Office of Enforcement, to issue the enclosed Notice of Violation and Proposed Imposition of Civil Penalty (Notice) in the amount of $7,500 for the Severity Level III problem.

In your response of July 24, 2003, you provided an estimate of $3,000 for the cost of disposal of the gauge, based on your discussions with the gauge manufacturer. As indicated in footnote (3) to Table 1A of the Enforcement Policy, the NRC's base civil penalty has been determined to be approximately three times the average cost of disposal of the gauge. In this case, three times the amount of your estimated disposal cost would exceed our proposed civil penalty. As such, the NRC considers an adjustment to the proposed civil penalty amount, based on your estimated cost of authorized disposal, to be unwarranted.

In addition, you requested that your status as a small business entity be considered to reduce any proposed civil penalty in order to minimize the impact on your company. If the amount of the civil penalty, as described herein, will significantly impact IBS's business, you may submit documentation to support IBS's request for mitigation. If the reasons for mitigation also include financial hardship, IBS must provide financial documentation for the past three years (such as profit and loss statements showing income and expenses including such items as gross sales and salaries, balance statements showing assets and liabilities, auditor's reports, and tax returns or other evidence). IBS must also provide a statement from at least one financial institution that you could not obtain a loan. Further, IBS will need to address why IBS has sufficient resources to safely conduct licensed activities and pay license and inspection fees. The NRC will give consideration of financial hardship upon IBS' submittal of the above documentation. Any documentation should be submitted under oath or affirmation. Moreover, if cash flow is a problem, the NRC can arrange payments over time which would include an interest charge.

Further, your responses of June 27 and July 24, 2003, stated that during the NRC inspection exit interview of May 20, 2003, you inquired about the possibility of monetary fines as a result of the inspection findings. You indicated that you were informed by NRC representatives at the time that monetary fines would not be applied due to the corrective actions taken by IBS. Based on our review, it appears that we may not have fully communicated the potential significance of the issues or our review process for determining the appropriateness of any enforcement action. In this case, you were informed at the exit interview that under normal circumstances and given the preliminary assessment of the significance of the findings, a monetary civil penalty would likely not be assessed, given the satisfactory completion of corrective actions. You were also advised at the exit interview that the preliminary significance of the findings would be reviewed by NRC management at a later date, which would result in a final determination of any resulting enforcement action. Upon further review of the details and significance of the inspection findings, and in consultation with multiple NRC offices, the NRC concluded that the circumstances in this case were significant, largely due to the improper transfer of licensed material. Accordingly, a civil penalty was proposed as described in Table 1A.f of the Enforcement Policy. We regret that our communications with you at the inspection exit interview may have confused you and failed to adequately address the potential for a monetary civil penalty.

However, you may pay the civil penalty proposed above in accordance with NUREG/BR-0254 (Enclosure 2). In addition, issuance of this Notice constitutes escalated enforcement action that may subject you to increased inspection effort.

The NRC has concluded that information regarding the reason for the violations, the corrective actions taken and planned to correct the violations and prevent recurrence, and the date when full compliance was achieved is adequately addressed on the docket in your response and in this letter. Therefore, you are not required to respond to the violations documented in this letter unless the description herein does not accurately reflect your corrective actions or your position. In that case, or if you choose to provide additional information, you should follow the instructions specified in the enclosed Notice.

In accordance with 10 CFR 2.790 of the NRC's "Rules of Practice," a copy of this letter, its enclosures, and your response will be available electronically for public inspection in the NRC Public Document Room or from the Publicly Available Records (PARS) component of NRC's document system (ADAMS). ADAMS is accessible from the NRC Web site at the Public NRC Library. To the extent possible, your response should not include any personal privacy, proprietary, or safeguards information so that it can be made available to the Public without redaction.

If you have any questions about this inspection, please contact Mr. Douglas M. Collins, Director, Division of Nuclear Materials Safety, at (404) 562-4700.

		Sincerely,
		/RA/ LRP for
		Luis A. Reyes Regional Administrator

Docket Nos. 030-34734
License Nos. 45-25435-01

Enclosures:
1. Notice of Violation and Proposed Imposition of Civil Penalty
2. NUREG/BR-0254

cc w/encls:
Commonwealth of Virginia

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NOTICE OF VIOLATION
AND
PROPOSED IMPOSITION OF CIVIL PENALTY

IBS of America Corporation Chesapeake, Virginia

Docket No. 030-34734 License No. 45-25435-01 EA-03-079

During an NRC inspection conducted on March 20, 2003 and subsequent telephone conversations through May 6, 2003, violations of NRC requirements were identified. In accordance with the "General Statement of Policy and Procedure for NRC Enforcement Actions," NUREG-1600, the NRC proposes to impose a civil penalty pursuant to Section 234 of the Atomic Energy Act of 1954, as amended (Act), 42 U.S.C. 2282, and 10 CFR 2.205. The particular violations and associated civil penalty are set forth below:

I.	Violations Assessed a Civil Penalty
	A.	10 CFR 30.41(a) and (b)(5) require, in part, that no licensee transfer byproduct material except to a person authorized to receive such byproduct material under the terms of a specific or general license issued by the Commission or Agreement State. 10 CFR 30.41(c) requires that, prior to transferring byproduct material, the licensee verify that the transferee's license authorizes the receipt of the type, form, and quantity of byproduct material to be transferred. 10 CFR 30.41(d) specifies acceptable methods for this verification. Contrary to the above, on October 1, November 14, and December 18, 2002, the licensee transferred two sealed sources that contained approximately 25 and 100 millicuries, respectively, of Americium-241 to individuals who were not authorized to receive such byproduct material, and the licensee did not verify, prior to transfer, that the individuals had licenses to receive byproduct material. Specifically, the licensee transferred an NDC Model No. 104P portable gauge, through a common carrier, to hotels in Camas, Washington and Augusta, Georgia, and to an individual's home in Raleigh, North Carolina, without first verifying that gauge recipients were authorized to receive the portable gauge.
	B.	10 CFR 20.1801 requires that the licensee secure from unauthorized removal or access licensed materials that are stored in controlled or unrestricted areas. 10 CFR 20.1802 requires that the licensee control and maintain constant surveillance of licensed material that is in a controlled or unrestricted area and that is not in storage. As defined in 10 CFR 20.1003, controlled area means an area, outside of a restricted area but inside the site boundary, access to which can be limited by the licensee for any reason: and unrestricted area means an area, access to which is neither limited nor controlled by the licensee. Contrary to the above, on October 1, November 14, and December 18, 2002, the licensee failed to maintain control and constant surveillance of licensed material contained in two sealed sources that were transferred to hotels in Camas, WA, and Augusta, GA, and to an individual's home in Raleigh, NC.
This is a Severity Level III Problem (Supplement IV). Civil Penalty - $7,500.
II.	Violation Not Assessed a Civil Penalty
	Condition 11.B. of License No. 45-25435-01 designates Scott Black as the Radiation Safety Officer for the license.
		Contrary to the above, as of March 20, 2003, the individual named in the license as the Radiation Safety Officer was no longer employed by the facility. Specifically, the individual had not worked for the licensee since 1999, and the licensee did not appoint another qualified individual to perform the duties of the RSO.

This is a Severity Level IV violation (Supplement VI).

The NRC has concluded that information regarding the reason for the violations, the corrective actions taken and planned to correct the violations and prevent recurrence, and the date when full compliance was achieved is already adequately addressed on the docket in your response and in the cover letter transmitting this Notice. However, you are required to submit a written statement or explanation pursuant to 10 CFR 2.201 if the description therein does not accurately reflect your corrective actions or your position. In that case, or if you choose to respond, clearly mark your response as a "Reply to a Notice of Violation," and send it to the U.S. Nuclear Regulatory Commission, ATTN: Document Control Desk, Washington, DC 20555-0001, with a copy to the Regional Administrator, Region II within 30 days of the date of the letter transmitting this Notice.

Within 30 days of the date of this Notice, the Licensee may pay the civil penalty proposed above in accordance with NUREG/BR-0254 and by submitting to the Director, Office of Enforcement, U.S. Nuclear Regulatory Commission, a statement indicating when and by what method payment was made, or may protest imposition of the civil penalty in whole or in part, by a written answer addressed to the Director, Office of Enforcement, U.S. Nuclear Regulatory Commission. Should the Licensee fail to answer within the time specified, an order imposing the civil penalty will be issued. Should the Licensee elect to file an answer in accordance with 10 CFR 2.205 protesting the civil penalty, in whole or in part, such answer should be clearly marked as an "Answer to a Notice of Violation" and may: (1) deny the violations listed in this Notice, in whole or in part, (2) demonstrate extenuating circumstances, (3) show error in this Notice, or (4) show other reasons why the penalty should not be imposed. In addition to protesting the civil penalty in whole or in part, such answer may request remission or mitigation of the penalty.

In requesting mitigation of the proposed penalty, the factors addressed in Section VI.B.2 of the Enforcement Policy should be addressed. Any written answer in accordance with 10 CFR 2.205 should be set forth separately from the statement or explanation in reply pursuant to 10 CFR 2.201, but may incorporate parts of the 10 CFR 2.201 reply by specific reference to avoid repetition. The attention of the Licensee is directed to the other provisions of 10 CFR 2.205, regarding the procedure for imposing a civil penalty.

Upon failure to pay any civil penalty due which subsequently has been determined in accordance with the applicable provisions of 10 CFR 2.205, this matter may be referred to the Attorney General, and the penalty, unless compromised, remitted, or mitigated, may be collected by civil action pursuant to Section 234c of the Act, 42 U.S.C. 2282c.

If you choose to respond, the response noted above (Reply to Notice of Violation, statement as to payment of civil penalty, and Answer to a Notice of Violation) should be addressed to: Director, Office of Enforcement, U.S. Nuclear Regulatory Commission, One White Flint North, 11555 Rockville Pike, Rockville, MD 20852-2738, with a copy to the Regional Administrator, U.S. Nuclear Regulatory Commission, Region II.

Because any response will be made available electronically for public inspection in the NRC Public Document Room or from the Publicly Available Records (PARS) component of NRC's document system (ADAMS), to the extent possible, it should not include any personal privacy, proprietary, or safeguards information so that it can be made available to the public without redaction. ADAMS is accessible from the NRC Web site at the Public NRC Library. If personal privacy or proprietary information is necessary to provide an acceptable response, then please provide a bracketed copy of your response that identifies the information that should be protected and a redacted copy of your response that deletes such information. If you request withholding of such material, you must specifically identify the portions of your response that you seek to have withheld and provide in detail the bases for your claim of withholding (e.g., explain why the disclosure of information will create an unwarranted invasion of personal privacy or provide the information required by 10 CFR 2.790(b) to support a request for withholding confidential commercial or financial information). If safeguards information is necessary to provide an acceptable response, please provide the level of protection described in 10 CFR 73.21.

In accordance with 10 CFR 19.11, you may be required to post this Notice within two working days.

Dated this 15^th day of September 2003