EA-96-140 - Diagnostic Reagents, Inc.
Mr. Thomas Kregoski, President
Diagnostic Reagents, Inc.
Dearborn, MI 48124
SUBJECT: NOTICE OF VIOLATION AND PROPOSED IMPOSITION OF CIVIL PENALTY - $1,000 (NRC INVESTIGATION REPORT NO. 3-95-031)
Dear Mr. Kregoski:
This refers to the investigation conducted by the NRC Office of Investigations (OI) concerning the relocation of Diagnostic Reagents, Inc., and an alteration made to the license. By letter dated May 1, 1996, the synopsis of the OI report and a description of the apparent violations were mailed to Diagnostics Reagents, Inc. By letter dated June 1, 1996, Diagnostic Reagents, Inc., responded to the apparent violations and did not request a predecisional enforcement conference.
Based on the information obtained during the OI investigation and provided in a June 1, 1996 letter from Diagnostic Reagents, Inc., the NRC has determined that significant violations of NRC requirements occurred. The violations are cited in the enclosed Notice of Violation and Proposed Imposition of Civil Penalty and the circumstances surrounding them are described in the OI investigation report. The first violation concerned the possession and use of NRC-licensed materials at a location that was not authorized by Materials License No. 21-19345-01G. The second violation pertained to an alteration on the license regarding the NRC-authorized location for the possession and use of licensed material (iodine-125 in vitro kits). The OI investigation concluded that the violations were deliberate.
The NRC considers the possession and use of NRC-licensed material at an unauthorized location to be a significant concern. The failure to notify the NRC and obtain authorization for such activities denies the NRC the opportunity to assure that activities are conducted in compliance with all NRC radiation safety requirements. Making an alteration on the license to show a different location where licensed materials are used is also a significant concern because the altered license was posted pursuant to 10 CFR 19.11 and because, by altering the license, Diagnostic Reagents, Inc., was able to receive licensed materials at an unauthorized location. In sworn testimony, Mr. Kregoski indicated that the license was altered because "[t]he manufacturers every so often ask you for a copy."
The licensee maintains in its June 1, 1996 letter that, because of pending fee issues, these violations were necessary under the circumstances in order to continue as a viable business. However, the licensee made no attempt to contact the NRC Region III Office to discuss the circumstances, or to arrange for payments over time while the fee issues were resolved. Rather, the licensee proceeded to willfully violate the Commission's requirements. The NRC regulatory program is based on the candor and integrity of each licensee and their employees; therefore, NRC cannot and will not condone willful violations. Accordingly, these violations are of significant regulatory concern and are categorized in the aggregate as a Severity Level III problem in accordance with the "General Statement of Policy and Procedure for NRC Enforcement Actions" (Enforcement Policy), 10 CFR Part 2, Appendix C, which was in effect for most of the time the violations existed. The Enforcement Policy set forth in 10 CFR Part 2, Appendix C, was applied in this matter as it resulted in more favorable treatment for the licensee than the application of the NRC's current Enforcement Policy, which is set forth in NUREG-1600.
Therefore, to emphasize that willful violations are not acceptable, and violations must be identified and corrected as promptly as possible, and after consultation with the Director, Office of Enforcement, I have been authorized to issue the enclosed Notice of Violation and Proposed Imposition of Civil Penalty (Notice) in the amount of $1,000 for the Severity Level III problem.
In accordance with the Enforcement Policy, a base civil penalty in the amount of $500 is considered for a Severity Level III problem. The base civil penalty was initially escalated 50 percent because the NRC identified the problem. The civil penalty was increased an additional 50 percent because prompt corrective action was not taken. The NRC recognizes that Amendment No. 4 to Materials License No. 21-19345-01G, issued on May 3, 1996, corrected the violation regarding the authorized location for the possession and use of licensed materials. However, the NRC identified during November 1994 that Diagnostic Reagents, Inc., had relocated. Diagnostic Reagents, Inc., did not write to the NRC about the move until February 1, 1995, and did not request the license be amended to list the new location until March 13, 1996. Furthermore, the June 1, 1996, letter from Diagnostic Reagents, Inc., did not specifically address corrective actions for the willful aspects of the problem. The licensee's past performance has been good; however, the NRC staff did not apply mitigation based on the licensee performance factor because the violations are willful. This exercise of discretion in cases involving willfulness is permitted under the Enforcement Policy, 10 CFR Part 2, Appendix C, in Section VII, and is intended to reflect the level of NRC's concern regarding willful violations and ensure that the enforcement action conveys the appropriate message to the licensee. The remaining civil penalty adjustment factors were considered and no further adjustment was necessary. On balance, the civil penalty was increased 100 percent. Diagnostic Reagents, Inc., should be aware that a substantially higher civil penalty could have been proposed had the violations been processed under the NRC's current Enforcement Policy (NUREG-1600).
Your letter of June 1, 1996, discussed the financial difficulties being encountered by Diagnostic Reagents, Inc. Your attention is directed to Section VI.B.1 of the current NRC Enforcement Policy (NUREG-1600, a copy of which was mailed to you on June 1, 1996) for the payment of a civil penalty over time. To use this option, Diagnostic Reagents, Inc., must demonstrate: (1) financial hardship; and (2) sufficient resources to safely conduct licensed activities and pay license fees. Application for payment of a civil penalty over time must be addressed to Mr. James Lieberman, Director, Office of Enforcement, U. S. Nuclear Regulatory Commission, Washington, DC 20555.
You are required to respond to this letter because your letter of June 1, 1996, did not address your specific actions to correct the willful aspects of the problem (i.e., to ensure that the NRC license is properly amended prior to making changes in ownership, location, or procedures required by license condition; to ensure that violations, once identified, are promptly corrected; and to prevent future willful violations). You should follow the instructions specified in the enclosed Notice when preparing your response. In your response, you should document the specific actions taken and any additional actions you plan to prevent recurrence. After reviewing your response to this Notice, including your proposed corrective actions and the results of future inspections, the NRC will determine whether further NRC enforcement action is necessary to ensure compliance with NRC regulatory requirements.
In accordance with 10 CFR 2.790 of the NRC's "Rules of Practice," a copy of this letter, its enclosure, and your response will be placed in the NRC Public Document Room (PDR). To the extent possible, your response should not include any personal privacy, proprietary, or safeguards information so that it can be placed in the PDR without redaction.
Sincerely, Hubert J. Miller Regional Administrator
Docket No. 030-17466
License No. 21-19345-01G
Enclosure: Notice of Violation and
Proposed Imposition of Civil Penalty
PROPOSED IMPOSITION OF CIVIL PENALTY
Diagnostic Reagents, Inc. Docket No. 030-17466 Dearborn, Michigan License No. 21-19345-01G EA 96-140
During an NRC investigation conducted from August 22, 1995, to March 22, 1996, violations of NRC requirements were identified. In accordance with the "General Statement of Policy and Procedure for NRC Enforcement Actions," 10 CFR Part 2, Appendix C, the Nuclear Regulatory Commission 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:
A. 10 CFR 30.34(c) requires, in part, that each licensee confine its possession and use of byproduct materials to the location authorized by the license.
Condition No. 10 of Materials License No. 21-19345-01G requires that licensed material be used only at 1034 Monroe, Dearborn, Michigan.
Contrary to the above, from May 26, 1993, to May 3, 1996, the licensee possessed licensed material (iodine-125 in vitro kits) at 1727 Monroe, Dearborn, Michigan, a location not authorized by the license. (01013)
B. 10 CFR 30.9(a) requires, in part, that information provided to the Commission by a licensee or information required by the Commission's regulations to be maintained by the licensee, be complete and accurate in all material respects.
10 CFR 19.11(a) and (b) require, in part, that the licensee post current copies of the license, or that the licensee post a notice describing this document and where it may be examined.
Contrary to the above, information required by the Commission's regulations to be maintained by the licensee was not complete and accurate in all material respects. Specifically, sometime between May 1993 and August 1995, the licensee deliberately altered the NRC-authorized location for the possession and use of byproduct material (iodine-125 in vitro kits) as stated on License No. 21-19345-01G, Amendment No. 3, to show the address as 1727 Monroe, Dearborn, Michigan (instead of 1034 Monroe, Dearborn, Michigan, as approved by the NRC); and, as of August 1995, the licensee had posted a copy of the altered license pursuant to 10 CFR 19.11. This information is material because 10 CFR 19.11 requires that a copy of the NRC license be posted or available for examination. (01023)
This is a Severity Level III problem (Supplements VI and VII).
Civil Penalty $1,000
Pursuant to 10 CFR 2.201, Diagnostic Reagents, Inc. (Licensee) is hereby required to submit a written statement or explanation to the Director, Office of Enforcement, U. S. Nuclear Regulatory Commission, within 30 days of the date of this Notice of Violation and Proposed Imposition of Civil Penalty (Notice). This reply should be clearly marked as a "Reply to a Notice of Violation" and should include for each alleged violation: (1) admission or denial of the alleged violation, (2) the reasons for the violation if admitted, and if denied, the reasons why, (3) the corrective steps that have been taken and the results achieved, (4) the corrective steps that will be taken to avoid further violations, and (5) the date when full compliance will be achieved. If an adequate reply is not received within the time specified in this Notice, an order or a Demand for Information may be issued as to why the license should not be modified, suspended, or revoked or why such other action as may be proper should not be taken. Consideration may be given to extending the response time for good cause shown. Under the authority of Section 182 of the Act, 42 U. S. C. 2232, this response shall be submitted under oath or affirmation.
Within the same time as provided for the response required above under 10 CFR 2.201, the Licensee may pay the civil penalty by letter addressed to the Director, Office of Enforcement, U.S. Nuclear Regulatory Commission, with a check, draft, money order, or electronic transfer payable to the Treasurer of the United States in the amount of the civil penalty proposed above, 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 violation 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 (e.g., citing page and paragraph numbers) 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.
The response noted above (Reply to Notice of Violation, letter with payment of civil penalty, and Answer to a Notice of Violation) should be addressed to: James Lieberman, 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 III, 801 Warrenville Road, Lisle, IL 60532-4351.
Because your response will be placed in the NRC Public Document Room (PDR), to the extent possible, it should not include any personal privacy, proprietary, or safeguards information so that it can be placed in the PDR without redaction. However, if you find it necessary to include such information, you should clearly indicate the specific information that you desire not to be placed in the PDR, and provide the legal basis to support your request for withholding the information from the public.
Dated at Lisle, Illinois
this 5th day of August 1996