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Information Notice No. 92-22: Criminal Prosecution and Conviction of Wrongdoing Committed by a Commercial-Grade Valve Supplier
UNITED STATES NUCLEAR REGULATORY COMMISSION OFFICE OF NUCLEAR REACTOR REGULATION WASHINGTON, D.C. 20555 March 24, 1992 NRC INFORMATION NOTICE 92-22: CRIMINAL PROSECUTION AND CONVICTION OF WRONGDOING COMMITTED BY A COMMERCIAL-GRADE VALVE SUPPLIER Addressees All holders of operating licenses or construction permits for nuclear power reactors. Purpose The U.S. Nuclear Regulatory Commission (NRC) is issuing this information notice to inform addressees of the results of the criminal prosecution of a case of wrongdoing that the NRC staff referred to the U.S. Department of Justice (DOJ). The NRC is also reminding licensees and their suppliers of the penalties that could result from intentionally violating Federal regulatory requirements and criminal statutes. Both the supplier and individual employees of the supplier could be subject to criminal statutes even if the vendor supplies only commercial-grade products. It is expected that recipients will review the information for applicability to their facilities and consider actions, as appropriate, to avoid similar problems. However, suggestions contained in this information notice are not NRC requirements; therefore, no specific action or written response is required. Background In Information Notice (IN) 88-48, "Licensee Report of Defective Refurbished Valves," and Supplements 1 and 2, the staff discussed a problem that the Pacific Gas and Electric Company (PG&E) found regarding what were believed to be Henry Vogt Company (Vogt) 2-inch valves (Model No. 13111) which exhibited excessive steam leakage around the bonnet and stem. PG&E contacted Vogt representatives to inspect and repair the leaking valves. Vogt examined the valves and determined that the valves were not manufactured by Vogt. PG&E subsequently determined that 70 valves procured by PG&E as new valves for its Diablo Canyon nuclear power plant were actually counterfeit. The 70 valves were shipped to PG&E by CMA International, Incorporated, (CMA) of Vancouver, Washington. IMA Valve Refurbisher Company, a Division of CMA, also operated from the same address as CMA. Description of Circumstances On March 28, and April 25-26, 1989, the NRC staff reviewed records at the CMA facility in Vancouver, Washington. The NRC staff found 67 CMA valve order packages that contained statements or information which indicated either 9203180179 . IN 92-22 March 24, 1992 Page 2 of 2 suspect valves or possible wrongdoing by CMA. The staff discussed some of these packages in IN 88-48, Supplement 2, of August 22, 1989. The NRC reviewed this matter and referred it to the DOJ for disposition. The DOJ conducted a criminal investigation and obtained a Federal grand jury indictment of the President of CMA, and CMA International, Incorporated, under Title 18 of the United States Code. On January 17, 1992, the President of CMA, and CMA pleaded guilty on Federal charges that they sold counterfeit valves that were ultimately installed at the Diablo Canyon Nuclear Power Plant, the Vogtle Nuclear Power Plant, and the U.S. Marine Corps military base in Quantico, Virginia. This felony conviction resulted in the sentencing of the President of CMA to 3 years imprisonment, and an order for the Corporation to pay restitution of $213,825.03 to the NRC's licensees. The U.S. District Court Judgement Orders are enclosed as Attachment 1. Discussion All personnel involved in NRC-regulated activities, including suppliers and vendors, have a responsibility to comply with applicable NRC regulatory requirements and other Federal laws. The NRC expects and demands compliance and will seek criminal prosecution of wrongdoing in cases of intentional or willful violations of these requirements. These criminal sanctions may include imprisonment, fines, and the restitution of monies, as evidenced by the case described herein. In addition, as provided in 10 CFR 50.5, "Deliberate Misconduct by Unlicensed Persons," 56 Federal Register 40684, August 15, 1991, suppliers and vendors may also be subject to direct NRC enforcement action for deliberately causing a licensee to be in violation of Commission regulations or by providing false information to licensees concerning licensed activities. Addressees may wish to distribute copies of this information notice to their employees and suppliers. This information notice requires no specific action or written response. If you have any questions about the information in this notice, please call the technical contact listed below or the appropriate Office of Nuclear Reactor Regulation (NRR) project manager. Charles E. Rossi, Director Division of Operational Events Assessment Office of Nuclear Reactor Regulation Technical contact: Joseph J. Petrosino, NRR (301) 504-2979 Attachments: 1. U.S. District Court, Western District of Washington, Judgement Orders 2. List of Recently Issued NRC Information Notices .
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