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Response to the 2016 GAO Audit and Investigation on NRC and Agreement State Materials Licensing

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The Government Accountability Office (GAO) published a report on July 15, 2016, on their investigation to test the NRC and some Agreement States on the process of issuing licenses for possession and use of radioactive materials.

In October 2015, GAO notified NRC staff that it had conducted an undercover investigation focused on improvements made since 2007 and whether they address vulnerabilities identified in the 2007 GAO investigation.  The undercover investigation was part of a longer term audit on NRC and Agreement State materials licensing that was completed in May 2016.

During the first half of 2015, GAO submitted three separate applications, each with different company names and different key staff.  Applications were submitted to an NRC Regional Office and two Agreement States seeking the authority to possess a single 16 curie Americium 241/Beryllium (AmBe) source for use in well logging.

Unlike in 2007, GAO rented storefronts/warehouses to demonstrate their legitimacy to the regulator during the 2015 pre-licensing visits.

In May 2015, the NRC Regional Office and one of the Agreement States visited the GAO facility in their jurisdictions.  Based on those site visits, the NRC and the Agreement State found inadequate safety facilities. Both also requested additional information on the license applications, which were found incomplete. Ultimately they did not provide GAO a radioactive materials license.

In August 2015, the second Agreement State used essentially the same guidance as the other two regulators to conduct a site visit. This Agreement State allows the reviewer to hand deliver the license at the end of the site visit, which the reviewer did.  A subsequent root cause analysis conducted by this Agreement State determined that the reviewer failed to follow all of the State's licensing procedures. 

GAO placed an order to one manufacturer/distributor (M&D) for a 16 curie AmBe source using the fake company name and their Agreement State license.  GAO then altered the license to change the manufacturer and model number of the source and placed a second order with another M&D.  Both M&Ds provided quotes and were ready to deliver.  In the language of radioactive materials categories, the fake GAO company had a valid license for a Category 3 quantity, but used a modified copy of that license to order two Category 3 quantities that, when combined, would have been a Category 2 quantity.  The sources were not actually purchased or shipped; however, GAO demonstrated the capability to obtain 32 curies of AmBe, an aggregated category 2 quantity of material.

It is important to note that the public's safety was never at risk because GAO never actually obtained radioactive material.

After the NRC learned of the GAO investigation in October 2015, the NRC and Agreement States took a number of immediate steps including:

  1. The NRC notified the two Agreement States subject to the GAO investigation, the Organization of Agreement States NRC Regional Offices and the remaining 35 Agreement States.
  2. The Agreement State that issued the license revoked the license and notified the vendors of revoked license.
  3. NRC staff issued a non-public letter to all Agreement States reminding them to follow pre-licensing guidance and suspend the presumption during the licensing process that applicants are acting in good faith.
  4. The NRC reviewed its materials training program to ensure the curriculum emphasizes pre-licensing guidance.  Additional content emphasizing importance of pre-licensing guidance was added to the existing training module for our licensing and inspection training courses.
  5. The NRC conducted training webinars for Agreement States and NRC staff on pre-licensing guidance and site visits on November 18, December 8 and December 15, 2015.
  6. The Agreement State that issued the illegitimate license performed a self-assessment and root cause analysis of their actions in association with the GAO application.
  7. NRC Regions and other Agreement States performed self-assessments of how they implement the pre-licensing guidance.

The NRC and Agreement States also formed joint working groups to see what additional lessons can be gathered from the GAO operation. These groups met throughout 2016 and completed their tasks. Among their tasks, the groups reviewed the pre-licensing guidance, evaluated new strategies to improve license verification and transfer procedures for the quantity and type of material involved in the GAO investigation and considered GAO's specific recommendations.  The working groups' evaluations and recommendations were incorporated into the NRC's re-evaluation of Category 3 source security and accountability.

The NRC will continue to focus on ensuring that licensing procedures used by the NRC and Agreement States adequately verify the identities of applicants for licenses, that applicants have a legitimate need to possess and use radioactive materials, and that licensed activities will be conducted in a manner that ensures adequate protection of the health and safety of public and security of the radioactive material.  Based on recent and ongoing reviews, we believe current NRC regulations for licensing radioactive sources remain adequate, consistent with the risks they pose. Nonetheless, the NRC is doing what it can to see what lessons from the GAO investigation can be applied to strengthen radioactive materials licensing.

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Categories of Radioactive Materials

Security requirements depend on potential risks posed by the quantity of a material. The international community has a list of materials that, if not safely managed or securely protected, are thought to pose the greatest threat. Specific quantities of those materials are in one of five categories reflecting the risk the material would pose to someone who removes a source from its shielding and holds it or keeps it nearby. The NRC and the Agreement States have security requirements for all radioactive material, but have additional detailed requirements for the security of Category 1 and 2 materials.

  • Category 1: permanent injury likely after a few minutes, could be fatal within an hour
  • Category 2: permanent injury possible after minutes to hours, possibly fatal within hours to days
  • Category 3: permanent injury possible after several hours, unlikely to be fatal after days to weeks
  • Categories 4 and 5: not likely to cause permanent injury or fatality.

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What the GAO recommended:

  • Add Category 3 sources to the NRC's electronic system for managing information on sources
  • Require anyone transferring a Category 3 source to confirm with the regulator or with the NRC's electronic information management system that the purchaser has a valid license to receive it
  • Consider requiring an onsite security review for all applicants for Category 3 licenses that the regulator does not know

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Page Last Reviewed/Updated Friday, July 07, 2017