EA-03-004 - SGL Carbon, LLC

June 24, 2004


Mr. Peter Hoffman, President
SGL Carbon, LLC
P.O. Box 563960
Charlotte, NC 28256-3960


Dear Mr. Hoffman:

This letter refers to enforcement matters which came to light as a result of various communications between representatives of SGL Carbon, LLC (SGL); Parker, Poe, Adams, & Bernstein, LLP; Berliner, Corcoran, & Rowe, LLP; and the U.S. Nuclear Regulatory Commission (NRC). Via a letter dated December 16, 2002, Parker, Poe, Adams, & Bernstein, LLP, documented SGL's voluntary self-disclosure of numerous large exports of bulk, non-fabricated, nuclear-grade graphite made without a specific license between 1998 and September 30, 2002. After reviewing the data provided in the December 16, 2002, letter, the NRC's Office of Enforcement requested additional information via a letter to Parker, Poe, Adams, & Bernstein, LLP, dated February 20, 2003. Parker, Poe, Adams, & Bernstein, LLP, replied on March 18, 2003. In order to obtain additional information, the NRC Office of Investigations (OI) also interviewed a representative from the NRC's Office of the General Counsel on April 4, 2003, and representatives from SGL and Parker, Poe, Adams, & Bernstein, LLP, on April 9, 2003. (NOTE: These OI assists were tracked via OI Case Nos. 2-2003-018F and 2-2003-019F, respectively, and these matters are considered closed.) A separate NRC letter requesting additional information was subsequently sent to SGL on June 19, 2003, and SGL responded on July 10, 2003. At SGL's request, representatives from Berliner, Corcoran, & Rowe, LLP; SGL; and the NRC also met at the NRC Headquarters Office in Rockville, MD, on October 23, 2003, to discuss SGL's licensing and enforcement concerns.

Exports of bulk, non-fabricated, nuclear-grade graphite are currently permitted under a general license by 10 CFR 110.25(a) as long as the exports are made in individual shipments of 100 kilograms or less to any country that is not embargoed and as long as the aggregate quantities exported are 2,000 kilograms or less per year to any 1 country. Otherwise, a specific NRC license is required. However, between 1998 and September 30, 2002, SGL exported bulk, non-fabricated, nuclear-grade graphite without a specific license in at least 746 individual shipments of more than 100 kilograms to 18 non-embargoed countries and in aggregate export amounts ranging from 2,053 to 512,607 kilograms to between 7 and 9 non-embargoed countries per year. (Refer to the enclosed nuclear-grade graphite export data tables for additional details.) These exports constitute a violation of 10 CFR 110.25(a).

Although these exports have significant regulatory concern because they were both numerous and large, these exports were neither intended for nuclear end use nor shipped to the embargoed export destinations listed in 10 CFR 110.28. Therefore, SGL's numerous large exports of bulk, non-fabricated, nuclear-grade graphite made without a specific license between 1998 and September 30, 2002, have been categorized as a Severity Level III violation. However, neither a civil penalty nor a Notice of Violation will be issued for the Severity Level III violation described above because the NRC has determined that the exercise of enforcement discretion is warranted in accordance with Section VII.B.6, "Violations Involving Special Circumstances," of the "General Statement on Policy and Procedures for NRC Enforcement Actions," (Enforcement Policy) NUREG-1600 (Enclosure 2). Discretion is warranted in this case because the violations were self identified, self disclosed, and corrected and because the NRC is in the process of pursuing rule changes that would permit the exports that were previously in violation (i.e., exports intended for non-nuclear end use).

If you contest the violation or significance, you should provide a response within 30 days of the date of this letter, with the basis for your denial, to the Nuclear Regulatory Commission, ATTN: Document Control Desk, Washington D.C. 20555-0001, with a copies to the Director, Office of International Programs, U.S. Nuclear Regulatory Commission, Washington, D.C. 20555-0001, and the Director, Office of Enforcement, at the same address.

In accordance with 10 CFR 2.390 of the NRC's "Rules of Practice," a copy of this letter, its enclosure, and your response, if you choose to provide one, will be made available electronically for public inspection in the NRC Public Document Room or from the NRC's document system (ADAMS), which is accessible from the NRC Web site at the Public NRC Library. To the extent possible, any response should not include any personal privacy, proprietary, or safeguards information so that it can be made available to the Public without redaction.

    Frank J. Congel, Director
Office of Enforcement

1. Nuclear-Grade Graphite Export Data Tables
2. Enforcement Policy

cc w/encl:

Katherine R. Prosser, Senior Paralegal
SGL Carbon, LLC
P.O. Box 563960
Charlotte, NC 28256-3960

Ben H. Flowe, Jr., Attorney at Law
Berliner, Corcoran, & Rowe, LLP
1101 Seventeenth Street, N.W.
Washington, D.C. 20036-4798

Mr. Robin DeLaBarre
NP/NE, Room 3318
U.S. Department of State
2201 C Street, N.W.
Washington, D.C. 20520

Mr. Steve Clagett
Director, Nuclear and Missile Technology
U.S. Department of Commerce
Bureau of Industry Standards
1401 Constitution Avenue, N.W.
Washington, D.C. 20230

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