EA-04-124 - Integrated Production Services, Inc.

October 12, 2004

EA-04-124

Mr. Dale Boudreaux
Senior Vice President for U.S.A.
Integrated Production Services, Inc.
205 Industrial Trace
Broussard, Louisiana 70518

SUBJECT:

NOTICE OF VIOLATION AND PROPOSED IMPOSITION OF CIVIL PENALTY – $3,000 (NRC INSPECTION REPORT 030-36382/04-001 AND OI INVESTIGATION REPORT 4-2004-004)

Dear Mr. Boudreaux:

This refers to NRC inspections conducted on January 19, March 4-5, and June 10, 2004, at your facility in Broussard, Louisiana, and to an investigation by the NRC Office of Investigations completed on April 14, 2004.

Based on the results of the inspection and investigation, an apparent willful violation of NRC requirements was identified and was described in an inspection report issued on August 9, 2004. The apparent violation involved Integrated Production Services' (IPS) use of byproduct material in offshore waters ¹ without either (1) following the reciprocity provisions of 10 CFR 150.20, which would have granted you an NRC general license to conduct activities permitted by your state of Louisiana license; or (2) obtaining a specific NRC license authorizing you to conduct licensed activities in offshore waters. On August 9, 2004, the NRC telephoned you to give you the results of the inspection and investigation, and to inform you that the NRC was considering escalated enforcement action for this apparent violation.

In the letter transmitting the inspection report, we provided you the opportunity to address the apparent violation by either attending a predecisional enforcement conference or by providing a written response before we made a final enforcement decision. In a letter dated August 31, 2004, you provided a written response to the apparent violation, in which you acknowledged that the violation had occurred and denied that there was any intent to violate federal law. Your letter also described several corrective actions, including: 1) employing a full-time radiation safety officer; 2) actions to assure that IPS managers are aware of meetings with regulatory agencies and any required actions; 3) monthly review of employee training plans; and 4) meetings with employees to emphasize the importance of compliance.

Based on the information developed during the inspection and investigation, and the information that you provided in your response to the inspection report, the NRC has determined that a violation of NRC requirements occurred. The violation is cited in the enclosed Notice of Violation (Notice) and the circumstances surrounding it were described in detail in the subject inspection report.

Although you stated in your August 31 letter that you did not believe there was any intent to violate federal law on the part of IPS, you provided no specific information to support your claim. The NRC continues to believe that willfulness was associated with this violation. As explained in the enclosure to the inspection report, NRC believes that IPS had a responsibility, following IPS's attendance at a May 10, 2001 NRC-sponsored meeting in Lafayette, Louisiana, to assure that it had the appropriate NRC license to operate in offshore waters. The primary purpose of this meeting was to bring these requirements to the attention of state of Louisiana licensees who may be conducting operations in offshore waters. Although no current IPS employees attended the 2001 meeting, IPS sent a representative to the meeting and had the overall responsibility to assure that the messages conveyed by NRC at this meeting were acted upon. NRC's Enforcement Policy provides that companies are responsible for the actions (or omissions) of their employees. Additionally, IPS conducted activities in offshore waters after applying for, but before receiving, its NRC license. Therefore, this violation has been categorized in accordance with the "General Statement of Policy and Procedure for NRC Enforcement Actions" (Enforcement Policy), NUREG-1600, at Severity Level III.

In accordance with the Enforcement Policy, a base civil penalty in the amount of $3,000 is considered for a Severity Level III violation. Because willfulness was associated with this violation, the NRC considered whether credit was warranted for Identification and Corrective Action in accordance with the civil penalty assessment process in Section VI.C.2 of the Enforcement Policy. Because the violation was identified by the NRC through its inspections, no credit for identification is warranted. However, credit for corrective actions is warranted based on the corrective actions you described in your August 31, 2004 letter. This results in the assessment of a civil penalty at the base value of $3,000.

Therefore, to emphasize the importance of maintaining compliance with NRC requirements and avoiding willful violations, 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 base amount of $3,000 for the Severity Level III violation described in the Notice. In addition, issuance of this Notice constitutes escalated enforcement action that may subject you to increased inspection effort.

You are required to respond to this letter and should follow the instructions specified in the enclosed Notice when preparing your response. The NRC will use your response, in part, to determine whether further enforcement action is necessary to ensure compliance with regulatory requirements.

If you disagree with this sanction, you may request alternative dispute resolution (ADR) with the NRC. ADR is a general term encompassing various techniques for resolving conflict outside of court using a neutral third party. The technique that the NRC has decided to employ during a pilot program which is now in effect is mediation. In mediation, a neutral mediator with no decision-making authority helps parties clarify issues, explore settlement options, and evaluate how best to advance their respective interests. The mediator's responsibility is to assist the parties in reaching an agreement. However, the mediator has no authority to impose a resolution upon the parties. Mediation is a confidential and voluntary process. If the parties to the ADR process (the NRC and the licensee) agree to use ADR, they select a mutually agreeable neutral mediator and share equally the cost of the mediator's services. Generally, the NRC is willing to discuss the resolution of three potential issues: 1) whether a violation occurred; 2) the appropriate enforcement action; and 3) the appropriate corrective actions for the violation(s). Additional information concerning the NRC's pilot program can be obtained at the Alternative Dispute Resolution (ADR) Program's web page. The Institute on Conflict Resolution (ICR) at Cornell University has agreed to facilitate the NRC's program as an intake neutral. Intake neutrals perform several functions, including: assisting parties in determining ADR potential for their case, advising parties regarding the ADR process, aiding the parties in selecting an appropriate mediator, explaining the extent of confidentiality, and providing other logistic assistance as necessary. Please contact ICR at 877-733-9415 within 10 days of the date of this letter if you are interested in pursing resolution of this issue through ADR. You may also contact Nick Hilton, Office of Enforcement, at (301) 415-3055 for additional information.

In accordance with 10 CFR 2.390 of the NRC's "Rules of Practice," a copy of this letter, its enclosure, and your response 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. The NRC also includes Issued Significant Enforcement Actions on its Web site.

		Sincerely,
		/RA/
		Bruce S. Mallett Regional Administrator

Docket No.: 030-36382
License No.: 17-27763-01

Enclosures:
1) Notice of Violation & Proposed Imposition of Civil Penalty
2) NUREG/BR-0254 Payment Methods (Licensee only)

cc w/Enclosure 1:
State of Louisiana Radiation Control Program Director

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Enclosure 1

NOTICE OF VIOLATION
AND
PROPOSED IMPOSITION OF CIVIL PENALTY

Integrated Production Services, Inc. Broussard, Louisiana

Docket No. 030-36382 License No. 17-27763-01 EA-04-124

During an NRC inspection and investigation completed on August 9, 2004, a violation of NRC requirements was 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 violation and associated civil penalty are set forth below:

10 CFR 30.3 requires, in relevant part, that no person shall possess or use byproduct material except as authorized by a specific or general license issued by the NRC.

10 CFR 150.20(a) provides in part that any person who holds a specific license from an Agreement State is granted an NRC general license to conduct the same activity in non-Agreement States and in offshore waters subject to the provisions of 10 CFR 150.20(b).

10 CFR 150.20(b)(1) requires, in part, that any person engaging in activities in non-Agreement States or offshore waters shall, at least 3 days before engaging in each such activity, file NRC Form-241, "Report of Proposed Activities in Non-Agreement States," a copy of its Agreement State specific license, and the appropriate fee as prescribed in 10 CFR §170.31 with the Regional Administrator of the appropriate NRC regional office.

Contrary to the above, Integrated Production Services, Inc., conducted well-logging activities in offshore waters in September 2003, and transported byproduct material into offshore waters on other occasions and did not file NRC Form-241, a copy of its Agreement State specific license, and the appropriate fee with the Regional Administrator of the U.S. NRC Region IV office in Arlington, Texas. Specifically, the licensee used a sealed source in offshore waters in the Gulf of Mexico at OCS-G-G6013 (Well # 868 in Mustang Island field) on September 15, 2003, and transported a well-logging sealed source to offshore oil/gas platforms in offshore waters on four separate occasions in calendar year 2003, without (1) obtaining an NRC specific license, as required by 10 CFR 30.3; or (2) following the requirements of 10 CFR 150.20(b)(1).

This is a Severity Level III violation (Supplement VI).
Civil Penalty - $3,000

Pursuant to the provisions of 10 CFR 2.201, Integrated Production Services (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; EA-04-124" 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. Your response may reference or include previous docketed correspondence, if the correspondence adequately addresses the required response. 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 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.

Within the same time as provided for the response required above under 10 CFR 2.201, the Licensee may pay the civil penalty proposed above or the cumulative amount of the civil penalties if more than one civil penalty is proposed, 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 30 days of the date of this Notice of Violation and Proposed Imposition of Civil Penalty, 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.C.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, statement as to payment of civil penalty, and Answer to a Notice of Violation) should be addressed to: Frank Congel, 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 IV, 611 Ryan Plaza Drive, Suite 400, Arlington, TX 76011.

Because your response will be made available electronically for public inspection in the NRC Public Document Room or from the 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 2.390(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 are required to post this Notice within two working days.

Dated this 12th day of October 2004

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¹"Offshore waters" is defined by 10 CFR 150.3 as that area of land and water, beyond Agreement States' Submerged Lands Act jurisdiction, on or above the U.S. Outer Continental Shelf.