EA-96-009 - Applied Health Physics, Inc.

March 29, 1996

EA 96-009

Mr. Robert G. Gallagher, P.E., CHP
President and CEO
Applied Health Physics, Inc.
2986 Industrial Boulevard
Bethel Park, Pennsylvania 15102

SUBJECT:

CONFIRMATORY ORDER (EFFECTIVE IMMEDIATELY) (NRC INSPECTION REPORT NOS. 030-10859/95-002 AND 030-06198/95-002)

Dear Mr. Gallagher:

The enclosed Confirmatory Order (Effective Immediately) is being issued to confirm your commitments described in your letter dated February 19, 1996, in your facsimiles dated February 23 and March 15, 21, and 25, 1996, and in a telephone call on March 28, 1996. The Order requires that: (1) authorization for the receipt of pre-packaged radioactive waste at the Bethel Park facility be suspended; (2) you dispose of radioactive waste as specified in your disposal schedule dated February 19, 1996, as amended by your facsimiles dated February 23 and March 15, 1996; (3) you dispose of the radioactive waste in containers W-1995-010, W-1995-050 through W-1995-062, S-1995-002, and S-1995-007 through S-1995-010, by December 31, 1996; (4) you establish an escrow account within 30 days of the date of this Order to provide financial assurance for waste handling and disposal of the waste; (5) you inform the NRC of the name, address and location of the escrow agent; (6) all revenues coming from customers for waste brokerage be delivered into escrow within 7 business days; and (7) you provide the NRC with monthly bank account statements pertaining to the escrow account.

As to your request for withholding escrow account information, we are prepared to do this to the extent provided by the law, provided you submit the information described in the enclosed Order.

In the above referenced telephone call between James H. Joyner, Technical Assistant to Director, Division of Nuclear Materials Safety, U.S.N.R.C., Region I, and Daniel Haber, Assistant to the President, Applied Health Physics, on March 28, 1996, you agreed to the issuance of the enclosed Order.

Pursuant to Section 223 of the Atomic Energy Act of 1954, as amended, any person who willfully violates, attempts to violate, or conspires to violate, any provision of this Order shall be subject to criminal prosecution as set forth in that section. Violation of this Order also may subject the person to civil monetary penalty.

Questions concerning this Order should be addressed to Mr. James Lieberman, Director, Office of Enforcement, at (301) 415-2741.

This letter also refers to your facsimiles received November 9, 21, and 29, 1995, and December 1, and 8, 1995, in response to our Confirmatory Action Letter (CAL) 1-95-019, dated November 8, 1995. Based on your responses, the NRC has found that all the commitments listed in the CAL have been met. No further response is required regarding the CAL.

In accordance with 10 CFR 2.790 of the NRC's "Rules of Practice," a copy of this letter, its enclosures, and your response will be placed in the NRC Public Document Room.

Sincerely,

James Lieberman, Director Office of Enforcement

Docket Nos. 030-10859; 030-06198 License Nos. 37-14600-01; 37-09135-01

Enclosures: As Stated

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UNITED STATES NUCLEAR REGULATORY COMMISSION

In the Matter of APPLIED HEALTH PHYSICS, INC. Bethel Park, Pennsylvania

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Docket Nos. 030-10859; 030-06198 License Nos. 37-14600-01; 37-09135-01 EA 96-009

CONFIRMATORY ORDER (EFFECTIVE IMMEDIATELY)

I

Applied Health Physics, Inc. (Licensee) is the holder of NRC License Nos. 37-14600-01 and 37-09135-01 issued by the Nuclear Regulatory Commission (NRC or Commission) pursuant to 10 CFR Part 30. The licensee's facility is located on the Licensee's site in Bethel Park, Pennsylvania. License No. 37-14600-01 currently authorizes the receipt, possession, and storage of pre-packaged wastes. License No. 37-09135-01 currently authorizes leak tests services, analysis of samples, calibrations of instruments, and fixed gauge services. Overall, the Licensee provides services to customers in a variety of areas such as radioactive waste brokerage, surveys, leak tests and analysis, calibration of instrumentation, sample analysis, training, and consultation. License No. 37-14600-01 initially was issued on September 4, 1975, and is due to expire on January 30, 1997. License No. 37-09135-01 was initially issued on February 19, 1963, and is due to expire on October 31, 2000.

II

On May 19, 1994, representatives from NRC Region I spoke with Licensee representatives concerning the need for financial assurance. The NRC representatives discussed options with Licensee representatives with respect to meeting the financial assurance requirements. The result of the conversation was that the Licensee decided to reduce the radioactive material possession limits on License No. 37-14600-01 such that financial assurance would not be required.

In a letter dated May 24, 1994, the Licensee requested a license amendment to lower possession limits, add specifically listed radionuclides for its waste broker License No. 37-14600-01, and limit possession to sealed sources only for its calibration service License No. 37-09135-01. The NRC approved these amendments on June 28, 1994.

On March 9, 1995, the Licensee voluntarily filed for bankruptcy under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Western District of Pennsylvania. On March 20 and 22, 1995, respectively, the NRC Office of the Controller filed for proofs of claim for 1994 license and Freedom of Information Act fees owed by the Licensee to the NRC. (On November 14 and 15, 1995, respectively, the NRC filed an additional proof of claim for 1995 license fees owed and amended the proof of claim previously filed for the 1994 fees.)

During a routine safety inspection conducted on April 18-19, 1995, the NRC identified seven violations as described in the Notice of Violation (Notice) dated May 22, 1995. One of the seven violations cited the Licensee for holding radioactive waste for more than 180 days, contrary to the requirements of Condition 14 of License No. 37-14600-01.

On May 26, 1995, four days after the issuance of the Notice, the Licensee took possession of two drums of radioactive waste. One drum contained approximately 23 microcuries of unsealed americium-241, which is not authorized on its waste broker license. The authorization for unsealed americium-241 was deleted from License No. 37-14600-01 in accordance with the Licensee's May 24, 1994 request.

In a letter dated June 26, 1995, the Licensee responded to the Notice and indicated that the Licensee's president would provide the management commitment and oversight needed to maintain compliance with conditions of both licenses. This response indicated that procedures would be developed to provide for immediate review of received material to determine acceptability for storage at the Licensee's facility.

On October 25, 1995, the date that the Licensee was to file a Chapter 11 disclosure statement and plan, the Chapter 11 case was converted to a Chapter 7 case. The conversion occurred due to the Licensee's inability to file the disclosure statement and plan by the October 25, 1995 deadline.

Due to the NRC's concern about the financial status of the Licensee and the possibility of abandoned radioactive material at the Bethel Park, Pennsylvania, facility, the NRC issued a Confirmatory Action Letter (CAL) to the Licensee on November 8, 1995, confirming the Licensee's commitment to:

(1) cease acquiring any additional radioactive waste from customers;

(2) provide an up-to-date inventory of the radioactive material in its possession at the Bethel Park facility to the NRC by November 9, 1995;

(3) provide a schedule of any shipments of radioactive waste planned for 1995; and

(4) provide a copy of the Licensee's plans over the next six months with regard to the bankruptcy proceedings.

The Licensee responded in a letter dated November 9, 1995, that included a current inventory of radioactive waste held at the Licensee's Bethel Park, Pennsylvania, facility, a schedule of shipments planned for 1995, a commitment not to accept any additional waste, and a commitment to inform the NRC, upon notification from the Licensee's attorney, of the Licensee's financial status.

The NRC conducted an inspection at the site on November 15, 1995, and reviewed the storage and security of licensed material, inventory, and storage of radioactive waste. As a result of this inspection, NRC found three apparent violations, as follows:

(1) failure to limit possession of byproduct material (unsealed Am-241) to those isotopes listed on the license, as required by 10 CFR 30.3;

(2) failure to limit possession of special nuclear material (Pu-239) to those authorized by the service license, as required by 10 CFR 70.19; and

(3) failure to limit possession of licensed material waste to a period not to exceed 180 days (May 26, 1995 acquisition of 2 drums), as required by License Condition No. 14 of License No. 37-14600-01, a repeat violation.

The Licensee met with the NRC staff during a predecisional enforcement conference at the NRC Region I office on January 30, 1996, to review the circumstances that led to these violations. During the enforcement conference, the Licensee proposed corrective actions that included: (1) establishing a separate bank account for payment of costs incurred due to waste disposal; (2) setting a disposal date of 100 days from the date of receipt of waste to assure that the waste is disposed prior to 180 days; (3) checking the Licensee's license prior to obtaining waste in order to assure compliance; and (4) hiring an Assistant to the President who will streamline procedures, maintain control of day-to-day business activities, and ensure that the RSO has the necessary resources to maintain compliance.

The NRC requested the Licensee to submit, by February 15, 1996, a more detailed, thorough plan describing the Licensee's plans for achieving compliance with all license requirements. A plan was received from the Licensee on February 15, 1996, but additional information was requested by the NRC staff.

III

By a letter dated February 19, 1996, and facsimiles dated February 23 and March 15, 21, and 25, 1996, the Licensee agreed that: 1) with the exception of the radioactive waste in containers W-1995-010, and W-1995-050 through W-1995-062, the Licensee will achieve compliance with Condition 14 of License No. 37-14600-01 by April 30, 1996; 2) with respect to the radioactive waste in containers W-1995-010, W-1995-050 through W-1995-062, S-1995-002, and S-1995-007 through S-1995-010, the Licensee will achieve compliance with Condition 14 of License No. 37-14600-01 by December 31, 1996; and 3) the Licensee will establish a separate bank account for radioactive waste disposal and use the account exclusively for the deposit of payments made by the Licensee's customers for the disposal of NRC-licensed radioactive waste materials.

I find that the Licensee's commitments as set forth in its letter of February 19, 1996 and facsimiles dated February 23 and March 15, 21, and 25, 1996, are acceptable and necessary and conclude that with these commitments the public health and safety are reasonably assured. In view of the foregoing, I have determined that the public health and safety require that the Licensee's commitments in its February 19, 1996 letter and February 23 and March 15, 21, and 25, 1996 facsimiles be confirmed by this Order. The Licensee has agreed to this action in a telephone call on March 28, 1996, between James H. Joyner, Technical Assistant to Director, Division of Nuclear Materials Safety, U.S.N.R.C., Region I, and Daniel Haber, Assistant to the President, Applied Health Physics. Pursuant to 10 CFR 2.202, I also have determined, based on the Licensee's consent and on the significance of the violations described above, that the public health and safety require this Order to be immediately effective.

IV

Accordingly, pursuant to sections 81, 161b, 161i, 161o, 182 and 186 of the Atomic Energy Act of 1954, as amended, and the Commission's regulations in 10 CFR 2.202 and 10 CFR Part 30, IT IS HEREBY ORDERED, EFFECTIVE IMMEDIATELY, that:

A. Authorization for the receipt of pre-packaged radioactive waste at the Bethel Park facility be suspended.

B. Radioactive waste be disposed of as specified in the Licensee's disposal schedule dated February 19, 1996, as amended by the Licensee's facsimiles dated February 23 and March 15, 21, and 25, 1996. With the exception of the radioactive waste in containers W-1995-010, and W-1995-050 through W-1995-062, S-1995-002, and S-1995-007 through S-1995-010, compliance with Condition 14 of License No. 37-14600-01 must be achieved by April 30, 1996.

C. Radioactive waste in containers W-1995-010, and W-1995-050 through W-1995-062, S-1995-002, and S-1995-007 through S-1995-010, be disposed of by December 31, 1996.

D. An escrow account be established in accordance with this Order within 30 days of the date of this Order to provide financial assurance for waste handling and disposal of the Licensee's waste. For the purposes of this paragraph, an escrow account is an account where money is put into the custody of a third party for delivery to a grantee only after the fulfillment of specified conditions. The escrow agent shall be provided a copy of this Order.

E. The NRC be informed of the name, address, and location of the escrow agent within 72 hours of the Licensee's opening of the escrow account. Such escrow account information as well as any other information required by this Order shall be submitted to the Director, Division of Nuclear Materials Safety, NRC Region I, 475 Allendale Road, King of Prussia, Pennsylvania 19406.

F. All revenues coming from customers for waste brokerage required to pay for the direct costs of transportation, permits, disposal, and a 10 % contingency fee will be delivered into the escrow account established under Paragraph D above within 5 business days and will remain in this escrow account until one of the following three conditions has been satisfied:

1. the Licensee formally notifies the NRC, by telephone and facsimile, of the planned withdrawal of funds for the purpose of waste handling or disposal at least 5 business days prior to withdrawal of funds and the NRC has not provided within this time period an objection to the dispersal of the funds; or

2. the escrow agent has been notified by the NRC, in writing, that the Licensee has defaulted on its obligation to carry out waste handling and disposal for the Bethel Park, Pennsylvania, facility; or

3. the escrow account has been terminated by joint notice, in writing, from the Licensee and NRC.

Upon the escrow agent receiving written notification from the NRC of the Licensee's default, the escrow agent shall make payments from the escrow account as the NRC shall direct, in writing, to provide for payment of the costs of the required waste handling and disposal activities covered by this agreement.

G. The NRC be provided with monthly bank account statements pertaining to the escrow account.

If personal privacy or proprietary information is included in any submittal required by this Order, the Licensee shall provide a bracketed copy that identifies the information that should be protected and a redacted copy that deletes such information. If the Licensee requests withholding of such material, the Licensee must specifically identify the portions that it seeks to have withheld and provide in detail the bases for its 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 2.790(b) to support a request for withholding confidential commercial or financial information).

The Regional Administrator, Region I, may relax or rescind, in writing, any of the above conditions upon a showing by the Licensee of good cause.

V

Any person adversely affected by this Confirmatory Order, other than the Licensee, may request a hearing within 20 days of its issuance. Where good cause is shown, consideration will be given to extending the time to request a hearing. A request for extension of time must be made in writing to the Director, Office of Enforcement, U.S. Nuclear Regulatory Commission Washington, D.C. 20555, and include a statement of good cause for the extension. Any request for a hearing shall be submitted to the Secretary, U.S. Nuclear Regulatory Commission, ATTN: Chief, Docketing and Service Section, Washington, D.C. 20555. Copies also shall be sent to the Director, Office of Enforcement, U.S. Nuclear Regulatory Commission, Washington, D.C. 20555, to the Assistant General Counsel for Hearings and Enforcement at the same address, to the Regional Administrator, NRC Region I, 475 Allendale Road, King of Prussia, Pennsylvania 19406, and to the Licensee. If such a person requests a hearing, that person shall set forth with particularity the manner in which his interest is adversely affected by this Order and shall address the criteria set forth in 10 CFR 2.714(d).

If a hearing is requested by a person whose interest is adversely affected, the Commission will issue an Order designating the time and place of any hearing. If a hearing is held, the issue to be considered at such hearing shall be whether this Confirmatory Order should be sustained.

Pursuant to 10 CFR 2.202(c)(2)(i), any person other than the Licensee adversely affected by this Order may, in addition to demanding a hearing, at the time the answer is filed or sooner, move the presiding officer to set aside the immediate effectiveness of the Order on the ground that the Order, including the need for immediate effectiveness, is not based on adequate evidence but on mere suspicion, unfounded allegations, or error.

In the absence of any request for hearing, or written approval of an extension of time in which to request a hearing, the provisions specified in Section IV above shall be final 20 days from the date of this Order without further order or proceedings. If an extension of time for requesting a hearing has been approved, the provisions specified in Section IV shall be final when the extension expires if a hearing request has not been received. AN ANSWER OR A REQUEST FOR HEARING SHALL NOT STAY THE IMMEDIATE EFFECTIVENESS OF THIS ORDER.

FOR THE NUCLEAR REGULATORY COMMISSION James Lieberman, Director Office of Enforcement

Dated at Rockville, Maryland
this 29th day of March 1996