EA-96-342 - NDC Systems

January 13, 1997

EAs 96-342 & 96-539

NDC Systems
ATTN: Mr. Daniel Fishman
President and Radiation Safety Officer
5314 N. Irwindale Avenue
Irwindale, California 91706

SUBJECT:

NOTICE OF VIOLATION AND CONFIRMATORY ORDER MODIFYING LICENSE (NRC Investigation Report 4-96-14)

Dear Mr. Fishman:

This refers to the predecisional enforcement conference held on October 23, 1996, in the NRC Region IV office in Arlington, Texas. The conference was held to discuss the circumstances surrounding an apparent violation identified to you by letter dated October 2, 1996.

Based on information developed during the investigation, and the information that you provided during the conference, 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 are described in our October 2, 1996 letter to you. The violation involves a willful failure to comply with NRC export requirements (10 CFR 110.50) in that packaging of certain gauging devices containing americium-241 was not in accordance with Department of Transportation (DOT) requirements.

NDC representatives stated that the circumstances surrounding the failure to comply with DOT requirements began around 1989 with the practice of improperly labeling gauges that were going to certain countries. Gauges going to certain countries were purposefully mislabeled to reflect a lower activity of 25 mCi, even though NDC personnel knew that the gauges contained 150 mCi. (This occurred after Amersham, the manufacturer of the sources, began shipping to NDC 150 mCi cylinder sources rather than 25 mCi disk sources.) NDC personnel stated they rationalized that this mislabeling was acceptable because the radiation output of the gauges was essentially the same, although the sources were of different activities. Since the mislabeled gauges appeared to be within the DOT limit for excepted packaging, NDC personnel improperly packaged them in excepted packaging rather than in the required Type A packaging. Thus, NDC shipping personnel were packaging and sending gauges going to certain countries in excepted packaging, while the same model gauges, which were correctly labelled, were shipped to other countries in Type A packaging.

Some NDC personnel stated that they raised concerns about the practice of mislabeling the gauge to senior NDC management on a number of occasions. Although NDC senior management agreed the practice was improper, NDC personnel were instructed to continue the practice despite their concerns. At the conference, you stated that this inappropriate practice was condoned by senior management with the rationalization that it would be a temporary practice until the devices were registered in those certain countries. All involved NDC personnel stated that there was no discussion of mispackaging the devices, which was the natural consequence of the mislabeling. Due to your admitted "sloppy" practices and total lack of oversight, NDC senior management inadequately evaluated the mislabeling concern and did not consider that the mislabeling would result in mispackaging. Thus, the NRC has concluded that this violation was willful based on, at least, the careless disregard by senior NDC management for applicable regulatory requirements.

During the conference, you stated that the root causes of the violation are: (1) a lack of management oversight of the NDC shipping program to ensure compliance with DOT regulations; and (2) a lack of a thorough understanding of applicable DOT regulations. In addition, NDC proposed various corrective actions that it had taken and planned to take to preclude recurrence of this violation and future DOT violations. In later discussions with NDC, the corrective actions were enhanced to address specific NRC concerns. By letter dated November 21, 1996, the NRC described to NDC the NRC's understanding of NDC's modified corrective actions. NDC subsequently confirmed that these corrective action be incorporated into license conditions by letter signed November 29, 1996.

To address the weaknesses which led to the violation, the NRC has determined that the public health and safety require that these conditions be confirmed by the attached Confirmatory Order Modifying License (Order). In brief, the Order requires an audit of NDC's transportation activities by an outside organization to be completed within specified timeframes, formal classroom training for individuals performing and supervising shipping activities, and a second comprehensive audit to be conducted in about a year to ensure NDC's corrective actions have been effective.

The NRC recognizes that the actual and potential safety significance of the violation is minor. DOT regulations changed in November 1995 to allow the higher activity sources to be transported in excepted packaging. However, the violation is of regulatory significance because the violation was committed with, at least, careless disregard for regulatory requirements. 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.

Normally, a base civil penalty in the amount of $2,500 is considered for Severity Level III violations, in accordance with the Enforcement Policy. However, in light of the issuance of the enclosed Order, the NRC is not proposing a civil penalty in this case.

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 the Confirmatory Order shall be subject to criminal prosecution as set forth in that section. Violation of this order may also subject the person to civil monetary penalty.

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

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 (PDR). To the extent possible, your response should not include any personal privacy or proprietary information so that it can be placed in the PDR without redaction. 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 2.790(b) to support a request for withholding confidential commercial or financial information).

Sincerely,

James Lieberman, Director Office of Enforcement

Docket No. 999-90004
General License Pursuant to Part 110

Enclosures: As Stated

cc:
State of California

Daryl Shapiro
Morgan, Lewis, and Bockius
1800 M Street NW
Washington DC 20036

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NOTICE OF VIOLATION

NDC Systems Irwindale, California

Docket No. 999-90004 General License Pursuant to Part 110 EA 96-539

During an NRC investigation conducted from April 12 through August 28, 1996, a violation of NRC requirements was identified. In accordance with the "General Statement of Policy and Procedure for NRC Enforcement Actions," NUREG-1600, the violation is listed below:

10 CFR 110.50(a) states, in part, that each general license is subject to all applicable provisions of the Atomic Energy Act and to all applicable rules and regulations of the Commission. Section 110.50(a)(7) states that a licensee shall not proceed to export and shall notify the Commission promptly if he knows or has reason to believe the packaging requirements of Part 71 of this chapter have not been met.

10 CFR 71.5(a) requires, in part, that a licensee who delivers licensed material to a carrier for transport comply with the applicable requirements of the regulations of the Department of Transportation (DOT) in 49 CFR Parts 170 through 189 appropriate to the mode of transport.

49 CFR 171.11(d) permits, in part, air transportation of limited quantities of radioactive material made in accordance with International Civil Aviation Organization (ICAO) Technical Instructions, provided the materials meet the provisions of 49 CFR §173.422 and §173.424. 49 CFR 171.12(d) permits, in part, that radioactive material being exported from the United States may be offered and accepted for transportation, when prepared for shipment in accordance with the International Atomic Energy Agency's (IAEA) "Regulations for the Safe Transport of Radioactive Materials, Safety Series No. 6, 1985 Edition," provided that Type A package contents are limited in accordance with 49 CFR 173.431.

49 CFR 173.475 requires, in part, that before each shipment of any Class 7 (radioactive) materials package, the shipper shall ensure by examination or appropriate tests that the packaging is proper for the contents to be shipped. 49 CFR 173.422, in effect prior to November 1, 1995, provided, in part, that instruments and manufactured articles or similar devices having radioactive materials are excepted from the specification packaging, shipping paper and certification, and marking and labeling requirements of 49 CFR Chapter I, Subchapter C, and the requirements of 49 CFR Part 173, Subpart I, if the total activity per package does not exceed the relevant limit in Table 7 of 49 CFR 173.423. IAEA regulations for transport of instruments and manufactured articles are given in IAEA Safety Series No. 6, at paragraphs 415-418, and Table IV. Table 7 in 49 CFR 173.423, and Table IV in IAEA Safety Series No. 6, both limit the activity for instruments and articles to 10-2 A1 for special form solids. 49 CFR 173.431 (through the table in 49 CFR 173.435), in effect prior to November 1, 1995, specified the A1 value for americium-241 as 8 curies. Thus, the activity limit for shipping an instrument or manufactured article containing americium-241 in excepted packaging in effect prior to November 1, 1995, under IAEA or DOT regulations, or ICAO Technical Instructions, was 80 millicuries, while Type A packaging was required for instruments containing between 80 millicuries and 8 curies of americium-241.

Contrary to the above, from about 1989 to November 1995, NDC Systems, a general licensee pursuant to 10 CFR Part 110, delivered gauging devices containing 150 millicurie americium-241 sources for transport, by air, to foreign countries in excepted packaging rather than in Type A packaging. (01013)

This is a Severity Level III violation (Supplement VI).

Pursuant to the provisions of 10 CFR 2.201, NDC Systems (Licensee) is hereby required to submit a written statement or explanation to the U.S. Nuclear Regulatory Commission, ATTN: Document Control Desk, Washington, D.C. 20555, with a copy to the Regional Administrator, Region IV, 611 Ryan Plaza Drive, Suite 400, Arlington, Texas 76011, within 30 days of the date of the letter transmitting this Notice of Violation (Notice). This reply should be clearly marked as a "Reply to a Notice of Violation" and should include for each violation: (1) the reason for the violation, or, if contested, the basis for disputing the violation, (2) the corrective steps that have been taken and the results achieved, (3) the corrective steps that will be taken to avoid further violations, and (4) 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 to why the license should not be modified, suspended, or revoked, or why such other action as may be proper should not be taken. Where good cause is shown, consideration will be given to extending the response time.

Under the authority of Section 182 of the Act, 42 U.S.C. 2232, this response shall be submitted under oath or affirmation.

Because your response will be placed in the NRC Public Document Room (PDR), to the extent possible, it should not include any personal privacy, proprietary, or safeguards information so that it can be placed in the PDR without redaction. 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 2.790(b) to support a request for withholding confidential commercial or financial information).

Dated at Arlington, Texas,
this 13th day of January 1997

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UNITED STATES
NUCLEAR REGULATORY COMMISSION

In the Matter of NDC SYSTEMS Irwindale, California

) ) ) ) )

Docket No. 999-90004 General License Pursuant to Part 110 EA 96-342

CONFIRMATORY ORDER MODIFYING LICENSE
(EFFECTIVE IMMEDIATELY)

I

NDC Systems (NDC or Licensee) has been granted a General License pursuant to the provisions of 10 CFR 110.19, 110.20, and 110.23. The General License authorizes the Licensee to export licensed material in accordance with the provisions contained therein.

II

Based on the NRC's investigation conducted from April 12 through August 28, 1996, at NDC's facility in Irwindale, California, and a predecisional enforcement conference held on October 23, 1996, the NRC has concluded that a violation of NRC requirements occurred. The violation involved the willful failure to comply with export requirements (10 CFR 110.50) in that packaging of certain gauging devices containing americium-241 (Am-241) was not in accordance with Department of Transportation (DOT) requirements.

The Commission's regulations in 10 CFR 110.50(a) and 10 CFR 71.5(a) require NDC, as a general licensee, to comply with the applicable DOT requirements in 49 CFR Parts 170 through 189. Prior to November 1, 1995, DOT requirements in 49 CFR Sections 171.11(d), 171.12(d), 173.422, 173.423, 173.431, and 173.475 required shippers to ensure that radioactive materials are packaged properly, with Type A packaging required for packages containing materials having total activity greater than 80 millicuries, and packages containing materials having total activity equal to or less than 80 millicuries being excepted from this requirement. Prior to November 1, 1995, however, NDC systems delivered gauging devices containing 150 millicuries of americium-241 sources for transport by air to foreign countries in excepted packaging, not in Type A packaging.

NDC representatives stated that the circumstances surrounding the failure to comply with DOT requirements began around 1989 with the practice of improperly labeling gauges that were going to certain countries. Gauges going to certain countries were purposefully mislabeled to reflect a lower activity of 25 mCi, even though NDC personnel knew that the gauges contained 150 mCi. (This occurred after Amersham, the manufacturer of the sources, began shipping to NDC 150 mCi cylinder sources rather than 25 mCi disk sources.) Since the lower activity was within the DOT limit for excepted packaging, NDC personnel improperly packaged the mislabeled gauges in excepted packaging rather than the required Type A packaging. Thus, NDC shipping personnel were packaging and sending gauges going to certain countries in excepted packaging, while the same model gauges, with the same sources, were shipped to other countries in Type A packaging. However, NDC personnel stated that they did not realize ??they were violating DOT requirements.

Some NDC personnel stated that they raised concerns about the practice of mislabeling the gauge to senior NDC management on a number of occasions. Although NDC senior management agreed the practice was improper, NDC personnel were instructed to continue the practice despite their concerns. At the conference, NDC senior management stated that it condoned this inappropriate practice with the rationalization that it would be a temporary practice until the devices were registered in those certain countries. All involved NDC personnel stated that there was no discussion of mispackaging the devices which was the natural consequence of the mislabeling. Due to NDC senior management's admitted "sloppy" practices and total lack of oversight, NDC senior management inadequately evaluated the mislabeling concern and did not consider that the mislabeling would result in mispackaging. Thus, the NRC has concluded that this violation was willful based, at least, on the careless disregard by senior NDC management of applicable requirements.

NDC stated that the root causes of the violation are: (1) a lack of management oversight of the NDC shipping program to ensure compliance with DOT regulations and (2) a lack of a thorough understanding of applicable DOT regulations.

During the October 23 predecisional enforcement conference, NDC proposed various corrective actions that it had taken and planned to take to preclude recurrence of this violation and future DOT violations. In later discussions with NDC, the corrective actions were enhanced to address specific NRC concerns.

III

By letter dated November 21, 1996, the NRC described to the Licensee the NRC's understanding of the Licensee's modified corrective actions. The Licensee subsequently consented to issuing this Order with the conditions, as described in Section IV below, in a letter signed on November 29, 1996. The Licensee further agreed that this Order be immediately effective and that its hearing rights be waived. The NRC has reviewed the above conditions and concludes that implementation of these actions would provide enhanced assurance that sufficient resources will be applied to the radiation safety program, and that the program will be conducted safely and in accordance with NRC requirements.

I find that the Licensee's commitments as set forth in Section IV 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 November 29, 1996, letter, be confirmed by this Order. Based on the above and on the Licensee's consent, this Order is immediately effective upon issuance.

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 110, IT IS HEREBY ORDERED, EFFECTIVE IMMEDIATELY, THAT NDC'S GENERAL LICENSE PURSUANT TO 10 CFR PART 110 IS MODIFIED AS FOLLOWS:

A. NDC shall retain the services of an independent individual or organization (consultant) to perform two audits of the Licensee's activities conducted under the general license, and shall provide the NRC with reports of the audits' findings as described in Provisions D and E below. The audits shall include, but are not limited to:

(1) review of export activities, including NDC's compliance with Department of Transportation (DOT) regulations;

(2) discussion and interviews with NDC employees to verify that employees understand DOT regulations as they relate to NDC's shipping activities and to verify the effectiveness of NDC's corrective actions to the violation identified in the Order;

(3) discussion and interviews with NDC employees to verify that NDC employees have been adequately trained on and understand NDC's procedures and policies for raising safety concerns and for seeking guidance related to NRC-licensed activities; and

(4) discussion and interviews with NDC employees to determine whether employees have concerns about NDC's policies or procedures for raising safety issues and for seeking guidance.

B. Within 30 days of the date of the Order, NDC shall submit to the NRC, for NRC review and approval, the name and qualifications of the consultant it proposes to use in conducting these audits. The consultant shall be independent of the Licensee's organization and shall be experienced in performing evaluations of NRC or Agreement State licensee programs with respect to implementation of the Department of Transportation (DOT) regulations.

C. Prior to supervising or performing any shipping activities, and no later than 60 days after the date of the Order, NDC will provide formal classroom training consistent with the training requirements of 49 CFR Part 172 Subpart H. All individuals who are involved in shipping activities, the Shipping Supervisor and Operations Manager, and the individual or individuals with responsibility for oversight of the radiation safety program, are subject to this commitment. For the purpose of the Order, shipping activities include tasks such as packaging, labeling, and completion of appropriate transportation documents.

D. Within 60 days of the date of NRC's approval of a consultant, NDC shall provide the NRC with a copy of the first audit report, including a description of actions taken and planned in response to any recommendations, comments, or findings in the audit report. Alternatively, if NDC does not believe any specific recommendation should be adopted or an audit finding should not be addressed, NDC will provide justification for its position to the NRC.

E. Within 12-18 months of the date of the Order, NDC shall provide the NRC with a copy of the second audit report, including a description of actions taken and planned in response to any recommendations, comments, or findings in the audit report. Alternatively, if NDC does not believe any specific recommendation should be adopted or an audit finding should not be addressed, NDC will provide justification for its position to the NRC. If NDC chooses to use a different auditor for this audit, NDC shall submit the qualifications of the auditor to the NRC for approval prior to conducting the audit.

F. For the purpose of the Order, NDC shall send the audits and its responses, and the qualifications of the auditor, to the Director, Division of Nuclear Material Safety, NRC Region IV, 611 Ryan Plaza Drive, Suite 400, Arlington, Texas 76011, and a copy to Chief, Materials Branch, NRC WCFO, 1450 Maria Lane, Walnut Creek California 94596-5368.

The Regional Administrator, Region IV, 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 IV, 611 Ryan Plaza Drive, Suite 400, Arlington, Texas 76011, 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.

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 13th day of January 1997