EA-97-202 - Capital Engineering Services, Inc.

May 15, 1997

EA 97-202

Mr. David F. Johns, P.E.
President and Radiation
Safety Officer
Capital Engineering Services, Inc.
101 Weston Drive Unit 3
Dover, Delaware 19901

SUBJECT:

ORDER REVOKING LICENSE NRC Inspection No. 030-33244/96-001 and NRC Office of Investigation Report No. 1-96-042)

Dear Mr. Johns:

On February 12, 1996, your NRC license was suspended by an NRC Order for nonpayment of fees. However, on May 17, 1996, the NRC issued a Conditional Order Extending Time that granted your request to pay the delinquent fees in twelve monthly installment payments and extended the effective date of the February 12, 1996 Order to March 15, 1997. In addition, the Conditional Order stated that, in the event the licensee fails to pay an installment during the 12-month period, each and every term and condition set forth in the February 12, 1996 Order will become immediately effective without further notice. You failed to make the first installment due June 15, 1996, after the Conditional Order was issued. Accordingly, on June 16, 1996, the terms of the February 12, 1996 "Order Suspending License" again became effective and your license is currently suspended.

The enclosed Order Revoking License is being issued because of your violations of NRC requirements. Based on the findings of an NRC inspection and an investigation by the NRC Office of Investigations, the NRC has concluded that you violated other NRC requirements by: (1) deliberately using licensed material on numerous occasions after your license had been suspended; (2) failure to maintain dose records for employees who used the gauges; and (3) failure to test sealed sources for leakage and/or contamination.

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 prosection as set forth in that section. Violation of the Order may also subject the person to a civil monetary penalty.

Given your deliberate misconduct, the NRC no longer has the necessary assurance you would perform NRC-licensed activities safely and in accordance with NRC requirements, should you engage in NRC-licensed activities under any other NRC license. Therefore, a separate Order, which precludes you from any involvement in NRC-licensed activities for a period of three years, is being issued to you concurrently.

In our letter dated March 26, 1997, we enclosed the synopsis of Investigation Report No. 1-96-042, which indicated that you willfully violated NRC requirements associated with dosimetry. Upon reconsideration of the facts in this case, the NRC has decided not to cite such failure in the enclosed Order because it is not clear that your employees, who were subject to radiation levels, were likely to receive an annual dose in excess of 10% of the applicable limit in 10 CFR 20.1201(a).

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.

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

Sincerely,

Edward L. Jordan Deputy Executive Director for Regulatory Effectiveness, Program Oversight, Investigations and Enforcement

Docket No. 030-33244
License No. 07-30056-01

Enclosures:
1. Order Revoking License
2. Listing of Violations

cc w/encls:
State of Delaware

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UNITED STATES
NUCLEAR REGULATORY COMMISSION

In the Matter of Capital Engineering Services, Inc. Dover, Delaware

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Docket No. 030-33244 License No. 07-30056-01 EA 97-202

ORDER REVOKING LICENSE

I

Capital Engineering Services, Inc., (Licensee) is the holder of Byproduct Nuclear Material License No. 07-30056-01 (License) issued by the Nuclear Regulatory Commission (NRC or Commission) pursuant to 10 CFR Part 30. The License authorizes possession and use of moisture/density gauges containing sealed sources. The License was originally issued on September 14, 1993, and is due to expire on September 30, 1998.

On February 12, 1996, the License was suspended by an NRC Order for nonpayment of fees. However, on May 17, 1996, the NRC issued a Conditional Order Extending Time that granted the Licensee's request to pay the delinquent fees in twelve monthly installment payments and extended the effective date of the February 12, 1996 Order to March 15, 1997. In addition, the Conditional Order stated that, in the event the Licensee fails to pay an installment during the 12-month period, each and every term and condition set forth in the February 12, 1996 Order will become immediately effective without further notice. The Licensee failed to make the first installment due June 15, 1996, after the Conditional Order was issued. Accordingly, on June 16, 1996, the terms of the February 12, 1996 "Order Suspending License" again became effective.

II

On October 30, 1996, November 19, 1996, February 20, 1997, and March 5, 1997, the NRC conducted an inspection at the Licensee's facility in Dover, Delaware. During the inspection, the inspector determined that the Licensee had continued to use licensed radioactive material after issuance of the NRC Order Suspending the License on February 12, 1996. Specifically, the Licensee used licensed material on numerous occasions between February 12, 1996, and May 16, 1996, before the Conditional Order Extending Time was granted, a violation of Condition A of the February 12, 1996 Order and 10 CFR 30.3.

Additionally, the Licensee continued to use the gauges on numerous occasions after June 16, 1996, the date on which the Order Suspending License once again became effective because of the Licensee's failure to pay the first fee installment required by the May 17, 1996 Order Extending Time, a violation of Condition A of the February 12, 1996 Order and 10 CFR 30.3.

On October 2, 1996, the NRC issued to the Licensee a letter reiterating that, given the Licensee's failure to abide by the installment plan, the License had been suspended as specified in the February 12, 1996 Order Suspending License. During an NRC inspection on October 30, 1996, the Licensee informed the NRC inspector that it continued to use licensed material because it had not received the October 2, 1996 letter until October 28, 1996.

As a result, the NRC issued a Confirmatory Action Letter (CAL) to the Licensee on November 1, 1996, which confirmed the Licensee's commitments to cease use and/or receipt of licensed material. The CAL references a telephone conversation between Mr. David Johns, the Licensee's President, and Mr. Frank Costello, NRC Region I, that took place on October 31, 1996, in which Mr. Johns agreed to the terms of the CAL.

Concurrently with NRC inspection, the NRC Office of Investigations (OI) conducted an investigation of these matters. During the investigation, the Licensee's President stated that he recalled the October 31, 1996 telephone conversation, but he understood that once he fully paid the outstanding debt, he could use the gauges. The Licensee, however, did not pay the outstanding debt⁽¹⁾ and, yet, continued to use licensed material on numerous occasions from October 29 to, at least, November 19, 1996, a violation of Condition A of the February 12, 1996 Order and 10 CFR 30.3. In addition, based on the OI investigation and inspection findings, the NRC determined that the Licensee failed to test sealed sources for leakage and/or contamination, a violation of License Condition 13.

On April 10, 1997, an enforcement conference was scheduled with the Licensee. However, the Licensee failed to appear for the enforcement conference. In a subsequent telephone conversation between Mr. David Johns, the Licensee President/Owner and Mr. R. Blough, Director, Division of Nuclear Materials Safety, NRC Region I, Mr. Johns indicated that he was not planning to attend the conference. During that telephone conversation, Mr. Johns was also informed that the NRC would proceed with appropriate enforcement action.

III

Based on the above, the NRC has concluded that the Licensee deliberately violated NRC requirements by continuing to use licensed material, a violation of 10 CFR 30.10(a)(1), Condition A of the February 12, 1996 Order, and 10 CFR 30.3. This conclusion is: (1) based on the Licensee's continued use of licensed material in violation of NRC requirements despite the Licensee receiving numerous written communications that specifically informed the Licensee of the License suspension; and (2) supported by the fact that the Licensee requested from the NRC that an installment plan be established to remove the suspension of the License; the Licensee's President recalled the October 31, 1996 telephone conversation in which he was specifically informed that the License was suspended and in which he agreed not to use licensed material; and the Licensee did not pay the outstanding debt and, yet, continued to use licensed material. Furthermore, the NRC has concluded that the Licensee failed to perform leak testing of sources, a violation of License Condition 13.

The NRC must be able to rely on its Licensees to comply with NRC requirements. It is important that licensed material be used in accordance with the applicable NRC requirements. The Licensee's continued deliberate violation demonstrates that the Licensee is either unwilling or unable to comply with NRC requirements. Given the deliberate nature of the violation, as well as the additional violations of other NRC requirements, as set forth in this section, the NRC no longer has reasonable assurance that public health and safety will be protected.

Consequently, I lack the requisite reasonable assurance that the Licensee is willing and able to conduct operations under License No. 07-30056-01 in compliance with the Commission's requirements, and that the health and safety of the public will be protected. Therefore, the public health, safety and interest require that License No. 07-30056-01 be revoked based on violations set forth above.

IV

Accordingly, pursuant to sections 81, 161b, 161i, 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 THAT LICENSE NO. 07-30056-01 IS REVOKED.

V

In accordance with 10 CFR 2.202, the Licensee must, and any other person adversely affected by this Order may, submit an answer to this Order, and may request a hearing on this Order, within 20 days of the date of this Order. 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. The answer may consent to this Order. Unless the answer consents to this Order, the answer shall, in writing and under oath or affirmation, specifically admit or deny each allegation or charge made in this order and set forth the matters of fact and law on which the Licensee or other person adversely affected relies and the reasons as to why the Order should not have been issued. Any answer or request for a hearing shall be submitted to the Secretary, U.S. Nuclear Regulatory Commission, ATTN: Rulemaking and Adjudications Staff, Washington, D.C. 20555. Copies of the hearing request also should 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 19406-1415, and to the Licensee if the hearing request is by a person other than the Licensee. If a person other than the Licensee 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 the Licensee or 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 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.

FOR THE NUCLEAR REGULATORY COMMISSION Edward L. Jordan Deputy Executive Director for Regulatory Effectiveness, Program Oversight, Investigations and Enforcement

Dated at Rockville, Maryland
this 15th day of May 1997

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¹ By Check No. 2054 dated November 20, 1996, the Licensee paid $531.16. However, the check did not clear due to insufficient funds.