Information Notice No. 92-22: Criminal Prosecution and Conviction of Wrongdoing Committed by a Commercial-Grade Valve Supplier

                                UNITED STATES
                        NUCLEAR REGULATORY COMMISSION
                    OFFICE OF NUCLEAR REACTOR REGULATION
                           WASHINGTON, D.C.  20555

                               March 24, 1992


NRC INFORMATION NOTICE 92-22:  CRIMINAL PROSECUTION AND CONVICTION OF 
                               WRONGDOING COMMITTED BY A COMMERCIAL-GRADE 
                               VALVE SUPPLIER


Addressees

All holders of operating licenses or construction permits for nuclear power 
reactors.

Purpose

The U.S. Nuclear Regulatory Commission (NRC) is issuing this information 
notice to inform addressees of the results of the criminal prosecution of a 
case of wrongdoing that the NRC staff referred to the U.S. Department of 
Justice (DOJ).  The NRC is also reminding licensees and their suppliers of 
the penalties that could result from intentionally violating Federal 
regulatory requirements and criminal statutes.  Both the supplier and 
individual employees of the supplier could be subject to criminal statutes 
even if the vendor supplies only commercial-grade products.  It is expected 
that recipients will review the information for applicability to their 
facilities and consider actions, as appropriate, to avoid similar problems.  
However, suggestions contained in this information notice are not NRC 
requirements; therefore, no specific action or written response is required.

Background

In Information Notice (IN) 88-48, "Licensee Report of Defective Refurbished 
Valves," and Supplements 1 and 2, the staff discussed a problem that the 
Pacific Gas and Electric Company (PG&E) found regarding what were believed 
to be Henry Vogt Company (Vogt) 2-inch valves (Model No. 13111) which 
exhibited excessive steam leakage around the bonnet and stem.  PG&E 
contacted Vogt representatives to inspect and repair the leaking valves.  
Vogt examined the valves and determined that the valves were not 
manufactured by Vogt.  PG&E subsequently determined that 70 valves procured 
by PG&E as new valves for its Diablo Canyon nuclear power plant were 
actually counterfeit.  The 70 valves were shipped to PG&E by CMA 
International, Incorporated, (CMA) of Vancouver, Washington.  IMA Valve 
Refurbisher Company, a Division of CMA, also operated from the same address 
as CMA.

Description of Circumstances

On March 28, and April 25-26, 1989, the NRC staff reviewed records at the 
CMA facility in Vancouver, Washington.  The NRC staff found 67 CMA valve 
order packages that contained statements or information which indicated 
either 

9203180179 
.

                                                            IN 92-22
                                                            March 24, 1992
                                                            Page 2 of 2


suspect valves or possible wrongdoing by CMA.  The staff discussed some of 
these packages in IN 88-48, Supplement 2, of August 22, 1989.

The NRC reviewed this matter and referred it to the DOJ for disposition.  
The DOJ conducted a criminal investigation and obtained a Federal grand jury 
indictment of the President of CMA, and CMA International, Incorporated, 
under Title 18 of the United States Code.  On January 17, 1992, the 
President of CMA, and CMA pleaded guilty on Federal charges that they sold 
counterfeit valves that were ultimately installed at the Diablo Canyon 
Nuclear Power Plant, the Vogtle Nuclear Power Plant, and the U.S. Marine 
Corps military base in Quantico, Virginia.  This felony conviction resulted 
in the sentencing of the President of CMA to 3 years imprisonment, and an 
order for the Corporation to pay restitution of $213,825.03 to the NRC's 
licensees.  The U.S. District Court Judgement Orders are enclosed as 
Attachment 1.

Discussion

All personnel involved in NRC-regulated activities, including suppliers and 
vendors, have a responsibility to comply with applicable NRC regulatory 
requirements and other Federal laws.  The NRC expects and demands compliance 
and will seek criminal prosecution of wrongdoing in cases of intentional or 
willful violations of these requirements.  These criminal sanctions may 
include imprisonment, fines, and the restitution of monies, as evidenced by 
the case described herein.  In addition, as provided in 10 CFR 50.5, 
"Deliberate Misconduct by Unlicensed Persons," 56 Federal Register 40684, 
August 15, 1991, suppliers and vendors may also be subject to direct NRC 
enforcement action for deliberately causing a licensee to be in violation of 
Commission regulations or by providing false information to licensees 
concerning licensed activities.  

Addressees may wish to distribute copies of this information notice to their 
employees and suppliers. 

This information notice requires no specific action or written response.  If 
you have any questions about the information in this notice, please call the 
technical contact listed below or the appropriate Office of Nuclear Reactor 
Regulation (NRR) project manager.


                                   Charles E. Rossi, Director
                                   Division of Operational Events Assessment
                                   Office of Nuclear Reactor Regulation


Technical contact:  Joseph J. Petrosino, NRR
                    (301) 504-2979


Attachments:  
1.  U.S. District Court, Western District of Washington, Judgement Orders
2.  List of Recently Issued NRC Information Notices
.