Information Notice No. 97-30: Control of Licensed Material During Reorganizations, Employee-Management Disagreements, and Financial Crises

                                 UNITED STATES
                         NUCLEAR REGULATORY COMMISSION
                            WASHINGTON, D.C.  20555

                                 June 3, 1997

                               REORGANIZATIONS, EMPLOYEE-MANAGEMENT            
                               DISAGREEMENTS, AND FINANCIAL CRISES 


All material and fuel cycle licensees.


The U.S. Nuclear Regulatory Commission is issuing this information notice to
alert addressees to potential loss of control of licensed material during
periods of reorganization, employee- management disagreements, and financial
crises.  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 nor written
response is required.

Description of Circumstances

Case 1:  On June 12, 1996, NRC was notified that the employees of an NRC-
licensed laboratory were leaving the facility because they claimed that they
had not been paid in over a month.  The licensee analyzed environmental and
bioassay samples containing small amounts of byproduct, source, or special
nuclear material.  Before their departure, the employees informed the parent
company that they had arranged for their customers to pick up their samples,
containing small amounts of source material; locked and secured the building;
and sent the facility keys to the parent company.  The management of the
parent company promptly sent someone to ensure that the facility was properly
secured from unauthorized access.  The management of the laboratory said that
the employees had been paid and the problems were a result of a

Case 2:  On September 19, 1996, NRC was informed that a licensee had filed an
involuntary petition for bankruptcy on April 30, 1996, without notifying NRC,
and that the trustee intended to abandon the property.  The licensee possessed
two portable moisture/density gauges, each containing gigabecquerel
(millicurie) quantities of cesium-137 and americium-241/beryllium sealed
sources.  NRC efforts to contact the licensee were unsuccessful. 
Communications with the trustee revealed that one of the gauges was stored at
the licensee's facility; and the licensee's former radiation safety officer
(RSO) possessed the other gauge.  The former RSO had formed his own company
and maintained possession of the gauge after his company took over a project
that the licensee had been working on at the time of the bankruptcy filing. 
The gauge was being stored at the home of an engineering technician, an
employee of the former RSO's company.  At NRC's request, the former RSO

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relocated the gauge to the NRC-licensed property where the other gauge was in


These cases demonstrate the potential for the security and control of licensed
material to be compromised during periods of organizational instability. 
Licensees are reminded that in controlled or unrestricted areas, 10 CFR
20.1801 and 20.1802 requires them to secure stored material, and to control
and maintain, under constant surveillance, licensed material that is not in
storage.  In addition, licensees must control access to restricted areas to
protect individuals against undue risks from exposure to radiation and
radioactive material.  These requirements are especially important during
periods of reorganization, employee-management disagreements, and financial
crises, since these situations may result in decreased financial and personnel
resources that may impact the ability to properly maintain control of the
licensee�s material.  

During times of instability, licensees are encouraged to take prompt and
comprehensive inventories of all licensed material to ensure that all material
is accounted for and properly secured.  In addition, licensees should consider
notifying NRC of such situations, so that NRC can verify that the material is
properly secured and has not been released into the public domain in an
uncontrolled manner.  If notified early, NRC can help ensure that all
necessary regulatory actions are completed.  In cases of bankruptcy, licensees
are required to make an immediate notification to NRC, pursuant to the
regulations in 10 CFR 30.34(h), 40.41(f), and 70.32(a)(9).  The actions that
both the employees and management took in case 1 are a good example of how to
properly maintain control of licensed material during a period of
organizational instability.  Licensees are ultimately responsible for the
security and control of their licensed material regardless of their financial,
staffing, or organizational situation.    

Licensees seeking to transfer control of a license are reminded of the
regulation in 10 CFR 30.34(b), which requires them to obtain written consent
from the Commission when transferring control of a license.  Licensees seeking
to transfer control of licensed material only must verify that the
transferee's license authorizes the receipt of the type, form, and quantity of
material to be transferred pursuant to 10 CFR 30.41(c), 40.51(c), and
70.42(c).  This type of transfer allows NRC to ensure that the transferee is
aware of the safety and regulatory requirements, associated with the material,
that occur during the licensing and inspection processes.  Both the transferor
(i.e., the shipper) and transferee (i.e., the recipient) may be subject to
enforcement actions in cases where a licensee transfers licensed material to
unlicensed or unauthorized entities.

In the case where a licensee abandons its licensed material instead of
properly disposing of, or transferring, the material to another licensed
entity, public health and safety may be greatly compromised.  Irretrievable
well-logging sealed sources are the only type of material that may be
abandoned, pursuant to the regulations in 10 CFR 39.15.  All other licensed
material may not be abandoned since members of the public, unaware of the
radiological hazards, may handle these materials and be exposed to ionizing
radiation unnecessarily.  A licensee that .                                                            IN 97-30
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abandons licensed material is subject to substantial civil penalties, up to
$100,000 per day, as well as criminal sanctions.  In addition, a licensee may
lose its license to use radioactive material since abandoning licensed
material demonstrates both a fundamental breakdown in the licensee's ability
to control material and, at least, careless disregard for public health and
safety.  Action may also be taken against the persons involved in the

Related Generic Communications

Other instances that may affect a licensee�s ability to properly maintain
control of licensed material, such as bankruptcy, are addressed in Information
Notices 93-100, "Reporting Requirements for Bankruptcy," issued December 22,

This information notice requires no specific action nor written response.  If
you have any questions about the information in this notice, please contact
the technical contact listed below or the appropriate regional office.

                                          signed by

                                    Donald A. Cool, Director
                                    Division of Industrial and
                                       Medical Nuclear Safety
                                    Office of Nuclear Material Safety
                                       and Safeguards

Technical contact:  Mark A. Sitek, NMSS

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