ML19158A080
| ML19158A080 | |
| Person / Time | |
|---|---|
| Issue date: | 07/03/2019 |
| From: | George Wilson NRC/OE |
| To: | Peters J Manufacturing Sciences Corp |
| Jones A | |
| References | |
| EA-19-040 | |
| Download: ML19158A080 (7) | |
Text
J. Peters UNITED STATES NUCLEAR REGULATORY COMMISSION WASHINGTON, D.C. 20555-0001 July 3, 2019 EA-19-040 Mr. Jack Peters Manufacturing Sciences Corporation 804 S Illinois Avenue Oak Ridge, TN 37830
SUBJECT:
EXPORT OF NUCLEAR REACTOR MATERIAL UNDER THE U.S. NUCLEAR REGULATORY COMMISSION LICENSING AUTHORITY AND EXERCISE OF ENFORCEMENT DISCRETION
Dear Mr. Peters:
This letter refers to a review of information related to the May 22, 2018, export of 360 kilograms (kg) of uranium-235, in the form of depleted uranium (DU). The export was performed by Manufacturing Sciences Corporation (MSC). In October 2018, the National Nuclear Security Administration (NNSA) received an inquiry from the European Atomic Energy Community (EURATOM) regarding MSCs export of DU to Germany. Prior to the receipt of DU by the intended recipient, EURATOM had not received notification of the export to Germany. On November 21, 2018, the NNSA requested that Nuclear Material Management and Safeguards System1 (NMMSS) staff initiate communications with MSC regarding its apparent failure to report the DU export on Form 741, Nuclear Material Transaction Report, prior to the export.
On December 5, 2018, after conversations with U.S. Nuclear Regulatory Commission (NRC) and NMMSS staff, MSC reported the export on a Form 741, and cited a general license authorizing the transaction. The NMMSS report produced an error because the quantity of material exported exceeded the limits for the material type for a general export license under Title 10 of the Code of Federal Regulations (10 CFR) 110.22(b). Section 110.22(b) states that a general license is issued to any person to export uranium or thorium in individual shipments of 10 kg or less. MSC was not in possession of a specific export license for this export, which exceeded the 10 kg limit permitted under the general license.
The NRC discussed its preliminary findings with you on April 16, 2019, in a telephone conversation with Ms. Andrea R. Jones. Based on the review of information, the NRC has determined that two apparent violations of NRC requirements occurred: (1) the export of nuclear material without obtaining a specific license, as required by 10 CFR 110.5, 110.9(b), 110.20(a),
and 110.22(b); and (2) the transfer of nuclear material without submitting a Nuclear Material Transaction Report before the close of business the next working day, as required by 10 CFR 40.64(a).
1 NMMSS is a U.S. Government database for tracking physical inventory and nuclear material transactions for source and special nuclear material.
J. Peters Regarding the apparent violation of 10 CFR 40.64(a), on May 22, 2018, MSC exported 360 kg of DU (uranium-235) under an Agreement State license. The Material Transaction Report was submitted later than the close of business on the next working day. Specifically, MSC exported DU on May 22, 2018, and did not report the shipment until December 5, 2018. MSC did not report the transaction due to a conclusion it made following an e-mail exchange with NMMSS.
On October 12, 2017, MSC sent an e-mail to NMMSS to inquire whether privately-owned DU was required to be reported to NMMSS, and provided a specific example of a domestic shipment involving privately-owned DU. On October 16, 2017, the NMMSS Analyst replied that privately-owned DU was not reportable to NMMSS, and only government-owned material was reportable. During subsequent conversations between MSC and NRC staff, MSC stated it believed DU was not reportable because the source material was privately-owned and was being shipped to a privately-owned ultimate consignee. MSC applied this reporting practice for both its domestic and exports of privately-owned DU. MSC did not realize that the material was reportable until the NNSA inquiry in November 2019.
Normally, reporting an export of nuclear material later than the close of business on the next working day would be considered a Severity Level III violation pursuant to the NRC Enforcement Policy. However, Section 3.5 of the NRC Enforcement Policy states, in part, that the NRC may reduce or refrain from issuing a civil penalty or a Notice of Violation for a Severity Level III violation based on the merits of the case after considering the guidance in the policy and such factors as the significance of the violation, the clarity of the requirement and associated guidance, and other relevant circumstances. After considering the October 2017 e-mail communications between the NMMSS Analyst and MSC, the NRC has determined that it is appropriate to exercise enforcement discretion and refrain from citing the reporting violation in accordance with Section 3.5 of the Enforcement Policy. This determination is based on clarity of the requirement and associated guidance regarding whether privately-owned DU is required to be reported to NMMSS. Although not specifically stated by the NMMSS Analyst, the 2017 guidance provided, regarding privately-owned DU, was limited to the reporting of domestic transactions. The licensee was not aware that this guidance did not apply to international transactions. Once notified of the reporting requirement for international transactions, the licensees reporting of the transaction was timely and was taken into consideration for exercising enforcement discretion.
Regarding the apparent violation of 10 CFR 110.5, 110.9(b), 110.20(a), and 110.22(b), the NRC considers the apparent violation to be significant because it impacted the NRC's ability to perform its regulatory oversight function wherein the U.S. Government would have requested Assurances from EURATOM confirming that the material was subject to all the terms and conditions of respective agreements for cooperation. Therefore, this violation is being considered for escalated enforcement in accordance with the NRC Enforcement Policy.
The current Enforcement Policy is included on the NRC Web site at http://www.nrc.gov/about-nrc/regulatory/enforcement/enforce-pol.html.
Before the NRC makes its enforcement decision, we are providing you an opportunity to:
(1) respond to the apparent violation addressed in this letter within 30 days of the date of this letter; (2) request a Pre-decisional Enforcement Conference (PEC); or (3) request Alternative Dispute Resolution (ADR). Please contact Mr. Peter Habighorst, Chief, Export Controls and Nonproliferation Branch, at 301-287-9241 or Ms. Andrea R. Jones, Sr. Licensing Officer, at 404-997-4443 within 10 days of the date of this letter to notify the NRC of your intended response. A PEC should be held within 30 days and an ADR session within 45 days of the date of this letter.
J. Peters If you choose to provide a written response, it should be clearly marked as a "Response to Apparent Violations, EA-19-040" and should include for the apparent violation: (1) the reason for the apparent violation or, if contested, the basis for disputing the apparent violation; (2) the corrective steps that have been taken and the results achieved; (3) the corrective steps that will be taken; and (4) the date when full compliance will be achieved. Your response may reference or include previously docketed correspondence, if the correspondence adequately addresses the required response. Additionally, your response should be sent to the NRC's Document Control Center, with a copy mailed to George Wilson, Director, Office of Enforcement, 11555 Rockville Pike, Rockville, MD 20852, within 30 days of the date of this letter. If an adequate response is not received within the time specified or an extension of time has not been granted by the NRC, the NRC will proceed with its enforcement decision or schedule a PEC.
If you choose to request a PEC, the conference will afford you the opportunity to provide your perspective on these matters and any other information that you believe the NRC should take into consideration before making an enforcement decision. The decision to hold a PEC does not mean that the NRC has determined that a violation has occurred or that enforcement action will be taken. This conference would be conducted to obtain information to assist the NRC in making an enforcement decision. If a PEC is held, it will be open for public observation and the NRC may issue a meeting notice and/or press release to announce the time and date of this open conference. The topics discussed during the conference may include information to determine whether a violation occurred, information to determine the significance of a violation, information related to the identification of a violation, and information related to any corrective actions taken or planned. In presenting your corrective actions, you should be aware that the promptness and comprehensiveness of your actions will be considered in assessing any civil penalty for the apparent violations. The guidance in NRC Information Notice 96-28, "Suggested Guidance Relating to Development and Implementation of Corrective Action," may be helpful, and is included on the NRC Web site at http://pbadupws.nrc.gov/docs/ML0612/ML061240509.pdf.
In lieu of a PEC, you may request ADR with the NRC in an attempt to resolve this issue. ADR is a general term encompassing various techniques for resolving conflicts using a neutral third party. The technique that the NRC has decided to employ is mediation. Mediation is a voluntary, informal process in which a trained neutral third party (the "mediator") works with parties to help them reach resolution. If the parties agree to use ADR, they select a mutually agreeable neutral mediator who has no stake in the outcome and no power to make decisions.
Mediation gives parties an opportunity to discuss issues, clear up misunderstandings, be creative, find areas of agreement, and reach a final resolution of the issues. Additional information concerning the NRC's program can be obtained at http://www.nrc.gov/aboutnrc/regulatory/enforcement/adr.html. The Institute on Conflict Resolution (ICR) at Cornell University has agreed to facilitate the NRC's program as a neutral third party. If you choose ADR, you must contact ICR at (877) 733-9415 within 10-days from the date of this letter if you are interested in pursuing resolution of this issue through ADR. If you choose to request ADR, the ADR will be closed to the public; however, the NRC may issue a meeting notice and/or press release to announce the time and date of this closed conference.
J. Peters In accordance with 10 CFR 2.390 of the NRC's "Rules of Practice," a copy of this letter, its enclosure(s), and your response, if you choose to provide one, will be made available electronically for public inspection in the NRC Public Document Room or from the NRCs Agencywide Documents Access and Management System (ADAMS), accessible from the NRC Web site at http://www.nrc.gov/reading-rm/adams.html. To the extent possible, your response should not include any personal privacy, proprietary, or safeguards information so that it can be made available to the public without redaction.
Sincerely,
/RA/
George A. Wilson, Director Office of Enforcement
Enclosures:
- 1. Summary of Issue
- 2. Apparent Violation
J. Peters
SUBJECT:
EXPORT OF NUCLEAR REACTOR COMPONENT UNDER U.S. NUCLEAR REGULATORY COMMISSION LICENSING AUTHORITY AND EXERCISE OF ENFORCEMENT DISCRETION. DATED JULY 3. 2019 DISTRIBUTION:
OIP r/f OE r/f T. Marenchin/OE M. Shoemaker/NMSS ADAMS Accession: ML19158A080 OFFICE OIP/ECNP OE BC:ECNP/OIP OE NMSS NAME AJones AJ TMarenchin PHabighorst JPeralta MKing DATE 06/07/19 06/25/19 06/25/19 06/ /19 06/19/19 OFFICE OGC DD: OIP D:OIP OE NAME MSimon PHabighorst NMamish GWilson for DSkeen DATE 0702/19 07/02/19 07/02/19 07/03/19 OFFICIAL RECORD COPY
SUMMARY
OF ISSUE On November 21, 2018, the National Nuclear Security Administration requested U.S. Nuclear Regulatory Commission and Nuclear Material Management and Safeguards System (NMMSS) staff initiate communications with Manufacturing Sciences Corporation (MSC). The staff inquiry was in response to an apparent failure to report uranium-235 in the form of depleted uranium (DU) on a Form 741, Nuclear Material Transaction Report, prior to its shipment on May 22, 2018. On December 5, 2018, MSC reported the export of the DU to NMMSS but cited a general license authorizing the transaction. As a result, an error was produced on the NMMSS report because the quantity of material exported exceeded the limits for the material type for a general export license set forth in Title 10 of the Code of Federal Regulations (10 CFR) 110.22(b).
Section 110.22(b) states that a general license is issued to any person to export uranium or thorium, in individual shipments of 10 kilograms (kg) or less, to any country not listed in 10 CFR 110.28 or 110.29. MSC was not in possession of a specific export license for this export, which exceeded the 10 kg limit permitted under the general license.
Enclosure 1
APPARENT VIOLATION BEING CONSIDERED FOR ESCALATED ENFORCEMENT Title 10 of the Code of Federal Regulations (10 CFR) 110.5, states, in part, "no person may export any nuclear equipment or material listed in 10 CFR 110.9, unless authorized by a general or specific license issued under this part."
10 CFR 110.9(b) lists source material, which includes uranium-235 in the form of depleted uranium, as a material that falls within the NRCs export licensing authority.
10 CFR 110.20(a) states, "A person may use a NRC general license as an authority to export or import nuclear equipment or material, if the nuclear equipment or material to be exported or imported is covered by the NRC general licenses as described in §§ 110.21 through 110.27. If an export or import is not covered by the NRC general licenses described in 10 CFR 110.21 through 110.27, a person must file with the Commission for a specific license in accordance with
§§ 110.31 through 110.32."
10 CFR 110.22(b) states, in part, that a general license is issued to any person to export uranium or thorium, in individual shipments of 10 kilograms or less, to any country not listed in 10 CFR 110.28 or 110.29.
Contrary to the above, on May 22, 2018, MSC exported to Germany 360 kilograms of uranium 235 in the form of dry powder metal depleted uranium, in an individual shipment exceeding 10 kilograms, without obtaining a specific license authorizing its export as required by 10 CFR 110.5, 110.9(b), 110.20(a), 110.22(b).
Enclosure 2