Text

Letter to Jerdle EA-17-175 and EA-18-183 Notice of Violation and Proposed Imposition of Civil Penalty - $43,500 (NRC Investigation Report No. 1-2017-006 and 1-2018-006; Dead Ringer, LLC)
	ML19210C220
Person / Time
Issue date:	08/08/2019
From:	George Wilson; NRC/OE
To:	Erdle J; Dead Ringer LLC
	Holiday, Sophie
References
	EA-17-175, EA-17-183, EA-18-183, EA-18-185, OI-1-2017-006, OI-1-2018-006
	Download: ML19210C220 (11)
	v • d • e

J. Erdle UNITED STATES NUCLEAR REGULATORY COMMISSION WASHINGTON, D.C. 20555-0001 August 8, 2019 EA-17-175 EA-18-183 Mr. Jesse Erdle Chief Executive Officer and President Dead Ringer, LLC 2144 Brighton Henrietta Town Line Rd.

Rochester, NY 14623

SUBJECT:

NOTICE OF VIOLATION AND PROPOSED IMPOSITION OF CIVIL PENALTY -

$43,500 (NRC INVESTIGATION REPORT NO. 1-2017-006 and 1-2018-006 -

DEAD RINGER, LLC)

Dear Mr. Erdle:

This letter refers to the investigations initiated by the U.S. Nuclear Regulatory Commissions (NRC) Office of Investigations (OI), on January 4, 2017, and January 19, 2018, respectively.

The purpose of the January 4, 2017, investigation was to determine whether Dead Ringer, LLC was in compliance with regulatory requirements related to Dead Ringer LLCs import and distribution of gun sights containing radioactive material (tritium). The purpose of the July 26, 2018, investigation was to determine whether Dead Ringer, LLC, had continued to willfully distribute gun sights containing tritium, despite having asserted during a December 2017 pre-decisional enforcement conference (PEC) that such sales had halted in early 2016 and that Dead Ringer was no longer selling gun sights containing tritium on Amazon.

The results of the January 4, 2017, investigation, and details regarding the apparent violations were described in the letter the NRC issued to you on November 13, 2017 (EA-17-175), which included a summary of the investigation findings. In the November 13, 2017, letter, you were informed that the NRC was considering escalated enforcement action against Dead Ringer, LLC for three apparent violations, and you were offered a choice to either request a PEC with the NRC or to request Alternative Dispute Resolution (ADR) mediation. You requested a PEC.

On December 12, 2017, a closed PEC was conducted with Dead Ringer, LLC to discuss the apparent violations, their significance, their root causes, the potential willfulness of the violations, and your corrective actions. The PEC was closed to public observation because we discussed the findings of an OI report that has not been publicly disclosed. During the conference, you stated that Dead Ringer, LLC had stopped selling gun sights containing tritium, had issued a recall for them, and that Dead Ringers products were no longer offered for sale on Amazon. Following the conference, the NRC staff identified products (gun sights containing tritium) for sale on the Dead Ringer Official Store on Amazon. This resulted in the subsequent OI investigation initiated on January 19, 2018.

J. Erdle 2

The results of the January 19, 2018, investigation, and details regarding the apparent violations were described in the letter the NRC issued to you on May 9, 2019 (EA-18-183), which included a summary of the investigation findings. In the May 9, 2019, letter, you were informed that the NRC was considering escalated enforcement action against Dead Ringer, LLC for two apparent violations, which were in addition to the previously identified apparent violations in EA-17-175.

You were provided with an opportunity to respond in writing to the two new apparent violations.

In your June 6, 2019, written response, you stated that you accepted the finding of the facts in this matter. However, you indicated that regardless of the definition of willfulness as stated in the letters, you believe that no Dead Ringer, LLC employees acted willfully. The NRCs position is that the circumstances in this case support a willful violation. Based on the facts of this case and the testimony of the President and Vice President, the NRC found sufficient evidence to conclude that despite being aware of the regulatory requirements, the President and Vice President made a deliberate decision to not comply given the cost associated with that compliance. Therefore, between January 2015 and January 2018, NRC determined that Dead Ringer, LLC deliberately distributed and imported gun sights containing tritium without the required licensing authorization and sealed source and device evaluation and registration.

Based on the information developed during both investigations, the December 12, 2017 PEC, including the information you provided during and after the conference, and the information that you provided in your June 6, 2019, response to the NRC letter dated May 9, 2019, the NRC has determined that three violations of NRC requirements have occurred. These violations are cited in Enclosure 1, Notice of Violation and Proposed Imposition of Civil Penalty (Notice) and the circumstances surrounding them are described in detail in Enclosures 1 and 2 of the November 13, 2017, letter and the May 9, 2019, letter, respectively.

The willful violations involved: (1) initially transferring, for sale or distribution, gun sights containing tritium, prior to obtaining an NRC license for such activity pursuant to Title 10 of the Code of Federal Regulations (10 CFR) 30.3, 30.19, 32.22; (2) failing to request an evaluation for a sealed source or device pursuant to 10 CFR 32.210; and (3) importing material (tritium) into the United States without having the required license for possession of the material containing byproduct material, issued by the Agreement State (New York) or the NRC, pursuant to 10 CFR 110.5, 110.9a, 110.20(a), and 110.27(a).

The NRC considers these violations to be significant because they impacted the NRCs ability to perform its regulatory oversight function to ensure that the byproduct material was possessed, stored, imported, and used adequately to protect public health and safety, and the environment.

In addition, the NRC considers your actions to be willful. Willful violations are of significant concern to the NRC because the NRCs regulatory programs rely upon the integrity of persons, entities, applicants, and licensees to comply with NRC regulations and requirements.

Each of the three violations identified in the Notice have been categorized in accordance with the NRC Enforcement Policy at Severity Level III. The NRC Enforcement Policy may be found on the NRC website at www.nrc.gov/about-nrc/regulatory/enforcement/enforce-pol.html.

Because Dead Ringer, LLC has not previously been the subject of escalated enforcement action and all three of the violations were determined to be willful, the NRC considered whether credit was warranted for Identification and Corrective Action in accordance with the civil penalty assessment process in Section 2.3.4 of the NRC Enforcement Policy. The NRC determined that Identification credit was not warranted because all three of the violations were not identified by Dead Ringer, LLC.

J. Erdle 3

For all three violations identified in the Notice, the NRC considered whether credit was warranted for Corrective Action in accordance with the civil penalty assessment process described in Section 2.3.4 of the Enforcement Policy. Dead Ringer, LLCs corrective actions included: (1) directing staff to cease all imports and sales of gun sights containing tritium in accordance with a Court Order; (2) issuing a written product recall notice to all known customers; (3) removing all gun sights containing tritium from Amazon; (4) returning any remaining inventory to the manufacturers in China; and (5) permanent cease of sales of products containing tritium. Therefore, the NRC determined that Corrective Action credit was warranted. The NRC also determined that due to the apparent, common cause of the three violations, it was appropriate to characterize the three violations as a single Severity Level III problem.

While the NRC recognizes that normal application of the civil penalty assessment process in accordance with Section 2.3.4 of the Enforcement Policy would have resulted in a base civil penalty in the amount of $14,500, we considered exercising discretion in accordance with Section 2.3.4 of the Enforcement Policy to increase the civil penalty due to the financial gain involved. The deliberate failure to obtain the appropriate NRC license resulted in the avoidance of the fees associated with the initial application and corresponding annual fees. In addition, a decision to cease distribution until the appropriate license could be obtained would have resulted in lost income from the sales of products during that timeframe. Therefore, due to the economic gain accrued as a result of the violations, and to emphasize the significance of deliberate violations and the importance of compliance with regulatory requirements, a Notice of Violation and Proposed Imposition of Civil Penalty (Notice) in the base amount of $43,500 (three times the base civil penalty amount of $14,500) is being issued for the Severity Level III problem. In addition, issuance of this Notice constitutes escalated enforcement action, which may subject Dead Ringer, LLC to increased inspection effort.

If in the future, any applications are submitted under the name Dead Ringer, LLC for an exempt distribution license and a sealed source and device safety evaluation, you may be required to provide a detailed discussion of how the NRC would be confident that these issues would not recur.

If you disagree with this enforcement sanction, you may deny the violation, as described in the Notice, or 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 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 NRCs ADR program can be found in Enclosure 3 and at http://www.nrc.gov/about-nrc/regulatory/enforcement/adr.html.

The Institute on Conflict Resolution (ICR) at Cornell University has agreed to facilitate the NRCs program as a neutral third party. If you are interested in pursuing this issue through the ADR program, please contact: (1) the ICR at 877-733-9415, and (2) Mr. Hipolito Gonzalez at 301-415-5637 within 10 days of the date of this letter. You may also contact the ICR for

J. Erdle 4

additional information about ADR. Your submitted signed agreement to mediate using the NRC ADR program will stay the 30-day time period for payment of the civil penalties and the required written response, as identified in the enclosed Notice, until the ADR process is completed.

The NRC has concluded that information regarding: (1) the reason for the violations; (2) the corrective actions that have been taken and the results achieved; and (3) the date when full compliance was achieved is already adequately addressed on the docket in the letter dated June 9, 2019. Therefore, you are not required to respond to this letter unless the description therein does not accurately reflect your corrective actions or your position on this matter.

In accordance with 10 CFR 2.390 of the NRCs Agency Rules of Practice and Procedure, a copy of this letter, its enclosures, and your response, if you choose to provide one, will be made available electronically for public inspection in the NRC Public Document Room and in 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 or proprietary information so that it can be made available to the public without redaction. The NRC also includes significant enforcement actions on its Web site at http://www.nrc.gov/reading-rm/doc-collections/enforcement/actions.

If you have any questions concerning this matter, please contact Mr. Hipolito Gonzalez, Chief, Materials Safety and Tribal Liaison Branch, at (301) 415-5637.

Sincerely,

/RA/

George A. Wilson, Director Office of Enforcement

Enclosures:

1. Notice of Violation and Proposed Imposition of Civil Penalty

2. NUREG/BR-0254, Payment Methods

3. NUREG/BR-0317, Enforcement Alternative Dispute Resolution Program cc: State of New York CERTIFIED MAIL RETURN RECEIPT REQUESTED

NOTICE OF VIOLATION AND PROPOSED IMPOSITION OF CIVIL PENALTY Dead Ringer, LLC EA-17-175 and EA-18-183 Rochester, New York During two separate NRC investigations initiated on January 4, 2017, and January 19, 2018, respectively, three violations of NRC requirements were identified. In accordance with the NRC Enforcement Policy, the NRC proposes to impose a civil penalty pursuant to Section 234 of the Atomic Energy Act of 1954, as amended (Act), 42 U.S.C. 2282, and Title 10 Code of Federal Regulations (10 CFR) 2.205. The particular violations and associated civil penalty are set forth below:

A. 10 CFR 30.3(a), "Activities requiring license" provides, in part, that no person shall manufacture, produce, transfer, receive, acquire, own, possess, or use byproduct material except as authorized in a specific or general license issued in accordance with the regulations in this chapter."

10 CFR 30.19(a), provides an exemption to the requirement for a license in 10 CFR 30.3(a) for persons who receive, possess, use, transfer, own or acquire tritium, krypton-85, or promethium-147 in self-luminous products manufacture, process, produce, or initially transfer in accordance with a specific license issue pursuant to § 32.22, which license authorizes the initial transfer of the product for use under 10 CFR 30.19.

However, the exemption in 10 CFR 30.19(a) excludes persons who initially transfer for sale or distribution such self-luminous products containing tritium.

Contrary to the above, Dead Ringer, Inc. willfully distributed material to unlicensed persons without an NRC license to distribute. Specifically, between approximately January 2015 and January 2018, Dead Ringer, LLC willfully initially transferred, for sale or distribution, approximately 10,350 gun sights containing tritium, which is a byproduct material to unlicensed persons without obtaining a specific license pursuant to 10 CFR 32.22.

B. 10 CFR 30.19(b) provides, in part, that any person who desires to initially transfer for sale or distribution self-luminous products containing tritium, krypton-85, or promethium-147 for use under 10 CFR 30.19(a) should apply for a specific license pursuant to 10 CFR 32.22 and for a certificate of registration in accordance with § 32.210, which license states that the product may be distributed by the licensee to persons exempt from the regulations pursuant to 10 CFR 30.15(a).

Contrary to the above, Dead Ringer, LLC willfully distributed gun sights containing tritium without having an evaluation by the NRC and a registration in the Sealed Source and Device Registry. Specifically, between approximately January 2015 and January 2018, Dead Ringer, LLC willfully distributed approximately 10,350 gun sights containing tritium without having an evaluation by the NRC and a registration in the Sealed Source and Device Registry in accordance with 10 CFR 32.210, as is required by 10 CFR 32.22(a)(3)(ii).

2 C. 10 CFR 110.5 states, in part, no person may import 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 110.9a, List of nuclear equipment and material under NRC import licensing authority, includes byproduct material (i.e. H-3).

10 CFR 110.20 states if an export or import is not covered by the NRC general licenses in §§ 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 110.27(a) states Except as provided in paragraphs (b) and (c) of this section, a general license is issued to any person to import byproduct, source, or special nuclear material if the U.S. consignee is authorized to receive and possess the material under a general or specific NRC or Agreement State license issued by the Commission or a State with which the Commission has entered into an agreement under Section 274b of the Atomic Energy Act.

Contrary to the above, Dead Ringer Inc., willfully imported byproduct material listed in 10 CFR 110.9 and the export of the material was not authorized under a general or specific license. Specifically, between approximately January 2015 and May 2017, Dead Ringer LLC. willfully imported approximately 10,350 gun sights, manufactured in China, and containing tritium, without having a possession license issued by the State of New York.

Therefore, the import was not authorized under the provisions of a general license.

This is a Severity Level III problem (NRC Enforcement Policy Sections 6.3 and 6.15).

Civil Penalty - $43,500 (EA-17-175 and EA-18-183)

The NRC has concluded that information regarding the reason for the violations, the corrective actions taken and planned to correct the violations and prevent recurrence, and the date when full compliance was achieved is already adequately addressed on the docket in the letter dated June 9, 2019. However, if the description therein does not accurately reflect your position or your corrective actions, you are required to submit a written statement or explanation pursuant to 10 CFR 2.201 within 30 days of the date of the letter transmitting this Notice of Violation. In that case, or if you choose to respond, clearly mark your response as a Reply to a Notice of Violation, and send it to the Director, Office of Enforcement, U.S. Nuclear Regulatory Commission, with copies to the Document Control Desk, Washington, DC 20555-0001, and the Director, Office of Nuclear Material Safety and Safeguards, U.S. Nuclear Regulatory Commission, Two White Flint North, 11545 Rockville Pike, Rockville, MD 20852-2738.

Dead Ringer, LLC may pay the civil penalty proposed above, in accordance with NUREG/BR-0254 (Enclosure 2) and by submitting to the Director, Office of Enforcement, U.S. Nuclear Regulatory Commission, a statement indicating when and by what method payment was made, or may protest imposition of the civil penalty in whole or in part, by a written answer addressed to the Director, Office of Enforcement, U.S. Nuclear Regulatory Commission, within 30 days of the date of this Notice.

Should you fail to answer within 30 days of the date of this Notice, the NRC will issue an order imposing the civil penalty. Should you elect to file an answer in accordance with 10 CFR 2.205 protesting the civil penalty, in whole or in part, such answer should be clearly marked as an Answer to a Notice of Violation; EA-17-175 and EA-18-183 and may: (1) deny the violations

3 listed in this Notice, in whole or in part; (2) demonstrate extenuating circumstances; (3) show error in this Notice; or (4) show other reasons why the penalty should not be imposed. In addition to protesting the civil penalty in whole or in part, such answer may request remission or mitigation of the penalty.

In requesting mitigation of the proposed penalty, the response should address the factors addressed in Section 2.3.4 of the Enforcement Policy. Any written answer addressing these factors pursuant to 10 CFR 2.205 should be set forth separately from the statement or explanation provided pursuant to 10 CFR 2.201, but may incorporate parts of the 10 CFR 2.201 reply by specific reference (e.g., citing page and paragraph numbers) to avoid repetition. The attention of the Licensee is directed to the other provisions of 10 CFR 2.205 regarding the procedure for imposing a civil penalty.

Upon failure to pay any civil penalty which subsequently has been determined in accordance with the applicable provisions of 10 CFR 2.205 to be due, this matter may be referred to the Attorney General, and the penalty, unless compromised, remitted, or mitigated, may be collected by civil action pursuant to Section 234c of the Act, 42 U.S.C. 2282c.

The responses noted above, i.e., Reply to Notice of Violation, Statement as to payment of civil penalty, and Answer to a Notice of Violation, should be addressed to: Director, Office of Enforcement, U.S. Nuclear Regulatory Commission, with copies to the Document Control Desk, Washington, DC 20555-0001, and the Director, Office of Nuclear Material Safety and Safeguards, U.S. Nuclear Regulatory Commission, Two White Flint North, 11545 Rockville Pike, Rockville, MD 20852-2738.

Your response will be made available electronically for public inspection in the NRC Public Document Room or in 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, the response should not include any personal privacy or proprietary information so that it can be made available to the public 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 that such material is withheld from public disclosure, you must specifically identify the portions of your response that you seek to have withheld and provide in detail the bases for your claim (e.g., explain why the disclosure of information will create an unwarranted invasion of personal privacy or provide the information required by 10 CFR 2.390(b) to support a request for withholding confidential commercial or financial information). If safeguards information is necessary to provide an acceptable response, please provide the level of protection described in 10 CFR 73.21.

In accordance with 10 CFR 19.11, you may be required to post this Notice within two working days of receipt.

Dated this 8th day of August 2019.