ML19289D947
| ML19289D947 | |
| Person / Time | |
|---|---|
| Issue date: | 02/14/1979 |
| From: | Hendrie J NRC COMMISSION (OCM) |
| To: | Oneill T HOUSE OF REP., SPEAKER OF THE HOUSE |
| Shared Package | |
| ML19289D945 | List: |
| References | |
| REF-10CFR9.7 NUDOCS 7903200566 | |
| Download: ML19289D947 (2) | |
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NUCLEAR REGULATORY COMMISSION
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WASHINGTON, D. C. 20555 5
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CHAIRMAN The Honorable Thomas P. O'Neill The Speaker of the House
.of Representatives Washington, D.C.
20515
Dear Mr. Speaker:
The. Nuclear Regulatory Commission has approved recommendations for new legislation to amend Section 234 of the Atcmic Energy Act of 1954, as amended, dealing with.the Comission's authority to issue civil penalties.
These recommendations are provided for the information of the appropriate
' Congressional comittees.
The Commission's present authority to impose civil penalties for violations by licensees is derived from Section 234~ of the Atomic Energy Act of 1954, as amended in 1969. Section 234 authorizes the Comission to impose for a variety of licensing violations a penalty ^
not to exceed $5,000 for each violation or $25,000 for all violations occurring within any period of thirty consecutive days.
If a violator refuses to pay, Section 234 (c) provides for collection of the penalty by a civil action instituted by the Attorney General at the Comission's request.
Civil penalties are useful to the Commission because they provide-flexible sanctions to enforce regulations that otherwise could be
. enforced only by the extreme measure of license revocation. However, the'Comission has been concerned for some time about the usefulness of the present statutory scheme of civil penalties. After reviewing
' eight years of experience with the civil penalty sanction, we believe that the limits on civil penalties need to be increased substantially and that a change to a system of administrative imposition is desirable.
The Comission has considered the various ways in which the present penalty limits can be increased.
It is our recomendation that the maximum penalty which can be assessed for a single violation should be raised to $100,000, with the total penalty limited only by the number of violations.
The Commission believes that administrative imposition of civil penalties is desirable and will become still more desirable if the limits on penalties are raised to the levels recomended.
Imposition 2075 184 7 903 20 0 fo9
The Honorable Thomas P. O'Neill of penalties substantially larger than those presently allowed may be expected to increase the number of times the Commission will have to resort to a collection action to carry an enforcement proceeding to conclusion.
If the civil penalties program is to achieve the full flexibility which the availability of higher penalties should provide, the entire penalty procedure needs to be brought under the Commission's control ~through a change to administ.ative imposition.
T'he reasons why the Commission is proposing increased per,alty limits as well as the arguments favoring administrative imposition of civil penalties are set out in the attached memorandum entitled " Proposed.
Cha'nges in NRC Civil Penalty Authority".
Sincerely, Joseph M. Hendrie
Attachment:
11emorandum IDENTICAL LETTER SENT TO PRESIDENT.0F THE SENATE MONDALE e
8 2015 185 W
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(DRAFT LEGISLATIVE PROPOSAL TO CONGRESS)
PROPOSED CHANGES'IN NRC CIVIL PENALTY AUTHC?.ITY Introduction In 1969, the Atomic Energy Act of 1954 was amended by jhe addition of Section 234, which conferred cpon the Atenic
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Energy Commission the statutory authority to levy civil monetary penalties on persons who violate certain require-nents contained in or derived frc: the Act.
The limits of these penalties were set at $5,000 for each violation, with the total payable by any person not to exceed $25,000 for all violations occurring within any thirty-day period.
Section 234 provides that a person given notice by the Commission of a violation and a proposed penalty may show in writing why such penalty should not be imposed.
No adminis-trative hearing other than this written response is required by.-Section 234, although the Commission's regulations offer a hearing on timely request.
10 CFR 2. 204 (d).
Collection of the penalty is by civil action instituted by the Attorney General at the request of the Commission.
After reviewing nine years of experience with the civil penalty sanction, the NRC believes that th.e limits on civil penalties need to be increased and that a change to a system of administrative imposition is desirable.
2075 186
2 Why Righer Civil Penalty Limits Are Needed In relation to the number of licensees, NRC has not had to employ civil penalties very frecuently.
.The compliance record of NRC licensees, now numbering over 10,000, has been
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generally good.
Few major injuries can be traced to nuclear-related causes in licensed facilities.
In the eight years that NRC/AEC has had authority to issue civil penalties, nearly 70 such penalties have been imposed.
All but ten of these pe,nalties were imposed after mid-1974.
In contrast to the large majority of licensees, however, a few major NRC licensees have been unresponsive.
For example, several utilities have ccanitted violaticns result-ing in the imposition of multiple civil monetary penal'ies t
,in the past few years.
For larger licensees, particularly utilities, the financial effects of current NRC penalties are negligible.
While in most cases utility attitudes may be influenced more by the mere imposition of an NRC penalty rather than the amount of that penalty, the Commission believes that the few major NRC 24 ensees who have not provided systematic, lasting corrections in response to penalties issued under the current limits might have responded more effectively to higher penalties.
The Commission would have imposed higher penalties on these licensees, had the 2075 187
3 authority been available.
Righer civil penalty limits are
.needed to provide NRC with escalated enforcement sanctions short of license, suspensions for the few maj or licensees with records of significant nonccmpliance who have not.
. responded to penalties issued under the existing authority.
The great variation-in econcaic status ancng NRC's licensees,and the widely differing consequences that could result from regulatory c:ncompliance provide another reason for increasing civil penalty limits.
The present $5,000/S25,000 limits define too narrow a spectrum to accommodate a scale of penalties commensurate with the many types of licensees and the varying seriousness of violations.
The seriousness of potential consequences ranges from relatively minor to
, highly'significant.
One of the most important attributes of a civil penalty is its ability to communicate to licensees the relative seriousness of various violations.
The present limit of $5,000 per violation does not provide NRC enough latitude to penalice all contributing violations in propor-tion to their significance while imposing a tota'l fine large enough to be commensurate with the overall. significance of a.
major noncompliance.
Increasing.the limit per violation would permit NRC to impose penalties more fairly and in proportion to the relative seriousness of each violation.
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2075 I88
4 The present enforcement progran recognizes that a civil penalty will be perceived as fair and will have maximum enforcement effect only if the penalty can be scaled in accordance with the violator's ability to pay.
Most small NRC. licensees have 'ccmparatively limited financial resources and operate either in competitive market envircnments or in situations, in which financial pressures are strong.
For these licensees, there is no evidence that civil penalties
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are ineffective, nor is there any indication that higher limits are needed to improve their compliance.
At the other end of the spectrum, however, are utilities and major indus-trial corporations with substantial resources.
If NRC penalties are to exert on these licensees a deterrent sffect
, comparable to the force of sanctions on aconomically small licensees, the agency needs the authority to impose.signifi-cantly higher penalties.
Increased penalty authority would allow NRC to redress what the NRC considers an imbalance between the levels of fines presently imposed on larger and on smaller licensees.
Crmparison with other Agencies NRC penalty authority is low compared to that of heveral.
.6ther regulatory agencies.
Civil penalty authority of regulatory agencies is commonly expressed in terms of total 2075 I89
5 maximum per violation or offense, er maximums per day cr month.
These different means of expressing civil penalty authority make direct comparisons difficult.
However, NRC's
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penalty authority is demonstrably less than that of several other agencies with regulatory responsibilities inv51ving
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public health and safety.- The Environmental Protection Agency (EPA), because of its regulatory responsibility relating to public health and environmental impacts of maj er commercial and industrial activity, provides an appropriate standard for comparison with NRC.
EPA can impose penalties up to $25,000 per day on persons who violate the Toxic Substances Control Act.
Persons who violate the effluent limitations set up by EPA pursuant to the Federal Water'
, Pollution Control Act may be fined up to.$10,000 for each day of violation.
Under this authority the Allied Chemical Company was fined $13 2 million, later reduced to $5 million, for polluting the James River with Kepone.
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Violations of regulations on automobile effluent stand-ards promulgated under the Clean Air Act are subject to civil penalties of up to $10,000 per offense.
Each motor vehi'cle or engine sold in violation constitutes a separ, ate offense.
Under this authority EPA has imposed and collected penalpy of $7 million against the Ford Motor Company.
The
,' maximum penalties that EPA can impose are limited only by the number of offenses committed.
20/5 190
The Department of Transper:ation (DOT) is authorized by the h'ational Traffic and 7.c:cr Vehicle Safety Act of 1,0c6 :c charge a penalty of up to $1,'00 for each ve.hicle that fails to meet
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safety standards required under the Act.
The m.axi-m;Gm total penalty assessable to a violator is now $800,000, increased from $406,000 by an amendment in 1974.
The Consumer Product Safety Commissien (C?SC) may impose civil penalties not to exceed 52,000 per violation en parsons who market consumer products not in conformance with applicable safety standards.
The maximur penalty for a series of related violatiens is $500,000.
The Federal Aviation Agency's civil penalty authority, which served in part as a model fer the original AEC civil penalties under Section 234, still provides maximum penalty of $1,000 for each violation.
Each day of violation is a separate offense, and there is no upper limit.
On occasion the FAA has imposed and collected penalties amounting to several hundred thousand dollars.
Several other Federal agencies have authority to impose substantial civil penalties.
The Food and Drug Administra-tion (FDA) has the authority to levy a maximum of $300,000.
in fines for a series of violations.
The Bureau of Motor Carrier Safety (BMCS) can issue civil penaltie. of up to
$10,000 for violations involving the use of hazardous v.aterials.
20/5 l91
7 In summary, present limits preclude HRC from imposing civil penalties comparable to majcr penalties impcsed by other Federal agencies whose regulatory activities have a
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significant impact on public health and safety.
Froposed New Limits
, Cn the basis of inflation alene, the current NRC ciyil penalty limits would. have to be increased to about $20,000 per violation to provide a financial impact equivalent throu'gh the late 1980's to that which existed when NRC/AEC received its civil penalty authority in 1969 Several arguments support an increase larger than this.
It is not uncommon for private individuals to be fined amounts in the tens of thousands of dollars.
Title 18 of the United States ' Code provides for fines typically on.the order of $10,000 maximum per violation (with some even higher).
Although civil penalties are not directly analogous,
to criminal fines ~ it is not unreasonable to apply to large corporations penalties substantially larger than. fines commonly imposed on individuals.
As previously discussed, the authority of other regu-latory agencies'with responsibilities for protecting public
'nealth and safety suggests that the NRC should be a'uthorized to impose significantly larger penalties for single violations.
20/5 l9;L
2 8
Secause of the potential for sericus. consecuences inherent in violations of Ccmmission regulations governing nuclear f acility construction and operation, the Ccamission be-lieves that the maximum penalty for a single viola-ion should be high.
The Commission also believes that, as with the Environ-mental Protection Agency's civil penalty authority under the Clean Air Act and Water Pollution Centrol Act, the maximum totdl penalty should be limited only by the number of viola-tions cc=mitted.
The Commission prefers this approach to one of si.mply increasing the present statutory limit on total penalties which can be assessed for violations during a thirty day period.
There appears to be no clear rationale for selecting any p, articular number of days a measure for a
such a " cap" on total penalties or for limiting the total penalty which might be imposed for repeated serious violations.
For example, in view of the high costs of replacement power when a nuclear reactor is shut down for corrective action, the allowable civil penalty for continued cperation in violation of Commission regulations ~ may have to be very large to cancel the possible econcmic incentive to postpone comp 1'iance.
Normally, of course, the Commission's regulatory and inspection program will detect serio.us violations at licensed nuclear
{acilitiesandprevent them from occurring in large numbers er continuing over any protracted time..
Thus, situatiens in which the absence of a " cap" could lead to penalties of many hundreds of thousands of dellars would be extraordinary 2075 193
9 occurrences.
Should such a situation arise, howe'.'er, the Commission believes that its authority to respond by an appropriate civil penalty should not be limited by an artifi-cially pre-selected maximum total penalty.
Based on the factors above, the NRC believes that.a maximum civil penalty authority for NRC of $100,000 per violation is reasonable.
Such a limit would:
.be less than the cost of a brief license suspension and therefore economically distinguishable frca such a shutdown; allow penalties in the same range as the maximum penalties than can be imposed by other Federal regulatory agencies; and be more than an order of magnitude larger than current NRC civil penalty authority, symbolizing a regulatory seriousnass that is consistent with an. expanding industry.
NRC would expect that this augmented civil penalty authority would carry with it the continued responsibility
, to exercise judgment, discretion and restraint.
The proposed increase.in maximum penalties is not intended to indicate the general level of fines that would typically be imposed.
Rather, this new penalty structure would give the NRC flex 1 bility to deal appropriately with those cases that should arise rarely, if at all, in a well-administered regulatory, program backed by adequate incentives for compliance.
Administrative Inocsition of Civil Penalties The Ccmmission's regulations implementing Section 23D of the Atomic Energy Act provide that befcre instituting a 20/5 i94
10 civil penalty proceeding the apprcphiate NRC Director shall serve written notice of violation upon the person charged.
The statute does not grant the person charged a right to an agency hearing, but the Commission's regulations offer a' hearing on request made within twenty days of the date of any o.rder issued following a written answer.
Section 234(c) now provides for collection of the
' penalty by a civil action instituted by the Attorney General at the recuest of the Commission.
The Attorney General is given " exclusive power to compromise, mitigate, or remit such civil penalties as are referred to him for collection."
Although Section 234 does not specify the form of the civil action, by E8 U.S.C. 1355, the collection action lies in the Federal district court.
Legislative history indicates.that Cengress intended the district court to provide a de novo
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- review, except perhaps in cases where a full agency record has already been developed and reviewed by the court of x
appeals during review of a license suspension proceeding based on the same factual sit.uation underlying imposition 1/
See Hearings before the Joint Committee on Atemic Energy, tist Congress, 1st Sess., on AEC Omnibus Legislation, Sept. 12, 1969 The language of Sec. 234(c), which provides for the collection action, is the sane as that proposed by the'AEC, which stress.ed at the Hearings that " civil action would be instituted by the Department of Justice in Federal district court where the right to a full hearing on the merits of the charges would exist."
Remarks of AEC General Counsel Joseph Hennessey, Id. at 29 20/$
i95 b] ))Q
11 of the civil penalty.
With regard to tr.e de novo review requirement, F?.C civil penalty authority is fairly typical.
I.: has been observed that "the vas: maferity.of agencies Cust be successful in a de novo adludication in federal s
district court (whether or not an administrative proceeding has previcusly occur;'ed) tefore a civ.il money penalty say be inposed."
Goldschnid, " An Evaluation of the Present and Potential Uce of Civil Money Penalties as a Sanction by Federal Administrative Agencies," ?.eper in Support of Recottendation 72-6, Administrative Ccnference of the.
United States, at 899 The potential.usefulness of civil penalties cannot be fully cchieved under this statutory scheme because crucial stages in tne imposition of a penalty fall outside the Com-mission's control.
The (:videntiary hearing, for example, under the present system need not take place before the Commission but may be deferred, in effect at the violator's
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bpt.;n, in favor of de novo review at a district court A1: hough the Cc= mission presently offers collection action.
full administrative hearings to persons charged (10 CFd-2.205(d)), under the present systen such persons may decline fheoffer, and may well do so if they regard the district court as a more favorable forum for review.
Even if the M 5 196
e 12 offer of administrative hearings is accepted, under the present system the agency ree:rd thereby develeped ay have to te dup 1;cated en de nove review bef:re the district Ocurt, snculd the person charged refuse tc pay the penalty, thereby forcing the~ agency either into a settlemen 'or int 0 a collection action.
- At the collection action stase, the Ocm ission can no lon;3r press directly for imposition cf the sanction it has found appropriate or even control the f evelopment of the record before the court, because the Attcrney General has exclusive authority to conduct the action or negotiate a settlement.
Thus the Commission lacks the authority to ensure that penalties actually collected will consistently reflect'the seriousness of the infraction being penali:ed.
An administrative imposition system,2/ by contrast, would recuire a full evidentiary review of a penalty pro-
- eeding before agency hearing boards, as in the case of a licensing action.
Imposition of the penalty would be a final c6 der of the Commission, reviewable only in the courts
~2/
Although the NRC technically " imposes" civil penalties under the present statute, the procedure for review and enforcement of this imposition differs significantly frc= agency and judicial review as applied to NRC I
licensing and rulemaking actions, which are generally reviewable exclusively in the courts of appeals on the basis of the record compiled by the agency.
The Adninistrative Conference of the United States has used the ter: " administrative impesi:icn" tc describe a similar procedure fcr impcsi:icn :f civil penalties.
20/5l97 NN
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13 cf appeals on the basis of substan-ial evidence in the ful'y develcped agency record.
Cc11ecti:n a:tirns, should they be nacessary, would invol.ve the yederal Cistrict Court only t:
the extent of issuing execution on the administrative 1; imposed penalty as sustained by tne Court of Appeals on review.
A change to a system of air.inistrative imposition wouid thus' assure that the effectiveness cf regulatory enforcement by civil penalties will not be compromised by the bargaining process inherent in da ncvo collection litigation.3/
Replacing the present statutory provision by an admin-1strative imposition system with full review at the adminis-trative level and subsequent review on the agency recopd in the court of appeals would also insure maximum use of the 3/ - The Administrative Conference Recort on civil penalties observed that " settlements reach'ed under the present system are, as a rule, substantially inferior to those that would occur under an administrative imposition system."
Goldschmid, sucra, at 921.
The one case which NRC has had to refer to the Attorney Genera" for collection (a safety infraction involving occupational exposures in radiography) resulted in a settlement for half the proposed penalty.
Although NRC experience so far indicates that resort to collection procedures will not occur frecuently, this does not minimize the impor-tance of the problem.
Should a case involving a penalty for a serious infraction involving hazard to the general
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public, at a nuclear plant for example, be settled for fifty cents on the dollar, the public might perceive the Commission's inability to insist on full payment of the penalty as indicating broader weakness in the enforcement of strict safety standards.
20'/5 i98 boOO$s ed3@,T.'
dm
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!c ission's expertise in exploring the technical questions efcen invcived in nuclear regulatory violacions.
The Com-
?ssion wculd have the oppertunity to speak f.irst en ques-cions of law and interpretation of regulations that arise in civil penalty proceedings and would be able to guide the developrent of an administrative record apprcpriate for effdctive judicial review at the appellate court level.
Texc of Prc:csed Amendments to Section 234 The rest detailed model for administration imposition cf civil penalties presently in the statutes is included in the Cecupational Safety and Health Act of 1970, S4 Stat.
( OSH A). 4 /The following draft 1590, 29 U.S.c. 651 et sea.
amendment of Sec. 234 of the Atomic Energy Act giving the Oc :ission authority for administrative inposition of civil penalties has been patterned after the OSHA. statute.
The acendment would also raise the limits on penalties which the Oc 21ssion could impose.
(Material not underlined is adepted directly frc: NRC's current statutory authority.)
3/
The constitutionality of the OSHA civil penalty provision has been upheld by the Supreme Court against a challenge that the procedures denied Seventh A=end-cent jury trial rights.
Atlas Roofing Co.,
Inc. v.
Occurational Safety and Health Review Ccmmission, et al., 430 U.S. 442 (1977).
20/5 l99 oS 0 0 j-Q i
15 Sec. 234 civil Monetary Fenalties for violations of Licensing Requirements. --
(a)
Any. erson who (1) violates any licensing provisien cf section 53, 57, 62,j63, 81, 82, 101, 103, 104, 107, or 109 or any rule, regulation, or order issued thereunder, or any term, condition, or limitation of any license issued there-under, or (2) commits any violation fer which a license may
'ge revoked under section 186, shall be subj ect to a civil penalty to be imposed by the Commission, not to exceed O!, :: $100,000 for each violation.
fr:vid:d th:: in n:-
- .:nt ch:11 th: tct:1.::naltS,227;ti: tL anL p-e ;;;;;d 0:!,000 f:: 111 ci:1;ti:n: ty uch ;;r: n :::urring.tithin
- na ::ri:i f thirt; ::n ::utiv: d;y.
If a violation is a continuing one, each day of such violation shall constitute a separate violation for the purpose of computing the applicable civil penalty.
The Commission shall have the power to ccmpromise, mitigate, or remit such penalties.
(b)
Whenever the Commission has reason to believe that a person has become subject to the imposition of a civil penalty under the provisions of this section, it shall notify such person in writing (1) setting forth the date, 5 acts, and' nature of each act of omission with which the o 90 no wM AM av nom 2075 200 a
O 16 perscn is charged, (2) specifically identifying the partic-2:ar provision er previsions of the section, rule, regulation,
- yder, or license involved in the violati:n,..and (3) advising Of each penalty which the Cc=rission prop: sed to impose and its. amount.
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The person so notified shall be granted"an Opportunity to show in writing, within such reasonable pericd as the Cc mission shall by regulation prescribe, why such penalty should not be imposed.
The notice shall also advice such person that upon failure to pay the civil penalty subsequently determined by the Cottissien, if any, the penalty may be collected by civil action at which the deter-nination' of the Commission will not be subject to review.
(c)
The Commission shall afford an occortunity for hearinc cricr to the issuance of a final order imoosing a cenalty cursuant to this section.
Fcr the ourcoses of delegation of authority by the Ccmmission to conduct such hearings and to rake intermediate and final decisions, croceedings under this section shall be deened ecuivalent to a croceedinc fer the crantine, suscendine, revoking, or amending of a license.
'( d 'i A' final crder entered in croceedings under this section shall be subj ect to iudicial review in the manner crescribed 207.5 201 I
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17 in the Act of December 29, 1950, as acer.ded (ch. 11c9, 62 Stat. 1129), and to the crovisions of see:1on 10 of the Administrative Procedure Act, as amended.
'*c Obj ecticn that has r.ot been urced before the Cctrission shall be censidered by.the ccurt, unles's the failure er neglect to urge'such obj ecticn shall be^ excused because of extraordinary circur-stances.
The findines of the Cctrission with resrect to' cuestions of fact, if succorted by substantial evidence en the reccrd considered as a whole, shall be conclusive.
(e)
Civil cenalties imoosed cursuant to this section may be collected in a civil action, which shall be initiated by the Attornev General on the reouest of the Cenmission.
In such acticn the validity and accrocriateness of the final order
'incosine the cenalty shall not be subject to review nor shall such cenalties be ccmcromised, mitigated, or remitted other than cursuant to an order of the Conmission.
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