ML20045E180

Partially Deleted Commission Decision Re ALAB-542.Concludes That Civil Penalty Should Not Be Imposed on Licensee in Absence of Specific Finding

ML20045E180
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Issue date:	01/08/1980
From:	Bickwit L NRC OFFICE OF THE GENERAL COUNSEL (OGC)
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Text

-

UNITED STATES

i.

NUCLEAR REGULATORY COMMISSION

{

g~-

W AS HIN GTON, D. C. 20555 -

C0h'SENT CALENDAR ITEM "* ~'

aemuery 8, na ADJUDICATORY For:

The Cem=1ssioners From:

Leonard Bickwig Jr.

General Counsel

Subject:

Commission Decision (In the.atter of Atlantic Research Corporation, Syproduct Material License No. 05-02808-04)

)

2.

Purpose:

Disecssion:

In ALAE-Sh2, the Appeal Ecard concluded that a civil penalty could not te imposed on a y

licensee in the absence of a specific finding either that licensee malfeasance, nonfeasance or misfeasance contributed to violations com-nitted by a licensee enployee or that the licensee failed to take prcept corrective acticn to prevent a repetition cf the ccncur-rence.

The Appeal Board reasoned that such a penalty would be " punitive" and t erefore j

outsi'de~the sc6pe of S~ectico~23 C l.

" s.V T.

The Com.ission Egieed and, by orcer dated Tugust 1,1979, the Oc=ission grar.ted review.

~

For reasons discussed reconr.end that 4

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Reco=endation:

I

(*

Leonard Bickwit, Jr.

General Counsel Attachments:

1.

ALAB-542 2.

Draft Decision Comissioners' coments or consent shuold be provided directly to the Office of the Secretary by c.o.b. Tuesday, January 22, 1980.

Comission Staff Office coments, if any, should be submitted to the Comissioners NLT January 15, 1980, with an'information copy to the Office of the Secretary.

If the paper is of such a nature that it requires additional time for analytical _ review and coment, the Comissioners and the Secretariat should be apprised of when coments may be expected.

This paper is tentatively scheduled for affimation at an Open Meeting during the Week of January 28, 1980.

Please refer to the appropriate Weekly Comission Schedule, when published, for a specific date and time.

DISTRIBUTION Comissioners Comission Staff Offices Secretariat

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40 ATOMIC SiFETY AND LICENSING APPEAL BOARD

. Th

~~

N

<t Alan S. Rosenthal, Chairman

(.

Dr. John H. Buck Ng g 2

Michael C. Farrar 8 RVED MAY 3 1979

)

i In the R.tter of

)

l

)

di. : -

. _ _ ATLANTIC R.", SEARCH CORPORATION

)

Byproduct Material License ~~

)

No. 45-02808-04

. !I _

alexandria, Virginia

)

j

)

i i -

Dr. Coleman Raphael, Alexandria, Virginia, for the appellant, Atlantic Research Corporation.

i Mr. James Lieberman (with whom Messrs. James.P..

_ _n Murray and Stephen G.

Burns were on the brief)'

~...j

. I :: ::tf:

for the Nuclear Regulatory Commission staff.:.

.._-l i

.3. _ _

=

DECISION May 2, 1979

( ALAB-54 2)

.:1 :

1. ; 2... -

- Before us is an appeal by the Atlantic Research Cor-.

f -; - :r._ peration (licensee) from two decisions of the Commission's 33:

-;t.

Administrative Law Judge.

In the first, rendered on f.

- _ october 28, 1977, the Administrative Law Judge affirmed ifj.

the imposition by the Director of the Office of Inspection

_ _j._

and Enforcement (I & E) of civil penalties against the i

l i

i

=

licensee in the total amount of $8,600.

ALJ-77-2, 6 NRC' i

The second decision, issued on April 6, 1978, denied

.702.

the licensee's request for mitigation of the penalties.

A1J-7 8-2, 7 NRC 7 01 The basic underlying facts are stipulated and, for the most part being adequately detailed in the October 1977 decision below, need not be rehearsed at length here.

Suffice it to say that the penalties were imposed by the i

Director of I & E in the first instance, and then upheld by the Administrative Law Judge, because of misconduct on This the part of a radiographer.in the licensee's employ.

misconduct -- essentially deliberate in character --

occurred on a Sunday morning in December 1976 during the course of the radiographer's performance, in the scope of his employment, of certain radiographic activities.

As a consequence of it, the radiographer himself, as well as

.. ~.

1 1/ The' licensee took a timely appeal following the rendi-.

i tion of the second decision.

We deferred the briefing

~

~-

of the appeal, however, to await the outcome below of

~

another civil penalty proceeding involving closely

- related issues.

That proceeding was concluded by the

~

Administrative Law Judge in late November.1978. Although an appeal was noted from his decision, it was subse-quently abandoned.

Thus, the appeal in the instant case has since moved forward on its own.

i

^

i 1

-4 _

i ::i: another employee who accompanied him, received excessive-

+ :._ n radiation doses. 2/

:~

~!

i There is no present dispute that the actions.ofathe

.e radiographer constituted serious violations of.the:out.-

-. standing byproduct material license under which.the radio,..

~

i !.

graphic activities were being conducted.

The licensee has

- l

i cxplicitly conceded as much and, at oral argument before us,: indicated that it likely would not have challenged.the

._ :i c:-

. issuance by I & E of a notice of violation (App.. Tr. 5 2-5 3)..

c.

~

.;.The focal point of the disagreement between the parties

- 2[:r-

.,is,: instead, the propriety of the assessment.of civil pen..

n ::: alt.ies against the licensee by reason of the radiographer's;,,...

f tri i

conduct.

tz.:-

?. n 1 : 1 2.

On this score, the licensee stresses that management-..

t-

- ::. derelictions related to that conduct were neither. charged L :-

~.

by~I & E nor found by the Administrative Law Judge.. More-1 specifically, there has been no clain by I &.E that:either.

4

):

1 - (1) the radiographer (who apparently possessed thirteen. -

II1

-~j years of prior experience in that line of work) had been _

i

.a J/ In the case of the radiographer, a dose of approximately.

ici i 1250 rems to portions of one hand and approx.imately S.2

-j1' 2-H rems to the whole body; in the case of the other --

employee, a whole body dose of approximatelyc4.4 rems.

I s

i j

-.. improperly selected, trained or supervised by.the. licensee;: a or (2) the licensee's management should have appreciated r

. that he might engage in deliberate misconduct and there-

- fore taken steps in advance to prevent it.

The licensee also calls attention to the fact that,'af ter the occur - r. :

.-r_

rence of the incident, it had immediately and permanently.

removed the radiographer from his position 8 -- i.e.,

took with dispatch whau, in its view, were the appropriate measures to avoid a repetition of the occurrence.

In support of its claim of a total absence of culpa-bility on its part, the licensee refers us to a colloquy between the Administrative Law Judge and the Director of I & E which took, place at the., mitigation he.aring on Janu-ary 31, 1978.

In response to a question, the~ Director q

l expressly acknowledged that, insofar as his office's..

. I

- investigation had disclosed, " management had done reason-ably what could be expected for them to carry.out their.

---I obligations" (Tr. 87).

That official gave a li.ke affirma-tive answer when then asked whether, in his view, "the licensee here had promptly reported the situation to the Commission, and had kind of stepped right in to do all l

3/ The employee was demoted and assigned to other work.

not under the NRC license.

~~

~~

1

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--,et 4. a 46-n-e-.

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-they could, to adopt all the corrective action that should. :-.

a rt :-

r::

be taken" (ibid.).

The staff's rejoinder is that, although all.this may 1

" be so, it does not serve to insulate the licensee from 1

the imposition of civil penalties.

We are told that a.

- 1, i

':- : l'icensee cannot avoid responsibility for a violation of r ;_:

-t the radiological safety requirements of its -license by 2 i~~- '

placing the blame for the violation on its employee.

More-

~

~

ri' over, according to the testimony of the I & E Director at

- the' mitigation hearing, as a general matter the taking of

? - -

ri: ~ prompt corrective action does not warrant a mitigation of f rthe civil penalty; rather, if such action is not forth-Or r

5 n-coming, the licensee involved will face "mor_e.. emphatic

-:ri Tr Te~nforcement action" on the part of I & E (Tr.. _8 8 ).

Still

--further, in his testimony the Director evinced the belief i"-~~:

.+

: -- that, in this instance the licensee's " good attitude d.

- n towards conpliance" with its obligations and..its prompt

=

ri :'

Erz : : response to the incident in question were counterbalanced

- by the "3 very major violations" which had brought about u: Ir' 1.'

~a "very, very, high" exposure -

" [olne of the highest we

.r i

1.

-have ever had" -- to the radiographer's hand.(Tr. 88-89).

r r':

As is thus seen, the issue is a narrow one: did the

- Administrative Law Judge err in declining to. mitigate the

.: :' ~

I i

6-1 assessed civil penalty S/ given the absence of any assertiona either (1) that by I & E (let alone an adjudicatory finding) i f nonfeasance contrib-

. management malfeasance, m s easance or that the :-

- uted in any way to the license violations; or.(2) licensee f ailed to take prompt and corrective action to

-w obviate a repetition of the occurrence.--/

5 l

For the reasons.

J that follow, we resolve that issue in the licensee's favor f

and set aside the imposition of civil penalties against (i.e., mitigate the assessed penalties in their full it er amount).

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= ===.: : :....a,,.,.

h I :=

. 4/: As will be seen / -infra, -p.14, -I-& E--has published.t e. c.n,

criteria which it utilizes in determining whether, 'and ~ ~ ~ ~ i

~ ~

~-

enforcement action is warranted in the if so what, event of a particular violation of a regulatory 1.

These criteria do not have the force requirement.

of regulations; rather, as noted in the staff's brief (at p. 31), they are intended simply "to explain to licensees and the public the implementation.of the Commission's enforcement program *.

Thus, at the oral ca.

staff counsel acknowledged that the Admin-J i

argument, istrative Law Judge was not bound by I & E's determin-that the ation (in the application of the criteria) warranted an $8,600 civil penalty established violations (App. Tr. 50).

given the record that_was made, 5/ It bears emphasis that, there we need not and do not decide whether, in truth,

~~

were steps which the licensee might have taken to pre-See fn. 14, infra; see also App.

vent the violations.

For the purposes of the appeal, the fact Tr. 13, 18.

that none was alleged or found is dispositive.

4 3

y

I, I.

3 1

1.4

.-A.

The authority to impose civil penalties for. violations!

1 irI:. -

- of NRC regulations or the terms of NRC licenses rests upon.

.Section 234 of the Atomic Energy Act of 1954, as amended,- : c. >

A:-

r 42 U.S.C.

2282.

Section 234 was added to the Act in 1969. by ii

~

'. - Section 4 of Public Law 91-161, 83 Stat. 444.

Prior to -

~

the Commission's 6/ enforcement powers were -.

.1 :ir ' ' ' ~

- its enactment,

--limited to the issuance of notices of violation, cease and. :.

desist orders and orders calling for the suspension, mod

• I

'~ir-ification and revocation of licenses. 7/

As its legislative history reflects, Section 234,was:

_7..

E modeled af ter similar provisions; contained' in :.the statutesy-

• ~-

r t'*

gtiverning the regulatory activities of the Federal.Communin,Jb,

~

~~

Ifi I ntri-

-1 : l' :

- cat ^ ions Commission, the Federal Aviation Agency. (now. Admin _ :

.E:-

~

istration) and the Federal Trade Commission..

S. Rept.

Ed

? - - - J/.As employed herein, the term " Commission" refers either a.

to the Atomic Energy Commission or to the Nuclear Regu.:..

l'atory Commission, depending upon whether the reference.;;.:

~005- -

l' is to a period prior to January 19, 1975 (the date upon.

which the NRC assumed the regulatory functions,preyiously l-

't performed by the AEC).

- + -

~ -

7/ In addition, the Commission (through the~ Attorney General.

04 i r -

of the United States) was empowered to seek judicial._:.

~~

' t ti i U ~~ '

enforcement of its orders and any other appropriate'.

i f

~

injunctive relief.

See Section 232 of the Act,_42.U.S.C, 2280.

l 1

1 I

P

1 7.-

No. 553 (Joint Committee on Atomic Energy) to accompany S.3169, 91st Cong. 1st Sess. (1969), at p.

9.

In the view of the Joint Committee, there was a need to provide our Commission with the greater enforcement flexibility which those other agencies enjoyed.

In the words of the Commit-

. tee, application of the enforcement remedies then.available..

to the Commission In may not always be in the public interest.

some instances, for example, the revocation of a license or suspension thereof may be tooMore-harsh a penalty under the circumstances.

over,in certain cases suspension may penalize the licensee's employees through loss of income without having any significant impact on the licensee itself.

At the present time, the AEC in such cases essentially must choose between issuing a revocation or suspension order, on the one hand, or, on~'the 'other, -issuing a-cease:a.nd. desist order.

The latter normally 2.

directs a licensee t'o"rsfrain :f rom specified

~

objectionable conduct under threat of imposition of an authorized penalty, but does not itself impose any penalty.

As noted, injunctions may also be sought in appropriate cases, but here again the enforcement action may be out of pro-portion to the infraction.

For these reasons the cosnittee is of the view that the authority to impose civil penalties

t-would materially assist the Commission in carry-ing out its program to protect public health and safety and assure the co= mon defense and security.

Conferring on the AEC the authority to topose civil monetary penalties, in addition to the Commission's existing authority to impose more severe sanctions either in lieu of or in addition to such monetary penalties, should afford the Commission ample flexibility to deal with

1 1

t t

L[~ '

infractions of varying severity.

Thus, for.....;:.;:: l

,l the Commission could, among other u. 3.,

,2

example,

..l

'C things, levy a civil monetary penalty where - - ;. _

suspension or revocation of a license is not- -

required, without depriving a licensee of his-;. _, ;

.l

-T -

n~

• means of livelihood or without requiring the :. ; - -

~

- l cessation of an authorized activity which

3 r ;. ;_ :-

' -1 might be of material benefit to the public.

I' 9-10. Y t

1 I_d,,. at pp.

~

In the course of the hearing which preceded ;iss.uance_.. :

T-of--its report, the Joint Committee posed a number o.f;. ques

~

~;

~ tions to the Commission which, together with.the answers ::.-.

' -to them, illumed the purpose that civil penalties. would

.- - i Ti' 1-2' 7 serve.

For example, when asked about the type of violation _..

~*~hich it sought to reach with the requested ci.vil penalty

- w I" ! authority, the Cosmnission responded that "[a]s: previously - -;.

~;

- 5:

-- - - - - =. wm m-f f + ~4tated, we believe civil penalties would be an. effective.__e

- :^ :

' deterrent, where more than a reprimand or cease a.nd desis.t.

~

2 :=:-

1-

^ order is needed, in cases in which a sanctioq:is needed' B/ The Committee went on to stress that it was.not suggest-17'

~~

ing that " serious violations of the Atomic Energy.Act

~~ ' ~ ~ ~

or of rules, regulations, orders or licenses is. sued..

t thereunder are to be penalized by a mere civ.il_ penalty".,-

particularly if "the violation is one that seriously

- 7 :---

f-threatens the health or safety of an employee.or a member of the public".

Rather, the civil penalty pro-j -

- ~ vision "is primarily intended f or application.. in cir-

~jc '

cumstances where utilization of the other and Senerally..

stronger regulatory tools available * *

• would be-;

.I ' ' ' -

tantamount to swatting a fly with a sledge ham::ler".;

7

~~

Id. at p.

10.

l 1

9

9 without depriving a licensee or his employees of their _..

means of livelihood and without requiring the-cessation-of an activity which might be of material benefit to.the Hearings before the Joint Committee on Atomic

- :" ;... :... public".

Enercy on AEC Omnibus Legislation - 1969, 91st.Cong., 1st.

Sess. (1969), at p. 39 (emphasis supplied).: Picking up the Committee then inquired whether the t-on that theme, proposed legislation " provide {d] for penalties.in suffi-ciently large amounts to be effective deterrents to licen-

..12.

sees which are large corporations * * *"; the Commission's

~

answer was that it believed that the penalties provided Ibid.

- would be " effective deterrents to our licensees".

+'

'(emphasis supplied).

And,- when subse'quently asked how

~

.-.=.m....----

---u

+:--

the amounts of civil penalties would be determined, the - : +_.

Commission commenced its response by repeating;a prior

- d

~

observation that "the purpose of imposing civil penalties

~

is remedial to deter persons from violating licensing pro-

__u i

f licenses".

_._.... visions of the Act and terms and condit ons o d

40 (emphasis supplied).

_I_d. at p.

Although the Joint Committee's report made no similar specific reference to the deterrent purposenand effect

" ~

of the ci.vil penalty provision, it did take pains to note.

~

l i

j

. fat p. 16) that

[t]he penalties authorized are civil only and are remedial in nature as opposed to punitive". cIn a..

f=

broader context, the Administrative Conference.of.the:

United States has more recently emphasized the.-same~ point.

- - 2:-

f-

A-Conference recommendation in 1972 that federal agencies -

.e consider the increased use of civil penalties as a means of t = : - j 1:..

enforcing regulatory recuirements was accompanied by a report

'I

' prepared by Professor Harvey J. Goldschmid of the-Columbia University Law School.

Taking note of the tenuous.line -

. r. t - - -.:

1:.

~ ~ ' - -. between civil and criminal sanctions, Professor Goldschmid

_ observed that a monetary penalty designated as " civil." by 2

+

.er:

. Congress should be beyond serious challenge if.it is.

-W '

i+

. 12

.. rationally related to a regEiatory scheinei=does not ' deal -

7

._:vith offenses which are mala in se; and may be.-expected'to '

r He added:

1 have a prophylactic or remedial ef fect.

5_:

"This last item is important.

It emphasizes that money

.rt

-penalty provisions may permissibly be aimed at preventing disapproved conduct -- in this sense, at having a deterrent

. - r-

c==

effect.

Exclusive use of the ' remedial' label-creates i

9/ Goldschmid, Report in Support of Recommendation 72-6,...

An Evaluation of the Present and Potential Use of Civil Money Penalties as a Sanction by Federal Ad5ihE N

,tE:

"~

2" istrative Agencies, Recommendations and Reports.of the'..

21

.:e Administrative Conference of the United States,. Jtily-~17 1970 - December 31, 1972, Vol. 2, 896, 914.

4 r-

,+m.

needless confusion.

Deterrence is not solely -a value of.1-.

the criminal law, but has long played a role in civil law.

treble damages in antitrust and punitive damages c:

too (e.g.,

in tort law)."SE!

In this connection, Professor Goldschmid at 914-15.

7:'--

10/ Id.

took note of the criticism leveled by Professor Walter Gellhorn against some of the reasoning in Helvering v.

391 (1938).

In that case, a taxpayer

~

Mitchell, 303 U.S.

had been assessed a large civil penalty under a provision of the internal revenue laws to the effect that "[i]f any

' part of any ' deficiency"is /due'"to fraud with intent to' ~

~^ ~

i

~

+- -

evade tax, then 50 per centum.of the total amount of s--

1 22~

the deficiency (in addition to such deficien'cy)'shall5 i :... :

The tax-

2

- + -

- be so assessed, collected and paid * * *".

payer challenged the assessment on double jeopardy grounds, pointing to his prior acquittal on a criminal charge of having willfully attempted to evade the taxes in question.

Rejecting the challenge, the Supreme Court held that the civil fraud penalty was not intended to be punishment for allegedly fraudulent acts but rather was a " remedial" sanction designed, inter _ alia, to reimburse 21:

the Government for investigative expenses and losses

= < _ _

According to Professor m3-

- caused by the taxpayer's fraud.

Ge11 horn, this explanation was dubious in that there was no relationship between the amount of the penalty As he saw and the amount of the Government's costs.

"Im) ore realistically, heavy penalties are imposed it, so that the fear of loss will deter would-be defrauders

..of the Public".

Gellhorn, Administrative Prescription and Imposition of Penalties, 1970 Wash. U.L.D. 265, 22.-

.._2.

'~~"-

~~

273-74 fn. 21.

!-n

- 5:.-

B.

The Commission's regulations implementing Section r;.. !.

234 are sparse and do not directly address the matter of what need be established in order to justify the imposition of a civil penalty for a violation of a regulatory require-

./

ment.

Our attention is called'by the staff, however, to

+- -

the Statement of Consideration which accompanied the: prom

-- ulgation of 10 CFR 2.205, the provision in the Rules of _

Practice which sets forth the procedure to be followed in r-

~- ~

assessing civil penalties.

The Commission there. stated a

that, "in determining the amount of a suitable penalty",-..

it will consider all relevant factors including, among others,..

the nature and number of the violations.(i.e.,.

. _ f. -

the significance from'-tihe standpoint of' health'

~

~

~

+'.:

and safety of the public or of.the.. common

'7 defense and security'such as safeguarding of special nuclear material), the steps taken by.

the persen to correct the violations, the licensee's history of previous violations and his demonstrated good faith in correcting them 1-promptly, and the appropriateness of the pen- -

alty to the size of the licensee's business conducted under license.

36 Fed. Reg. 16894 (August 26, 1971).

The staff also points to the fact that, as authorized by Section 161n. of the Atomic Energy Act, 40 U.S.C.

471(n),

the Commission has delegated its authority to institute l

enforcement actions to, inter alia, the Director of I & E.

\\

10 CFR 1.64, 2.201, 2.205.

For his part, the Director has

. 4 i

i loyed

+-issued a manual in which are detailed the cr ter a emp for-determining whether a civil penalty should be imposed.-

Inspection and Enforcement Manual, Section 0815 r.02..(May 5, ;

-1976).11/

Most of those criteria involve licensee dere -

7 - - -

the failure "to

~

lictions of one kind or another; e.g.,

carry out in a timely manner the corrective. action.the

..r e.

licensee stated would be taken in response to a previous 4 written notice"; chronic noncompliance with regulatory requirements which makes it " apparent that management

• is not conducting its licensed activities in conformance with [those) requirements"; " breakdown in management or

-s 1-procedural controls as evidenced by significant. items of noncompliance

• id*.".;. and int:[antigmal _ut.ilizati_on ;bysthe,2

_m.

. ~.

licensee of unauthor'ized~ Bate'rfals oi ~of authorized

..t..

~

And another of the materials for unauthorized purposes.

i

)

criteria explicitly embraces the notion of deterrence --

• punitive f

it calls for a civil penalty in cases "where *

~<

2j

- action is deemed necessary to assure future compliance"..

At the same time, however, at least one criterion conveys the impression that I & E believes there to be room for the imposition of a penalty simply because "an item of J-11/ In Section 0855, the manual also addresses the matter of the determination of the amount of the penalty.

~"-

~

~

G,

- - noncompliance resulted in or contributed to the: cause or the seriousness of an accident or an incident";

i.e., with-

'out regard to management shortcomings or to whether.the assessed penalty might serve to lessen the chances of I

future instances of noncompliance.

II.

~+~~

1-A.

In light of the foregoing, it seems manifest to us that the propriety of the civil penalties in;. issue hinges upon whether they would serve a discernible remedial-purpose -- more particul, ly, whether they might have the aff ect of deterring future violations of regulatory require..

r-a: ments by this or.other licensees (or.their employees)..To :.

d....

tr:- ' -

the extent, if any, that the I^ & E criteria might be taken.-

~

5: '

- to suggest otherwise, those criteria must give way to the....

legislative contemplation underlying the enactment of

-r Section 234 of the Atomic Energy Act.

I 12/ As previously noted, fn.

4, supra, the criteria-are..

not claimed by the staf f to have the force of law. Addi-tionally, no Commission regulation either explicitly or by necessary implication sanctions the assessment e.

of a civil penalty in the absence of a remedial purpose.;

Thus, we can give effect to our understanding of the - -

i::t-

- - - - - statutory bounds surrounding the Section 234: authoriza- - :

tion without casting doubt upon the validity. of any regulation promulgated under it.

f -

E

i

.16 -

I where the violation of statute,.r,eg-

~ ~

~~In circumstaneet ulation or license is both asserted and foun.d to. have been at 1 east influenced by licensee action (or inaction),_ there 1

'~

3 '

will normally be little room for doubt as to.the potential

~

Moreover, ev.en if the

+' '

deterrent value of a civil penalty.

Ti e violation cannot itself be traced to licensee..fau.lt, a..

civil penalty very well may fulfill a remedi.al. function

~= ~ i -

~hould it appear that the licensee either failed promptly s

~-

to institute appropriate measures to avoid a repetition or, in some other fashion, demonstrated a lick of awareness of.

the imperative necessity that it take all reasonable meas-ures to insure scrupulous compliance by its employees and J

^

agents with all regulatory _ requirements.

/. As_,we have.

13 heeE,* however, neither of these situations.has been alleged 7'*

2" To the contrary, we have the 1

1 or found to exist here.

inso-express acknowledgment by the Director of I J E that, far as his investigation disclosed, before the event the j

L_

' licensee had done everything that might have been reasonably

'E expected of it to insure that its employees would comply M~

~

~

13/ In the case of a licensee which lacks the ability (asto carry ou opposed to desire or incentive)tions, one would suppose

~~

No civil penalty, would be a lifting of its license.can induce a licehsee to irrespective of its amount, 2

do what it is not capable of doing.

I i

i

• i t

I i

~ fully with the terms of its license.

It is equally plain t.

.. that,~once the radiographer's misconduct came to its atten-

~

tion (immediately after it took place), the. licensee.both

-- - b 2 : ~ manifested its awareness of the gravity of that misconduct -

i and took suitable action to avoid a repetition of it:the.

i J-

.L demotion of the employee and his permanent debarment from the performance of any activities covered by the byproduct N -

material license.

17 In sum, what the record depicts is an isolated :

instance of an employee of the licensee engaging over a 4:

~ ~~ :~

E-

~ -

-- :short time span in a series of unauthorized-acts -_ acts ini : ti

n'either claimed nor.found to have been anticipatible or-

~ ' pr'eventable by the licensee. --To be sure, asDboth'-the, staff. _,

t 1: - 1

'-~

~anB the Administrative Law Judge stress (and the licensee

~

is were major ones and

~~ -

- does not deny), these transg a

i: '

had serious consequences in th' 'o 7 cf excessive radiation exposure (principally to the errant mployee. himself).

T But although that factor might be enough to sustain the

-imposition of a sanction pure.ly punitive in character, it

- scarcely is sufficient of itself to support a. sanction

~

which must have a remedial foundation as well, Put another

-~

~ way, there is no inevitable relationship between, on the I i t' 6

4 1

l 18 -

the level of significance -- from.a, radiation #

i :.

-one hand,

)

1 1

exposure standpoint or otherwise -- of a par.ticular viola-

)

tion and, on the other, the enforcement measures.which

.might be necessary or appropriate to deter its; repetition.:

From all that appears in his decision declining to mitigate the assessed penalties, the Administrative Law

.3 f;

~

Judge did not focus upon these considerations.- - No.nore - - :

satisf actory is the analysis of fered in the staff's brief in support of the result below.

Civil penalties here are remedial in the sense that they bring forcefully to the attention of the Licensee, its employees, and other licensees _

the seriousness of the cited violations and the A

need to prevent their future occurrences.

civil _ penalty gives notice to the Licensee that similar. violations ln the_ future may lead c.g_.,

12

=-

~

to more drastic enforcement action-such as sus

.1_

cension or revocation of the license.

Imposi-tion of the penalty provides incentive to the Licensee to take steps to avoid future overexpo-

~

~~

This deterrent effect against future..~~

sures.

~

misconduct is precisely the valid remedial

~~

function that civil penalties perform in any administrative regulatory program.

[Brief, p. 37; emphasis supplied; footnote omitted.]-

The.

principal difficulty with this line of reasoning is that it involves a repudiation of the concessions made by I & E below; i.e., it necessarily assumes (contrary to those con-that there were steps which this licensee might cessions)

t

.,I I

1-have taken either (1) before the event to avoid its occur.

rence or (2) after the event to avoid its repetition.

f 1-I fI Of course, due process problems might arise were we to I

countenance such a drastic change in position on the appellate level.

Quite apart from that, even now we have

~ '

~

- 'been left to speculate as to what are the steps which, according to the staff's present thinking, this licensee.

~

-- ~

'(or others similarly situated) might pursue -- and thus.

~could be given an " incentive" to pursue -- in the interest oof " avoid [ing) future overexposures". The short of the

- hatter is that, although (as we have earlier r.ecognized, C

--: :p. 16, supra) I& E's thesis regarding remedial.effect

.-. =.. -

might well carry'the' day inh'e.insEa'nce 'of many;I(if'not.-

t

~ :most) established license violations, it has no meaning

~ '

:: ~^

Ewhatever in the setting of the undisputed facts of.this

' case.

And, as hardly requires extended discussion, civil

= -

no less than criminal sanctions are to be tailored to the.

~

particular situation at bar, rather than fashioned.by to abstract propositions of no apparent applica-11-'

' resort bility to that situation.

-~ - :,-

~

At oral argument, we further explored the staff's analysis with its counsel.

We were told that. the " con-

~~

cept of amphasis" was at the heart of the imposition..

j F

i I

i of. penalties (App. Tr. 34).

According to counsele ' strong

. enforcement action in the form of civil penalties" -is nec-I essary to get the message across that "when you have an u.

over-exposure you need to reexamine your operation,..that

-what might have been good might not have been good enough" (App. Tr. 34-35).

When pressed, however, respecting what value that message might have in circumstances where there. -

has been no identification of anything which the licensee d

might have done which had not been done,14/-counsel's response was:

Under the license the management has certain -

responsibilities, the radiographers have certain responsibilities.

In this case we're not saying that; management-didn't meet their m

-"~

responsibilities, we f re~saying th'e radiographer.,..

i It's the did not meet his responsibilities.

radiographer that does this work.

Management 'l -~

C-doesn't make the surveys.

Management doesn't conduct the radiography.

It's the radiographer

]

who conducts the radiography.

And this radiog-rapher did not do what he was supposed to do.

j And that's why we're holding the licensee in violation, and that's why we're imposing a civil penalty, to give the message that you -

have to do the job properly, you have to make 14/ Early in the argument, we asked staff counsel what evidence there was in the record concerning measures

~~

the licensee could have taken to avoid this incident (App. Tr. 9-10).

The answer was that "[t]he record does not have any evidence or testimony as to what could have been done" (id. at 10).

i I

i i

1

. i the surveys, you're supposed to wear film badges, you're supposed to fill out the logs,..

and the various other items of non-compliance that occurred here.

i

{

(App. Tr. 4 0-41).

It would appear from that statement'that what in -.

- a -

Lactuality may have been at the root of the penalty assess-ment was not (as the staff's brief suggested) an intent to send a message to this and other licensees, but rather 1-a desire to impress upon radiographers generally that they are supposed to perform their tasks in conformity with all

- :-.. regulations.

It has not been explained to our satisf action,

- L

~ - however, how the penalties might fulfill that purpose here.

'~

~

To the extent that radiographersjmight be thought to require a reminder of their obligations "to.do.the job

+

properly" -- more precisely to refrain from the kind of gross and deliberate misconduct engaged in by this radiog-

~

rapher -- one might reasonably suppose that.the personnel

-J' action taken by the licensee would have provided that

:~

reinforcement.

Put another way, it is not immediately obvious to us why the miscreant's prompt demotion and transfer did not furnish a sufficient object.. lesson.

At

'c~

least this much seems clear: if the severe sanction which the licensee imposed upon its radiographer has not had

-- - 1the effect of impressing other persons engaged in activities

]

I

22 -

'under a Commission license with the need to comply faith 1

it is scarcely 1

fully with NRC regulatory requirements, likely that a monetary penalty assessed against the might have that effect.15/ -

- - ~

' - licensee (not the radiographer)

We thus remain entirely unconvinced that, on the

~~

-- f acts of this case, any remedial effect might.possibly be.

achieved by the assessed penalties.

Although some. measure of respect may be owed to the contrary judgment of the Commission office specifically vested with e.nforcement

~

~

responsibilities, we would be derelict in the. execution of our own duties were we simply to rubber-stamp that judg-f

="

ment. notwithstanding the absence of any assigned (or _appar-ent)~ rational foundation'-for t.- ;Those duties include the.

7...

~

, m

c

~~

ascertainment that any enforcement action challenged'by a licensee comports with existing statutory limitations.

as earlier noted, civil penalties are outside the l

=5

Because, M '

bounds of the Section 234 authorization if their purpose

)

is solely punitive,15! it follows that we could_,_

-O

~ or effect

)

i 15/ For these reasons, we may pass here the question of of imposing a penalty against the legality (and equity) fault in order to deter improper conduct on j

7' one not at the part of another.

That question manifestly is not

)

1 free from doubt.

the staff is, of' course, 16/ Although of no help to it here,(Br. pp. 35-39) that all quite right in its insistence

~~

civil penalties inherently have some punitive aspects.

j :r.. : :- c mot. justifiably af firm the result below without there being _-.,

at least some cause to believe that something. more than punishment is produced by that result.

It need be added only that none of the judicial or 4

Commission decisions cited by the staff cuts..against these conclusions.

Particularly heavy reliance is :placed on Vircinia Electric and Power Co. (North Anna. Power Statio..n,..... - -.

Units 1 and 2), CLI-76-22, 4 NRC 480 (1976), in which civil.

penalties were assessed against an electric utility under 11/

or making material f

~'

~ Section 186 of the Atomic Energy Act n -

-false statements in connection with its application for

~

.; permits to. construct a nuclear power f acility.- Although,

~ ri: : -

..;' 2s the staff emphasi es, it was there conceded.that the_

1

--?:

- : :- statements had not been made with knowledge.of their

'i+~

falsity, there was certainly neither agreement among the

-:- parties nor a finding that the utility had done everything

-L.

1 that could have been reasonably expected of -it to ins'ure M 'T -

that the representations it made to the Commission were

' ~~

acco: ate and complete.18/

With respect to the other decisions 17/ 42 U.S.C.

2236.

1.J18/ In our own opinion in North Anna, we stressed that the

- I ;- r case did not involve an attempt to hold the utility

~~

2

' ~

~

accountable "for a statement which, although no basis

~~ -

existed upon which its f alsity could have been perceived - -

(FOOTNOTE CONTINUED ON NEXT PAGE)

.n.

to which the staf f points,E our examination of.them has not disclosed anything which intimates, let alone holds, that civil penalties are an appropriate sanction for.a

.ne:

license violation even if their effect will be punishment... - -

alone.

Rather, they stand only for the proposition that

- M

.a violation of a regulatory requirement becomes.no less a Je:

viciation because it was unintentional;2g/ a proposition.._-

18/ (FOOTNOTE CONTINUED FROM PREVIOUS PAGE) upon reasonable investigation at the time made, is

~~

nevertheless revealed by subsequent developments to be untrue".

We went on to observe that, "(allthough Congress was understandably concerned that facts which' -

are either known or ascertainable upon reasonable inquiry not be misrepresented, it seems most unlikely that the legislature intended Section 186 to make an applicant a guarantor that every scientific dudgment

_s:

.:+

f airly made and.f airly reported would not later..be ; > -. -

. ~.- -

proven wrong".

ALAB-324, 3 NRC 347, 357-58.(1976). -

The Co= mission did not take issue with these conclu.

~

sions in CLI-76-22.

19/ United States v. Johnson, 541 F.2d 710 ( 8 th Cir. 197 6),

certiorari denied, 429 U.S. 1093 (1977)(~Uniled States

. )

v.

H.

M. Prince Textiles, Inc., 262 F. Supp. 383 (S.D.

~ ~ l N.Y. 1966); United States v. Vitasafe Corporation', 212

~

F. Supp. 397 (S.D. N.Y. 1962).

These decisions were also cited by the Administrative Law Judge in his first (October 1977) decision.

6 NRC at 711-12.

j 20/ E.g., "the good faith effort * *

• to assure compli.

ance * *

• is generally not a defense to an setion for

~

civil penalties for violation" (United States v.

Johnson, supra, 541 F. 2d at 712) ; " liability for civil penalties arises without a need for any showing that the practices were intentional or malicious" (ibid.);

" lack of wilfulness or intention is not a valiT Tefense

.o an action * *

• to recover civil penalties"-(United t

States v. B. M. Prince Textiles, Inc., supra, 262 F.

Supp. at 388); " the way in which def endant carr'ied on ~~

^

~~" ~

its operations, and its claimed good faith, have no (FOOTNOTE CONTINUED ON NEXT PAGE) i

.i

25 -

which is not in dispute here but quite beside _the. point.21/ _ _:

B.

Lest the reach of our decision in this case be

. misunderstood, some udditional observations are warranted..

i We have taken pains throughout this opinion to stress -

that the result we reach is founded entirely.upon the

- -. specific -- and in some respects perhaps unique -- facts before us.

Care must be taken, therefore, to. avoid read-ing too much into that result.

To begin with, we do not decide that I & E had the burden of persuasion on the issue of licensee. culpability.-

2.... _ 1 _.- Beyond doubt, the Commission staff office instituting the 20/ (FOOTNOTE CONTINUED FROM PREVIOUS PAGE),

l ' r '

bearing on the question of whether it has violated ' the

~~

z:.

order" (United States v. Vitasafe Corporation, supra,..~~~

~~

~~ ~~ 212 F. Supp. at 398).

In none of the three cases was there a claim that the

~

violation in question was not merely unintentional, but also unavoidable in the exercise of reasonable

~

~ ~ ~ - - - ~~

care by the corporate management.

Moreover, in both.

B. M. Prince and Vitasafe, the court pointed out, that,.

i although not a defense to liability, " good faith" (i.e., a " lack of intent to violate the order"1 could.

be urged in mitigation of the penalty.

262 F.

Supp.

at 388; 212 F.

Supp. at 398.

In its brief (at fn. 34),the i

staff notes its agreement with that view.

21/ Once again, this licensee does not challenge that a-violation of the terms of its licensee occurred.

Nor..

~~

does it seek to escape the imposition of a sanction for that violation on the ground simply that it had acted "in good faith" (although, as just seen, that is a recognized basis for the mitigation of civil penalties).

e

l I

i 26 -

4 l

t -

enforcement action must show (unless conceded.by the.

.l licensee) that there has been, in fact, a violation of a -

regulatory requirement.

But this does not perforce mean

__f-

.that, in order to justify an assessment of a civil penalty-

-for an established or acknowledged violation, the staff

.l e!

~

office must shoulder the additional burden of pr.oving (1) that the violation might have been avoided in.the exercise of reasonable care by the licensee; or (2) that the licensee's conduct after the event was such as to

-f bring into legitimate doubt its appreciation of the gravity of the violation and the possible necessity to 1

'take further measures to obviate future transg:essions.

'~

Indeed, there may wellibe 'very good reasons.why a

~

- r

~.l'icensee should be taken to have the affirmative obliga'-

~~

tion of demonstrating the converse; i.e.,

that the civil penalties should be mitigated in whole or in.part because

=

it neither can be held fairly accountable for what trans-pired nor can be charged with indifference to.its respon-sibilities under the license.

Among other things, such a conclusion would appear te draw support from considerations 2

I akin to those underlying the res ipsa loquitur doctrine which h__ long been firmly rooted in tort law.

The licensee, af ter all, possesses control over the licensed activities

.. l 1

~

ti J

d

~

27 -

i and the performance of its employees in the carrying on of those activities.

In the event of a violation of a regu-latory requirement, there is thus ample room for an at least rebuttable presumption that management shortcomings were a contributing factor.

Be there an explanation for

.. the violation. which counters the presumption, the licensee can best supply it -- i.e., can best assume the burden of going forward (if not the ultimate burden of proof).22/

The basis upon which the staff chose to proceed against this licensee relieved us, however, of any necessity now

2 to rule definitively on the burden-of-persuasion question.

Greeted with the licensee's assertions both that the radiog-

.ti.

- rapher's misconduct could not be attributed.to f ault on its. -

.part and that it has done all that m ght hahebeenexpected-i 2

of.it to prevent a repetition, the staff might have opted to put the licensee to its proof.

It might have, for r

22/ Once the licensee had put forth an explanation of the _-

t.

~

violation which, prima facie, demonstrated the absence of fault on its part, the burden of going forward would, of course, shift to the staff.

In the discharge of that burden, the staff could be expected to identify with particularity those preventive measures which the licensee might have, but had~not, taken (and then to

.. justify their reasonableness).

If the staf f's' claim.

were that, after the event, the licensee did not take the proper steps to avoid a repetition, a like iden-tification and showing on its part would be in order.

A licensee cannot be fairly called upon to establish that it was not remiss in failing to take actions which no one has suggested should have been taken.

l v-

- r

s f-example, sought to compel the licensee to show..affirmati.vely.

not only that the radiographer had been carefully selected.,

- 2 trained and supervised but, as well, that al.1 pther. reason-able measures had been taken to guard against the possibil.

= -

ity that he might bring about a radiation over-exposure to f :.+.

- himself and a co-employee through a willful disregard.o

- :: '+ ~

Similarly, it might have insisted settled procedures.

that the licensee demonstrate the sufficiency of its post.-

i event remedial actions.

But, as we have seen, the Jtaff 2"

- explicitly converted the matter of possible licensee short-comings into a non-issue -- perhaps because of.a conscious election to use this case to test its theory that the radiographer's malf easance, (coupled with_ the consequences

- ~~

was a legally adequate foundation -fog :the imposi-.

th~ereof) tion of civil penalties.

While, now that that theory has been rejected, it is too late for the staff to change directions in this civil penalty proceeding, there of course will be nothing to preclude it from taking a dif-i ferent tack when confronting future violations of regu-f latory requirements by licensees.

Secondly, nothing we have said should be taken as intimating a view that the smaller the role assumed by a 4

i licensee and its high-level management in the superintend-ence of the day-to-day execution of the licensed activities,

.4

's

i

)

i e

. _. the smaller the risk of its being saddled with civil pen-

- ]

alties in the event that a rank-and-file employee is 1

derelict.

" Hear no evil, see no evil, speak no evil" does

... -not have a place in our regulatory scheme; no official of j

a licensee, from its chief operating officer on down, enjoys the freedom to insulate himself from what is being done (or not done) by subordinates.

Whether in a specific case there has been enough direct management involvement or surveillance will, of course, hinge upon the nature of the activity in question; assuredly, considerably more can be demanded along that line in the instance of the

~

. operation of a nuclear power reactor than in the perform-

- - - ance of routine industrial radiography workc. This is at

. least implicitly recognized by the staff.

Once again, we

. have not been asked to find that the licensee at bar fell short in the discharge of its own responsibilities by not monitoring more closely what its experienced radiographer was doing on the day in question.

Rather, in the words of

-its counsel, it was "the radiographer (who] did not meet his responsibilities".

See p. 20 supra (emphasis supplied).

The April 6, 1978 decision of the Administrative Law Judge is reversed insofar as it denied the licensee's,,,_,

i s, -

t,

1

-d.

.. _ request for the mitigation of the civil penalties imposede - :~

l by order of the Director of the Office of Inspection and -

..e e

1

=

- Enforcement.

That request should have been, and.hereby

^

J c..

now is, granted in its entirety.

i It is so ORDERED.

FOR THE APPEAL BOARD

~

Wn,Y bAha

~

Margaret E.

Du Flo i

Secretary to the Appeal Board

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