[Federal Register Volume 64, Number 90 (Tuesday, May 11, 1999)]
[Notices]
[Pages 25376-25383]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-11818]
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NUCLEAR REGULATORY COMMISSION
[EA 95-009]
Thermal Science, Inc.; Order Imposing Civil Monetary Penalty
I
Thermal Science, Inc. (TSI) is the manufacturer and vendor of fire
barrier products known generally as Thermo-Lag. TSI began marketing
this product in the early 1980s to licensees of the United States
Nuclear Regulatory Commission (NRC) for use in nuclear power plants.
TSI represented that Thermo-Lag had undergone independent testing by
Industrial Testing Laboratories, Inc. (ITL). Using ITL stationery, TSI
issued reports in ITL's name, making it appear that the reports were
written by ITL, when in fact they were written by TSI. Many NRC
licensees thereafter purchased Thermo-Lag to meet the NRC's fire
protection requirements, codified in 10 CFR 50.48 and appendix R to
part 50.
II
In 1989 the NRC began receiving licensee reports of problems with
installed Thermo-Lag. As part of a subsequent NRC investigation, TSI
was questioned in the fall of 1991 about the testing and installation
of Thermo-Lag. TSI continued to represent that its product had been
independently tested by ITL. However, during an NRC inspection of TSI's
facility in December
[[Page 25377]]
1991, it was learned that TSI, not ITL, had written the test reports,
and that ITL had very limited involvement in the testing process. In
1992 the United States Department of Justice began a criminal
investigation of the matter, resulting in indictments and a jury trial
in the United States District Court for the District of Maryland in
1995. The jury acquitted TSI and TSI's President, Ruben Feldman, on all
of the criminal charges. A written Notice of Violation and Proposed
Imposition of Civil Penalties (Notice) in the amount of $900,000 was
subsequently served upon TSI by letter dated October 1, 1996. The
Notice sets forth nine violations of 10 CFR 50.5, the NRC's
``Deliberate Wrongdoer'' rule.
TSI delayed filing a response to the Notice while it sought a
preliminary injunction of NRC's administrative process from the United
States District Court for the Eastern District of Missouri. The
District Court finally denied the injunction request and dismissed
TSI's cause of action by opinion dated June 23, 1998, holding that TSI
must exhaust its administrative remedies before seeking judicial
relief. Thereafter, on July 7, 1998, TSI filed its answer to the
Notice. In its answer, TSI set forth its legal objections to the
Notice, and denied each of the 10 CFR 50.5 violations. TSI's appeal
from the District Court's June 1998 decision is pending before the
United States Court of Appeals for the Eighth Circuit. However, by
order dated September 10, 1998, the appeals court denied TSI's motion
to stay the NRC's administrative proceeding pending the appeal.
III
After consideration of TSI's answer, the NRC staff has determined,
as set forth in the Appendix to this Order, that the violations of 10
CFR 50.5 occurred as stated in the Notice, and that the penalties
proposed for the violations designated in the Notice should be imposed.
IV
In view of the foregoing and pursuant to section 234 of the Atomic
Energy Act of 1954, as amended (Act), 42 U.S.C. 2282, and 10 CFR 2.205,
it is hereby ordered that:
TSI pay civil penalties in the amount of $900,000 within 30 days of
the date of this Order, in accordance with NUREG/BR-0254. In addition,
at the time of making the payment, TSI shall submit a statement
indicating when and by what method payment was made, to the Director,
Office of Enforcement, U.S. Nuclear Regulatory Commission, One White
Flint North, 11555 Rockville Pike, Rockville, MD 20852-2738.
V
TSI may request a hearing within 30 days of the date of this Order.
Where good cause is shown, consideration will be given to extending the
time to request a hearing. A request for extension of time must be made
in writing to the Director, Office of Enforcement, U.S. Nuclear
Regulatory Commission, Washington, DC 20555, and include a statement of
good cause for the extension. A request for a hearing should be clearly
marked as a ``Request for an Enforcement Hearing'' and shall be
submitted to the Secretary, U.S. Nuclear Regulatory Commission, ATTN:
Rulemakings and Adjudications Staff, Washington, DC 20555. Copies also
shall be sent to the Director, Office of Enforcement, U.S. Nuclear
Regulatory Commission, Washington, DC 20555, to the Assistant General
Counsel for Materials Litigation and Enforcement at the same address,
and to the Regional Administrator, NRC Region III, 801 Warrenville
Road, Lisle, IL 60532-4351.
If a hearing is requested, the Commission will issue an Order
designating the time and place of the hearing. If TSI fails to request
a hearing within 30 days of the date of this Order (or if written
approval of an extension of time in which to request a hearing has not
been granted), the provisions of this Order shall be effective without
further proceedings. If payment has not been made by that time, the
matter may be referred to the United States Attorney General for
collection.
In the event TSI requests a hearing as provided above, the issues
to be considered at such hearing shall be:
(a) Whether TSI was in violation of the Commission's requirements
as set forth in the Notice referenced in Section II above; and
(b) whether, on the basis of such violations, this Order should be
sustained.
Dated this 3rd day of May, 1999.
For the Nuclear Regulatory Commission.
William D. Travers,
Executive Director for Operations.
Appendix--Evaluation and Conclusion
On October 1, 1996, the NRC issued a Notice of Violation and
Proposed Imposition of Civil Penalty (Notice) for violations of NRC
requirements identified during an investigation of Thermal Science,
Inc. (TSI). The Notice set forth nine violations (designated A through
I) of 10 CFR 50.5. TSI's response to the Notice, filed on July 7, 1998,
was devoted largely to two legal objections to the Notice: (1) NRC
lacks authority to impose a civil penalty on a non-licensee like TSI;
and (2) NRC's administrative proceeding is criminal rather than civil,
and thus violates the Double Jeopardy Clause of the United States
Constitution. These objections repeat those made in TSI's request for a
preliminary injunction, filed with the United States District Court for
the Eastern District of Missouri. The district court dismissed TSI's
injunction request in June 1998. The NRC staff has reviewed TSI's legal
objections and finds that they do not bar this administrative action
for the following reasons.
The question of whether the Atomic Energy Act of 1954, as amended,
42 U.S.C. 2011 et seq. (AEA) provides the NRC with authority to impose
civil penalties on non-licensees was examined at the time 10 CFR 50.5
was promulgated. See 56 FR 40664-670 (August 15, 1991). As discussed
therein, 10 CFR 50.5 was issued under the general authority of AEA
sections 161b and 161i, pursuant to which the Commission may issue any
regulation deemed necessary to protect public health. Absent from these
statutory provisions is any limitation to whom such regulations may be
made applicable. Moreover, in evaluating the general powers conferred
on the Commission by Congress, federal courts have uniformly found the
AEA's provisions quite broad. In passing the AEA, Congress enacted a
regulatory scheme which is virtually unique in the degree to which
broad responsibility is reposed in the administering agency, free of
close prescription in its charter as to how it shall proceed in
achieving the statutory objectives.
Siegel v. AEC, 400 F.2d 778, 783 (D.C. Cir. 1968). See also Power
Reactor Development Co. v. International Union of Elec. Radio and Mach.
Workers AFL-CIO, 367 U.S. 396 (1961). In exercising its broad
rulemaking authority, the Commission explicitly made 10 CFR 50.5
applicable to, among others, any ``supplier'' who provided to one or
more NRC licensees ``materials, or other goods or services,'' relating
to licensed activities. 10 CFR 50.5(a). As detailed in the Notice, TSI
qualifies as such a ``supplier.'' Accordingly, TSI is properly subject
to the regulation, even though TSI is not an NRC license.
TSI's Double Jeopardy argument is contrary to the Supreme Court's
holding in Hudson v. U.S., 118 S.Ct. 488 (1997). The Court there held
that while a second ``criminal prosecution'' for the same conduct is
prohibited, civil penalties based on the alleged criminal conduct may
be lawfully imposed
[[Page 25378]]
unless ``the clearest proof'' shows that the statute authorizing the
civil penalty can only be construed as a criminal sanction. Hudson, 118
S.Ct. at 493. In making this determination, only the ``statute on its
face'' is to be evaluated (Id., at 494), and if the statute confers
sanction authority upon an administrative agency this is ``prima facie
evidence that Congress intended to provide for a civil sanction.'' Id.,
at 495. In this regard, the Court distinguished between the ``infamous
punishment of imprisonment'' imposed following a judicial trial, and
money penalties. Id., at 495-96.
Applying Hudson to the facts here, the October 1, 1996 Notice
informed TSI that the NRC proposed to impose civil penalties pursuant
to section 234 of the AEA, 42 U.S.C. 2282, and 10 CFR
2.205.1 Reading AEA section 234, which is titled ``Civil
Monetary Penalties For Violations of Licensing Requirements,'' there
can be no doubt that it provides for civil, not criminal, sanctions.
Persons are subject to ``civil'' penalties of up to $100,000 ``to be
imposed by the Commission.'' 42 U.S.C. 2282(a). Unpaid penalties
imposed by the Commission ``may be collected by civil action.'' 42
U.S.C. 2282(b). Even when a penalty matter is referred to the United
States Attorney General for collection, the Attorney General is only
``authorized to institute a civil action.'' 42 U.S.C. 2282(c). Section
234 provides only for monetary penalties, with no provisions for
imprisonment, and does not contain the word ``criminal.'' 2
Similarly, 10 CFR 2.205 provides only for the imposition of civil
penalties, and specifies the procedures by which a person charged with
violations may contest those violations by requesting an administrative
hearing. Accordingly, any administrative action taken by the Commission
against TSI pursuant to the Notice will necessarily be civil rather
than criminal in nature. In these circumstances the Double Jeopardy
Clause does not bar the administrative action even though it arises
from some of the same conduct for which TSI was criminally tried in
1995.
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\1\ 10 CFR 2.205 is the NRC regulation implementing the
statutory authority of 42 U.S.C. 2282. The regulation was also
issued under the authority, inter alia, of AEA sections 161 b, i,
and o, 42 U.S.C. 2201 (b), (i), and (o). See preamble to 10 CFR Part
2.
\2\ Section 234 thus stands in sharp contrast to the criminal
provisions of the AEA, set forth in sections 221-223, 42 U.S.C.
2271-2273, which either refer to ``criminal violations,'' or specify
terms of imprisonment as punishment.
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With respect to the facts upon which the staff based its proposed
action, TSI's response to the Notice denied the nine violations. The
NRC's evaluation and conclusion regarding TSI's factual denial are as
follows:
Restatement of Violation A
A. Contrary to 10 CFR 50.5, TSI deliberately made statements in an
October 5, 1991 letter to the NRC which it knew contained inaccurate
and incomplete information material to the NRC, as evidenced by the
following examples:
1. In its October 5, 1991 letter, TSI stated that Thermo-Lag had
been ``. . . extensively tested by independent testing laboratories on
many occasions. . . .'' See TSI Letter of October 5, 1991, at 1. TSI's
statement was incomplete and inaccurate in that the NRC later
determined during an inspection at TSI's offices that test reports
bearing the logo of Industrial Testing Laboratories, Inc. (ITL) were
actually drafted by TSI, typed by TSI, and issued by TSI. ITL's role
was limited to having one of its representatives witness data
acquisition on the date of the test, and verify furnace temperature
readouts, without having had any involvement in the construction or
approval of the test article. Thus, with respect to ITL, the statement
that Thermo-Lag had been ``. . . extensively tested by independent
testing laboratories on many occasions. . . .'' misrepresented the
respective roles of TSI and ITL in Thermo-Lag testing.
2. In its October 5, 1991 letter, TSI stated that Thermo-Lag
provides ``a fire barrier of consistent performance[]'' when installed
``in accordance with the instruction manuals in concert with training
programs of Thermal Science,'' and that this performance had ``been
proven by independent testing on multiple occasions.'' See TSI Letter
of October 5, 1991, at 2. This statement was inaccurate in that most of
the configurations tested by TSI, in those tests that were submitted to
the NRC, were not installed in accordance with the TSI instruction
manual.
3. In TSI's ``Response To The United States Nuclear Regulatory
Commission's Letter Dated 10 September 1991,'' attached to its October
5, 1991 letter, TSI provided results from 1986 tests conducted by
Underwriter's Laboratory (UL) regarding ampacity derating tests of one-
hour and three-hour Thermo-Lag fire barrier systems, and stated that
the values obtained by the UL tests reflected ``the most current and
conservative results of tests . . .'' and were ``the most conservative
information available to us.'' \3\ See TSI Response at 6 and 12. These
statements were inaccurate in that TSI was aware of an alternate
baseline UL ampacity derating test that was more current and provided
more conservative values than the test results submitted to the NRC on
October 5, 1991.
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\3\ This answer responded to NRC Question I.A.5., ``What are
ampacity deratings for 1-hour fire rated THERMO-LAG fire barrier
systems[,]'' and NRC Question I.B.5., ``What are ampacity deratings
for 3-hour fire rated THERMO-LAG fire barrier systems[,].'' See NRC
letter to TSI dated September 10, 1991, Enclosure at 1.
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These statements were material to the NRC because they were made by
TSI: (1) In response to concerns the NRC had raised about the quality
and adequacy of Thermo-Lag, including specific concerns about the
nature of the testing performed to qualify Thermo-Lag for use in
nuclear power plants; and (2) to influence the NRC's investigation into
whether Thermo-Lag met NRC's fire barrier requirements and guidelines.
(01011)
This is a Severity Level I violation (Supplement VII) Civil
Penalty--$100,000
Summary of TSI's Answer to Violation A
In denying Violation A, TSI stated that at all times it acted and
intended to act in accordance with all applicable requirements. TSI
stated that no false statements were ever deliberately made by its
representatives, and that its representatives ``never deliberately
omitted to disclose any material information to the NRC.'' In support
of its denial, TSI referenced the fact that based on the evidence
presented at the criminal trial in 1995, the jury acquitted TSI of all
charges.
NRC Evaluation of TSI's Answer to Violation A
TSI's brief pro forma answer on the facts provides no rebuttal or
other information regarding the detailed allegations made in Violation
A. The answer makes no attempt to explain why the allegations are
incorrect. In the absence of new information, the NRC staff continues
to believe that violations of NRC requirements occurred as alleged in
Violation A, that these violations are properly classified as Severity
Level 1, and that these violations carry a high degree of regulatory
significance. Accordingly, the NRC staff finds that the proposed civil
penalty of $100,000 should be imposed for Violation A.
Restatement of Violation B
B. Contrary to 10 CFR 50.5, during an October 17, 1991 meeting with
the NRC Staff, Mr. Rubin Feldman, the President of TSI, deliberately
made oral statements to the NRC that he knew
[[Page 25379]]
contained inaccurate information material to the NRC. With respect to
the participation of ITL in the fire barrier testing of Thermo-Lag, the
following exchange took place:
Mr. West (NRC): You mentioned in your [October 5, 1991] letter--
in fact, you provided us with an enclosure that identifies quite a
few tests that had been sponsored, presumably, by TSI. It looks like
the bulk of the tests were actually done at your facility, although
there seemed to be some involvement of a testing outfit called ITL,
Industrial Testing Laboratory. We are not familiar with it; it's not
UL or Southwest. Could you fill us in on who ITL is and tell us what
involvement they have in each test, in terms of planning, conduct
and report writing and documentation base?
Mr. Feldman: Industrial Test Laboratories is a St. Louis-based
laboratories. . . . We needed a third part (sic) observing the
various phases of the testing. We have asked them if they would be
willing to do that. They indicated that they would, so they
officiated during the phases of the testing. That's how the reports
were published.
Tr. at 167-8 (emphasis added). The discussion about ITL continued
as follows:
Mr. West: . . . What I'm trying to find out is, I think we need
to decide if their [ITL's] involvement in the test really would
constitute the independence for the test.
Mr. Feldman: They were very independent. They reviewed all the
data. They analyzed all the data. It was as independent as you can
make it.
Tr. at 170 (emphasis added.)
Mr. Feldman's statements were inaccurate and misrepresented the
respective roles of ITL and TSI in Thermo-Lag testing. Mr. Feldman knew
that ITL did not function as an independent tester of Thermo-Lag, and
that ITL's role was limited to having one of its representatives
witness data acquisition on the date of the test, and verify furnace
temperature readouts, without having any involvement in the
construction or approval of the fire barrier/raceway test article.
Mr. Feldman's statements were material to the NRC because Mr.
Feldman made them, on behalf of TSI: (1) in response to concerns the
NRC had raised about the quality and adequacy of Thermo-Lag, including
specific concerns about the nature of the relationship between TSI and
ITL regarding the testing performed to qualify Thermo-Lag as 1-hour and
3-hour fire barrier material for use in nuclear power plants; (2) to
influence the NRC's investigation into whether Thermo-Lag met NRC's
fire protection requirements and guidelines; and (3) to persuade the
NRC that, for those Thermo-Lag tests in which ITL had involvement, ITL
had acted as an independent, third-party reviewer and analyzer of all
the test data. (02011).
This is a Severity Level I violation (Supplement VII) Civil
Penalty--$100,000
Summary of TSI's Answer to Violation B
In denying Violation B, TSI stated that at all times it acted and
intended to act in accordance with all applicable requirements. TSI
stated that no false statements were ever deliberately made by its
representatives, and that its representatives ``never deliberately
omitted to disclose any material information to the NRC.'' In support
of its denial, TSI referenced the fact that based on the evidence
presented at the criminal trial in 1995, the jury acquitted TSI of all
charges.
NRC Evaluation of TSI's Answer to Violation B
TSI's brief pro forma answer on the facts provides no rebuttal or
other information regarding the detailed allegations made in Violation
B. The answer makes no attempt to explain why the allegations are
incorrect. In the absence of new information, the NRC staff continues
to believe that violations of NRC requirements occurred as alleged in
Violation B, that these violations are properly classified as Severity
Level 1, and that these violations carry a high degree of regulatory
significance. Accordingly, the NRC staff finds that the proposed civil
penalty of $100,000 should be imposed for Violation B.
Restatement of Violation C
C. Contrary to 10 CFR 50.5, TSI deliberately submitted inaccurate
information material to the NRC on November 12, 1991, in response to
NRC questions sent to TSI by letter dated October 31, 1991, as
evidenced by the following examples:
1. The NRC asked TSI to ``provide copies of all TSI correspondence
and documents related to UL Project Report 86-NK-23826, File R-6-802,
dated January 27, 1987'' dealing with ampacity derating testing used to
qualify Thermo-Lag as 1-hour and 3-hour rated fire barrier material.
See NRC letter of October 31, 1991, Enclosure at 1, Question 7. In
partial response, TSI submitted ITL Report 82-355-F-1 and ITL Report
84-10-5. See TSI's ``Partial Response To The United States Nuclear
Regulatory Commission's Letter Dated 31 October 1991'' (attached to
TSI's letter dated November 12, 1991), Answer 7-2 (2), at 9, and
Attachment 4. This response was inaccurate in that TSI knew ITL Report
82-355-F-1 misrepresented the respective roles of TSI and ITL in the
testing of Thermo-Lag. This report's cover sheet carries the ITL logo,
indicating that the report was written by ITL. This report is TSI
Technical Note 111782, with an ITL cover sheet attached to it. TSI
Technical Note 111782 had been written and issued by TSI in November
1981. ITL had no involvement in creating or issuing ITL Report 82-355-
F-1, did not witness the subject ampacity test, and had no role in
documenting or analyzing the test results.
2. Regarding ITL Report 84-10-5, TSI's November 12, 1991 response
was further inaccurate in that TSI knew that this ITL Report also
misrepresented the respective roles of TSI and ITL in the testing of
Thermo-Lag. The report's headings and titles indicate that the report
was written by ITL. In fact, TSI wrote ITL Report 84-10-5, using ITL
stationery that TSI had obtained from ITL. Section 2 of the report
represents that ITL compared the test data to baseline data obtained in
an October 1981 test (a reference to the test reported in ITL Report
82-355-F-1). In fact, no such data comparison was performed by ITL.
The inaccurate information TSI submitted to the NRC on November 12,
1991, in the form of the ``ITL'' reports, was material to the NRC
because TSI's submittal was made: (1) In response to concerns the NRC
had raised about the quality and adequacy of Thermo-Lag, including
specific concerns about the ampacity derating testing used to qualify
Thermo-Lag as 1-hour and 3-hour rated fire barrier material for use in
nuclear power plants; and (2) to influence the NRC's investigation into
whether Thermo-Lag met NRC's fire protection requirements. (03011)
This is a Severity Level I violation (Supplement VII) Civil
Penalty--$100,000
Summary of TSI's Answer to Violation C
In denying Violation C, TSI stated that at all times it acted and
intended to act in accordance with all applicable requirements. TSI
stated that no false statements were ever deliberately made by its
representatives, and that its representatives ``never deliberately
omitted to disclose any material information to the NRC.'' In support
of its denial, TSI referenced the fact that based on the evidence
presented at the criminal trial in 1995, the jury acquitted TSI of all
charges.
[[Page 25380]]
NRC Evaluation of TSI's Answer to Violation C
TSI's brief pro forma answer on the facts provides no rebuttal or
other information regarding the detailed allegations made in Violation
C. The answer makes no attempt to explain why the allegations are
incorrect. In the absence of new information, the NRC staff continues
to believe that violations of NRC requirements occurred as alleged in
Violation C, that these violations are properly classified as Severity
Level 1, and that these violations carry a high degree of regulatory
significance. Accordingly, the NRC staff finds that the proposed civil
penalty of $100,000 should be imposed for Violation C.
Restatement of Violation D
D. Contrary to 10 CFR 50.5, TSI deliberately submitted inaccurate
information material to the NRC on December 3, 1991, in further
response to NRC questions sent to TSI by letter dated October 31, 1991,
as evidenced by the following examples:
1. The NRC asked TSI to ``provide full copies of ITL fire test
reports 82-11-80 and 82-11-81, including daily work sheets, quality
assurance documentation, and thermocouple temperature records.'' NRC
letter of October 31, 1991, Enclosure at 3, Question 19. This request
was generated by Mr. Feldman's offer to provide the quality control
records attached to ITL reports 82-11-80 and 82-11-81, which were
needed to answer a question concerning test article construction. See
October 17, 1991 transcript, at 89-90; 190-91. In response, TSI
submitted complete copies of ITL Report 82-11-80 and ITL Report 82-11-
81, which were the generic 1-hour and 3-hour test reports used to
qualify Thermo-Lag as 1-hour and 3-hour fire barrier material for use
in nuclear power plants. See TSI's ``Supplemental Response To The
Remaining Questions Contained In The United States Nuclear Regulatory
Commission's Letter Dated 31 October 1991'' (attached to TSI's letter
dated December 3, 1991), Answer 19, at 9, and Enclosures 8 and 9. This
response was inaccurate in that TSI knew ITL Report 82-11-80
misrepresented the respective roles of TSI and ITL in the testing of
Thermo-Lag. The Proprietary Rights statement of TSI, included as part
of the report, stated that the report was prepared by ITL. In fact, the
report was not prepared by ITL. TSI wrote ITL Report 82-11-80, using
ITL stationery that TSI had obtained from ITL. Section 3 of ITL Report
82-11-80 states that the subject testing was performed ``under the
supervision and total control of Industrial Testing Laboratories, of
St. Louis, Missouri, an independent testing laboratory.'' In fact, the
test was conducted under the supervision and control of TSI, with an
ITL representative merely witnessing the test and verifying furnace
temperature readouts.
2. Regarding ITL Report 82-11-81, TSI's December 3, 1991 response
was further inaccurate in that TSI knew that this ITL Report also
misrepresented the respective roles of TSI and ITL in the testing of
Thermo-Lag. The Proprietary Rights statement of TSI, included as part
of the report, stated that the report was prepared by ITL. In fact, the
report was not prepared by ITL. TSI wrote ITL Report 82-11-81, using
ITL stationery that TSI had obtained from ITL. Section 3 of ITL Report
82-11-81 stated that the subject testing was performed ``under the
supervision and total control of Industrial Testing Laboratories, of
St. Louis, Missouri, an independent testing laboratory.'' In fact, the
test was conducted under the supervision and control of TSI, with ITL
representative Donald Storment merely witnessing the tests and
verifying furnace temperature readouts, which took place between
September 10 and October 12, 1982. Moreover, several daily work sheet
pages from Section 7 of the report are represented as having been
signed by Mr. Storment. In fact, those pages contain replicated
signatures of Mr. Storment, which TSI added to the report without the
knowledge or consent of either ITL or Mr. Storment. For the daily work
sheets that Mr. Storment did sign, TSI instructed Mr. Storment to
backdate those sheets to make it appear that he had witnessed TSI work
performed in August and early September of 1982, when, in fact, Mr.
Storment had not witnessed that work.
The inaccurate information TSI submitted to the NRC on December 3,
1991 was material to the NRC because TSI's submittal was made: (1) In
response to concerns the NRC had raised about the quality and adequacy
of Thermo-Lag, including specific questions about the test articles
discussed in ITL Reports 82-11-80 and 82-11-81, which were generic
tests TSI had used to qualify Thermo-Lag as 1-hour and 3-hour rated
fire barrier material for use in nuclear power plants; and (2) to
influence the NRC's investigation into whether Thermo-Lag met NRC's
fire protection requirements. (04011)
This is a Severity Level I violation (Supplement VII)
Civil Penalty--$100,000
Summary of TSI's Answer to
Violation D
In denying Violation D, TSI stated that at all times it acted and
intended to act in accordance with all applicable requirements. TSI
stated that no false statements were ever deliberately made by its
representatives, and that its representatives ``never deliberately
omitted to disclose any material information to the NRC.'' In support
of its denial, TSI referenced the fact that based on the evidence
presented at the criminal trial in 1995, the jury acquitted TSI of all
charges.
NRC Evaluation of TSI's Answer to Violation D
TSI's brief pro forma answer on the facts provides no rebuttal or
other information regarding the detailed allegations made in Violation
D. The answer makes no attempt to explain why the allegations are
incorrect. In the absence of new information, the NRC staff continues
to believe that violations of NRC requirements occurred as alleged in
Violation D, that these violations are properly classified as Severity
Level 1, and that these violations carry a high degree of regulatory
significance. Accordingly, the NRC staff finds that the proposed civil
penalty of $100,000 should be imposed for Violation D.
Restatement of Violation E
E. Contrary to 10 CFR 50.5, TSI deliberately made a statement in a
May 8, 1992 letter to the NRC which it knew contained inaccurate
information material to the NRC. In this letter, TSI stated that its
ongoing test program at Omega Point Laboratories was ``under the total
control of Omega Point.'' See TSI Letter of May 8, 1992, at 2. This
statement was inaccurate in that this test program was not under the
total control of Omega Point Laboratories. For example, the
construction of the test articles and placement of the test
thermocouples was under TSI's control.
This statement was material to the NRC because TSI submitted it:
(1) In response to concerns the NRC had raised about the quality and
adequacy of Thermo-Lag, including specific concerns about the
misleading nature of the ``ITL'' reports; and (2) to persuade the NRC
that TSI was now subjecting Thermo-Lag to truly independent testing.
(05011)
This is a Severity Level I violation (Supplement VII) Civil
Penalty--$100,000
[[Page 25381]]
Summary of TSI's Answer to Violation E
In denying Violation E, TSI stated that at all times it acted and
intended to act in accordance with all applicable requirements. TSI
stated that no false statements were ever deliberately made by its
representatives, and that its representatives ``never deliberately
omitted to disclose any material information to the NRC.'' In support
of its denial, TSI referenced the fact that based on the evidence
presented at the criminal trial in 1995, the jury acquitted TSI of all
charges.
NRC Evaluation of TSI's Answer to Violation E
TSI's brief pro forma answer on the facts provides no rebuttal or
other information regarding the allegations made in Violation E. The
answer makes no attempt to explain why the allegations are incorrect.
In the absence of new information, the NRC staff continues to believe
that violations of NRC requirements occurred as alleged in Violation E,
that these violations are properly classified as Severity Level 1, and
that these violations carry a high degree of regulatory significance.
Accordingly, the NRC staff finds that the proposed civil penalty of
$100,000 should be imposed for Violation E.
Restatement of Violation F
F. Contrary to 10 CFR 50.5, TSI deliberately made statements in a
June 16, 1992 letter to the NRC which it knew contained inaccurate
information material to the NRC, including but not limited to the
following examples:
1. TSI stated that its continuing test program at Omega Point
Laboratories was ``under the total control of Omega Point.'' See TSI
Letter of June 16, 1992, at 2. This statement was inaccurate in that
this test program was not under the total control of Omega Point. For
example, the construction of the test articles and placement of the
test thermocouples was under TSI's control.
2. TSI stated that the tests were being conducted in accordance
with, among other criteria, the ``applicable prerequisites of'' NRC
Generic Letter 86-10. See TSI Letter of June 16, 1992, at 3. This
statement was inaccurate in that these tests were not being conducted
in accordance with the guidance of NRC Generic Letter 86-10.
These statements were material to the NRC because TSI submitted
them: (1) In response to concerns the NRC had raised about the quality
and adequacy of Thermo-Lag, including specific concerns about the
misleading nature of the ``ITL'' reports; and (2) to persuade the NRC
that TSI was now subjecting Thermo-Lag to truly independent testing.
(06011)
This is a Severity Level I violation (Supplement VII) Civil
Penalty--$100,000
Summary of TSI's Answer to Violation F
In denying Violation F, TSI stated that at all times it acted and
intended to act in accordance with all applicable requirements. TSI
stated that no false statements were ever deliberately made by
representatives, and that its representatives ``never deliberately
omitted to disclose any material information to the NRC.'' In support
of its denial, TSI referenced the fact that based on the evidence
presented at the criminal trial in 1995, the jury acquitted TSI of all
charges.
NRC Evaluation of TSI's Answer to Violation F
TSI's brief pro forma answer on the facts provides no rebuttal or
other information regarding the detailed allegations made in Violation
F. The answer makes no attempt to explain why the allegations are
incorrect. In the absence of new information, the NRC staff continues
to believe that violations of NRC requirements occurred as alleged in
Violation F, that these violations are properly classified as Severity
Level 1, and that these violations carry a high degree of regulatory
significance. Accordingly, the NRC staff finds that the proposed civil
penalty of $100,000 should be imposed for Violation F.
Restatement of Violation G
G. Contrary to 10 CFR 50.5, TSI deliberately made a statement in a
June 22, 1992 letter to the NRC which it knew contained inaccurate
information material to the NRC. In this letter, TSI stated that the
TSI-sponsored tests conducted at Omega Point Laboratories were ``under
their (Omega Point Laboratories') total control, which also included
quality control during construction.'' See TSI Letter of June 22, 1992,
at 2. This statement was inaccurate in that (1) TSI knew that the test
program was not under the total control of Omega Point and that (2) TSI
knew that quality control during construction of the test articles was
not under the total control of Omega Point.
This statement was material to the NRC because TSI submitted it:
(1) In response to concerns the NRC had raised about the quality and
adequacy of Thermo-Lag, including specific concerns about the
misleading nature of the ``ITL'' reports; and (2) to persuade the NRC
that TSI was now subjecting Thermo-Lag to truly independent testing.
(07011)
This is a Severity Level I violation (Supplement VII) Civil
Penalty--$100,000
Summary of TSI's Answer to Violation G
In denying Violation G, TSI stated that at all times it acted and
intended to act in accordance with all applicable requirements. TSI
stated that no false statements were ever deliberately made by its
representatives, and that its representatives ``never deliberately
omitted to disclose any material information to the NRC.'' In support
of its denial, TSI referenced the fact that based on the evidence
presented at the criminal trial in 1995, the jury acquitted TSI of all
charges.
NRC Evaluation of TSI's Answer to Violation G
TSI's brief pro forma answer on the facts provides no rebuttal or
other information regarding the allegations made in Violation G. The
answer makes no attempt to explain why the allegations are incorrect.
In the absence of new information, the NRC staff continues to believe
that violations of NRC requirements occurred as alleged in Violation G,
that these violations are properly classified as Severity Level 1, and
that these violations carry a high degree of regulatory significance.
Accordingly, the NRC staff finds that the proposed civil penalty of
$100,000 should be imposed for Violation G.
Restatement of Violation H
H. Contrary to 10 CFR 50.5, TSI deliberately made a statement in a
July 29, 1992 letter to the NRC which it knew contained inaccurate
information material to the NRC. In this letter, TSI stated that the
1986 ampacity testing ``was done by Underwriters Laboratories [sic] in
Chicago under its [Underwriters Laboratory's] total control.'' TSI
Letter of July 29, 1992, at 4. This statement was inaccurate in that
TSI knew that the referenced ampacity testing was not under the total
control of Underwriters Laboratory.
This statement was material to the NRC because TSI submitted it:
(1) In response to concerns the NRC had raised about the quality and
adequacy of Thermo-Lag, including specific concerns about the ampacity
derating testing used to qualify Thermo-Lag as 1-hour and 3-hour rated
fire barrier material for use in nuclear power plants; and (2) to
influence how the NRC disseminated information to the nuclear
[[Page 25382]]
industry about the performance of Thermo-Lag products. (08011)
This is a Severity Level I violation (Supplement VII) Civil
Penalty--$100,000
Summary of TSI's Answer to Violation H
In denying Violation H, TSI stated that at all times it acted and
intended to act in accordance with all applicable requirements. TSI
stated that no false statements were ever deliberately made by its
representatives, and that its representatives ``never deliberately
omitted to disclose any material information to the NRC.'' In support
of its denial, TSI referenced the fact that based on the evidence
presented at the criminal trial in 1995, the jury acquitted TSI of all
charges.
NRC Evaluation of TSI's Answer to Violation H
TSI's brief pro forma answer on the facts provides no rebuttal or
other information regarding the allegations made in Violation H. The
answer makes no attempt to explain why the allegations are incorrect.
In the absence of new information, the NRC staff continues to believe
that violations of NRC requirements occurred as alleged in Violation H,
that these violations are properly classified as Severity Level 1, and
that these violations carry a high degree of regulatory significance.
Accordingly, the NRC staff finds that the proposed civil penalty of
$100,000 should be imposed for Violation H.
Restatement of Violation I
I. Contrary to 10 CFR 50.5, on or about August 31, 1992, TSI
deliberately submitted to the NRC ITL Reports 85-6-283, 85-2-382, 85-5-
314, 85-11-227, 86-7-472, 87-5-435, 87-6-350, 85-1-106, and 85-4-377.
These reports misrepresented the respective roles of TSI and ITL in the
testing of Thermo-Lag. TSI knew these reports contained inaccurate
information material to the NRC, as evidenced by the following
examples:
1. Regarding ITL Report 85-6-283, the report's headings and titles
indicate that the report was prepared by ITL. This information was
inaccurate in that TSI wrote this report, using ITL stationery that TSI
had obtained from ITL. Section 3 of the report stated that the subject
testing was conducted ``under the direct supervision and total control
of Industrial Testing Laboratories, Inc.'' In fact, the test had been
conducted under the supervision and control of TSI, with an ITL
representative merely witnessing the test and verifying furnace
temperature readouts. Page (i) of the report represents that the ITL
representative witnessing the test (Dave Siegel) was a professional
engineer. However, subsequent NRC review has determined that Dave
Siegel was not a professional engineer, did not have a college degree,
and that TSI was aware of his lack of qualifications. Page (i) of the
report also represents that Allan Siegel reviewed, approved, and signed
the report on behalf of ITL. However, subsequent NRC review has
determined that page (i) contains the replicated signature of Allan
Siegel, which TSI added to the report without the knowledge or consent
of Allan Siegel. Daily work sheets contained in Section 6 of the report
were altered by TSI to make it appear that Dave Siegel witnessed TSI's
construction of the test article on May 17, 1985, when in fact Dave
Siegel only witnessed the test itself, which was performed on June 19,
1985. Similarly, in Section 7 of the report, TSI forged the initials of
Dave Siegel on work sheets to make it appear that Dave Siegel was
present on May 17, 1985, when TSI constructed the test article.
2. Regarding ITL Report 85-2-382, the report's headings and titles
indicate that the report was prepared by ITL. This information was
inaccurate in that TSI wrote this report, using ITL stationery that TSI
had obtained from ITL. Section 3 of the report stated that the subject
testing was conducted ``under the direct supervision and total control
of Industrial Testing Laboratories, Inc.'' In fact, the test had been
conducted under the supervision and control of TSI, with an ITL
representative merely witnessing the test and verifying furnace
temperature readouts.
3. Regarding ITL Report 85-5-314, the report's headings and titles
indicate that the report was prepared by ITL. This information was
inaccurate in that TSI wrote this report, using ITL stationery that TSI
had obtained from ITL. Section 3 of the report stated that the subject
testing was conducted ``under the direct supervision and total control
of Industrial Testing Laboratories, Inc.'' In fact, the test had been
conducted under the supervision and control of TSI, with an ITL
representative merely witnessing the test and verifying furnace
temperature readouts. Page (i) of the report represents that the ITL
representative witnessing the test (Mike White) was a professional
engineer. This is inaccurate in that Mr. White was not a professional
engineer, and at that time TSI knew that Mr. White was not a
professional engineer. Among the daily work sheets contained in Section
6 of the report are ones signed by Mike White, regarding test article
work performed by TSI on May 14, 1985. These work sheets are inaccurate
in that Mr. White was present only during the test itself on May 21,
1985. In fact, TSI instructed Mr. White to backdate the work sheets he
signed to make it appear that he had witnessed TSI May 14 work when, in
fact, he had not witnessed that work.
4. Regarding ITL Report 85-11-227, the report's headings and titles
indicate that the report was prepared by ITL. This information was
inaccurate in that TSI wrote this report, using ITL stationery that TSI
had obtained from ITL. Section 3 of the report stated that the subject
testing was conducted ``under the direct supervision and total control
of Industrial Testing Laboratories, Inc.'' In fact, the test had been
conducted under the supervision and control of TSI, with an ITL
representative merely witnessing the test and verifying furnace
temperature readouts. Among the daily work sheets contained in Section
6 of the report are ones signed by Mike White, regarding test article
work performed by TSI on November 8, 1985. Section 6 is inaccurate in
that Mr. White was present only during the test itself on November 19,
1985. In fact, Mr. White was instructed by TSI to sign work sheets to
make it appear that he had witnessed TSI's November 8 work when, in
fact, he had not witnessed that work.
5. Regarding ITL Report 86-7-472, the report's headings and titles
indicate that the report was prepared by ITL. This information was
inaccurate in that TSI wrote this report, using ITL stationery that TSI
had obtained from ITL. Section 3 of the report stated that the subject
testing was conducted on August 1, 1986 ``under the direct supervision
and total control of Industrial Testing Laboratories, Inc.'' In fact,
the test had been conducted under the supervision and control of TSI,
with an ITL representative merely witnessing the test and verifying
furnace temperature readouts. Contained within this report is a
``Verification of Application'' document dated July 31, 1986 and signed
by R. A. Lohman on behalf of TSI. This document refers to ITL Test
Article No. 86-7-472. This information was inaccurate in that there
were never any ITL test articles, as ITL neither built nor helped to
assemble any of the articles tested by TSI.
6. Regarding ITL Report 87-5-435, the report's headings and titles
indicate that the report was prepared by ITL. This information was
inaccurate in that TSI wrote this report, using ITL stationery that TSI
had obtained from ITL. Section 3 of the report stated that the subject
[[Page 25383]]
testing was conducted ``under the direct supervision and total control
of Industrial Testing Laboratories, Inc.'' In fact, the test had been
conducted under the supervision and control of TSI, with an ITL
representative merely witnessing the test and verifying furnace
temperature readouts.
7. Regarding ITL Report 87-6-350, the report's headings and titles
indicate that the report was prepared by ITL. This information was
inaccurate in that TSI wrote this report, using ITL stationery that TSI
had obtained from ITL. Section 3 of the report stated that the subject
testing was conducted ``under the direct supervision and total control
of Industrial Testing Laboratories, Inc.'' In fact, the test had been
conducted under the supervision and control of TSI, with an ITL
representative merely witnessing the test and verifying furnace
temperature readouts.
8. Regarding ITL Report 85-1-106, the report's headings and titles
indicate that the report was prepared by ITL. This information was
inaccurate in that TSI wrote this report, using ITL stationery that TSI
had obtained from ITL. Section 3 of the report stated that the subject
testing was conducted ``under the direct supervision and total control
of Industrial Testing Laboratories, Inc.'' In fact, the test had been
conducted under the supervision and control of TSI, with an ITL
representative merely witnessing the test and verifying furnace
temperature readouts.
9. Regarding ITL Report 85-4-377, the report's headings and titles
indicate that the report was prepared by ITL. This information was
inaccurate in that TSI wrote this report, using ITL stationery that TSI
had obtained from ITL. Page (i) of the report represents that the ITL
representative witnessing the test (Clarence Bester) was a professional
engineer. This is inaccurate in that Mr. Bester was not a professional
engineer. Section 3 of the report stated that the subject testing was
conducted ``under the direct supervision and total control of
Industrial Testing Laboratories, Inc.'' In fact, the test had been
conducted under the supervision and control of TSI, with an ITL
representative merely witnessing the test and verifying furnace
temperature readouts.
The reports TSI submitted to the NRC on or about August 31, 1992
were material to the NRC because they were submitted by TSI: (1) In
response to concerns the NRC had raised about the quality and adequacy
of Thermo-Lag products; (2) in the context of an ongoing NRC
investigation into concerns about the quality and performance of
Thermo-Lag products; and (3) to influence the NRC's investigation into
whether Thermo-Lag products met the fire barrier requirements of 10 CFR
50.48 and 10 CFR part 50, appendix R. (09011)
This is a Severity Level I violation (Supplement VII)
Civil Penalty--$100,000
Summary of TSI's Answer to Violation I
In denying Violation I, TSI stated that at all times it acted and
intended to act in accordance with all applicable requirements. TSI
stated that no false statements were ever deliberately made by its
representatives, and that its representatives ``never deliberately
omitted to disclose any material information to the NRC.'' In support
of its denial, TSI referenced the fact that based on the evidence
presented at the criminal trial in 1995, the jury acquitted TSI of all
charges.
NRC Evaluation of TSI's Answer to Violation I
TSI's brief pro forma answer on the facts provides no rebuttal or
other information regarding the detailed allegations made in Violation
I. The answer makes no attempt to explain why the allegations are
incorrect. In the absence of new information, the NRC staff continues
to believe that violations of NRC requirements occurred as alleged in
Violation I, that these violations are properly classified as Severity
Level 1, and that these violations carry a high degree of regulatory
significance. Accordingly, the NRC staff finds that the proposed civil
penalty of $100,000 should be imposed for Violation I.
NRC Conclusion
The NRC has concluded that the violations alleged in the Notice
occurred as stated. TSI did not provide any basis for reducing the
severity level of the violations, and did not provide any basis for
mitigation of the proposed civil penalties. Consequently, the proposed
civil penalty in the amount of $900,000 should be imposed on TSI.
[FR Doc. 99-11818 Filed 5-10-99; 8:45 am]
BILLING CODE 7590-01-P
