2024-12255. In the Matter of Mistras Group, Inc.; Confirmatory Order

AGENCY:

Nuclear Regulatory Commission.

ACTION:

Notice; issuance.

SUMMARY:

The U.S. Nuclear Regulatory Commission (NRC) issued a Confirmatory Order to Mistras Group, Inc. (Mistras) to document commitments made as part of a settlement agreement between the NRC and Mistras following an alternative dispute resolution mediation session held on March 21, 2024. The mediation addressed an apparent violation involving the falsification by two Mistras employees of certificates of calibration for non-destructive test equipment that was used at nuclear power plants. Mistras has committed to corrective actions in the following areas: safety culture and safety conscious work environment, quality assurance program, audits, and training. The Confirmatory Order became effective upon issuance.

DATES:

The Confirmatory Order was issued on May 22, 2024.

ADDRESSES:

Please refer to Docket ID NRC-2024-0103 when contacting the NRC about the availability of information regarding this document. You may obtain publicly available information related to this document using any of the following methods:

• Federal Rulemaking Website: Go to https://www.regulations.gov and search for Docket ID NRC-2024-0103. Address questions about Docket IDs in Regulations.gov to Stacy Schumann; telephone: [phone]; email: [e-mail]. For technical questions, contact the individual listed in the FOR FURTHER INFORMATION CONTACT section of this document.
• NRC's Agencywide Documents Access and Management System (ADAMS): You may obtain publicly available documents online in the ADAMS Public Documents collection at https://www.nrc.gov/​reading-rm/​adams.html. To begin the search, select “Begin Web-based ADAMS Search.” For problems with ADAMS, please contact the NRC's Public Document Room (PDR) reference staff at 1-800-397-4209, at 301-415-4737, or by email to [e-mail]. The Mistras Confirmatory Order is available in ADAMS under Accession No. ML24116A294.
• NRC's PDR: The PDR, where you may examine and order copies of publicly available documents, is open by appointment. To make an appointment to visit the PDR, please send an email to [e-mail] or call 1-800-397-4209 or 301-415-4737, between 8 a.m. and 4 p.m. eastern time (ET), Monday through Friday, except Federal holidays.

FOR FURTHER INFORMATION CONTACT:

David Jones, Office of Enforcement, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001, telephone: [phone]; email: [e-mail].

SUPPLEMENTARY INFORMATION:

The text of the order is attached.

Dated: May 30, 2024.

For the Nuclear Regulatory Commission.

June Cai,

Deputy Director, Office of Enforcement.

Attachment—Mistras Services—Confirmatory Order

United States of America

Nuclear Regulatory Commission

In the Matter of: Mistras Group, Inc, EA-23-105.

Confirmatory Order

Effective Upon Issuance

I

Mistras Group, LLC. (Mistras) performs activities such as testing of heavy lifting equipment at nuclear power plants licensed by the U.S. Nuclear Regulatory Commission (NRC or Commission). Mistras, as specified in purchase orders and contracts with NRC licensees, is required to implement Appendix B, “Quality Assurance Criteria for Nuclear Power Plants and Fuel Reprocessing Plants,” of Part 50, “Domestic Licensing of Production and Utilization Facilities,” to Title 10 of the Code of Federal Regulations (10 CFR). Mistras' non-destructive testing (NDT) service includes usage of an Acoustic Emission (AE) Data Acquisition System to examine the structural integrity of cranes used for lifting components such as reactor vessel heads and reactor vessel internals at many NRC licensee sites.

This Confirmatory Order (CO) is the result of an agreement reached during an Alternative Dispute Resolution (ADR) mediation session conducted on March 21, 2024, in Rockville, Maryland, to address one apparent violation.

II

On October 22, 2021, the NRC's Office of Investigations (OI) opened an investigation (OI Case No. 1-2022-003) at Mistras' Trainer, Pennsylvania facility. The investigation, which was completed on October 19, 2022, and supplemented on May 9, 2023, evaluated whether a former Director of Advanced Services and a former NDT engineer engaged in deliberate misconduct by falsifying certificates of calibration for AE equipment that was used to perform inspections of heavy lifting equipment for safety-related components at nuclear power plants.

Based on the conclusions of the investigation, the NRC's Office of Nuclear Reactor Regulation, Division of Reactor Oversight, Quality Assurance Vendor Inspection Branch, issued an apparent violation that was documented in an NRC letter, dated December 7, 2023 (Agencywide Documents Access and Management System (ADAMS) Accession No. ML23340A106).

The apparent violation of 10 CFR 50.5, “Deliberate misconduct,” stated that from approximately 2011 until 2021, Mistras (a contractor) knowingly provided services related to licensees' activities in 10 CFR part 50 and deliberately submitted to licensees information that the person submitting the information knew to be incomplete or inaccurate in some respect material to the NRC. Specifically, Mistras maintained falsified records documenting the calibration of test equipment used at nuclear power plants. On multiple occasions, two Mistras employees created falsified documents to conceal Mistras' failure to calibrate the AE Data Acquisition Systems on an annual basis, as specified by the equipment manufacturer. These falsified documents, including certificates of calibration, were submitted to NRC licensees as part of AE test reports on multiple occasions between approximately 2011 and 2021.

Additionally, the apparent violation stated that the Mistras AE test reports provided by Mistras to licensees (which included the falsified certificates of calibration) are material to the NRC. The test reports concerned AE systems that were used in activities affecting quality ( e.g., AE systems were used by NRC licensees to examine the structural integrity of cranes used for lifting components such as reactor vessel heads and reactor vessel internals), and the test reports are quality assurance records in accordance with Appendix B, Criterion XVII, “Quality Assurance Records,” to 10 CFR part 50, which provide evidence that licensees are in compliance with NRC regulations.

When issuing the apparent violation, the NRC provided Mistras an opportunity to attend a pre-decisional enforcement conference or participate in an ADR mediation session to resolve this concern. In response, Mistras requested the use of the NRC's ADR process. On March 21, 2024, the NRC and Mistras conducted an ADR session mediated by a professional mediator, arranged through Cornell University's Scheinman Institute on Conflict Resolution. The ADR process is one in which a neutral mediator, with no decision-making authority, assists the parties in reaching an agreement to resolve any differences regarding the dispute. This Confirmatory Order is issued pursuant to the agreement reached during the ADR process.

III

NRC and Mistras reached a preliminary settlement agreement during a full-day mediation session that was conducted on March 21, 2024. The elements of the agreement include the following:

1. In recognition of the prompt and corrective actions taken in response to the apparent violation, as documented in this CO and discussed at the ADR, Mistras is not required to provide a written response in accordance with 10 CFR 2.201. Corrective actions completed by Mistras prior to the mediation session include, but are not limited to, the following:

a. Individuals responsible for the fraudulent records had their employment terminated.

b. AE instruments were properly calibrated by Physical Acoustics, the manufacturer of the equipment.

c. Developed a web‐based training course for all employees, which included an introduction by the company's Chief Executive Officer, to speak about the importance of promoting a culture of ethics, and how any deliberate misconduct has consequences, including loss of employment and imprisonment.

d. Local and Corporate Quality Departments reviewed procedures, records, and equipment.

e. AE procedures and forms were adopted into the Corporate Document Center, as formal quality assurance records.

f. AE test equipment was added to the measuring and test equipment (M&TE) recall system.

g. AE program procedures and work instructions were revised to clarify the calibration verification instructions and to identify future calibration requirements.

h. Notification letters were written and distributed to notify applicable nuclear power plants of the nonconformance associated with their equipment.

i. An interim report and a final 10 CFR part 21 report were submitted to the NRC.

j. Mistras developed or revised the following procedures:

i. Revised procedure 100-QC-006, “Contract Review & Project Planning” to ensure that “Nuclear Projects” are submitted to the Nuclear Projects Division for review.

ii. Revised procedure 100-QC-007, “Project Execution.”

iii. Developed procedure 100-QC-007.1, “Nuclear Projects” which defined the Nuclear Projects Division.

iv. Revised procedure 100-QC-014 “Internal Audits” to require additional oversight of Nuclear Projects by requiring an annual audit by an outside, independent Lead Auditor.

v. Planned revision of 100-QC-017 “Control of Nonconforming Items.”

vi. Revised procedure 100-QC-017.1, “Reporting of Defects and Noncompliance in Accordance with 10 CFR part 21 and 10 CFR 50.55(e),” Revision 6, dated October 9, 2023, which incorporates appropriate evaluation criteria consistent with guidance provided in Nuclear Energy Institute (NEI) 14-09, “Guidelines for Implementation of 10 CFR part 21 Reporting of Defects and Noncompliance.”

2. Mistras agreed upon future actions in the following areas (see Section V for details):

a. Safety Culture and Safety Conscious Work Environment.

b. Quality Assurance Program.

c. Audit.

d. Quality Assurance Program Training for Employees Involved in Nuclear Safety-Related Activities.

3. The NRC considers the corrective actions and commitments delineated above to be appropriately prompt and comprehensive to address the causes which resulted in the apparent violation identified in NRC's December 7, 2023, letter.

4. In consideration of the commitments delineated above and described in Section V below, the NRC agrees not to assess a civil penalty and refrain from issuing a notice of violation for all matters discussed in the NRC's choice letter dated December 7, 2023 (EA-23-105).

5. The NRC and Mistras agree that the above elements will be incorporated into a Confirmatory Order which will also describe the apparent violation.

6. The Confirmatory Order is an escalated enforcement action in accordance with the NRC Enforcement Policy.

7. In the event of the sale of Mistras Services division, which services commercial nuclear facilities, to another entity, the terms and conditions set forth hereunder shall continue to apply to the new entity and accordingly survive any transfer of ownership.

8. The Director, Office of Enforcement, may, in writing, relax, rescind, or withdraw any of the above conditions upon demonstration by Mistras or its successors of good cause.

Based on the completed (and planned) actions described above, and the commitments described in Section V below, the NRC agrees to not pursue any further enforcement action based on the apparent violation identified in NRC's December 7, 2023, letter (see Section I).

On May 15, 2024, Mistras consented to issuing this Confirmatory Order with the commitments, as described in Section V below. Mistras further agreed that this Confirmatory Order is to be effective upon issuance, the agreement memorialized in this Confirmatory Order settles the matter between the parties, and Mistras has waived its right to a hearing.

IV

I find that the actions completed or planned by Mistras, as described in Section III above, combined with the commitments as set forth in Section V, are acceptable and necessary, and conclude that public health and safety are reasonably assured with these completed actions and commitments. In view of the foregoing, I have determined that public health and safety require that Mistras' commitments be confirmed by this Order. Based on the above and Mistras' consent, this Confirmatory Order is effective upon issuance.

V

Accordingly, pursuant to Sections 104b, 161b, 161i, 161o, 182, and 186 of the Atomic Energy Act of 1954, as amended, and the Commission's regulations in 10 CFR 2.202 and 10 CFR part 50, as applicable, it is hereby ordered, effective upon issuance, that:

1. Safety Culture and Safety Conscious Work Environment

a. Mistras will maintain a clear and enforceable policy ( e.g., code of conduct) for safety culture and safety conscious work environment (SCWE).

b. Within 60 days of the issuance of this Confirmatory Order, Mistras will review its policy for safety culture and SCWE for consistency with the NRC's May 2011 Safety Culture Policy Statement and associated traits, the NRC's May 1996 Safety Conscious Work Environment Policy Statement, and the NRC's Regulatory Issue Summary 2005-18, “Guidance for Establishing and Maintaining a Safety Conscious Work Environment.” Mistras will document the results of this review.

c. Within 90 days of the issuance of this Confirmatory Order, Mistras will communicate to its employees its policy for safety culture and SCWE, if any changes are made based on the results of the review from Condition 1.b.

d. Mistras will provide indoctrination and annual refresher training on Mistras' policy for safety culture and SCWE. Mistras will maintain a record of the individuals receiving training and the date of the training.

e. Mistras will conduct a survey to assess the effectiveness of Mistras' policy for safety culture and SCWE taking into consideration the May 2011 NRC Safety Culture Policy Statement and associated traits on a periodic basis with a minimum frequency of two years.

2. Quality Assurance Program.

a. Within 90 days of the issuance of this Confirmatory Order, Mistras will review, revise as necessary, and implement its Quality Manual and implementing procedures to ensure that they are compliant with Appendix B, “Quality Assurance Criteria for Nuclear Power Plants and Fuel Reprocessing Plants,” to Title 10 of the Code of Federal Regulations (10 CFR) Part 50, “Domestic Licensing off Production and Utilization Facilities.” At a minimum, the Quality Manual will address the following criteria within Appendix B to 10 CFR part 50:

i. Criterion I, “Organization”

ii. Criterion II, “Quality Assurance Program”

iii. Criterion IV, “Procurement Document Control”

iv. Criterion V, “Instructions, Procedures, and Drawings”

v. Criterion VII, “Control of Purchased Material, Equipment, and Services,”

vi. Criterion IX, “Control of Special Processes,”

vii. Criterion XII, “Control of Measuring and Test Equipment,”

viii. Criterion XV, “Nonconforming Materials, Parts, and Components,”

ix. Criterion XVI, “Corrective Actions”

x. Criterion XVII, “Quality Assurance Records,”

xi. Criterion XVIII, “Audits”

b. Mistras will maintain the Quality Manual and implementing procedures to ensure that they remain compliant with Appendix B to 10 CFR part 50.

3. Audits.

a. Within 1 year of the issuance of this Confirmatory Order, Mistras will have a comprehensive audit performed of its Nuclear Quality Assurance Program, including the in-house and in-field activities affecting quality. This audit shall be performed by an independent, contracted entity that is knowledgeable in Appendix B to 10 CFR part 50 and 10 CFR part 21.

b. Within 60 days of the completion of Condition 3.a, Mistras will submit to the NRC the audit report(s) and Mistras' written response to the audit report. Mistras' written response will either address how it will implement each recommendation and corrective actions of the audit report, including a proposed timeline; or provide an explanation and justification for why each recommendation and corrective action will not be implemented.

c. Thereafter, on a periodicity to not exceed three years, Mistras shall have a comprehensive audit performed of its Nuclear Quality Assurance Program as described in Condition 3.a of this Order. Mistras shall maintain records of the audit report as well as its written response that documents its implementation of the report's recommendations and corrective actions, or provides an explanation and justification for why any recommendation and corrective action was not implemented.

d. Mistras will perform comprehensive audits to verify compliance with all aspects of its Nuclear Quality Assurance Program, including the in-house and in-field activities affecting quality, and assess its effectiveness, on an annual basis. The audits shall be performed in accordance with written procedures or check lists by appropriately trained personnel not having direct responsibilities in the areas being audited. Audit results shall be documented and reviewed by management having responsibility in the area audited. Follow up action, including reaudit of deficient areas, shall be taken where indicated.

4. Quality Assurance Program Training for Employees Involved in Nuclear Safety-Related Activities.

a. Within 60 days of the issuance of this Confirmatory Order, Mistras will create and deliver to its employees a statement from senior Mistras management highlighting the meaning of a nuclear worker's signature, the regulatory and legal significance of a signature, and the importance of ensuring activities affecting quality are accomplished in accordance with Mistras policies and procedures.

b. Within 180 days of the issuance of this Confirmatory Order, Mistras will ensure that it has training that addresses:

i. Compliance with 10 CFR 50.5 and 10 CFR 50.9 that:

1. Emphasizes the importance of complete and accurate information for all required records, correspondence, and communications with the NRC and its licensees.

2. Emphasizes individual accountability and clearly expresses that willful or deliberate failures to comply with regulations, orders, or contractual requirements could result in significant individual enforcement action by the NRC or Department of Justice.

3. Reinforces that if any individual recognizes a non-compliance, they will immediately report the observation of the non-compliance to management.

ii. Compliance with Mistras Quality Manual and implementing procedures. This training shall encompass changes resulting from Condition 1 of this Order.

c. Within 1 year of the issuance of this Confirmatory Order, training prescribed in Condition 4.a and 4.b shall be presented to all Mistras employees involved in nuclear safety-related activities; thereafter, the training shall be presented annually.

d. The training developed in Condition 4.b of this Section shall be reviewed and updated, as needed, at a frequency not to exceed 24 months.

5. In the event of the sale of Mistras Services division, which services commercial nuclear facilities, to another entity, the terms and conditions set forth hereunder shall continue to apply to the new entity and accordingly survive any transfer of ownership.

6. The Director, Office of Enforcement, may, in writing, relax, rescind, or withdraw any of the above conditions upon demonstration by Mistras or its successors of good cause.

VI

In accordance with 10 CFR 2.202 and 10 CFR 2.309, any person adversely affected by this CO, other than Mistras, may request a hearing within 30 calendar days of the date of issuance of this CO. 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.

All documents filed in NRC adjudicatory proceedings, including a request for hearing and petition for leave to intervene (petition), any motion or other document filed in the proceeding prior to the submission of a petition, and documents filed by interested governmental entities that request to participate under 10 CFR 2.315(c), must be filed in accordance with the NRC's E-Filing rule (72 FR 49139; August 28, 2007, as amended at 77 FR 46562; August 3, 2012). The E-Filing process requires participants to submit and serve all adjudicatory documents over the internet, or in some cases to mail copies on electronic storage media. Detailed guidance on making electronic submissions may be found in the Guidance for Electronic Submissions to the NRC and on the NRC website at https://www.nrc.gov/​site-help/​e-submittals.html. Participants may not submit paper copies of their filings unless they seek an exemption in accordance with the procedures described below.

To comply with the procedural requirements of E-Filing, at least 10 days prior to the filing deadline, the participant should contact the Office of the Secretary by email at [e-mail], or by telephone at 301-415-1677, to (1) request a digital identification (ID) certificate, which allows the participant (or its counsel or representative) to digitally sign submissions and access the E-Filing system for any proceeding in which it is participating; and (2) advise the Secretary that the participant will be submitting a petition or other adjudicatory document (even in instances in which the participant, or its counsel or representative, already holds an NRC-issued digital ID certificate). Based upon this information, the Secretary will establish an electronic docket for the hearing in this proceeding if the Secretary has not already established an electronic docket.

Information about applying for a digital ID certificate is available on the NRC's public website at https://www.nrc.gov/​site-help/​e-submittals/​getting-started.html. Once a participant has obtained a digital ID certificate and a docket has been created, the participant can then submit adjudicatory documents. Submissions must be in Portable Document Format (PDF). Additional guidance on PDF submissions is available on the NRC's public website at https://www.nrc.gov/​site-help/​electronic-sub-ref-mat.html. A filing is considered complete at the time the document is submitted through the NRC's E-Filing system. To be timely, an electronic filing must be submitted to the E-Filing system no later than 11:59 p.m. Eastern Time on the due date. Upon receipt of a transmission, the E-Filing system time-stamps the document and sends the submitter an email notice confirming receipt of the document. The E-Filing system also distributes an email notice that provides access to the document to the NRC's Office of the General Counsel and any others who have advised the Office of the Secretary that they wish to participate in the proceeding, so that the filer need not serve the document on those participants separately. Therefore, applicants and other participants (or their counsel or representative) must apply for and receive a digital ID certificate before adjudicatory documents are filed so that they can obtain access to the documents via the E-Filing system.

A person filing electronically using the NRC's adjudicatory E-Filing system may seek assistance by contacting the NRC's Electronic Filing Help Desk through the “Contact Us” link located on the NRC's public website at https://www.nrc.gov/​site-help/​e-submittals.html, by email to [e-mail], or by a toll-free call at 1-866-672-7640. The NRC Electronic Filing Help Desk is available between 9 a.m. and 6 p.m., Eastern Time, Monday through Friday, excluding Federal government holidays.

Participants who believe that they have good cause for not submitting documents electronically must file an exemption request, in accordance with 10 CFR 2.302(g), with their initial paper filing stating why there is good cause for not filing electronically and requesting authorization to continue to submit documents in paper format. Such filings must be submitted by (1) first class mail addressed to the Office of the Secretary of the Commission, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001, Attention: Rulemaking and Adjudications Staff; or (2) courier, express mail, or expedited delivery service to the Office of the Secretary, 11555 Rockville Pike, Rockville, Maryland 20852, Attention: Rulemaking and Adjudications Staff. Participants filing adjudicatory documents in this manner are responsible for serving the document on all other participants. Filing is considered complete by first-class mail as of the time of deposit in the mail, or by courier, express mail, or expedited delivery service upon depositing the document with the provider of the service. A presiding officer, having granted an exemption request from using E-Filing, may require a participant or party to use E-Filing if the presiding officer subsequently determines that the reason for granting the exemption from use of E-Filing no longer exists.

Documents submitted in adjudicatory proceedings will appear in the NRC's electronic hearing docket which is available to the public at https://adams.nrc.gov/​ehd, unless excluded pursuant to an order of the Commission or the presiding officer. If you do not have an NRC-issued digital ID certificate as described above, click “cancel” when the link requests certificates and you will be automatically directed to the NRC's electronic hearing dockets where you will be able to access any publicly available documents in a particular hearing docket. Participants are requested not to include personal privacy information, such as social security numbers, home addresses, or personal phone numbers in their filings, unless an NRC regulation or other law requires submission of such information. For example, in some instances, individuals provide home addresses in order to demonstrate proximity to a facility or site. With respect to copyrighted works, except for limited excerpts that serve the purpose of the adjudicatory filings and would constitute a Fair Use application, participants are requested not to include copyrighted materials in their submission.

The Commission will issue a notice or order granting or denying a petition, designating the issues for any hearing that will be held, and designating the Presiding Officer. A notice granting a hearing will be published in the Federal Register and served on the parties to the hearing.

If a person (other than Mistras) requests a hearing, that person shall set forth with particularity the manner in which his interest is adversely affected by this CO and shall address the criteria set forth in 10 CFR 2.309(d) and (f). If a hearing is requested by a person whose interest is adversely affected, the Commission will issue an order designating the time and place of any hearings. If a hearing is held, the issue to be considered at such hearing shall be whether this CO should be sustained.

In the absence of any request for hearing, or written approval of an extension of time in which to request a hearing, the provisions specified in Section V above shall be final 30 days from the date of this CO without further order or proceedings. If an extension of time for requesting a hearing has been approved, the provisions specified in Section V shall be final when the extension expires if a hearing request has not been received.

For the Nuclear Regulatory Commission.

Dated this 22 day of May 2024.

David L. Pelton,

Director, Office of Enforcement.