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UNITED STATES,

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NUCLEAR REGULATORY COMMISSIONn

,f j' wAsmNQ TON. D. C. 20666

k ~ #' April le,1989;_

Mr. Lawrence Lippe. ChiefCriminal Division 6th FloorU. S. Department of Justice1400 New York Avenue, NWWashington, D.C. 20530

Dear Mr. Lippe:0

The enclosed report (Case No. 3-88-003) is the result of an investigationconducted by the NRC Office of Investigations (01) into an allegation thatMinnesota Mining and Manufacturing Company (3M) failed to report to the NRCinfonnetion on damaged leaking static eliminators as required pursuant to

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their specific distribution license.

In 1979, pursuant to the NRC's renewal of 3M's static eliminator distributionlicense, the NpC required that 3M perfonn 100% leak testing of all staticeliminators returned to them by their customers. Previously, only random

.testing, not 100% testing, was required. The license also required that 3M,'

annually report to the NRC the number of devices which ' leak tested greaterthan 0.005 microcuries (uti). That requirement is consistent with 10 C.F.R.

| 5 31.5(c)(5) of the NRC's regulations which requires either 3M or their'

customers (HRC general licensees) to report such leaking devices,

3M established a quality control inspection program to perform the requiredj

100% leak testing for returned static eliminators. In that program, 3Mcategorized practically every returned device that was leaking as,

i damaged / leaking from customer abuse. 3M then interpreted their license torequire them to report to the NRC only those static eliminators leaking inexcess of 0.0005 uti which had not been daaged by customer abuse. By sodoing, from 1979 to 19BS, 3M only reported a handful of undamaged leakingdevices.

3M's static eliminator distribution license also comitted them to notifyingtheir customers of damaged and leaking static eliminators.Affairs Manager (RAM), who was responsible under the license for thatThe 3M Regulatorynotification, set up a program whereby the 3M Static Analysts (salesmen) wereassigned the responsibility to perform that notification. The inherentproblem in that process was that static analysts were not consistently "

provided with necessary data to determine when notification was necessary. -

Therefore the 3M RAM failed to systematically notify 3M customers of alldamaged leakers in excess of 0.005 uC1, thereby causing 3M customers to be inviolation of 10 C.F.R. 6 31.5(c)(5), which requires that the customers, asgeneral licensees, report the leaks to the NRC.

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This investigation has developed evidence indicating that at least one 3M RAM,the one who set up the customer notification program knowingly failed to reportto the NRC damaged static eliminators which tested greater than 0.005 uCi, andknowingly failed to notify 3M customers (general licensees) of those leakingunits. That individual characterized 3M's distribution license as ambiguousand unclear, but failed to seek clarification of license requirements fromNRC. Rather, the RAM chose interpret the license in such a manner as tosuggest to the NRC through required annual reports that damaged leakingdevices rarely occurred.

Notwithstanding the potential regulatory violation, it is also important that18 U.S.C. 2, and 42 U.S.C. 2273,

possible criminal violations,18 U.S.C.1001,(5) states in part, "Upon thebe brought to your attention. 10 CFR 31.5(c)occurrence of a failure of or damage to, or any indication of a possiblefailure of or damage to, the shielding of the radioactive material or theon-off mechanism or indicator, or upon the detection of 0.005 microcurieor mort. removable radioactive material, shall imediately suspend operationof the device until it has been repaired by the manufacturer...and, within30 days, furnish to the Administrator of the appropriate Nuclaar RegulatoryComission, Regional Office...a report containing a brief aescription of theevent and the remedial action taken."

j Evidence developed durn , this investigation has detennined that 3M and oneof its RAMS knowingly withneld from their general license customer informationon leaking devices at the customer facilities that were leaking in excess of0.005 uti. By such action, both 3M and the RAM caused their gener&1 licenssesto be in violation of 10 CFR 31.5(c)(5), which is issued under Section 161(o)c' the Atomic Energy Act (AEA) of 1954, as amended (42 U.S.C. '.'201).Section 223(a) of the AEA (42 U.S.C. 2273) makes a willful violation of aregulation issued under Section 161(b)(i) or (o) of the AEA a criminal act.The willful causing of the violation of 161(o) by both 3M and the RAF thusbecomes a violation of 18 U.S.C. 2.

Additionally, both 3M and the RAM willfully committed a violation of18 U.S.C.1001, Material False Statement, in that information on the number of1eaking devices in excess of 0.005 uCi was knowingly withheld from the NRC

; thro gh the submittal of an NRC required report that contained clearlyu

I o.oneous information in response to License Condition 15 c3err 3M LicenseN 22-00057-326.

einally, the facts developed during the investigation indicate that 3Mwillfully violated License Condition 15 of their NRC license to manufacturedevices containing radioactive byproduct material. That license was issuedpursuant to 10 CFR 32.51. 10CFR32.1(b)indicatesany"...provisionsandrequirements of this part (Part 32) are in addition to, and not in substitutionfor, other requirements of this chapter. In particular, the pravisions ofPart 30 of this chapter apply to applications and licenses subject to thispart."

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titiWithin Part 3 E 3ection 30.3 states in part, "no person shall manufacture, |

produce, transfer, receive, acquire, own, possess, or use byproduct materialexcept as authorized in a specific or general license issued pursuant to theregulations in this chapter." 10 CFR 30.3 was issued under the provisions i

of Section 161(b) of the AEA and as such, falls under the provisions ofSection 223(a) of the AEA, which makes a willful violation a criminal act.

Based upon t.he information provided above, we are forwarding the describedreport and supporting documentation, including sworn statements made to NRCinvestigators, for whatever action you may deem appropriate. TheU.S. Attorney's Office for the District of Minnesota has expressed an interestin this matter and has raquested that the enclosed 01 report be forwarded totheir office for review. If there are any questions regarding this matter,feel free to contact Eugene T. Pawlik, 01 Region 111 Field Office Director, ,

on FTS 388-S686 or Comercial (312) 790-5686. |

Si erely.

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Ben B. H es, DirectorOffice of Investigatio .

Enclosure:As stated

cc w/o encl:Chaiman ZechComissioner Pobert:Comissioner CarrComissioner RogersCommissioner CurtissJ. Lieberman. OE.L. Chandler, 060W. Parler, 0GCR. Bernero, NMSSV. Stello, Jr. , EDOH. Thompson, Jr. DEDSA. B. Davis, RIIIE. Pawlik, DI:RIIIJ. Arnold. U.S. Attorney

Judicial District of Minnesota

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>AttCy

i ,,+( o UNITED STATES

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NUCLE AR REGULATORY COMMISSION( g/g

w Asm NG TON, D. C. 20555;;

%, .V / April 18,1989....

Mr. Jerome ArnoldU.S. AttorneyJudicial District of Minnesota

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234 U.S. Courthouse110 S. 4th StreetMinneapolis, MN 55401

Dear Mr. Arnold:

The enclosed report (Case No. 3-88-003) is the result of an investigationconducted by the NRC Office of Investigations (01) into an allegation thatMinnesota Mining and Manufacturing Company (3M) failed to report to the NRCinformation on damaged leaking static eliminators as required pursuant totheir specific distribution license.

In 1979, pursuant to the NRC's renewal of 3M's static eliminator distributionlicense, the NRC required that 3M perfom 100% leak testing of all staticeliminators returned to them by their customers. Previously, only random

i tes.ing, not 100% testing, was required. The license also required that 3M, -

a nt . ily report to the NRC the number of devices which leak tested greaterth6! 0.005 microcuries (uCi). That requirement is censistent with 10 C.F.R.5 31.5(c)(5) of the NRC's regulations which requires either 3M or theircustomers (NRC genera; 'icensees) to report such leaking devices.

D' established a qualitj control in;pection program to perform tne recuired10Ci ieck testinc 'or returnec static elid nators. Ir, that program, 3Mcategcrized practically every returned cevice that was leaking asdamaged / leaking from customer abuse. 3M then interpreted their license to

.

require them to report to the bRC only those static eliminators leaking inexcess of 0.0005 uCi which had not been damaged by customer abuse. By sodoing, from 1979 to 1988, 3M only reported a handful of undamagea 1 eakingdevices.

,

3M's static eliminator distribution license also comitted them to notifyingtheir customers of damagud and leaking static eliminators. The 3M RegulatoryAffairs Manager (RAM), who was respor.sible under the license for thatnotification, set up a program whereby the 3M Static Acalysts (salesmen) 5:ereassigned the responsibility to perform that notification. The inherentproblem in that process was that static analysts were not consistentlyprovided with necessary data to determine when notification was necessary.Therefore the 3M RAM failed to systematically notify 3M customers of alldamaged leakers in excess of 0.005 uCi, thereby causing 3M customers to be in

I violation of 10 C.F.R. 5 31.5(c)(5), which requires that the customers, asgeneral licensees, report the leaks to the NRC.

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wThis investigation has developed evidence indicating that at least one 3M RAM,

- the one who set up the customer notification program knowingly failed to reportto the NRC damaged static eliminators which tested greater than 0.005 uCi, and<

knowingly failed to notify 3M customers (general licensees) of those leakingunits. That individual characterized 3M's distribution license as ambiguousand unclear, but failed to seek clarificatim of license requirements from

,

NRC. Rather, the RAM chose interpret the ;. cense in such a manner as to Isuggest to the NRC through required annual reports that damaged leaking '

devices rarely occurred.

Notwithstanding the potential regulatory violation, it is also important thatpossible criminal violations, 18 U.S.C. 1001, 18 U.S.C. 2, and 42 U.S.C. 2273,be brought to your attention. 10 CFR 31.5(<.)(5) states in part,."Upon theoccurrence of a failure of or damage to, or any indication of a possiblefailure of or. damage to, the shielding of the radioactive material or theon-off mechanism or indicater,-or upon the aetection of 0.005 microcurieor more removable radioactive material, shall imediately suspend operationof the device until it has been repaired by the manufacturer...and, within i30 days, furnish to the Administrator of the appropriate Nuclear Regulatory )Connission, Regional Office...a report containing a brief description of theevent and the remedial action taken."

f vidence developed during this investigation has detennined that 3M and oneE

of its RAMS knowingly withheld from their general ifcense customer informationon leaking devices at the customer facilities that were leaking ir excess of0.005 uC1 -By such action, both 3M and the RAM caused their gerr al licenseesto be in-violation of 10 CFR 31.5(c)(5), which is issued under 5 etion 161(o)of the Atomic Energy Act (AEA) of 1954, as amended (42 U.S.C. 2201)'.

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Section 223(a) of the AEA (42 U.S.C. 2273) makes a willfut violation of aregulation issued under Section 161(b)(1)-or'(o) of the AEA a criminal act.

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The-willful causing of the violation of 161(o) by both 3M and the RAM thusbecomes a violation of 18 U.S.C. 2. ,

Additionally, both 3M and the RAM willfe:1y comitted a violation of18 U.S.C. 1001, Material False Statemen~., in that information on the number of

;1eaking devices-in excess of 0.005 uCi was knowingly withheld from the NRC:through the submittal of an NRC required report t. hat contained clearly

}Ha.22-00057-326. erroneous infonnation in response to License Condition 15 of 3M Licensej.

Finally, the facts developed during the investigation indicate that 3MI willfully-violated License Condition 15 of their NRC license to manufacture

devices containing radioactive byproduct material. That license was issuedpursuant to 10 CFR 32.51. 10CFR32.1(b)indicatesany"...provisionsandrequirements of this part (Part 32) are in addition to, and not in substitutionfor, other requirements of this chapter. In particular, the provisions ofPart 30 of this chapter apply to applications and licenses subject to this

,

|-part."

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Mr. Jerome Arnold 3

Within Part 30. Section 30.3 states in part, "no person shall manufacture,produce, transfer, receive, acquire, own, possess, or use byproduct materialexcept as authorized in a specific or general license issued pursue.nt to theregulations in-this chapter " 10 CFR 30.3 was issued under the provisionsof Section 161(b) of the AEA and as such, falls under the provisions ofSection 223(a) of ti'e AEA, which makes a willful violation a criminal act.

Based upon the infonnation provided above,-we are forwarding the describedreport and supporting documentation, including sworn statements made to NRCinvestigators, for your review. If there are eny questkns regarding thismatter, feel free to contact Eugene T. Pawlik, 01 Region .?I Field OfficeDirector, on FTS 388-5686 cr Comercial (312) 790-5686.

Si erely,

si

Ben B. Hayes, Director<-

Office of Investigatians

Enclosure:As stated

cc w/o encl:Chairman ZechCommissioner RobertsCcamissioner CarrCervissioner RogersCommissioner CurtissJ. Lieberman, OEL. Chancier, OGCW. Parler, OGCR.-Bernero, NMSSV. Stello, Jr., EDOH. Thompson, Jr. DEDSA. B. Davis, RillE. Pawlik, 01:RIIIU.S. Department of Justice

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