Results of Investigation

In October and November 2006, using fictitious names, our investigators  created two bogus companies—one in an agreement state and one in a  non-agreement state. The license  applications stated that our company intended to purchase machines with  sealed radioactive sources. It took a total of 4 weeks to obtain the license. We  altered the license so that it appeared our bogus company could purchase  an unrestricted quantity of sealed source materials rather than the small  amounts of Americium-241 and Cesium-137 listed on the original license. Next, we contacted two U.S. suppliers of the machines specified in our  license. Although we had no legitimate use for the machines, our investigators  received, within days of obtaining a license from NRC, price quotes and  terms of payment that would have allowed us to purchase numerous  machines containing sealed radioactive source materials. It could possibly—although it is  unlikely—be fatal to be close to this amount of unshielded radioactive  material for a period of days to weeks.” Importantly, with patience and the  proper financial resources, we could have accumulated, from other  suppliers, substantially more radioactive source material than what the  two suppliers initially agreed to ship to us—potentially enough to reach  category 2. According to IAEA, category 2 sources, if not safely managed  or securely protected, “could cause permanent injury to a person for a  short time (minutes to hours), and it could possibly be fatal to be close to  this amount of unshielded material for a period of hours to days.”

		Application to the Agreement State

Ten days after mailing their application form to the agreement state’s  department of environment, our investigators received a call from a  department license examiner. The license examiner stated that the  application was deficient in some areas and said that she would send us a  letter outlining what additional information the state required before  approving the license. The official told us  that as a matter of long-standing state policy, license examiners in this  state conduct site visits and interview company management (especially  radiation safety officers) before granting new licenses for radioactive  materials. An NRC official indicated that NRC would take immediate action to  address the weaknesses we identified. After this meeting, we learned that  NRC suspended its licensing program for specific licenses until it could  determine what corrective actions were necessary to resolve the  weaknesses. On June 12, 2007, NRC issued  supplemental interim guidance with additional screening criteria. These  criteria are intended to help a license examiner determine whether a site  visit or face-to-face meeting with new license applicants is required. Once we received our license, the ease with  which we were able to alter the license and obtain price quotes and  commitments to ship from suppliers of radioactive materials is also cause  for concern. Accordingly, we are making the following three  recommendations to the Chairman of the NRC:    First, to avoid inadvertently allowing a malevolent individual or group  to obtain a license for radioactive materials, NRC should develop  improved guidance for examining NRC license applications.
Why GAO Did This Study

The Nuclear Regulatory Commission (NRC) regulates domestic medical, industrial, and research uses of sealed radioactive sources. Organizations or individuals attempting to purchase a sealed source must apply for a license and gain the approval of either NRC or an "agreement state." To become an agreement state, a state must demonstrate to NRC that its regulatory program is compatible with NRC regulations and is effective in protecting public health and safety. NRC then transfers portions of its authority to the agreement state. In 2003, GAO reported that weaknesses in NRC's licensing program could allow terrorists to obtain radioactive materials. NRC took some steps to respond to the GAO report, including issuing guidance to license examiners. To determine whether NRC actions to address GAO recommendations were sufficient, the Subcommittee asked GAO to test the licensing program using covert investigative methods.

What GAO Found

By using the name of a bogus business that existed only on paper, GAO investigators were able to obtain a genuine radioactive materials license from NRC. Aside from traveling to a non-agreement state to pick up and send mail, GAO investigators did not need to leave their office in Washington, D.C., to obtain the license from NRC. Further, other than obtaining radiation safety officer training, investigators gathered all the information they needed for the license from the NRC Web site. After obtaining a license from NRC, GAO investigators altered the license so it appeared that the bogus company could purchase an unrestricted quantity of radioactive sealed sources rather than the maximum listed on the approved license. GAO then sought to purchase, from two U.S. suppliers, machines containing sealed radioactive material. Letters of intent to purchase, which included the altered NRC license as an attachment, were accepted by the two suppliers. These suppliers gave GAO price quotes and commitments to ship the machines containing radioactive materials. The amount of radioactive material we could have acquired from these two suppliers was sufficient to reach the International Atomic Energy Agency's (IAEA) definition of category 3. According to IAEA, category 3 sources are dangerous if not safely managed or securely protected. Importantly, with patience and the proper financial resources, we could have accumulated substantially more radioactive source material. GAO also attempted to obtain a license from an agreement state, but withdrew the application after state license examiners indicated they would visit the bogus company office before granting the license. An official with the licensing program told GAO that conducting a site visit is a standard required procedure before radioactive materials license applications are approved in that state. As a result of this investigation, NRC suspended its licensing program until it could determine what corrective actions were necessary to resolve the weaknesses GAO identified. On June 12, 2007, NRC issued supplemental interim guidance with additional screening criteria. These criteria are intended to help a license examiner determine whether a site visit or face-to-face meeting with new license applicants is required.